Tangible noncurrent Assets.ppt

1、Tangible non-current Assets,Syllabus C2,2,Definition,Noncurrent assets assets intended for use on a continuing basis in the business, including the tangible, intangible and financial assets of a long-term nature Standards related to tangible noncurrent assets Property, plant and equipment (IAS16) Go

2、vernment grants (IAS20) Borrowing costs (IAS23) Leased assets (IAS17) Investment property (IAS40),F7,2,4a Dec09,IAS16 Property, plant and equipment,4,Definition,Property, plant and equipment tangible assets held by the enterprise for more than one accounting period for use in production or supply of

3、 goods or services, for rental to others, or for administrative purpose. examples: land, buildings, machinery, ships, aircraft, motor vehicles, furniture, and fittings.,F7,4,5,Initial recognition,Recognised as an asset if: It is probable that the future economic benefits associated with the item wil

4、l flow to the enterprise; and the cost of the item can be measured reliably. Measured at its cost cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction.,F7,5,6,Continued,Measured at it

5、s cost including capital costs purchase price and any other costs directly attributable to bringing the asset into a working condition for its intended use, such as the cost of site preparation, delivery cost and installation cost, etc. materials, labor, and other inputs. (self-constructed assets) e

6、xcluding revenue costs (e.g. general overhead costs, abnormal costs),F7,6,Test1, p204,7,Continued,Note Cost of PPE may include the estimated costs of removing and dismantling an asset and restoring its site (IAS 37) if it qualify as a liability, Cost of PPE may include directly attributable borrowin

7、g costs (IAS 23) that would have been avoided had there been no expenditure on the asset. Cost of PPE may be reduced by any applicable government grants related to assets (IAS 20),F7,7,3a, c(i) Dec01,8,Separate components with different useful lives in a complex asset should be capitalised as separa

8、te assets and each depreciated over their useful lives. E.g. Plane: seats and fabrics Vehicle: engine Building: roof,3d Dec03,9,Subsequent expenditure,Capitalised if it improves the asset beyond its originally assessed standard of performance. (more future economic benefits flow in.) an increase in

9、its life or production capacity an improvement of the quality of output a decrease in the operating cost,F7,9,10,Continued,separately as a non-current asset and depreciated over their useful lives when major inspection or overhaul costs satisfy the IAS 16 rules for separate components. Written off t

10、he other expenditures,F7,10,Example4, p206,Example1, p205,11,Depreciation,Depreciation the systematic allocation of the depreciable amount of an asset over its useful life. Depreciable amount the cost of an asset, or other amount substituted for cost (current market value after revaluation) in the f

11、inancial statements, less its residual value.,F7,11,12,Continued,Residual value estimated at the date of purchase or any subsequent revaluation. any expected costs of disposal should be offset against the gross residual value. Useful life measured in terms of years or in terms of units of service pr

12、ovided by the asset.,F7,12,13,Continued,Commencement of depreciation From the date the asset is available for use. Depreciated even if the asset is idle. Methods straight line reducing balance sum of the digits unit of production,F7,13,2notei, Jun02,14,Continued,Revision of life if excess, recognise

13、d as an expense,F7,43,44,Continued,Grants related to assets reducing the deferred income balance ( if gross method is used). increasing the carrying amount of the asset and cumulative additional depreciation should be recognised immediately as an expense ( if net method is used).,45,Disclosure of go

14、vernment assistance and grants,Accounting policy adopted, including the methods of presentation adopted The nature and extent of government grants recognised and an indication of other forms of substantial government assistance directly beneficial to the enterprise even if they cannot be placed a re

15、asonable value.,F7,45,46,Continued,Free technical or marketing advice Provision of guarantees Government procurement policy that cannot be distinguished from the normal trading transactions of the entity Loans at nil or low interest rates Unfulfilled conditions and other contingencies attaching to g

16、overnment assistance recognised,F7,46,47,Exercises,3c, Jun03 5a, Jun07,F7,47,IAS23 Borrowing costs,49,Objective,It regulates the extent to which enterprise should be allowed to capitalise interest and other costs of borrowing into the acquisition costs of assets.,F7,49,50,Continued,Arguments in favo

17、ur of capitalisation Borrowing costs are a genuine cost of the asset. better consistency with cost of assets bought externally: time taken, added in vendors voice Accruals concept Arguments against capitalisation Interest is a period cost. Not relating general borrowings to specific assets Carrying

18、value varies with method of financing Consistency if borrowing costs are always written off as incurred. (comparable),F7,50,51,Accounting methods,All borrowing costs should be written off as incurred Borrowing costs can be capitalised as part of the cost of an asset if the asset necessarily takes a

19、substantial time to get ready for its intended use or sale. Consistency must be applied to all qualifying borrowing costs.,F7,51,52,Rate of interest used,The specific borrowing costs if specific borrowings (less any investment income on the temporary investment of the borrowings) The weighted averag

20、e cost of general borrowings if no specific borrowings,F7,52,53,Capitalisation,Commencement when expenditure is being incurred, and borrowing costs are being incurred, and activities in preparing the asset are in progress. Cessation when substantially all the activities in preparing the asset are co

21、mplete. Suspension during periods in which active development is interrupted.(因管理决策或不可预见等原因形成的非正常中断或连续中断时间较长),F7,53,Test5, p218 5, Jun10,54,Disclosure requirements,Accounting policy adopted for borrowing costs Amount of borrowing costs capitalised during the period Capitalisation rate used,F7,54,IAS

22、40 Investment property,56,Definition,Land or building held to earn rentals or for capital appreciation or both, rather than for use in the enterprise (owner-occupied property) or for sale in the ordinary course of business. more in the nature of investments,F7,56,57,Initial recognition,Recognised as

23、 an asset if future benefit will flow to the enterprise the cost of property can be measured reliably. Measured at its cost, including transaction costs.,F7,57,58,Subsequent remeasurement,Two policies Cost model Fair value model The chosen policy must be applied to all the investment properties held.,F7,58,59,Continued,Cost model valued at cost less accumulated depreciation and accumulated impairment losses. just like the cost model of IAS16,F7,59,60,Continued,Fair value model revalued to fair value in the SFP each year, any gain or loss being included in