IA Chapter4

INTERNATIONALSCHOL
HaNoiNationalUniversity
h tp:/is.vnu.edu.vn/
INTERNATIONAL ACCOUNTING
Ha Noi, 2019
Topic Three
International Financial
Reporting Standards
(IFRS): Part I
Copyright © 2012 The McGraw-Hill Companies,

All Rights Reserved
HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP:/IS.VNU.EDU.VN
INTERNATIONAL FINANCIAL REPORTING
STANDARDS
- Until 2017, 41 IASs and 17 IFRSs had been issued.
Ref:
1. https://www.ifrs.org/issued-standards/list-of-standards/
2.
https://en.wikipedia.org/wiki/List_of_International_Financial_Rep
orting_Standards
INTERNATIONALSCHOL
International Financial Reporting Standards - Part I
Chapter Topics
• Differences between IFRS and US GAAP.
• Inventories. – IAS 2
• Property, Plant & Equipment. – IAS 16
• Investment Property. – IAS 40
• Biological assets – IAS 41
• Impairment of Assets. – IAS 36
• Intangible Assets. – IAS 38
• Goodwill.
• Borrowing Costs. – IAS 23
INTERNATIONALSCHOL
International Financial Reporting Standards - Part I
Learning Objectives
1. Discuss the differences between IFRS and U.S. GAAP.
2. Describe IFRS requirements for recognition and measurement
of inventories; property, plant and equipment; intangibles and
leased assets.
3. Explain the major differences between IFRS and U.S. GAAP on
the recognition and measurement of assets.
4. Describe the IFRS requirements in a variety of disclosure and
presentation standards.
5. Explain the major differences between IFRS and U.S. GAAP on
certain disclosure and presentation issues.
6. Analyze the impact that the differences between IFRS and
U.S. GAAP can have on financial statements.
INTERNATIONALSCHOL
Types of Differences Between IFRS and U.S. GAAP
• Definitions
• Recognition.
• Measurement.
• Alternatives.
• Lack of requirements or guidance.
• Presentation.
• Disclosure.
Learning Objective 1 INTERNATIONALSCHOL

Types of Differences Between IFRS and U.S. GAAP
IFRS more flexible in many cases:

• Choice of alternatives.
• Less bright-line guidance leads to more judgment in applying
IFRS.

1. IAS 2 Inventories
3 main issues addressed by IAS 2:

• Initial cost.
• Cost formulas to allocate cost of inventories to expense.
• Subsequent balance sheet measurement.

• Costs included:
– Cost of purchase (eg: purchase price and direct
acquisition costs).
– Conversion costs (eg: labor and production overhead). Fixed
production overhead should be based on normal level of production.
– Other costs incurred in bringing inventories to their present location
and condition (eg: design, interest if takes time to bring to saleable
condition).
• Costs excluded:
– Abnormal waste.
– Storage unless necessary for production process.
– Purely administrative overhead.
– Selling costs.
• Exercise 1 page 139
• A company incurred the following costs related to the production of
inventory in the current year:
$
Cost of materials 100,000
Cost of direct labor 60,000
Allocation of variable overhead costs 30,000
Allocation of fixed overhead costs (based on normal 25,000
production levels)
Storage costs (after production, prior to sale) 2,000
Selling costs 8,000
• The cost of materials included abnormal waste of $10,000. What is the

cost of inventory in the current year?
• Exercise 1 page 139
Cost of inventory $
Cost of materials 100,000
Cost of direct labor 60,000
Allocation of variable overhead costs 30,000
Allocation of fixed overhead costs (based on normal 25,000
production levels)
Abnormal waste (10,000)
Cost of inventory 205,000

Cost formulas:
• For interchangeable inventories: FIFO, AVCO. No LIFO. Standard cost
and retail method are also acceptable.
• For not ordinarily interchangeable inventories: specific identification
method.
• Must use same cost formula for similar nature and use inventory items.
Subsequent balance sheet measurement:
• On balance sheet, inventories should be reported at lower of cost
and net realizable value.
• NRV = estimated selling price less costs of completion and other costs
to make sale.
• Write-downs to NRV must be reversed when the selling price
increases.
Learning Objectives 2 and 3 INTERNATIONALSCHOL
1. IAS 2 Inventories. Example
INTERNATIONALSCHOL
US. GAAP:
- Cost formulas:
Allow LIFO
Do not require the same cost formula for similar nature and use
inventories
- Subsequent balance sheet measurement:
Any write-down establishes new cost for subsequent periods.
Reversing prior write-down is prohibited.

