Recognisation of assets

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2012 In a Aviation Company, Crockery used in the Flights were not being recognized in their balance sheet as any of their assets, even no valuation as on date for crockery was available.

It should be recognized or not?

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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19 May 2012 You may draw conclusion from the following practice:

A restaurant maintains a base stock inventory of silverware and dishes in an unchanging amount. Additions to the
stock are charged to expense. On average, the turnover of these items is two years. Is it appropriate to classify the
dishes and silverware as property, plant and equipment?

Yes. They are tangible assets held for use in the supply of goods and services and are expected to be used for more
than one period. They should not be included in current assets.

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2012 Yes, I agree with you. Pls advice whether they should be included in balance sheet or not. If yes, Under which head?

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2012 And as you have given example of a restaurant , Crockery for them is a fixed asset, but for a aviation company, it is a fixed asset for their catering services, hence it should be recognized under fixed assets for the company or not? Pls suggest...

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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19 May 2012 Excerpt from Jet Airways annual report:
In respect of reusable items such as rotables, galley equipment and tooling etc.,NRV takes into consideration provision for obsolescence and wear and tear and net of provisioning for non – moving / slow moving items.
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Analysis:
If the case is made that there will always be minimum stock then the minimum stock can be part of inventory.

However, bringing in inventory in the curent period may need an adjustment to opening retained balance.

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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