Vol. 3 Non-Current Assets: PPE & Investment Flashcards
Define (IFRS)
Property, plant, and equipment (PPE)
Balance Sheet
tangible assets that are used in company operations and expected to be used (provide economic benefits) over more than one fiscal period
Balance Sheet
Compliance (IFRS)
Property, plant and equipment are tangible items that:
Balance Sheet
- are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
- are expected to be used during more than one period
Balance Sheet
recognition principle
items of property, plant, and equipment
IAS 16.7
- it is probable that future economic benefits associated with the item will flow to the entity; and
- the cost of the item can be measured reliably
IAS 16.7
measurement model (IFRS)
Property, plant, equipment
Balance Sheet
may be reported using either a cost model or a revaluation model
Balance Sheet
permits companies to use a cost model for PPE
(A) IFRS
(B) US GAAP
(C) Both IFRS & US GAAP
Balance Sheet
(C) Both IFRS & US GAAP
Balance Sheet
permits companies to use a cost model for PPE
(A) IFRS
(B) US GAAP
(C) Both IFRS & US GAAP
Balance Sheet
(A) IFRS only
Balance Sheet
Calculation
PPE
Balance Sheet
carried at amortized cost
(historical cost - accumulated depreciation - any impairment losses)
Balance Sheet
Concept
systematic allocation of cost over an asset’s useful life.
Balance Sheet
Depreciation
Balance Sheet
Concept
Reflects an unanticipated decline in value.
Occurs when the asset’s recoverable amount is less than its carrying amount
Balance Sheet
impairment loss
Balance Sheet
Measurement subsequent to initial recognition
permits two accounting models (PPE)
IAS 16
Cost model 16.30;
Revaluation model 16.31
IAS 16
Define
Cost model (PPE)
IAS 16.30
The asset is carried at cost - (accumulated depreciation + impairment)
IAS 16.30
Define
Revaluation model (PPE)
IAS 16.31
The asset is carried at a revalued amount, being its fair value at the date of revaluation - (subsequent depreciation and impairment)
IAS 16.31
Initial measurement
PPE
IAS 16.15
an item of property, plant and equipment should initially be recorded at cost.
Cost includes necessary to bring the asset to working condition for its intended use.
IAS 16.15
Scope
accounting for property, plant and equipment
IAS 16
- assets classified as held for sale
- biological assets related to agricultural acitivity
- exploration and evaluation assets
- mineral rights and mineral reserves such as oil, natural gas and similar non-regenerative resources
IAS 16
circumstances for
impairment
IAS 36, ASC 360
occurs when the asset’s recoverable amount is less than its carrying amount
IAS 36, ASC 360
recognition principle
when an asset is considered impaired
Balance Sheet
the company recognizes the impairment loss in the income statement in the period the impairment is identified
Balance Sheet
compliance
Reversals of impairment losses on assets are permitted under:
(A) IFRS
(B) US GAAP
(C) neither
(D) Both IFRS and US GAAP
Balance Sheet
(A) IFRS only
Balance Sheet
define (IFRS)
Recoverable amount
impairment
The higher of an asset’s fair value - (cost to sell + asset’s value in use)
Balance Sheet
define (IFRS)
fair value - cost to sell
impairment
The amount obtainable in a sale of the asset (1) in an arms-length transaction (2) between knowledgeable willing parties, (3) less the costs of the sale
impairment
define (IFRS)
value in use
impairment
The present value of the future cash flows expected to be derived from the asset
impairment
Concept
(1) Property not used in the production of goods or services or for administrative purposes, but instead,
(2) it is used to earn rental income or capital appreciation, or both
Balance Sheet
Investment property
Balance Sheet
define (IFRS)
Investment property
Balance Sheet
(1) Property not used in the production of goods or services or for administrative purposes, but instead,
(2) it is used to earn rental income or capital appreciation, or both
Balance Sheet
define (US GAAP)
Investment property
Balance Sheet
(US GAAP does not include a specific definition for investment property)
Balance Sheet
reporting
Investment property
Balance Sheet
- reporting for investment property is identifical to PPE
- Cost - (accumulated depreciation + any impairment)
Balance Sheet
cost model
Investment property
Balance Sheet
carried at cost - (any accumulated depreciation + any accumulated impairment losses)
Balance Sheet
fair value model
Investment property
Balance Sheet
The property is carried at its fair value. Any gain or loss arising from a change in the fair value of the investment property is recognized in profit and loss, i.e., on the income statement, in the period in which it arises
Balance Sheet
classification
property, plant and equipment
Balance Sheet
Non-Current Assets
Balance Sheet
classification
Investment property
Balance Sheet
Non-Current Assets
Balance Sheet
