Deloitte has responded to the IASB's ED, “Property, Plant and Equipment – Proceeds before Intended Use (Proposed amendments to IAS 16),” that was published in June 2017.
Deloitte does not agree with the proposed amendment to IAS 16 and shares many of the concerns expressed in the Alternative View on the ED and believes that the proposed amendments will likely have an effect primarily on entities in the energy and extractives industries, where construction of an asset can be a lengthy and complex process with many costs (including those of testing) attributable to bringing the asset to the condition necessary for it to be capable of operating in the manner intended by management.
Deloitte recommends that a thorough consideration of the issues arising from such activities (for example, the unit of account for property, plant and equipment relating to a large mining development and the point at which such an asset is determined to be available for use) and similar issues arising in other industries is necessary prior to making amendments to specific IFRSs as a very limited scope amendment such as the one proposed in the ED cannot address those issues and carries the risk of unintended consequences.
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DTTL comment letter - ED-2017-4.pdf
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