Assets资产andliabilities负债

MANG6269FundamentalsofFinancialAccountingSession3Accountingforassets:•Property,plantandequipment•inventories•receivablesToday’slecture:•Recapfromlasttime•Measurementissuesandestimatesinfinancialstatements:–Noncurrentassetsanddepreciation–Currentassets:•Inventories•Receivables•prepayments–Currentliabilities•AccrualsNON-CURRENT(ORFIXED)ASSETSANDDEPRECIATION•WhatisaNonCurrentAsset?•WhatisMeantby:–‘Property,plantandequipment’–IntangibleFixedAssets–Investmentsheldforlongterm•Whatismeantby“Cost”ofafixedasset?•WhatismeantbyDepreciation?•MethodsofDepreciationDefinitions-AssetAsset:Aresourcecontrolledbytheenterpriseand•Theremustbeanexclusiverightofcontrol•afutureeconomicbenefitassociatedwiththeitemisexpectedtoflowtotheenterprise•Thebenefitmusthavearisenfromsomepasttransactionorevents•theitemhasacostorvaluethatcanbemeasuredwithreliabilityAdaptedfromInternationalAccountingCommittee,FrameworkforthePreparationandPresentationofFinancialStatements,1989Non-currentassetAssetsacquired•foruseintheenterprise•onacontinuingbasis•notforresaleUsemaybe•intheproductionorsupplyofgoodsorservices•forrentaltoothers•orforadministrativepurposesIAS16Examples•Tangible•IntangibleCostofproperty,plantandequipmentincludes:•itspurchaseprice–+importdutiesandnon-refundablepurchasetaxes–-tradediscountsandrebates.•anycostsdirectlyattributabletobringingtheassettothelocationandconditionnecessaryforittobecapableofoperatinginthemannerintendedbymanagement.•Anyobligationsforcoststobeincurredfordismantlingetc.ExamplesofattributablecostRepairsandimprovements•CostofRepairs–arechargedtotheincomestatemente.g.•Costofimprovements-addedtothecostofabuildinge.g.Depreciation•Non-current(fixed)assetsaregraduallyusedupinprovidinggoodsandservicesovertime.•Purposeofaccountingdepreciationistospreadthecostofanon-current(fixed)assetoveritsexpectedusefullife.•Depreciationisamethodofallocatingcost.•Achievesamatchingofcostsagainsttherelatedrevenues.©WeetmanEffectonAccountingEquationAssets=Liabilities+Owners’FundsDepreciation:•“Themeasureofthecostorrevaluedamountoftheeconomicbenefitsofthetangiblefixedassetthathavebeenconsumedduringtheperiod”.•Consumptionincludesthewearingout,theusinguporotherreductionintheusefuleconomiclifeofatangiblefixedassetwhetherarisingfromuse,effluxionoftime,orobsolescencethrougheitherchangesintechnologyordemandforthegoodsandservicesproducedbytheasset.”•“Thefundamentalobjectiveofdepreciationistoreflectinoperatingprofitthecostofuseofthetangiblefixedassets(i.e.theamountofeconomicbenefitsconsumedbytheentity)intheperiod.FRS15•Depreciableamountisthecostofanasset,lessitsresidualvalue.”•“Depreciationisthesystematicallocationofthedepreciableamountofanassetoveritsusefullife.”IAS16Note:influenceofaccrualsconcept.•NetbookvalueisCostlessaccumulateddepreciation(i.e.Theportionofcostthathasnotyetbeen‘usedup’)MethodsofDepreciationinclude:•Straightline•ReducingBalance•MachinehoursExampleAmachineisboughtfor£20,000.Itsexpectedusefullifeis3yearsor60,000machinehoursofuse,anditsestimatedresidualvalueis£8,000.FortheReducingbalancemethod,use25%.Actualhoursused:Year119,000;year221,000;year319,500.Profitbeforedepreciationinyear1is£4,500.Whatisnetprofitundereachof3depreciationmethods?Example•Asmallbusinessbuysamachinefor£20,000.Theownerexpectsittolastforfouryearsandtobescrappedfornothingattheendofthattime.Shedecidestousestraightlinedepreciation.•WhatwillbeshownintheIncomestatementeachyear?•Whatwillbeshowninthebalancesheeteachyear?LandandBuildingsatValuation•Mostfixedassetsareshownintheaccountsatcost(lessaccumulateddepreciation).•Howeversomecompaniesmaychoosetoincludelandandbuildingsatrevaluedamount(lessdepreciation).•Ifacompanymakesthischoice,alltheassetsinthecategorymustberevalued,andtheymustberevaluedatregularintervals.•Revaluationreserve•Lookoutfortheaccountingpolicy.•IAS16referstoopenmarketvaluewhereasFRS15requiredvaluationtobeatexistingusevalue,ImpairmentIfcircumstanceschange,directorsneedtoreviewtheirnon-currentassetsandseeiftheirvalueintheaccounts(thenetbookvalue)hasbeenimpaired.Ifnecessary,theywillneedtoreducethevalueofthefixedassetstothe•higherofthenetrealisablevalue(whatitcanbesoldforlessexpenses)or•thevalueinuse(the“present”valueofestimatedfuturecashflows).Inventories(Stocksandwork-in–progress)•Whatareinventories?•Accountingforinventories•Objectivesofinventoriesvaluation•Normalvaluation:Lowerofcostandnetrealisablevalue•Whatisthecostofinventories?–costflowassumptions–costofmanufacturedgoods,orofservices•Whatisnetrealisablevalue?Whatareinventories?Examplesfromdifferenttypesofbusiness:•Cornershop•Crispmanufacturer•Toymanufacturer•Builder•SolicitorWHATAREINVENTORIES?Assets:(a)heldforsaleintheordinarycourseofbusiness;(b)intheprocessofproductionforsuchsale;or(c)intheformofmaterialsorsuppliestobeconsumedintheproductionprocessorintherenderingofservices.(IAS2)Commoncategories:“a)goodsorotherassetspurchasedforresaleb)consumablestoresc)rawmaterialsandcomponentspurchasedforincorporationintoproductsforsaled)productsandservicesinintermediatestagesofcompletion(Work-in-Progress)e)longt