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Speaking GSEVIDEO ON THE TOPIC: Spare parts for the railway industry - MRO and OEM - Components and Maintenance
One of the biggest issues related to property, plant and equipment is accounting for spare parts, servicing equipment, stand-by equipment and similar items. IFRS standards are pretty silent about this topic, the guidance is very limited and as a result, companies need to rely on careful assessment of the situation and their judgment. The standard IAS 16 , paragraph 8 specifically says that spare parts are recognised in accordance with this IFRS when they meet the definition of property, plant and equipment thus they need to meet the definition of PPE.
If not, then spare parts might be considered PPE. Time aspect Do you need spare parts to operate some other asset during more than one period? Do you plan to use these items during more than 1 period? If not, then they are inventories. Some spare parts are easy to classify, for example back-up engine with significant acquisition cost is a major spare part and thus accounted for as PPE. Some other items might not be that easy.
Therefore, apart from the 2 criteria above, there are even more issues to consider:. Sometimes, you can have an asset that is used in the production process for more than 1 period, but its acquisition cost is very small. And sometimes, you can have a huge amount of similar spare parts or servicing equipment.
In this case, you need to assess materiality, or significance of similar spare parts and servicing equipment for your financial statements. And not only materiality on an individual, asset-by-asset level, but also materiality of the whole group of these assets. Both options are possible, but the first one does not make much economical sense, as it would be difficult to keep records for 5 small assets.
Special For You! Click here to check it out! Take oil refinery, for example. My limited knowledge about refineries tells me that refineries must contain some minimum quantity of oil to operate.
This oil must stay there until the plant ceases operations. And as strange as it might be, you need to account for a minimum level of oil as for PPE, and for the remaining oil as for inventories. After we learned how to classify an item as PPE or as inventories, the question is when and how to depreciate major spare parts that are classified as PPE.
Depreciation of spare parts is not specifically addressed by the standards and therefore, we must apply our judgment. IAS 16 in paragraph 55 only says that the depreciation should begin when an asset is available for use. Should you depreciate spare parts only when they actually replaced a defective part and are in operation?
Or, should you depreciate spare parts once they are in the warehouse , regardless their actual usage? In such a case, what is their useful life? If you keep the spare part to ensure smooth operation of some machinery without interruptions, then the depreciation period should start immediately. The reason is that such a critical spare part is available for use immediately when an original part in the machine stops working.
However, if you keep the spare part to be used as a replacement part at some future time and you are sure that this part will be installed and put into use at a later date, then the depreciation should start when the part is installed. You should carefully assess the nature of your spare parts, their function and future use and only then decide.
Here, judgment is necessary. Thank you! Please leave this field empty. Check your inbox or spam folder now to confirm your subscription. Please check your inbox to confirm your subscription. That is a wonderful article on the very important topic! I really liked it. And what about the depreciation methods for spare parts mentioned? I suspect they are to be the same as it was chosen for the related PPE.
Or not? And, obviously, something has to be written in the Accounting Policies? Also, the useful lives are the same or at least, they end at the same time. And of course, appropriate disclosures are needed. Thank you and have a nice day! Hi Silvia. I have a question. What will be the accounting treatment for the calculator? Is it going to be recognized as PPE or as an inventory? Is it on the basis of the effluxion of time?
Thanks for this useful article. I just have a concern about minimum stock that you referred in your oil example that has to be kept for a longer period. I would assume it refers to buffer stock but that will always be treated under IAS 2.
It is not so clear how to deal with low-acquisition-price-long-live items depreciate, control, valuate. I really enjoyed the example with screwdrivers! There are some problems with such items, however.. If we account a big amount of screwdrivers as a PPE item, so how to depreciate it?
And how we should revalue it? Hi Sergey, sure, I got your point. As usual, there is some common sense and judgment to apply. For example — how about performing the count of screwdrivers at the year-end, hm?
