Danh sách nhóm

TỰ NHÓM CHỮ
HỌ & TÊN MSSV BÀI TẬP ĐÁNH ĐÁNH KÍ
GIÁ GIÁ
Trần Thị
13094881 11.12
Hoàng Hà (NT)
Lê Thị Thanh
13094261 11.9(e f g )
Thuý
Nguyễn Thị
13090821 1; 11.9(a b)
Thuỷ Tiên
Lê Hoàng Thảo
13091701 2; 11.9(c d)
Trúc
Lương Ngọc
13057641 4; 11.10(a b)
Phương Uyên
Hoàng Xuân
13064131 10; 11.10( e f)
Thảo
Nguyễn Lê
13085461 9; 11.10(c d)
Thanh Thảo
 11 Property, plant and equipment
Discussion questions:

1. What assets constitute property, plant and equipment ?

Paragraph 6 of IAS 16 defines property, plant and equipment as follows:
Property, plant and equipment are tangible items that:
(a) Are held for use in the production or supply of goods or services, for rental
to others, or for administrative purposes; and for administrative purposes.
(b) Are expected to be used during more than one period.

Ex: land, machinery, motor vehicles and office equipment

2. What are the recognition criteria for property, plant and equipment?
Paragraph 7 of IAS 16 contains the principles for recognition of property, plant
and equipment:
The cost of an item of property, plant and equipment shall be recognized as an
asset if, and only if:
a) It is probable that future economic benefits associated with the item will
flow to the entity
b) The cost of the item can be measured reliably

4. How is cost determined ?

Para 16 states :
The cost of an items of property, plant, and equipment comprises :
- Its purchase price, including import duties and non- refundable purchase
taxes, after deducting trade discounts , and rebates.
- Any costs directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner intended
by management.
- The initial estimate of the costs of dismantling and removing the item and
restoring the side on which it is located , the obligation for which an entity
incurs either when the item is acquired or as consequence of having used
the item during a particular period for purposes other than to produce
inventories during that period.
9. What is meant by “residual value” of an asset ?
The residual value of an asset is the estimated amount that the entity would
currently obtain from disposal of an asset, after deducting the estimated costs of
disposal, if the asset were already of the age and in the condition expected at the
end of its useful life

10. How does an entity choose between depreciation methods, for example,
straightline versus disminishing-balance models?
Depreciation is the allocation of an asset’s cost over its useful life. You
incur a depreciation expense each period to account for using an asset, such as a
building, in your operations. For financial reporting purposes, your small business
may choose one of several methods to depreciate an asset. Based on generally
accepted accounting principles, you should select the method that best matches the
depreciation expense to the revenue the asset helps to generate. Base your choice
on how you expect to use an asset in your small business during the asset’s life.

Step 1
 Consider whether you will use an asset an equal amount each period
continually throughout its useful life. If so, select the straight-line depreciation
method, which allocates an equal portion of an asset’s cost to depreciation expense
each period. Assets for which you might choose this method include buildings and
office furniture, such as a desk. For example, assume your small business owns a
factory that you typically use during the same business hours each week. You
would choose the straight-line method to best match the factory’s depreciation
expense to its use.
Step 2
Determine if an asset generates a measurable quantity of output each period
in units, such as pages printed or machine hours used. If your asset produces
measurable units, you may use the units-of-production method, which allocates
depreciation on a per-unit basis each period. This method allocates more
depreciation expense to periods of heavier use and less expense to periods of
lighter use. For example, if your small business owns a copier and you can track
the number of pages it prints each period, you may use the units-of-production
method.
Step 3
Decide whether you will use an asset more in the early years of its life than
in the later years. If this is the case, you may use the declining-balance method,
which allocates a greater amount of depreciation expense to the early years of an
asset’s life. The amount of depreciation expense decreases each year with this
method. This method works well for assets that you expect to wear out quickly.
For example, if your small business owns a truck that you will use less as it ages,
the declining-balance method would properly match depreciation expense to its
use.

Exercises:

Exercise 11.9 BUILDING COSTS

Trabitz Ltd has acquired a new building. Which of the following items should be
included in the cost of the building?

A) Stamp duty should be included in the cost of the building because:

According to paragraph 16 of IAS 16: The cost of an item of property, plant

and equipment comprises:
 - any costs directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner intended
by management.

Stamp duty a duty levied on the legal recognition of certain documents. A tax that
Trabit Ltd pay when it buy a new building.

B) Real estate agent’s fees should be included in the cost of the building
because:there are fees to the persons who arrange the sale, leasing,
management, land and buildings to the owners

C) Architect’s fees for drawings for internal adjustments to the building to

be made before use
 Include
(Paragraph 16 specifies three elements of cost, namely:
 Purchase price
 Directly attributable costs
 Initial estimate of the costs of dismantling and remove the item or restoring
the site on which it ios located
Paragraph 17 of IAS 16 provides examples of directly attributable costs:
 Costs of employee benefits arising directly from the construction or the
acquisition of the item of PPE,
 Costs of site preparation,
 Initial delivery and handling costs,
 Installation and assembly costs,
 Costs of testing whether the asset is functioning properly, after deducting
the net proceeds from selling any items produced while bringing the asset
to that location and condition, and
 Professional fees.

