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Plant Replacement Reserve

12 May 2009 3,324 views 2 Comments

Dear Members
What does IFRS or GAAP say about plant repacement reserve . In particular I would like to know when/how one can use the reserve.

Thanks.

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2 Comments »

  • ifrsexpert said:

    The word “reserve” has been very carefully removed from IFRS. This is because you’re no longer allowed to use one. Plant acquisitions must now be divided into components which have different lifespans, and each component is depreciated over its lifespan. Replacements are then capitalised as new assets when the old assets are retired. There is therefore no longer any need to set aside profits in a replacement reserve.

  • cmanishiyer said:

    All Reserves are part of equity. IFRS does not say anything on use of the components of equity. Framework says that local laws and regulations may govern their use.

    Regards
    CA Manish Iyer
    +919825286903

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