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1、Unit 2 Financial Statement Elements-AssetsFinancial assetIAS 39 classifies financial assets under the following categories:Financial assets at fair value through profit or loss （以公允价值计量且其变动计入当期损益的金融资产）: these are held for trading or elected to be classified in this category. Derivatives are always c

2、lassified as held for trading unless they are effective hedges （有效套期）.Financial assets held for trading 交易性金融资产Derivatives 衍生工具On the balance sheet at fair value with gains and losses immediately recognized through profit and loss account. Held-to-maturity investments（持有至到期投资）: are financial assets

3、with fixed or determinable payments and fixed maturity（到期） that an entity has the positive intent and ability to hold to maturity. Loans and receivables: 贷款和应收款项Both held to maturity investments and loans and receivables are carried at amortized cost using the effective interest method （实际利率法下的摊余成本）

4、.Available-for-sale financial assets （可供出售的金融资产）: are any financial assets designated as such or that do not fall into any of the three categories above.Available-for-sale financial assets are carried at fair value with gains and losses recognized directly in equity but recycled to income on disposa

5、l （处置时要将公允价值累计变动额从所有者权益中转出，重新计入当期损益）. Illustration:(1) A company invests $5,000 in 10% debentures. The debentures are repayable at a premium after 3 years. The effective rate of interest is 12%. What amounts will be shown in Income Statement and Balance Sheet for year 1-3? (2) A company invested in

6、10,000 shares of a listed company in 11/20x7 at a cost of $ 4.2 per share. At 31/12/2007, the s hares have a market value of $ 4.9. The company are planning on selling these shares in 2008/4.Prepare extracts from Income Statement for 31/12/20x7 and Balance Sheet at that date.(3) A company invested i

7、n 10,000 shares of a listed company in 10/20x7 at a cost of 4.9 per share. At 31/12/2007, the shares have a market value of $ 4.2. The company are not planning on selling these shares in the short term. Prepare extracts from Income Statement for 31/12/20x7 and Balance Sheet at that date.Solution:(1)

8、 Assumed held to maturity-amortized costIncome Statement Investment income123 600612625Balance Sheet : 123Non-current asset : Investment: 5,100 5,212 0WorkingYearb/finvestment inc12%Cash received 10%c/f15,000600(500)5,10025,100612(500)5,21235,212625(500)(5,337)0(2) This is a fair value through profi

9、t or loss asset as it is held for sale in the short term. Change in value recognized in Income Statement. Income Statement :Investment income ( 10,000 x (4.9-4.2)7,000Balance Sheet :Current Assets:Investment (10,000 x 4.9)49,000(3) This is an available for sale investment. Income Statement:Investmen

10、t income:0Balance Sheet :Non-current asset: 10,000 x 4.242,000Equity:Reserve 10,000*(4.2-4.9)(7,000)InventoryThe cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.存货成本包括采购成本，加工成本以

11、及使存货达到目前场所和状态所发生的其他成本。Inventories are valued at lower of cost and NRV（Net Realizable Value）at the balance sheet date. 存货期末应当按照成本与可变现净值孰低计量。NRV is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale.

12、Any write-down to NRV should be recognized as an expense in the period in which the write-down occurs.Dr Asset impairment loss Cr Provision for the decline in value of inventories借：资产减值损失贷：存货跌价准备Perpetual Inventory System （永续盘存制）This involves keeping a current and continuous record of all stock tran

13、sactions on an inventory card or computer record for each type of inventory item held. Periodic inventory system (定期盘存制)The costs of additional stock purchases during the year are recorded in the Purchases Journal. When an item of stock is sold, only one entry is made and that is to record the sale

14、at selling price. Since no record of the goods sold is maintained during the period, it is necessary to count the units on hand to determine the cost of goods on hand (or unsold) at the period end. There are 4 methods of valuing stock:(a) Specific identification （个别计价法）- Specific costs are attributa

15、ble to identified items of inventory.(b) First-in-first-out (FIFO) （先进先出）- Assumes goods are sold in order of their receipt, i.e. first price in is the first price out. Ending stock is always valued at the latest price.(c) Last-in-first-out (LIFO) （后进先出）- Assumes goods are sold in the reverse order

16、of their receipt, i.e. last price in is the first price out. Ending stock is valued at the earliest price. (not allowed in IAS 2)(d) Weighted average (AVCO) （加权平均）- The weighted average cost per unit of stock is measured by dividing total cost of goods available for sale by total number of units ava

