ACC M115 Lecture Notes - Lecture 23: Income Statement, Impaired Asset, Book Value
Document Summary
Expense depends on each year"s volume of production. The consumption of economic benefits varies according to how much production is achieved each year. E. g. the delivery truck is expected to last so many kilometres rather than so many years. The following information is needed: cost of the asset, estimated salvage value, estimated number of units to be produced during the life of the asset. When a noncurrent asset is sold: dr cash or non-trade receivables (proceeds, dr accumulated depreciation on that asset (all that has accumulated, dr loss (or cr gain on sale, cr noncurrent asset (for original cost) Think of gains and losses as depreciation corrections. Directors need to ensure that the carrying value of an asset does not exceed the recoverable amount. If not, the carrying amount of the asset needs to be reduced to its recoverable amount.
