Know Your Rights!!

Have you come across a situation when you find that the block of assets are fully depreciated in the books but the company is still using them in its operation to generate revenue?  In this case, the original estimate of assets useful life proved to be incorrect. These assets are used beyond their useful life, they are fully depreciated and their carrying amount in the books is zero. What depreciation expense can you recognize in the profit or loss? None, of course – because the carrying amount of the assets cannot be sub zero. As a result, the matching principle does not work here. The expenses simply do not match the benefits gained from these assets. The standard IAS 16 Property, Plant and Equipment defines the useful life as either: · The period over which an asset is expected to be available for use by an entity, or · The number of production or similar units expected to be obtained from the asset by an entity. Now this is e...

  Prior to the introduction of IFRS 9, OCI had 5 components and the easier way to remember was the acronym CAART – which is: C – The effective portion of gains/losses on hedging instruments in a C ash flow hedge A - A ctuarial gains and losses on defined benefit pension plans  A - Gains and losses on A vailable-for-sale financial assets R - R evaluation surplus related to property, plant and equipment T - Gains and losses arising from T ranslating the financial statements of a foreign operation Now with IFRS 9 earlier adoption, the acronym has changed from CAART to CRAAFT C – The effective portion of gains and losses on hedging instruments in a C ash flow hedge R - R evaluation surplus related to property, plant and equipment A - A ctuarial gains and losses on defined benefit pension plans  A - Gains and losses on A vailable-for-sale financial assets F - F inancial liabilities designated as at fair value through profit or loss: fair value changes attr...