Accounting For Other Assets

Question 1

IAS 38

Answer 1

Intangible Assets

• Outlines the accounting requirements for intangible assets
• Which are non-monetary assets which are without physical substance and identifiable

Question 2

Recognition In The Financial Statements

Answer 2

• Probable that’s future economic benefits attributed to the asset will flow into the entity
• The asset cost can be measured reliably

Question 3

Research

Answer 3

• Investigation undertaken to gain new scientific or technical knowledge
• Research cannot be capitalised and must be expenses

Question 4

Development

Answer 4

• Application of the research findings
• Plan or design for the production of
• New or improved materials, devices, products processes and systems

Question 5

PIRATE

Answer 5

• Probable future economic benefits will be generated by the asset
• Intention to complete and use/sell asset
• Resources adequate and available to complete and use/sell asset
• Ability to use/sell asset
• Technical feasibility of completing asset for use/sale
• Expenditure can be measured reliably

Question 6

Internally Generated Assets

Answer 6

• Goodwill (generated internally)
• Brand names
• Customer lists
• Research and development that doesn’t meet the PIRATE criteria

Are not capitalised. Costs recognised as expense in SPL

Question 7

Subsequent Measurement

Answer 7

Cost
- Cost less accumulated amortisation (like depreciation but for intangibles)

Revaluation

• Carried at fair value less any accumulated amortisation
• Rarely used as difficult to determine fair value.

Question 8

Amortisation

Answer 8

• Equivalent of depreciation
• Should be applied if asset has finite life
• If indefinite life, no amortisation is applied, instead an impairment review must be carried out

Question 9

IAS 36

Answer 9

Impairments of Assets

• To ensure that an entity’s assets are not carried at more than their recoverable amount
• The recoverable amount is; the higher of fair value less costs to sell, and value in use (present value)
• If recoverable amount is lower than carrying value (NBV), the asset is impaired.

Question 10

Carrying Amount

Answer 10

Amount asset is recognised after depreciation or amortisation

Question 11

Impairment Loss

Answer 11

Amount by which the carrying amount of an asset exceeds its recoverable amount

Question 12

Fair Value

Answer 12

Price that would be received to sell an asset or paid to transfer a liability in a transaction in the market at a measurement date

Question 13

Recoverable Amount

Answer 13

Value of an asset and is calculated as the higher of the fair value in use and its fair value less costs to sell

Question 14

Value In Use

Answer 14

Present value of future cash flows to be generated through the use of the asset

Question 15

Inventories

Answer 15

• Governed by IAS2
• Assets held for sale or use
  Inventory valuation is the lower of cost and net realisable value
• Lifo is prohibited