IAS 16 links to which other standards relating to the use or impairment of assets and lease arrangements?

• A. IAS 16 links only to IAS 38
• B. IAS 16 links to IAS 38, IAS 36 and IFRS 16
• C. IAS 16 links to IFRS 15 only
• D. IAS 16 has no linkage

Answer: (B)

When accounting for property, plant and equipment, the way the asset is used, tested for impairment and the treatment of any leases it’s involved in all pull in other standards. Leases bring in IFRS 16, because a lessee recognizes a right-of-use asset and a lease liability, and the depreciation and possible impairment of that right-of-use asset follow the same framework as owned PPE under IAS 16 and IAS 36. If there are indications the asset’s carrying amount may not be recoverable, IAS 36 governs how to test for impairment and recognize any losses. If the asset includes intangible components or rights (for example licenses embedded in the asset), IAS 38 may apply to those parts, influencing measurement and impairment considerations. So IAS 16 links with IAS 38, IAS 36 and IFRS 16.