FAR — Quick Sheet
Property, Plant & Equipment
Read time: ~5 minutes
One-minute revision
- Capitalize: costs to get asset ready for use, including capitalized interest during self-construction
- Repairs that extend life/capacity → capitalize; routine maintenance → expense
- Held-for-use impairment: Step 1 recoverability test uses undiscounted cash flows; Step 2 measures loss as carrying value − fair value
- US GAAP impairment losses on held-for-use assets are never reversed (unlike IFRS)
- Held-for-sale: lower of carrying value or FV − costs to sell; stop depreciating
COMMON TRAP: The recoverability test uses undiscounted cash flows to decide whether impaired; the loss itself is then measured using fair value, not discounted cash flows directly.