FINAL EXAM Flashcards
Non-financial non-current assets
- Intangibles
- Tangibles (Property, plant and equipment)
- Property investment
Long-term financial investments
- Shares of another company (Equity instruments)
- Long-term Bonds (Debt securities)
- Long-term deposits
- Long-term credits (Loans)
173
Non-current payables to suppliers of fixed assets
161
Non-current payables to suppliers of fixed assets, related parties
253
Non-current loans for disposal of fixed assets
242
Non-current loans to related parties
523
Current payables to suppliers of fixed assets
511
Current payables to suppliers of fixed assets, related parties
543
Current loans for disposal of fixed assets
532
Current loans to related parties
Initial Valuation: Purchase Price is not Acquisition Price
The Acquisition Price includes the purchase Price plus all necessary expenditures to get the asset in place and ready to be used, minus discounts in the invoices
Post-Valuation: Book value
It is the initial value minus the correction amounts (accumulated depreciation, accumulated amortization, accumulated impairment)
Systematic losses
- depreciation
- amortization
Potential non-systematic losses
Impairment
680
Amortization of intangible assets
681
Depreciation of property, plant and equipment
Depreciation or Amortization Expense Account
It represents the economic impact of depreciation or amortization expense that must be shown in the income statement at the end of the accounting cycle.
Accumulated Depreciation or Amortization Account
It represents the financial impact of depreciation or amortization being disclosed on the balance sheet as an asset correction. It stands for the cumulative amount charged year by year, since the initial recognition and measurement of an asset.
280
Accumulated Amortization of intangible assets
281
Accumulated Depreciation of property, plant and equipmen
For depreciation (tangible assets) or amortization (intangible assets) we need:
The asset cost: the acquisition Price
The estimated useful life: period over which an asset is expected to be utilized.
The estimated residual value: estimated amount less estimated disposal costs (disposal of the asset at the end of its expected life).
Methods for calculating depreciation/amortization, generally accepted according to IFRS
Straight-line
Accelerated depreciation
Usage-based (technical and functional)
STRAIGHT-LINE
The depreciation/amortization expense is the same in each period, implying that the contribution to revenue generation by the asset is the same each period.
ACCELERATED DEPRECIATION
The depreciation is more allocated to expense in the early years of life and less in the later years.
It is appropriate for assets sensitive to obsolescence, like computers.
USAGE-BASED (Technical and functional)
When the asset’s consumption is readily associated with its use and not to the passage of time or obsolescence.
The annual depreciation expense depends on the degree of use of the asset.
Units of production
Kilometers traveled by a vehicle
Hours of machinery use
IMPAIRMENT
At the end of the accounting cycle, the company must compare the net book value of the non-current asset with its recoverable value.
The recoverable amount is the largest one between the net fair value (fair value minus expenses) and the value in use (the current value of the expected cash flows – cash-generating ability)
IMPAIRMENT
Two possibilities:
When cost is higher than market value: impairment has to be recorded as a real loss, although it is only estimated;
When cost is lower than market value: due to prudence principle the company cannot record the estimated profit.
Impairment Expense/Surplus Accounts
It represents an expense in the period of the income statement. It is the estimated loss suffered by assets, recorded when the net book value of it exceeds its recoverable value.
(690) Impairment losses on intangible assets (691) Impairment losses in property, plant and equipment (790) Reversal of impairment of intangible assets (791) Reversal of impairment of property, plant and equipment
Accumulated Impairment Accounts
It represents the asset correction. It corrects the value of an overestimated asset disclosure on the balance sheet.
(290) Impairment of intangible assets
(291) Impairment of property, plant
and equipment
690
Impairment losses on intangible assets
691
Impairment losses in property, plant and equipment
790
Reversal of impairment of intangible assets
791
) Reversal of impairment of property, plant and equipment
290
Impairment of intangible assets
291
Impairment of property, plant and equipment
DERECONGITION OF NON-CURRENT ASSETS
Sales of non-current assets
Irreversible loss
When no future economic benefits are expected from them
Financial Instruments
A Financial Instrument is a contract that gives rise to a financial asset in one company and, simultaneously, a financial liability or an equity instrument(*) in another company
Financial assets
- Cash and cash equivalents
- Trade and other receivables
- Loans and credits extended to third parties, including those relating to the sale of non-current assets
- Acquired debt securities of other companies, such as obligations, bonds and promissory notes
- Acquired equity instruments of other companies
- Other financial assets, such as bank deposits, loans and advances to personnel, guarantees, dividends
recievables, etc.
Financial liabilities
- Trade and other payables
- Debts with financial institutions
- Obligations and other securities issued, such as bonds and promissory notes
- Payables of special nature
- Loans and credits extended by individuals or companies other than financial institutions, including those
relating to the purchase of non-current assets, guarantees and payables to third parties
Current liabilities accounts
(50-) Current debentures, payables of
special nature and similar issuances
(51-) Current payables to related parties
52-) Current payables for loans and others
56-) Current guarantees, deposits, prepaid
expenses and deferred income
Non-current liabilities accounts
(16-) Non-current payables to related parties
(17-) Non-current payables for loans,
debentures and others
(18-) Non-current guarantees, deposits and
other liabilities
Current assets accounts
(53-) Current investments in related parties
(54-) Other current investments
56-) Current guarantees, deposits, prepaid
expenses and deferred income
Non-current assets accounts
(24-) Non-current investments in related
parties
(25-) Other non-current investments
(26-) Non-current guarantees and deposits
extended
Group 4
Has assets and liabilities
Group 5
Has assets and liabilities
Land
Never depriciated (unless mining, farming etc)
(4751)
Taxation authorities, withholding tax
(5208)
Payables, discounted trade bills
(4708)
Grants receivable
(4412) (4312)
debt collection
(4411) (4311)
discounted note
(4410) (4310)
bill of exchange
(4415) (4315)
past maturity
(4752)
income tax payable
(4330)
Trade receivables, group companies
(4307)
Trade receivables, foreign currency
(4331)
Trade bills receivables, group companies
