8. Non-current assets and intangible assets Flashcards
Examples of expenditures to include in the cost of a non-current asset would include, but not be limited to, the following:
● ________________
● ________________
● ________________
● ________________
● ________________
● ________________
Examples of expenditures to include in the cost of a non-current asset would include, but not be limited to, the following:
● purchase price
● taxes paid on the purchase
● fees such as legal (conveyancing) costs paid to a solicitor
● delivery costs
● insurance costs during transit
● installation costs
A non-current asset converts to an ______ as it is used or consumed.
A non-current asset converts to an expense as it is used or consumed.
The expensing of non-current assets is accomplished through _______.
The expensing of non-current assets is accomplished through depreciation.
depreciation
The process of systematically and rationally allocating the cost of a non-current asset over its useful life.
depreciation expense
The portion of a non-current asset’s cost that is recognised as an expense in the current period.
accumulated depreciation
The cumulative amount of depreciation expense recognised to date on a non-current asset.
Depreciation expense is normally calculated at the ______ of an accounting period and is recorded with an ______ journal entry.
Depreciation expense is normally calculated at the end of an accounting period and is recorded with an adjusting journal entry.
carrying amount
(also known as…)
net book value
The unexpired cost of a non-current asset, calculated by subtracting accumulated depreciation from the cost of the non-current asset.
cost
The historical cost of a non-current asset being depreciated.
(the amount that was recorded when the asset was purchased)
residual value
(also known as…)
salvage value
An estimate of the value of a non-current asset at the end of its useful life.
useful life
The length of time a non-current asset is expected to be used in operations.
depreciation method
The method used to calculate depreciation expense, such as the straight-line, reducing-balance and units-of-activity methods.
straight-line method
A depreciation method that results in the same amount of
depreciation expense each year of the asset’s useful life.
Key Formula
straight-line method
reducing-balance method
A depreciation method that accelerates depreciation expense into the early years of an asset’s life.
Key Formula
reducing-balance method
units-of-activity method
A depreciation method in which depreciation expense is a function of the actual usage of the asset.
Key Formula
units-of-activity method
When a non-current asset’s recoverable amount falls materially below its carrying amount, the asset is
considered ________.
When a non-current asset’s recoverable amount falls materially below its carrying amount, the asset is
considered impaired.
cost model
After recognition as an asset, an item of plant, property and equipment shall be carried at its cost less any accumulated depreciation and any impairment loss.
revaluation model
If fair value can be measured reliably the asset shall be carried at a revaluation amount.
The accounting standards divide income into two parts: ‘________________’ and ‘________________’.
The accounting standards divide income into two parts: ‘profit or loss’ and ‘comprehensive income’.
Upward revaluations of assets are included in comprehensive income, while the sale of an asset above its carrying amount would be (normal) profits.
Upward revaluations of assets are included in comprehensive income, while the sale of an asset above its carrying amount would be (normal) profits.
The second step is to calculate any gain or loss on the
disposal by comparing the asset’s carrying amount to the proceeds from the asset’s sale, if any.
When the proceeds exceed the carrying amount, a _____ on disposal is recognised.
When the carrying amount exceeds the proceeds, a _____ on disposal is recognised.
The second step is to calculate any gain or loss on the
disposal by comparing the asset’s carrying amount to the proceeds from the asset’s sale, if any.
When the proceeds exceed the carrying amount, a gain on disposal is recognised.
When the carrying amount exceeds the proceeds, a loss on disposal is recognised.
