CH. 7 - Property, Plant, & Equipment (PP&E) Flashcards
Recording a Nonmonetary Exchange w/ Commercial Substance
Step 1
Record Asset Received
- Record at FV of Asset given up + Cash paid (-Cash Received)
Step 2
Remove Asset Given Up
- Remove cost and any related accumulated depreciation
Step 3
Recognize Gain or Loss
= FV - CV
Double Declining Balance Depreciation Method
Annual Depreciation Expense = Carrying Value x 2/Useful Life
Carrying Value formula
Cost - Accumulated Depreciation
Straight-Line Depreciation (Annual Depreciation Expense)
Cost - Salvage Value / Years of Life
Under IFRS PP&E_________
The entire class of which the asset belongs must also be revalued.
What is Goodwill?
Goodwill represents the excess of the Fair Value of a reporting unit over the fair value of its underlying net identifiable assets.
When do you test for recoverability of an Asset?
- Significant Adverse Changes
- Cost significally exceeding the original amount expected to acquire/construct the asset.
- Projection that demonstrates continuing losses
- Probable Asset will be disposed before the end of its expected useful life.
ASC 410-20-25-4
Requires entities to recognize asset retirement obligations (AROs) at fair value
Calculation of Weighted Average Accumulated Expenditures (WAAE)
Each Month Expenditures x Months Outstanding / 12 Months
Commercial Substance
The expectation that the entity’s future cash flows will change as a result of a business transaction
What is an Impairment?
An unanticpated decline of an asset’s value
How do you calculate the Impairment Loss?
Carrying Value - Fair Value
Once an Impairment Loss for a Long Lived asset used in Operations has been recorded, it _________________.
Cannot be restored wholly or partually.