2. IAS 16 Property, Plant & Equipment
IAS 16 provides guidances related to:

1. Recognition of initial and subsequent cost
2. Measurement after initial recognition
3. Depreciation
4. Derecognition

HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP:/IS.VNU.EDU.VN 2. IAS 16 Property, Plant & Equipment
1. Recognition of initial and subsequent costs
Initially measured at cost. Including: (1) purchase price; (2) all costs
directly to put it into service; (3) estimated costs of dismantling the
asset and restoring the site.
- Example: Caylor Corporation constructed a powder coating facility at a
cost of $3,000,000: $1,000,000 for the building and $2,000,000 for
machinery and equipment. Local law requires the company to dismantle
and remove the plant assets at the end of their useful life. Caylor
estimates that the net cost, after deducting salvage value, for removal of
the equipment is $100,000, and the net cost for dismantling and
removing the building will be $400,000. The useful life of the facility is 20
years, and the company uses a discount rate of 10 percent in
determining present values.
- Required: Calculate the initial costs of each of the building and
machinery & equipment; and prepare the appropriate journal entries

1. Recognition of initial and subsequent costs

- IAS 16 allows 2 treatments for subsequently reporting fixed assets on
BS: cost model and revaluation model.
+ Cost model: CA of PPE = cost – accumulated depreciation –
accumulated impairment losses. (same with US GAAP)
+ Revaluation model: CA of PPE = revalued amount – subsequent
accumulated depreciation – subsequent accumulated impairment loss
- US GAAP: does not allow to revalue PPE.

- Revaluation model:
• IAS 16 requires that all assets of the same class be revalued at the
same time
• Annual revaluation is not compulsory. Revaluation should be
conducted regularly to keep the revalued amount not differring
materially from fair value at the reporting date.
• Treatment of revaluation surpluses and deficits:
+ Revaluation gains should be off-setted against previous
revaluation loss recognized in PL, any excess should be credited
to revaluation surplus in equity.
+ Revaluation losses should be off-setted against previous
revaluation gain recognized in revaluation surplus, any excess
should be expensed off in PL.
• Example: Kiely Company has elected to measure PPE at revalued
amounts. Costs and fair values for Kiely Company’s 3 classes of
PPE at Dec 31, Year 1 and Year 2 are as follows:
Land Buildings Machinery
Cost $100,000 $500,000 $200,000
Fair value at 31/12/Y1 120,000 450,000 210,000
FV at 31/12/Y2 150,000 460,000 185,000
• Required: Prepare journal entries for the revaluations at 31/12/Y1

and 31/12/Y2

Cost $100,000 $500,000 $200,000
Fair value at 31/12/Y1 120,000 450,000 210,000
Gain/loss on revaluation 20,000 (50,000) 10,000
31/12/Y1:
Dr Land: 20,000
Cr Revaluation surplus – land: equity 20,000
Dr loss on revaluation (expense on PL): 50,000
Cr Buildings: 50,000
Dr Machinery: 10,000
Cr Revaluation surplus – machinery: 10,000
Fair value at 31/12/Y1 120,000 450,000 210,000
FV at 31/12/Y2 150,000 460,000 185,000
Gain or loss 30,000 10,000 (25,000)
31/12/Y2:
Dr Land 30,000
Cr Revaluation surplus - land: 30,000
Dr Buildings: 10,000
Cr Recovery of loss on Revaluation (P/L) 10,000
Dr Revaluation surplus - machine 10,000
Dr Loss on revalution (PL): 15,000
LearningCr machinery:
Objectives 2 and 3 25,000 INTERNATIONALSCHOL
3. Depreciation
- Depreciation is the allocation of the depreciable amount of an asset over
its estimated useful life.
- Estimated useful lives, residual value and method should be reviewed
annually—any changes are “prospective”
- Note: Significant components must be depreciated separately if they
have different appropriate depreciation methods or useful lives.
(Component depreciation is not common under US GAAP).

Example: Component Depreciation
On January 1, Year 1, an entity acquires a new piece of

machinery with an estimated useful life of 10 years for
$120,000. The company has determined that the straight-
line method. The component as following:
1. Calculate Depreciation Year 1 follow IFRS?

