Term
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Definition
| Is the difference between inventory on LIFO method VS any other cost method. |
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Term
| The US GAAP lower of cost or market rule fro inventories may be applied to total inventory, to groups of similar items or to each item. Which application generally results in the lowest inventory amount? |
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Definition
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Term
| Estimates of pricelevel changes for specific inventories are required for which of the following inventory method |
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Definition
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Term
| Market Value of Inventory |
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Definition
| US GAAP, market value is the median (middle value) of an inventory item's replacement cost, its market ceiling and its market floor. |
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Term
| Replacement cost of inventory |
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Definition
| is the cost to purchase the item of inventory as of the valuation date |
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Term
| Market ceiling of inventory |
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Definition
| Market Ceiling is an item's net selling price less the costs to complete and dispose (called net realizable value) |
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Term
| Market floor of inventory |
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Definition
| market floor is the market ceiling less a normal profit margin |
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Term
| What cost should be capitalized for a plant asset |
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Definition
| Any cost incurred to acquire and make ready a plant asset is capitalized |
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Term
| Weighted average amount of accumulated Expenditures |
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Definition
| Capitalized interest costs for a particular period are determined by applying an interest rate t the average amount of accumulated expenditures for the qualifying assets during the period (this is known as the avoidable interest) |
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Term
| Rule for Interest cost during the construction period and subsequent to the construction period? |
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Definition
| Rule: Interest costs incurred during the construction period of machinery to be used by a firm as a fixed asset, should be capitalized as part of the historic cost of acquiring the fixed asset. Interest costs on the fixed assets subsequent to the construction period as well as all interest costs on the routine manufacturing of machinery for sale to customers(inventory) should be expensed in the income statement for the period incurred. |
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Term
| Investment property (IFRS) |
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Definition
| Under IFRS land or building held by an entity or by a lessee under a finance (capital) lease to earn rentals of for capital appreciation are classified and recorded as investment property. |
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Term
| Investment property IFRS - Measurement Models |
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Definition
1. Cost Model: Under Cost model, investment property is reported on the balance sheet at historical cost less accumulated depreciation (if appropriate). When the cost model is used the fair value of the investment property must be disclosed.
Fair Value Model: Under the fair Value model, investment property is reported on the balance sheet at fair value and is not depreciated. The best evidence for fair value is current prices in an active market for similar property in the same location and condition. FAir value reflects market conditions at the end of the accounting period.
Once adopted FV measurement must be applied consistently until asset is disposed of or can no longer be classified as investment property because it is owner occupied or will be developed for sale in the ordinary course of business. |
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Term
| depletion base calculation |
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Definition
a. cost to purchase
b. + development costs to prepare the land for extraction
c. + Any estimated restoration costs
d. Less: Residual Value of land after the resources (e.g. mineral ore, oil, etc) are extracted. |
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Term
| sum of year method formula |
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Definition
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Term
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Definition
| depreciation expense = 2*1/N*(Cost - Accumulated Depreciation) |
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Term
| Units of production method calculation |
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Definition
service potential declines with use: Cost-salvage value/ estimated units or hours = rate per unit or hour.
Rate per unit* # of units produced (or hrs worked) = Depreciation expense. |
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Term
| Both group and composite depreciation are based on? explain the two. |
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Definition
| Both group and composite depreciation are based on straight-line dep method. The group method is for groups of similar assets while the composite method is for a collection of dissimilar assets. |
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Term
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Definition
| The cost of the equipment to the manufacturing firm - salvage value estimated by the manufacturing firm. |
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Term
| When is a long-lived asset considered impaired |
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Definition
| A long lived asset is impaired if the carrying amount of the asset is greater than, not less than, its fair value and if that carrying amount is not recoverable ( the FV would be recoverable, but the diff would not be). An impairment loss would then be recognized for the amount of the diff between book value and fair value. |
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Term
| Impairment exists under IFRS if? |
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Definition
Impairment exists when the CV of the fixed asset exceeds the fixed asset's recoverable amount. The recoverable amount is the greater of the asset's FV less costs to sell and the asset's value in use (PV of Future cash flows)
Impairment Loss = FV less cost to sell - Carrying Value. |
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Term
| Reversal of impairment loss is permitted or prohibited in GAAP/ IFRS |
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Definition
GAAP - Prohibited
IFRS - Permitted |
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Term
| When should a long-lived asset be tested for recoverability? |
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Definition
| When events or changes in circumstances indicate that its carrying amount may not be recoverable. The Carrying amount of FA should be tested for recoverability at least annually or the above. |
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Term
| Under US GAAP restoration of carrying value for long lived assets are permitted if an assets fair value increases subsequent recording an impairment loss for ______ |
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Definition
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Term
| Under US GAAP restoration of carrying value for long lived assets are permitted if an assets fair value increases subsequent recording an impairment loss for ______ |
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Definition
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