Microsoft PowerPoint - Chapter 11 Student Version.pptx
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Chapter 11
Property, Plant, and
Equipment and
Intangible Assets:
Utilization and
Disposition
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Cost Allocation—Overview
• Property, plant, and equipment and intangible assets
are purchased with the expectation that they will
provide future benefits, usually for several years
• These assets are acquired to be used as part of
evenue‐generating operations
• The acquisition cost of these assets should be
allocated to periods benefited by their use
Cost allocation
known as
Depreciation
• For plant and equipment
Depletion
• For natural resources
Amortization
• For intangible assets
LO11‐1
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Cost Allocation
LO11‐1
Year 1Year 1 Year 2 Year 2 Year 3 Year 3 Year 4 Year 4 Year 5 Year 5
Beginning of
year 1
$8,200
Cost
End of
year 5
$2,200
Residual
$6,000
A company purchases a used truck for $8,200 to deliver products to
customers. The company estimates that five years from the
acquisition date the truck will be sold for $2,200. This means that
$6,000 ($8,200 − 2,200) of the truck’s purchase cost is expected to be
used up (consumed) and should be allocated to expense over its five‐
year useful life.
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Measuring Cost Allocation
• The process of cost allocation requires that three
factors be established at the time the asset is put to
use. These factors are:
LO11‐1
Service life
• The estimated use that the company expects to receive
from the asset
Allocation base
• The cost of the asset expected to be consumed during
its service life
Allocation method
• The pattern in which the allocation base is expected to
e consumed
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Service Life
• Amount of use that the company expects to obtain
from an asset before its disposal
• Expressed in units of time or in units of activity
Example:
The estimated service life of a delivery truck could be
expressed in terms of years or in terms of the number
of miles that the company expects the truck to be
driven before disposition
– For a depreciable asset, physical life provides the
upper bound for service life
– Physical life will vary according to the purpose for
which the asset is acquired and the environment
in which it is operated
LO11‐1
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Service Life (continued)
Service life of an asset Physical life of an asset
For tangible assets
For intangible assets
(1) Expected rate of technological change
(2) Suppliers are expected to develop new technologies that
are more efficient
(3) Sold in market that frequently demands new products
(4) Economically not feasible
(5) Management intent
Legal or contractual life provides the upper bound for service life
Reasons
LO11‐1
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Allocation Base
• Allocation base is the amount of cost to be allocated
over an asset’s service life
• Estimating residual value for many assets can be very
difficult due to the uncertainty about the future
• Residual values sometimes are immaterial and are
assumed to be zero
LO11‐1
Allocation
ase
Initial value of the
asset at its acquisition
Residual (salvage)
value
The amount expected to be received for the asset at the
end of its service life less any anticipated disposal costs
−=
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Allocation Method
• A method should be selected that co
esponds to the
pattern of benefits received from the asset’s use
– To determine how much cost to allocate to periods over the
asset’s service life
• According to U.S. GAAP, the chosen method should allocate
the asset’s cost “as equitably as possible to the periods
during which services are obtained from [its] use”
• Method should produce cost allocation in a “systematic and
ational manner”
LO11‐1
Allocation
approaches
Time‐based method
• Allocates the depreciable base according to
the passage of time
Activity‐based method
• Allocates the depreciable base using a
measure of the asset’s input or output
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Depreciation Methods LO11‐2
• Straight‐line (SL) method
– Allocates an equal amount of depreciable base to
each year of the asset’s service life
• Accelerated methods
– Declining pattern of depreciation, with higher
depreciation in the earlier years of the asset’s life
and lower depreciation in later years
– Declining balance methods
• Multiplies beginning‐of‐year book value by an
annual rate that is a multiple of the SL rate
– Sum‐of‐the‐years’‐digits (SYD) method
• Multiplies depreciable base by a declining
fraction
• Units‐of‐production method
– Computes a depreciation rate per measure of
activity and then multiplies this rate by actual
activity to determine periodic depreciation
Time‐Based
Depreciation
Methods
Activity‐
Based
Depreciation
Methods
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Straight‐Line Method
LO11‐2
The most widely
used and most easily
understood method.
Results in the same
amount of depreciation in
each year of the asset’s
service life.
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Straight‐Line Method
LO11‐2
At the beginning of Year 1, Hogan Manufacturing Company purchased a
machine for $250,000 and made the following estimates at that time:
• Estimated residual value of $40,000.
