Module 26.4: Fixed Asset Disclosures Flashcards
Under IFS what must a firm disclose for PP&E?
1) Basis for measurement
2) Useful lives or depreciation rate
3) Gross carrying value and accumulated depreciation
4) Reconciliation of carrying amounts from beginning to end of period
If the revaluation model is used under IFRS, what must be disclosed?
1) the revaluation date
2) How fair value was determined
3) Carrying value using historical cost
Under IFRS for impaired assets - what must a firm disclose?
1) Amounts of impairment losses and reversals by asset class
2) Where the losses and loss reversals are recognized in the income statement
3) Circumstances that caused the impairment loss or reversal
Under US GAAP, what must a firm disclose for PP&E?
1) Depreciation expense by period
2) balances of major classes of assets by nature and function, such as land, buildings etc.
3) Accumulated depreciation by major classes or in total
4) General description of depreciation methods used.
Under US GAAP what must a firm disclosure for impaired assets?
1) A description of the impaired asset
2) circumstances that caused the impairment
3) how fair value was determined
4) the amount of loss
5) where the loss is recognized on the income statement
What are the two reasons why the average age of a firms assets important?
1) older, less-efficient assets may make a firm less competitive
2) the average age of assets helps an analyst to estimate the timing of major capital expenditures and a firm’s future financing requirements
What is the formula for average age?
accumulated depreciation / annual depreciation expense
What is the formula for total useful life?
historical cost / annual depreciation expense
what is the formula for remaining useful life?
ending net PP&E / annual depreciation expense
Under IFRS, how is investment property valued?
cost model or the fair value model. fair value model unrealized gain and loss is realized on the income statement.
If property is transferred from owner-occupied to investment property, what is the affect on financial statement?
treat as revaluation, recognize gain only if it reverses previously recognized loss
If property is transferred from inventory to investment property, what is the affect on financial statement?
recognize gain or loss if fair value is different from carrying amount
If property is transferred from investment property to owner occupied or inventory, what is the affect on financial statement?
fair value of asset at date of transfer will be its cost under new classification.
