Question ID : 40632

Asset Classification

Dear All, Please suggest whether Civil Structure which is an integral part of Plant & machinery Should be classified as plant & machinery or under factory Building . Please reply asap

Reference to Ind AS 16, Clause 58, Land and buildings are separable assets and are accounted for separately, even when they are acquired together. With some exceptions, such as quarries and sites used for landfill, land has an unlimited useful life and therefore is not depreciated. Buildings have a limited useful life and therefore are depreciable assets. An increase in the value of the land on which a building stands does not affect the determination of the depreciable amount of the building Clause 43 Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately. Looking at these clauses, it is clear that if the Civil Structure of the Plant & Machinery has a significant cost, compare to total cost, if it has different useful life compare to plant & Machinery, then it should be treated as a separate class of assets and should be depreciated accordingly the useful life. Life of Civil structure is definitely different then the life of plant and machinery