F4 Notecards- Deck #3

Question 1

3 Characteristics of fixed assets:

Answer 1

1- for use in operations; not for resale
2- long term in nature; subject to depreciation
3- physical items

Question 2

4 Classifications of fixed assets

Answer 2

1- land
2- buildings
3- equipment
4- accumulated deprecation (cost - AD = NBV)

Question 3

What financial statement are fixed assets shown on?

Answer 3

Balance sheet (or footnotes) at cost

Question 4

Historical cost AKA

Answer 4

Purchase price

Question 5

2 Ways to recognize fixed assets under IFRS

Answer 5

1- Cost Model

2- Revaluation Model

Question 6

Cost Model (IFRS)

Answer 6

• Just like US GAAP

- Reported at cost, adjusted for AD and impairment

Question 7

Revaluation Model (IFRS)

Answer 7

• Classes of fixed assets

- Revalued at fair value frequently

Question 8

Revaluation losses shown on what statement:

Answer 8

Income Statement

Question 9

Revaluation gains shown on what statement:

Answer 9

OCI

Question 10

Steps to recognize impairment of fixed assets (IFRS)

Answer 10

1- Take out of OCI any gains previously reported

2- Put loss on I/S

Question 11

Several commons Costs of Equipment

Answer 11

• Invoice price
• Less cash discounts
• Add freight in
• Add installation charges (rearrange)
• Add sales and excise taxes

Question 12

Additions: capitalize or expense?

Answer 12

Capitalize

Question 13

Improvements and Replacements: capitalize or expense?

Answer 13

Capitalize

Question 14

Repairs: capitalize or expense?

Answer 14

Expense if ordinary

Capitalize if extraordinary

Question 15

Cost of Land include

Answer 15

Anything before digging a hole for the foundation

Examples: purchase price, commissions, title fees, legal fees, draining, clearing site, filling in/leveling site, etc.

Question 16

Common Land Improvements

Answer 16

Are depreciable

Examples: fences, water systems, sidewalks, lighting, etc.

Question 17

Cost of Building include

Answer 17

Excavation and forward

Examples: purchase price of building, all repair charges from previous owner, alterations, architect fees, etc.

Question 18

If Basket purchase of land and building:

Answer 18

Allocate purchase price based on ratio of appraised values

Question 19

Investment Property Definition

Answer 19

A rental or property to flip

Question 20

Accounting for Investment Property (IFRS Only)

Answer 20

• US GAAP does not have special rules

- Capitalize anything except normal maintenance and day-to-day costs (expense those)

Question 21

2 Investment Property measurement models

Answer 21

1- Cost Model

2- Fair Value Model (not depreciated)

Question 22

Only capitalize interest on:

Answer 22

Money actually spent, not on the total amount borrowed

Question 23

The amount of capitalized interest is the lower of:

Answer 23

1- Actual interest cost incurred OR

2- Computed capitalized interest (avoidable interest)

Question 24

When to capitalize interest

Answer 24

DURING construction, expense after