Archive / 1.5.3 Subsequent Measurement

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Change in residual value

Whilst we have discussed the term ‘residual value’, we haven’t really approached the matter of this being changed. An asset’s residual value is an estimate the management makes using it’s best knowledge of the asset, it’s condition, it’s possible market at the end of it’s useful life, how extensively it will be used and so […]

Writing down assets in their value

An asset is written down in value if and only if the recoverable amount identified is lower of the assets carrying value recognized within the books. On the basis of the test for an impairment you’ve identified the assets recoverable amount (as mentioned earlier it’s highest of either the ‘value in use’ or ‘fair value […]

Property, plant and equipment that’s not in use

First and foremost it’s important you go about and actually investigate into your property, plant and equipment items to identify all assets which don’t find any usage within your business, your production. Often enough I see that it’s not done and assets are carried on the balance sheet even if they’re fully depreciated and in […]

Assets not depreciating

We talk a lot about depreciation, however, as the situation may be, there are assets which don’t depreciate at all. Those are assets that you can technically use for as long as they exist and their value for your business wouldn’t change (unless their market value changes, which is another matter).  (more…)

Depreciation treatment for prepayments and construction in progress

When we think “depreciation”, we define it as reflecting on consuming future economic benefits arising from the asset. However, depreciation of an asset nonetheless begins when it’s available for use, that is, it is in the condition and location which are necessary for the asset to operate as intended. If you think about it, we […]