26b.Compare the intangible assets: purchased, internally developed, acquired in a business combination.
Intangible assets- 属于long-term assets-lack physical substance, eg. patents, brand names, copyrights and franchises.
Amortized is the cost of finite-lived intangible assets over useful life.
Indefinite-lived intangible assets not amortized, must test for impairment at least annually.
Under IFRS,
identifiable intangible asset 可辨认无形资产must be:
- separated from firm/ contractual or legal right
2.controlled by the firm
3.expected to provide future economic benefits
Future economic benefits must be probable and asset's cost must be reliably measurable.
Unidentifiable intangible asset-cannot purchased separately
eg.goodwill
Not all intangible assets are reported on BS.
Intangible Assets Created Internally
research and development costs(under IFRS) and software development costs
Under IFRS, research costs--aimed at the discovery of new scientific or technical knowledge and understanding.
Development costs are capitalized-to translate research findings into plan or design of a new product or process.
Under GAAP,两种cost都算expensed
Purchased intangible assets
recorded on the BS cost, typically fair value at acquisition.
Intangible Assets Obtained in a business combination
acquisition method,
the purchase price is allocated to the identifiable assets and liabilities of the acquired firm on the basis of fair value.
26c. Explain and evaluate how capitalizing vs expensing costs in the period
1.Net income
capitalize an expenditure delays the recognition of an expense in IS.
2.Shareholders' Equity
3.Cash flow from operations
4.Financial Ratios
26d. Describe the different depreciation methods for PP&L and calculate depreciation expense
Depreciation is the systematic allocation of an asset's cost over time.
two important terms:
a.carrying (book) value.
The net value of an asset or liability on the BS.
For PP&L, carrying value= historical cost-accumulated deprecitiaon
b. historical cost又叫gross investment in the asset
the original purchase price of asset包括installation and transportation costs.
Depreciation is a real and significant operating expense.
economic depreciation--actual decline in the value of asset over the period.
Depreciation methods
1.straight-line depreciation
the predominant method for financial reporting
depreciation expense=(original cost-salvage value)/depreciable life
在各年使用资产情况相同时，采用直线法比较恰当。
- accelerated depreciation
more depreciation expense is recognized in the early year of asset' life and less depreciation expense in the later years.
-早期lower net income，后期higher net income
DDB double-declining balance method
=(2/depreciable life in years)*book value at beginning of year
必须注意不能使固定资产的净值低于其预计净残值以下。 - unites-of-production -based on usage rather than time
depreciation expense is higher in period of high usage.
=(original cost-salvage value)/life in output units)*output units in the period
是根据实际工作量计提折旧额的一种方法。理论依据在于资产价值的降低是资产使用状况的函数。根据企业的经营活动情况或设备的使用状况来计提折旧.
Component Depreciation
IFRS requires firms to depreciate the components of an asset separately,
require useful life estimates for each component.
Component depreciation也可以用gaap但是很少用
26e. Describe how the choices of depreciation method and assumptions concerning useful life and residual value affect
For single long-lived asset, these effects reserve in the later years of its useful life.
For a fast-growing firm, persist over time as long as the firm is acquiring more depreciable assets than it is derecognizing.
ROA and ROE are higher with 直线法
Effects of depreciation methods 直线法vs accelerated
depreciation expense 低
asset turnover ratios 低
cash flow一样
Net income高
total assets
shareholders' equity
ROA
ROE
26f.Describe the different amortization methods for intangible assets with finite lives and calculate amortization expense.
Intangible assets with finite lives are amortized over useful lives.
Amortization is identical to the depreciation of tangible assets.
However,estimating useful lives is complicated by many legal,regulatory,contractual,competitive and economic factors that may limit the use of intangible assets.
Timing of amortization expense in the IS is the only difference.
eg.trademark-specific expiration date-intangible asset with indefinite life
26g. Describe how the choice of amortization method and assumptions concerning useful life and residual value affect
Amortization method affect expenses, assets,equity and financial ratios
26h. Describe the revaluation model
Under GAAP, no fair value alternative for assets reported on BS.
Under IFRS, most long-lived assets are reported at depreciated cost(cost model).
revaluation model(IFRS很少用）, permits a long-lived asset at fair value, as long as an active market exists for the asset so its fair value can be reliably(and somewhat objectively) estimated.
First Revaluation Date
revaluation surplus
Subsequent Revaluation Dates
26i.Explain the impairment of PP&L
1.Impairments under IFRS
Under IFRS, the firm must assess whether events or circumstances indicate an impairment of an asset's value has occurred.
recoverable amount
value in use
2.Impairments under GAAP
determining an impairment and calculating the loss potentially involves recoverability test
recoverability
loss measurement
26j.Explain the derecognition of PP&L and intangible assets
Derecognition occurs when assets are sold, exchanged or abandoned.
26k.Explain and evaluate ow impairment, revaluation and derecognition of PP&L
26I.Describe the FS presentation and disclosures relating to PP&L
