Financial Edge - Non current assets Flashcards
What are non-current assets?
Something that will provide a future economic benefit to the business, that has a lifetime of greater than one year
Types of non-current assets?
Tangible, intangible, and financial
Examples of tangible non current assets?
Land, buildings, plant, equipment, vehicles
Examples of intangible non current assets?
Goodwill, copyrights, patents, licenses
Examples of financial non current assets?
Long-term investments, joint ventures
How to forecast PPE?
Beginning balance
Add capex
Subtract depreciation
Ending balance
Most common method of depreciation?
Straight-line depreciation
Is accounting depreciation the same as the depreciation used for tax purposes?
No, tax authorities will decide their own depreciation methods to circumvent manipulation
What is the logic behind including yearly depreciation on an income statement?
Allows you to expense the theoretical value of the asset that you have used over that period
Difference between gross and net PPE?
Gross is original value, net is value after accumulated depreciation
How to forecast intangibles?
Beginning intangibles
Addition purchases
Subtract amortisation
Ending intangibles
Which types of intangibles can be amortised?
definite life intangibles
How are indefinite life intangibles amortised?
They’re not; instead, they are periodically tested for impairments
How are R&D capitalised or expensed, under IFRS?
Research - has to be expensed as occurred
Development - costs can be capitalised.
Under U.S. rules, both research and development are expensed, apart from software related R&D costs.
What is the difference between fair value through profit and loss and fair value through other comprehensive income?
FVPL is for assets that you decide to trade as a firm, i.e. to make money
FCOCI is assets that are not held for trading purposes