2. Calculate Depreciation Year 1 follow U.S. GAAP
INTERNATIONALSCHOL
Example: Component Depreciation
1. IFRS
Component Cost Useful life Depreciation
Motor $10,000 5 $2,000
Inspection 2,000 2 1,000
Machine 108,000 10 10,800
Total $120,000 $13,800
2. U.S. GAAP
Total $120,000 10 $12,000
3. Depreciation
2 alternative treatments of accumulated depreciation upon Revaluation
described in IAS 16:
- Restate the accumulated depreciation proportionately with the change
in the gross carrying amount of the asset
- Eliminate the accumulated depreciation against the gross carrying
amount of the asset
Example: Kiely has buildings that cost $1,000,000 with accumulated
depreciation of $600,000 on Dec 31, Year 1. On that date, Kiely
determines that the market value for these buildings is $750,000. Kiely
wishes to use revaluation method to report buildings.

3. Depreciation
Method 1: Restate the Acc. Depn proportionately
CV of asset before revaluation: 400,000 (40% cost)
Restated cost: x
Restated acc. Depn: (x)
Net carrying amount: 750,000
 Restated cost: 1,875,000
 Restaed acc. Depn: 1,125,000
Entries: Dr PPE – cost: 875,000
Cr Acc. Depn: 525,000
Cr Revaluation surplus: 350,000
3. Depreciation
Method 2: Eliminate the acc. depn
Dr Acc depn: 600,000
Cr Buildings – cost: 600,000
Dr Buildings – cost: 350,000
Or
Dr Acc depn: 600,000
Cr Buildings – cost: 250,000
4. Derecognition
- Derecognition refers to the removal of an asset or liability from the
balance sheet and the accounts
- An item is derecognized when: (1) retirements and (2) disposals

3. IAS 40, Investment Property
• Definition: Land or buildings held for rental, capital appreciation or both.

• Same general principles as IAS 16
• Choice of cost model or fair value model. Fair value model differs from
revaluation model for PPE in that:
− Revaluation must be conducted annually, no need to
depreciate the asset.
− Changes in Fair value (FV) recognized in current income
(P/L) and not revaluation surplus (OCI)
• Even using cost model—disclose FV in notes.
• U.S. generally requires use of cost model for investment property.

4. Biological Assets
IAS 41 Agriculture applies the requirements of IFRS to the treatment of

biological assets.
Biological assets are living animals or plants. They are divided into two
broad categories of agricultural production system:
(a) Consumable: animals and plants themselves are harvested (such as
beef cattle and wheat).
(b) Bearer: animals and plants bear produce for harvest (such as dairy
cows and apple trees).
Note: Bearer plants (eg. Apple trees) should be accounted in accordance
with IAS 16.

4. Biological Assets
Measurement
- IAS 41 requires all biological assets to be measured at the year end at
fair value less cost to sell.
- Fair value can usually be taken to be market value.
- Any gain or loss arising from changes to fair value is recognised in
profit or loss.
- Agricultural produce is recognised prior to harvest at fair value less
estimated point of sale costs.
- Following harvest agricultural produce is classified as inventory and
accounted for in accordance with IAS 2.
- This measurement method resembles the fair vale method for
investment property. However, while IAS 40 makes the fair value
method optional for investment property, IAS 41 makes it mandatory for
biological assets in most case.
Homework
Exercises and problems 1-9 pages 139, 15-16, 18, page

143

5. IAS 36, Impairment of Assets
• PPE; intangible assets; goodwill; investments in subsidiaries,

associates and joint ventures should be tested for impairment.
• Impairment test does not apply to inventory, construction in progress,
deferred tax assets, employee benefit assets or financial assets (eg
accounts and notes receivable).
• Under IAS 36, entity must assess annually whether there are any
indicators that assets are impaired—external events (eg economic,
legal, technological) or internal events (eg damage, obsolescence).
• Impairment test for asset is also required by US GAAP with several
important differences.

• Impairment means carrying amount > recoverable amount:

– Recoverable amount = greater of net selling price and value in use
– Net selling price = price in active market less disposal costs
– Value in use = PV of future net cash flows (cover maximum of 5 years unless
longer period is justified)—based on approved budgets and using
appropriate discount rate
• U.S. GAAP– carrying amount > undiscounted future cash flows
(net selling price not considered).
• Impairment more likely under IFRS since discounted cash flows
is used.

