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Required: Evaluate the implications of accounting procedures for the recording and management of non-current assets in Australia.In this topic you should consider how accounting for non-current assets...

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Required: Evaluate the implications of accounting procedures for the recording and management of non-current assets in Australia.In this topic you should consider how accounting for non-current assets is impacted by the following events:
•Initial recognition
•Post-acquisition expenditure
•Annual changes in value
•Impairment events
revaluationdisposal
should use academic references to support the arguments and consider (and reference) how the legislative power of the Australian Accounting Standards Board (AASB) effects non-current assets for reporting entities in Australia.


Answered Same Day May 16, 2020

Solution

Pulkit answered on May 25 2020
162 Votes
1. INTRODUCTION
The aim of the accounting for the non-cu
ent assets is for the better management and also to provide clear and true data with respect to the assets in the financial statements. The Non-Cu
ent Asset includes the items of plant & equipment, property, intangible assets and assets held for resale. The accounting foe the non-cu
ent assets is required in the following cases: Acquiring, developing or constructing a non-cu
ent asset Costs incu
ed for keeping of a non-cu
ent asset Revaluation of non-cu
ent assets Disposal of non-cu
ent asset Accounting for the depreciation or amortization of non-cu
ent assets Reporting and disclosing non-cu
ent assets impairment of non-cu
ent assets.
2. APPLICABLE AUSTRALIAN ACCOUNTING STANDARDS
The following Australian Accounting Standards are applicable in the accounting of the non-cu
ent assets:
· AASB 13 – Fair Value Measurement
· AASB 101 – Presentation of Financial Statements
· AASB 116 – Property, Plant and Equipment
· AASB 136 – Impairment of Assets
· AASB 1041 – Revaluation of non-cu
ent assets
· Any other relevant standard
3. INITIAL RECOGNITION
The Non-Cu
ent Asset includes the items of plant & equipment, property, intangible assets and assets held for resale. The following criteria in relation to the item to be recognized as a non-cu
ent asset should be met:
· The company has got the control over the asset to be classified as non-cu
ent.
· It is necessary that the future economic benefits associated with the asset under consideration must flow to the company.
· There must be occu
ence of a transaction or an event in the past which have resulted in the occu
ence e of the asset under consideration.
· For an asset to be classified as a non-cu
ent asset the same must be have a useful life of more than one year. (Cairns, D., Massoudi, D., Taplin, R. and Tarca, A., 2011.)
As per the Australian accounting standard AASB 116(10) the asset under consideration is recognized when the cost associated with the asset have been incu
ed. The cost of an asset includes the following:
· Purchase price less any deductions in the form of discounts, rebate
· Costs associated directly with the
inging of the asset to its location. For example cost associated with the construction or acquisition of the asset, Site preparation cost, site restoration cost, Assembly costs, and inspection cost act.
However purchase Costs exclude the following costs: Marketing and advertising costs. Maintenance costs incu
ed after the asset is put to use. Avoidable costs. Financing Costs include the amount of Interest charged on bo
owings made for purchase of asset. Preliminary Study costs incu
ed. (White, G.I., Sondhi, A.C. and Fried, D., 1998.)
4. POST ACQUISITION EXPENDITURE
The expenditure incu
ed on an asset after it is put to use are mainly of two types:
• Capital Expenditure – these are the expenditure costs incu
ed to add value to the asset under consideration. Certain costs incu
ed over the useful life of an asset are of such a nature that they
ing a change in the asset under consideration by way of renewal, extension or up gradation of the asset...
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