chapter 5 - ppe

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• Describe the cost model for PPE. The initial recognized cost, less depreciations and impairments, plus dismantling costs at the end
• If the revalued PPE a year later is sold, how will a revaluation gain, relating to the previous year, be recognized? Directly in retained earnings in equity
• Define depreciations. A systematic allocation aiming at allocating expenses
• If a PPE is revalued and the value increases, how will the gain be recognized? An increase is presented in Other Comprehensive Income (OCI)
• Define 2 level inputs. Quoted prices for a similar asset in an active market
• How is a gain or loss on a fair value revaluation of investment property presented in the financial reports? On a separate line in the P/L
• How should the initial recognition be measured? To the purchase price, less discounts and rebates
• If it is profitable that future economic benefits from an asset will flow to the company, what other requirement must be fulfilled to be able to recognize PPE? The cost can be measured reliably
• If a company takes up a loan in a bank to use for construction of its own building, how will the interest cost on the loan be accounted for? It should be capitalized and included in the cost of the building
• Repair, maintenance, replacement of major parts and major inspections, which should be treated as a capital expenditure? Major replacements
• What is a carrying amount? The amount that is shown in the financial statements
• How does IAS16 define property, plant and equipment? Held for use in the production, held for more than one period, held for rental to others. Not held for sale
• IFRS13 defines three levels of inputs in its fair value hierarchy, describe a valuation using level 3 inputs. Using unobservable inputs, meaning inputs for which market data is not available, for example estimates of future cash flows
• If the depreciation method is changed, how will this be dealt with according to IAS? It is a change in accounting estimate and will be changed prospectively

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