Under HKAS 16, Property, Plant and Equipment (PPE) are tangible assets that are held by an entity. They are for use in the production or supply of goods or services, for rental to others, or for administrative purposes and expected to be used during more than one period. PPE includes land, land improvements, buildings, equipment, machinery and motor vehicles.

In the aspect of relevance, if it is capable of making a difference in the decisions made by users, it could be defined as relevant. This quality helps users to confirm or correct their past evaluations. According to HKAS 16, if items of property, plant and equipment are stated at revalued amounts, the disclosure includes the effective date of the revaluation, the involvement of an independent valuer and the revaluation surplus, indicating the change for the period and any restrictions on the distribution of the balance to shareholders. Therefore, HKAS 16 enable users to evaluate past information of PPE by providing relevant information such as revaluation surplus and revaluation date. Users like auditors can examine the value and confirm company’s past evaluations by their own, so that a relevant decision can be made.

Faithful representation means that the information presents the substance. It includes completeness, neutrality and no errors or omissions. Under HKAS 16, the financial statements shall disclose the measurement bases used for determining the gross carrying amount, the depreciation methods used, the useful lives or the depreciation rates used and the gross carrying amount and the accumulated depreciation, etc. at the beginning and end of the period showing for each class of property, plant and equipment. It apply the characteristics of faithful representation because HKAS 16 includes all information necessary for a user to understand the phenomenon with all essential descriptions and