When you have figured out the period and the fact that this expense has to be recognized, a final question arises and this is a tricky one. It does not have to be difficult, but depending on the situation may require consultation and extra amount of resources in the form of time and money to come up with a figure to put into the accounts.
Continue reading
Category Archives: 1 Basic Accounting
Is this expense recognized?
What often needs to be assessed is whether certain possible outflows need to be recognized as expense. We have already covered the period in which a certain expense is recognized, but what comes into the equation, is the possibility of this not being an expense later on. We know the period, but since we are not sure of this expense really happening, does it have to be recognized?
Continue reading
In which period is this expense recognized?
An expense is recognized on an income statement. That’s a fact, right. Well, what almost always raises questions, is the proper period the expense needs to be disclosed in. It’s not always this easy, you know … What I am trying to do now, is bring some insight to this situation. You have an expense and you’re not sure whether it needs to be in current, next or even prior period.
Continue reading
Capitalizing expenses as property, plant and equipment – Excel Balance Sheet Template
Excel Balance Sheet Template includes a group of assets labeled as “Property, plant and equipment”. When we have covered the meaning of those assets in our separate blog about property, plant and equipment, in general we want to share with you some issues regarding capitalizing expenses under the abovementioned line.
What often is ignored and neglected are the conditions when expenses are capitalized as assets and when not. It happens more than often that auditors find expenses that should have been capitalized. This is strange when you stop to think about it however. One should be more interested in keeping the costs as low as possible. But to put that aside, we are concentrating more on the possible treatments that should be considered.
Continue reading
Understanding when impairment needs to be charged – Property, plant and equipment schedules template
Property, plant and equipment schedules template includes a line labeled as “Revaluation surplus”. It may however not always be surplus and may be a negative in the form of a charge. In the accounting and IFRS it’s called an impairment charge. To start off with impairment one needs to understand when impairment is initially charged and why is it?
Continue reading
revaluation surplus – Property, plant and equipment schedules template
Property, plant and equipment schedules template includes a line named as “Revaluation surplus”. This is not a normal default line in the schedule and is added on rare cases only. How and why is there such a line in the schedule?
First off the line only comes up when revaluation model is used. When normally assets are carried on the balance sheet at cost less accumulated depreciation model, under the revaluation model the assets are carried at a revalued amount, being its fair value at the date of the revaluation less subsequent depreciation and impairment, provided that the fair value can be measured reliably. Don’t make a mistake here, even assets that are revalued, are also depreciated. But that’s not the point we’re trying to make here.
Continue reading
Subsequent measurement – Property, plant and equipment schedules template
Property, plant and equipment schedules template includes in addition to line “Additions” other changes inside the asset groups. After the initial recognition already discussed in our previous post the asset is carried on the balance sheet and various things can happen to it. It may be disposed, classified as held for sale, depreciated, revalued and impaired. When we’ll cover those changes in more detail in our future posts, what are in fact the key principles one should keep in mind when measuring the assets after the initial recognition?
Continue reading