12

Financial Accounting (Fach) / Long Term & Intangible Assets (Lektion)

<3

Diese Lektion wurde von Janaw55 erstellt.

Lektion lernen

Diese Lektion ist leider nicht zum lernen freigegeben.

zurück  |  weiter 1 / 1

Anzeige
  • Changes in Depreciation estimates or methods IAS 8 Accounting Policies No need to state previous year's numbers Changes in the estimates are applied prospectively IAS 16 PP&E  Estimates must be evaluated periodically 
  • Impairment of Assets IFRS IAS 36 Step 1:  Carrying amount > Recoverable Amount Step 2: Impairment Loss in income Reduce Carrying amount to Recoverable Amount by Adjusting accumulated depreciation  Dr Impariment (loss) Cr. A/D Going Forward: Calculate depreciation usind the new carrying amount and the estimated useful Life of the asset Previous impairment Loss may be reversed =>> More accurate Balance sheet, higher expense
  • Measurement of Value of Long-Term Assets (1) Measurement of Cost of Asset (a) Acquisition Cost (Capitalize when recorded as asset) Purchase Price  - Sales Tax - Delivery & Handling - Installation Cost - Related Professional Fees (lawyers, architects, engineerss) (b) Acquisition by Construction Materials & Labor traceable to construction Reasonable amount of Overhead Interest on debt incurred during the construction (2) Further Measurement (a) Cost model of subsequent measurement: Recorded at initial cost - accumulated depreciation, Reflects pattern of use of the asset (b) IFRS ONLY: Revaluation Model of Subsequent Measure - IAS 16.31 - Revaluation to "Fair Value" regularly. - Carry asset at revalued amount - accumulated depreciation - any impairment - Changes: Increase => OCI; Decrease => Expense Fair Value needs to be measured reliably Expensive and provides few benefits  If 1 item is revalued, so should entire class of similar assets Revalued assets are depreciated as under the Cost Model
  • Repairs, Maintenance and Improvement Ordinary Repairs and maintenance Maintains normal operating condition Does not increase productivity Does not extend useful life Recurring in nature Involves small amounts =>> Accounting Treatment: Expense in current period  Improvements Represents major overhaul or partial replacement Increases efficiency May extend useful life Occurs infrequently Involves large amounts =>> Accounting Treatments: Add to the asset account - Capitalize
  • Impairment of Assets ASC 360-10-35 - US GAAP Step 1: Carrying amount > Undiscounted Future CF Step 2: Impairment Loss in income = Net Book Value - Fair Value  Step 3: Reduce Carrying Amount to Recoverable Amount by eliminating accumulated depreciation and writing down the assets to lower of market value or PV of Discounted future CFs Going Forward: No restoration of previous impairment loss possible Therefore, more time to see whether amount will recover 
  • Recognition Criteria - Internally generated intangibles IFRS - IAS 38 (Intangibles) R&D Capitalize only after feasibility criteria are met later during the development stage Economic Feasibility & Techincal Feasibility Not specific to R&D; i.e. Software.  US GAAP - ASC 350 (Intangibles) - ASC 730 (R&D) Internally used Software; web-sites, after feasibility criteria are met  Never recognize/ capitalize internally generated brands Never recognize/ capitalize internally generated customer lists 
  • Acquisition: Intangible assets Definition: Non current assets without physical substan (1) When intangible assets are acquired, either separately or as part of a business combination, they should be identified and recognized at fair value.  They should:  Identifiable: separable; often provide contractual or legal rights and privileges Under firms control: entity has the power to obtain the assets benefits Provide economic benefits  They either have: Finite lives: amortize on systematic basis (straight line) over useful life (i.e. Netflix liscenced content) Indefinitve lives: do not amortize but test periodically for impairment (i.e. brands)
  • Goodwill Definition: The Profit generating capacity of a business, which is not explained by recorded net assets (unrecorded & acquired) Arises only due to acquisition of assests from another company; an entire business or a business combination Indefinite life Can only be acruired Cannot be negative  Impairment of goodwill will reduce net income Sources Less reliable: Unpredicted synergies Maybe: Reputation; Customer loyality; Emplyiees; Business relations; Cost Savings  More reliable: Increased market power; Barriers to entry; Economies of Sclae Acquisition Method of Accounting:  (1) Identify & Measure Fair Value of Identifiable Assets Acquired & Liabilities assumed from target  (2) Goodwill = Purchase Price - Fair Value of Net Asset acquired. Purchase Price < Fair Value => Record Bargain Purchase Price Goodwill = Purchase Price - (Fair Value of Assets + Fair Value of Liabilities) Measurement and Subsequent Valuation: (1) If: Fair Value of reporting Unit holding Goodwill < Book Value, do (2) (2) Calculate revised Value Of Goodwill => Fair Value of Unit - Fair Value of Identifiable Assets Δ Book Value & Revised Value = Impairment Loss.
  • Long-Term Assets Overview Assets with a relatively long life, which are intended for use on a continuing basis in the company's activities.  IFRS: IAS 16 - PP&E IAS 38 - Intangible Assets IFRS 6, IAS 41 - Agriculture  US GAAP: ASC 360 - PP&E ASC 350 - Intangbile Assets 
  • Revised Depreciation Expense Net Book Value = New Residual Value + 1/Remaining Life (Cost - Accumulated. Depreciation) * Depreciation Rate 
  • Anzeige
  • Market to Book Ration MTB Ratio = Market Value of Equit / BV of Equity In general, firms have a MTB greater than 1.   Vaule of Equity at 0 = BV + ∑Residual Income / (1+r) DCF valuation can also be derived in terms of the accounting book value plus the discounted stream of “excess earnings” 
  • Differences between Pre-Tax Income and Taxable Income Permanent differences:  interest received from government bonds not taxable interest from municipal bonds penalties and fines never tax-deductible  Temporary differences tax liabilities: Items deducted in taxable income before in accounting income (prepaid insurance expense, accelerated depreciation)  tax assets: Items deducted in accounting income before recognized as tax expense  Provision for doubtful debts warranty expense (deferred tax assets) Losses can be carried forward (as a deferred tax asset) and set off against taxable profits in the future, to the extent that management believe they will be able utilize these losses 

zurück  |  weiter 1 / 1