Part A: Measurement of Tangible and Intangible assets under Accounting Standards Assets are classified according to their “tangibility”, that are tangible assets or intangible assets. Under tangible assets, are classified as either current or non-current assets. AASB 1010 “Recoverable Amount of Non- Current Assets”, which applied to non-current assets measured on the cost basis that is requires the carrying mount of non-current assets to be written down to their recoverable amounts when their carrying amount is greater than their recoverable amount. (Parker C, 2001, p 497) While the carrying amount of a non-current assets is written down to its recoverable amount, the decrement in that carrying amount must be recognised as an expense in net P/L for the reporting period and must disclose the aggregate carrying amount of each of the assets.
ASB 1021 “Depreciation” requires non-current assets that have limited useful lives to be depreciated over those useful lives. AASB 1041 “Revaluation of Non-Current Assets” which applies to non-current assets measured on either the cost basis or the fair value basis. AASB 1041. 6. 2 requires that an increment shall be credited directly to an asset revaluation reserve account and decrement must be recognised immediately as an expense in net P/L. On the other hand, intangible assets those are readily identifiable and unidentifiable.
The Term Paper on Total Asset Bmw Audi Debt
-vs-Management Analysis December 12, 2002 George Kantor&Julianne Crum BMW and Audi, two German automobile manufacturers, have a reputation for making some of the best cars in the industry. Not only are both companies superior in their production, but their financial statements also indicate stability and efficiency. Looking at financial ratios, we will compare both companies on a basis of ...
IAS 38 “Intangible assets” defined intangible assets as an asset without physical substance held for use in the production or supply of goods and services, for rental to others, or for administrative purpose. Under ED 49: Accounting for identifiable intangible assets, identifiable intangible assets which have been purchased or developed internally by the reporting entity are brought to account as assets and they shall be classified in the financial statements according to type and the period of time over which the reporting entity expects to derive a benefit. Unidentifiable intangible assets, goodwill must be amortised so that it is recognised as an expense in the profit and loss account on a straight-line basis under AASB 1013. 5. 2. Part B: Impairment of Assets Impairment or asset impairment occurs when, due to changed circumstances, the previously allowed recovery of costs of a regulatory asset through rates is eliminated or removed by action of a regulatory body.
An events or changes in circumstances are: – A significant decrease in the market value of an asset – A significant change in the extent or manner in which an asset is used – A significant adverse change in legal factors or in business climate that affects the value of assets – An accumulation of significant costs in excess of the amount originally expended to acquire or construct an asset – A projection or forecast that demonstrates a history of continuing losses associated with the asset. (Richard G. Schroeder, 2001, p 253) Expose Draft 99 & 104 propose that an asset’s recoverable amount need only be measured where there is an indication that the asset’s carrying amount may exceed its recoverable amount. ED 104 proposes measuring the recoverable amount of an asset at the higher of an asset’s net selling price and its value in use. Where it is determined that an asset’s recoverable amount needs to be estimated, am impairment loss must be recognised. An impairment loss must be recognised in net profit or loss or result as an expense.
It is necessary of impairment test which to ensure that the carrying amounts of assets are recoverable from the future economic benefits they are expected to generate, and that any losses of future economic benefits are recognised in a timely manner. ED 99& 104 propose that, for assets other than goodwill, an impairment loss recognised in a previous reporting period for an asset should be reversed only where the assets recoverable amount has risen above its carrying amount. Where impairment losses are recognised or reversed, certain information must be disclosed: – By class of assets; and – For each reportable segment within the entity’s primary segment reporting format. Part C: Rationale for the prescribed treatment of impaired assets under the proposed AASB 1010 AASB 1010 “Recoverable Amount of Non-Current Assets” is principally a reissue of the requirements concerning the recoverable amount test for non-current assets set out in Accounting Standards. The standard requires the carrying amount of non-current assets to be written down to their recoverable amount. Recoverable amount means, in relation to an asset, the net amount that is expected to be recovered through the cash flows and inflows arising from its continued use and subsequent disposal.
The Essay on Impairment Quiz Questions
... impairment loss? (1 Mark) The loss of future economic benefit as the amount in the balance sheet for the asset or CGU exceeds it recoverable amount. ... 75000 + 32000 = 737000 Carrying amount assets 680 000 Value in use Impairment loss = 57000 14.Silkyoak Ltd has determined ... impairment loss recognised in previous period that no longer exists can be reversed in the current year. However an impairment ...
