PROF ELECTIVE 4 PRELIMS 2A

NATURE AND VALUATION OF PPE - 1

Nos. 1 to 3 PPEs are?

1. Tangible assets
2. Used in production or supply of goods or services
3. Expected to be used over a period of more than one year

Nos, 4 to 5: An item of PPE is recognized if:

4. It is probable that future economic benefits associated with the assey will flow to the entity.
5. The cost of the asset can be measured reliably.

Cost 6. An item of PPE is INITIALLY MEASURED at _____________?

Cash price 7. No, 6 is measured at _____________ equivalent at acquisition date

Nos. 8 to 16: Modes of Acquisition

Acquisition on cash basis 8. Is the cash price (net of trade discounts and rebates) and other
incidental costs incurred in the connection with its acquisition plus
necessary costs incurred to bring the asset to its present location and
condition and to prepare the asset for its intended use

Acquisition on account
9. Is the cash price (net of trade discounts and rebates) net of the cash
discount whether taken or not and other incedental costs incurred in
connection with its acquisition plus necessary costs incurred to bring
the asset to its present location and condition and to prepare the
asset for its intended use

Acquisition on installment basis 10. Is the cash price and other incidental costs incurred in connection with
its acquisition plus necessary costs incurred to bring the asset to its
present location and condition and to prepare the asset for its intended
use

Present value 11. Is the present or discounted value of all future payments

Issuance of securities 12. Is the fair market value of the asset received or securities issued,
which ever is clearly determinable

Donated capital 13. The asset received is initially measured at its fair market value with a
corresponding credit to Additional Paif in Capital/Share Premium

Supply of goods and services 14. The asset received is measured at its cost. The deemed cost of that
asset is its fair market value at the date of thee transfer.
IAS 18

Non-Monetary Transactions 15. The fair market value of the asset received or asset surrendered which-
ever is clearly determinable. Gain or loss is recognized in their entirety

Impairment loss 16 The asset received is initially measured at carrying value or impaired
value. Gain is not recognized, howrever, if there is an objective
evidence that the non-cash asset given up is impaired, the amount of
impairment loss is recognized

Nos. 17 - 19 Costs after Recognition

Repairs and maintenance 17. _____________The costs of the day-to-day servicing of an item of
property, plant and equipment (cost of labor, cosumablesm small parts)

Surplus or deficit 18. are recognized in the ______________ as they are incurred

Expense 19. The usual account title for No. 17

Nos. 20 - 23 Measurement after Recognition

Cost model 20 Nos. 20 - 21: Measurement after Recognition
Revaluation model 21

Carrying amount 22. After recognition as an asset, an item of PPE shall be carried at its
cost less any accumulated depreciation and any impairment loss
PROF ELECTIVE 4 PRELIMS 2A
its fair value at the date of the 23. After recognition as an asset, an item of PPE, whose fair value can be
revaluation less any subsequent measured reliably shall be carried at a revalued amount
depreciation and subsequent
accumulated impairment losses.

Nos. 24-26 Expense Recognition Principle

24. If revenue is deferred to a future period, the related costs of generating that income should be deferred to the same future pe
25. Accruals and deferrals are often necessary in order to report expenses in the proper time periods.
26. Externally acquired intangible assets are capitalized and amortized over the periods benefited.

Depreciation 27. The systematic allocation of the depreciable amount of an asset over i
its useful life

Depreciation method 28. The residual value of the asset shall be reviewed at each financial
year-end, if expectations differ from previous estimates, the change(s)
shall be accounted for as a change in _________________________?

derecognition 29. An item of PPE is disposed of and no future economic benefits are
expected from its use or disposal

Wasting Assets: Mineral Resource

Restoration costs 30. These are costs that can be capitalized

Fair value 31. Initial recognition of No. 30 shall be measured at ___________?

Nos. 32 - 35 At least four expenditres that might be included in the initial measurement
32. Acquisition of rights to explore
33. Sampling
34. Trenching
35. Exploratory drifing

Depletion 36. A systematic allocation of the cost of the natural resourcre or

wasting asset

Fair value less costs to sell 37. Is the present value of estimte future cash flows expected to arise from
the continuing use of an asset from its dispodal at the end of its
useful life

Plus 3 = 40/40
ts of generating that income should be deferred to the same future period.