F4 Notecards- Deck #3 Flashcards Preview

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Flashcards in F4 Notecards- Deck #3 Deck (24):
1

3 Characteristics of fixed assets:

1- for use in operations; not for resale
2- long term in nature; subject to depreciation
3- physical items

2

4 Classifications of fixed assets

1- land
2- buildings
3- equipment
4- accumulated deprecation (cost - AD = NBV)

3

What financial statement are fixed assets shown on?

Balance sheet (or footnotes) at cost

4

Historical cost AKA

Purchase price

5

2 Ways to recognize fixed assets under IFRS

1- Cost Model
2- Revaluation Model

6

Cost Model (IFRS)

-Just like US GAAP
-Reported at cost, adjusted for AD and impairment

7

Revaluation Model (IFRS)

-Classes of fixed assets
-Revalued at fair value frequently

8

Revaluation losses shown on what statement:

Income Statement

9

Revaluation gains shown on what statement:

OCI

10

Steps to recognize impairment of fixed assets (IFRS)

1- Take out of OCI any gains previously reported
2- Put loss on I/S

11

Several commons Costs of Equipment

-Invoice price
-Less cash discounts
-Add freight in
-Add installation charges (rearrange)
-Add sales and excise taxes

12

Additions: capitalize or expense?

Capitalize

13

Improvements and Replacements: capitalize or expense?

Capitalize

14

Repairs: capitalize or expense?

Expense if ordinary
Capitalize if extraordinary

15

Cost of Land include

Anything before digging a hole for the foundation
Examples: purchase price, commissions, title fees, legal fees, draining, clearing site, filling in/leveling site, etc.

16

Common Land Improvements

Are depreciable
Examples: fences, water systems, sidewalks, lighting, etc.

17

Cost of Building include

Excavation and forward
Examples: purchase price of building, all repair charges from previous owner, alterations, architect fees, etc.

18

If Basket purchase of land and building:

Allocate purchase price based on ratio of appraised values

19

Investment Property Definition

A rental or property to flip

20

Accounting for Investment Property (IFRS Only)

-US GAAP does not have special rules
-Capitalize anything except normal maintenance and day-to-day costs (expense those)

21

2 Investment Property measurement models

1- Cost Model
2- Fair Value Model (not depreciated)

22

Only capitalize interest on:

Money actually spent, not on the total amount borrowed

23

The amount of capitalized interest is the lower of:

1- Actual interest cost incurred OR
2- Computed capitalized interest (avoidable interest)

24

When to capitalize interest

DURING construction, expense after