Animals are Entitled To Basic Legal Rights: Discussion

Animals are Entitled To Basic Legal Rights: Discussion There are people who agree with animals having rights and there are also people who dont. However I am one of those people who believe that animals are entitled to basic legal rights. No matter how big or how small they are, they all deserve equal rights. Many animals are used for being tested on like body products and cosmetics. Animals should be free from exploitation, cruelty, neglect, and abuse. Animals should not be used in a laboratory for unnecessary experiments, they deserve to be a part of their wildlife in their natural habitat. Animals are defenseless against exploitation and abuse by human beings. It is time that we take an act and end animal cruelty! There is failure within human beings improving the way they treat their animals. There are enough animals being mistreated by their owner, the last thing we need is scientist or biologists hunting down these animals to use them for their experimental use. We need to provide basic care for these animals even wild animals, the more we kill the more we hunt down the less we will have throughout the years, we just need to leave these animals alone and let them be. They are defenseless once a hunter gets near them, they react with defense or fear because theyre scared, its kill or be killed, and their mind set isnt like us human beings especially animals out in the wild. Even though it has been proven that gorillas are very much similar to us. Jeremy Rifkin was able to prove that a 300 pound gorilla was able to learn of 1000 English words and able to do and understand sign language. This should be more than enough proof that these animals have more than just killing in their mind. If an a nimal is taken by biologist when young and they teach them as they grow they will be able to do fascinating never seen before activities. It is addressed that animals such as wildlife, marine life and farm animals are to be excluded from anit-cruelty. Most of these animals are used by veterinarians to practice medicine or research on these poor animals. When they experiment on marine life and see no pain or tears come out of them doesnt mean they dont feel it, Im sure these animals feel pain and needles just like we do when we go to the doctors. It is now said that a citizen is now able to file a civil suit against a person who is abusing an animals for their personal wants. Other than scientist treating these animals unfair there are people out here who hoarder animals! Just imagine how unfair and cruel that is! Someone so selfish to keep all these animals but not take care of them? This is unfair for any animal who is kept by a hoarder they didnt ask for that punishment. There should be a more sever laws towards people who do this to animals. There are requirements and standards for care and treatment for animals. Other than the statements I have proven to you, the main thing that this country needs to end is testing products on animals! I am very against this I do not find it fair or useful for these animals to be treated this way. It is proven that when a product goes wrong the animal stays damaged and gets put back in the cage it goes and on to the next animal until they get the product right! We need to find a way to get scientist to stop testing on these animals. As the author Jeremy Rifkin shared with us, these animals are not put on this earth to be captured and tested on, they deserve to be out in the wild and be killed by getting eaten not by experiments going wrong. I understand that there are people out there who hunt and eat animals but that is a different story from people like biologists collecting a whole load of animals and sticking needles in them to see the end results. There are over 1500 hundred animals living in a laboratory waiting to be tested on. I dont understand how t hese people dont find it unfair, no animal deserves to live their whole life locked in a cage or whatever these scientist choose to put them in. Im sure that novel writers share with us only what they want us to know but, dont share what really happens behind the walls of a laboratory. These animals deserve justice! Not from an article, but from us, the government, everyone. Many people think that they can feel free to treat animals however they want, but they cant, animals feel pain, fear, pleasure, and love. Havent you noticed when a dog gets attached to its owner they love being around them, and they flinch when you raise your hands towards them? They feel just like we do and people fail to realize that, just because animals cant talk or cry like humans do, doesnt mean they dont feel any pain. Animal cruelty is horrible, in any situation whether if its the owner treating them bad, or them being practiced on with cosmetics, it does not matter the situation, animals do not deserve to be treated badly, it is very unfair and cruel, and they are defenseless! We can use tools or guns to hurt them but what do they have? Just a sharp pair of teeth thatll do the trick when you frighten them and they attack. Majority of us citizens grew up wearing leather, and eating meat, thats a whole different era from animals being tested on. These are animals that get cook ed or get skinned once they are already dead, scientists study on living creatures! They feel the pain once a needle gets in them, they feel the pain once a product goes wrong and theyre burning from the inside out. Meat markets are okay to me but what these scientists are doing inside a lab to these animals is not okay they are living creatures who deserve justice! We need more people like Jeremy Rifkin and Victoria Braithwaite in this world, we need more people like them to get the word out and encourage people to make habits like this stop! We need to come together as a whole and end this once and for all, reading their articles really made me see the bigger picture and realize that animals are not placed here for us to experiment on or to torture. They are here the same reason we are here, to live, to live to give and receive, as much as people doubt it, fishes in the oceans eat up the bad things and theyre use to it because that is what they do. The more wildlife animals we kill the less we will have for our future generation to see, I do not want any children having to see what a tiger looks like through a picture just because we failed to keep them to continue to off-spring. Thousands of years ago, People would hunt and kill willy mammoths and now in this time 2017 we will only know what they look like through a picture because people for m back them killed them for their own use. I want animals to live and give us more animals to see, not to be killed or be studied on, enough animals suffer each day the last thing we need are these scientists taking our animals away from us. We need to make a change and actually think if this is fair for our animals. More people need to be influenced on this idea, if animals cant stand up for themselves, then why dont we take a stand for them!

Solving Problems And Making Decisions

Solving Problems And Making Decisions SitesPower is a training institute specialized in providing Technical courses in IT and courses in Business Management fields. It is based in Dubai and with a branch in Sharjah. It has been approved by the UAE Ministry of Education and it is an approved and accredited institute from awarding bodies like ILM, Autodesk, and Microsoft etc. whose courses and trainings are delivered in the institute. As a trainer in SitesPower, I provide training courses in ICDL, Microsoft Office Applications (2007-2010), and a wide range of certified courses in Business Management to deliver specific skills that students need. Also, I accomplish a lot of tasks assigned to me by my manager, and that requires a lot of time, effort and preparation to complete those tasks on time. Trainers face many problems in training programs, but some of these problems are frequent and sometimes worrying, such as: problems of students failing in the ICDL Exams, and delay in receiving the certificate due to students repeating the course or not being able to complete the course. Before talking about this issue, I will explain through the following chart: the administrative and organizational structure of the training centre SitesPower Sharjah branch in which I work there Present situation (Analysis of the problem) The International Computer Driving License Course (ICDL) is the most important certificate for a large number of employees or job seekers, particularly in government jobs in the United Arab Emirates. For this reason, the demand for this certificate has increased over many years and has become a key requirement for employment in many companies. Because of its importance, the candidates enrol in our training centre programs and attend ICDL classes for the preparation for ICDL Exams so as not to be an obstacle to access to jobs or losing their current jobs. The main problem that we face with these courses is the failure of some students in the ICDL exams, and therefore they will not get the certificate or causing a delay to obtain the certificate due to repetition of the course or the exam, which leads to a major embarrassment and might lose job opportunities. First of all, I will explain the components of the ICDL sessions, rules and how to obtain the certificate in order to understand the causes of students failure in the exams. ICDL Course consists of the following Modules: IT (Information Technology) Using Computer and Managing Files (Operating System) Word Processor (Microsoft Word) Spread Sheets (Microsoft Excel) Database (Microsoft Access) Presentations (Microsoft PowerPoint) Web browsing and Communication (Internet Explorer Outlook Express) This course duration is seven weeks, i.e. average of 9 hours for each module. The candidate must pass the exam assessments for each module to obtain the certificate. Exams are provided on the web through a software program, and its files contains exercises shown on a computer screen and questions bar shown on the screen with a time calculator to calculate the time required to complete the test. The Exam timing prescribed for each subject is 45 minutes. Questions are categorized into groups according to the exam module, but the numbers of questions for each module are 36 questions. The Candidate should answer these questions within 45 minutes and has to get the rate of 75% or more to pass in the exam. Based on the above, the main problem I encounter during teaching and training students for the exam is some repetition in these certification exams and this will affect negatively on the students and also on the training centre and its employees. There are many reasons that I will clarify them later, some of these reasons are: Inefficient trainee using the computer Inability to concentrate during the lecture and thus no interaction with the instructor. Lack of opportunity to review the material and training tests on these exams. The student may not be able to answer all questions within the time allocated for the exam. Student may face a problem in understanding the wording of the question. There are reasons linked to the technical aspects of the ICDL Exams online, hardware and software used may affect the result of the exam and cause the failure of the student. We can classify the above mentioned problems into two categories: First: Expected problems Problems associated with weak efficiency trainee in using the computer, Exam system, and inability of the trainee to answer all questions within the limited time. These problems occur continuously, and we face them in every training session including: Number of students enrolled in the training course. Difference in the level of competencies and comprehension of the trainees in using the computer. Second: Unexpected problems The technical problems associated with the exam system, the computer used by the trainee during