Non Current Assets Depreciation Mark FieldingPritchard mefielding com

Non Current Assets & Depreciation Mark Fielding-Pritchard mefielding. com 1

Non Current Assets an asset: a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity; Cost is the costs required to make it work. This includes testing but not training Repairs & refurbishment If improved new cost is depreciated over revised useful life mefielding. com 2

Depreciation Straight Line Dr Cr On acquisition NCAs@cost 12000 Cash 12000 Each year Depreciation Expense 2500 Accumulated Depreciation 2500 mefielding. com 3

Depreciation Straight Line SOFP Extracts Year 1 Year 2 Year 3 Year 4 NCAs@cost 12000 Accumulated Depreciation 2500 5000 7500 10000 Carrying value 9500 7000 4500 2000 mefielding. com 4

Depreciation- Reducing Balance Purchase an asset on 1 January for $12000. Residual value is $2000. Useful life is 4 years. Reducing balance is applied at 30% On Purchase 12000 Year 1 Depreciation (30%) (3600) Carrying Value 8400 Year 2 Depreciation (30%) (2520) mefielding. com Dr Cr Depreciation Expense 3600 Accumulated Depreciation 3600 Depreciation Expense 2520 Accumulated Depreciation 2520 5

Depreciation- Reducing Balance Notice we ignore the residual value when calculating depreciation Carrying Value 5880 Year 3 Depreciation (30%) (1764) Carrying Value 4116 Year 4 Depreciation (30%) (1235) Dr Cr Depreciation Expense 1764 Accumulated Depreciation 1764 Depreciation Expense 1235 Accumulated Depreciation 1235 2881 mefielding. com 6

SOFP Extracts Cost Accum Depn Carrying Value 1 12000 3600 8400 2 12000 6120 5880 3 12000 7884 4116 4 12000 9119 2881 mefielding. com 7

Impairment Interactive Q 5 P 266 1. 102000/15= 6800 Part 2 Dr Impairment Accum Depn 18000 Impairment Expense 7000 Depreciation Expense 9500 Depreciation mefielding. com Cr NCAs @ Cost 25000 Accumulated Depreciation 9500 8

Asset Disposals P 272 Asset cost $30000, carrying value $18000 Proceeds $19000 Dr Cr Cash 19000 NCAs 30000 Accum Depn 12000 Gain on sale 1000 Proceeds $17000 Dr Cr Cash 17000 Accum Depn 12000 Loss on sale 1000 mefielding. com NCAs 30000 9

Trade Ins P 273 Also called part exchange You want to buy a car which costs $30000 You pay $22000 in cash plus your old car Trade in allowance is $8000 Treat as disposal of old car for $8000 and purchase of new car for $30000 Worked example on page 273 Old car is disposed of for $8000 when carrying value is $11000 (cost $15000, accum depn $4000) New car purchased for $20000 ($12000 in cash) mefielding. com 10

Asset Disposals P 272 Asset cost $30000, carrying value $18000 Disposal of old car Dr Cr NCAs@cost 8000 Accum Depn 4000 Loss on sale 3000 NCAs@cost 15000 Purchase of new car Dr NCAs@cost Cr 12000 Cash 12000 8000 and 12000 are matched in FA Register to give acquisition cost of $20000 mefielding. com 11

Fixed Asset Register P 277 Kept for accounting but also insurance and security purposes See list on P 277 Will also include custodian and physical location mefielding. com 12

Intangible Assets- Goodwill Difference between purchase price of business and carrying value of assets Goes into SOFP as an intangible asset You can only show purchased goodwill It cannot be revalued upwards, only downwards mefielding. com 13

Research & Development Research is expensed, development is capitalised Computer game development Dr Cr Wages Development 50000 Cash Depreciation Development 20000 Accum Depn 20000 Overhead Development 70000 Cash 70000 Depreciation of development expenditure will begin when the product goes into commercial production mefielding. com 14

NCA Note P 281 Note shows additions, disposals, accumulated deprecation Will also show deprecation expense for the year, evaluations, impairments, reclassifications, assets moved to assets for sale, discontinued operations etc mefielding. com 15