Tangible and Intangible Assets, Identifying

Question 1

Deferred Income Balances

Answer 1

Remember, first year after stays as current liability
Dr bank, Cr Deferred Income CL
Remaining years is the non-current liability
Dr bank Cr Deferred Income NCL

Question 2

Retranslation of exchange rates

Answer 2

If non-monetary item e.g. Land, use the spot rate and don’t change

Question 3

Capitalised Borrowing costs accounting entry

Answer 3

If meets the criteria, Dr Asset PPE, Cr Bank/AR

Question 4

Identifying vs Capitalising

Answer 4

Identifiable assets:
Must arise from legal or contractual rights
Must have a measurable cost
Capitalisable:
Must be separable, and probable future economic benefits

Question 5

Research Expenditure

Answer 5

Always expensed

Question 6

Holding at FV or Carrying value

Answer 6

If the asset has a UEL, it’s held at carrying value

Question 7

Depreciation costs capitalisation

Answer 7

If directly used to develop an intangible asset, yes they can be capitalised as part of the development costs

Question 8

Impairment amount

Answer 8

If CA > than RA, RA is greater of FV less cost to sell, or Value-in-use, then impair

Question 9

Assets held for sale - Criteria

Answer 9

Must be probable sale, and available to sell immediately

Question 10

Assets held for sale - Revaluation model

Answer 10

If under the revaluation model, revalue using the OCI. Any costs to sell hit the P&L

Question 11

Assets held for sale - FV

Answer 11

Less of Carrying amount, or FV less cost to sell at date of decision