the exam or software used by trainee to answer questions. These problems occur few and only appear during the exam, but may cause either postpone the exam or failure of the trainee and thus give him a chance to repeat the exam again. The problems that I mentioned earlier, both expected and unexpected adversely affect everyone. First of all The candidate will be affected by these problems due to the failure and delay in receiving the certificate, which means losing job opportunities or may lead to termination of employment. Other candidates will also be affected by these problems because of their fear from making the same mistakes and problems that have occurred with their colleagues and thus will affect their self-confidence and possibly lead to failure as well. Secondly these problems might also affect the training centre, as it may lead to bad reputation of the training centre as it was unable to address the problems of the trainees and its inability to help the candidate solve these problems and ensure their success in the exam. Thirdly These problems will also affect the trainer in taking part of the responsibility for the failure of the trainee. One of the most important goals that I am trying to achieve through solving these problems mentioned above and in cooperation with the management is to help the trainees to achieve their objective to be certified by developing their computer skills to ensure getting that certificate. Through achieving the objective of the trainees, training centre will achieve its goal and gain a special position among the other accredited training centres in the region. The failure to take any actions to address these problems that I have mentioned above and solve them, will lead to increase the gap between the trainees and the training centre and unable to achieve the training centres goals and the trainees objectives. Investigation and identification of possible solutions to the problem When I started my job at the centre in 2006, as a trainer, I was assigned to give ICDL courses and train candidates on the ICDL practice exams. A lot of candidates joined our training centre programs at that time to get the ICDL certificate. Some of them faced many problems in the exams and failed to get the certificate. During that time, I didnt realize the reasons of those candidates who were failing in the exams. Gathering the information After a few months, the management asked me to start monitoring ICDL exams due to lack of exams testers. But I had to be qualified first in order to be authorized as a tester to monitor these exams. Therefore, I took a training course in the ICDL office in Dubai Internet City on how to monitor and solve problems that might occur during the exams. After taking this course, I had started to understand and analyse the reasons for why candidates were failing in these exams and also to know the nature of ICDL questions. And analyse historical records of exams and result reports. After knowing this, I decided to help candidates to overcome all problems of the exams plus for being an exam tester. In Summary, I gathered the information about the problem from the following sources: My evaluation of the candidates skills during the lectures. Monitoring the Exams Reports of the Exams Evaluation of Possible Solutions Fishbone is a way of analysing problems Super Series from ILM Based on the information gathered above, I have decided to use the Fishbone Tool to analyse this issue by identifying the main reasons and the subsets as shown in the diagram below: Problems in the Network system Difficult terms set out in some exam questions Lack of maintenance of devices before the exam by computer technicians Errors in the booking of exams for candidates Problems in the live exam system Problems in the hardware and software in the users computer The difference between the candidates in their skills The number of candidates in the ICDL course no interaction with the instructor during the lecture No preparation prior to exam Lack of practicing on mock exams Lack of computer skills Causes of student failure in ICDL Exams Candidates ICDL Course Equipment Employees Live Exam System By using the Fishbone analysis tool, I managed to collect all the reasons that might cause the students failure in the exams. After that, I conducted a survey among the candidates in a scale of impact and importance from (1-5), where (No.1 is very weak) and (No. 5 very strong): Identify the areas of improvement that can enrich the overall performance of the candidate in the exam. To know the level of impact on the students failure in the exams No. The Reason of student failure in the ICDL Exams 1 2 3 4 5 1 Weakness in skills, and incompetence and inability to use computer by trainee 31.58% 10.53% 21.05% 15.79% 21.05% 2 No enough time allocated for training on the practice exams at home or at office 15.79% 10.53% 15.79% 31.58% 26.32% 3 Less time of training on the sample exams in the classroom 47.37% 10.53% 36.84% 5.263% 4 The inability to interact with the instructor and the inability to understand his explanation of the modules 31.58% 31.58% 15.79% 21.05% 5 Uncertainty, and lack of understanding of examination program and not knowing how to use it during the exam by the student 26.32% 26.32% 31.58% 5.263% 10.53% 6 Lack of understanding of exam question because of the difficulty of the terms used in the exam 26.32% 21.05% 21.05% 21.05% 10.53% 7 Exam time is not enough 36.84% 15.79% 31.58% 5.263% 10.53% 8 Technical problems associated with the exam software 21.05% 15.79% 31.58% 26.32% 5.263% 9 Technical problems related with the computer user in the exam or technical problem in its software. 36.84% 26.32% 21.05% 10.53% 5.263% 10 Lack of the trainer experience and skills 89.47% 10.53% 11 ICDL Books and materials 47.37% 21.05% 5.263% 10.53% 15.79% Depend on the result shown in the table above I discovered that the most important reasons of student failure in the ICDL Exams were: Weakness in skills, and incompetence and inability to use computer by trainee No enough time allocated for training on the practice exams at home or at office Technical problems associated with the exam software Lack of understanding of exam question because of the difficulty of the terms used in the exam Recommended implementation plan to solve problem According to the results mentioned above, I have recommended to management the idea of taking the advantages of some features that we got form ICDL office, like booking for candidates ICDL exams at convenient and also provide them with practice exam cards. In addition, I have determined some other actions that would help solving these problems. These actions consist of the following points: Determine the number of candidates in each session with maximum number of 12 candidates. Increase the number of scheduled hours for each subject if necessary, and making more practices in the class. Provide each student with practice exam cards with 20 hours training to conduct the necessary training before the exam either in their offices, homes or even in the training centre. Explain the exam system for students at the beginning of each session, providing them with important advices and guidelines to ensure their success in the exam. Aware candidates of the importance of the exam timing, and the importance of answering the questions quickly. Getting help from the computer technician during candidate taking the ICDL exams, to resolve any technical problem that appears during the test. Update the computers and replacing the old one with new one. Making a routine and regular check on the computers, and especially before the ICDL exams. Print the result report of the student after taking the exam when necessary, in order to study the wrong answers with the student to avoid these mistakes next time. After applying these recommendations, and monitored its effectiveness and impact, we managed to: Increase the success rate of the ICDL exams. Reduce the percentage of the problems appearing in these exams to the minimum. Improve the performance of the candidates using of computers. Raise self-confidence of trainees in the exams. Following table show the different between ICDL Results through three years 2011 2012 -2013 2011 2012 2013 (January) Pass 42.85714% 70.58824% 71.42857% Fail 57.142857% 29.411765% 28.571429%

Discovering Sicke Cell Anemia Essay -- essays research papers

Discovering Sicke Cell Anemia The topic that I am learning about is Sickle Cell Anemia, a hereditary disease which affects red blood cells. Throughout this research paper, I will discuss what exactly it is, how it is caused, any known treatments or cures, and many other facts that are important in this disease. Sickle Cell Anemia is a health problem throughout the world. More than 250,000 babies are born worldwide with this inherited blood cell disorder (http://www.medaccess.com/h_child/sickle/sca_01.htm). The disorder causes red blood cells to extend into a sickle shape which clogs the arteries.Persistant pain and life-threatening infections result from the illness. About one in 400 black newborns in the U.S. have sickle cell anemia. And one in 12 black Americans carry the sickle cell trait (http://www.medaccess.com/h_ child/sickle/sca_01.htm). This leaves a good chance that the parent with the trait can pass the defect onto offspring although their own health is not harmed. The cause of sickle cell anemia is rather simple but it leaves a life threatening affect. Anyone who carries the inherited trait for sickle cell anemia, but doesn't have the disorder, is actually protected from a severe form of malaria. This helped the children in countries where malaria was a problem, to be able to survive against that disease. What happened to those children? They grew up, had their own children and ended up passing the gene for sickle cell anemia onto their offspring. This disease is a hereditary blood disorder that affects the red blood cell. Red blood cells contain a protein called hemoglobin which transports oxygen from your lungs to every part of your body. Hemoglobin's oxygen carrying ability is essential for living but if there is a structural defect on the pigmented molecule, it can be fatal. When a normal red blood cell distributes its oxygen, it has a disc shape. But when an affected red blood cell containing sickle cell hemoglobin releases its oxygen, the image of the cell changes from a disc shape to a sickled shape. In hemoglobin, there are four chains of amino acids. Two are know as alpha chains, and two are called beta chains. In a normal hemoglobin, the amino acid in the sixth position on the beta chain is known as glutamic acid (refer to diagram 1.1 on page 6). During sickle cell anemia, the glutamic acid is pushed out of its place and replaced wi... ...ease, I have learned many new details about it. I realized that even the slightest change in the sequence of amino acids can lead to very harmful effects. In this disease, only one amino acid was substituted and still the illness is very harsh. I also learned how exactly the cells deform and why they go into a sickle shape. It was very interesting to learn that the disease mostly effects African Americans. I also learned that when the sickles get clogged in an artery, it results in a very painful attack on the person and may cause them to have an episode. When episodes occur, the patient may have to go into a hospital for pain killers. The disease also can lead to ulcers, strokes, paralysis, decay of tissues, and many other problems throughout the persons entire life. Sickle Cell Anemia is a very serious disease that effects a person and there way of life. It doesn't have a known cure yet but many treatments and therapy are available. If a person has this disease, it is life-threatening and painful attacks can occur at any time, anywhere. It is important to know the causes and reasons for the disease so that you can relate to what a person with Sickle Cell Anemia is going through.

