6 - Tangible Non-Current Assets Flashcards
What are subsequent expenses of an asset?
Any repairs or maintenance to put the asset back to its original condition (recognised in the P&L)
What are subsequent enhancements of an asset?
Any cost associated with improving the performance of an asset (recognised as additional cost of the asset in BS)
Define fair value
the price that would be received if the asset were to be sold
What happens to an assets revaluation surplus when it is subsequently sold?
It becomes a realised gain and is transferred to the retained earnings account
What is the definition of a tangible asset?
Physical items held by the company that are to be used in the productions or supply of goods or services, for rental to others or for admin purposes and are to be used for more than one period
What is the initial cost of an asset?
Cost of the asset plus and directly attributable costs i.e. transportation or setup costs
What is the recognition of an asset?
Asset is a present economic resource controlled by the entity as a result of past events. An economic resource is one that can produce economic benefits
What is depreciation?
The systematic allocation of the depreciable amount of an asset over its useful life
If the rate of depreciation or useful life of an asset has changed what is the formula for depreciation?
Carrying Amount - Residual Value / Remaining Useful Life
When should an asset be derecognised?
It is disposed of or when no future economic benefits are expected from its use or disposal
What note should be included in the accounts for depreciation?
A note that reconciles opening and closing balances of assets as well as depreciation and carrying amounts (there should also be a policy that depreciation policy and rate for each asset class
