Question 1

What are the disclosures required for ARO

Accepted Answer

- description of the obligation and related asset - description of how fair value was determined - the funding policy - the reconciliation of the beginning and ending carrying value

Question 2

How do you handle is you get an asset as a donation

Accepted Answer

It is treated as ordinary income (non-operating income) for the FMV of the donation: dr. Land 3M cr. Other Income (contributed revenue) 3M

Question 3

What are interest amount that can be capitalized as part of building:

Accepted Answer

- Weighted avg. accumulated expenditures interest rate - Interest on other debt that could have been avoided by repayment of debt - NEVER exceed actual interest cost11

Question 4

IFRS and ARO

Accepted Answer

Under IFRS - ARO is called a decommissioning liability - It is the estimated amount to return the the property to useable condition - It is periodically adjusted to recognize changed in carrying value of of the property and subsequent;y affecting depreciation and amortization expense - When property is fully depreciated - any adjustment to the decommissioning liability is recognized in profit or loss since it is too late to make an adjustment to depreciation or amortization

Question 5

are legal fees during negotiation of land purchase and engineering fees for grading capitalized and land?

Accepted Answer

Yes - both capitalized under land

Question 6

How are ARO's recognized

Accepted Answer

- recognized at fair value - capitalize the asset retirement costs by increasing the carrying value of the related assets - allocate ARO costs to expense over the useful life if the related asset

Question 7

When a transaction lacks commercial substance - how is the non monetary transaction measured

Accepted Answer

the transaction is measured on the basis of the reported amounts

Question 8

At what type of interest rate is the accretion expense recorded at

Accepted Answer

a credit adjusted risk free interest rate.

Question 9

When calculating depletions what will total costs include

Accepted Answer

land, engineering costs, development costs, costs to restore land, and reduced by residual value expected at the end

Question 10

When is reversal of a previously recognized impairment loss allowed

Accepted Answer

long lived assets held for sale / held for disposal

Question 11

What amount of interest can be capitalized

Accepted Answer

Interest that can be capitalized on a qualifying asset is the avoidable interest which is the interest that could have been avoided if the qualifying as not been made. The amount capitalized is calculated on the excess average accumulated expenditure using weighted avg. of the d

Question 12

Newt Co. sold a warehouse and used the proceeds to acquire a new warehouse. The excess of the proceeds over the carrying amount of the warehouse sold should be reported as a (an

Accepted Answer

Part of continuing operations The sale of a warehouse, as is true for the sale of any asset, is reported by eliminating the carrying value and recognizing the difference between the carrying value and the proceeds as a gain or loss in the period of sale, not a reduction of the cost of the new warehouse. It is not considered extraordinary as it is not a transaction that would be both unusual in nature and infrequent of occurrence and would, as a result, be included in income from continuing operations. It would only be considered discontinued operations if the sale of the warehouse represented a strategic shift in operations.

Question 13

What are the general disclosures required for PP&E

Accepted Answer

you are required to disclose: - Balances in each major class of PP&E or in aggregate - depreciation expense - The methods used to calculate depreciation (no need to disclose Fair value info or info about upcoming major repairs or maintenance)

Question 14

How are ARO Under IFRS different - (decommissioning liability)

Accepted Answer

It is basically the same - its the estimated amount to get it back to shape - it is periodically adjusted with increases and decreasing going to the carrying value by affecting accumulated depreciation - any adjustments after its fully depreciated - go to profit and loss

Question 15

What are the two methods of of recognizing assets under IFRS

Accepted Answer

cost - asset depreciated to its residual value - you can depreciate components separately revaluation model - asset is periodically evaluated and adjusted to its fair value An asset may not be reported at an amount that is greater than its recoverability amount this is an impairment and is recognized. Once impaired cost - impairment recon. immediately revaluation - impairment is a revaluation decrease. this is done when there is an indication of impairment Exceptions: indefinite lives intangibles, intangibles not ready for use - these are regularly tested

Brainscape's Knowledge GenomeTM

FAR 17 Flashcards

Brainscape's Knowledge Genome^TM