A comprehensive summary, with examples, of all the work covered in term test 2. This includes PPE, Inventory, and Inventory on Consignment. (note: scope of work may change from year to year)
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1. Property, Plant and Equipment
Key definitions:
PPE – Tangible items held for use in:
- the production or supply of goods and services,
- rental to others, or
- for admin purposes
AND
Expected to be in use for more than one financial period.
Carrying amount - Statement of financial position amount after subtracting
accumulated depreciation and impairment losses.
Cost – Cash and cash equivalents paid, or
- fair value of other consideration given to acquire the asset at time of
acquisition or construction, or
- Where applicable, the amount attributed to that asset in accordance with the
requirements of other IFRSs (i.e. IFRS 2)
Depreciable amount – Cost less residual value
Depreciation – the systematic allocation of the depreciable amount over the useful
life of an asset
Useful life – period over which an asset is expected to be in use by the entity, OR
- Number of production, or similar units, expected to be obtained from the
asset by the entity
Residual value - Estimated amount that an entity would currently obtain from
disposal of the asset,
- After deducting the estimated costs of disposal,
- If the asset were already of the age / condition expected at end of useful life
Fair value - Price that would be received to sell an asset (or paid to transfer a
liability) in an orderly transaction between market participants at the measurement
date.
COST PRICE AND DEPRECIABLE AMOUNT:
What forms part of the cost price?
Elements of cost include:
Purchase price, import duties, non-refundable purchases taxes, deducting
discounts / rebates
Directly attributable costs bringing the asset to the location & condition to be
capable of operating
Initial estimate of costs of dismantling / removing the item and restoring the
site on which it is located (Not in FA 178)
If question mentions INVOICE PRICE= VAT INCLUDED
If question mentions COST PRICE= VAT EXCLUDED
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