对外财务决策-6非流动资产和减值WIP终稿.pptxVIP

CMA Part 1 External Financial Reporting Decisions Non-current Assets and Impairment Purchase of Property, Plant and Equipment Items of property, plant, and equipment should be recognized as assets when it is probable that: 1. it is probable that the future economic benefits associated with the asset will flow to the entity, and 2. the cost of the asset can be measured reliably; Purchase of Property, plant and equipment Dr. Property, plant and equipment Cr. Cash Purchase of Property, Plant and Equipment Cost includes all costs necessary to bring the asset to working condition for its intended use which includes: Purchase price of an asset (less any trade discount); and Directly attributable costs such as cost of site preparation, initial delivery and handling costs, installation and testing costs and professional fees; and Interest (borrowing costs) attributable to the acquisition, construction, or production of a PPE asset constructed for internal use is included in its initial cost; Depreciation of Property, Plant and Equipment Depreciation is the process of systematically and rationally allocating the depreciable base of a tangible capital asset over its expected useful life. The periodic depreciation expense is recognized in the income statement. Depreciation begins when the asset is available for use and continues until the asset is derecognized, even if it is idle. Dr. Depreciation expense Cr. Property, plant and equipment – Accumulated depreciation Depreciation of Property, Plant and Equipment 1. Straight-line depreciation is the simplest method because an equal amount of depreciation is charged to each period of the asset’s useful life. Depreciation = (Cost – residual value) / Useful economic life 2. The units-of-output method allocates cost based on production. As production varies, so will the depreciation expense. Depreciation = (Cost – residual value) / Output Depreciation of Property, Plant and Equipment 3. Accelerated depreciation methods are time-b