Conceptual Framework Asset Definition - Click to Free Sample

Question: Gather relevant facts and evidence, sort all evidence, identify themes or issues and develop a data scaffold. Provide your opinion of the themes or issues you have identified, justified by the evidence you have gathered and evaluated.? Answers: 1: The following are the journal entries that would be passed: Date Particulars Debit Credit 1-Jul-14 Assets-trucks 700,000.00 Cash 700,000.00 30-Jun-19 Depreciation expense 65,000.00 Accumulated depreciation-trucks 65,000.00 30-Jun-20 Assets-trucks 160,000.00 Profit on revaluation of trucks 160,000.00 Depreciation expense 97,500.00 Accumulated depreciation-trucks 97,500.00 1-Jul-20 Cash 200,000.00 Loss on sale 35,000.00 Truck 235,000.00 30-Jun-25 Depreciation expense 48,750.00 Accumulated depreciation-trucks 48,750.00 This will be the last depreciation since the second truck would have been fully depreciated by then The truck will be depreciated by the end of 2025 since during the year 2020, the estimated life of the truck were 5 years which expires in 2025 2: The IASB is of the opinion that the definitions of the terms asset and an expense could be clarified. They contain the references of the expected inflows and the outflows of the economic benefits. Some of the people say that the asset or the liability is the flow of the economic benefits rather than the underlying resource or the obligation. In order to avoid any misunderstanding, an asset is defined as the underlying resource or the obligation rather than the ultimate flow of the economic benefits. These inflows or the outflows need always not be certain. The formal definition of the term is as follows: 1. An asset if the present economic resource controlled by the entity as a result of past events2. An economic resource is a right, or other source of value, that is capable of producing economic benefits (IFRS, 2015) An expense is the decrease in the economic benefits during the year under consideration of the company and is in the form of decrease or the depletions in the value of the assets or the incurrence of the liabilities that results in the equity, other than those that are related to distributions to the participants of the equity (IFRS, 2012) The issue here is that both of them are related with the economic benefits and if there is a change in the definition of the assets, then how it would affect the expense. For example, the revised IAS 19 has provided the segregation in the changes in the net defined liability, which is an asset, into service cost, finance cost and the re-measurement components. This shows the service costa and the finance cost as the component of the profit and loss account and the measurements of the components in the other comprehensive income. Further, the revised standard also has given a lesser amount of flexibility in the presentation of the items in the income statements. The benefit cost has been split between current-service cost and benefit changes, which include past-service cost, settlements and curtailments and finance expense or income. References: www.ifrs.org, (2015). Conceptual Framework Asset Definition. [Online] Available at: https://www.ifrs.org/Current-Projects/IASB-Projects/Conceptual-Framework/Other-Public-Meetings-Observer-Notes/Documents/WSSAGENDAPAPER1A.pdf [Accessed 17 Mar. 2015]. www.ifrs.org, (2012). The Conceptual Framework for Financial Reporting 2011. [Online] Available at: https://www.ifrs.org/IFRSs/Documents/ConceptualFramework.pdf [Accessed 17 Mar. 2015].