Investment Cycle Flashcards
What are the 2 subsequent measurements of PPE?
Cost model
Revaluation model
What is the cost model?
cost - ( accumulated depreciation and impairment losses )
What is the revaluation method?
fair value - ( accumulated depreciation and impairment losses )
What is impairment loss?
a decrease in asset’s carrying amount as a result of damages or economic conditions
How is recoverable amount recognised?
higher of asset’s fair value less disposal costs or value in use
What is a financial lease?
A lease that transfers all risks and rewards to ownership
What is goodwill?
Assets representing future economic benefits from assets acquired in a business combination which are not individually identified
What is a business combination?
Event where an acquirer obtains control of a business
What is fair value?
Price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
What is amortisation?
The systematic allocation of depreciable amount of an intangible asset over its useful life.
What is investment property?
Property held solely for passive income
How is investment property valued?
Using either method
What are the implications of investment property being valued using the cost model?
No depreciation is accounted for
What are the implications of investment property being valued using the fair value method?
All movements are accounted in profit and loss
