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Flashcards

Section B - F7

D A English 82 cards

Cards in this deck (82)

  1. 1Tangible Non Current AssetsCovers all aspects of accounting for PP E
  2. 2Tangible Non Current Assets Does NOT apply to:Biological assets related to agricultrual activity.
    Mineral rights and mineral reserves
  3. 3FEATURES of Tangible Non Current AssetsExpected to be used for more than 1 period
    USED for use for production/admin purposes
  4. 4THESE FEATURES NOT PART OF PP+E UNLESS DIRECTLY BOUGHT INTO ASSETS ACQUSIITION (EXPENSES)ADMIN+ OVERHEAD COSTS
    START UP+ PRODUCITON COST
    INITIAL OPERATING LOSSES
  5. 5Component of costs.Purchase price
    Import duties
    Directly attributable cost
  6. 6If not relatable then the component should just be added/deducted to/from the carrying amount.If not relatable then the component should just be added to carrying amount.
  7. 7Fair Value :Price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
    FAIR VALUE = MARKET VALUE AT TIMES
  8. 8Impairment loss:amount by which the carrying amount exceeds recoverable amount.
  9. 9Small items : ? Large Items: ?Small items : Inventory/Expense
    Large Items: PP E
  10. 10Recognition CriteriaFuture economic benefits
    Cost measured reliablity
  11. 11Cost Modelcost - depreciation and any accumulated impairment loss
  12. 12Revaluation model.Carry the asset at a revalued amount being its FV at the date of the revaluation less any depreciation/impairment loss.
  13. 13REVLUATION MODEL IS ONLY AVAIBLAE IF FV CAN BE MEASURED. T/FTrue
  14. 14Increase in Value for Revluation DR and CRDebit : Value in SOFP
    Credit (Profit or lLoss)
    Credit : Revlauatlion surplus
  15. 15Borrowing costsInterest and other cost incurred by an entity in connection with borrowing funds.
  16. 16Qualifying asset.An asset that takes a long period to get ready for its intended use or sale
  17. 17Weighted Average =X% Loan Repayable*(part/total)
    Add both of the loans together to get the % which will be used for borrinw g cost
    (If it is just one loan indicated focus on months,)
  18. 18Borrowing Costs= Amount withdrew*Weighted average * (Amount of months left in year/12)
  19. 19Investment income=SAmount invested*(x%)*(Time it took to use the loan/12)
  20. 20Investment propertygenerate cash flow largely independent of other assets which the entity holds. The treatment of investment property is covered by the IAS 40
  21. 21Example s• Land held for long term capital appreication
    • Leased out under an operating leases
    • Held by ap arent leased to subsidary
    • Constricuted or developed for future use
  22. 22Recognition of IP1. Future eocnomic benefits
    2. Measured reliabilty
  23. 23Investment property factsCan be held at cost or FV
    IF FV must be applied to all entity ip
    IP initsally measured at cost include transacation cost
    Gain/Loss should be in P/L
  24. 24Overhaul.This is based on upgrading something so it can make more revenue.
    Therefore you capitalised this and depreciation over the period to next overheal
  25. 25Intangible Non Current Assets• Non-monetary assets without physical substance
  26. 26RULES OF INTANGIBLE ASSETS• Intangible asset cannot be recognised unless cost is reliably measured
    • Must be controlled by the entity as a result of events in the past
    • Must be identifaible
    • Expected FEB to flow inside.
    • Must have control
  27. 27R&D AND INTANGIBLE ASSETS• Development costs can be recognised and capitalised.
    • Research costs get WRITTEN OFF.
  28. 28Cost MeasurementInitially measured at COST but subsequently they can be carried at COST or at a revalued amount.
  29. 29Cost ModelCarry at cost
  30. 30Revaluation Model :Carry at revaluated amount : Fair Value at date of revaluation less any accumulated amortisation and impairment losses
  31. 31Active market in that type of intangible assetEntire class of intangible asssts must be revalued
  32. 32No active marketCost – Amortisatio nand impairment lsoses
  33. 33Intangible asset revalued UP : Credited under XCredited under Revaluation surplus
  34. 34Reversal of a revaluation decrease:increase can be recognised as income
  35. 35Downward revaluation should be chargedas an Expense against income
  36. 36Revaluation model and intangible asset goes up, surplus can be transferredto xretained earnings
  37. 37Amortisation defintionDecrease in value of an asset
  38. 38Amortisation should start when the asset isavailable for use
  39. 39Should stop whenheld for sale
  40. 40Residual value of an intangible asset with finite life is X unless third party want purchase.Residual value iof an intnabile asset with finite life is ZERO unless third party want purchase.