(AASB 1010. 9. 1) This standard applies to each entity which is required to prepare financial reports in accordance with Part 2 M. 3 of the Corporation Law and which: (1) is a reporting entity; or (2) holds those financial reports out to be, or form part of, a general-purpose financial report. (Parker C, 2001, p. 499) This standard does not apply to non-current assets measured on the fair value basis as permitted by Accounting Standard AASB 1041 “Revaluation of Non-Current Assets.” The purpose of AASB 1010 is to: – require the application of the recoverable amount test to non-current assets – Require disclose relating to the application of the recoverable amount test to non-current assets (Parker C, 2001, p.
501) On the other hand, the recoverable amount test is applicable to non-current assets to avoid the need to reissue AASB 1041 when the requirements for the recoverable amount test are amended as a result of the Board IASC harmonisation project on impairment of assets. By the recoverable amount test, when its carrying amount is greater than its recoverable amount which means that an asset is desired as impaired. A non-current asset must be written down to its recoverable amount. A recoverable amount write-down recognises that future economic benefits that had previously been assessed as being available to the entity no longer exist. When the carrying amount of a non-current asset or a group of non-current assets is written down to its recoverable amount, the decrement in that carrying amount must be recognised as an expense in net profit or loss for the reporting period in which the recoverable amount write-down occurs. Moreover, the financial report must, in respect of each such non-current asset or class of non-current assets, disclose: – its carrying amount – the recoverable amount write-down recognised during the reporting period Part A: Measurement of Tangible and Intangible assets under Accounting Standards Assets are classified according to their “tangibility”, that are tangible assets or intangible assets.
The Essay on Intangible Assets – Woolworths limited
Intangible Assets: An intangible asset, despite not having a physical form to it, has great value to a company and is to be disclosed in the financial reports. Some companies only disclose the brand and goodwill as their only intangible assets, while others include more such as software and the company trademarks (Loftus et al. 2012). The Accounting Standard AASB 138 advises businesses on the ...
Under tangible assets, are classified as either current or non-current assets. AASB 1010 “Recoverable Amount of Non- Current Assets”, which applied to non-current assets measured on the cost basis that is requires the carrying mount of non-current assets to be written down to their recoverable amounts when their carrying amount is greater than their recoverable amount. (Parker C, 2001, p 497) While the carrying amount of a non-current assets is written down to its recoverable amount, the decrement in that carrying amount must be recognised as an expense in net P/L for the reporting period and must disclose the aggregate carrying amount of each of the assets. ASB 1021 “Depreciation” requires non-current assets that have limited useful lives to be depreciated over those useful lives. AASB 1041 “Revaluation of Non-Current Assets” which applies to non-current assets measured on either the cost basis or the fair value basis. AASB 1041.
6. 2 requires that an increment shall be credited directly to an asset revaluation reserve account and decrement must be recognised immediately as an expense in net P/L. On the other hand, intangible assets those are readily identifiable and unidentifiable. IAS 38 “Intangible assets” defined intangible assets as an asset without physical substance held for use in the production or supply of goods and services, for rental to others, or for administrative purpose. Under ED 49: Accounting for identifiable intangible assets, identifiable intangible assets which have been purchased or developed internally by the reporting entity are brought to account as assets and they shall be classified in the financial statements according to type and the period of time over which the reporting entity expects to derive a benefit. Unidentifiable intangible assets, goodwill must be amortised so that it is recognised as an expense in the profit and loss account on a straight-line basis under AASB 1013.
The Essay on Intangible Assets Quiz Questions ANS
1.List two assets which would not meet the ‘identifiable’ aspect of the definition of an intangible asset. (2 Marks) Answer: Goodwill and Knowledge. These items are either not separable from the company or do not meet the definition of an asset because the benefits they represent cannot be controlled by the entity. 2.Intangible assets acquired via a separate acquisition are always recognised. Why? ...
5. 2. Part B: Impairment of Assets Impairment or asset impairment occurs when, due to changed circumstances, the previously allowed recovery of costs of a regulatory asset through rates is eliminated or removed by action of a regulatory body. An events or changes in circumstances are: – A significant decrease in the market value of an asset – A significant change in the extent or manner in which an asset is used – A significant adverse change in legal factors or in business climate that affects the value of assets – An accumulation of significant costs in excess of the amount originally expended to acquire or construct an asset – A projection or forecast that demonstrates a history of continuing losses associated with the asset. (Richard G. Schroeder, 2001, p 253) Expose Draft 99 & 104 propose that an asset’s recoverable amount need only be measured where there is an indication that the asset’s carrying amount may exceed its recoverable amount.
