Introduction
The NIF C-6 – Property, plant and equipment (PPE) It establishes the criteria for recognition, valuation, presentation and disclosure of tangible assets used for the production, supply of goods and services, or for administrative purposes.
In the notes to the financial statements, entities must provide information that allows users to understand how assets were valued, their useful lives, the depreciation method applied, as well as impairments and changes in accounting estimates.
Main disclosure standards
According to NIF C-6 and the general disclosure rules, the following must be reported in notes to financial statements:
- Initial valuation bases to determine the acquisition cost.
- Depreciation methods and rates applied.
- Useful lives used for each asset class.
- Acquisition cost, accumulated depreciation and impairment at the beginning and end of the period.
- Ownership restrictions, warranties and acquisition commitments.
- Reconciliation between opening and closing balances, detailing additions, deletions, depreciation, impairments, and reversals.
Example of Comparative Note
Note X – Property, plant and equipment
(Figures in thousands of pesos)
a) Comparative breakdown
| Concept | Cost 2024 | Cost 2023 | Cumulative Depreciation 2024 | Cumulative Depreciation 2023 | Net PPE 2024 | Net PPE 2023 |
|---|---|---|---|---|---|---|
| Land | 5,000 | 5,000 | – | – | 5,000 | 5,000 |
| Buildings | 12,500 | 11,800 | (3,500) | (3,000) | 9,000 | 8,800 |
| Machinery and equipment | 9,800 | 8,900 | (4,200) | (3,600) | 5,600 | 5,300 |
| Office furniture and equipment | 1,200 | 1,000 | (600) | (500) | 600 | 500 |
| Computer equipment | 2,000 | 1,600 | (900) | (700) | 1,100 | 900 |
| Total PPE | 30,500 | 28,300 | (9,200) | (7,800) | 21,700 | 20,500 |
b) Accounting policies and depreciation rates
| Asset type | Depreciation method | % Annual depreciation | Estimated useful life |
|---|---|---|---|
| Buildings | Beeline | 4% | 25 years |
| Machinery and equipment | Beeline | 10% | 10 years |
| Office furniture and equipment | Beeline | 10% | 10 years |
| Computer equipment | Beeline | 20% | 5 years |
| Land | They do not depreciate | 0% | N/A |
c) Reconciliation of balances 2024
- Initial net PPE: 20,500
- Additions: 3,200
- Depreciation for the period: (1,800)
- Impairment loss: (200)
- Final net PPE: 21,700
d) Additional disclosures
- In 2024, the useful life of certain computer equipment was modified from 3 to 5 years, reducing the annual depreciation expense by $150.
- Some buildings are secured by a bank loan of $2,000.
- There were no impairment reversals during the period.
Conclusions
- The comparison 2023 vs 2024 shows growth in buildings and machinery, reflecting investment in productive capacity.
- The depreciation rate table provides transparency and allows users to understand the accounting criteria behind expense allocation.
- Reconciling balances is key to understanding how the carrying value of PPE changes: from 20,500 in 2023 to 21,700 in 2024.
- IFRS C-6 requires detailing changes in estimates and impairments, which strengthens the comparability and quality of financial information.
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