Measurement of Impairment Loss

Under IAS 36:
- Impairment loss = CA – Recoverable amount
- Impairment loss can be reversed if recoverable amount > new carrying
amount
- Can only reverse up to what it would have been if no impairment loss had
been recognized.
- Recognize reversal in income immediately.
Under US GAAP:
- Impairment loss = CA – Fair value
- US GAAP does not allow the reversal of a previously recognized
impairment loss
Example: Determination and Measurement of
Impairment Loss
Required: Determine whether the equipment has been impaired in

accordance with IFRSs and US GAAP? How much is the impairment
loss?
INTERNATIONALSCHOL
Example: Determination and Measurement of
Impairment Loss
- IFRSs:
Carrying amount: 50,000
Recoverable amount: higher of FVLCS and VIU. FVLCS (39,000),
VIU (46,000)
=> Impairment: 4,000
- US GAAP:
CA: 50,000
Undiscounted future CF: 55,000
=> no impaired
INTERNATIONALSCHOL
Example: Reversal of impairment loss
Spring Company purchased new water filtration equipment at the

beginning of year 1 for $1,000,000. expected useful life of it is 40 years
with no residual value. By the end of year 3, Spring concluded that the
equipment was not performing up to expectations and estimated its
recoverable amount of $740,000 based on net selling price. In January,
year 6, a technician discovered that the equipment had not been properly
set up at the time of initial installation. Subsequent adjustments
significantly boosted its performance. New recoverable amount of
$900,000 is determined based on its value in use.
INTERNATIONALSCHOL
ANSWER
- At the end of year 3:
Cost: 1,000,000
Acc. Depn: (1,000,000/40*3) (75,000)
CV: 925,000
Impairment: (185,000)
Post-impaired value: 740,000
- At the end of year 5:
Post-impaired value: 740,000
Acc. Depn (740,000/37*2) (40,000)
CV: 700,000
CV without impairment: 1,000,000 – 1,000,000/40*5 = 875,000
RA: 900,000
 Impairment reverse: 875,000 – 700,000 = 175,000
INTERNATIONALSCHOL
6. IAS 38, Intangible Assets
Applies to:
• (i) Purchased intangibles.
• (ii) Intangibles acquired in business combination.
• (iii) Internally-generated intangibles.
• (iv) Goodwill covered separately under IFRS 3— Business
Combinations.

Definition:
• An identifiable, nonmonetary asset without physical substance.
• Held for production of goods or services, rental to others, or for
administrative purposes.
• Must be controlled by enterprise as result of past events from which
future economic benefits are expected to be realized.
• Must expense immediately if definition not met unless It is obtained in
business combination and then it is included in goodwill.
Question:
• Is human capital or talent, experience, etc of an entity’s employees an
intangible asset of the entity?

(i) Purchased intangibles:

• Initially measured at cost and useful life is either finite or infinite .
• Finite—amortize over useful life—usually assume zero residual value
unless 3rd party agreement to purchase or active market exists.
• Indefinite – no foreseeable limit to the period over which the asset is
expected to generate cash flows – no amortization.
• Similar to U.S. GAAP treatment.

(ii) Intangibles acquired in business combination:

• Like U.S. GAAP— in a combination, patents, trademarks and customer
lists should be recognized as assets apart from goodwill as long as fair
value is measurable (even if not previously recognized by the acquiree).
• Must have finite or infinite life.
• Special situation: target’s development costs incurred prior to its being
acquired---if meet certain criteria—capitalize— otherwise include in
goodwill.
• Recent changes in U.S. GAAP converged treatment of in- process
development costs with IFRS.

6. IAS 38,Intangible Assets
(iii) Internally generated intangibles:

• Major difference with U.S. GAAP
- IFRS: some development costs may be capitalized
- U.S. GAAP: all research and virtually all development costs should be
expensed immediately
• R&D costs under IAS 38:
- Research is original and planned investigation undertaken with the
prospect of gaining new scientific or technical knowledge and
understanding => Expensed off immediately
- Development: Development is the application of research findings or
other knowledge to a plan or design for the production of new or
substantially improved materials, devices, products, processes, systems
or services prior to the commencement of commercial production or use
=> Be capitalized if it qualifies all PIRATE criteria in IAS 38
- If can’t separate R&D costs—must treat all as research and expense
immediately.

All PIRATE criteria must be met for
capitalization of development costs:
P – How Probable future economic benefits will be generate
I – Intention to complete the intangible asset for use or sell
R – the availability of Resources to complete the development and use
or sell
A – Ability to use or sell
T – Technical feasibility of completing the asset
E – reliable measurement of Expenditure
- Development costs capitalized as an internally generated intangible can
only be treated as having a finite useful life.