ED 104 proposes measuring the recoverable amount of an asset at the higher of an asset’s net selling price and its value in use. Where it is determined that an asset’s recoverable amount needs to be estimated, am impairment loss must be recognized. An impairment loss must be recognized in net profit or loss or result as an expense. It is necessary of impairment test which to ensure that the carrying amounts of assets are recoverable from the future economic benefits they are expected to generate, and that any losses of future economic benefits are recognized in a timely manner. ED 99& 104 propose that, for assets other than goodwill, an impairment loss recognized in a previous reporting period for an asset should be reversed only where the assets recoverable amount has risen above its carrying amount. Where impairment losses are recognized or reversed, certain information must be disclosed: – By class of assets; and – For each reportable segment within the entity’s primary segment reporting format.
The Essay on Intangible Assets
IAS 38 was revised in March 2004 and applies to intangible assets acquired in business combinations occurring on or after 31 March 2004, or otherwise to other intangible assets for annual periods beginning on or after 31 March 2004. History of IAS 38 February 1977 Exposure Draft E9 Accounting for Research and Development Activities July 1978 IAS 9 (1978) Accounting for Research and Development ...
Part C: Rationale for the prescribed treatment of impaired assets under the proposed AASB 1010 AASB 1010 “Recoverable Amount of Non-Current Assets” is principally a reissue of the requirements concerning the recoverable amount test for non-current assets set out in Accounting Standards. The standard requires the carrying amount of non-current assets to be written down to their recoverable amount. Recoverable amount means, in relation to an asset, the net amount that is expected to be recovered through the cash flows and inflows arising from its continued use and subsequent disposal. (AASB 1010. 9.
1) This standard applies to each entity which is required to prepare financial reports in accordance with Part 2 M. 3 of the Corporation Law and which: (1) is a reporting entity; or (2) holds those financial reports out to be, or form part of, a general-purpose financial report. (Parker C, 2001, p. 499) This standard does not apply to non-current assets measured on the fair value basis as permitted by Accounting Standard AASB 1041 “Revaluation of Non-Current Assets.” The purpose of AASB 1010 is to: – require the application of the recoverable amount test to non-current assets – Require disclose relating to the application of the recoverable amount test to non-current assets (Parker C, 2001, p. 501) On the other hand, the recoverable amount test is applicable to non-current assets to avoid the need to reissue AASB 1041 when the requirements for the recoverable amount test are amended as a result of the Board IASC harmonisation project on impairment of assets. By the recoverable amount test, when its carrying amount is greater than its recoverable amount which means that an asset is desired as impaired.
The Essay on Current and Non-Current Assets
Current assets are items on a balance sheet. According to Investorwords, current assets equal “…the sum of cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that could be converted to cash in less than one year,” (2008). If a company goes bankrupt, current assets are easily liquidated. Additionally, current assets are a ...
A non-current asset must be written down to its recoverable amount. A recoverable amount write-down recognizes that future economic benefits that had previously been assessed as being available to the entity no longer exist. When the carrying amount of a non-current asset or a group of non-current assets is written down to its recoverable amount, the decrement in that carrying amount must be recognized as an expense in net profit or loss for the reporting period in which the recoverable amount write-down occurs. Moreover, the financial report must, in respect of each such non-current asset or class of non-current assets, disclose: – its carrying amount – the recoverable amount write-down recognized during the reporting period – the assumptions made in respect of its recoverable amount. Where some or all of the assets within a class of non-current assets have been written down to their recoverable amount during the reporting period or a previous reporting period, the financial report must disclose the aggregate carrying amount of each of the following: – assets within that class of non-current assets which are carried at that recoverable amount less, where applicable, any subsequent accumulated depreciation – any other assets within that class of non-current assets. The financial report must, regardless of whether non-current assets have been written down to recoverable amount during the reporting period, disclose whether, the expected net cash flows include in determining the recoverable amount of non-current assets have been discounted to their present value.
(Parker C, 2001, p. 503) Part D: Intangible Assets might be accounted for under current impairment principles In Australia, classification and accounting for intangible assets is based on identifiability and manner of acquisition. According to the identifiability, intangible assets that are readily identifiable asset and unidentifiable asset. Identifiable intangible assets can be considered as a specific value can be placed on each individual asset, and they can be separately identified and sold. (Deegan C, 1999, p. 212) For example: patents, trademarks, licenses, research and development and the others.
