Deprecation For Balance Sheet

Revaluation

PP&E can be carried on the balance sheet at amortized cost OR revalued amount

• Revaluation → requires companies to revalue their PP&E frequently so fair value (how much asset/ liability is worth in current market (current value)) isn’t materially different than the carrying amount at BS date if asset is revalued, the entire class of assets in the same as the revalued asset would be revalued.

Depreciable amount

Calculated as the asset cost less than residual value (estimated value after it’s useful life (end value))

(ASPE → Calculated as the greater of [asset cost less residual value] or [asset cost less salvage value]

→ there isn’t a “greater” amount in IFRS. Depreciation is calculated as the asset cost less residual value

→ companies can choose the revalue model, the depreciable amount will change every time the asset is revalued

Component Separation & Depreciation

→ Components of PP&E that represent a significant cost relative to the total must be depreciated separately (IFRS: Requires separation and individual depreciation for significant parts of an asset.) (different plane parts deppreciates separtely

Revenue Recognition → 5 steps

1. Identify contract

2. Identify performance obligations

3. Determine transaction price

4. Allocate the transaction price to performance obligations

5. Recognize revenue in accordance with performance

Expenses Classification:

• ASPE: By nature (e.g., rent, depreciation).

• IFRS: By nature or function (e.g., admin, sales).

Tax JR

DR. Women’s accessories inventory         $10,000

DR. HST receivable                                         $1,300

CR. Cash                                                     $11,300

To record purchase of women’s accessories inventory.

DR. Cash                                                         $22,600

CR. Women’s blouses revenue                         $20,000

CR. HST payable                                                   $2,600

To record sale of women’s blouses to a major customer.