IAS 16 Property, Plant and Equipment paragraph 7 to 14 regulates the recognition of PPE.

Recognition Principle (par. 7) – the cost of an item of property, plant and equipment shall be recognized as an asset if, and only if : (a) it is probable that future economic benefits associated with the item will flow to the entity; and (b) the cost of the item can be measured reliably.

Spare parts and servicing equipment are usually carried as inventory and recognized in profit and loss as consumed. However, major spare parts and stand-by equipment qualify as PPE when an entity expects to use them during more than one period.

Similarly, if the spare parts and servicing equipment can be used only in connection with an item of PPE, they are accounted for as property, plant and equipment.

This Standard does not prescribe the unit of measure of recognition, i.e. what constitutes an item of PPE. Thus, judgment is required in applying the recognition criteria to an entity’s specific circumstances. It may be appropriate to aggregate individually insignificant items, such as moulds, tools and dies, and to apply the criteria to the aggregate value.

An entity evaluates under this recognition principle all its PPE costs at the time they incurred. These costs include costs incurred initially to acquire or construct an item of PPE and costs incurred subsequently to add to, replace part of, or service it.

Read the complete article in here : How IAS 16 regulates the recognition of PPE