Chapter 2

Chapter 2

IAS16 property , plant and equipment:
* For emample,the cost of an extension to a building should be capitalised(资本化)，while the cost of general repairs should be written off(revenue expenditure) immediately.
* UEL = useful economic lives (使用寿命，使用寿命改变则折旧也要改变)
* separate components(一个大固资包含不同种类小固资) ç separate assets and each depreciated
* major inspection or overhaul costs(大修一般为revenue cost,但separate components修要capitalised,飞机等)
* revaluations(对固资重新评估)
有两种treatments: 1,cost model: permitted treatment/benchmark


(valued at cost less accumulated depreciation)

2,revalunation model: the allowed altern

(the property plant and equipment maybe carried at a revalued amount less any subsequent accumulated depreciation)

*if the revaluation is adopted,two conditions must be complied with:


A,至少每年revalue一次，使fair value差别不大

B,若一个资产revalue,则同类型资产也要revalue


*若在revalue时出现revaluation gains盈余,则提到equity权益里面;

*若在revalue时出现revaluation losses减值,则确认到income statement损益里面.
======================================================================================Accounting for a revaluation
Steps: 1 restate asset from cost to valuation

2 remove any existing depreciation provision
(指重新评估后的固资以前的折旧都没有了)

3 include increase in carrying value in revaluation reserve
* Journal: D: non-current assets(NBV)
X

C: revaluation reserve
X
--------------------------------------------------------------------------------------Depreciation of revalued asset:

1,must charge(必须计算折旧)；based on valuation less residual value,
over remaining useful economic life(UEL)

2,the whole charge must go to income statement for year

3,make annual reserve transfer(Revaluation reserve -> retained
earnings)for extra depreciation on revalued amount compared to cost.


* Journal: D: I/S – depreciation charge
X

C: non-current asset(NBV)
X


D: revaluation reserve （权益类帐户借方代表减少）



C: retained earnings

EXAMPLE1

Q：the above company purchased a new machine during the year.the related costs were as follows => list price 100 ; installation 20 ; pre-production testing 10 ;

Insurance 2 ; warranty(担保) 2 ; maintenance(维护费) 3 ；

The company received a 10% trade discount on the list price and then a further 3% discount for payment on delivery.the supplier offers three months’credit,but broadleaf chose to take the settlement discount.the installation should have cost 18 but broadleaf wasted 2 on installing the wrong machine supports at first.the maintenance occurred after the start of production and was required by the warranty and the insurance were for one year only.

Calculate the initial cost at which broadleaf should recognise the manchine.
A:
list price
100-10

Installation
20-2

pre-production testing
10

其余三项为费用（只有为使固资正常使用的支出才可资本化)
EXAMPLE2
Q：the above company revalued its land and buildings at the year start to 10000(4000 for the land).the property cost 5000(1000 for the land)ten years prior to the revaluation. The total expected useful economic use of 50 years is unchanged.

Show the effects of the above on the financial statements for the year.
A: 1 land与buildings（分开计算，land不计折旧）

land
building
total
cost
1000
4000
5000
less accumu depr
--
(10*4000/50)
(800)
carrying value(净值) 1000
3200
4200
revalued amount
4000
6000
10000
revaluation reserve
3000
2800
5800

(产生盈余)
D：land
3000

Building
2800
C: revaluation reserve
5800 （权益类帐户贷方代表增加）
计算revaluation后的折旧
2 Depreciation -> building
6000/40 =150

D: I/S
150

C: building 150
3 annual transfer (Revaluation reserve -> retained earnings)

Land:
no transfer (no depreciation assets)

Building: over remaining UEL

revaluation reserve = 2800/40 = 70

D: RR
70

C: returned earnings 70