Class Test Flashcards
IAS 16
PPE
To be tangible asset must (2)
- Be used within business
- Held for more than 12 months
Can settlement discount be capitalised?
No
IAS 37
Costs relating to dismantling assets
Straight line depreciation
Cost - residual value / UEL OR cost x %
Reducing balance depreciation
NBV x %
Double entry depreciations
DR Depreciation expense
CR Accumulated depreciation
Subsequent expenditure expensed if improves: (3)
- UEL
- Capacity
- Quality
Change in depreciation method/ UEL steps
1) Calculate NBV
2) Apply the change
Revaluation double entry (Step 1)
DR NCA Cost
DR Accumulated Depreciation
CR Revaluation Reserve
NCA cost revaluation =
Difference between revalued amount and original cost
New depreciation expense revaluation (Step 2)
Revalued amount / Remaining UEL
Annual reserve transfer revaluation (Step 3)
New depreciation expense X
Less old depreciation (X)
Excess depreciation = X
Double entry annual reserve transfer revaluation
DR Revaluation reserve
CR Retained earnings
IAS 38
Intangible assets
Intangible asset is..
Not physical substance, but something that owned by company and generates cash. Must be internally generated
Goodwill..
Not internally generated > arises from business combinations
Research costs
Expensed in the P/L
Can intangibles be revalued?
Only if active market exists
Development expenditure can be capitalised if meets critera:
P > Probable I > Intention to complete R > Resources A > Ability T > Technical resources E > Expenditure measured reliably
Amortisation commences on intangibles
Once brought into use, NOT during development
IAS 36
Impairment of assets
What is impairment?
When carrying value exceeds recoverable amount
Recoverable amount =
Higher of:
Fair value less selling costs
OR
Value in use