Sigmund Freud Essay -- essays research papers fc

Freud didn't exactly invent the idea of the conscious versus unconscious mind, but he certainly was responsible for making it popular. The conscious mind is what you are aware of at any particular moment, your present perceptions, memories, thoughts, fantasies, feelings, etc. Working closely with the conscious mind is what Freud called the preconscious, what we might today call "available memory:" anything that can easily be made conscious, the memories you are not at the moment thinking about but can readily bring to mind. Now no one has a problem with these two layers of mind. But Freud suggested that these are the smallest parts. The largest part by far is the unconscious. It includes all the things that are not easily available to awareness, including many things that have their origins there, such as our drives or instincts, and things that are put there because we can't bear to look at them, such as the memories and emotions associated with trauma. According to Freud, the unconscious is the source of our motivations, whether they be simple desires for food or sex, neurotic compulsions, or the motives of an artist or scientist. And yet, we are often driven to deny or resist becoming conscious of these motives, and they are often available to us only in disguised form. Freudian psychological reality begins with the world, full of objects. Among them is a very special object, the organism. The organism is special in that it acts to survive and reproduce, and it is guided toward those ends by its needs such as hunger, thirst, the avoidance of pain, and sex. A part -- a very important part -- of the organism is the nervous system, which has as one its characteristics a sensitivity to the organism's needs. At birth, that nervous system is little more than that of any other animal, an "it" or id. The nervous system, as id, translates the organism's needs into motivational forces. Freud also called them wishes. This translation from need to wish is called the primary process. The id works in keeping with the pleasure principle, which can be understood as a demand to take care of needs immediately. Just picture the hungry infant, screaming itself blue. It doesn't "know" what it wants in any adult sense; it just knows that it wants it and it wants it now. The infant, in the Freudian view, is pure, or ... ... and represents the resurgence of the sex drive in adolescence, and the more specific focusing of pleasure in sexual intercourse. Freud felt that masturbation, oral sex, homosexuality, and many other things we find acceptable in adulthood today, were immature. This is a true stage theory, meaning that Freudians believe that we all go through these stages, in this order, and pretty close to these ages. Some of Freud's ideas are clearly tied to his culture and era. Other ideas are not easily testable. Some may even be a matter of Freud's own personality and experiences. But Freud was an excellent observer of the human condition, and enough of what he said has relevance today that he will be a part of personality textbooks for years to come. Even when theorists come up with dramatically different ideas about how we work, they compare their ideas with Freud's. BIBLIOGRAPHY McCary, J L. Psychology of Personality. New York 1956. Blum G S. A study of the Psychoanalytic Theory of Psychosexual Development NY 1949 Brill A. Freud's contribution to psychiatric. NY 1944 Reuben Fine. A critical re-evaluation of his theories NY 1962 P. Rieff. Freud The mind of the moralist NY 1959

Linguistic Reclamation of “Queer” Essay -- Social Issues, Discriminati

Linguistic reclamation is a cultural process of removing hatefulness from a term that is used negatively and oppressively by a dominant culture (out-group) against a specific, less powerful group (in-group). In the article â€Å"A Queer Revolution: Reconceptualizing the Debate Over Linguistic Reclamation,† the author, Robin Brontsema explores the reclamation of the word â€Å"queer† and other related â€Å"hateful speech intended to disable its target† from three different perspectives that are based on three identifiable goals: â€Å"neutralization† of the word, its â€Å"value reversal,† and â€Å"stigma exploitation† (46, 52). According to the first perspective, the â€Å"pejoration† or hate is â€Å"inseparable† from the detestable word, which implies that reclaiming the word would do no good; instead, omitting the word from language, if possible, will take care of the pain caused by the word (Brontsema 49). The supporte rs of the second perspective, on the other hand, believe that â€Å"pejoration† is separable from the spiteful word, and thus, reclamation of that word is supported (Brontsema 51). Finally, the third perspective believers, stressing that hate is inseparable from the word, support its reclamation because they believe that â€Å"a revolutionary call† that starkly obligates the out-group to accept the in-group for what it stands for can help in reversing the negativity of the word (Brontsema 52, 53). The topic of reclamation is more complex than one thinks because words that carry hate are dangerous to play with. As Jeane Kirkpatrick, the 16th US ambassador and an ardent anticommunist, once said, â€Å"Words can destroy. What we call each other ultimately becomes what we think of each other, and it matters† (ncvs.org). Words that are powerful and have the abi... ...anguage. They do not keep in mind that neutralizing â€Å"queer† will not neutralize the words related to â€Å"queer† automatically; in fact, the related words may recreate the original, hateful â€Å"queer†. Furthermore, those who think that hate is removable from â€Å"queer† are mostly young, and have not faced the real pain inflicted by the word in the past. On the other side of spectrum, some think that the in-group (homosexuals) must create a revolution against the out-group by using the power of hate that â€Å"queer† contains in order to force the authoritarian group to stop using â€Å"queer† in an abusive way. However, homosexuals may not be successful in changing the faith of others because faith cannot be forcefully determined. In the end, one can definitely say that reclamation of â€Å"queer† is of no use because the hate associated with â€Å"queer† only dies if the word â€Å"queer† dies.

Plastic Money Essay

The study assesses the impact of outsourcing on organisational performance and it is done in Century Bottling Company Limited. It focuses on the benefits and challenges companies face in outsourcing their non-core activities. The study uses the objective of assessing the impact of outsourcing on organisational performance to get data presented in the findings. These show that companies benefit from outsourcing though they face some challenges in their bid to outsource their non-core activities to outside providers. Organisations always prefer letting specialists in different fields accomplish certain tasks in their companies and this means that organisations can benefit from outsourcing as shown in the Literature Review The Data was collected and then analysed to fit the purpose of the study though with several limitations ranging from financial constraints to time constraints. see more:types of plastic money The findings show that companies outsource to access special expertise, speed up delivery of services, reduce costs and get  enough time to concentrate on their core activities. In the long run companies have benefited from outsourcing in several ways like reduction in costs and company staff getting enough time to concentrate on their core activities to promote the company`s competitiveness in the market. In conclusion, companies should outsource some of their services so as to reduce costs and concentrate on core activities. This therefore shows how important outsourcing is and other companies should adopt it just like Century Bottling Company has done and get good quality services from experts as well as more time for core activities. CHAPTER ONE 1.0 INRODUCTION. This chapter looks at the background, problem statement, objective, research questions and significance of the study. 1.1Background The rationale to outsource was rooted in the cost constraints facing asset managers as they struggled to survive the bear market. Traditionally, the outsourcing market focused on infrastructure, data operation and cost takeout as primary drivers but in addition enterprises are looking at outsourcing business areas to achieve greater flexibility and gain greater ability to respond easily as outsourcing is evolving into a strategic tool for change. Lysons 2000, says outsourcing developed as a reaction to the over diversification that took place in the 1970’s and early 1980’s and has led many enterprises to review their core and concentrate on them. In Uganda, business processes that were kept inside the firm such as cleaning and transport are increasingly being outsourced to places where costs are cheaper and back-off operations can be provided like in Century Bottling Company Limited, cleaning, security and part of transport have been outsourced to outside providers. Century Bottling Company Limited located at Namanve and it deals in production of soft drinks like sodas in different brand names say, Sprite, Coke, Fanta, Novida, Stoney, Datsan and Minute maid among others. It has a range of activities some of which are core 1  and not outsourced. Those that are considered non-core are outsourced to different service providers. It gets a list of service providers, looks at their terms, kind and quality of services provided and the costs involved. It is from this list that it selects the most favourable to outsource to. For instance, Century Bottling Company outsources activities like part of its transport is given private vendors who have trucks in good mechanical conditions, negotiate the price and terms of service. These pick the products from the company premises and deliver them to the agreed destinations like depots and various customers. Cleaning is also done by A&A for all departments in the company and this gives the employees a good working environment and more time to perform their duties. However, despite outsourcing these activities are still having weaknesses like late deliveries due car mechanical breakdowns and unsatisfactory cleaning which is at times due to personal character of the cleaners and poor supervision. Looking at outsourcing as a way of reducing on the work load of the company staff and giving core activities more time for companies to perform to their best, Century Bottling Company also outsources its non-core activities so as to concentrate on the core activities to improve its performance in important areas like the production department since the quality of a company’s products is very crucial for its performance in the market. In its bid to outsource, Century Bottling Company has not forgotten what outsourcing is all about. This gives a relationship between what outsourcing is and what Century Bottling Company is doing. 1.2 Problem statement Outsourcing is a very crucial function in an organisation because it directly affects the firm’s operational activities. Following the identified problems such as late delivery, poor cleaning, high transportation costs in Century Bottling Company, steps have been taken to solve the problem by bringing trusted and better qualified people to provide the services. Despite the steps taken, the contribution of outsourcing to organisational performance is still low. Therefore, the study is to establish the impact of outsourcing on organisational performance with a  case study of Century Bottling Company. 1.3 Objective of the study. The study aims at assessing the impact of outsourcing on organisational performance. 1.4 Research questions (i) Which activities are out sourced and which are not? (ii) How is outsourcing beneficial to an organisation? (iii)What are the challenges encountered in carrying out outsourcing? 1.5 Scope of the study The study focuses on the procurement department of Century Bottling Company Limited. It establishes the impact of outsourcing on organisational performance and the study covers the procurement staff, user department and providers of different services. The study looks at the outsourced activities, benefits of outsourcing and the challenges in connection with the organisational performance. 1.6 Significance of the study (i) The study will help business managers to minimise losses through minimising costs and creating value for money. (ii) The research CHAPTER TWO LITERATURE REVIEW. 