• Estimated service life of 5 years.
• Estimated production of 140,000 units.
Actual production during the five years of the asset’s life was as follows:
Year Units Produced
1
2
3
4
5
20,000
32,000
44,000
28,000
26,000
150,000
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Straight‐Line Method (continued)
LO11‐2
The residual value ($40,000 in this example) does not affect the
calculation of book value, but the residual value does set a limit on
which book value cannot go below. Straight‐line depreciation for each
year of the asset’s life is as follows:
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Declining‐Balance Method
LO11‐2
DB depreciation
• Based on the straight‐line rate
multiplied by an acceleration
factor.
• Computations initially ignore
esidual value.
Stop depreciating
when:
BV = Residual Value
Double-Declining-Balance (DDB) depreciation
is computed as follows:
DDB = Book Value × ( 2 × Straight-line Rate )DDB =
Book
Value × ( 2 × Straight-line Rate )
Note that the Book Value will get lower each year.
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Double‐Declining‐Balance Depreciation
LO11‐2
At the beginning of Year 1, Hogan Manufacturing Company purchased a
machine for $250,000 and made the following estimates at that time:
• Estimated residual value of $40,000.
• Estimated service life of 5 years.
The machine was disposed of after five years of use. DDB depreciation for
each year of the asset’s life is as follows:
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Sum‐of‐the‐Years’‐Digits Method
LO11‐2
=SYD Depreciation
Residual
Value –Cost(
Remaining Years
of Useful Life
Sum-of-the-Years
Digits*
×)
Sum-of-
the-
Years'-
Digits
= ( Useful Life × [
Useful
Life + 1 ] )
(SYD)
Sum-of-
the-
Years'-
Digits
= ( Useful Life × [
Useful
Life + 1 ] )
(SYD) 2
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Sum‐of‐the‐Years’‐Digits Depreciation
LO11‐2
At the beginning of Year 1, Hogan Manufacturing Company purchased a
machine for $250,000 and made the following estimates at that time:
• Estimated residual value of $40,000.
• Estimated service life of 5 years.
The machine was disposed of after five years of use. SYD depreciation for
each year of the asset’s life is as follows:
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Activity‐Based Depreciation Methods
LO11‐2
At the beginning of Year 1, Hogan Manufacturing Company purchased a
machine for $250,000 and made the following estimates at that time:
• Estimated residual value of $40,000.
• Estimated service life of 5 years.
• Estimated production of 140,000 units.
Actual production during the five years of the asset’s life was as follows:
Year Units Produced
1
2
3
4
5
20,000
32,000
44,000
28,000
26,000
150,000
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Units‐of‐Production Depreciation LO11‐2
At the beginning of Year 1, Hogan Manufacturing Company purchased a
machine for $250,000 and made the following estimates at that time:
• Estimated residual value of $40,000.
• Estimated service life of 5 years.
• Estimated production of 140,000 units.
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Comparison of Various Depreciation Methods
LO11‐2
Year Straight‐Line Sum‐of‐the‐Years’‐Digits
Double‐Declining
Balance
Units‐of‐
Production
1
2
3
4
5
Total
$ 42,000
42,000
42,000
42,000
42,000
$100,000
60,000
36,000
14,000
0
$210,000
$ 30,000
48,000
66,000
42,000
$ 70,000
56,000
42,000
28,000
$210,000
24,00014,000
$210,000 $210,000
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Decision Makers’ Perspective—Selecting a
Depreciation Method
• Straight‐line method is easy
• Straight‐line method results in less depreciation in the
earlier years of an asset’s life compared to accelerated
methods
– Positive effect on net income in earlier years
– Negative effect on net income in later years
• Accelerated methods result in more depreciation in the
earlier years of an asset’s life
– Taxation benefits derived through greater depreciation
deduction
– Unlike the LIFO conformity rule for inventory valuation, no
constraints in using different depreciation methods for
financial reporting and tax reporting
• Activity‐based depreciation typically provides a better
match of revenues and expenses
LO11‐2
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Differences between IFRS and U.S. GAAP: Depreciation
U.S. GAAP IFRS
Depreciation
Component depreciation is allowed
ut is not often used in practice.
Each component of an item of
property, plant, and equipment must
e depreciated separately if its cost
is significant in relation to the total
cost of the item.
