6. Tangible Non-current Assets Flashcards
What does IAS16 cover?
Any tangible asset that is:
A) held for use, and
B) expected to be used for more than one accounting period
It deals with the recognition of assets, the initial measurement, measurement post acquisition and derecognition
How do you recognise an asset?
When there is probable future economic benefit associated with the item that will flow to the entity, and
The cost of the item can be measured reliably
How do you do initial measurement of an asset?
Cost = purchase price + directly attributable costs.
Directly attributable costs are all costs associated with getting the asset to its location and condition for use.
What are the types of subsequent expenditure?
Expenses - repairs and maintenance to put the asset back to its original condition.
Enhancement - enhancement to the assets performance
What is a component asset?
When an asset is split into separate elements and depreciated separately
What are the types of measurement post acquisition?
- Cost model = cost - accumulated depreciation
2. Revaluation model = fair value - subsequent accumulated depreciation
What happens if a revaluation model is used?
ALL assets within that class must be held at fair value
What is frequency of valuation?
Valuations should be made in sufficient frequency that the carrying amount of the asset doesn’t differ materially from its actual fair value
When do you account for revaluation?
When fair value is greater than carrying value.
When should an asset be derecognised?
When it is disposed of or when no future economic benefits are expected.
When do you get a realised gain?
When proceeds are greater than carrying value
How often should methods of depreciation be reviewed?
Annually
What needs to be disclosed in the notes?
Details on classes, volumes and movements of assets during the period.
The accounting policy stating the depreciation policy and rate for each asset class.
