optimusmind:
Chartered accountants to be,

What is the difference between impairment, depreciation, and amortisation?

And when a financial asset is categorized as Available for sale financial asset(AFS asset) , how is profit from revalution treated when the asset is disposed?


15 marks

Err let me try

Depreciation simply put is a cost recovery model (tangible assets)

Impairment is the reduction in the recovery amount of an asset as against its book value

Amortisation is also a cost recovery model i.e allocating the cost of an asset over its useful life (intangible asset )

Changes in the value of AFS are initially recognised through equity then on derecognition , the profit is recognised through Profit and Loss

optimusmind:
Chartered accountants to be,

What is the difference between impairment, depreciation, and amortisation?

And when a financial asset is categorized as Available for sale financial asset(AFS asset) , how is profit from revalution treated when the asset is disposed?


15 marks

When there is revaluation gain on AFS asset, OCI is Cr while AFS asset is DR and when the asset is disposed, OCI is DR while P/L is CR with the gain previously recognized, the AFS asset is CR while Cash is DR

optimusmind:


My hands are up


Answer the second one on AFS financial asset

sopulurespect:


When there is revaluation gain on AFS asset, OCI is Cr while AFS asset is DR and when the asset is disposed, OCI is DR while P/L is CR with the gain previously recognized, the AFS asset is CR while Cash is DR

AbbyE:


Err let me try

Depreciation simply put is a cost recovery model (tangible assets)

Impairment is the reduction in the recovery amount of an asset as against its book value

Amortisation is also a cost recovery model i.e allocating the cost of an asset over its useful life (intangible asset )

Changes in the value of AFS are initially recognised through equity then on derecognition , the profit is recognised through Profit and Loss

lols....make them come down
kudos to the scholarly presentations above! Simply, accumulating "gains" on AFS until they are subsequently disposed of by a CR to the PorL;and de-recognizing such AFS by CR to the AFS account...

by his Grace, we will all smile today.

sopulurespect:


When there is revaluation gain on AFS asset, OCI is Cr while AFS asset is DR and when the asset is disposed, OCI is DR while P/L is CR with the gain previously recognized, the AFS asset is CR while Cash is DR

Correct.

12/15

miscoe:








lols....make them come down
kudos to the scholarly presentations above! Simply, accumulating "gains" on AFS until they are subsequently disposed of by a CR to the PorL;and de-recognizing such AFS by CR to the AFS account...

There are two Methods.
Either through OCI
Or
Through P/L.

ofirima:
YES RESULT WILL BE OUT 2MOROW

I'm really hopeful about today

There is only one way we know if result is coming out today, that is if only council members sit today. So lets pray they sit or the wait continues

Someone pls help us confirm if council members are meeting today? Goodmorning ican world

centK:
Someone pls help us confirm if council members are meeting today? Goodmorning ican world

Good morning,


Gbolahanrasaq..
Kindly help confirm

Deprecation is the actual reduction of the value of an asset over time. While a way of measuring depreciation is by allocating cost of the asset over a period of time.

Simple. Na only depreciation I sabi for now. Lol

It is well oh. Even ordinary waec updates candidates on date of releasing result. '' WAEC Reveals Date For Release Of 2017 May/June Results''. Lets be hopeful amyways. This weeks completes the 6-8weeks on their site

kaboninc:
Deprecation is the actual reduction of the value of an asset over time. While a way of measuring depreciation is by allocating cost of the asset over a period of time.

Simple. Na only depreciation I sabi for now. Lol

According to IAS16, depreciation is no longer reduction in value, but an allocation of cost.
This is why,
After depreciating a building, for instance, for a period of 10 years, if that asset is valued it could even have a value higher than the original cost. So what would you make of that?
Therefore, impairment is the reduction in the value of an asset. And you measure impairment by carrying out an impairment test

Personally, I'm not expecting any result to be released today. If eventually it's released fine

So far, there has not been any reliable information regarding the release of results

Before you know it, another stories will start

gbolahanrasaq:
Before you know it, another stories will start

The result is not going to be extended than this week, so it should be out either today or tomorrow..

OlalekanEdun:


The result is not going to be extended than this week, so it should be out either today or tomorrow..

What if something comes up, and it gets delayed till next week Thursday?

OlalekanEdun:


The result is not going to be extended than this week, so it should be out either today or tomorrow..

If it's ICAN anything can still happen. You would recall this was how the delay in Nov 2016 diet result began.