Architect’s fees for drawings is professional fees )

D) Interest on the bank loan to acquire the building, and an application

fee to the bank to get the loan, which is secured on the building
 Include
(A further cost may be capitalized into the cost of an item of property, plant and
equipment is that of borrowing costs. Borrowing cost (i.e interest and other cost
associated with the borrowing of funds) are accounted for under IAS 23
Borrowing Costs. Paragraph 8 of IAS 23 states that borrowing costs that are
directly attributable to the acquisition, construction or production of a qualifying
asset must be capitalized as a part of the cost of the asset)
 E) Cost of changing the name on the building

Following paragraph 16 of IAS: The cost of an item of property, plant and

equipment comprises: any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner
intended by management.

F) Cost of changing the parking bays

If the parking bays located in the building or it is a part of the building, it should
be included in the cost of the building.
The parking bays is seprated as a asset when it located outside of the building

G) Cost of refurbishing the lobby to the building to attract customer and

make it more user friendly.

Following paragraph 16 of IAS: The cost of an item of property, plant and

equipment comprises: any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner
intended by management.

Exercise 11.10 CAPITALISATION

Rennau Ltd has acquired a new machine , which is has had installed in its factory.
Which of the following items should be capitalized into the cost of building ?

(a) Labour and travel costs for managers to inspect possible new machines
and for negotiating for a new machine .
 This cost is excluded into the cost of building because of management’s
decisions regarding the timing of operations rather than being attributable
to getting the asset in a position for operation.

(b) Freight costs and insurance to get the new machine to the factory.
 This cost is excluded into the cost of building because these costs do not
enhance the operating ability of machine .

(c) Costs for renovating a section of the factory, in anticipation of the new
machine’s arrival, to ensure that all the other parts of the factory will
have easy access to the new machine
 the costs of building because paragraph 16 of IAS 16 include costs of
renovating
 (d) Cost of cooling equipment to assist in the efficient operation of the new
machine
 the costs of building because paragraph 16 of IAS 16 include costs of
cooling equipment

(e) Costs of repairing the factory door, which was damaged by the
installation of the new machine.
 It is general expense and be revenue expenditure.
 Costs of repair – these are not directly attributable to bringing the asset to
its location and condition for operation. These costs should be expensed.

(f) Training costs of workers who will use the machine.

 It is also revenue expenditure. You can ask me why and I can answer,
training costs is part of salary of worker not the part of asset. After
installing machine by labor, no other charges will add except purchasing of
new part of machine. You should also read "Difference between revenue
and capital items."

Exercise 11.12 DEPRECIATION

The journal entries for the 3 years:

2012 $ $
1 July Delivery truck Dr 50,000
Cash Cr 50,000

Insurance expense (Delivery Truck) Dr 1,200

Cash Cr 1,200
2013
30 June Annual depreciation of delivery truck:
(50,000 – 24,000 + 400) / 5 = 5,280
Depreciation expense (Delivery Truck) Dr 5,280
Accumulated depreciation Cr 5,280

1 July Flat-top truck Dr 30,000

Cash Cr 30,000

Flat-top truck Dr 2,920

($2,300 + $620)
Cash Cr 2,920
 Servicing engine expense Dr 480
Cash Cr 480

Delivery truck Dr 300

(radio communication system)
Cash Cr 300

Flat-top truck Dr 300

(radio communication system)
Cash Cr 300

Insurance expense Dr 2,100

(both trucks: $1,200 + $900)
Cash Cr 2,100
2014
30 June Annual depreciation of Flat-top truck:
(30,000 + 2,920 +300 - 15,000 +400) / 2 = 9,310
Annual depreciation of delivery truck:
5,280 + 300/4 = 5,355
Depreciation expense Dr 14,665
(both Truck: 9,310 + 5,355)
Accumulated depreciation Cr 14,665

1 July Insurance expense (both truck) Dr 2,100

Cash Cr 2,100

1 August Depreciation expense Dr 776

(Flat-topTruck: 9,310 / 12)
Accumulated depreciation Cr 776

Accumulated depreciation Dr 10,086

(9,310 + 776)
Flat-top truck(write down to carrying Cr 10,086
amount)

Flat-top truck Dr 6,500

(major overhaul)
Cash Cr 6,500
2015
30 June Annual depreciation of Flat-top truck:
{[(30,000 + 2,920 +300 - 15,000 +400) – 9,310 – 776 + 6,500] /3}*
11/12 = 5,480
Depreciation expense Dr 10, 835
(both Truck: 5,480 + 5,355)
Accumulated depreciation Cr 10,835