Final answer:
The accountable events in the life cycle of PPE are Acquisition, Depreciation, Impairment, and Disposal. These stages ensure accurate financial reporting and reflect the asset's cost, value over time, any value losses, and the final removal from service.
Step-by-step explanation:
The accountable events in the life cycle of Property, Plant, and Equipment (PPE) are Acquisition, Depreciation, Impairment, and Disposal. These are critical stages that companies must manage to ensure accurate financial reporting and compliance with accounting standards.
- Acquisition: This is when PPE is purchased or constructed and brought into service. The costs associated include the purchase price and any additional expenditure to bring the asset to a working condition.
- Depreciation: This is the systematic allocation of the cost over the useful life of the asset. It reflects the consumption of economic benefits over that period.
- Impairment: This occurs when the carrying amount of an asset exceeds its recoverable amount. An impairment loss is recognized to bring the carrying amount to its recoverable amount.
- Disposal: This is when PPE is removed from service, either by sale, trade-in, or retirement. The difference between its carrying amount and the amount realized from the disposal is recorded as a gain or loss.