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 make accounting easy and hassle without disturbing the basic accounting concepts. Complex asset is an asset in which different components are […]
What is Double declining balance method of depreciation?
Before we discuss Double Declining Balance method, lets have a review of basic Declining Balance method and understand how it works. Declining balance method: a type of accelerated depreciation method Declining Balance method or reducing balance method or diminishing balance method is basically one type of accelerated depreciation method which accelerates the recognition of depreciation […]
What is accelerated depreciation method?
i-ask! | Have a question? Ask Tutor! What is meant by accelerated depreciation method? When such method is used and how many types are there for this method? And what is the position of accounting standards on such depreciation method? As the name suggests, the accelerated depreciation method accelerates the the recognition of depreciation […]
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 as cost of the asset or to be included in the carrying amount of the non-current asset or fixed asset. According […]
How can we change the Depreciation method?
Most of the non-current assets held by the entities require depreciation because of use devaluation as a result of use of the asset in business operations or other factors. Many different depreciation methods can be used by the entities to record the effect of devaluation. However, IAS 16 Property, Plant and Equipment requires that: In […]
Why residual value (salvage value) is not allocated to the useful life of a depreciable asset?
Scrap value or salvage value or residual value is the value which we expect to receive by selling an asset at the end of its useful life. So basically it is the monetary value of the economic benefits that will be recovered from the asset by selling the asset and not through use of the […]
Is cash a tangible asset or an intangible asset?
In order to check the status of an asset whether it relates to a particular class or not, it is always a good idea that we go for the definitions provided in the relevant pronouncements first as they give the criteria whether a certain asset can be classified in one way or not. In this […]