  41. 41Intangible assets with non indefinite useful life should/ should NOT Be amortised.Intangible assets with non indefinite useful life should NOT Be amortised.
  42. 42GOODWILLDefined as FEB arising from assets that are not capable of being individually identify and separately recognised
  43. 43Examples of goodwillGood Relationships between business and customer
    Reputation
    Responding promptly and helpfully
    Personality of staff.
  44. 44Why goodwill Is omitted from accountsIts Inherent
    And can change easily
  45. 45When a business is sold goodwill has objective/subjective valuationWhen a business is sold goodwill has objective valuation
  46. 46Valuation method 1 (IMPORTANT)Seller nad buyer agree on a price for business without specifically quantifying the goodwill
    Difference between price agreed and the value of the identifiable net assets.
  47. 47Valuation method 2Fixing the purchasing price and negotiating.
  48. 48Goodwill is recognised as an asset/cost and initially measured as a cost/assetGW is recognised as an asset and initially measured as a cost
  49. 49Goodwill is amortised True/FalseFALSE
  50. 50Goodwill arising on consolidation (IFRS 3) Calcuation:Cost – accumulated impairment losses
  51. 51Negative goodwill can occur. True or FalseTRUE
  52. 52If a company offers to buy your brand, you use the new purchase figure, then divide it by the years, then by the months. True or FalseIf a company offers to buy your brand, you use the new purchase figure, then divide it by the years, then by the months.
  53. 53When the directors are confident,capitalise and amortise the expenses
  54. 54Impairment of assets (IAS36)A Fall in the value of an asset, so that its recoverable amount is less than carrying amount in SOFP.
  55. 55Carrying amount: Net value at which the asset is included in the statement of financial position
  56. 56Recoverable amount:HIGHER OF
    FAIR VALUE – COST OF DISPOSAL
    OR
    VALUE IN USE (PV – any liabiltiies)
  57. 57Carrying amountshould not be reduced below the HIGHEST OF
    Recoverable Amount
    OR
    VALUE IN USE (PV – any liabiltiies)
    (DISCOUNT RATE APPLIED)
    OR
    ZERO
  58. 58ACTIVE MARKETFV = MARKET PRICE
  59. 59NO ACTIVE MARKET:: FV = ESTIMATE FAIR VALUE
  60. 60What do you do if it is impssoble to find fine the price/valueCASH GENERATING UNIT SHOULD BE MEASURED INSTEAD.
  61. 61Cash generating unitsmallest identifiable group of assets for which independent cash flows can be identified and measured
  62. 62Goodwill must/ must not be allocated to each of the acquireiers cash generating unitsGoodwill must be allocated to each of the acquireiers cash generating units
  63. 63CGU Carrying amount is compared with the Recoverable amount True or FalseTrue
  64. 64Carrying amount – Impairment loss =Carrying amount post impairment
  65. 65What gets written off first Goodwill or tangible non current assets.Good will gets written offfirst, then tangible non current assets.
  66. 66Impairment loss decreases a revlauted asset True or falseTrue
  67. 67Pro RataThings must be done equally.
  68. 68Goodwill should be tested for impairment on an annual/monthly basisGoodwill should be tested for impairment on an annual basis
  69. 69External signs of impairmentSignficant fall in market value
    Interest in market interest rates used to calculate value of assets
  70. 70Internal signs• Evidence of obsolesce of one or more assets
    • Decline in the economic performance of one or more assets
  71. 71Impairment loss is the BALANCING figure between recoverable and the current value True or FalseTrue
  72. 72Xyear annuity figure:Just use the PV Value given at the end.
  73. 73IF NRV of asset is greater than CV impairment has occured. True or falseFALSE
    IF NRV of asset is greater than CV no Impair has been taken
  74. 74Revaluation surplus is the BALANCING Figure betweenCarrying amount after Depreciation
    AND Fair VALUE
  75. 75Lawyer win/losses.55% is probable so add it up with other costs
  76. 76Straight line vs Reduced balanceAdd
  77. 77Impairment of assets calculation. Step 1Cash generating Units Assets - Impairment loss = Carrying value after
    *You suusally need to find the impairment loss
  78. 78Step 2Remove Goodwill completely
  79. 79Step 3Deduct from anything that is relevant in the question e.g Machines c/fwd £40000 being scrapped.
  80. 80Step 4Use thE CARRYING VALUE of What is left of the assets as a basis for calculation NOT THe original amount because it has been depreicated. Does not make sense to use the original amount!
    E.g
    700/860
    160/860 (Machines)
  81. 81Early discounts can be ignored True or FalseTrue
  82. 82—

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Flashcards on Section B - F7, created by D A on 06/01/2019.
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D A
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