Chapter 2 - Property, Plant & Equipment

Question 1

Initial measurement (to be capitalised)

Answer 1

all costs directly attributable to bringing the asset into working condition for its intended use.
Eg  direct labour costs
       delivery fees
      Legal fees
      Testing costs
      etc

Question 2

Subsequent expenditure (capitalised)

Answer 2

if it enhances the economic benefits of the asset in excess of its previously assessed standard f performance

Question 3

Property, plant & equipment (definition)

Answer 3

tangible assets
held for use in the production/supply of goods & services
expected to be used for more than one period

Question 4

Depreciation (Definition)

Answer 4

systematic allocation of the depreciable amount of an asset over its useful life

Question 5

Depreciable amount (Definition)

Answer 5

cost/valuation of asset less any residual valuation

Question 6

Useful life (definition)

Answer 6

length of time/number of units of production for which an asset is expected to be used

Question 7

Fair Value (Definition)

Answer 7

the price that would be received to sell asset or paid to transfer a liability in an orderly transaction between market participants at the date of valuation (measurement date)

Question 8

Impairment loss (Definition)

Answer 8

Amount by which the carrying amount exceeds the recoverable amount

Question 9

Recoverable amount (Definition)

Answer 9

the higher of the assets fair value less costs to sell and its value in use

Question 10

Carrying amount (definition)

Answer 10

amount at which an asset is recognised on the SFP after deducting any accumulated depreciation and impairment losses