I was always confused on this topic but atleast after reading this article I can handle It now. Thank you Sylvia. Very informative article. Consider the scenario of a Whole sale Dealer. Say this Whole sale dealer is a distributor of Chip and food stuff to Supermarkets.
They have display stands which is provided to supermarket to display their product. Value of individual stand is low and collectively have medium material value. This items Company can use more than for one or two year. But these stands not under the control of Company. Kept with supermarket and can be damage at any time.
But company can take back stand at any time. So how to treat this kind of asset. I strongly consider this item should not be consider as PPE neither as Invedntorey. Dear Srinath, indeed, this depends on the careful assessment of the situation. Auditors seemed to accept both treatments. Dear Silva, thanks for taking your time to educate and enlighten this generation in the area of your expertise.
With regards to spare parts measurement and presentation in the financial statement, lets consider the aviation industry or better still aircraft industry where planes are used for charter per transportation and other logistics. How do you measure and present spare parts use to service the aircraft own by the company and the spare parts use to service other aircraft own by third party.
Note that all spare parts in this situation are stored in one and the same ware house. Dear Joseph, I repeat myself again: assessment and judgement is needed. Thanks sylvia for helping everyone to learn ifrs. I have two question 1. Intially i held a particular spare parts to use in production process but later due to need i used in ppe, so i charge depn only when installed,so will it be a change in accounting policy but it was wholly unitentional?.
Thank you once again. J Hi sivya My concern about spare parts which is for replacement You said should be depreciated right away in the stores that mean could be deprecisted before being installed Am i right. Jumaa, it depends on what kind of spare part it is. Sylvia, Thank you so much. You have really made this simple for even a layman. After recognize the minimal quantity of Oil as PPE, will you depreciate it later on or how to deal with itafter?
Dear Amr, sorry for my poor industry knowledge, but let me ask maybe stupid questions: will you keep the same oil there? Of course it can have some residual value for which you would sell it , so you need to take this into account. Dear Silvia, it is interesting how to allocate cost on such volume if it is internally produced. It happens at the beginning of production. In oil industry there are no big raw material cost but mostly overheads. At the beginning of production due to small production volume, cost per barrel could be significant in comparison to market price.
Thanks a lot, Silvia! Hi Silvia, Thank you for this article. For me it is so timely as I am currently dealing with a similar issue.
One of the biggest issues related to property, plant and equipment is accounting for spare parts, servicing equipment, stand-by equipment and similar items. IFRS standards are pretty silent about this topic, the guidance is very limited and as a result, companies need to rely on careful assessment of the situation and their judgment. The standard IAS 16 , paragraph 8 specifically says that spare parts are recognised in accordance with this IFRS when they meet the definition of property, plant and equipment thus they need to meet the definition of PPE. If not, then spare parts might be considered PPE.
An official website of the United States government Here is how you know. Federal government websites often end in. Before sharing sensitive information, make sure you're on a federal government site. The site is secure. These national industry-specific occupational employment and wage estimates are calculated with data collected from employers of all sizes, in metropolitan and nonmetropolitan areas in every state and the District of Columbia, in NAICS - Aerospace Product and Parts Manufacturing. Additional information, including the hourly and annual 10th, 25th, 75th, and 90th percentile wages, and the percent of establishments reporting the occupation, is available in the downloadable XLS files. Links to OES estimates for other industries.
Are you looking for Spare Parts?
No, I want to read more. Atlas Copco Canada homepage. Atlas Copco Shop Online is our e-commerce system where you can easily manage your orders 24 hours a day, 7 days a week. Parts Online is a user-friendly platform that allows you to quickly and easily find spare parts for Atlas Copco construction equipment and request a quote for the spare-parts you need. Visit Shop Online. Visit Parts Online. Scan the QR code on your machine to find all the information about your equipment.SEE VIDEO BY TOPIC: 2019 Steel Mill Industry Equipment, Engineering services and spare parts
Aero Supply is a strong and specific e-commerce platform for the aviation industry. You can purchase parts simply and fast. Lowland Aero Repair is a specific e-commerce platform for the aviation industry. You can purchase parts easily online. We offer products and services at the highest service level to the aviation industry. All designed to simpli f ly processes, reduce down times, guarantee your mission and reduce cost. What we can offer:. As an independent organisation, Lowland Aerospace offers with the group of companies products and services, all against competitive prices, the highest quality and service standard.
