FR REVISION chap 15

Question 1

Can impairment loss on goodwill be reversed

Answer 1

Nope.

Question 2

What is the extent to which impairment can be reversed

Answer 2

Impairment can be reversed upto a maximum of the carrying value (net book value) of the asset that would have been if the impairment did not occur

Question 3

What is a qualifying asset

Answer 3

An asset that takes a substaintial period of time to get ready for its intended use or sale

Question 4

Which borrowing costs are capitalised

Answer 4

1) Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset must be capitalized.
2) Capitalized borrowing costs are added to the cost of the asset, rather than being expensed in the period.
3) Once the asset is ready for use, capitalization stops, and borrowing costs are then expensed.

Question 5

What to do if the firm used general borrowing to finance the development of a qualifying asset , instead of specific boorrowing

Answer 5

In the case of general borrowing, the weighted average interest rate must be used to find out the interest / finance cost that will be capitalised along with the cost of the asset.

Question 6

when can Subsequent expenditure on ppe be capitalized

Answer 6

When the expenditure improves or enhances the performance of product, beyond the orignial performance

Question 7

when should we use weighted average to calculate the borrowing cost

Answer 7

When general borrowing have been used to finance the acquisition, construction or production of a qualified asset

Question 8

When should we strop capitalising the borrowing cost

Answer 8

When all the activities that are done to prepare the asset to the consition where it can be used or sold are completed.

Question 9

suspnesion of capitalising borrowing cost occurs when?

Answer 9

The is an extended periods where the active development of the asset is interrupted.