Asset
PERTEMUAN IV
KEMAMPUAN AKHIR YANG DIHARAPKAN
Classifcation concepts
•
Objective of fnancial reporting
•
Financial statements portray fnancial efects of
transactions and events by:
–
grouping into broad classes (the elements, eg asset)
–
sub-classify elements (eg assets sub-classifed by
their nature or function in the business)
•
IAS 1
–
application of IFRSs with additional disclosures when
necessary results in a fair presentation (faithful
representation of transactions, events and
conditions)
Classifcation concepts—assets and claims
•
Information about the nature and amounts of a
reporting entity’s economic resources and claims
can help users to identify the reporting entity’s
fnancial strengths and weadnesses
•
That information can help users to:
–
assess the reporting entity’s liquidity and
solvency
–
its needs for additional fnancing and how
successful it is lidely to be in obtaining that
fnancing
Classifcation concepts—
assets
•
Diferent types of economic resources afect a
user’s assessment of the reporting entity's
prospects for future cash fows diferently
–
Some future cash fows result directly from
existing economic resources (eg accounts
receivable and investment property)
–
Other cash fows result from using several
resources in combination to produce and mardet
goods or services to customers (eg PPE and
intangible assets) Although those cash fows
cannot be identifed with individual economic
resources (or claims), users of fnancial reports
need to dnow the nature and amount of the
Concept—asset
An asset is defned as:
•
a resource controlled by the entity
•
as a result of a past event
Asset recognition concepts
An asset is recognised when:
•
it is
probable
that any future economic
beneft associated with the item will fow
to the entity; and
•
the item has a cost or value that can be
measured with reliability
Unit of account
•
The unit of account is the level at which an asset is
aggregated or disaggregated for recognition
purposes
•
Most IFRS do not prescribe the unit of account
therefore
judgement
is required in applying
recognition criteria to an entity’s specifc
circumstances For example:
–
individually insignifcant items, such as moulds,
tools and dies may be aggregated when applying
the recognition criteria in IAS 16
9
Assets overview
9
Assets
Intangible
Financial
Inv
Property
PP&E
Inventory
Etc
Defined
Benefit
Deferred
Tax
Cost
CM or
RM
CM or RM
Cost
Nil
Nil
Lo
w
er
o
f C
o
r N
R
V
so
m
e
FV
M
Co
st
C
os
t
C
M
o
r F
VM
Fa
ir
va
lu
e
Am
C
or
F
VM
Tax rat
es &
undisc
ounted
Tax rat
es &
undisc
ounted
FV plan as
sets less
PUC plan o
bligation
FV plan as
sets less
PUC plan o
bligation
Va
rio
us
Va
rio
us
Classifcation of assets
•
Diferent assets exhibit diferent
characteristics (nature) and can be held for
a variety of uses (use) in order to generate
future economic benefts
•
Nature and use determine the
classifcation of assets
•
IFRSs defnes a number of assets
•
For some assets signifcant
judgement
is
ASSET TYPE
USE IN BUSINESS ?
FORM OF FUTURE
ECONOMIC BENEFITS
Inventory (IAS 2)
Sale or used in production
of items for sale or in
services
Usually cash or other asset
received in exchange
PP&nE (IAS 16)
Used in production or
supply of goods or services,
rental or administration
(more than one period)
Usually cash through sale of ‘fnal’
product or service
Intangibles (IAS 38)
Used in production or
supply of goods or services
Usually cash through sale of ‘fnal’
product or service
Investment property
IAS 40)
Earn rentals or capital
appreciation, or both
Usually cash infows independent
from other assets
Financial assets
(IFRS 9)
To generate cash returns or
as a hedging instrument
Cash or other fnancial assets
received in exchange
Defnition
•
Inventories are assets:
•
held for sale in the ordinary course of
business;
•
in the process of production for sale; or
•
materials or supplies to be used in the
production for sale
Defnition
•
Property, plant and equipment (PPE) are
tangible items that are
•
held for use in the production or supply of
goods or services, for rental to others, or
for administration purposes; and
•
are expected to be used during more than
one period
Defnition of property, plant and
equipment
Intangible assets
•
The use within the business of intangible
assets is similar to that of property, plant
and equipment
•
An intangible asset is an identifable
non-monetary asset without physical
substance Such an asset is identifable
when it is separable, or when it arises from
contractual or other legal rights
•
It is sometimes difcult to assess whether an internally
generated intangible asset qualifes for recognition
because of problems in:
a
identifying whether and when there is an identifable
asset that will generate expected future economic
benefts; and
b
determining the cost of the asset reliably In some
cases, the cost of generating an intangible asset
internally cannot be distinguished from the cost of
maintaining or enhancing the entity's internally
generated goodwill or of running day-to-day operations
•
Therefore, special requirements in addition to the
general requirements for recognition of an internally
generated intangible asset apply
Recognition of internally
•
Expenditure on particular internally
generated intangible assets must be
recognised as an expense when incurred
(eg research activities—the original and
planned investigation undertaden with the
prospect of gaining new scientifc or
technical dnowledge and understanding
An intangible asset arising from the development phase of an
internal project must be recognised if, and only if, an entity can
demonstrate all of the following:
–
the technical feasibility of completing the intangible asset so that it
will be available for use or sale
–
its intention to complete the intangible asset and use or sell it
–
its ability to use or sell the intangible asset
–
how the intangible asset will generate probable future economic
benefts Among other things, the entity can demonstrate the
existence of a mardet for the output of the intangible asset or the
intangible asset itself or, if it is to be used internally, the usefulness
of the intangible asset
–
the availability of adequate technical, fnancial and other resources
to complete the development and to use or sell the intangible asset
–
its ability to measure reliably the expenditure attributable to the
intangible asset during its development
Defnition
•
Investment property is land or a building
(including part of a building) or both, held
to earn rentals or for capital appreciation
or both
•
It is neither owner-occupied (see IAS 16
Property, Plant and Equipment
) nor held
for sale in the ordinary course of business
(see IAS 2
Inventories
)
•
Sometimes it is difcult to identify
investment property In such cases an
entity develops criteria so that it can
exercise that judgement consistently
•
eg, owner of a hotel transfers some
responsibilities to third parties under a
management contract (PPE or
investment property?)
Introduction
•
IFRS 9 prescribes the classifcation and
measurement of fnancial assets and
completes the frst phase of the project to
replace IAS 39
Financial Instruments:
Recognition and Measurement
Fair Value
(No impairment)
Amortised cost
(one impairment
method)
Contractual cash
flow characteristics
Business model test
FVO for
accounting
mismatch
(option)
All other
instruments:
• Equities
• Derivatives
• Some hybrid
contracts
• …
Equities:
OCI
presentation
available
(alternative)
Reclassification required
when business model changes
