F3 - M4 - PP&E: Cost Basis

Question 1

If Assets are purchased requiring fixed payments, how to value assets?

Answer 1

The asset should be valued at present value of all future payments.

Question 2

how to record reversal of impairment loss?

Answer 2

Subsequent Impairment loss reversal is prohibited by US GAAP unless the Asset is held for disposal

Question 3

Sum of Years Deprciation Method

Answer 3

(N*( N+1)/2) calculate denominator= addition of number of useful life. example 5years useful life= 1+2+3+4+5=15.

first year depn will be calculated based on remaining life which is 5/15* value of asset.

Pls note it is not the declining value of the asset

Question 4

which Depriciation method do not take into Account salvage value?

Answer 4

Double declining method do not take into consideration salvage value.but must be accounted for manually to ensure that the value of the asset never falls below the salvage value

Question 6

Double decline method for depreciation

Answer 6

Double decline methos NEVER takes into account salvage value or allowance while calculating depreciation.