17、ilable for sale. Consistency: An entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature or use, different cost formulas may be justified.Illustration：During an inventory count on 31 March 2004 items that had c

18、ost $6 million were identified as being either damaged or slow moving. It is estimated that they will only realize $4 million in total, on which sales commission of 10% will be payable. Answer：The damaged and slow moving inventory should be written down to its estimated realizable value. This is $36

19、 million ($4 million less sales commission at 10%). Therefore the required write down is $24 million ($6 million $36 million).Dr Asset impairment loss $2.4Cr Provision for the decline in value of inventories $2.4Initial measurement 初始计量n At cost. n That is all necessary costs involved in bringing th

20、e asset into working condition. （达到固定资产预定可使用状态前所发生的一切合理必要的支出）Purchase price (less trade discount , not cash discount)Add: Import duties and non-refundable purchase taxesDirectly attributable costs: Site preparation cost Initial delivery and handling costs Installation costs Testing costs whether the

21、 asset is functioning properly; Professional fees Borrowing costs (Refer to IAS23) Present value of future clean-up costs if the entity has an obligation to incur such costs (Refer to IAS37 Provision, contingent assets and liabilities) 存在弃置费用的固定资产Excluding: Administration and general overheads Abnor

22、mal costs Costs incurred after the asset is physically ready for useExchanges of assets 资产交换IAS 16 specifies that exchange of items of PPE regardless of whether the assets are similar, are measured at fair value, unless the exchange transaction lacks commercial substance （商业实质） or the fair value of

23、neither of the assets exchanged can be measured reliably. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up.Subsequent expenditure 后续支出n Capital expenditure (资本化支出)-Subsequent expenditure on property, plant and equipment should only

24、 be capitalized if it improves performance e.g. faster production or higher quality output. n Revenue expenditure（费用化支出）-All other expenditure incurred to maintain the economic benefits originally expected should be expensed in Income Statement. Depreciation methods Straight line:Annual Depreciation

25、 = (Cost-residual value残值)/useful life Reducing balance Annual Depreciation = Net book value opening balance* depreciation rate%Sum of DigitsAnnual Depreciation =(cost-residual value)*depreciation rate% Machine hoursDepreciation per machine hour = (Cost-residual value)/total machine hoursDr: Depreci

26、ation expenseCr: Accumulated depreciationDisposal of PPE 固定资产的处置Profit or loss on disposal = Net proceeds Carrying Value of the assetRecognized as income or expense in I/SThe useful lives of assets or depreciation method should be reviewed at least at each financial year-end and change of useful lif

27、e or method is a change in accounting estimate not a change in accounting policy. Illustration：Louisville Farms paid $432,000 cash for a prize-winning stallion on January 1, 2002. The stallion is depreciated on a straight-line basis. Estimated useful life was nine years, with no residual value. Afte

28、r owning the animal for six years and five months, Louisville Farms sold the stallion on May 31, 2008, for cash of $85,000. Depreciation had last been recorded on December 31, 2007.Required： a) Compute the book value of the stallion at May 31, 2008, the date of sale. b) Compute the gain or loss on t

29、he sale of the stallion. Answer：a) Book value of the stallion at May 31, 2008Original cost$432,000Depreciation for 6 years (year 1 through year 6)($432,000 9) x 6 years$288,000Depreciation for 5 months in year 7 ($432,000 cost 9 years) x 5/12 $ 20,000Accumulated depreciation to May 31, 2008(308,000)

30、Book value of stallion at May 31, 2008$ 124,000b) Loss on sale of the stallion:Sales price $85,000 - $124,000 book value$ 39,000lossIntangible AssetsResearch and development costsResearch Expense as incurred Development Capitalized as intangible assets if all following criteria have been met:l techn

31、ical feasibility to complete.l intention to complete.l generate probable future economic benefits l availability of adequate technical, financial and other resources to complete.l ability to measure reliably the expenditure attributable to the intangible asset during its development.The cost of an i

32、nternally generated intangible asset is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria. The earlier expenditure which have been expensed should not be retrospectively recognized at a later date as part of the cost of an intangible ass

33、et.内部开发无形资产的成本仅包括在满足资本化条件的时点之后的支出。对于之前已经费用化计入当期损益的支出不在进行调整。Measurement after initial recognitionCost model (more commonly used in practice), the accounting treatment is that intangible assets should be carried at cost less amortization and any impairment losses.An entity must assess whether the usef

