Measuring non-current assets

Question 1

What is depreciation

Answer 1

the allocation of the depreciable amount of the life of the asset

Question 2

How are depreciable assets shown on the balance sheet?

Answer 2

depreciable assets are carried at their cost (or fair value) less accumulated depreciation

Question 3

Exceptions of non-current assets

Answer 3

○ Goodwill
- Cannot be revalued upwards and must be tested at least annually for impairment

○ Identifiable intangibles
- Can be revalued upwards only if an active and liquid market exists

○ Financial instruments
- Measured at their fair value

○ Agricultural assets
- Measured at their value - costs to sell

Question 4

Carrying amount of non-current assets at cost must be no more than …..?

Answer 4

than their recoverable amount

Question 5

Recoverable amount

Answer 5

Higher of expected fair value - costs to sell

Question 6

Value in use

Answer 6

Present value of expected future cash flows associated with the use and subsequent disposal of the asset

Question 7

Impairment Loss

Answer 7

An expense - must be recognised immediately

Impairment loss if;
Carrying amount is MORE than recoverable amount