,Table of Content
Asset Defined 3
The difference between non-current and current assets
Tangible vs. intangible Non-current Assets
Determining the cost of a non-current asset: Initial Recognition 4
Cost of a non- current asset
Subsequent Measurement
Example 1.1: cost of an asset 5
Exercise 1.1 cost of an asset 6
Example 1.2 Recording Depreciation
Asset Realisation 10
Scrapping of an Asset 11
Example 1.3 Scrapping of an asset -no profit or loss
Exercise 1.2 Scrapping of an asset - loss 13
Selling of an Asset- profit 14
Example 1.4 Selling of an Asset – profit 15
Exercise 1.3 Selling of an Asset – profit 16
Selling of an Asset – loss 18
Example 1.5 Selling of an Asset – loss
Trade in of Asset – loss 21
Example 1.6 Trade in and loss
Definition and recognition of intangible noncurrent assets 23
Amortisation of intangible assets 24
Example 1.7 Amortisation
Impairment of Assets 25
Example 1.8 Impairment losses
2
, Assets Defined:
According to the conceptual framework an asset is defined as:
Present Economic resource (and the right to it)
Controlled by the entity
As a result of past event
The recognition criteria for an asset are:
Relevance of the information regarding the asset
Faithful representation
The Difference Between Non-Current and Current Assets
Non-current assets refer to assets that are expected to be controlled by the entity for longer than next
12 months. In other words, these assets will not convert into cash within the next financial year.
Examples:
Land
Buildings
Vehicles
Furniture
Machinery
Equipment
Current assets refer to assets that are expected to be controlled by the entity for a period shorter than
next 12 months. This means that these types of assets will be converted into cash within the next
financial years. Examples:
Inventory
Cash and Cash equivalents
Debtors
Other income receivable
Prepaid expenses
Tangible vs. Intangible Non-current Assets
Tangible non-current assets are assets that one can experience with one’s natural sense and these
assets are expected to be controlled by the entity for longer than the next 12 months.
Section 17.2 of IFRS for SMEs defines “property, plant and equipment” as tangible assets that are
controlled by the entity for the purposes of production administrative purposes or to be rented out
(investment property). These assets are expected to be under the control of the entity for longer than
one reporting period (financial year). However, this definition excludes biological assets (agricultural
activities), mining rights and mineral reserves (oil and other reserves that cannot be replenished once
consumed).
Intangible non-current assets are assets that one cannot experience with one’s natural senses, but these
assets are expected to be controlled by the entity for longer than the next 12 months. Examples are
trademarks, patents copyrights and recipes.
3
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