lecture Four Flashcards
(26 cards)
what is IAS 40?
it is applied to the recognition, measurement and disclosure of investment proeprty
when does IAS40 apply?
when the owner does not occupy it
how do you know what is classed as an investment property?
it is held for:
-capital appreciation
-rental income
-both
how do you know if a property is specifically classed as PPE (IAS16)?
it is primarily held for:
- admin purposes
-for the production of goods and services
what is the recognition criteria for an investment property?
an investment property is recognised as an asset with probable future benefits that will flow and cost measured reliably. recognition criteria that is applied is:
-initially to acquire investment property
-subsequently to replace part of the property
-cost of day-to-day services to maintain is recognised as an expense
criteria for properties that are not classified as an investment property?
-property occupied by the owner
-property held for sale in the ordinary course of business.
should properties bough initially be measured at cost?
yes
what measurement of recognition can be used after initial measurement?
-measurement of cost
-measurement using revaluation model
what are the only circumstances you can switch accounting policies away from revaluation model once chosen?
IAS8 dictates changes away form revolution model is allowed only if it leads to better and more reliable information been produced.
what happens when re-valaution model is chosen for investment properties?
all the investment properties are measured using this accounting policy and any gain/loss would go directly to the income statement.
how to calculate market cap?
quantity of shares x market price
how to calculate value of equity on the SOFP?
OE x (A-L)
what are the three criteria of an intangible asset?
-identifiable
-controlable
-future economic benefits
an intangible asset is recognised when future economic benefits flow to the entity and its cost can be measured reliably: (T/F)
true
how are intangible assets first measured?
using the cost model
what is business combination and when does it occur?
business combination is when one business acquires another business and it occurs at the date the acquirer inherits the assets and liabilities of the buisness
during business combination, how are intangible assets acquired valued?
-fair value
-any internally generated by the acquirer are recognised as long as it meets the recognition criteria and it wasn’t recognised by the previous entity in the SOFP.
what is goodwill?
the difference in market value and netbook value for non current assets
what is covered by IAS 39?
capital financial assets
what does cost compromise of?
-purchase price, import duties, non-refundable VAT.
-Directly attributable costs.
what do you need to determine before you measure an assets probable economic benefits?
-seperable?
-arises form contractual rights
-sufficient info exists to measure reliably the future value of the asset
how would you recognised intangible assets that is acquired separately?
-probable future economic benefits (usually the cost)
-cost can usually be measured reliably
-you stop recognising cost once the asset is ready to be used as intended by management
what happens when an asset is classed as a goodwill?
it is always expensed because:
-no legal rights to protect relationship
-entity has insufficient control over future economic benefits
-customers may leave
what happens if research and development can not be distinguished?
they are both expensed
