Non-current assets Essay Example | Topics and Well Written Essays - 1250 words

Non-current assets - Essay ExampleThe paper will look at two standards by the IAS, which are the IAS 16 and IAS 38 regarding non-current assets. This paper attempts to analyze the standards that IAS sets regarding write up of non-current assets. It sets these guidelines on how organizations and companies should handle both tangible and impalpable non-current assets. IAS is responsible for setting international auditing standards so that they act as guidelines for auditors and accountants to follow regarding non-current assets (Kirk, 234). Each part in the story profession has its own standards as a guide on how to handle it. For instance, handling plant and machinery under IAS 16 is different from dealing with intangible non-current assets under IAS 38. This creates a form of independence when dealing with various aspects in the accounting process. IAS standards on Property, plant, and equipment IAS 16 defines handling of shoes, plant and equipment which is different from IAS 38 which defines handling of intangible assets in financial statements. Property, plant and equipment are all fixed tangible assets therefore, adoption of a common method when dealing with them in the accounting process. ... The first guideline is their initial measurement which entails the initial cost and all other cost necessary to make the assets ready for use. It also includes capitalization of provoke costs. The other step is the subsequent measurement of the fixed assets which entails depreciation and disposal of assets (Kirk, 234). The rule of Impairment and disposing of the assets indicates how to dispose of such assets in terms of the guidelines. Accounting standards regarding these triple assets provides a guideline on how to classify long-lived assets that are held for deal and those held for use. Long-lived assets that are meant to be held for bargain do not depreciate therefore, their show should be separate. They should be placed separately in a statement of financ ial position. This is because they are not in the business for use, rather they are for sale hence, their selling price does not fall. The accounting standards provide rules and formula regarding how to measure this type of fixed assets (Kirk, 250). The other guideline regarding plant, property and equipment is the discontinued operations for those assets held for sale and those held for use. The impairment test and recoverability test give rules regarding recoverability of fixed assets and those that are not recoverable. There are also rules on the impairment loss on plant, property and equipment under the accounting standards. The standards provide for impairment loss that can be reversed, and that is unversed. This indicates how these types of losses are recognized when preparing financial statement (Alexander, 359). The standards also give conditions on when such losses cannot be reversed, for instance in situations where there is an increase in the fair value of plant,