FRA : Reading 28. Long-Lived Assets

28. Long-Lived Assets

a. distinguish between costs that are capitalized and costs that are expensed in the period in which they are incurred. (page 189)

Capitalized cost

- purchase price

- installment cost

- 내용연수를 증가시키는 cost

 

cost expense

- training cost

- 단순 수리 및 내용연수 유지

 

b. compare the financial reporting of the following types of intangible assets: purchased, internally developed, acquired in a business combination. (page 191) 

1. Intangible assets created intenally

- US GAAP : Research & Developement cost

- IFRS : Reserach cost & Developement cap

 

2. Purchased Intangible asset

- US GAAP ,IFRS : Capitalize

 

3. Obtained in M&A

- US GAAP ,IFRS : Capitalize

 

c. explain and evaluate how capitalizing versus expensing costs in the period in which they are incurred affects financial statements and ratios. (page 193)

	Capitalizing	Expensing
Total assets	Higher
Equity	Higher
Net income (first year)	Higher
Net income (subsequent year)		Higher
C/F from operations	Higher
C/F from investing		Higher
Debt to equity		Higher
Interest coverage (first year)	Higher
Interest coverage (subsequent year)		Higher
ROE, ROA (first year)	Higher
ROE, ROA (subsequent year)		Higher

 - *자산의 depreciation 때문에 first year과 향후 year이 다름

 

d. describe the different depreciation methods for property, plant, and equipment and calculate depreciation expense. (page 196) 

- SL (Straight Line Dep)

- DDB (Double Declining Balance)

- UOP (Unit of Production)

- Component Depreciation : 요소별 감가상각 따로함

 

e. describe how the choice of depreciation method and assumptions concerning useful life and residual value affect depreciation expense, financial statements, and ratios. (page 199)

- useful life, residual value 증가 -> depreciation expense 감소 

- useful life or salvage value에 대한 추정이 바뀌는 경우 accounting estimate가 바뀌는 경우에 해당하므로 prospectively 변경

In the early year

	Straight Line	Accelerated
Depriciation expense		Higher
Net income	Higher
Total assets	Higher
Equity	Higher
ROA, ROE	Higher
Asset turnover ratio		Higher
Cash flow (no tax)	Same(실제 지출이 아니기때문)	Same

 

f. describe the different amortisation methods for intangible assets with finite lives and calculate amortisation expense. (page 200)

 - tangible asset과 동일

g. describe how the choice of amortization method and assumptions concerning useful life and residual value affect amortization expense, financial statements, and ratios. (page 201) 

h. describe the revaluation model (page 202)

- IFRS

- Fair(market) value가 Book value보다 큰경우, Accumulated other comprehensive income(AOCI, 기타포괄이익)이라는 자본 항목에 인식함. I/S에는 인식 안함. 

Ex) 100 -> 120 (AOCI에 20 인식) -> 90 (AOCI 20감소, I/S비용 10 인식) -> 95 (I/S에 5반영) 

 

I. explain the impairment of property, plant, and equipment and intangible assets. (page 204)

IFRS

A = max(Value in use , NRV)

Value in use ; 보통 미래 현금흐름 discount해서 구함

NRV = Fair(market) Value – Cost ; 순실현가능가치

BV vs A 해서 BV가 더 큰경우 impariment 인식

 

US-GAAP

Step1. recoverability test

BV vs Undicounted future CF

BV가 예상되는 미래 현금흐름보다 크다면 impairment 해야함

 

Step2. BV vs FairValue

Fair Value(Discount, 시장거래가격, 상대가치평가)로 BV를 수정

 

j. explain the derecognition of property, plant, and equipment and intangible assets. (page 206)

1. Sell

- gain or loss in the income statement

 

2. Exchange

- a gain or loss 는 old asset의 BV 와 Fair value의 차이로 구하거나, new asset의 fair value의 차이로 구함

 

3. Abandon(처분)

- gain or loss in the income statement

 

k. explain and evaluate how impairment, revaluation, and derecognition of property, plant, and equipment and intangible assets affect financial statements and ratios. (page 207)

l. describe the financial statement presentation of and disclosures relating to property, plant, and equipment and intangible assets. (page 210)

- Carrying values for each class of asset.

- accumulated depreciation and amortization.

- Title restrictions and assets pledged as collateral.

 

m. analyze and interpret financial statement disclosures regarding property, plant, and equipment and intangible assets. (page 211)

 1. Average age(평균 사용연수)= accumulated depreciation / annual depreciation expense 

2. Total useful life(총 내용연수) = historical cost / annual depreciation expense 

3. Remaining useful life(잔여연수) = ending net PP&E /annual depreciation expense

= total useful life – average age 

- *공시사항 아님!

 

n. compare the financial reporting of investment property with that of property, plant, and equipment. (page 212) 

- GAAP에서는 투자자산 인정 안함, 투자 목적 자산이기 때문에, 재평가 후 기존 가치보다 상승한 경우에도 손익계산서에 반영한다는 차이가 있음 ex. rental을 목적으로 asset을 구매한 경우

- cost model과 Fair value model 사용

 

o. explain and evaluate how leasing rather than purchasing assets affects financial statements and ratios. (page 213) 

-

p. explain and evaluate how finance leases and operating leases affect financial statements and ratios from the perspective of both the lessor and the lessee. (page 213)