Accounting Treatment of PPE Acquired for Dual Purposes Such as Operational Use and Resale Under Ind AS Framework
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- Last Updated on 12 March, 2025
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Have you ever thought about a case where a company buys equipment for both business use and future resale? This document explores whether such an asset should remain classified as Property, Plant, and Equipment (PPE) or be reclassified under Indian Accounting Standards (Ind AS) when its purpose shifts. It presents a scenario where a company purchases specialized machinery, planning to use it for a few years before selling it. Initially categorized as PPE under Ind AS 16, the asset remains in this classification even after the decision to sell, raising the question of whether it should have been reclassified under Ind AS 2, Inventories or Ind AS 105, Non-Current Assets Held for Sale and Discontinued Operations The document breaks down key accounting provisions, emphasizing disclosure requirements and the importance of reassessing asset classification.
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