Good morning my fellow nairalandite.. As we are anxiously waiting for our results today! I wish everybody best of luck! We shal all av reasons to smile nd thank God. #Amin#

optimusmind:


According to IAS16, depreciation is no longer reduction in value, but an allocation of cost.
This is why,
After depreciating a building, for instance, for a period of 10 years, if that asset is valued it could even have a value higher than the original cost. So what would you make of that?
Therefore, impairment is the reduction in the value of an asset. And you measure impairment by carrying out an impairment test

For the sake of semantics, when something depreciates, it means it loses value. How do you measure the loss in value over time, you allocate a cost of that asset over a period for which it is expected to be in use or it's life span.

Now there's a difference between depreciation and impairment as per your example.

If I build a house, it is expected that the house deteriorates over time. So in my balance sheet, I have to reflect this deterioration by gradually reducing the asset each year until the life span of this building.

However, impairment is different as it test to see that the value of the asset as started in the balance sheet is worth the value as stated. In testing for impairment, we differentiate between the net asset carry value (cost of acquisition - accumulated depreciation) and the future undiscounted cash flows. Now impairment will only be carried out when there are certain changes in the business environment or internal. If there is a charge, it is write off. This is like wanting to be sure that your asset is even worth it. But depreciation must be carried out over the life span of the asset whether we like it or not.


As for the building, I'll carry out an impairment test to see that the value of the building as stated in my balance sheet reflects the current reality.


My 2 cents.

highb1:
Good morning my fellow nairalandite.. As we are anxiously waiting for our results today! I wish everybody best of luck! We shal all av reasons to smile nd thank God. #Amin#

Amen

Me I want to work in a consulting, advisory firm, an investment bank, or private equity firm. I will love to even intern....this is my passion.

So guys, remember me in your board meetings ohh

kaboninc:


For the sake of semantics, when something depreciates, it means it loses value. How do you measure the loss in value over time, you allocate a cost of that asset over a period for which it is expected to be in use or it's life span.

Now there's a difference between depreciation and impairment as per your example.

If I build a house, it is expected that the house deteriorates over time. So in my balance sheet, I have to reflect this deterioration by gradually reducing the asset each year until the life span of this building.

However, impairment is different as it test to see that the value of the asset as started in the balance sheet is worth the value as stated. In testing for impairment, we differentiate between the net asset carry value (cost of acquisition - accumulated depreciation) and the future undiscounted cash flows. Now impairment will only be carried out when there are certain changes in the business environment or internal. If there is a charge, it is write off. This is like wanting to be sure that your asset is even worth it. But depreciation must be carried out over the life span of the asset whether we like it or not.


As for the building, I'll carry out an impairment test to see that the value of the building as stated in my balance sheet reflects the current reality.


My 2 cents.

I get all you said.
However, depreciation is not a loss in value, but simply and allocation of cost.
Read IAS16 on definition of depreciation.
Before now, what you said is correct but with the adoption of IAS16, it is now completely different. Depreciation is no longer a loss in value but an accounting measure used to allocate the depreciable amount.
an asset over the period of its useful life

Measurement after initial recognition is either
Cost model
Or
Revaluation model.
Under cost model, the carrying amount is cost less deprecation less impairment.
For revaluation model, The asset is carried at a revalued amount, being its fair value at the date of revaluation less subsequent depreciation and impairment, provided that fair value can be measured reliably.
When the asset is revalued, any actual loss in value would be recognized. N. B. On revaluation, you get revaluation loss or gain. Where as on carrying out impairment test the results is just impairment loss.

In summary, depreciation is no longer loss in value of assets, but an allocation of the depreciable amount, over the useful life of an asset, irrespective of whether the asset losses value or gains value.

Ghenghen... The day has come, wish everyone best of luck

Inexhaustible:
Ghenghen... The day has come, wish everyone best of luck

It's next week, it's not today again

optimusmind:

It's next week, it's not today again

If I hear nextweek again from anybody, hmm...I reserved my comment

Na una sabi, if ICAN like make dem keep am till August... Kin sa ti pass...

optimusmind:

It's next week, it's not today again

Seems everyone is not capitalizing on ICAN not announcing the probable date that exams will be released to fix their own dates and we now feed on speculations.

ICAN itself gave room for the speculations. There is no communication whatsoever from them

gbolahanrasaq:
ICAN itself gave room for the speculations. There is no communication whatsoever from them

Gbolahan, Pls dont mind optimusmind:, Can u pls, help monitor progress today since u re close to ICAN office

optimusmind:
It's next week, it's not today again

Are you serious?