Chapter 5 - NCA

Question 1

Investment income

Answer 1

E.g property for investment. There is no dep charge on FV model.

Question 2

NCA held for sale

Answer 2

An assest where the CA will be recovered from a sales transaction rather than continued use

Question 3

Intangibe assets

Answer 3

With an indefinate useful life will need an annual impairment review, as will devlopmental projects which have not been completed. Patent will only require a review if indications of impairment exsist

Question 4

Asset held for sale

Answer 4

IFRS 5 states that when an asset is classed as ‘held for sale’, then depreciation should cease. The asset should be moved to current assets (below the subtotal of the other current assets) and held at the lower of carrying value and fair value less costs to sell.

Question 5

NET Realisable value

Answer 5

Estimated selling price less estimated cost of completion and costs needed to make the sale

Question 6

NCA held for sale - LOWER OF

Answer 6

lower of CA or FV-costs

Question 7

Impairment

Answer 7

The lower of CA or Recov amount – but recoverable amount is the higher of FV-costs or value in use (PV)

Question 8

CGU

Answer 8

current assets are usually already held at recoverable amount. As an example, trade receivables would usually be stated at the amount that would be expected to be received from customers, therefore it would not be appropriate to impair receivables further

Question 9

investment property

Answer 9

An investment property is any land or building held to earn rentals, or for capital appreciation or both, rather than for use in the business or for sale in the ordinary course of business.

Question 10

Borrowing costs - capitalised when?

Answer 10

Borrowing costs can only be capitalised in relation to aqualifyingasset, not all non‐current assets. If borrowing costs are directly attributable to a qualifying asset, then theymustbe capitalised.

Question 11

CGU - Amounts left over

Answer 11

CGU - item / sum to the remaining balance x amount left to allocate to

Question 12

Revaluations affects?

Answer 12

Revaluation affects depn if there is a gain – means less profit – means less RE — so shareholders are not happy = less div

Question 13

Goodwill

Answer 13

Goodwill is an intangible asset with an indefinite life, and therefore subject to annual impairment reviews with no amortisation. Any reversals of goodwill impairment would be as a result of internally generated goodwill, which cannot be recognised.

Question 14

Borrowing costs

Answer 14

• the SPL will have the amounts that are not capitalised = they are expensed as they don’t occur during the qual period

Question 15

Gov Grant

Answer 15

• could ask about the liability or expense in spl ! Know the diff and how to accoutn for it

Question 16

Borrowing costs must be capitalised

Answer 16

if they are directly attributable to qualifying assets, which are assets that take substantial time to complete/

capitalisation should cease once substantially all the activities to prepare the asset are complete. Capitalisation commences when expenditure is incurred on the asset, borrowing costs are being incurred AND preparation activities have commenced