1. Understanding, Classification, Recognition and
2. Evaluation of Long-Term Assets.
3. Depreciation of Long-Term Assets.
4. Exit of Long-Term Assets.
5. Submission to Financial Statements.
An asset is a unit-controlled resource
Economic as a result of past events and by which are expected to enter the unit future benefits.
The entity will recognize an element as active.
Long-term (AAGJ) when:
-the element is controlled by the entity
– When the unit expects to receive benefits from it in it future, for more than 12 months from the date of construction of PF, and
-when the cost of the element can be estimated at reliable or accurate way.
To organize their accounting records, Assets
Long-term can be grouped:
a) AAGJ Materials (object of consumption / object of consumption / not object of consumption);
b) Non-Material AAGJ (Study and Development Spent / Patent, brand, copyright / Good name);
c) Financial AAGJ (Participation of control / AGJ Loan /
IAGJ-Actions / -Obligation).
Long-term material assets are:
a) Those identifiable non-monetary assets that they have a physical content
b) Used (controlled) by the security unit of profit in the future
c) For a period of many 12 months.
So it is those AAGJs that have a material content, so they are embodied in a certain material form. For example, land, buildings, machinery and equipment, tools e transport, etc.
Jo Knowledge of AAGJM; AA Input rating of AAGJM; Jab Submission to the AAGJM Accounting Balance Sheet:
• Depreciation of AAGJM
• AAGJM reassessments Pashto Extraction & Sales of AAGJM; AA AAGJM exchange.
An asset element should be known as AAGJM when:
1) It is possible that future economic benefits will come in society (12 months);
2) Asset cost can be measured reliably
The input estimate takes into account the source of the input of
a) Entry from purchase or production – Estimated by Cost of their purchase or production;
b) Enters as a gift – is valued at fair value in the moment of donation;
c) Enters as capital contribution – is assessed with the value of set out in the contribution agreement or with the value evaluated by an expert.
At the cost of an element that is classified as a Long-term Asset
a) Cost of purchase / production (including import taxes and other non-refundable taxes after deduction commercial & financial discounts);
b) Other costs of dad, relating to behavior & putting in its functioning, according to the goals of the unit (including the cost of producing the asset if there are such costs).
Predict the valuation of the purchase of an asset by one total value specified in the contract.
1. When the asset consists of a single element then will be recorded at the value of the lump-sum contract
2. When the asset purchased under the lump-sum contract consists from some elements which need to be presented separately in accounting records the ratios with market value.
The Company bought a building with lump-sum contracts for the amount of 90 million ALL. This contract provided performing land repairs for parking and adjustment. In the market separately the value of the building 60 miles were presented, land 30 miles and repairs and land improvements 10 mil. Determining the part of each constituent element in the contract, or buying a hotel (not as a business) that has composition his some active.
The fair value at the time of donation – the value at which an asset is exchanged when there is a buyer and a seller that want to perform the sales operation, and when they have complete information about it.
If this value cannot be calculated then it can be estimated with the accounting value of the donor.
If even this value is not found then it is estimated with the value of their precious.
Donation is presented as deferred income and is amortized over a lifetime of the asset being included in the income of the period
These assets are valued because the entity expects to receive profits from their use.
Evaluated with the set value in the agreement of contribution or value assessed by an expert.
This value is determined by valuation, that is, by one reasonable assessment, keeping in mind the market value of the asset and the expected benefit that of the entity.
For example, in the initial agreement, partner A invests a plot of land as well contribution to the entity.
Assessment at the close of the exercise, on the date of construction of the balance sheet can be made:
With net historical cost from accumulated depreciation and depreciation (depreciated cost) – basic method;
. With net revalued value from accumulated depreciation and value reductions – alternative methods.
When the assessment is made with the revalued value, in the balance sheet the market value of the asset is presented (as shown by last reassessment made to him) minus accumulated depreciation as well as accumulated losses from price declines, from the date of the last revaluation until the last date of the exercise.
Reassessments are made that the AAGJM net book value in the date of closing of the exercise, to be as close as possible the value of their market on that date.
The revaluation can be done for those AAGJM market value of which it changes frequently and in the manner of visible from their VKN, but it costs.
The standard recommends that reassessments be made once in 3-5 years for the whole class of assets.
When the carried value of an asset increases as a result of revaluation, growth should be credited directly to capital appearing as revaluation surplus. Example:
. TID Company has a building worth 2 million like and with accumulated depreciation of 1 million ALL. In date
31.12.2015 revalues it with the market value that it was 1.3 million let. This is the first re-evaluation of this building
Methods for presenting reassessment:
1) By increasing revaluation both cost and accumulated depreciation;