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topic4 _assets_3pp - Question from last week CONTINGENT...

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1 1 Question from last week CONTINGENT LIABILITIES… In which statement(s) you expect to see contingent liabilities? 2 Topic 4: Accounting for assets square6 Lecture outline boxshadowdwn PPE: brief history, recognition, revaluation, depreciation, impairment, disposal boxshadowdwn Investment properties, brief history, contrast with PPE boxshadowdwn Intangible assets: history, recognition, revaluation, amortisation, impairment square6 Reading boxshadowdwn D: Ch 6: Revaluations and Impairment testing of non-current assets boxshadowdwn D : Ch 8: Intangible assets, pp. 268-292 boxshadowdwn H: AASB 116: Property, Plant and Equipment boxshadowdwn H: AASB 138: Intangible assets boxshadowdwn H: AASB 136: Impairment of Assets . 3 Lecture objectives boxshadowdwn To provide background information that helps to explain how different requirements emerged boxshadowdwn To review and compare the accounting requirements for PPE and investment property boxshadowdwn To review and compare the accounting requirements for intangible assets square6 At the end of the class you should be able to: boxshadowdwn Recall/revise your earlier learning of accounting for assets boxshadowdwn Compare and contrast different approaches to accounting for assets boxshadowdwn Better understand what led to these standards and the specific requirements
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2 4 Property, plant and equipment square6 Accounting treatments precede accounting standards (fixed assets) boxshadowdwn Early practices under historical cost square6 Recognise asset at cost square6 Depreciate cost over the useful life boxshadowdwn Balance sheet: balances carried forward boxshadowdwn Annual depreciation expense linked to income tax deductions 5 Property, plant and equipment square6 Accounting treatments precede accounting standards (fixed assets) square6 Revaluations square6 After depression of 1930s US banned revaluations square6 UK, Australia, NZ allowed revaluations boxshadowdwn Practices linked to ideas that reported profit must be “earned”, and dividends paid out of earned profits – revaluation reserve outside profit boxshadowdwn Ongoing debate about appropriate valuation base; meaning of depreciation after revaluations 6 PP&E (AASB116) OVERVIEW square6 Seems complicated. AASB116: boxshadowdwn Allows choice of cost model or revaluation model square6 Some rules cover changing from one model to the other boxshadowdwn Imposes lop-sided revaluation requirements square6 Initial revaluation: upwards to revaluation reserve; downwards to expense square6 Subsequent revaluations in opposite direction: first reverse previous boxshadowdwn Includes both revaluations and impairments? square6 Revaluations (occasional 3-5 yearly): class of assets square6 Impairment test (between revaluations): individual assets
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3 7 Summary: PP&E (AASB116) square6 Initial recognition at cost square6 Subsequent measurement (class of assets): boxshadowdwn Either cost model; OR boxshadowdwn Revaluation model (to fair value less cost to sell) square6 Revalue regularly (3-5 yearly) square6
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