Expected Outcome
Scope, Definition & Recognition
Definition
Tangible assets that:
- Are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes
- Are expected to be used during more than one period
Recognition Criteria
probable future economic benefits (associated with the asset will flow to the entity)
cost of the asset can be measured reliably
!!! Separate items
- Smaller items (tools, dies, mould) => Expense
- Major components or spare parts => PPE
- Large and specialised items => Significant parts are separated
Safety and environmental equipment
- Recognised as asset
- Review for impairment (IAS 36) for safety equipment plus its related assets
Initial Measurement
Example 1:
PetroVietnam had an oil rig to be built in the sea. The asset cost $10 million to construct, and would cost $4 million to remove in 20 years. Given the interest rate were 5%
Required
How should the cost of the oil rig and dismantling cost be recognised initially?
How should these items be recognised and after 1 year?
Example 2:
An entity started constructing a building for its own use on 1 April 20X7 and incurred following costs:
Purchase price of land $250,000
Stamp duty $5,000
General overheads: $20,000
Materials $100,000
Labour (period 1 April 20X7 to 1 July 20X8) $150,000
Site preparation and clearance $18,000
The following information is also relevant:
- On investigation, it was found that materials costing $10,000 had been spoiled and therefore wasted and a further $15,000 was incurred on materials as a result of faulty design work.
- As a result of these problems, work on the building ceased for a fortnight during October 20X7 and it is estimated that approximately $9,000 of the labour costs relate to this period.
- The building was completed on 1 July 20X8 and occupied on 1 September 20X8
Calculate the cost of the building that will be included in tangible non-current asset?
Capital Expenditure
Depreciation
Example 1:
A company bought a lorry that cost $17,000. It is expected to last for three years and then be sold for scrap for $2,000. Usage over the three years is expected to be:
Year 1: 150 days Year 2: 100 days Year 3: 50 days
Required
Calculate the depreciation to be charged in Year 1 under:
(1) The straight-line method
(2) The diminishing balance/ reducing balance method (using a rate of 50%)
(3) The machine hour method
ĐĂNG KÝ NGAY ĐỂ NHẬN BÀI GIẢNG
KLE giúp người học (Mentees) đi từ mơ hồ đến có lộ trình chuẩn bị rõ ràng, nền tảng ACCA, kỹ năng thực tế và sự tự tin để bước vào nghề Kế toán – Kiểm toán – Tài chính. KLE không chỉ giúp Mentees thi đỗ ACCA mà còn trang bị toàn diện để gia tăng cơ hội việc làm ở Big4 và các Doanh nghiệp lớn. Ở KLE, chúng tôi coi sự nghiệp của Mentees như sự nghiệp của chính mình.