Example: Z Co incurred the following costs during the year ended 31

August 20X8:
(1) $20,000 on salaries for market research staff sent out to canvass
drivers‘ opinions on a potential new car.
(2) $100,000 to purchase a machine to manufacture components for
the new car. It has an estimated useful life of ten years.
(3) $25,000 on materials to manufacture a prototype and $50,000 on
salaries relating to its design and manufacture. The new car is
expected to go on sale in 20X9.
Required
How should each of the above items be shown in the financial statements
for the year ended 31 August 20X8?
Example: Szabo Company Inc. incurred costs to develop a specific product

for a customer in Year 1, amounting to $300,000. Of that amount, $250,000
was incurred up to the point at which PIRATE criteria were met. In Year 2,
Szabo Company incurred an additional $300,000 in costs in the
development of the product. The product was available for sale on January
2, Year 3, with the first shipment to the customer occurring in mid-February,
Year 3. Sales of the product are expected to continue for four years, at
which time it is expected that a replacement product will need to be
developed. The total number of units expected to be produced over the
product’s four-year economic life is 2,000,000. The number of units
produced in Year 3 is 800,000. Residual value is zero.
Required: Prepare appropriate journal entries for the R&D costs?
7. Goodwill under IFRS 3, Business
Combinations
• Recognize only in business combinations, is measured as the
difference between (a) and (b)
(a) The consideration transferred by the acquiring firm plus any amount
recognized as noncontrolling interest;.
(b) The fair value of net assets acquired
• When (a) exceeds (b), goodwill is recognized as an asset. When (a) is
less than (b), a “bargain purchase” – negative goodwill is possible—
must recognize in income (P/L).
• Not amortized as life is indefinite.

7. Goodwill under IFRS 3, Business
Combinations
Impairment of goodwill:
• As an indefinite-lived intangible asset, goodwill is not amortized.
Instead, goodwill must be tested for impairment annually
• Impairment is tested at the level of the cash-generating unit
(CGU)—the smallest identifiable group of assets that generates
cash inflows—use bottom-up and top-down test to allocate
overall goodwill to each CGU.
• Compare carrying value of CGU, including goodwill, with
recoverable amount (higher of value in use and fair value less
costs to sell).
• U.S. GAAP is tested at level of the reporting unit which can be
different and typically larger than CGU.
• U.S. GAAP only requires only a bottom-up test.

8. IAS 23 . Borrowing Costs
• Prior to its revision, IAS 23 provided two methods of accounting for

borrowing costs:
1 . Benchmark treatment: Expense all borrowing costs in the period
incurred.
2. Allowed alternative treatment: Capitalize borrowing costs that are
attributable to the acquisition, construction, or production of
qualifying assets.
• IAS 23 was revised in 2007 to be similar to U.S. GAAP. As a result, the
benchmark treatment was eliminated, the allowed alternative treatment
became the only acceptable treatment

8. IAS 23 . Borrowing Costs
• IAS 23 defines borrowing costs as interest and other costs incurred in

connection with borrowing—broader in scope than U.S. GAAP definition
of interest cost.
• IAS 23 includes foreign currency exchange gain/loss if regarded as
adjustment to interest cost.
• An asset that qualified for borrowing cost capitalization (Qualifying
asset) is one that takes substantial time to get ready for intended use
or sale.
• Under IAS 23 (and not U.S. GAAP) specifically includes inventories that
require a substantial period to bring them to a marketable condition.

8. IAS 23. Borrowing Costs
• Capitalized amount is the amount of interest that could have been

avoided in absence of expenditure on the qualifying asset.
• Types of borrowing costs:
• Funds borrowed specifically: Capitalise actual borrowing costs incurred
less investment income on temporary investment of funds. Unlike U.S.
GAAP, IAS 23 allowed to offset interest income on temporary
investment of specific borrowed funds against interest cost.
• Funds borrowed generally: Capitalise borrowing costs calculated as
the weighted average cost of borrowings for the period multiplied by
the expenditure on the qualifying asset. (Similar to US GAAP)
• Example: Capitalization of Borrowing Costs (page 143)

HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP:/IS.VNU.EDU.VN 8. IAS 23. Borrowing Costs
• On January 1, Year 1, Pinquill Company borrows 30,000,000 euros (€) at
an annual interest rate of 8% to finance the construction of a new facility
in Spain. The facility is expected to cost €30,000,000 and take two years
to build. Pinquill temporarily invests the borrowed euros until it is need.
During Year 1, expenditures of €20,000,000 are incurred; the weighted-
average expenditures are €12,000,000. Pinquill makes annual interest
payments on the loan and will repay the loan in full on December 31, Year
2 by converting U.S. dollars into euros, The U.S. dollar/euro exchange
rate was $1.42 on January 1, Year 1, and $1.40 on December 31, Year 1
(reporting currency is USD). The change in exchange rate is the result of
the difference in interest rates on U.S. dollar and euro borrowings.
• Required: Assume that income earned on temporary investment of
borrowing during year 1 is € 225,000. Calculate the amount of interest
eligible for capitalization?
HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP:/IS.VNU.EDU.VN 8. IAS 23. Borrowing Costs

HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP: /IS.VNU.EDU.VN-HTP:/IS.VNU.EDU.VN Homework
• 19-23, 25-28, 34, 36, 37 Page 144

IA Chapter4

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

IA Chapter4

Uploaded by

Copyright:

Available Formats

INTERNATIONALSCHOL

Copyright © 2012 The McGraw-Hill Companies,

Types of Differences Between IFRS and U.S. GAAP

Learning Objective 1 INTERNATIONALSCHOL

Types of Differences Between IFRS and U.S. GAAP

IFRS more flexible in many cases:

Learning Objective 1 INTERNATIONALSCHOL

3 main issues addressed by IAS 2:

Learning Objective 2 INTERNATIONALSCHOL

• The cost of materials included abnormal waste of $10,000. What is the

Learning Objective 2 INTERNATIONALSCHOL

1. IAS 2 Inventories. Example

Learning Objectives 2 and 3 INTERNATIONALSCHOL

IAS 16 provides guidances related to:

Learning Objectives 2 and 3 INTERNATIONALSCHOL

Learning Objectives 2 and 3 INTERNATIONALSCHOL

Learning Objectives 2 and 3 INTERNATIONALSCHOL

Learning Objectives 2 and 3 INTERNATIONALSCHOL

• Required: Prepare journal entries for the revaluations at 31/12/Y1

Learning Objectives 2 and 3 INTERNATIONALSCHOL

Learning Objectives 2 and 3 INTERNATIONALSCHOL

Example: Component Depreciation

On January 1, Year 1, an entity acquires a new piece of

1. Calculate Depreciation Year 1 follow IFRS?

Example: Component Depreciation

Learning Objectives 2 and 3 INTERNATIONALSCHOL

2. IAS 16 Property, Plant & Equipment

Learning Objectives 2 and 3 INTERNATIONALSCHOL

3. IAS 40, Investment Property

• Definition: Land or buildings held for rental, capital appreciation or both.

Learning Objectives 2 and 3 INTERNATIONALSCHOL

IAS 41 Agriculture applies the requirements of IFRS to the treatment of

Learning Objective 2 INTERNATIONALSCHOL

Exercises and problems 1-9 pages 139, 15-16, 18, page

Learning Objective 2 INTERNATIONALSCHOL

5. IAS 36, Impairment of Assets

• PPE; intangible assets; goodwill; investments in subsidiaries,

Learning Objective 2 INTERNATIONALSCHOL

• Impairment means carrying amount > recoverable amount:

Learning Objectives 2 and 3 INTERNATIONALSCHOL

5. IAS 36, Impairment of Assets

Measurement of Impairment Loss

Required: Determine whether the equipment has been impaired in

Spring Company purchased new water filtration equipment at the

Learning Objective 2 INTERNATIONALSCHOL

6. IAS 38, Intangible Assets

Learning Objective 2 INTERNATIONALSCHOL

(i) Purchased intangibles:

Learning Objectives 2 and 3 INTERNATIONALSCHOL

(ii) Intangibles acquired in business combination:

Learning Objectives 2 and 3 INTERNATIONALSCHOL

(iii) Internally generated intangibles:

6. IAS 38, Intangible Assets

Learning Objective 2 INTERNATIONALSCHOL

6. IAS 38, Intangible Assets

Example: Z Co incurred the following costs during the year ended 31

6. IAS 38, Intangible Assets

Example: Szabo Company Inc. incurred costs to develop a specific product

Learning Objective 2 INTERNATIONALSCHOL

Learning Objectives 2 and 3 INTERNATIONALSCHOL

8. IAS 23 . Borrowing Costs

• Prior to its revision, IAS 23 provided two methods of accounting for

Learning Objectives 2 and 3 INTERNATIONALSCHOL

8. IAS 23 . Borrowing Costs