PPE Flashcards
Revaluation journal entry
Dr Asset revaluation ±
Dr Accumulated depreciation
Cr Revaluation surplus (OCI)
Excess depreciation transfer journal entry
Dr Revaluation surplus
Cr Retained earnings
Annually
When should an impairment test be carried out?
If there are indicators that an asset is impaired
At period end if required by the standards
When has an impairment occurred?
If the carrying amount of a non-current asset > recoverable amount
The recoverable amount of an asset is the higher of…
Value in Use (PV of future cash flows expected to be generated from using the asset)
Fair value less costs of disposal
Impairment losses journal entry
Dr revaluation surplus (OCI)
Dr Profit or loss
Cr Carrying amount (carrying amount - recoverable amount)
Non-current asset held for sale
Shown separately under current assets in SFP as ‘non-current assets held for sale’
Valued at lower of carrying amount and FVLCOD
No longer depreciated
P/L balancing figure reflects the impairment loss upon the classification of the asset as held for sale
Non-current asset held for sale criteria
SALE
Seeking a buyer
Available
Likely
Expected within 12 months
Non-current asset held for sale journal entry
Dr PPE (accumulated depreciation)
Dr NCA held for sale
Dr P/L (balancing figure)
Cr PPE - cost
Disposal of revalued PPE journal entries on date of classification
Revaluation
Dr NCA
Cr Revaluation surplus
Reclassification
Dr NCA held for sale (FVLCOD)
Dr P/L (costs of disposal)
Cr NCA (FV)
Disposal of revalued PPE journal entries on date of sale
Dr Cash (sale price)
Dr P/L
Cr NCA held for sale (FVLCOD)
Dr Revaluation surplus
Cr Retained earnings
Government grant recognition
If it can reasonably have a value placed upon it
Reasonable assurance that the entity will comply with the conditions of the grant / receive the grant
Government grant treatement
If conditional, split and allocate grant to different costs of meeting the conditions
If costs already incurred or no costs expected, recognise grant immediately in P/L
When received for depreciating assets, grant released to P/L over the )useful life of the asset in the same proportion to the depreciation charge
Government grant presentation
Grants related to assets - deferred income / deduction in carrying amount (net off)
Grants related to income - credit in P/L / deduction from related expense (net off)
Borrowing costs to be capitalised
Interest expense - interest income (used when one loan is directly attributable)
Qualifying asset cost x weighted average cost of loans x period
