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FRS 15 Tangible Fixed

AssetsValuation:

Carrying value of TFA:

Fixed Assets may be stated at Historical

Cost less depreciation or

Fixed assets may be stated at Current

Value less depreciationCarrying value should never exceed

recoverable amount

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AssetsValuation:

TFA should be re-valued only where

the entity adopts a policy of revaluationApply to individual classes of TFA

Where a TFA is re-valued, its carrying

amount should be its current value atBS date

Annual revals are not required

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AssetsValuationsContd

Full valuation at least every five years,

interim in year 3 Where material change in value likely, re-

value in years 1,2,4 also

Material reasonably influence the decisionsof a user of the accounts

Full valuation conducted by qualified valuer

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AssetsClass of Assets:

All TFA of same class should be re-valued

Companies Legislation categories: Land and Buildings

Plant & Machinery

Fixtures, fittings, tools & equipment

Companies may adopt other, narrowerclasses, as appropriate to their business

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AssetsReporting Revaluation Losses:

All reval losses that are caused by a

clear consumption of economicbenefits should be recognised in the

P&L a/c. (physical damage,

deterioration in quality of serviceprovided by asset)

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AssetsReporting Gains on Revaluation

v Revaluation gains should be recognised inthe P&L a/c only to the extent (afteradjusting for subsequent depreciation) that

they reverse revaluation losses on the same

asset that were previously recognised in the

P&L a/c

v All other revaluation gains should berecognised in the STRGL

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AssetsGains/Losses on Disposal

Include in the P&L the difference

between:

Net sales proceeds

Carrying amount

(Per FRS 3)

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AssetsDisclosures where assets revalued: For each class of re-valued assets:

Names and qualifications of valuers

Basis of valuation Date and amount of valuation

Carrying amount had assets been includedunder HC

Whether the person carrying out the valuation isinternal or external

Where valuation had not been updated or is nota full valuation, the date of the last full valuation

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Assets

Depreciation

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AssetsDepreciation

Depreciable Amount of TFA should be

allocated on a systematic basis over itsuseful economic life.

The depreciation method used shouldreflect as fairly as possible the pattern in

which economic benefits are consumedDepreciation charge for each period is

expensed to the P&L account

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AssetsObjective of Depreciation:

Reflect the cost of use of the TFA in the

period

That is the amount of economic benefitconsumed

The cost to the entity of using the asset togenerate its revenues

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AssetsWhere asset re-valued:

Depreciation is based on re-valued

amount

Depreciation is based on the

remaining UEL

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AssetsMethods of Depreciation:

Most Common

Straight-line

Reducing balance

If uncertain of consumption of benefits

use straight line

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AssetsWhere TFA comprises two or more

major components with substantially

different UEL, each component shouldbe accounted for separately for

depreciation purposes (e.g. land and

buildings, buildings and the fittings)

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AssetsNon-depreciation of TFA?

Maintenance or refurbishment is carried

out regularly, significantly extending theUEL or maintaining the Residual Value ofthe asset

ASB states that subsequent expenditure

that maintains or enhances the previouslyassessed standard of performance of theasset does not negate the need to chargedepreciation

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AssetsHowever, some TFAs may have very

long useful economic lives and thus

the depreciation charge may beimmaterial

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AssetsWhen No Depreciation is permissable:

Land

Depreciation may not be charged

where that charge would be

immaterial:

Depreciation may be immaterial if:

Asset has a very long useful life

Asset has a high residual value

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AssetsUEL and Residual Value

UEL should be reviewed at the end of each

period and revised if expectations aresignificantly different from previousestimates

Where residual value is material, it should

be reviewed at the end of each reportingperiod to take account of expectedtechnological changes based on pricesprevailing at the date of acquisition

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Assets

Disclosures

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AssetsDisclosures:

The following information should be disclosed

separately in the FS for each Class of TFADepreciation method

UEL

Total depreciation charged

Financial effect of a change during theperiod in either the estimate of UEL or theestimate of residual values

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AssetsCost or re-valued amount at beginning and

at BS date

Cumulative amount of provisions fordepreciation or impairment at the beginningof the period and at BS date

Reconciliation of movements, separately

disclosing additions, disposals, re-valuations, transfers, depreciation,impairment losses, and reversals of pastimpairment losses written back

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Assets Net carrying amount at beginning

and at BS date

Where there is a change in

depreciation method, the effect, and

reason for the change should bedisclosed.

Ac 120 Lecture 39 Frs 15

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