Fixed assets are normally referred to as property, plant, and equipment with a useful life of more than one year. In order words, they are expected to be converted into cash in more than one year due to their usages. Fixed assets costs are not directly charged into the entity’s income statement immediately when purchasing. […]
How Often Should Fixed Assets’ Useful Life be Reviewed? (Explained) Read More »
Overview: IAS 16 Property, plant, and equipment are the standard that deals with depreciation. Under this standard, an entity must depreciate fixed assets and then charge these depreciation expenses to its income statement in the period the entity uses those assets. Under this standard, depreciation starts when fixed assets are ready for us, and depreciation
What Are the Acceptable Depreciation Methods as per IFRS? Read More »
Definition: Net Book Value is the value of fixed assets after deducting the accumulated depreciation and accumulated impairment expenses from the original cost of fixed assets. Accumulated depreciation expenses are the total depreciation expenses of assets from the beginning to the reporting date. In other words, the total annual depreciation expenses since the day that
Net Book Value of Fixed Assets (Explained with Example) Read More »
Fixed assets are classed as assets in the balance sheet of the entity. The common nature of fixed assets is generally different from current assets due to the useful life, the value of assets, and the ways in which assets contribute to the company. The different entities might have different accounting policies on the capitalization
When Should Fixed Assets be Capitalized? (Explained) Read More »
Fixed assets are the kind of capital expenditures that higher costs to most of the organizations. Cash outflow from the entity is big and the way that those fixed assets generate income to the entity is longer than one. This is the main reason why accounting policy required fixed assets to be depreciate and the
Why do we need to depreciate fixed assets? (Explained) Read More »
Definition: The declining balance or reducing balance depreciation method considers the value of assets that are largely used or highly contribute to operation at the beginning and then subsequently decline. That means depreciation expenses that should be charged to certain types of assets are high at first and then low subsequently. This is the main
Declining Balance or Reducing Balance Method of Depreciation Read More »
Explanation: The diminishing balance depreciation method is one of the three depreciation methods mentioned in IAS 16. This kind of depreciation method is said to be highly charged in the first period, and then subsequently reduce. This is because the charging rate is applying to the Net Book Value of Assets and the Net Book
Diminishing Balance Depreciation Method: Explanation, Formula, and Example Read More »
Definition: The straight-line depreciation method is one of the most popular depreciation methods used to charge depreciation expenses from fixed assets equally period assets’ useful life. This method is quite easy and could be applied to most fixed assets and intangible fixed assets. The straight-line depreciation method considers assets used and provides the benefit equally
Straight-line Depreciation Method: Definition, Formula, Example, More Read More »
Definition: Capital expenditures are the type of expenses that the entity spends on acquiring or upgrading long-term assets. Capital expenditures are normally called CAPEX. The expenses could be recognized as or classed as capital expenditure only if those expenses are allowed to be capitalized as long-term assets according to accounting standards and the company’s accounting
Capital Expenditures: Definition, Example, Analysis, and List Read More »
Fixed assets definition: Fixed assets normally refer to property, plant, and equipment held for use in the production or supply of goods or services, rental to others, or administrative purposes. They are expected to be used by an entity with more than one year accounting period. Those assets included land, building, machinery, cars, computers, and other
