Why amortisation of goodwill is not permissible?
Before IFRS 3 was introduced, entities were allowed to amortize goodwill. However, after it was introduced back in 2004-2005, amortization of goodwill was strictly prohibited and entities were required to follow impairment regime. As...
What is french straight line method of depreciation?
French straight line depreciation method is not completely a new method to calculate depreciation. Rather it is more of a derivation or extended version of usual straight line method accounting students learn in depreciation topic....
What is ‘Declining balance to Straight line crossover’ method of depreciation?
Majority of the students studying accounting, either at initial stages or experienced in accountancy academics, are familiar with two of the most renowned depreciation methods used by entities to calculate depreciation expense for the...
What is complex asset or separate component asset?
An asset that consistes of different components and each component is significant in relation to the cost of the asset then such assets are called complex assets or separate components asset.
This becomes an important...
Can we capitalize material relocation expenses incurred on non-current asset?
First of all we must be clear about subsequent expenditures, criteria for capitalizing subsequent expenditures in carrying amount of non-current/fixed assets and relocation costs or expenses.
Subsequent expenditures refers to such costs which are...
Is depreciation expense a fixed cost or a variable cost?
Let's revisit the terms Fixed cost and Variable cost and then we will discuss where depreciation cost/expense really fits.
Fixed costs are such costs that do not change with the change in activity level (e.g....
What is the difference between Complex asset and Cash generating unit?
To keep things simple, complex asset (or also known as separate component asset) and cash generating unit (CGU) is more of a concept rather than kinds of assets. These concepts are there just to...
Can we capitalize Tax amounts?
According to IAS 16 the purchase price of the asset includes the amount of non-refundable taxes i.e. such taxes which cannot be claimed back are capitalized and are included in the cost of the...
Why Training Costs are not capitalized as cost of the asset?
First of all not every directly attributable cost can amount to capitalization as cost of the asset. IAS 16 requires more than just a cost to be directly attributable before it qualifies for capitalization...
Why don’t we revalue current assets like non-current assets?
Concept of revaluation of assets is usually associated with non-current assets only. The main reason why the term 'revaluation' is just attached with non-current asset might be that International Accounting Standard (IAS) 16 use...