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Class notes CPAK An Introduction to Financial Accounting, ISBN: 9781912350285
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THESE ARE NOTES ON ADVANCED ACCOUNTING AND PAST PAPERS ON ADVANCED MANAGEMENT ACCOUNTING.
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ADVANCED MANAGEMENTACCOUNTING
ACCOUNTING FOR ASSETS AND LIABILITIES
ASSETS
PROPERTY, PLANT AND EQUIPMENT - lAS 16,
The objective of this Standard is to prescribe the accounting treatment for property,
plant and
equipment so that users of the financial statements can discern information about
an ,entity's
investment in its property, plant and equipment and the changes in such investment.
The principal
issues in accounting for property, plant and equipment are the recognition of the
assets, the
determination of their carrying amounts and the depreciation charges and impairment
losses to be
recognised in relation to them.
Property, plant and equipment are tangible items that:
(a)
Are held for use in the production or supply of goods or services, for rental to others,
or
for administrative purposes; and
(b)
Are expected to be used during more than one period.
(c)
, The cost of an item of property, plant and equipment shall be recognised as an asset if,
and only if:
i)
It is probable that future economic benefits associated with the item will flow to the
entity; and
ii)
The cost of the item can be measured reliably.
Measurement at recognition: An item of property, plant and equipment that
qualifies .for
recognition as an asset shall be measured at its cost. The cost of an item '.if property,
plant and
equipment is the cash price equivalent at the recognition date. If payment is deferred
beyond normal
credit terms, the difference between the cash price equivalent and the total payment is
recognised as
interest over the period of credit unless such interest is recognised in the carrying
amount of the item
in accordance with the allowed alternative treatment in lAS 23.
The cost of an item of property, plant and equipment comprises:
(a)
Its purchase price, including import duties and non-refundable purchase taxes. After
deducting trade discounts and rebates
(b)
Any costs directly attributable to bringing the asset to the location and condition
necessary
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