{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

2.3 SWLecture3_Deprecn_Learn

2.3 SWLecture3_Deprecn_Learn - ACIS 211 Financial...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
5-1 ACIS 211 Financial Accounting Week 2 Lecture 3 ASSETS ASSETS Property, Plant and Equipment Depreciation and Disposal
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
5-2 DEPRECIATION & DISPOSAL of PPE Learning Objectives Understand the role of accounting in allocating the depreciable amount of an item of property, plant and equipment over its expected useful life. Be aware of factors that must be considered in determining the useful life of a depreciable asset. Understand the various approaches (straight-line, sum-of-digits, declining balance, production basis) for allocating the depreciable amount of a non- current asset to particular financial periods.
Image of page 2
5-3 Learning Objectives (cont.) Understand when to start depreciating a depreciable asset. Understand why, when, and how depreciation rate and method is revised. Describe how to account for Land and Buildings. Understand how to account for asset modification. Demonstrate accounting treatment for asset disposal. Know the disclosure requirements of NZ IAS 16 ‘Property, Plant and Equipment’ as they pertain to depreciation. Reading: Deegan & Samkin Chapter 5, NZ IAS 16
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
5-4 Introduction Depreciation: Recognises the decrease in the service potential of a non-current asset across time. Involves allocating the historical cost of an asset or revalued amount over periods in which benefits are expected to be derived. Involves recognizing such allocation as an expense, unless included in another asset’s carrying amount. Should not be confused with the decline in market value of an asset over time.
Image of page 4
5-5 Introduction (cont.) Depreciable assets Non-current assets having limited useful lives. Depreciable assets may comprise a significant proportion of total assets. Depreciation expense can have a significant effect on profits eg. Deegan & Samkin - BHP and News Corp Eg Air New Zealand, Fonterra, etc
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
5-6 Introduction (cont.) In determining how to allocate the historical cost of an asset, three issues must be addressed: 1. Which depreciable base should be used for the asset? 2. What is the asset’s useful life? 3. Which method of cost apportionment is most appropriate for the asset?
Image of page 6
5-7 Depreciable Amount (base) for Assets Depreciable amount Cost of a depreciable asset or other amount substituted for cost in the financial statements less its residual value. Residual value The estimated amount the entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life (NZ IAS 16, par. 6).
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern