Topic 2 - Accounting for Assets Flashcards
Define assets.
What are the recognition criteria for assets?
What is the 2-step process when accounting for assets?
What is the definition of a current asset?
Differentiate between historical cost, present value, and market value.
What are the advantages and disadvantages of the multiple valuation techniques available?
How are non-current tangible assets initially valued?
And subsequently?
What does the cost of an item of Property Plant and Equipment (PPE) include?
Calculate the present value of a $100 payment made in 5 years’ time with a discount rate of 8%.
100 / (1 + 0.08)5 = $68.06
What is the formula for the discounting of a one-off payment?
What is the formula for the discounting of an annuity?
List 6 directly attributable costs of PPE.
List 4 costs that are not directly attributable to PPE.
Items may be purchased by giving cash, or another item or the entity’s own shares.
But how do we know the value of the item we gave away as payment?
Borrowing expenditure directly attributable to the acquisition, construction or production of a qualifying asset is included as part of its cost.
These may include:
1.
2.
3.
4.
What is the difference between repairs and additions to property, plant, and equipment?
