Report Essay Example | Topics and Well Written Essays - 1000 words - 2

Report - Essay ExampleThe essence of this system of accounting for Non Current assets is that eventually, these assets have to be replaced and whence the best estimate for the company to use as the replacement cost of wearing away is derogation. Accounting in the Income Statement Although IFRS has clearly spelt protrude that costs should be capitalized as part of the cost of the asset if future economic benefits are probable and can be reliably measured (Ernst &Young, 2009, p. 7), the modelling has not clearly specified clearly, how the units of account, used in long-term assets, should be determined. As such, the determination of a unit of account is based on the fragility of the management, who consider both the assets materiality and the intended use in order to fix the appropriate units. In respective of this view, the minor sheer parts should be considered less material and, therefore, treated as expenses infra the Income Statement. The entire ? 5,700 should be accounted for under this category. The other two categories of costs, including service contract (W4) and depreciation (W2), should be accounted for in the Income Statement since they are expensed. ... or the year ending 30 celestial latitude 2012 is a sum of the depreciation before the review, of ?30,000 (W5.1) and the depreciation later the review, of ?52, 500 (W5.3). The essence of these calculations, in the context of a change in the original estimate of asset life, is that the unamortised depreciable amount of the asset is charged to revenue everywhere the revised remaining useful life. (Accounting Standard AS 6, p. 5). Building X Accounting in the Income Statement Under IFRS (IAS 16), building X is treated as billet Plant and Equipment (PP&E) since it is held for the production of goods and services and it is a Non Current asset. An item under this category is measured at its cost less accumulated depreciation. Alternatively, an entity is at license to use revaluation model, consid ering the asset was revalued. In this respect, a depreciation of ?20,000, ?20,000 and ?40,000 will be accounted for in the Income Statement for the years ending 31 December 2010, 2011, and 2012 respectively. In addition, the gain on revaluation will be reflected on the Income Statement at ? 1,620,000 (W 8.2). Accounting in the Balance Sheet Following revaluations at 31 December 2011 and 31 December 2012, for ?2 million and ?2.5 million respectively the value of the cost that will appear in the Balance Sheet is ?1 million, ?1 million, ?2 million and ?2.5 million for the years ending 31 December 2010, 2011, 2012 and 2013 respectively (W 8.1). The respective accumulated depreciations for the years ending 31 December 2010, 2011, and 2012 will be ?60,000, ?80,000 and ?40,000 respectively. Therefore, the cost after revaluation, which will be accounted for the years ending 31 December 2011, 2012 and 2013 will be ?1,000,000, ?20,000 and ?2,500,000 respectively, all treated under Non Current