34、ul life of an intangible asset is finite or indefinite.With a finite useful life使用寿命有限 Amortization 摊销 Normally the straight-line method with a zero residual value should be used. 直线法摊销，残值为零With a indefinite useful life使用寿命不确定 Not amortized. Instead an impairment review must be carried out at least

35、annually.Investment PropertyInvestment property is defined by IAS 40 as land or a building held to earn rentals or for capital appreciation or both, rather than for use or for sale in the ordinary course of business. 投资性房地产持有的目的是为了赚取租金或资本增值。Accounting treatment Investment properties should initially

36、 be measured at cost. IAS 40 then gives a choice between following a cost model or a fair value model.Fair value model The asset is revalued to fair value at the end of each year. The change in fair value (gain or loss) will then be shown directly in the income statement. (公允价值变动损益：Gain/loss of the

37、change of fair value) No depreciation is charged on the asset.If it is impossible to measure fair value reliably, then the cost-based model should be adopted.Changing modelsonce the entity has chosen the fair value or cost model, it should apply it to all its investment property. It should not chang

38、e from one model to the other unless the change will result in a more appropriate presentation. IAS 40 states that it is highly unlikely that a change from the fair value model to the cost model will result in a more appropriate presentation. Transfers Transfer to or from investment property should

39、only be made when there is a change in use. l From investment property to owner occupied:Cost = Fair value at date of changeDifference between fair value and carrying amount should be recognized in the income statement. 企业将采用公允价值模式计量的投资性房地产转换为自用房地产时，应当以其转换日的公允价值作为自用房地产的账面价值，公允价值与原账面价值的差额计入当期损益。 l Fr

40、om owner occupied to investment property:Revalue from cost to fair value If the fair value is higher than carrying amount, the difference should be recognized in the reserve. 企业将自用房地产转换为采用公允价值模式计量的投资性房地产时，应当以其转换日的公允价值作为投资性房地产的入账价值，结转原已计提的累计折旧或减值准备，转换日公允价值小于账面价值的，差额计入当期损益，转换日公允价值大于账面价值的，差额计入资本公积。Exam

41、ple:A building has been using as a head office. On 30 June 2009 it was rent out. It had an original cost on 1 January 2000 of $250,000 with useful life 50 years. At 30 June 2009 its fair value was $350,000. Dr Investment property $350,000Dr Accumulated Depreciation (250,000/50*9.5) $47,500Cr PPE $ 2

42、50,000Cr Capital reserve $147,500Impairment of assetsImpairment loss: 减值损失Recoverable amount： 可收回金额Carrying value：账面价值Fair value minus the disposal expenses ( FV less cost to sell) : 公允价值减去处置费用Current value of the expected future cash flow of the assets ( Value in use ): 预计未来现金流量的现值Individual asset：

43、 个别资产Group asset ( cash generating unit): 资产组Impairment test (review): 减值测试Reversal of impairment: 减值的转回Impairment signs (indicators): 减值迹象The objective of IAS 36 Impairment of assets is to set rules to ensure that the assets of an enterprise are carried at no more than their recoverable amount l An

44、 asset has been impaired if its carrying value in the Statement of Financial Position exceeds its recoverable amount.资产减值，是指资产的可回收金额低于其账面价值。l The recoverable amount is the greater of net selling price (selling price less direct costs of sale )and value in use (Present Value of future cash flows gene

45、rated by the asset discounted at a pre-tax market determined rate which allows for the risks specific asset)Carrying Value Recoverable AmountGreater of Fair value less costs to sell Value in Use (PV of future cash flow)资产的可回收金额，应当根据资产的公允价值减去处置费用后的净额与资产预计未来现金流量的现值之间较高者确定。 An entity should assess at t

46、he end of each reporting period whether there are any indications of impairment （减值迹象）to any assets. Recognition and measurement of an impairment lossImpairment losses are recognized in the income statement immediately and future depreciation charges are adjusted to depreciate the recoverable amount

47、 of the asset over its remaining useful economic life.Reversal of previous impairment losses is not permitted. 资产减值损失计入当期损益，在以后期间对该固定资产计提折旧时，应当以固定资产的账面价值为基础计提每期的折旧额。资产减值准则规定，资产减值损失一经确认，在以后期间不得转回。Cash-generating units (CGUs) a. If it is not possible to calculate the recoverable amount for an individual asset, the recoverable amount of the assets cash-generating unit should be measured instead. b. Cash generating unit is the smallest identifiable group of assets for which independent cash flows can be identified and measured. c. Impairment should