9.

1 - Categories of Long-Lived
Assets
Property, Plant & Equipment

A tangible item expected to be used for more than one period, and held for use in
the production/supply of goods and services/for rental to others/for
administrative purposes

• Not intended for sale in the ordinary course of business

Investment Property

A unique classification for land and/or buildings that are held for rent/capital
appreciation

Biological Assets

Living plants and animals

Intangible Assets

Long-lived assets that do not have a physical substances

• Separately identifiable and often arise from legal/contractual rights

• Held to generate revenue, and are not intended for sale in the ordinary course of
business
Goodwill

Goodwill is a category of its own, because it does not have physical substance but
it is not a separately identifiable asset

Valuation of Long-Lived Assets

1. Cost Model

Cost Model

Which records assets at cost

• Accumulated depreciation and accumulated impairment losses are kept in a

separate account

Net Book Value

Cost less these accumulated amounts

• Cost is usually the fair value at the date of purchase

2. Revaluation Model

• Companies can choose to use the revaluation model for the following long-
lived assets:

◦ Property, plant and equipment

◦ Intangible assets with an active market; and/or

◦ Exploration and evaluation costs for mineral resources

Revaluation Model

Uses fair value as its measurement base

• The asset is recorded at the revalued amount less accumulated depreciation

and accumulated impairment losses

3. Fair-Value Model

• Companies can choose to use the fair-value model for investment property

Fair-value Model

Assets are revalued to fair value annually

• Depreciation is not recorded with the fair-value model