Fixed Assets Flashcards
Insurance on machine while transit and testing to make it ready for used should be capitalized
In fact, any cost incurred and make ready a plant asset also capitalized.
Cost included to cap land account includes
Cost of land, cost to raze building and subtract any sale of scrap.
Weighted average amount of accumulated expenditure is also called
Avoidable interest
Cap internet equals the lessor of
Total intranet incurred or the avoidable interest
Cost of a machine includes all cost to get it to useable condition
Cost, shipping and testing etc.
Cap cost of refurbishing
Record the loss in amount = CV of the damaged portion, when…
Building suffers damage and you refurbished it.
Interest cost during construction of fixes asset for own used is cap as part of historic cost
Intranet after construction and machine for sale construction is EXPENSED!
Excavation for construction of a basement is not
Cost of land! Not cost of land!!
When investment property is reported at cost less accumulated depreciation,
FV must be disclosed!
Invest property can be reported at CV or FV .
Gains and losses in investment property FV adj are reported in I/S.
Revaluation G/L that are not in investment property goes to OCI!
Best evidence of FV of investment property is current prices inactive market.
If that info is not available, use the PV of future cash flows to get FV!
If an single asset is revalued, the entire asset must be revalued too.
Single fixed assets cannot be revalued alone.
If 6 face @8% and 8 face@9%.
Weighted avg interest rate is :
(6/14).08 + (8/14).09=8.57%
Use weighted rate is borrowings are not tied to specific construction of asset.
IFRS impairment loss is the BV of asset minus the
Greater of the FV-cost to sell or
Assets value in use.
Only cap interest on money actually spent, not on total amount borrowed
The amount of cap interest is the LOWER of:
- Actual interest cost incurred, or
- Computed cap interest (avoidable interest)