Unidentifiable intangible assets, on the other hand, would be those intangible assets that cannot be separately sold. (Deegan C, 1999, p. 212) For example: an organization may be particularly successful because of factors such as loyal customers, established reputation and good employees. Rather, we may treat them as a composite asset entitled “Goodwill.” As with the majority of other assets, intangible assets, whether identifiable or unidentifiable, typically have a limited useful life. As such, intangible assets should be amortized over their useful lives.
There is no requirement to amortize for identifiable intangible assets and it can be revalued. For unidentifiable intangible assets, there is a requirement to amortize over a period less than twenty years. Under identifiable assets, it can be raised as an asset if it is purchase or via an internally generated process, but unidentifiable assets can only be raised as an asset if it is purchased, no internal generation. To date, there are no specific Accounting Standards governs for identifiable intangible assets except for the AASB 1011 “Accounting for the research and development.” Moreover, there is another Accounting Standard governs for unidentifiable intangible assets which is AASB 1013 “Accounting for goodwill.” Excepting AASB 1011, there are still have another two accounting standard which are relevant to the accounting for the identifiable intangible assets that are ED 49 and IAS 38. According to ED 49, identifiable intangible assets that have been acquired are to be brought to account as assets as acquisition and recorded at their cost of acquisition. The proposed requirements of ED 49 are: – to recognizes internally developed identifiable intangibles – to use independent valuations – to amortize all identifiable intangibles Within AASB 1011, the research and development costs shall be charged to the profit and loss account as incurred, except to the extent that costs incurred during the financial year on a research and development project shall be deferred to future financial years to the extent that such costs, together with un amortized deferred costs in relation to that project, are expected beyond any reasonable doubt to be recoverable.
AASB 1013. 5. 1 applied that goodwill which is purchased by the entity must be recognized as a non-current asset at acquisition. Goodwill must be measured as the excess of the cost of acquisition incurred by the entity over the fair value of the identifiable net assets acquired.
Where a variation in the cost of acquisition depends upon a contingency, which affects the determination of the fair value of net assets of the acquired entity, an adjustment to the individual assets or liabilities and to the purchase consideration must be made. Where the contingency does not affect the value of the net assets of the acquired entity, the acquiring entity must treat the variation as an adjustment to the purchase consideration, thereby increasing or decreasing the amount of goodwill or discount on acquisition. (Parker C, 2001, p. 561) As with the majority of other assets, intangible assets, whether identifiable or unidentifiable, typically have a limited useful life. As such, intangible assets should be amortised over their useful lives. There is no requirement to amortise for identifiable intangible assets and it can be revalued.
For unidentifiable intangible assets, there is a requirement to amortise over a period less than twenty years. Under identifiable assets, it can be raised as an asset if it is purchase or via an internally generated process, but unidentifiable assets can only be raised as an asset if it is purchased, no internal generation. To date, there are no specific Accounting Standards governs for identifiable intangible assets except for the AASB 1011 “Accounting for the research and development.” Moreover, there is another Accounting Standard governs for unidentifiable intangible assets which is AASB 1013 “Accounting for goodwill.” Excepting AASB 1011, there are still have another two accounting standard which are relevant to the accounting for the identifiable intangible assets that are ED 49 and IAS 38. According to ED 49, identifiable intangible assets that have been acquired are to be brought to account as assets as acquisition and recorded at their cost of acquisition. The proposed requirements of ED 49 are: – to recognises internally developed identifiable intangibles – to use independent valuations – to amortise all identifiable intangibles Within AASB 1011, the research and development costs shall be charged to the profit and loss account as incurred, except to the extent that costs incurred during the financial year on a research and development project shall be deferred to future financial years to the extent that such costs, together with una mortised deferred costs in relation to that project, are expected beyond any reasonable doubt to be recoverable. AASB 1013.
5. 1 applied that goodwill which is purchased by the entity must be recognised as a non-current asset at acquisition. Goodwill must be measured as the excess of the cost of acquisition incurred by the entity over the fair value of the identifiable net assets acquired. Where a variation in the cost of acquisition depends upon a contingency, which affects the determination of the fair value of net assets of the acquired entity, an adjustment to the individual assets or liabilities and to the purchase consideration must be made. Where the contingency does not affect the value of the net assets of the acquired entity, the acquiring entity must treat the variation as an adjustment to the purchase consideration, thereby increasing or decreasing the amount of goodwill or discount on acquisition. (Parker C, 2001, p.
561).
