Determining the Replacement Value of the Asset when Original Cost Data is not Available
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- Last Updated on 6 October, 2023
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Para 70 of Ind AS 12, Income Taxes, states when using the recognition principle, an entity recognizes in the carrying amount of an item of property, plant, and equipment the cost of a replacement for part of the item, then it derecognizes the carrying amount of the replaced part regardless of whether the replaced part had been depreciated separately. If it is not practicable for an entity to determine the carrying amount of the replaced part, it may use the cost of the replacement as an indication of what the cost of the replaced part was at the time it was acquired or constructed.
In this story, we have discussed a case study on how to determine the replacement value of the asset when original cost data is not available with the entity.
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