week 2 - School of Accounting ACCT 1511 Accounting and...

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Unformatted text preview: School of Accounting ACCT 1511 Accounting and Financial Management 1B Session 2, 2010 Week 2 Assets (1) General Principles and Non-current Assets Student Handout Contents: 1. Learning Objectives (LO) 2. Tutorial Questions 3. Lecture Materials Lecturer: Dr Leon Wong Learning Objectives At the end of this week, you should: LO1. Understand the definition and recognition criteria for assets and expense, and why they are important. LO2. Understand the concepts underlying the valuation and measurement of assets and expenses LO3. Be technically competent in calculating gains/ losses on disposals and related journal entries LO4. Understand the link between cost, asset and expense LO5. Appreciate the fungibility of accrual accounting Required Readings Trotman & Gibbins (TG) Chapter 6.3-6.4 Trotman & Gibbins (TG) Chapter 9.6-9.8 Additional References http://www.aasb.com.au AASB 116 Property, Plant and Equipment Tutorial Questions for Week 3 (Commencing 2 August) Preparation Questions Trotman and Gibbins: Problem 6.14 Problem 6.18 Homework Questions Trotman and Gibbins: Problem 6.15 Problem 9.17 L1 ACCT1511 Assets (1) General Principles & Week 2 1 General Principles & Non-current Assets Dr Leon Wong QUAD 3063 leon.wong@unsw.edu.au Accrual Accounting Asset v . Expense Revenue v . Liability v . Equity Asset Expense Definition Revenue Liability Equity 2 Income Statement & Balance Sheet Recognition Measurement Effect With thanks to Dr Cheng Lai Classifications In The Balance Sheet 3 general classes (assets, liabilities and equity) are further subdivided. Assets Current assets Liabilities and equity Current liabilities 3 Current assets Non-current assets Intangible assets Other assets Current liabilities Non-current liabilities Share capital Retained earnings Other reserves Non-Current Assets Long term investments may be investments in securities (eg bonds, shares, long-term notes) investments in tangible non-current assets (eg land not used in operations) investments set aside in special funds (eg sinking fund 4 investments set aside in special funds (eg sinking fund, pension fund) investments in affiliated entities Property, plant and equipment consists of properties of a durable nature used in the regular operations of the firm They include land, building, machinery, furniture, tools and wasting resources (eg timber, minerals) Most assets (except land) are either depreciable or depletable, i.e. expensable Non-Current Assets continued Intangible assets lack physical substance and are not financial instruments They include patents, licences, copyrights, franchises, goodwill, trademarks Limited life assets are written off (amortised) over their...
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week 2 - School of Accounting ACCT 1511 Accounting and...

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