Depreciable base is determined by
subtracting estimated residual value
from cost.
Depreciable base is determined by
subtracting estimated residual value
from cost. A review of residual
values at least annually is required.
Depreciation Methods
Various depreciation methods are
used in practice.
Specifically mentions three
depreciation methods: straight‐line,
units‐of‐production, and the
diminishing balance method.
LO11‐10
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Partial Period Depreciation
LO11‐2
• When acquisition and/or disposal occurs at times
other than the beginning or the end of a company’s
fiscal yea
• Depreciation, depletion, and amortization is
ecorded for the part of the year that the asset
actually is used
• Half‐year convention:
–A convention where one‐half of a full year’s
depreciation is recorded in the year of acquisition
and another half in the year of disposal
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Depreciation Methods—Partial Yea
LO11‐2
On April 1, 2021, Hogan Manufacturing Company purchased a machine for
$250,000 and made the following estimates at that time:
• Estimated residual value of $40,000.
• Estimated service life of five years.
• Estimated production of 140,000 units.
The company has a December 31 year‐end. Actual production during the five
years of the asset’s life was as follows:
Year Units Produced
2021 (beginning April 1)
2022
2023
2024
2025
16,000
30,000
40,000
32,000
24,000
150,000
2026 (ending April 1) 8,000
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Yearly Depreciation
LO11‐2
Year Straight‐Line Double‐Declining Balance
Units‐of‐
Production
1
2
3
4
5
Total
$ 42,000
42,000
42,000
42,000
42,000
$100,000
60,000
36,000
14,000
0
$210,000
$ 30,000
48,000
66,000
42,000
$210,000
24,000
$210,000
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Partial Year Depreciation
LO11‐2
Year Straight‐Line
Double‐Declining
Balance
Units‐of‐
Production
2021
Totals
$42,000 x ¾ = $ 31,500
42,000
42,000
42,000
42,000
$250,000 x 40% x ¾ = $ 75,000
$175,000 x 40% = $70,000
23,000
‐
$210,000
$ 24,000*
45,000
60,000
48,000
$210,000
33,000
$210,000
2022
2023
2024
2025
2026 $42,000 x ¼ = $ 10,500 ‐
$105,000 x 40% = $42,000
*16,000 units x $1.50
‐
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Dispositions
• Gain or loss recognized for the difference between
the consideration received and the asset’s book value
Selling price (consideration received) $ XXX
Less: Book value of asset sold
Original cost $ XXX
Accumulated depreciation (XXX) XXX
Gain/loss on sale of asset $ XXX
LO11‐2
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Disposition (continued)
On January 1, 2021, Hogan Manufacturing Company purchased a machine for
$250,000. The company expects the service life of the machine to be five years.
The estimated residual value is $40,000. Hogan uses the straight‐line
depreciation method.
Suppose Hogan decides not to hold the machine for the expected five years but
instead sells it on December 31, 2023 (three years later), for $140,000. We first
need to update depreciation to the date of sale. Since depreciation for 2021
and 2022 has already been recorded in those years, we need to update
depreciation only for the cu
ent year, 2023.
The entry to update depreciation for 2023:
LO11‐2
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Disposition (concluded)
LO11‐2
The entry to record the sale on December 31, 2023, for $140,000:
Selling price (consideration received) $ 140,000
Less: Book value of asset sold
Original cost $ 250,000
Accumulated depreciation (126, XXXXXXXXXX,000)
Gain/loss on sale of asset $ 16,000
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Decision Makers’ Perspective: Understanding
Gains and Losses
• A gain on the sale of a depreciable asset means the
asset was sold for more than its book value
–The net increase in the book value of total assets
is an accounting gain (not an economic gain)
• A loss signifies that the cash received is less than
the book value of the asset being sold
–There is a net decrease in the book value of total
assets
LO11‐2
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Assets Held for Sale
An asset is classified as “held for sale” in the period in which all of
the following criteria are met:
1. Management commits to a plan to sell the asset
2. The asset is available for immediate sale in its present condition
3. An active plan to locate a buyer and sell the asset has been
initiated
4. The completed sale of the asset is probable and typically
expected to occur within one year
5. The asset is being offered for sale at a reasonable price relative
to its cu
ent fair value
6. Management’s actions indicate the plan is unlikely to change
significantly or be withdrawn
An asset classified as held for sale is reported at the lower of its
cu
ent book value or its fair value less any cost to sell.