2.0 Introduction This chapter looks at a review of issues and factors that have been explored and studied in the existing literature on outsourcing and examine the existing gaps. 2.1 The concept of outsourcing. Baily, 1998, many organisations today are turning to external procurement, where we even find that functions such as transport, accounts, computer services, even purchasing can be outsourced. This gives the company employees time to perform their duties to the company’s satisfaction and this improves the organisational performance which is every company’s objective to achieve competitive advantage. Eyaa, 2006, defined outsourcing as a decision by firms to have an external supplier to take over an activity that would have otherwise been performed in-house by organisation employees. Usually organisations look for the best service providers to whom to outsource their  work, this gives them a chance to get their work done by experts which means good quality work leading to a good company name. Lysons and Gillingham, 2003, states that outsourcing is the strategic use of resources to perform activities traditionally handled by internal staff and their resources. It is a management strategy by which an organisation outsources major non-core functions to specialised and efficient service providers to help the organisations perform best where it is best capable. Axelsson and Wynstra, 2000 defines outsourcing as a decision and subsequent transfer process by which activities that constitute a function that earlier have been carried out by a company are instead purchased from an external supplier. Usually companies that provide outsourced services choose what they can do better, this means training their workers to perform to the best of the clients expectations. This means specialisation with all its benefits to organisations. Different Authors like, Bendor, Bona and Lysons suggest that the following activities should not be outsourced or if done it should be done with great management consideration; management of strategic planning, management of finance, management of consultancy, control of supplies Quality and environmental management. The ranges of services that are outsourced are timeless and these include; Waste disposal, research and development, transmission service, estate management, customer brokage, catering, Asset repair and control library and cleaning. Although various organisations have tried to look at what the different Authors have written and put it in consideration in their bid to outsource, they have not fully met their intentions like cost reduction, efficient and effective service provision from the service providers to whom they outsource their activities. This is partly due to the ever increasing prices of products which also mean increase in prices of services being outsourced. 2.2 Cost reductions. Sabiti, 2003, says that, the organisation that outsources is cutting administration cost of maintaining or doing the activity in house, the overriding factor in outsourcing decision is cost cutting, but where as this may make business sense in the beginning, in some cases it 6  could bring complications and put the whole exercise at a high risk if all concerns are not adequately assessed. This means that the outsourcing organisation should not only look at the costs being low but also consider the outcomes of process of outsourcing at the end of everything to the organisation. Manzi, 2004, states that the most common economic factor that influences the decision is the need to reduce costs. Where the benefits analysis has been carried out and has been established that it is most economic to outsource rather than continue to operate a given function looks forward to making profits in business. Kulumba, 2005, states that, outsourcing is a popular phenomenon with managers because they believe that outsourcing vendors are inherently more efficient due to economies of scale. The outsourcing organisation benefits from getting the services from the provider at a reduced cost since it is provided on a large scale and usually for a reasonable time if it is good work. Antonuccci 1998, advised that, if the vendor is efficient than the prospective client, organisations could reduce its own costs through function consideration and resource optimization. Due to experience in the field and knowledgeable experts, it leads to proper and efficient use of resources yet with good quality work. 2.3 Key factors necessary for outsourcing 2.3.1Competence Bourassa 1988, says that organisations should focus on core activities and leave the noncore activities to outside providers who have the skills to do them better. The providers who have all the required competence, skills, and service providers should be of desired level to be able to meet the company requirement. K Farrington, 2006, also shows how important competence is, it is the core activities of the company that tell or manifest the performance of the organisation. These activities need much more time so as to come out at their best and give the company competitive advantage over others. This can be achieved through outsourcing non-core activities and concentrate on its core competence. 2.3.2 Management support Peter Jeans 2008, suggests that when it comes to outsourcing, it should be supported by all departments of the organisation so as to get the best of the benefits of outsourcing in the  organisation. To achieve success, we always have to stand together to share ideas for better organisational performance. Garry Petty, says that any activity in the company done without management consent and support is a manifestation of failure in that activity. This shows how much important management support and involvement is in all company activities outsourcing inclusive. 2.4 Drivers of outsourcing 2.4.1 Quality actual capacity Lysons and Gillingham 2006, state that, it is temporarily insufficient to comply with demand; the quality motive can be subdivided into three aspects, that is to say; Increased quality demand, shortage of qualified personnel and outsourcing as a transitional period. Therefore companies have various reasons for outsourcing their non-core activitie s. 2.4.2 Finance Frankwood and Sangster, according to them, the company has a limited investment budget. The funds must be used for investments in the core activities which are long term decisions and leave non-core activities to outside providers to do them on behalf of the organisation. 2.4.3 Core business Erick Bartz, shows that, Core business is a primary activity that enables an organisation to generate revenues to concentrate on core business activities. All subsequent activities are supportive and should be outsourced to give enough time to the core activities. 2.4.4 Benefits of outsourcing Outsourcing is beneficial in the following ways; 2.6.1 Cost saving This is the lowering of the overall cost of the service to the business. This involves the score defining quality levels, repulsing, renegotiations, cost restructuring, access to lower cost economies through off showing cold labour arbitrage 2.6.2 Specialisation Lysons and Gillingham, say that, Outsourcing allows an organisation to concentrate on areas of business that derive competitive advantage and outsource non core activities to specialist with better skills and expertise. 2.6.3 Access to innovation There are opportunities to have access to capabilities of suppliers into the products and services of the customer organisation rather than attempt to replicate the capabilities of a supply network (www.pwc.com) 9 2.6 Challenges of outsourcing Like any restructuring exercise and management decision making in business, there are risks associated with outsourcing that procurement managers or top management need to consider carefully (Procurement News December,17th,23rd 2003) and these may be; The possibility of over depending on or leveraged by suppliers which make switching costs to other suppliers in future prohibitively expensive. Over a long time, a supplier of outsourced service may become complacent or change ownership and also a risk of a fall in employ morale for fear of being made redundant, confidentiality links of company matters and in some instances loss of intellectual property rights. Eyaa, 2006, says that, high prices being imposed on suppliers due to increasing trends in outsourcing, the demand for suppliers is so high and has pushed the rates being charged by the suppliers to be high. This later increases the costs yet outsourcing is all about helping firms cut costs. Too much expectancy from suppliers as Company employees tend to expect too much from supplier firms as far as service provision is concerned because they are specialists yet things can go wrong once in awhile. Such issues should not be ignored. Manzi, 2005, according to him, there is a possibility that vital company information may be at a risk of being linked to the company’s competitors which is dangerous since some suppliers may be spies to the company. Conclusion. Organisations always want to let specialists in a particular area accomplish a certain task for them. This implies that business can benefit from the practice of outsourcing. 10 Outsourcing is growing at an exponential rate and could deliver desired benefits if proper choices are made at the inception of the arrangement. When companies choose to outsource, they should give themselves room to monitor performance, renegotiation, or terminate the arrangement with the service providers. The outsourcing client must also ensure that their employees are informed about the progress of discussions regarding outsourcing their department and properly treated when the arrangements come into effect. CHAPTER THREE METHODOLOGY 3.0 Introduction This chapter provides an over view of the methods used to collect and process data. It gives the research design the sample selection methods, size, and data processing. 3.1 Research Design The study uses both qualitative and descriptive study designs. Both methods are used to help carry out self report data collection from the interested sample and allowing a thorough and easy analysis of the respondents’ opinion. Both survey designs adequately lead to collection of reliable information by description of the impact of outsourcing on organisational performance in the study area. 3.2 Data Collection Methods Data is collected from interviews conducted in Century Bottling Company as well as responses from the questionnaires. Some of it is from secondary sources such as magazines, text books, internet and Newspapers and this is quoted where necessary and used to draw deductions as per the study. 3.3 Data processing and analysis The information is assessed, edited to eliminate the errors, the data is then coded and grouped according to the study to ease analysis, it is then analysed using SPSS. The findings are interpreted in light of the research objective and reviewed in order to attach meaning to the Data collected. 3.4 Limitations of the study i. Financial constraints Relatively a lot of money is required in this study. This involves photocopying of articles, making phone calls, word processing, binding, transport. These increase the cost of the study. ii. Language barrier Questionnaires written in English are only limited to respondents who only know English. This is quite a problem while extracting information from the illiterate respondents. iii. Lack of adequate cooperation Some respondents are busy and others suspicious of the study thereby not willing to fully cooperate. Officials in the procurement department are busy attending to their normal schedules and meetings and had no time to answer some of the questions. This affected the quality and quantity of data collection. iv. There is a threat of time limit and deadlines that need attention considering the fact that the study is carried out alongside other activities like course works, lectures and tests as well. CHAPTER FOUR PRESENTATION, INTERPRETATION AND DISCUSSION OF THE FINDINGS 4.0 Introduction. This chapter presents findings from literature review, primary data from the interview and questionnaires filled by Century Bottling Company staff. The study is guided by the objective of assessing the impact of outsourcing on organisational performance. 4.1 Relevance of outsourcing. To Century Bottling Company, outsourcing is relevant in different ways, say, it easies the working process, it is cost saving and provides more time to the employees to concentrate on the core activities. This helps the company to keep in business with competitors in the industry as lack of concentration may have a very big impact on the company’s performance and customers may be taken. Century Bottling Company outsources its non core activities leaving the core activities to their staff. In Century Bottling Company, all core activities such as the, production of all their products, the cooler department, the ware house, managerial staff recruitment, among others have not been outsourced for reasons like protecting the quality of the company’s product, protect company secrets and records. However, non core activities have been outsourced to outside providers who have more expertise and these include the following; Medical services to staff are provided by International Medical Centre which renders medical services to the staff whenever they need it. Cleaning services in all departments of the company is done by A&A cleaning services Motor vehicle repair and servicing is done by City Tyres Company Limited to the company cars. Security services are provided by Saraceen security services limited. Part of the transport of the company’s products is done by individuals with trucks that are in conditions good enough to deliver company products to the various destinations. Catering services are  provided by Sunset Hotel where staff is able to get their meals in time and get back to their duties in time. The other findings indicate that outsourcing is a manifestation of hurdles that are associated with the functionality of internal departments. This is because some senior organisation executives have a feeling that there is no return on expenditure, in sourcing does not meet the needs of the business and forecasted games in productivity that are used to justify that never materializes. As a result of this perception, top executives find outsourcing more relevant as a means of cost saving and focusing on their core business activities. 4.2 Nature of organisational performance Century Bottling Company considers outsourcing of non core activities as the best option. It looks at identifying potential providers, establishing both short term and long term relationship with the service providers without compromising the objectives of the organisation as a way of having good organisational performance through outsourcing. 15 This is because the services that have been outsourced are also important to the organisation as well as its performance in the long run. 4.3 Whether outsourcing improves organisational performance It is seen that the impact of outsourcing on the performance of an organization depends on which stake holder is making the analysis. In Century Bottling Company, many of the non core activities are outsourced in order to give the organisation ample time to concentrate on core activities such as production and the cooler department. Looking at the way activities were done before outsourcing, for instance, in the transport department, it was at times hard to deliver company products to the customers in time more especially the ones in the remote areas, but with the idea of outsourcing part of transportation to capable individuals, such customers have been catered for as they are now able to get what they need in time. This promotes customer loyalty and creates a good company image leading to competitive advantage. This indicates an improvement in organisational performance through the transport department. Source: primary data. Table 1 above indicates that, majority of the people are degree holders. This implies that the company is in position of making good decisions about outsourcing. 4.4 Conclusion Century Bottling Company carries out outsourcing to gain access to special expertise, to speed up delivery of services, reduce costs, focus on core activities and improve technology among others. Since the inception of the concept of outsourcing, organisations find outsourcing as the preferred method of procuring non core services and enjoy benefits of outsourcing by concentrating on core activities thus improved management performance CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATION 5.0 Introduction. This chapter looks at the summary of the findings, conclusions and recommendations drawn from the study. 5.1 Summary Basing on the case study of Century Bottling Company and other literature by various authors, it is believed that organisations outsource services that are noncore to the organisation. It is established that outsourcing has a long term as well as short term bearing on the organisation. The study establishes why organizations outsource many of their non core activities. This is seen by analyzing and discussing the literature review and the interview conducted in Century Bottling Company 5.2 Conclusions Basing on the study above, it is clear that outsourcing positively increases on the performance of organisations, that is to say, it reduces on costs, increase access to new technology, new expertise, core competence concentration, speed up delivery and increase revenue / profits. Therefore, the rate of organisational performance as a result of outsourcing is high in both short and long- term and many business executives are committed to attach their success to the outsourcing process. In the previous chapter, we find that to a greater extent, outsourcing is very relevant Century Bottling Company, however, it is not in order to judge outsourcing as trouble free since it is associated with some calamitous results and firms need time to apply clear outsourcing methodolo gies in order to realize its full usefulness. 5.3 Recommendations Organisations should outsource their noncore business to outside providers that can bring great competitiveness. This is because outsourcing gives company staff more time to concentrate on core competences to produce better quality products and outcompete their competitors in the market hence a competitive advantage. Organisations should establish a partnership with the service providers to establish tools to measure the performance where organisational requirements should be matched with the implementation process through identifying new skills, abilities and knowledge for each project, thus, encourage organisations to obtain front-edge outsourcing. The choices are many for service outsourcing as well as their providers, therefore, this puts organisation on attention to strategically assess their partners. Organisations should not only consider cost reduction and base on low prices and big players to fill their requirements, but should also emphasize the type of relationship and the trend of behaviour between the outsourcing organization and the service providers. Organisations should come up with clear acknowledgement on whether the provider will be able to respond reasonably to the expectations and frequent changes in business and technology requirements to ensure continuity in service provision. For organisations to measure outsourcing effectiveness as regards performance, they should put in place a standard format of measuring performance such as performance evaluation, performance ratios and performance appraisal such that the success from outsourcing g management point of view is the same as what clients deem to be success. 5.4 Areas for further research Opportunities for further research still exist in this area. The study examines outsourcing and its impact on the performance of

Malaysian Financial Reporting Standard 116 Essay

Malaysian Financial Reporting Standard 116 Property, Plant and Equipment This version includes amendments resulting from MFRSs with effective dates no later than 1 January 2012. Amendments with an effective date later than 1 January 2012 MFRS 116 has been amended by MFRS 13 Fair Value Measurement*. As those amendments have an effective date after 1 January 2012 they are not included in this edition. * effective date 1 January 2013 559 MFRS 116 CONTENTS paragraphs Preface INTRODUCTION IN1–IN15 MALAYSIAN FINANCIAL REPORTING STANDARD 116 PROPERTY, PLANT AND EQUIPMENT OBJECTIVE SCOPE DEFINITIONS RECOGNITION Initial costs Subsequent costs MEASUREMENT AT RECOGNITION Elements of cost Measurement of cost MEASUREMENT AFTER RECOGNITION Cost model Revaluation model Depreciation Depreciable amount and depreciation period Depreciation method Impairment Compensation for impairment DERECOGNITION DISCLOSURE TRANSITIONAL PROVISIONS EFFECTIVE DATE WITHDRAWAL OF OTHER PRONOUNCEMENTS 1 2–5 6 7–14 11 12–14 15–28 16–22 23–28 29–66 30 31–42 43–62 50–59 60–62 63 65–66 67–72 73–79 80 81–81E 82–83 560  © IFRS Foundation MFRS 116 Malaysian Financial Reporting Standard 116 Property, Plant and Equipment (MFRS 116) is set out in paragraphs 1–83. All the paragraphs have equal authority. MFRS 116 should be read in the context of its objective and the Basis for Conclusions, the Foreword to Financial Reporting Standards and the Conceptual Framework for Financial Reporting. MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.  © IFRS Foundation 561 MFRS 116 Preface The Malaysian Accounting Standards Board (MASB) is implementing its policy of convergence through adopting International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) for application for annual periods beginning on or after 1 January 2012. The IASB defines IFRSs as comprising: (a) International Financial Reporting Standards; (b) International Accounting Standards; (c) IFRIC Interpretations; and (d) SIC Interpretations. Malaysian Financial Reporting Standards (MFRSs) equivalent to IFRSs that apply to any reporting period beginning on or after 1 January 2012 are: (a) Malaysian Financial Reporting Standards; and (b) IC Interpretations. First-time application of MFRSs equivalent to IFRSs Application of this Standard will begin in the first-time adopter’s * first annual reporting period beginning on or after 1 January 2012 in the context  of adopting MFRSs equivalent to IFRSs. In this case, the requirements of MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards must be observed. Application of MFRS 1 is necessary as otherwise such financial statements will not be able to assert compliance with IFRS. MFRS 1, the Malaysian equivalent of IFRS 1 First-time Adoption of International Financial Reporting Standards, requires prior period information, presented as comparative information, to be restated as if the requirements of MFRSs effective for annual period beginning on or after 1 January 2012 have always been applied, except when it (1) prohibits retrospective application in some aspects or (2) allows the first-time adopter to use one or more of the exemptions or except ions contained therein. This means that, in preparing its first MFRS financial statements* for a financial period beginning on or after 1 January 2012, the first-time adopter shall refer to the provisions contained in MFRS 1 on matters relating to transition and effective dates instead of the transitional provision and effective date contained in the respective MFRSs. This differs from previous requirements where an entity accounted for changes of accounting policies in accordance with the specific transitional provisions contained in the respective Financial Reporting Standards (FRSs) or in accordance with FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors when the FRS did not include specific transitional provisions. * Appendix A of MFRS 1 defines first-time adopter and first MFRS financial statements. 562 MFRS 116 In this regard the effective and issuance dates contained in this Standard are those of the IASB’s and are inapplicable in the new MFRS framework since MFRS 1 requirements will be applied on 1 January 2012. Comparison and compliance with IAS 16 MFRS 116 is equivalent to IAS 16 Property, Plant and Equipment as issued and amended by the IASB, including the effective and issuance dates. Entities that comply with MFRS 116 will  simultaneously be in compliance with IAS 16. 563 MFRS 116 Introduction IN1 International Accounting Standard 16 Property, Plant and Equipment (IAS 16) replaces IAS 16 Property, Plant and Equipment (revised in 1998), and should be applied for annual periods beginning on or after 1 January 2005. Earlier application is encouraged. The Standard also replaces the following Interpretations: ï‚ · ï‚ · ï‚ · SIC-6 Costs of Modifying Existing Software SIC-14 Property, Plant and Equipment—Compensation for the Impairment or Loss of Items SIC-23 Property, Plant and Equipment—Major Inspection or Overhaul Costs. IASB’s reasons for revising IAS 16 IN2 The International Accounting Standards Board developed this revised IAS 16 as part of its project on Improvements to International Accounting Standards. The project was undertaken in the light of queries and criticisms raised in relation to the Standards by securities regulators, professional accountants and other interested parties. The objectives of the project were to reduce or eliminate alternatives, redundancies and conflicts within the Standards, to deal with some convergence issues and to make other improvements. For IAS 16 the IASB’s main objective was a limited revision to provide additional guidance and clarification on selected matters. The IASB did not reconsider the fundamental approach to the accounting for property, plant and equipment contained in IAS 16. IN3 The main changes of IAS 16 IN4 The main changes from the previous version of IAS 16 are described below. Scope IN5 This Standard clarifies that an entity is required to apply the principles of this Standard to items of property, plant and equipment used to develop or maintain (a) biological assets and (b) mineral rights and mineral reserves such as oil, natural gas and similar non-regenerative resources. Recognition: subsequent costs  IN6 An entity evaluates under the general recognition principle all property, plant and equipment costs at the time they are incurred. Those costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service an item. The previous version of IAS 16 contained two recognition principles. An entity applied the second recognition principle to subsequent costs.  © 564 IFRS Foundation MFRS 116 Measurement at recognition: asset dismantlement, removal and restoration costs IN7 The cost of an item of property, plant and equipment includes the costs of its dismantlement, removal or restoration, the obligation for which an entity incurs as a consequence of installing the item. Its cost also includes the costs of its dismantlement, removal or restoration, the obligation for which an entity incurs as a consequence of using the item during a particular period for purposes other than to produce inventories during that period. The previous version of IAS 16 included within its scope only the costs incurred as a consequence of installing the item. Measurement at recognition: asset exchange transactions IN8 An entity is required to measure an item of property, plant and equipment acquired in exchange for a non-monetary asset or assets, or a combination of monetary and non-monetary assets, at fair value unless the exchange  transaction lacks commercial substance. Under the previous version of IAS 16, an entity measured such an acquired asset at fair value unless the exchanged assets were similar. Measurement after recognition: revaluation model IN9 If fair value can be measured reliably, an entity may carry all items of property, plant and equipment of a class at a revalued amount, which is the fair value of the items at the date of the revaluation less any subsequent accumulated depreciation and accumulated impairment losses. Under the previous version of IAS 16, use of revalued amounts did not depend on whether fair values were reliably measurable. Depreciation: unit of measure IN10 An entity is required to determine the depreciation charge separately for each significant part of an item of property, plant and equipment. The previous version of IAS 16 did not as clearly set out this requirement. Depreciation: depreciable amount  IN11 An entity is required to measure the residual value of an item of property, plant and equipment as the amount it estimates it would receive currently for the asset if the asset were already of the age and in the condition expected at the end of its useful life. The previous version of IAS 16 did not specify whether the residual value was to be this amount or the amount, inclusive of the effects of inflation, that an entity expected to receive in the future on the asset’s actual retirement date. Depreciation: depreciation period IN12 An entity is required to begin depreciating an item of property, plant and equipment when it is available for use and to continue depreciating it until it  © IFRS Foundation 565 MFRS 116 is derecognised, even if during that period the item is idle. The previous version of IAS 16 did not specify when depreciation of an item began and specified that an entity should cease depreciating an item that it had retired from active use and was holding for disposal. Derecognition: derecognition date IN13 An entity is required to derecognise the carrying amount of an item of property, plant and equipment that it disposes of on the date the criteria for the sale of goods in IAS 18 Revenue would be met. The previous version of IAS 16 did not require an entity to use those criteria to determine the date on which it derecognised the carrying amount of a disposed-of item of property, plant and equipment. An entity is required to derecognise the carrying amount of a part of an item of property, plant and equipment if that part has been replaced and the entity has included the cost of the replacement in the carrying amount of the item. The previous version of IAS 16 did not extend its derecognition principle to such parts; rather, its recognition principle for subsequent expenditures effectively precluded the cost of a replacement from being included in the carrying amount of the item. IN14 Derecognition: gain classification IN15 An entity cannot classify as revenue a gain it realises on the disposal of an item of property, plant and equipment. The previous version of IAS 16 did not contain this provision. 566  © IFRS Foundation MFRS 116 Malaysian Financial Reporting Standard 116 Property, Plant and Equipment Objective 1 The objective of this Standard is to prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern information about an entity’s investment in its property, plant and equipment and the changes in such investment. The principal issues in accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the depreciation charges and impairment losses to be recognised in relation to them. Scope 2 This Standard shall be applied in accounting for property, plant and equipment except when another Standard requires or permits a different accounting treatment. This Standard does not apply to: (a) property, plant and equipment classified as held for sale in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations; 3 (b) biological assets related to agricultural activity (see MFRS 141 Agriculture); (c) the recognition and measurement of exploration and evaluation assets (see MFRS 6 Exploration for and Evaluation of Mineral Resources); or (d) mineral rights and mineral reserves such as oil, natural gas and similar non-regenerative resources. However, this Standard applies to property, plant and equipment used to develop or maintain the assets described in (b)–(d). 4 Other Standards may require recognition of an item of property, plant and equipment based on an approach different from that in this Standard. For example, MFRS 117 Leases requires an entity to evaluate its recognition of an item of leased property, plant and equipment on the basis of the transfer of risks and rewards. However, in such cases other aspects of the accounting treatment for these assets, including depreciation, are prescribed by this Standard. An entity using the cost model for investment property in accordance with MFRS 140 Investment Property shall use the cost model in this Standard. 5 Definitions 6 The following terms are used in this Standard with the meanings specified:  © IFRS Foundation 567 MFRS 116 Carrying amount is the amount at which an asset is recognised after deducting any accumulated depreciation and accumulated impairment losses. Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other MFRSs, eg MFRS 2 Share-based Payment. Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Entity-specific value is the present value of the cash flows an entity expects to arise from the continuing use of an asset and from its disposal at the end of its useful life or expects to incur when settling a liability. Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount. Property, plant and equipment are tangible items that: (a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and (b) are expected to be used during more than one period. Recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. The residual value of an asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life. Useful life is: (a) the period over which an asset is expected to be available for use by an entity;  or (b) the number of production or similar units expected to be obtained from the asset by an entity. Recognition 7 The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if: (a) it is probable that future economic benefits associated with the item will flow to the entity; and (b) the cost of the item can be measured reliably.  © 568 IFRS Foundation MFRS 116 8 Spare parts and servicing equipment are usually carried as inventory and recognised in profit or loss as consumed. However, major spare parts and stand-by equipment qualify as property, plant and equipment when an entity expects to use them during more than one period. Similarly, if the spare parts and servicing equipment can be used only in connection with an item of property, plant and equipment, they are accounted for as property, plant and equipment. This Standard does not prescribe the unit of measure for recognition, ie what constitutes an item of property, plant and equipment. Thus, judgement is required in applying the recognition criteria to an entity’s specific circumstances. It may be appropriate to aggregate individually insignificant items, such as moulds, tools and dies, and to apply the criteria to the aggregate value. An entity evaluates under this recognition principle all its property, plant and equipment costs at the time they are incurred. These costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. 9 10 Initial costs 11 Items of property, plant and equipment may be acquired for safety or environmental reasons. The acquisition of such property, plant and equipment, although not directly increasing the future economic benefits of any particular existing item of property, plant and equipment, may be necessary for an entity to obtain the future economic benefits from its other assets. Such items of property, plant and equipment qualify for recognition as assets because they enable an entity to derive future economic benefits from related assets in excess of what could be derived had those items not been acquired. For example, a chemical manufacturer may install new chemical handling processes to comply with environmental requirements for the production and storage of dangerous chemicals; related plant enhancements are recognised as an asset because without them the entity is unable to manufacture and sell chemicals. However, the resulting carrying amount of such an asset and related assets is reviewe d for impairment in accordance with MFRS 136 Impairment of Assets. Subsequent costs 12 Under the recognition principle in paragraph 7, an entity does not recognise in the carrying amount of an item of property, plant and equipment the costs of the day-to-day servicing of the item. Rather, these costs are recognised in profit or loss as incurred. Costs of day-to-day servicing are primarily the costs of labour and consumables, and may include the cost of small parts. The purpose of these expenditures is often described as for the ‘repairs and maintenance’ of the item of property, plant and equipment. Parts of some items of property, plant and equipment may require replacement at regular intervals. For example, a furnace may require relining  © 13 IFRS Foundation 569 MFRS 116 after a specified number of hours of use, or aircraft interiors such as seats and galleys may require replacement several times during the  life of the airframe. Items of property, plant and equipment may also be acquired to make a less frequently recurring replacement, such as replacing the interior walls of a building, or to make a nonrecurring replacement. Under the recognition principle in paragraph 7, an entity recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced is derecognised in accordance with the derecognition provisions of this Standard (see paragraphs 67–72). 14 A condition of continuing to operate an item of property, plant and equipment (for example, an aircraft) may be performing regular major inspections for faults regardless of whether parts of the item are replaced. When each major inspection is performed, its cost is recognised in the carrying amount of the item of property, plant and equipment as a replacement if the recognition criteria are satisfied. Any remaining carrying amount of the cost of the previous inspection (as distinct from physical parts) is derecognised. This occurs regardless of whether the cost of the previous inspection was identified in the transaction in which the item was acquired or constructed. If necessary, the estimated cost of a future similar inspection may be used as an indication of what the cost of the existing inspection component was when the item was acquired or constructed. Measurement at recognition 15 An item of property, plant and equipment that qualifies for recognition as an asset shall be measured at its cost. Elements of cost 16 The cost of an item of property, plant and equipment comprises: (a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates. (b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. (c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the  obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period. 17 Examples of directly attributable costs are: (a) costs of employee benefits (as defined in MFRS 119 Employee Benefits) arising directly from the construction or acquisition of the item of property, plant and equipment; 570  © IFRS Foundation MFRS 116 (b) costs of site preparation; (c) initial delivery and handling costs; (d) installation and assembly costs; (e) costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling any items produced while bringing the asset to that location and condition (such as samples produced when testing equipment); and professional fees. (f) 18 An entity applies MFRS 102 Inventories to the costs of obligations for dismantling, removing and restoring the site on which an item is located that are incurred during a particular period as a consequence of having used the item to produce inventories during that period. The obligations for costs accounted for in accordance with MFRS 102 or MFRS 116 are recognised and measured in accordance with MFRS 137 Provisions, Contingent Liabilities and Contingent Assets. Examples of costs that are not costs of an item of property, plant and equipment are: (a) costs of opening a new facility; 19 (b) costs of introducing a new product or service (including costs of advertising and promotional activities); (c) costs of conducting business in a new location or with a new class of customer (including costs of staff training); and (d) administration and other general overhead costs. 20 Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management. Therefore, costs incurred in using or redeploying an item are not included in the carrying amount of that item. For example, the following costs are not included in the carrying amount of an item of property, plant and equipment: (a) costs incurred while an item capable of operating in the manner intended by management has yet to be brought into use or is operated at less than full capacity; (b) initial operating losses, such as those incurred while demand for the item’s output builds up; and (c) 21 costs of relocating or reorganising part or all of an entity’s operations. Some operations occur in connection with the construction or development of an item of property, plant and equipment, but are not necessary to bring the item to the location and condition necessary for it to be capable of operating in the manner intended by management. These incidental operations may occur before or during the construction or development activities. For example, income may be earned through using a building site as a car park until construction starts. Because incidental operations are not  © IFRS Foundation 571 MFRS 116 necessary to bring an item to the location and condition necessary  for it to be capable of operating in the manner intended by management, the income and related expenses of incidental operations are recognised in profit or loss and included in their respective classifications of income and expense. 