Scribd Logo
Upload

Welcome to Scribd!

  • 125 views

    Accounting For Assets, Impairments and Grants

    Uploaded by

    Sajid Iqbal
    This document provides an overview of key topics related to accounting for assets, impairments, and grants under IFRS. It covers IAS 38 on intangible assets, IAS 36 on impairment of assets, IAS 20 on accounting for government grants, IAS 2 on inventories, and includes examples applying the standards. The standards address definitions of intangible assets, recognition criteria, measurement models, impairment testing, cash generating units, accounting for government grants, and inventory costing methods.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Accounting For Assets, Impairments and Grants

    Uploaded by

    Sajid Iqbal
    125 views21 pages
    This document provides an overview of key topics related to accounting for assets, impairments, and grants under IFRS. It covers IAS 38 on intangible assets, IAS 36 on impairment of assets, IAS 20 on accounting for government grants, IAS 2 on inventories, and includes examples applying the standards. The standards address definitions of intangible assets, recognition criteria, measurement models, impairment testing, cash generating units, accounting for government grants, and inventory costing methods.

    Original Description:

    IFRS 5

    Original Title

    MODULE 5

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document provides an overview of key topics related to accounting for assets, impairments, and grants under IFRS. It covers IAS 38 on intangible assets, IAS 36 on impairment of assets, IAS 20 on accounting for government grants, IAS 2 on inventories, and includes examples applying the standards. The standards address definitions of intangible assets, recognition criteria, measurement models, impairment testing, cash generating units, accounting for government grants, and inventory costing methods.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    125 views21 pages

    Accounting For Assets, Impairments and Grants

    Uploaded by

    Sajid Iqbal
    This document provides an overview of key topics related to accounting for assets, impairments, and grants under IFRS. It covers IAS 38 on intangible assets, IAS 36 on impairment of assets, IAS 20 on accounting for government grants, IAS 2 on inventories, and includes examples applying the standards. The standards address definitions of intangible assets, recognition criteria, measurement models, impairment testing, cash generating units, accounting for government grants, and inventory costing methods.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 21

    MODULE 5

    Accounting for Assets, impairments and grants


    IAS 38 – Intangible assets

    will learn
    What you
    IAS 36 – Impairment of assets

    IAS 20 – Accounting for government grants

    IAS 2 - Inventories
    IAS 38
    Intangible assets
    IAS 38

    “An intangible asset is an identifiable, non-monetary asset without physical substance.”

    To be recognised in the financial statements, an intangible asset must:


    • meet this definition, and
    • meet the IAS 38 recognition criteria.

    IAS 38 excludes:
    • Internally generated goodwill, Brands, customer lists
    • Staff
    • Account receivable
    Recognition

    Intangible asset is recognised if:

    • "It is probable that future economic benefits associated with the item will flow to the entity
    and
    • The item's cost can be measured reliably".
    Intangibles Application of research
    findings for commercial
    purposes

    Craiteria
    1. technically feasible
    2. intention to
    Costs to acquire Research complete
    new scientific costs Development 3. ability to sell asset
    knowledge costs 4. probable benefits
    5. can complete project
    6. can measure reliably

    Expense out
    immediately

    Capitalize, if craiteria met


    Measurement

    Initial Subsequent

    Revaluation
    Cost Cost model
    model
    Amortization

    Finite life Indefinite life

    Amortize No Amortization

    Impairment review Annual impairment review


    Exercise 5.1
    At 1 January 20X5, Moor Labs Co has capitalised development costs with an original cost of $10 million and
    carrying amount of $5million.

    The company started a new R&D project on 1 January 20X5, incurring $1.6 million costs during the research
    phase, which lasted until 31 August 20X5. From that date, average development costs incurred on the project
    were $750,000 per month.

    On 1 November 20X5, the management of Moor Labs Co became confident that the project would be a
    commercial success and make good profits. The project is still in development at 31 December 20X5.
    Capitalised development expenditure is amortised at 25% per annum using the straight line method.

    What amount is recognised as an expense in terms of R&D in the year ended 31 December 20X5?
    IAS 36
    Impairment of assets
    Impairment

    Carrying Greater than Recoverable


    amount amount

    Higher Fair value less


    Value in use
    CTS
    Exercise 5.2

    An item of plant has a carrying amount (based on historical cost) of $124,000 and a value in use of $117,000.

    The price the asset could achieve at auction is expected to be $127,000 and fees of 10% would be incurred

    on a sale.

    Calculate impairment, if any?


    Cash generating units (CGU)

    The carrying amount of the CGU is compared with its recoverable amount. Any impairment loss is allocated:

    1. To physically damaged assets

    2. To any goodwill in the CGU

    3. To other assets of the CGU (that are within the scope of IAS 36) on a pro rata basis.
    Exercise 5.3

    A CGU comprises goodwill with a carrying amount of $20,000, PPE with a carrying amount of $150,000,

    Intangible assets with a carrying amount of $50,000 and net current assets with a carrying amount of

    $90,000. The recoverable amount of the CGU is $250,000. The recoverable amount of the PPE is its value in

    use of $130,000. The carrying amount of the CGU is $310,000.

    Calculate impairment loss of CGU and review carrying amounts.


    IAS 20
    Accounting for government grants
    Recognition
    "reasonable assurance that:

    • The entity will comply with...[grant conditions]


    • The grant will be received".
    Government
    IAS 20
    Grants

    Types Capital Revenue

    Methods of accounting Deferred Separate


    Net asset Net off
    treatment income line
    Exercise 5.4

    Sydney Co acquires an asset at a cost of $200,000 on 1 July 20X7. A government grant of $50,000 is

    received towards the purchase on the same date. The asset has a useful life of 10 years.
    IAS 2
    Inventories
    Measurement

    IAS 02: Inventories Measurement

    LOWER OF Cost NRV

    LIFO
    Determining cost FIFO
    AVCO

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy