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Hi sir, first of all big apology for whatever happen last time :(…sir last time i asked u question that if we re testing non current asset for impairment and eg its carrying value is 1000 and recoverable amount is 4000, you said that if ths asset is under cost model then we will make no adj bt if the asset is on revaluation model then we will make revaluation adjustment, i want to ask that under revaluation model are we bound to revalue the asset or does it depend on company choice to revalue it or not ? …and similarly under cost model does company have a choice to keep asset at its cost or revalued amount Or will company be bound to keep asset at its cost?….can u give me the reference of the paragarph of the standard where it is bieng mention?…and my second question to you is that do we subsequently measure intangible asset with indefinite life at either cost or revaluation model or they dont get subsequently measure eg if we buy a intangible asset which has indefinite life, after initialy measuring it at cost,will we subequently measure this intangible asset with indefinate life at either cost or revaluation model ?….if yes then if we are testing the intangible asset with indefinate for impairment and lets suppose its carrying value is 1000 and recoverable amount is 4000 then can u please tell me that what adjustments should we make on both cost and revaluation model?..are we bound to revalue the asset under revaluation model or does it depend upon company policy ? and similarly under cost model are we bound to keep asset at its cost or does it depend on company policy to either keep it at cost or revalued amount ?..if u can refer me paragaph of relevant standard it will be great …by the way thank u very much sir for helping us out 🙂
If you write like this in the professional exams, you’re destined to score amazingly fewer marks than your answer may be worth.
This is appalling style and I’m having to persuade myself to answer it! I’m going to copy / paste and make it user (me) friendly
“Hi sir
First of all, a big apology for whatever happened last time
Sir, last time I asked you a question that if we’re testing a non current asset for impairment and its carrying value is $1,000 and recoverable amount is $4,000, you said that, if this asset is under the cost model, then we will make no adjustment but if the asset is under the revaluation model then we will make a revaluation adjustment.
I want to ask that under the revaluation model are we bound to revalue the asset or does it depend on company choice to revalue it or not?
Similarly under cost model does company have a choice to keep the asset at its cost or revalued amount or will company be bound to keep asset at its cost?
Can you please give me the reference of the paragraph of the standard where it is mentioned?
My second question is whether we subsequently measure intangible asset with indefinite life at either cost or revaluation model or they don’t get subsequently remeasured? For example, if we buy an intangible asset that has an indefinite life, after initially measuring it at cost, will we subequently measure this intangible asset with indefinite life under the cost model or the revaluation model?
If yes, then when we are testing the intangible asset with indefinite life for impairment and let’s suppose its carrying value is $1,000 and the recoverable amount is $4,000 then can you please tell me what adjustments should be made under both the cost and the revaluation model?
Is the company bound to revalue the asset under the revaluation model or does it depend upon company policy?
Similarly under the cost model are we bound to keep asset at its cost or does it depend on company policy to keep it either at cost or at the revalued amount?
If you could give me the reference to the paragaph of the relevant standard it would be great
By the way, thank you very much sir for helping us out”
“I want to ask that under the revaluation model are we bound to revalue the asset or does it depend on company choice to revalue it or not?” – if you’re under the revaluation model, you’re under the revaluation model!
“Similarly under cost model does company have a choice to keep the asset at its cost or revalued amount or will company be bound to keep asset at its cost?” – similarly, if you’re under the cost model, you’re under the cost model. You can move, but the new model must be applied to all similar assets in that class
From IAS Plus site “The recoverable amounts of the following types of intangible assets are measured annually whether or not there is any indication that it may be impaired. In some cases, the most recent detailed calculation of recoverable amount made in a preceding period may be used in the impairment test for that asset in the current period: [IAS 36.10]
an intangible asset with an indefinite useful life
an intangible asset not yet available for use
goodwill acquired in a business combination”“carrying value is $1,000 and the recoverable amount is $4,000 then can you please tell me what adjustments should be made under both the cost and the revaluation model?” – no adjustment under the cost model, $3,000 increase (Cr Revaluation Account) under the revaluation model
“carrying value is $1,000 and the recoverable amount is $4,000 then can you please tell me what adjustments should be made under both the cost and the revaluation model?” – if you’re under the revaluation model, you’re under the revaluation model! – still!
“Similarly under the cost model are we bound to keep asset at its cost or does it depend on company policy to keep it either at cost or at the revalued amount?” – similarly, if you’re under the cost model, you’re under the cost model. You can move, but the new model must be applied to all similar assets in that class
ok sir i will be careful next time, i have got answer of all of my questions except intangible asset with indifinate life
Firstly i want to ask that is there any other examples of intangible asset (with indefinate life) apart from good will?
if yes, then kindly tell me
And secondly,do we subsequently measure intangible asset who has indefinate life at either cost or revaluation model?,like we subsequently measure intangible asset with definate life (kindly tell me yes or no,with reason).
Thanks soo much for your precious time, Mr little.
and lastly i have a question with respect to disposal of a revalued non current asset, what entries are we supposed to make ?
1. Debit disposal account
Credit asset account2. Debit provision for depreciation account
Credit Disposal account3. Debit Revaluation reserve
Credit Retained Earnings4. Debit Cash account
Credit Disposal account5. if for example there is gain on disposal then,
Debit Disposal account
Credit Income statementAre my entries correct special entry number 3, which deals with elimination of revaluation surplus of the asset dispose of ?
With respect to intangible asset question asked above, as far as my knowledge of standard is concerned standard says, all intangible assets should be subsequently measure at either cost or revaluation model
It means intangible asset with indefinite life also get measure at either cost or revaluation model ? right
“Firstly i want to ask that is there any other examples of intangible asset (with indefinate life) apart from good will?
if yes, then kindly tell me”
What about copyright? Or knowhow? Or fishing rights?
Here’s a bit from the standard “Intangible assets meeting the relevant recognition criteria are initially measured at cost, subsequently measured at cost or using the revaluation model, and amortised on a systematic basis over their useful lives (unless the asset has an indefinite useful life, in which case it is not amortised).” That should answer your indefinite useful life issues
“Are my entries correct special entry number 3, which deals with elimination of revaluation surplus of the asset dispose of ?” – yes
“It means intangible asset with indefinite life also get measure at either cost or revaluation model ? right” – yes
And now a question from me to you …. what is it about intangible assets and indefinite lives that has got you so fixated that you’ve spent hours worrying about it? If this came up in the exam I would be AMAZED if it was worth more than 2 marks and I wouldn’t be surprised if it didn’t appear in the exam at all!
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