Week 7 Non-current Assets and Depreciation (2)

Question 1

What is capital expensiture?

Answer 1

Capital expenditure results in the acquisition of non-current assets, or an increase in their earning capacity.

Question 2

What is revenue expendeture?

Answer 2

Revenue expenditure is incurred for the purpose of trade or to maintain the existing earning capacity of the non-current assets.

Question 3

what is the Definition of property, plantand equipment?

Answer 3

IAS16 defines property, plant and equipment as “tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
Excludes assets held for sale
(b) are expected to be used during more than one period.”

Question 4

when should an item of property, plant and equipment should be recognised as an asset?

Answer 4

An item of property, plant and equipment should be recognised as an asset when:
(a) it is probable that future economic benefits will flow to the entity, and
(b) the cost of the item can be measured reliably.