Distinctive Financial Reporting FAC3702 Semesters 1 & 2

FAC3702/501/3/2021 Tutorial letter 501/3/2021 Distinctive Financial Reporting FAC3702 Semesters 1 & 2 Department of Financial Accounting FAC3702/501/3/2021 2 CONTENTS INTRODUCTION iv LECTURERS AND CONTACT DETAILS iv LEARNING UNIT 1 – PROPERTY, PLANT AND EQUIPMENT 2 LEARNING UNIT 2 – INVESTMENT PROPERTY 45 LEARNING UNIT 3 – INTANGIBLE ASSETS 74 LEARNING UNIT 4 – IMPAIRMENT OF ASSETS 107 LEARNING UNIT 5 – NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS 135 LEARNING UNIT 6 – THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES 173 iii FAC3702/501 INTRODUCTION Dear Student, Attached please find the following learning units: • Learning unit 1 – Property, plant and equipment (IAS 16) • Learning unit 2 – Investment property (IAS 40) • Learning unit 3 – Intangible assets (IAS 38) • Learning unit 4 – Impairment of assets (IAS 36) • Learning unit 5 – Non-current assets held for sale and discontinued operations (IFRS 5) • Learning unit 6 – The effects of changes in foreign exchange rates (IAS 21) LECTURERS AND CONTACT DETAILS Please use only the following e-mail address for all communication with the lecturers: Please use only the following telephone numbers for all communication with your lecturers: iv FAC3702 LEARNING UNIT 1 PROPERTY, PLANT AND EQUIPMENT [IAS 16] Distinctive Financial Reporting LEARNING UNIT 1 – PROPERTY, PLANT AND EQUIPMENT LEARNING OUTCOMES Once you have studied and completed this course material, you should be able to: • account for property, plant and equipment, and depreciation in the financial statements of an entity in terms of the requirements of International Financial Reporting Standards. • account for revaluations of property, plant and equipment in the financial statements of an entity in terms of the requirements of International Financial Reporting Standards. • account for the deferred tax and tax implications in respect of property, plant and equipment. OVERVIEW This learning unit will be discussed under the following sections: A PROPERTY, PLANT AND EQUIPMENT 1.1 Objective – IAS 16.1 1.2 Scope – IAS 16.2–5 1.3 Definitions – IAS 16.6 1.4 Recognition of property, plant and equipment – IAS 16.7–14 1.4.1 Initial costs – IAS 16.11 1.4.2 Subsequent costs – IAS 16.12–14 1.5 Measurement at recognition – IAS 16.15–28 1.5.1 Elements of cost – IAS 16.16–22 1.5.2 Measurement of cost – IAS 16.23–28 1.6 Measurement after recognition – IAS 16.29–66 1.6.1 Cost model – IAS 16.30 1.6.2 Revaluation model – IAS 16.31–42 1.6.3 Depreciation – IAS 16.43–62 1.6.4 Impairment – IAS 16.63 1.6.5 Compensation for impairment – IAS 16.65–66 1.7 Derecognition – IAS 16.67–72 B REVALUATION MODEL – IAS 16.31–42 1.8 Introduction 1.9 Frequency of revaluations 1.10 Revaluation methods 1.10.1 Change in accounting policy 1.10.2 Residual value 1.10.3 Estimated useful life 1.10.4 Determination of replacement value 1.11 Revalue an entire class of property, plant and equipment – IAS 16.36–38 1.12 Revaluation surplus – IAS 16.39–42 1.13 Further examples 1.14 Summary of revaluations ................................................continued.....................................................