Week 3_PPE - 1 Issues in Corporate Financial Reporting and...

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Unformatted text preview: 1 Issues in Corporate Financial Reporting and Analysis (ACCT3563/3573) Accounting for Physical Assets and Intangible Assets 19/03/2009 1 ACCT3563/3573 IFRA Required readings Deegan chapter 6 Deegan chapter 8 AASB 102 AASB 116 AASB 123 2 AASB 123 AASB 136 AASB 138 19/03/2009 ACCT3563/3573 IFRA 2 Recognition and measurement issues in accounting for physical assets in the Learning Objectives balance sheet including meaning of cost of acquisition the role of valuations impairment 3 borrowing costs construction contracts 19/03/2009 ACCT3563/3573 IFRA 19/03/2009 ACCT3563/3573 IFRA Accounting for intangible assets identifiable intangibles versus goodwi Learning Objectives (cont.) identifiable intangibles versus goodwill recognition and measurement rules research and development costs 4 19/03/2009 ACCT3563/3573 IFRA 19/03/2009 ACCT3563/3573 IFRA 3 Comparison between accounting for physical assets and accounting for Learning Objectives (cont.) physical assets and accounting for intangible assets Relationship to earnings management 5 19/03/2009 ACCT3563/3573 IFRA 19/03/2009 ACCT3563/3573 IFRA Definition Assets: Definition AASB Framework (par. 49): Resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity 6 19/03/2009 ACCT3563/3573 IFRA 19/03/2009 ACCT3563/3573 IFRA 4 Recognition criteria Under AASB Framework (par 89) an asset is Assets: Recognition Criteria Under AASB Framework (par. 89) an asset is to be recognised in the balance sheet only when: it is probable that future economic benefits embodied in the asset will flow to the entity; 7 and the asset possesses a cost or other value that can be measured reliably. 19/03/2009 ACCT3563/3573 IFRA 19/03/2009 ACCT3563/3573 IFRA Various measurement rules Inventory: lower of cost and net realisable Assets: Measurement Inventory: lower of cost and net realisable value Property or plant: cost basis or fair value basis Purchased goodwill: cost basis 8 19/03/2009 ACCT3563/3573 IFRA 19/03/2009 ACCT3563/3573 IFRA 5 Inventory Inventories are assets: held for sale in the ordinary course of business; in the process of production for such sale; or in the form of materials or supplies to be consumed in the production process or in the rendering of services Cost of goods sold recognised as an expense: the cost of inventory sold during the period the cost of inventory sold during the period can be determined either on a periodic or perpetual basis 19/03/2009 9 ACCT3563/3573 IFRA The general basis of inventory measurement Inventories must be measured at the lower of cost and net realisable value Cost of inventories costs of purchase: purchase price, import duties, transport costs in; costs of conversion: direct labour and direct materials, allocation of overhead costs; other costs incurred in bringing the inventories to their other costs incurred in bringing the inventories to their...
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This note was uploaded on 05/02/2010 for the course ACCT 3756 taught by Professor Leung during the Three '09 term at University of Sydney.

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Week 3_PPE - 1 Issues in Corporate Financial Reporting and...

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