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6.12 Property, plant, and equipment—overhaul costs
Publication date: 30 Nov 2020
us IFRS & US GAAP guide
US GAAP may result in earlier expense recognition when portions of a larger asset group are replaced.
US GAAP | IFRS |
US GAAP permits alternative accounting methods for recognizing the costs of a major overhaul. Costs representing a replacement of an identified component can be (1) expensed as incurred, (2) accounted for as a separate component asset, or (3) capitalized and amortized over the period benefited by the overhaul.
| IFRS requires capitalization of the costs of a major overhaul representing a replacement of an identified component.
Consistent with the componentization model, the guidance requires that the carrying amount of parts or components that are replaced be derecognized.
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