22 The cost of a self-constructed asset is determined using the same principles as for an acquired asset. If an entity makes similar assets for sale in the normal course of business, the cost of the asset is usually the same as the cost of constructing an asset for sale (see MFRS 102). Therefore, any internal profits are eliminated in arriving at such costs. Similarly, the cost of abnormal amounts of wasted material, labour, or other resources incurred in self-constructing an asset is not included in the cost of the asset. MFRS 123 Borrowing Costs establishes criteria for the recognition of interest as a component of the carrying amount of a self-constructed item of property, plant and equipment. Measurement of cost 23 The cost of an item of property, plant and equipment is the cash price equivalent at the recognition date. If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and the total payment is recognised as interest over the period of credit unless such interest is capitalised in accordance with MFRS 123. One or more items of property, plant and equipment may be acquired in exchange for a non-monetary asset or assets, or a combination of monetary and non-monetary assets. The following discussion refers simply to an exchange of one non-monetary asset for another, but it also applies to all exchanges described in the preceding sentence. The cost of such an item of property, plant and equipment is measured at fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable. The acquired item is measured in this way even if an entity cannot immediately derecognise the asset given up. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up. An entity determines whether an exchange transaction has commercial substance by considering the extent to which its future cash flows are expected to change as a result of the transaction. An exchange transaction has commercial substance if: (a) the configuration (risk, timing and amount) of the cash flows of the asset  received differs from the configuration of the cash flows of the asset transferred; or 24 25 (b) the entity-specific value of the portion of the entity’s operations affected by the transaction changes as a result of the exchange; and (c) the difference in (a) or (b) is significant relative to the fair value of the assets exchanged. For the purpose of determining whether an exchange transaction has commercial substance, the entity-specific value of the portion of the entity’s 572  © IFRS Foundation MFRS 116 operations affected by the transaction shall reflect post-tax cash flows. The result of these analyses may be clear without an entity having to perform detailed calculations. 26 The fair value of an asset for which comparable market transactions do not exist is reliably measurable if (a) the variability in the range of reasonable fair value estimates is not significant for that asset or (b) the probabilities of the various estimates within the range can be reasonably assessed and used in estimating fair value. If an entity is able to determine reliably the fair value of either the asset received or the asset given up, then the fair value of the asset given up is used to measure the cost of the asset received unless the fair value of the asset received is more clearly evident. The cost of an item of property, plant and equipment held by a lessee under a finance lease is determined in accordance with MFRS 117. The carrying amount of an item of property, plant and equipment ma y be reduced by government grants in accordance with MFRS 120 Accounting for Government Grants and Disclosure of Government Assistance. 27 28 Measurement after recognition 29 An entity shall choose either the cost model in paragraph 30 or the revaluation model in paragraph 31 as its accounting policy and shall apply that policy to an entire class of property, plant and equipment. Cost model 30 After recognition as an asset, an item of property, plant and equipment shall be carried at its cost less any accumulated depreciation and any accumulated impairment losses. Revaluation model 31 After recognition as an asset, an item of property, plant and equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations shall be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. The fair value of land and buildings is usually determined from market-based evidence by appraisal that is normally undertaken by professionally qualified valuers. The fair value of items of plant and equipment is usually their market value determined by appraisal. If there is no market-based evidence of fair value because of the specialised nature of the item of property, plant and equipment and the item is rarely 32 33  © IFRS Foundation 573 MFRS 116 sold, except as part of a continuing business, an entity may need to estimate fair value using an income or a depreciated replacement cost approach. 34 The frequency of revaluations depends upon the changes in fair values of the items of property, plant and equipment being revalued. When the fair value of a revalued asset differs materially from its carrying amount, a further revaluation is required. Some items of property, plant and equipment experience significant and volatile changes in fair value, thus necessitating annual revaluation. Such frequent revaluations are unnecessary for items of property, plant and equipment with only insignificant changes in fair value. Instead, it may be necessary to revalue the item only every three or five years. When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the revaluation is treated in one of the following ways: (a) restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount. This method is often used when an asset is revalued by means of applying an index to determine its depreciated replacement cost. 35 (b) eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset. This method is often used for buildings. The amount of the adjustment arising on the restatement or elimination of accumulated depreciation forms part of the increase or decrease in carrying amount that is accounted for in accordance with paragraphs 39 and 40. 36 If an item of property, plant and equipment is revalued, the entire class of property, plant and equipment to which that asset belongs shall be revalued. A class of property, plant and equipment is a grouping of assets of a similar nature and use in an entity’s operations. The following are examples of separate classes: (a) land; 37 (b) land and buildings; (c) machinery; (d) ships; (e) (f) aircraft; motor vehicles; (g) furniture and fixtures; and (h) office equipment. 574  © IFRS Foundation MFRS 116 38 The items within a class of property, plant and equipment are revalued simultaneously to avoid selective revaluation of assets and the reporting of amounts in the financial statements that are a mixture of costs and values as at different dates. However, a class of assets may be revalued on a rolling basis provided revaluation of the class of assets is completed within a short period and provided the revaluations are kept up to date. If an asset’s carrying amount is increased as a result of a revaluation, the increase shall be recognised in other comprehensive income and accumulated in equity under the heading of revaluation surplus. However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. If an asset’s carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss. However, the decrease shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus. The revaluation surplus included in equity in respect of an item of property, plant and equipment may be transferred directly to retained earnings when the asset is derecognised. This may involve transferring the whole of the surplus when the asset is retired or disposed of. However, some of the surplus may be transferred as the asset is used by an entity. In such a case, the amount of the surplus transferred would be the difference between depreciation based on the revalued carrying amount of the asset and  depreciation based on the asset’s original cost. Transfers from revaluation surplus to retained earnings are not made through profit or loss. The effects of taxes on in come, if any, resulting from the revaluation of property, plant and equipment are recognised and disclosed in accordance with MFRS 112 Income Taxes. 39 40 41 42 Depreciation 43 Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately. An entity allocates the amount initially recognised in respect of an item of property, plant and equipment to its significant parts and depreciates separately each such part. For example, it may be appropriate to depreciate separately the airframe and engines of an aircraft, whether owned or subject to a finance lease. Similarly, if an entity acquires property, plant and equipment subject to an operating lease in which it is the lessor, it may be appropriate to depreciate separately amounts reflected in the cost of that item that are attributable to favourable or unfavourable lease terms relative to market terms. 44  © IFRS Foundation 575 MFRS 116 45 A significant part of an item of property, plant and equipment may have a useful life and a depreciation method that are the same as the useful life and the depreciation method of another significant part of that same item. Such parts may be grouped in determining the depreciation charge. To the extent that an entity depreciates separately some parts of an item of property, plant and equipment, it also depreciates separately the remainder of the item. The remainder consists of the parts of the item that are individually not significant. If an entity has varying expectations for these parts, approximation techniques may be necessary to depreciate the remainder in a manner that faithfully represents the consumption pattern and/or useful life of its parts. An entity may choose to depreciate separately the parts of an item that do not have a cost that is significant in relation to the total cost of the item. The depreciation charge for each period shall be recognised in prof it or loss unless it is included in the carrying amount of another asset. The depreciation charge for a period is usually recognised in profit or loss. However, sometimes, the future economic benefits embodied in an asset are absorbed in producing other assets. In this case, the depreciation charge constitutes part of the cost of the other asset and is included in its carrying amount. For example, the depreciation of manufacturing plant and equipment is included in the costs of conversion of inventories (see MFRS 102). Similarly, depreciation of property, plant and equipment used for development activities may be included in the cost of an intangible asset recognised in accordance with MFRS 138 Intangible Assets. Depreciable amount and depreciation period 50 51 The depreciable amount of an asset shall be allocated on a systematic basis over its useful life. The residual value and the useful life of an asset shall be reviewed at least at each financial year-end and, if expectations differ from previous estimates, the change(s) shall be accounted for as a change in an accounting estimate in accordance with MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors. Depreciation is recognised even if the fair value of the asset exceeds its carrying amount, as long as the asset’s residual value does not exceed its carrying amount. Repair and maintenance of an asset do not negate the need to depreciate it. The depreciable amount of an asset is determined after deducting its residual value. In practice, the residual value of an asset is often  insignificant and therefore immaterial in the calculation of the depreciable amount. The residual value of an asset may increase to an amount equal to or greater than the asset’s carrying amount. If it does, the asset’s depreciation charge is 46 47 48 49 52 53 54 576  © IFRS Foundation MFRS 116 zero unless and until its residual value subsequently decreases to an amount below the asset’s carrying amount. 55 Depreciation of an asset begins when it is available for use, ie when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with MFRS 5 and the date that the asset is derecognised. Therefore, depreciation does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. However, under usage methods of depreciation the depreciation charge can be zero while there is no production. The future economic benefits embodied in an asset are consumed by an entity principally through its use. However, other factors, such as technical or commercial obsolescence and wear and tear while an asset remains idle, often result in  the diminution of the economic benefits that might have been obtained from the asset. Consequently, all the following factors are considered in determining the useful life of an asset: (a) expected usage of the asset. Usage is assessed by reference to the asset’s expected capacity or physical output. 56 (b) expected physical wear and tear, which depends on operational factors such as the number of shifts for which the asset is to be used and the repair and maintenance programme, and the care and maintenance of the asset while idle. (c) technical or commercial obsolescence arising from changes or improvements in production, or from a change in the market demand for the product or service output of the asset. (d) legal or similar limits on the use of the asset, such as the expiry dates of related leases. 