TAILIEUCHUNG - Lecture Intermediate accounting: IFRS edition - Chapter 11: Property, plant and equipment, investment property and intangible assets: Utilization and impairment
Chapter 11 completes the discussion of accounting for property, plant and equipment, investment property and intangible assets by addressing the subsequent valuation and allocation of the value of these assets to the periods benefitted by their use. Expenditures subsequent to acquisition and impairment are also covered in this chapter. | PROPERTY, PLAND AND EQUIPMENT,INVESTMENT PROPERTY, AND INTANGIBLE ASSETS: UTILIZATION AND IMPAIRMENT Chapter 11 Chapter 11: Property, Plant and Equipment, Investment Property and Intangible Assets: Utilization and Impairment. Chapter 11 completes the discussion of accounting for property, plant and equipment, investment property and intangible assets by addressing the subsequent valuation and allocation of the value of these assets to the periods benefitted by their use. Expenditures subsequent to acquisition and impairment are also covered in this chapter. Some of the cost is expensed each period. Cost Allocation – An Overview Expense Acquisition Cost (Balance Sheet) (Income Statement) The matching principle requires that part of the acquisition cost of property, plant and equipment, investment property and intangible assets be expensed in periods when the future revenues are earned. Depreciation, depletion, and amortization are cost allocation processes used to help meet the matching principle requirements. Part I. The matching principle requires that part of the acquisition cost of property, plant and equipment, investment property and intangible assets be expensed in periods when the future revenues are earned. A portion of an asset’s cost is moved from the balance sheet to the income statement each period. Part II. Depreciation, depletion, and amortization are cost allocation processes. We allocate the cost of the asset to expense over its useful life in some rational and systematic manner. The unused portion of the asset’s cost appears on the balance sheet. We allocate a portion of the cost to expense on the income statement each accounting period. Accumulated depreciation represents the depreciation taken on the asset since its purchase, and is deducted from the asset’s cost on the balance sheet. Depreciation, depletion, or amortization of an asset used in manufacturing a product is a part of the product cost that is included in inventory. The depreciation,
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