Pas 2
Pas 2
Pas 2
Use the following information to calculate the value of Sales From Mar 1 68 $15.00 $1,020
inventory on hand on Mar 31 and cost of goods sold Inventory
during March in FIFO periodic inventory system and
under FIFO perpetual inventory system
Sales From Mar 5 Purchase 140 $15.50 $2,170
Mar 1 Beginning Inventory 68 units @ $15.00
per unit
272 $4,226
FIFO Perpetual
20 Sale 116 units @ $19.50
per unit
Dat Purchases Sales Balance
e
24 $16. $39
5 140 $15. $2,1 68 $15. $1,0 50 6
50 70 00 20
Depreciation = (Historical cost – Residual value) ÷ Subsequently, the revaluation surplus is accounted for as
Estimated useful life follows:
1. If the revalued asset is non-depreciable, the
Changes in depreciation method, useful life, and revaluation surplus accumulated in equity is
residual value transferred directly to retained earnings when
● A change in depreciation method, useful life, or the asset is derecognized.
residual value is a change in accounting estimate 2. If the revalued asset is depreciable, a portion of
accounted for prospectively. the revaluation surplus may be transferred
periodically to retained earnings as the asset is
● Prospective accounting means the change being used.
affects only the current period and/or future
periods. The change does not affect past periods. Derecognition
The carrying amount of an item or PPE shall be
Revaluation Model derecognized:
After recognition as an asset, an item of PPE whose fair a. on disposal; or
value can be measured reliably shall be carried at a b. when no future economic benefits are expected
revalued amount, being its fair value at the date of the from its use or disposal
revaluation less any subsequent accumulated
PAS 40 e. Property that is being constructed or developed for
Investment Property future use as investment property.
Includes only land and May include assets other than land Ancillary services to occupants
building and building ● When ancillary services are provided to the occupants
of a property held, the property is classified as
investment property if the services are insignificant
to the arrangement, as a whole.
Accounted for under PAS 40 Accounted for under PAS 16
○ Example: When the owner of an office building
provides security and maintenance services to
the building tenants
Examples of investment property ○ If services provided are significant, the entire
a. Land held for long-term capital appreciation rather property is classified as PPE.
than for short-term sale in the ordinary course of
business. Measurement
b. Land held for a currently undetermined future use. Initial Measurement: Cost
c. A building owned by the entity (or held by the entity ● Cost depends on the mode of acquisition.
under a finance lease) and leased out under one or ● Purchase price and any directly attributable
more operating leases. costs in bringing the asset to its intended
● An operating lease is a contract that permits condition.
the use of an asset but does not convey ● It may include professional fees for legal
ownership rights of the asset. services, property transfer taxes and other
d. A building that is vacant but is held to be leased out transaction costs.
under one or more operating leases. Subsequent Measurement: Either the Cost model or Fair value
model
The following are excluded from the cost of investment Calculation of Investment Property
property and are expensed immediately:
a. Start-up costs (unless they are necessary to bring the
property to the condition necessary for it to be capable
of operating in the manner intended by management)
b. Operating losses incurred before the investment
property achieves the planned level of occupancy
c. Abnormal amounts of wasted material, labor or other
resources incurred in constructing or developing the
property
Commencement of capitalization
The capitalization of borrowing costs as part of the cost
of a qualifying asset commences on the date when all of
the following conditions are met:
a. The entity incurs expenditures for the asset;
b. The entity incurs borrowing costs; and
c. It undertakes activities that are necessary to
prepare the asset for its intended use or sale.
Suspension of capitalization
Capitalization of borrowing costs shall be suspended
during extended periods of suspension of active
development of a qualifying asset.
Cessation of capitalization
An entity shall cease capitalizing borrowing costs
when substantially all the activities necessary to
prepare the qualifying asset for its intended use or sale
are complete.
Recognition
An intangible asset shall be recognized if management
can demonstrate that:
1. The item meets the definition of intangible asset;
2. It is probable that the expected future economic
benefits will flow to the entity; and
3. The cost of the asset can be measured reliably.
Initial measurement
An intangible asset shall be measured initially at cost.
Measurement of cost depends on how the intangible
asset is acquired. Intangible assets may be acquired
through:
1. Separate acquisition
2. Acquisition as part of a business combination
3. Acquisition by way of a government grant
4. Exchanges of assets
5. Internal generation
Separate acquisition
The cost of a separately acquired intangible asset
comprises:
1. Its purchase price, including import duties and
non-refundable purchase taxes, after deducting
trade discounts and rebates; and
2. Any directly attributable cost of preparing the
asset for its intended use.
Acquisition-related costs
Acquisition-related costs are costs the acquirer incurs to
effect a business combination.