PPE: Cost Model Flashcards
1
Q
Cost model
A
First measure the assets at cost then reflect depreciation & impairment
2
Q
Carrying Value
A
Cost
- Acc dep
- Acc impairment losses
3
Q
Recognition
A
Meets definition & recognition creteria
4
Q
PPE definition
A
- Must be tangible
- Must be planning to use it
-Must use item for more than one period
5
Q
PPE recognition criteria
A
- An inflow of future economic benefits to the entity is probable
- Cost can be reliably measured
6
Q
Initial Cost
A
- Purchase price
- Directly attributable cost
- Initial estimate of some future cost
6
Q
Initial Cost
A
- Purchase price
- Directly attributable cost
- Initial estimate of some future cost
7
Q
Purchase price
A
Includes: import duties, non-refundable taxes
reduced by:
-Trade discount
- rebates received
- Cash discounts
-Settlement discount
8
Q
Directly attributable cost
A
-Prep site
- Delivery & handing over cost
-Installation
- Professional fees
- Employee benefits
- Cost of testing
9
Q
subsequent cost
A
- Maintenance
-Replacement parts - Major inspections
