Question: Presented below are excerpts from the 2012 annual report of

Presented below are excerpts from the 2012 annual report of Marston’s PLC, a UK-based company that operates pubs.

Property, plant and equipment
• Freehold and leasehold properties are initially stated at cost and subsequently at valuation. Plant and machinery and fixtures, fittings, tools and equipment are stated at cost.
• Depreciation is charged to the income statement on a straight-line basis to provide for the cost of the assets less residual value over their useful lives.
• Freehold and long leasehold buildings are depreciated to residual value over 50 years.
• Short leasehold properties are depreciated over the life of the lease.
• Plant and machinery and fixtures, fittings, tools and equipment are depreciated over periods ranging from 3 to 15 years.
• Own labour and interest costs directly attributable to capital projects are capitalised.
• Land is not depreciated.
Residual values and useful lives are reviewed and adjusted if appropriate at each balancesheet date.
Properties are revalued by qualified valuers on a sufficiently regular basis using open market value so that the carrying value of an asset does not differ significantly from its fair value at the balance sheet date. Substantially all of the Group’s properties have been externally valued in accordance with the Royal institution of Chartered Surveyors’ Red Book. These valuations are performed directly by reference to observable prices in an active market or recent market trans- actions on arm’s length terms. Internal valuations are performed on the same basis.
The estate is reviewed for indication of impairment at each reporting date, using a process focusing on areas of risk and business performance throughout the portfolio to identify any exposure.
Impairment losses are charged to the revaluation reserve to the extent that a previous gain has been recorded, and thereafter to the income statement. Surpluses on revaluation are recognised in the revaluation reserve, except to the extent that they reverse previously charged impairment losses, in which case the reversal is recorded in the income statement.
Disposals of property, plant and equipment
Profit/loss on disposal of property, plant and equipment represents net sale proceeds less the carrying value of the assets. Any element of the revaluation reserve relating to the property disposed of is transferred to retained earnings at the date of sale.
If there are indications of impairment or reversal of impairment, an assessment is made of the recoverable amount. An impairment loss is recognised where the recoverable amount is lower that the carrying value of assets, including goodwill. The recoverable amount is the higher of value in use and fair market value less costs to sell.

Using the Marston’s excerpts, identify the similarities and differences between U.S. GAAP and IFRS regarding accounting for property, plant, andequipment.
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  • CreatedSeptember 10, 2014
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