- This topic has 4 replies, 2 voices, and was last updated 9 years ago by
.
- Posts
What is the actual purpose of Disclosure Notes for non-current assets? Other than it being an IAS requirement.
Why is it necessary to show the carrying amount at both the start and end of a period?Thank you.
On the same topic of disclosure notes, could you please also explain what this means:
‘Financial statements should also include the line item(s) of the statement of P/L in which any amortisation of intangible assets is included.’
Thank you.
The purpose of all disclosure notes is to give users of the statements as much information as possible so that they can understand what has happened in the business.
What the sentence means is that the notes should say which heading in the Statement of profit or loss the amortisation is included (i.e. is it included in cost of sales, or in administrative expenses or wherever). You won’t be tested on this bit however (and you certainly will not be asked to actually write any disclosure notes).
But drafting disclosure notes for NCAs is part of the F3 syllabus?
Also referring back to the sentence, I don’t understand your explanation. If a NCA is classified as an expense, then it shouldn’t be amortised. So how can it state ‘which heading in the Statement of profit or loss the amortisation is included’?
And when reconciling the carrying amount in the Disclosure Note, is the cost at the end of the period (which includes the additions, disposals etc) brought forward when reconciling the carrying amount for the next year?
Thank you!
Drafting the notes is not part of the syllabus – you can not be expected to produce any of the notes in the exam.
Knowing what must be disclosed by note (but only in relation to some of the standards) is in the syllabus.
A non-current asset can never be classified as an expense!! By definition it is an asset and appears in the Statement of financial position. Just as with the depreciation expense, it is the amortisation for the year that is the expense and this does appear in the Statement of Profit or Loss. That is what you quoted and that is what I explained.
The notes on non-current assets (whether tangible or intangible) have to show the cost at the start of the year, the changes during the year, and the cost at the end of the year.
They have to show the accumulated depreciation or amortisation at the start of the year, the changes during the year, and the depreciation/amortisation at the end of the year.
Also, you have to show the carrying value at the start of the year and at the end of the year.The above must be shown for each class of asset (i.e. machines; cars etc.) separately.
- You must be logged in to reply to this topic.