Course Description
Accounting for fixed assets can be a complex area with extensive implications on a company's value. In this thorough and well-written course, accounting expert Steven Bragg uses real-life examples to illustrate the principles covered, and offers helpful tips and advice that can be easily implemented. This course addresses both the GAAP and IFRS accounting for all aspects of fixed assets, including their initial purchase, impairment, revaluation, and disposal.
This course also covers:
- Disclosure of fixed asset information
- Capital budgeting
- Asset recognition
- Interest capitalization
- Asset retirement obligations
- Financial statement disclosures associated with fixed assets
- Creating strong control systems for fixed assets
- Fixed asset record keeping
- Ratios that can be used to monitor fixed assets
Instructor
Learning Objectives
Upon successful completion of this course, participants will be able to:
Chapter 1
- State why construction in progress is a temporary account
- Identify an advantage of having many fixed asset classifications
- Define depreciation
Chapter 2
- Specify where constraint analysis is used
- Define throughput
- List a way the payback method works well in analyzing a budget
Chapter 3
- Identify fixed asset costs to be capitalized and how to value fixed assets acquired in a business combination
- Cite when to capitalize a lease
- State how to account for a major inspection under IFRS
Chapter 4
- Specify when to capitalize interest and which projects to capitalize interest on
- Cite when to terminate interest capitalization in a dependent completion project
- Define interest capitalization rate
Chapter 5
- Identify when to defer an asset retirement obligation and what to do with a retirement obligation when there is no probability distribution
- Define accretion expense
Chapter 6
- Define depletion
- Identify when an assumption is made using the mid-month convention
- Calculate first-year depreciation using the double declining balance method
- Specify when depreciating land is acceptable
Chapter 7
- Cite possible choices and best practices for situations under the IFRS revaluation model
- Identify when you are permitted to revalue fixed assets on a rolling basis
Chapter 8
- Identify what to do if an asset group is impaired
- Cite when it is permissible to reverse an impairment loss under GAAP
- Specify how to tell that a prior impairment loss has been reduced under IFRS
Chapter 9
- Cite how to measure fixed assets that are being moved out of held for sale status
- Identify proper accounting for abandoned, temporarily idle, or disposed of assets
Chapter 10
- Identify what should be disclosed under GAAP for capitalized interest or an impairment loss on an intangible asset
- Identify items not disclosed under IFRS concerning change of estimate information or optional fixed asset disclosure
Chapter 11
- Cite when to record a contributed asset as a gain and what may be recorded from contributions of art
- Cite proper recognition of conditional promises to give
Chapter 12
- Cite why a single accumulated depreciation account is advantageous
- Define chart of accounts
- Identify the purpose of the responsibility report and project cost sheet
Chapter 13
- Define a fixed asset acquisition control
- Identify what areas specific actions are designed to be controls for
- Cite what is included in a good corporate capitalization limit
Chapter 14
- Specify when an interest capitalization procedure is unnecessary
- Identify when fixed asset transfer policies are not being utilized best
Chapter 15
- Identify potential uses of a paper identification tag and an alternative to a metal tag
- List two benefits of bar code tags in asset tracking
- Identify what wireless monitors can and cannot track
Chapter 16
- Identify the effect of an increasing ratio of repairs and maintenance to fixed assets
- Identify a situation that are not best for using the fixed asset requirements ratio
- Specify the purpose of return on operating assets
- List effects of unscheduled machine downtime
Chapter 17
- Identify why auditors may perform actions like comparing the capital budget to actual purchases or match assets to a fixed asset register during a physical count
- Identify an audit activity related to fixed asset disposals
- Cite the purpose of the purchases detail binder
Table of Contents
Preface
Chapter 1 – Introduction to Fixed Assets
Learning Objectives
Introduction
Introduction to Fixed Assets Terminology
What are Fixed Assets?
The “Fixed Asset” Designation
Fixed Asset Classifications
Applicable Accounting Frameworks
Accounting for Fixed Assets
Accounting for Intangible Assets
Accounting for Not-for-Profit Fixed Assets
Fixed Asset Disclosures
Fixed Asset Controls
Fixed Asset Policies and Procedures
Fixed Asset Record Keeping
Fixed Asset Auditing
Fixed Asset Measurements
Summary
Chapter 1 Review Questions
Chapter 2 – Capital Budgeting Analysis
Learning Objectives
Introduction
Overview of Capital Budgeting
Bottleneck Analysis
Net Present Value Analysis
The Payback Method
Capital Budget Proposal Analysis
The Outsourcing Decision
The Capital Budgeting Application Form
The Post Installation Review
The Lease or Buy Decision
Capital Budgeting with Little Cash
Summary
Chapter 2 Review Questions
Chapter 3 – Initial Fixed Asset Recognition
Learning Objectives
Introduction
The Capitalization Limit
The Base Unit
GAAP: The Initial Measurement of a Fixed Asset
Interpretive Commentary
GAAP: The Measurement of Assets Acquired in a Business Combination
GAAP: The Measurement of Assets Acquired in a Capital Lease
GAAP: Non-Monetary Exchanges
GAAP: Internal-Use Software
GAAP: Website Development Costs
IFRS: Initial Inclusions in a Fixed Asset
IFRS: Initial Cost of a Fixed Asset
IFRS: The Measurement of Assets Acquired in a Business Combination
IFRS: The Measurement of Assets Acquired in a Capital Lease
IFRS: Non-Monetary Exchanges
Summary
Chapter 3 Review Questions
Chapter 4 – Interest Capitalization
Learning Objectives
Introduction
Why and When Do We Capitalize Interest?
Assets for Which You Must Capitalize Interest
Assets for Which You Do Not Capitalize Interest
The Interest Capitalization Period
The Capitalization Rate
Calculating Interest Capitalization
Derecognizing Capitalized Interest
Interest Capitalization under IFRS
Summary
Chapter 4 Review Questions
Chapter 5 – Asset Retirement Obligations
Learning Objectives
Introduction
The Liability for an Asset Retirement Obligation
The Initial Measurement of an Asset Retirement Obligation
Subsequent Measurement of an Asset Retirement Obligation
Settlement of an Asset Retirement Obligation
Overview of Environmental Obligations
Measurement of Environmental Obligations
Recoveries Related to Environmental Obligations
Asset Retirement Obligations under IFRS
Summary
Chapter 5 Review Questions
Chapter 6 – Depreciation and Amortization
Learning Objectives
Introduction
The Purpose of Depreciation
Depreciation Concepts
Accelerated Depreciation
Straight-Line Method
Sum-of-the-Years’ Digits Method
Double-Declining Balance Method
Depletion Method
Units of Production Method
MACRS Depreciation
The Depreciation of Land
The Depreciation of Land Improvements
Group Depreciation
Composite Depreciation
Depreciation Accounting Entries
Accumulated Depreciation
Depreciation under IFRS
Other Depreciation Topics
Impact on Cash Flow Analysis
Depreciation and Market Value
Summary
Chapter 6 Review Questions
Chapter 7 – Subsequent Fixed Asset Measurement
Learning Objectives
Introduction
The Capitalization of Additional Expenditures
Asset Revaluation for Tangible Assets
Asset Revaluation for Intangible Assets
Summary
Chapter 7 Review Questions
Chapter 8 – Fixed Asset Impairment
Learning Objectives
Introduction
Asset Impairment under GAAP
GAAP: Measurement of Asset Impairment
GAAP: Impairment Testing Exemption for Intangible Assets
GAAP: The Impact of Asset Retirement Obligations
GAAP: Measurement of Disposal Losses on Assets Held for Sale
GAAP: The Asset to Be Tested
GAAP: Timing of the Impairment Test
GAAP: Accounting for the Impairment of an Asset Group
GAAP: Reversing an Impairment Loss
GAAP: Reversing a Disposal Loss
Asset Impairment under IFRS
IFRS: The Impairment Test
IFRS: The Asset to be Tested
IFRS: Goodwill and Impairment Testing
IFRS: Corporate Assets and Impairment Testing
IFRS: Timing of the Impairment Test
IFRS: Indications of Impairment
IFRS: Intangible Asset Measurement
IFRS: Determining Value in Use
IFRS: Determining the Fair Value Less Costs to Sell
IFRS: Accounting for the Impairment of an Asset
IFRS: Reversing an Impairment Loss
Summary
Chapter 8 Review Questions
Chapter 9 – Fixed Asset Disposal
Learning Objectives
Introduction
Asset Derecognition
The Held-for-Sale Classification
Reclassification from Held for Sale
Discontinued Operations
Abandoned Assets
Idle Assets
Asset Disposal Accounting
Asset Disposal under IFRS
Summary
Chapter 9 Review Questions
Chapter 10 – Fixed Asset Disclosures
Learning Objectives
Introduction
GAAP Disclosures
GAAP: General Fixed Asset Disclosures
GAAP: Asset Retirement Obligations
GAAP: Capitalized Interest Disclosures
GAAP: Change in Estimate Disclosures
GAAP: Intangible Asset Impairment Disclosures
GAAP: Intangible Asset Disclosures
IFRS Disclosures
IFRS: General Fixed Asset Disclosures
IFRS: Capitalized Interest Disclosures
IFRS: Change in Estimate Disclosures
IFRS: Estimates of Recoverable Amounts
IFRS: Held for Sale Disclosures
IFRS: Impairment Disclosures
IFRS: Intangible Asset Disclosures
IFRS: Revaluation Disclosures
IFRS: Optional Disclosures
Summary
Chapter 10 Review Questions
Chapter 11 – Not-for-Profit Fixed Asset Accounting
Learning Objectives
Introduction
Initial Recognition of Fixed Assets
Restrictions on Contributed Assets
Valuation of Contributed Assets
Valuation of Contributed Services
Valuation of Art, Historical Treasures, and Similar Items
Depreciation of Fixed Assets
Recordation of Fixed Assets
Fixed Asset Controls in a Not-for-Profit Entity
Summary
Chapter 11 Review Questions
Chapter 12 – Fixed Asset Record Keeping
Learning Objectives
Introduction
Fixed Asset Accounts
Construction Project Record Keeping
Building Record Keeping
Equipment Record Keeping
Land Record Keeping
Lease Record Keeping
Operating Lease Record Keeping
Capital Lease Record Keeping
Document Retention
Fixed Asset Reports
Depreciation Report
Audit Report
Responsibility Report
Asset Replacement Report
Maintenance Report
Summary
Chapter 12 Review Questions
Chapter 13 – Fixed Asset Controls
Learning Objectives
Introduction
Controls for Fixed Asset Acquisition
Controls for Fixed Asset Construction
Controls for Fixed Asset Theft
Controls for Fixed Asset Valuation
Controls for Fixed Asset Depreciation
Controls for Fixed Asset Disposal
The Control of Laptop Computers
Summary
Chapter 13 Review Questions
Chapter 14 – Fixed Asset Policies and Procedures
Learning Objectives
Introduction
Capital Budgeting Policies and Procedures
The Capital Request Form
Asset Recognition Procedures
Asset Revaluation Policies and Procedures
Asset Exchange Policies and Procedures
Depreciation Policies and Procedures
Impairment Policies and Procedures
Asset Retirement Obligation Policies and Procedures
Intangible Asset Policies and Procedures
Transfer Policies
Disposal Policies and Procedures
The Asset Disposal Form
Record Keeping Policies
Tracking Policies and Procedures
The Fixed Asset Manual
Summary
Chapter 14 Review Questions
Chapter 15 – Fixed Asset Tracking
Learning Objectives
Introduction
Tag Tracking
Bar Code Tracking
RFID Tracking – Active Transmission
RFID Tracking –Passive Transmission
Wireless Monitoring
Summary
Chapter 15 Review Questions
Chapter 16 – Fixed Asset Measurements
Learning Objectives
Introduction
Sales to Fixed Assets Ratio
Repairs and Maintenance Expense to Fixed Assets Ratio
Accumulated Depreciation to Fixed Assets Ratio
Cash Flow to Fixed Asset Requirements Ratio
Return on Assets Employed
Return on Operating Assets
Bottleneck Utilization
Unscheduled Machine Downtime
Summary
Chapter 16 Review Questions
Chapter 17 – Fixed Asset Auditing
Learning Objectives
Introduction
Fixed Asset Audit Objectives
Fixed Asset Audit Procedures
Auditor Requests
Summary
Chapter 17 Review Questions
Review Question Answers and Rationales
Appendix
Journal Entries
Glossary
Index
Final Examination
Answer Sheet
Course Evaluation
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