recognition

it is probable that future economic benefits associated with the

asset will flow to the entity
the cost of the asset can be measured reliably

initial measurement
at cost

subsequent measurement
1. cost model
depreciation
2. revaluation
gain: OCI -> revaluation surplus -> retained earning
loss: P/L
RECOGNGITION
An intangible asset is an identifiable non-monetary
asset without physical substance
it is probable that future economic benefits
attributable to the asset will flow to the entity
the cost of the asset can be measured reliably

MEASUREMENT
1. COST MODEL
cost less amortisation and any impairment losses
2. REVALUATION MODEL

revalued to a carrying amount of fair value

less subsequent amortisation and impairment losses

CAPITAL DEVELOPEMENT EXPENDITURE

Probable flow of economic benefit from the asset
Intention to complete the intangible asset and use
or sell it
Reliable measure of development cost
Adequate resources to complete the project
Technical feasibility of completing
Expected to be profitable
the asset can be bought or sold separately
from the rest of the business

arises from legal/contractual rights

government provide money

related to asset related to expenditure

deffered income deduct from assets post costs incurred current/future cost
DR cash CR deferred income DR cash CR PPE DR cash CR expense DR cash CR other income
DR deferred income CR P/L DR cash CR expense
R other income
recognition
held to earn rentals
for capital appreciation
both
measurement
1. cost model
IAS 16
2. Fair value model
revalued each year
gain/loss -> P/L
no depreciation
RECOGNITION

An entity shall classify a non-current asset as held for

sale if its carrying amount will be recovered
principally through a sale transaction rather
than through continuing use

MEASUREMENT
Lower of carrying amount and (FV-cost to sell)
presented seperately under CA
not depreciation
RECOGNITION
the asset should be written down to recoverable amount
revaluation surplus -> P/L

REVERSALS IMPAIRMENT LOSS

PROVISION
A provision is a liability of uncertain timing or amount
RECOGNITION

A provision shall be recognised when:

• an entity has a present obligation (legal or constructive) as a result
of a past event,
• a reliable estimate can be made of the amount of the obligation,
and
• it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation
RECOGNISED AS EXPENSE
DR EXPENSE CR PROVISION
MEASUREMENT
best estimate of expenditure
expected value (various different outcomes)
discount to present if material different (dismantling cost)

CONTIGENT LIABILITY
A contingent liability is

a possible obligation that arises from past events and whose

existence will be confirmed only by the occurrence or
nonoccurrence of one or more uncertain future events not wholly
within the control of the entity, or
 a present obligation that arises from past events but is not
recognised because:
 it is not probable that an outflow of resources embodying
economic benefits will be required to settle the obligation,
or
 the amount of the obligation cannot be measured with
sufficient reliability'
disclosed as a note to the accounts only, no entries
are made into the financial statements other than this disclosure

A contingent asset is a possible asset that arises from past events

and whose existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly
within the control of the entity

WARRANTY
Events after the reporting period are those events,
both favourable and unfavourable, which occur
between the reporting date and the date on
which the financial statements are approved for
issue by the board of directors
Adjusting events are events after the reporting date
that provide additional evidence of conditions
existing at the reporting date

Non-adjusting events are events after the reporting

date that concern conditions that arose after the
reporting date
non-adjusting events after the reporting date are of
such importance that non-disclosure would affect
the ability of the users of the financial statements to
make proper evaluations and decisions, an entity
should disclose the following information for each
non-adjusting event
after the reporting date:
• the nature of the event
• an estimate of its financial effect, or a statement
that such an estimate cannot be made.
Adjusting events require the adjustment of
amounts recognised in the financial
statements.

Non-adjusting events should be disclosed

by note if they are of such
importance that non-disclosure would
affect the ability of the users of the
financial statements to make proper
evaluations and decisions.
At the commencement of the lease, the lessee
should recognise a lease liability
and a right-of-use asset
step 1
an agreement between two or more parties that
creates enforceable rights and obligations
A contract can be agreed in writing, orally, or
through other customary business practices

step 2
Performance obligations are promises to transfer
distinct goods or services to a customer

step 3
amount of consideration to which an entity
expects to be entitled in exchange for transferring
promised goods or services to a customer

step 4
The total transaction price should be allocated to
each performance obligation in proportion to stand-
alone selling prices.

step 5
Revenue is recognised 'when (or as) the entity
satisfies a performance obligation by transferring a
promised good or service to a customer

Satisfying a performance obligation at a point in time

If a performance obligation is satisfied at a point in

time then the entity must determine the point in
time at which a customer obtains control of a
promised asset

Control of an asset refers to the ability to direct the

use of, and obtain substantially all of the remaining
benefits (inflows or savings in outflows) from,
the asset. Control includes the ability to prevent
other entities from obtaining benefits from an asset.
Satisfying a performance obligation over time

calculating
profit
1 overall
price of contract 2
cost to date 1
cost to complete 0.5
overall profit 0.5
2 progress
input method
cost incurred 1
cost estimated 1.5
progress 66.67%
3 SOPL
revenue 1.33
cost of sale 1
profit 0.33
4 SOFP
cost to date 1
profit to date 0.33
billed to date 1
contract asset 0.33

loss
1 overall
price of contract 10
cost to date 6
estimated cost 6
 estimated profit -2
2 progress input method
cost to date 6
estmated cost 12
progress 50%
3 SOPL
revenue 5
cost to date 6
provision cost of sale 1
loss -2
4 SOFP
loss -2
cost to date 6
billed to date 3
contract asset 1
A liability
is a
present
obligation
of the
entity
arising
from past
events,
the
settlemen
t of which
is
expected
to result
in an
outflow
from the
entity of
resources
embodyin
g
economic
benefits