57 The useful life of an asset is defined in terms of the asset’s expected utility to the entity. The asset management policy of the entity may involve the disposal of assets after a specified time or after consumption of a specified proportion of the future economic benefits embodied in the asset. Therefore, the useful life of an asset may be shorter than its economic life. The estimation of the useful life of the asset is a matter of judgement based on the experience of the entity with similar assets. Land and buildings are separable assets and are accounted for separately, even when they are acquired together. With some exceptions, such as quarries and sites used for landfill, land has an unlimited useful life and therefore is not depreciated. Buildings have a limited useful life and therefore are depreciable assets. An increase in the value of the land on which a building stands does not affect the determination of the depreciable amount of the building. If the cost of land includes the costs of site dismantlement, removal and restoration, that portion of the land asset is depreciated over the period of benefits obtained by incurring those costs. In some cases, the land itself may 58 59  © IFRS Foundation 577 MFRS 116 have a limited useful life, in which case it is depreciated in a manner that reflects the benefits to be derived from it. Depreciation method 60 61 The depreciation method used shall reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the entity. The depreciation method applied to an asset shall be reviewed at least at each financial year-end and, if there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the method shall be changed to reflect the changed pattern. Such a change shall be accounted for as a change in an accounting estimate in accordance with MFRS 108. A variety of depreciation methods can be used to allocate the depreciable amount of an asset on a systematic basis over its useful life. These methods include the straight-line method, the diminishing balance method and the units of production method. Straight-line depreciation results in a constant charge over the useful life if the asset’s residual value does not change. The diminishing balance method results in a decreasing charge over the useful life. The units of production method results in a charge based on the expected use or output. The entity selects the method that most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. That method is applied consistently from period to period unless there is a change in the expected pattern of consumption of those future economic benefits. 62 Impairment 63 To determine whether an item of property, plant and equipment is impaired, an entity applies MFRS 136 Impairment of Assets. That Standard explains how an entity reviews the carrying amount of its assets, how it determines the recoverable amount of an asset, and when it recognises, or reverses the recognition of, an impairment loss. [Deleted by IASB] 64 Compensation for impairment 65 Compensation from third parties for items of property, plant and equipment that were impaired, lost or given up shall be included in profit or loss when the compensation becomes receivable. Impairments or losses of items of property, plant and equipment, related claims for or payments of compensation from third parties and any subsequent purchase or construction of replacement assets are separate economic events and are accounted for separately as follows: (a) impairments of items of property, plant and equipment are recognised in accordance with MFRS 136; 66 578  © IFRS Foundation MFRS 116 (b) derecognition of items of property, plant and equipment retired or disposed of is determined in accordance with this Standard; (c) compensation from third parties for items of property, plant and equipment that were impaired, lost or given up is included in determining profit or loss when it becomes receivable; and (d) the cost of items of property, plant and equipment restored, purchased or constructed as replacements is determined in accordance with this Standard. Derecognition 67 The carrying amount of an item of property, plant and equipment shall be derecognised: (a) on disposal; or (b) when no future economic benefits are expected from its use or disposal. 68 The gain or loss arising from the derecognition of an item of property, plant and equipment shall be included in profit or loss when the item is derecognised (unless MFRS 117 requires otherwise on a sale and leaseback). Gains shall not be classified as revenue. However, an entity that, in the course of its ordinary activities, routinely sells items of property, plant and equipment that it has held for rental to others shall transfer such assets to inventories at their carrying amount when they cease to be rented and become held for sale. The proceeds from the sale of such assets shall be recognised as revenue in accordance with MFRS 118 Revenue. MFRS 5 does not apply when assets that are held for sale in the ordinary course of business are transferred to inventories. The disposal of an item of property, plant and equipment may occur in a variety of ways (eg by sale, by entering into a finance lease or by donation). In determining the date of disposal of an item, an entity applies the criteria in MFRS 118 for recognising revenue from the sale of goods. MFRS 117 applies to disposal by a sale and leaseback. If, under the recognition principle in paragraph 7, an entity recognises in the carrying amount of an item of property, plant and equipment the cost of a replacement for part of the item, then it derecognises 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. The gain or loss arising from the derecognition of an item of property, plant and equipment sha ll be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item. 68A 69 70 71  © IFRS Foundation 579 MFRS 116 72 The consideration receivable on disposal of an item of property, plant and equipment is recognised initially at its fair value. If payment for the item is deferred, the consideration received is recognised initially at the cash price equivalent. The difference between the nominal amount of the consideration and the cash price equivalent is recognised as interest revenue in accordance with MFRS 118 reflecting the effective yield on the receivable. Disclosure 73 The financial statements shall disclose, for each class of property, plant and equipment: (a) the measurement bases used for determining the gross carrying amount; (b) the depreciation methods used; (c) the useful lives or the depreciation rates used; (d) the gross carrying amount and the accumulated depreciation (aggregated with accumulated impairment losses) at the beginning and end of the period; and (e) a reconciliation of the carrying amount at the beginning and end of the period showing: (i) (ii) additions; assets classified as held for sale or included in a disposal group classified as held for sale in accordance with MFRS 5 and other disposals; acquisitions through business combinations; increases or decreases resulting from revaluations under paragraphs 31, 39 and 40 and from impairment losses recognised or reversed in other comprehensive income in accordance with MFRS 136; impairment losses recognised in profit or loss in accordance with MFRS 136; impairment losses reversed in profit or loss in accordance with MFRS 136; (iii) (iv) (v) (vi) (vii) depreciation; (viii) the net exchange differences arising on the translation of the financial statements from the functional currency into a different presentation currency, including the translation of a foreign operation into the presentation currency of the reporting entity; and (ix) other changes. 580  © IFRS Foundation MFRS 116 74 The financial statements shall also disclose: (a) the existence and amounts of restrictions on title, and property, plant and equipment pledged as security for liabilities; (b) the amount of expenditures recognised in the carrying amount of an item of property, plant and equipment in the course of its construction; (c) the amount of contractual commitments for the acquisition of property, plant and equipment; and (d) if it is not disclosed separately in the statement of comprehensive income, the amount of compensation from third parties for items of property, plant and equipment that were impaired, lost or given up that is included in profit or loss. 75 Selection of the depreciation method and estimation of the useful life of assets are matters of judgement. Therefore, disclosure of the methods adopted and the estimated useful lives or depreciation rates provides users of financial statements with information that allows them to review the policies selected by management and enables comparisons to be made with other entities. For similar reasons, it is necessary to disclose: (a) depreciation, whether recognised in profit or loss or as a part of the cost of other assets, during a period; and (b) accumulated depreciation at the end of the period. 76 In accordance with MFRS 108 an entity discloses the nature and effect of a change in an accounting estimate that has an effect in the current period or is expected to have an effect in subsequent periods. For property, plant and equipment, such disclosure may arise from changes in estimates with respect to: (a) residual values; (b) the estimated costs of dismantling, removing or restoring items of property, plant and equipment; (c) useful lives; and (d) depreciation methods. 77 If items of property, plant and equipment are stated at revalued amounts, the following shall be disclosed: (a) the effective date of the revaluation; (b) whether an independent valuer was involved; (c) the methods and significant assumptions applied in estimating the items’ fair values; (d) the extent to which the items’ fair values were determined directly by reference to observable prices in an active market or recent market transactions on arm’s length terms or were estimated using other valuation techniques;  © IFRS Foundation 581 MFRS 116 (e) for each revalued class of property, plant and equipment, the carrying amount that would have been recognised had the assets been carried under the cost model; and the revaluation surplus, indicating the change for the period and any restrictions on the distribution of the balance to shareholders. (f) 78 In accordance with MFRS 136 an entity discloses information on impaired property, plant and equipment in addition to the information required by  paragraph 73(e)(iv)–(vi). Users of financial statements may also find the following information relevant to their needs: (a) the carrying amount of temporarily idle property, plant and equipment; 79 (b) the gross carrying amount of any fully depreciated property, plant and equipment that is still in use; (c) the carrying amount of property, plant and equipment retired from active use and not classified as held for sale in accordance with MFRS 5; and  (d) when the cost model is used, the fair value of property, plant and equipment when this is materially different from the carrying amount. Therefore, entities are encouraged to disclose these amounts. Transitional provisions 80 The requirements of paragraphs 24–26 regarding the initial measurement of an item of property, plant and equipment acquired in an exchange of assets transaction shall be applied prospectively only to future transactions. Effective date 81 An entity shall apply this Standard for annual periods beginning on or after 1 January 2005. Earlier application is encouraged. If an entity applies this Standard for a period beginning before 1 January 2005, it shall disclose that fact. An entity shall apply the amendments in paragraph 3 for annual periods beginning on or after 1 January 2006. If an entity applies MFRS 6 for an earlier period, those amendments shall be applied for that earlier period. MFRS 101 Presentation of Financial Statements (IAS 1 Presentation of Financial Statements as revised by IASB in 2007) amended the terminology used throughout MFRSs. In addition it amended paragraphs 39, 40 and 73(e)(iv). An entity shall apply those amendments for annual periods beginning on or after 1 January 2009. If an entity applies MFRS 101 (IAS 1 revised by IASB in 2007) for an earlier period, the amendments shall be applied for that earlier period. 81A 81B 582  © IFRS Foundation MFRS 116 81C MFRS 3 Business Combinations (IFRS 3 Business Combinations as revised by IASB in 2008) amended paragraph 44. An entity shall apply that amendment for annual periods beginning on or after 1 July 2009. If an entity applies MFRS 3 (IFRS 3 revised by IASB in 2008) for an earlier period, the amendment shall also be applied for that earlier period. Paragraphs 6 and 69 were amended and paragraph 68A was added by Improvements to MFRSs (Improvements to IFRSs issued by IASB in May 2008). An entity shall apply those amendments for annual periods beginning on or after 1 January 2009. Earlier application is permitted. If an entity applies the amendments for an earlier period it shall disclose that fact and at the same time apply the related amendments to MFRS 107 Statement of Cash Flows. Paragraph 5 was amended by Improvements to MFRSs (Improvements to IFRSs issued by IASB in May 2008). An entity shall apply that amendment prospectively for annual periods beginning on or after 1 January 2009. Earlier application is permitted if an entity also applies the amendments to paragraphs 8, 9, 22, 48, 53, 53A, 53B, 54, 57 and 85B of MFRS 140 at the same time. If an entity applies the amendment for an earlier period it shall disclose that fact. 81D 81E Withdrawal of other pronouncements 82 83 [Deleted by MASB] [Deleted by MASB]  © IFRS Foundation 583 MFRS 116 Deleted IAS 16 text Deleted IAS 16 text is produced for information only and does not form part of MFRS 116. Paragraph 82 This Standard supersedes IAS 16 Property, Plant and Equipment (revised in 1998). Paragraph 83 This Standard supersedes the following Interpretations: (a) SIC-6 Costs of Modifying Existing Software; (b) SIC-14 Property, Plant and Equipment—Compensation for the Impairment or Loss of Items; and (c) SIC-23 Property, Plant and Equipment—Major Inspection or Overhaul Costs. 584  © IFRS Foundation