Packaging Solutions for the aerospace industry
Its other activities include participation in international trade fairs, mounting trade delegations overseas and bringing out publications on various topical subjects related to the automotive industry. Your browser does not support the video tag. Deepak Jain. Vinnie Mehta.
Participants of HeliRussia Aero Stock. Official and exclusive distributor in Russia and the CIS of aviation chemicals by the world's leading manufacturers. Aeroelectromach, JSC. Manufacturer of power equipment for aeronautical and space apparatus. Electric power equipment design, development and production. Supplier and overhaul of air-technical manufactured goods. Sale of helicopters and spare parts. Manufacture and supply of wind and lighting equipment for heliports, airfields and landing sites for airplanes and helicopters. Airbus Helicopters Vostok.
Service & Spare Parts
Parts Trading Company has more than 30 years experience in supplying genuine spare parts, tires and batteries. PTC is specialized in Japanese and European brand. This Manuchar subsidiary works in partnership with many UN organizations, large fleet-owners, contractors, mining and construction companies. Thanks to the long-term relationships that we have cultivated with the suppliers and manufacturers, we are able to offer competitive prices for genuine parts. PTC exports spare parts for cars, trucks and construction machinery, tires, batteries, tools and safety equipment. In response to enquiries mentioning reference numbers and quantities, we optimise the sourcing and shipment for each product. Arranging transport by sea freight, air freight or express courier when needed is part of our business. Speed and efficiency are our trademark! Feel free to contact us in order to discuss any particular requirement.
7 Things to Consider for Successful Spare Parts Management
All are based on the standard Woodward Product and Service Warranty that is in effect at the time the product is originally shipped from Woodward or when a service is performed. Warranty service for Woodward products shipped with an engine or equipment system should also be handled through the OEM or Packager. Please review your equipment system documentation for details. Please use the following link to submit inquiries to Woodward Aircraft Turbine Systems or Aircraft Frame Systems, including but not limited to, quotes for spare parts and repairs, specific contact information, repair capabilities, and product line questions. Woodward takes pride in helping end users minimize downtime with sophisticated repair and overhaul services. Along with shortened turnaround time, our exchange banks help manage downtime by allowing customers to order and receive a new component before removing the existing one. Our engineers and support staff continually work to develop repair and overhaul methods that provide the highest-quality, fastest-turnaround, most cost-effective service in the industry.
Participants of HeliRussia 2019
ALVEST is a group dedicated to the design, manufacture and distribution of technical products for the aviation industry, which include aviation ground support equipment, spare parts and services, and technical adhesives and markings for the aerospace and industrial markets. ALVEST aims to lead in these markets and consistently invests in innovation, product development and manufacturing and customer support process improvement. We pride ourselves in our ability to increase and strengthen the effectiveness, safety and energy efficiency of aviation ground support. TLD is a leading industrial group specializing in the design, assembly, distribution and after-sales support of airport ground support equipment for the aviation industry.
Participants of HeliRussia 2019
Benefit from the expertise of NTN-SNR, a manufacturer of original equipment and multi-specialist in engines, chassis and gearboxes for your automotive spare parts. Our range of products for the automotive aftermarket revolves around 3 main areas of expertise.
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Practical spare part management is the foundation for reliable plant operation and is crucial to a plant managers success. As plant manager, you need to know how to determine which spare parts are needed to make up an effective and comprehensive inventory system.