lec 3 ch 4

These flashcards cover fundamental concepts related to accounting for assets and the principles of measuring and recognizing property, plant, and equipment (PPE) as outlined in the lecture.

Economic resource

A right that has the potential to produce economic benefits.

Recognition criteria

Criteria used to determine when to recognize an asset or liability.

Impairment loss

A loss recognized when the recoverable amount of an asset is less than its carrying amount.

Fair value

The price received to sell an asset or paid to transfer a liability in an orderly transaction.

Recoverable amount

The higher of an asset's fair value less costs to sell and its value in use.

Carrying amount

The cost of an asset minus accumulated depreciation and impairment losses.

Measurement uncertainty

Uncertainty that arises when monetary amounts in financial reports cannot be observed directly.

Capitalization

Accounting process of recording a cost as an asset rather than an expense.

Current asset

An asset expected to be realized or consumed within one year.

Non-current asset

An asset not classified as current; typically held for longer than one year.

Asset measurement rules

Standards and methods used to assess the value of various asset types.

Directly attributable costs

Costs that are directly linked to bringing an asset to the location and condition necessary for it to be capable of functioning.

Recognition of an asset

The process of recording an asset in the financial statements after confirming that it meets specific criteria.

Disclosure requirements

Mandatory reporting standards for information related to asset measurements and valuations.

Subsequent measurement

Revaluation of an asset after it has been initially recognized, which can affect financial statements.