BUS 251 Lecture Notes - Lecture 6: Book Value, Impaired Asset

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Susan Bubra

Document Summary

Depreciation = allocation of asset"s cost over period it is used to generate revenue (portion of asset expensed in useful period) Three categories: ppe (tangible assets), intangible assets, goodwill (held for longer than 12 months) Significance of long term assets: generate future revenue; purchase/sale of long term assets = most significant investing activity. Most long term assets are subjected to depreciation (tangible) and amortization (intangible) Purchase of ppe = cash outflow; sale of ppe = cash inflow. Under ifrs there are two valuation methods: cost model (only model allowed under aspe) Cost model: assets reflected at carrying amount (cost accumulated depreciation accumulated impairment loss) on statement of financial position; depreciated over useful life. Carrying value = book value = ending nbv = beginning nbv of the next year (find nbv for first year, subtract depreciation for next year) Does not represent what the asset is worth, only represents portion of its cost that has yet to be expensed.