nd ion 1. objectives . tiron tudor - e s after studying ... · pdf...
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Financial Accounting
prof. Adriana Tiron Tudor- course
att
Agenda course
1. Objectives
2. Assets definition and recognision
3. Tangible assets
4. Depreciation
5. Recording of the transactions with tangible assets
Lands and lands’ improvements
Buildings, machinery, equipment, furniture
Tangible assets in progress
Real estate investments
That tangible assets
represent a significant portion of both total and fixed assets
are physically observable items, held for use in the
production, sale or supply of goods or services, for rental to
others, or for administrative purpose, and are expected to be
used during more than one period
are different from inventories
1. Objectives
After studying this chapter, you will understand:
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How to
distinguish capital expenditures and revenue expenditures
record internally constructed tangible assets
handle financing or borrowing ( interest) cost
1. Objectives
What
the concept of depreciation represents
the main methods of depreciation are
the main concepts are that allow the preparation of a
depreciation schedule
An asset represents a source controlled by the entity
as a result of past events
which is expected to generate future economic benefits for the entity
with a cost that can be credibly evaluated;
2. 1. Assets definition
An asset is recorded in the balance sheet when:Future economic benefits are likely to be realized as a result of
keeping (storing), using, selling that certain asset;
That certain asset has a cost or a value that can be evaluated
credibly.
The non-current assets are also called investment goods, long term assets or immobile
goods.
have the following characteristics: A period of utilization longer than a year;
They participate in the development of multiple economic circuits; they are not consumed nor replaced at their first utilization.
They are fixed in the activity of the patrimonial unit; they aren’t directly destined for sale.
They are held for use in the production or supply of goods or services, for rental to others or for administrative purpose
2. Assets definition
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In most countries of the Western Europe, the assets are presented in the reverse order of liquidity, as follows:
Non-current assets intangible assets
tangible assets
financial assets
Current assets inventory
receivable
short term investments
cash
Regulation assets pre-payments
2. Assets recognition
2.2 Assets recognition in BS
►2012 Financial documents
http://www.lvmh.com/investor-relations/documentation/results?date=2013
2.2. Assets recognition
Which of the following are examples of
fixed assets?
Cars on display at a showroom
Machine installed at a factory
Employees with more than one year of service
remaining before their retirement
Prof.PhD Adriana Tiron Tudor
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Questions/Discussion
A company buys 10 trucks with the payment in
2 weeks. Where will be recorded the trucks
knowing that the company’s object of activity
is :
a. transport
b. trade with trucks
What do you think ?
Which is the proportion that tangible assets
represent in balance sheet in each case.
2.2. Assets recognition
The recognition of the assets in the balance sheet
usually takes place along with the recognition of a
debt or an income in the profit and loss account (the
principle of the connection between the expenses
and incomes).
Acquisition Asset = Supplier (2=4)
Internally constructed Asset = Capitalized costs (2=7)
2.2. Assets recognition
birth life death
•Definition/
•Recognition
•Measurement
•Acquisition cost
•Production cost
Depreciation
Subsequent
expenditures
Capital
expenditures
Sale
Removing a
fully
depreciated
asset from
the books
3. Tangible assets
Accounting issues in reporting tangible assets
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3. Tangible assets
3. Tangible assets
are also called investment goods, long term assets or
immobile goods.
have the following characteristics:
A period of utilization and liquidation longer than a
year;
They participate in the development of multiple
economic circuits; they are not consumed nor replaced
at their first utilization.
They are fixed in the activity of the patrimonial unit;
they aren’t directly destined for sale.
RO value higher than 2.500 Ron ( fiscal recognition)
3. Tangible assets
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Contains the material goods of long term utilization in the activity of the entity.
According to the IAS 16 a tangible asset must be acknowledged in the balance sheet if:
It is estimated to generate economic benefits for the artificial person and
The cost of the asset can be evaluated credibly
Are recorded at cost.
cost consists of all expenditures necessary to acquire the asset and make it ready for its intended use.
3. Tangible assets
In the category of the tangible assets are contained:
The land
Land improvements
Buildings
Equipment, machinery, motor vehicles
Furniture
Mineral resources assets
Productive biological assets ( animals)
Tangible assets in transfer/progress
Real estate investments
3. Tangible assets
1. Land and land improvements are recorded
on two categories: land and land
improvements.
The land can be displayed on the following
categories: build on lands, non build on lands, lands
with deposits, agricultural, forest lands etc.
The land improvements are investments
effectuated and destined to enrich the lands, lakes,
swamps, other similar elements but also irrigation
systems, works of access, recordation at the energy
sources, embankments etc.
3. Tangible assets
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Acquisitions
Cost of Land Includes:
the cash purchase price
closing costs such as title and attorney's fees
real estate brokers commissions
accrued property taxes and other liens on the land
assumed by the purchaser.
3. Tangible assets
All expenditures necessary to make the improvements ready for their intended use.
Examples:
Drive ways
Parking lots
Fences
Underground sprinklers
Cost of Land Improvements include:
3. Tangible assets
The buildings contain halls, administrative
buildings, warehouses, including the
necessary installations (heat, telephone,
energy, water etc.) where the
enterprise’s activities take place:
production,
services,
commerce,
administration etc.
3. Tangible assets
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