LO11‐2
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Retirements
• Instead of selling a used asset, a company may retire (or
abandon) the asset
• At the time of retirement:
• The asset account and the co
esponding
accumulated deprecation account are removed from
the books
• A loss equal to the remaining book value of the asset
is recorded
LO11‐2
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U.S. GAAP IFRS
Valuation of Property, Plant, and Equipment
A company reports property, plant,
and equipment (PP&E) in the
alance sheet at cost less
accumulated depreciation (book
value). U.S. GAAP prohibits
evaluation.
It allows a company to report
property, plant, and equipment at
ook value or, alternatively, at its
fair value (revaluation). If a
company chooses revaluation, all
assets within a class of PP&E must
e revalued on a regular basis.
Differences between IFRS and U.S. GAAP:
Valuation of Property, Plant, and Equipment
LO11‐10
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Revaluation of Property, Plant, and
Equipment Under IFRS
LO11‐10
• If fair value is higher than book value : credit revaluation
surplus (other comprehensive income) and debit the asset
account
• If book value is higher than fair value: credit the asset
account and debit revaluation expense
• If the asset has a balance of revaluation surplus from a previous
increase in fair value: eliminate revaluation surplus first before
debiting revaluation expense
• Depreciable assets are revalued according the following
atio: fair value over book value
• Cost of asset and accumulated depreciation will be revalued
at the same time.
• The book value after revaluation will be the amount of fair
value
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Revaluation of Property, Plant, and
Equipment Under IFRS
LO11‐10
At the beginning of 2021, Candless Corporation
purchases equipment for $100,000. The equipment is
expected to have a five‐year useful life with no
esidual value. At the end of the year, Candless
chooses to revalue the equipment as permitted by
IFRS. Assuming the fair values of the equipment at
the end of 2021 and 2022 are $84,000 and $57,000
espectively. Make the journal entries about
depreciation and revaluation for Candless for year
2021 and 2022.
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Revaluation of Property, Plant, and
Equipment Under IFRS
LO11‐10
Before Afte
December 31, 2021 Revaluation Ratio Revaluation
Equipment $100 × 84/80 $105
Accumulated Depreciation (20) × 84/80 (21)
Book value $80 × 84/80 $84
Before Afte
December 31, 2022 Revaluation Ratio Revaluation
Equipment $105 × 57/63 $95
Accumulated Depreciation (42) × 57/63 ($38)
Book value $63 × 57/63 $57
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Depletion of Natural Resources
• Allocation of costs of natural resources
• Activity‐based units‐of‐production method widely used
to calculate periodic depletion
– Because the usefulness of natural resources is directly
elated to the amount of the resources extracted
• Service life is the estimated amount of natural resource
to be extracted
LO11‐3
Cost − Residual valueDepletion base =
Depletion base
Estimated extractable units
Depletion per unit =
Journal entry:
Depletion (depletion rate × units extracted) xxx
xxxNatural resource
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LO11‐3Depletion of Natural Resources (continued)
In 2021, Jackson Mining Company has the following costs related to 500 acres of
land in Pennsylvania:
1. Payment for the right to explore for a coal deposit $1,000,000
2. Actual exploration costs for the coal deposit 800,000
3. Intangible dev. costs in digging, constructing the mine shaft 500,000
4. Restoration of the land for recreational use after extraction 468,360
is completed, as required by contract (determined using
expected cash flow approach)
5. Purchase of excavation equipment for the project $600,000
The company geologist estimates that 1 million tons of coal will be extracted
over the three‐year period. After the coal is removed from the site, the
excavation equipment will be sold for an anticipated residual value of $60,000.
During 2021, 300,000 tons were extracted.
$2,768,360
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Depreciation of Equipment Used in Extraction
LO11‐3
If the asset is movable and useable on future projects
• The asset’s depreciable base should be allocated over its
useful life
If the asset is not movable
• The asset should be depreciated over its useful life or the
life of the natural resource, whichever is shorte
• The units‐of‐production method often is used to
determine depreciation on assets used in the extraction
of natural resources
Estimated extractable units
Depletion baseDepletion per unit =
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LO11‐3
Depreciation of Equipment Used in Extraction (continued)
In 2021, Jackson Mining Company has the following costs related to 500 acres of
land in Pennsylvania:
1. Payment for the right to explore for a coal deposit $1,000,000
2. Actual exploration costs for the coal deposit 800,000
3. Intangible dev. costs in digging, constructing the mine shaft 500,000
4. Restoration of the land for recreational use after extraction 468,360
is completed, as required by contract (determined using
expected cash flow approach)
5. Purchase of excavation equipment for the project $600,000
The company geologist estimates that 1 million tons of coal will be extracted
over the three‐year period. After the coal is removed from the site, the
excavation equipment will be sold for an anticipated residual value of $60,000.
