Non-Current Assets: Revaluation, Disposal and Other Aspects

Question 1

Upwards Revaluation of Assets

Answer 1

appears as part of an entity’s comprehensive income, and is then directly accumulated into equity as a revaluation surplus which is a type of reserve

for a reversal, the decrease in an asset’s carrying amount shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset

Question 2

Downwards Revaluation of Assets

Answer 2

if an asset’s carrying amount is decreased as a result of a revaluation, the decrease must be recognised in profit or loss as an expense

any reversal in excess of the previous write‐down should then be credited to the Gain on Revaluation

Question 3

Derecognition of NCA

Answer 3

scrapping

sale

exchange

Question 4

Depreciation using Composite Rates

Answer 4

often used in practice by business entities with many similar assets in the one class of assets

a single average depreciation rate is applied to the cost of a functional group of assets such as office furniture or store equipment

Question 5

Accounting for Acquisition of Mineral Resources

Answer 5

mineral deposits, and oil and gas reserves

as it is used up, the entity must charge depreciation on the item

costs

• exploration and evaluation costs
• development costs, construction costs and inventories

Question 6

Accounting for Depletion of Mineral Resources

Answer 6

amortization
- calculated in a similar way to depreciation under the units‐of‐production method

depreciation
- constructed at the area of interest is calculated on a similar basis to amortisation by use of the units‐of‐production method

Question 7

Nature of Biological Assets and Agricultural Produce

Answer 7

living animals or plants and the harvested product of the entity’s biological assets

Question 8

Nature of Intangible Assets

Answer 8

an identifiable non‐monetary asset without physical substance

• internally generated
• patents and R&D costs
• copyrights
• trademarks and brand names
• franchises

can be revalued

Question 9

Problems with Accounting for Intangibles

Answer 9

the apparent lack of physical substance makes their identification and valuation more difficult

Question 10

Nature of Goodwill

Answer 10

future economic benefits arising from assets that are not capable of being individually identified and separately recognised

may be purchased in an exchange transaction or generated internally by an entity

Question 11

How to Account for Goodwill

Answer 11

non‐current asset