FR&A Long-Lived Assets

Question 1

Accelerated Methods

Answer 1

Depreciation methods that allocate a relatively large proportion of the cost of an asset to the early years of the assets useful life.

Question 2

Acquisition Method

Answer 2

A method of accounting for a business combination where the acquirer is required to measure each identifiable asset and liability at fair values. This method was the result of a joint project of the IASB and the FASB aiming at convergence in standards for the accounting of business combinations

Question 3

Finance Lease

Answer 3

From the lesser perspective, under US GAAP, a type of lease which is more akin to the purchase of an asset by the lesser. From the lessor Perspective under IFRS, a lease which transfers substantially all the risks and rewards incidental to ownership of an underlying asset

Question 4

Intangible assets

Answer 4

Assets lacking physical substance, such as patents and trademarks

Question 5

Long-lived assets

Answer 5

Assets that are expected to provide economic benefits over a future period of time, typically greater than one year

Question 6

Property Plant and Equipment

Answer 6

Tangible assets that are expected to be used for more than one period in either the production or supply of goods or services, on for administrative purposes

Question 7

Revaluation model

Answer 7

Under IFRS, the process of valuing long-lives assets at fair value, rather than at cost less accumulated depreciation. Any resulting profit or loss is either reported on the income statement and/or through equity under revaluation surplus

Question 8

Straight-Line method

Answer 8

A depreciation method that allocates evenly the cost of a long-liver asset its estimated residual value over the estimated useful life of the asset.

Question 9

Units of production method

Answer 9

A depreciation method that allocated the cost of a long-lived asset based on actual usage during the period