During 2021, 300,000 tons were extracted.
$2,768,360
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LO11‐4
Intangible Assets Subject to Amortization
• Legal, regulatory, or contractual provisions often limit
the useful life of an intangible asset
• Useful life might sometimes be less than the asset’s
legal or contractual life
Useful life
• Expected residual value of an intangible asset usually
is zero
• The residual value is not zero if at the end of the
asset’s useful life to the reporting entity the asset will
enefit another entity
Residual value
• The method of amortization should reflect the
pattern of use of the asset in generating benefits
Allocation method
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Intangible Asset Useful Life Disclosure—
Intel Corporation
LO11‐4
Summary of Significant Accounting Policies (in part)
Identified Intangible Assets (in part)
The estimated useful life ranges for identified intangible assets that are
subject to amortization are as follows:
(in years) Estimated Useful Life
Acquisition‐related developed technology 3‐9
Acquisition‐related customer relationships 5‐11
Acquisition‐related
ands 5‐8
Licensed technology and patents 2‐17
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Amortization of Intangibles
LO11‐4
Hollins Corporation began operations in 2021. Early in January, the company
purchased the following two intangible assets:
1. A franchise from Ajax Industries for $200,000. The franchise agreement is for a
period of 10 years.
2. A patent for $50,000. The remaining legal life of the patent is 13 years. However,
due to expected technological obsolescence, the company estimates that the
useful life of the patent is only 8 years.
Hollins uses the straight‐line amortization method for all intangible assets. The
company’s fiscal year‐end is December 31.
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Software Development Costs
• Amortization of capitalized software development
costs begins when the product is available for general
elease to customers
• The periodic amortization percentage is:
Percentage‐of‐
evenue method
Straight‐line
method
The greater of:
LO11‐4
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R&D: Software Development Costs
The Astro Corporation develops computer software graphics programs for sale.
A new development project started in 2020 and reached the point of
technological feasibility on June 30, 2021. Costs in 2021 were as follows:
Prior to June 30, 2021 $1,200,000
From June 30 to December 31, XXXXXXXXXX,000
The software was available for sale on January 1, 2022, and has the following
elated sales information:
Sales in 2022 $3,000,000
Estimated sales in 2023‐2025 7,000,000
Total estimated sales over four years $10,000,000
In 2021, Astro Corporation would expense the $1,200,000 in costs incu
ed
prior to the establishment of technological feasibility and capitalize the
$800,000 in costs incu
ed between technological feasibility and the product
availability date.
LO11‐4
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International Financial Reporting
Standards—Software Development Cost
LO11‐4
U.S. GAAP IFRS
Software development cost
The percentage we use to
amortize computer software
development costs under U.S.
GAAP is the greater of (1) the ratio
of cu
ent revenues to cu
ent and
anticipated revenues or (2) the
straight‐line percentage over the
useful life of the software.
This approach is allowed under IFRS,
ut not required. Amortization unde
IFRS typically occurs over the useful
life of the software, based on pattern
of benefits, with straight‐line as the
default.
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Intangible Assets Not Subject to Amortization
LO11‐4
• An intangible asset that is determined to have an
indefinite useful life is not subject to periodic
amortization
–Useful life is considered indefinite if there is no
foreseeable limit on the period of time over which the
asset is expected to contribute to cash flows of the
entity
• Indefinite does not necessarily mean permanent
• Intangible assets with indefinite useful lives are
subject to impairment
Examples of indefinite‐life intangibles assets:
Goodwill, trademarks, and tradenames
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U.S. GAAP IFRS
Valuation of Intangible Assets
Prohibits revaluation of any
intangible asset.
Allows a company to value an
intangible asset subsequent to
initial valuation at: (1) cost less
accumulated amortization or
(2) fair value, if fair value can be
determined by reference to an
active market. Goodwill, however,
cannot be revalued.
