Topic4_assets_3pp - Question from last week CONTINGENT LIABILITIES In which statement(s you expect to see contingent liabilities 1 Topic 4

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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 s Lecture outline b PPE: brief history, recognition, revaluation, depreciation, impairment, disposal b Investment properties, brief history, contrast with PPE b Intangible assets: history, recognition, revaluation, amortisation, impairment s Reading b D: Ch 6: Revaluations and Impairment testing of non-current assets b D : Ch 8: Intangible assets, pp. 268-292 b H: AASB 116: Property, Plant and Equipment b H: AASB 138: Intangible assets b H: AASB 136: Impairment of Assets . 3 Lecture objectives b To provide background information that helps to explain how different requirements emerged b To review and compare the accounting requirements for PPE and investment property b To review and compare the accounting requirements for intangible assets s At the end of the class you should be able to: b Recall/revise your earlier learning of accounting for assets b Compare and contrast different approaches to accounting for assets b Better understand what led to these standards and the specific requirements
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2 4 Property, plant and equipment s Accounting treatments precede accounting standards (fixed assets) b Early practices under historical cost s Recognise asset at cost s Depreciate cost over the useful life b Balance sheet: balances carried forward b Annual depreciation expense linked to income tax deductions 5 Property, plant and equipment s Accounting treatments precede accounting standards (fixed assets) s Revaluations s After depression of 1930s US banned revaluations s UK, Australia, NZ allowed revaluations b Practices linked to ideas that reported profit must be “earned”, and dividends paid out of earned profits – revaluation reserve outside profit b Ongoing debate about appropriate valuation base; meaning of depreciation after revaluations 6 s Seems complicated. AASB116: b Allows choice of cost model or revaluation model s Some rules cover changing from one model to the other b Imposes lop-sided revaluation requirements s Initial revaluation: upwards to revaluation reserve; downwards to expense s Subsequent revaluations in opposite direction: first reverse previous b Includes both revaluations and impairments? s Revaluations (occasional 3-5 yearly): class of assets s Impairment test (between revaluations): individual assets
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3 7 s Initial recognition at cost s Subsequent measurement (class of assets): b Either cost model; OR b Revaluation model (to fair value less cost to sell) s Revalue regularly (3-5 yearly) s Revalue ALL assets in a class – no offsetting of valuation adjustments s Depreciation b Depreciation expense based on depreciable amount; expected useful life b when asset revalued, clear accum depreciation and start again 8 s Impairment (AASB116) (individual assets) b At reporting date, assess whether any indication AN
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This note was uploaded on 08/27/2011 for the course ACCT 2011 taught by Professor D during the Three '11 term at University of Sydney.

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Topic4_assets_3pp - Question from last week CONTINGENT LIABILITIES In which statement(s you expect to see contingent liabilities 1 Topic 4

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