Part 1 Flashcards
Define Assets held for sale
class of assets whose carrying amounts would be recovered through a sale transaction rather than continuing use. Does not include abandoned or wound down assets
Define Disposal group
group of assets/liabilities that the entity intends to dispose of in a single transaction
Define: Discontinued operation
a ‘component’ (operations, CGU, sub) of an entity that has either been disposed of or is classified as held for sale
- represents a major line of business or area of business
- is part of a single co-ordinated plan to dispose of a major line of business or area of business
- is a subsidiary acquired exclusively with a view to resale
Conditions to be met before assets can be held for sale (6pt)
- item is available for sale in its immediate condition.
- -there is a plan to dispose of the asset
- -the asset would be sold within the next one year
- -the plan to sell the asset would not likey change
- -mgt is actively marketing the asset at a reasonable price
- -an active program is in place to locate a buyer
(Assets held for sale) Initial measurement: Assets are held:
at the lower of carrying amount and net realizable amount (as at date to be held for sale).
If carrying amount is lower, there is a write-down taken to the profit or loss
(Assets held for sale) Subsequent measurement: Assets are held
..if they meet the conditions to keep being held for sale. No depreciation. Revalued NRV with gain to profit or loss
(Assets held for sale): Principles (4pts)
- assets/liabilities H4S are held as current assets/liability
- for discontinued operations, a single amount should be disclosed in the p/l, OCI for a) profit/loss after tax & b)post-tax gain/loss recognized on the measurement of NRV ???
- if sale does not happen, assets can still be H4S if a) delay was beyond the entity’s control b) conditions are still here
- if conditions are no longer in place, asset must stop being H4S at the lower of carrying amount before it became held for sale adjusted for normal dep/revaluation etc and recoverable amount as at date it doesn’t meet condition
(Assets held for sale): Disclosures
- description of the non-current asset or disposal group H4S
- description of the facts and circumstances for the sale/expected sale.
- any impairment losses
Define biological asset, agricultural product, harvest, and biological transformation
B.A is living plant or animal…
A.P is the harvested product of an entity’s B.A
H is the detachment of a, AP from a BA or the end of a BA’s life
B.T is the process of growth, degeneration, production and procreation done to increase the value.quantity of the BA.
Biological assets: Recognition criteria (3pts)
- it is probable that future economic benefits will flow to the entity from the asset
- COST OR FAIR VALUE of the asset can be reliably measured
- the entity controls the asset
Biological assets: Initial and subsequent measurement
I: B.A and AP (at harvest) is measured at the point of harvest at fair value less estimated cost to sell. gain/loss go to p/l
S: B.A is revalued to fair value less cost to sell, AP after harvest likely becomes inventory item. gain/loss to p/l
Biological Assets: Principles (5)
- BA are non-current assets presented separately
- In the absence of market prices, subsequent can be cost less accumulated dep but it is changed as soon as fair value can be reliably measured
- Does not relate to bearer plants or land as they are PPE
- Cost to sell includes broker fees and dealers commissions but excludes transport or moving costs
- related Govt grant, unconditional is recognized when it becomes available/receivable…conditional recognized when the conditions are met. However, govt grant related to BA measured using cost less accu dep is treated under grants ???????
Define govt grants… govt assistance
G are transfers of resources in return for past/future compliance with certain conditions
A are gvot actions designed to provide economic benefits to a specific entity
Govt grant, recognition criteria
There is REASONABLE ASSURANCE that
- the entity would comply with any conditions AND
- the grant would be received.
Govt grant: Principles (3pts)
- Income grants should be matched with the expenses that are intended for in the p/l.
- Capital based grants should be recognized over the useful life of the related asset. a) income approach= deduct from cost b) deferred income approach= release the match dep over lifetime of asset
- if a grant becomes repayable. a) deferred income (matching cost/exp) charge p/l and balance off deferred income b) capital-based (cost reduction) increase asset with the cost of the repayment