Differences between IFRS and U.S. GAAP:
Valuation of Intangible Assets
LO11‐10
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Revaluation of Intangible Assets Under IFRS
LO11‐10
Hollins LTD. Prepares its financial statements according
to IFRS. At the beginning of its 2021 fiscal year, the
company purchased a franchise for $500,000. The
franchise has a 10-year contractual life and no residual
value. At the end of the year, Hollins chooses to revalue
the franchise. Assuming that the fair value of the
franchise at year-end is $600,000. What are the journal
entries for 2021? What is the amount of amortization for
2022?
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Change in Estimates
• Accounted for prospectively
• Reflected in the financial statements of the cu
ent
and future periods
• A disclosure note should describe the effect of a
change in estimate for the cu
ent period on:
– Net income
– Related per share amounts
LO11‐5
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Change in Accounting Estimate
On January 1, 2019, the Hogan Manufacturing Company purchased a machine for
$250,000. At the time of purchase, the company estimated the following:
1. Service life of the machine to be five years.
2. Residual value to be $40,000.
On January 1, 2021, the company revised its estimates as follows:
1. Service life from a total of five to eight years.
2. Residual value from $40,000 to $22,000.
The company’s fiscal year‐end is December 31 and the straight‐line depreciation method
is used for all depreciable assets. Depreciation for 2021 and subsequent years is recorded
as follows:
LO11‐5
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Change in Estimate Disclosure—
Verizon Communications Inc.
LO11‐5
Plant and Depreciation (in part)
In connection with our ongoing review of the estimated useful lives of plant,
property and equipment during 2016, we determined that the average useful
lives of certain leasehold improvements would be increased from 5 to 7 years.
This change resulted in a decrease to depreciation expense of $0.2 billion in 2016.
We determined that changes were also necessary to the remaining estimated
useful lives of certain assets as a result of technology upgrades, enhancements,
and planned retirements. These changes resulted in an increase in depreciation
expense of $0.3 billion, $0.4 billion and $0.6 billion in 2016, 2015 and 2014,
espectively. While the timing and extent of cu
ent deployment plans are subject
to ongoing analysis and modification, we believe the cu
ent estimates of useful
lives are reasonable.
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Change in Depreciation, Amortization, or
Depletion Method
• Change in accounting estimate that is achieved by a
change in accounting principle
• Accounted for in the same way as any other change
in accounting estimate
• Requires a clear justification as to why the new
method is preferable
– Because this change in estimate is a result of a
change in accounting principle
LO11‐6
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Change in Depreciation Method
On January 1, 2019, the Hogan Manufacturing Company purchased a
machine for $250,000. The company expects the service life of the
machine to be five years and its anticipated residual value to be
$30,000. The company’s fiscal year‐end is December 31 and the double‐
declining‐balance (DDB) depreciation method is used. During 2021, the
company switched from the DDB to the straight‐line method.
LO11‐6
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Change in Depreciation Method—Agrium, Inc.
LO11‐6
Accounting standards and policy changes (in part)
We changed the method of depreciation from the straight‐line basis to the units
of production basis for our potash facility mining and milling assets beginning
January 1, 2015, and our nitrogen and phosphate mining and plant assets
eginning October 1, 2015. The change in method of depreciation reflects
anticipated changes to our production schedule due to facility expansions,
volatility in market conditions, and the frequency and duration of plant
turnarounds. The cu
ent and expected reduction in depreciation expense is 2015
– $30 million and 2016 – $7 million.
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Impairment of Value
• Implicit assumption in allocating the cost of an asset over
its useful life:
• Situations can arise that cause a significant decline or
impairment of those benefits or service potentials
Example:
Building destroyed by fire before the asset is fully
depreciated.
• Remaining book value of the asset is written off as a loss.
• Recognizing and measuring an impairment loss depends on
whether the assets are:
– To be held and used o
– Being held for sale
LO11‐8
There has been no significant reduction in the anticipated
total benefits or service potential of the asset.
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Impairment of Value
LO11‐8
Accounting treatment differs.
Assets to be held
and used
Assets
held for sale
PPE and
intangible
with finite
useful lives
Intangible
with
indefinite
useful lives
Goodwill
Test for impairment of
value at least annually.
Test for impairment of value when it is suspected
that