chapter 14 and 15 Flashcards
1
Q
assets
A
- depreciate because have a limited useful life
- e.g expected usage, expected wear and tear
- technical and commercial obsolescence
2
Q
overhauls and replacement
A
- made to extend an asset’s expected future benefits beyond the original estimate
- add materially to the asset’s future capabilities to rpoduce goods / services
3
Q
scrapping of non current asset
A
- must be derecognised in the accounting records
- there is no expense on disposal if fully depreciated
- if scrapped before carrying amount is fully depreciated, carrying amount counts as an expense
4
Q
revaluation increase
A
- not included in profit, but apart of entity’s comprehensive income
- carrying amount is less than revaluation amt
5
Q
revaluation decrease
A
- carrying amount assets exceed their fair values
- represents a write off
- decrease recognised in profit and loss
6
Q
amortisation
A
- allocation of depreciable amount of intangles to the periods benefiting from their use
- Accountants supported the view that some intangible assets had unlimited lives and therefore should not be amortised
- amortisation method must reflect pattern in which the asset’s future economic benefits are consumed by the entity
7
Q
patent
A
exclusive right to produce and sell a particular product or to use a specific process for a period fo 20 years
- expenditure of research and development increases productivity and economic growth
8
Q
copyrights
A
- exclusive right to reproduce and sell an artistic or published work
- exists for life of author plus 70 years
- most copyrights are amortised over a short period as difficult to determine how long benefits will be received.
- is an asset
9
Q
goodwill
A
- future economic benefits arising from assets that are not capable of being individually identified and separately recognised.
- arises from many factors, including customer confidence, superior management etc
- goodwill may be purchased in an exchange transaction
- can not be sold / purchased otherwise
