Becker CPA 4.3 Fixed Assets
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Purchase price, cash, promisory note, etc.
Donated Fixed Asset Entry?
- Fixed Asset DR.
- Gain on nonreciprocal transfer CR.
- Donated fixed assets are recorded at fair market value among with incidental costs incurred.
- Donated fixed assests result in the recognition of a gain on the income statement.
How are fixed assets are initially recognized under IFRS?
At the cost to acquire the asset. Subsequent to acquisition, fixed assets can be valued using the cost model or the revaluation model.
How are assets reported under the Cost Model?-IFRS
Under the cost model, fixed assets are reported at historical cost adjusted for accumulated depreciation and impairement:
Cost model carrying value=Historical cost-Accumulated depreciation-Impairement
How are assets reported under Revaluation Model?-IFRS
Revaluation model carrying value=Fair value at revaluation date-Subsequent accumulated depreciation-Subsequent impairement.
-Under revaluation model, a class of fixed assets is revalued to fair value and then report at fair value less subsequent accumulated depreciation and impairment.
How often should the revaluations be made? IFRS
-Revaluations must be made frequently enough to ensure that carrying amount does not differ materially from fair value at the end of the reporting period.
When if further revaluation required? IFRS
-When fair value differs materially from carrying value, further revaluation is required.
What items in a class of fixed assets, should revaluation be applied? IFRS
- Revaluation must be appied to all itmes in a class of fixed assets, not to individual fixed assets.
- Land and buildings, machinery, furniture and fixutres, and office equipment are examples of fixed asset classes.
When must the historical cost equivalent be disclosed? IFRS
When fixed assets are reported at fair value
How are Revaluation Losses determined? IFRS
-Revaluation loss: (Fair Value is less than carrying value before revaluation)
How are revaluation losses recognized? IFRS
Reported on the income statement
What if revaluation loss reverses a previously recognized revaluation gain? IFRS
A revaluation loss that reverses a previously recognized revaluation gain is recognized in other comprehensive income and reduces the revaluation surplus in accumulated other comprehensive income.
How is revaluation Gains determined? IFRS
Revaluation gains: Fair Value is less MORE than carrying value before revaluation
How are revaluation gains reported? IFRS
In other comprehensive income and accumulated in equity as revaluation surplus.
What happens when revaluation gain reverses a previously recognized revaluation loss? IFRS
revaluation gains are reported on the income statement to the exten that they reverse a previously recognized revaluation loss (so gain-loss=what you would report)
How is Impairment reported if revalued fixed assets subsequently become impaired? IFRS
The impairment is recorded by first reducing any revaluation surplus to zero with further impairement losses reported on the income statement.
Where is revaluation loss reported under IFRS?
Where is revaluation gain reported under IFRS?
Other Comprehensive Income
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