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Finance & Accounting
Pages 4 (1004 words)
FINANCIAL REPORTING STANDARDS FOR ASSETS NAME: COURSE: COURSE INSTRUCTOR: DATE DUE: Financial reporting for fixed assets (a) i. International Financial Reporting Standards provides for the costs that should be added up to sum up the actual cost of a fixed asset.
The relevant costs of computing for Machine A in this scenario are therefore, purchasing price, less the discount allowed, then adding the delivery charge, installation charge and testing charge. Minor spare parts and service contract quotations are irrelevant in computation of the cost of the machinery. ii. IAS 16 provides for methods of depreciation on fixed assets. Under the straight line method, Machine B has an annual depreciation of 60,000 per year since it had an expected or useful life of 10 years. Since its acquisition date on June 2009 through to its revaluation in 2012, it had a carrying amount of 420,000 which is gained after deducting the accumulated depreciation through the first 3 years of its expected life. On a straight line basis and a remaining expected life of 4 years, the depreciation for Machine B is expected to be at 105,000 per year. The scope provides for a revision of the asset’s depreciation method, if the expected economic benefit to be consumed off it by the entity changes appropriately. iii. IAS 40 sets out the guidelines under which assets should be treated and the criterion for the treatment of investment property and also disclosures requirement in their reporting. Investment property is that which is held not for resale but for an economic benefit of the organization. It is that where future economic benefit is expected from. ...
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