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CH4- Tangible Non-Current Assets

IAS 16 PPE

Scope ( exclude biological assets related to agriculture activity IAS41 apart from

bearer biological assets Exc. Mineral rights and reserves )

Recognition Criteria : Future Economic benefits & Reliable Measurement
Initial Measurement The initial cost of a tangible fixed asset is all the
expenditure in bringing the asset to its present location and condition. ( include
testing, installation, legal No Admin/overheads )
Subsequent Expenditures & Overhauls: Replacements recognized &added
to the CV of Asset-take care of Dep
Subsequent Measurement: 2 options ( Cost Model OR Revaluation Model but
only if reliable measurement is available)
Revaluations: depends on Mkt. V. The whole class of assets should be revalued
Dr: Asset Cr: Revaluation Surplus.
Examples 1.8&9&10 P 70
Depreciation: Land & Building dealt with separately
Example 1.11.2&1.12 P71
Retirements & Disposals: removed from the FS if no future economic benefits
inflows from disposal
DEPRECIATION ACCOUNTING: taking the remaining carrying value and
dividing by the remaining life.
Useful Life: one of 2 ( period of the asset OR No. of production units )
When to start depreciation? Once the asset is available for use even if it is
idle during the period
Depreciation Methods: Consistency is important to ensure
comparability
Ex. P78-79
IAS 20 Government
Grants

Recognition: The entity will actually receive it the entity will comply with the
conditions of the grant
Gov Grant should not be recorded as income directly (but to be recorded as
deferred revenue first) then should be allocated on a systematic basis.
Non Monetary Grant: recorded using the fair value dr Asset cr Other income
Presentation: Grants related to assets / income ( separate OR Offsetting )
IAS 40 Investment
Property
Def: a property owned as an investment rather than for use in the business.(not
occupied by entity)
Measurement: initially at depreciated cost-impairment losses. /Subsequent: either
Cost or Fair Value.
Change in FV: recorded as gain or loss in the statement of profit or Loss.

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Depreciation: NO / STOP Depreciation

Transfers to investment
property.

.Ex 4.7 P87

IAS 23 Borrowing Costs

Under existing rules, finance related to the period of building a fixed asset is
capitalized
Remember to deduct any investment income from the borrowed funds
Start of capitalization: Expenditures incurred-Borrowing costs incurred-Activities to
bring the asset to its intended use are in progress.

CH5- Impairment of Assets

IAS 36 Impairment Of
Assets
The company should assess annually whether there are any indications of
impairment of any assets.
This occurs when the recoverable value falls below the carrying value.
Recoverable value: This is the higher of value in use (VIU) and net realizable
value (NRV).
Cash Generating Unit
This is a unit that could independently generate an income.
Goodwill and Impairment
of Assets

Losses are allocated in a CGU as follows:

(1) Specific obvious impairment
(2) Goodwill
(3) Remainder Non Current Assets (Pro-rated) ..
Ex3.3 P 101
Accounting for
Impairment Loss

Dr: Impairment Loss (Income statement) Cr. Asset (SFP) ..

Ex1&2 P102
Reversal of impairment

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Loss
Reversal of impairment loss recorded as income in profit or Loss.
Take Care: Goodwill can never be pushed up in value so one can never record a
revaluation or reversal for goodwill.
................
.... Ex P103