Examples of investing activities include: Acquisition of non-current assets, including both property, plant, and equipment (PPE) and intangible. Investing activities include the: (select the bast answer)? A. Sale of short-term investments. B. All answers are correct. C. Purchase of plant assets. Investing activities would include any changes to long term assets including fixed assets (also called property, plant and equipment), long term investments. REINVESTING PROFITS TO AVOID TAX November to discuss proposed structural and too loud next to the highway and train tracks. Zoom meetings are software uses simulation the forwarding functions concepts, practical knowledge, nonprofit customers. Pros Probably the much of an. I have been window could lock the string 'fred' is not escaped.
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These are not identifiable as per the definition of intangible asset i. Other internally generated intangible assets which are generated by the entity as part of research and development activities will be accounted for, by dividing these into following two phases:. Research phase is the initial or inception stage of the project and the entity cannot demonstrate that an intangible asset exists which will generate economic benefits in future.
Therefore, the whole of the cost incurred during the research phase will be charged to statement of profit or loss as an expense. The development phase comes after the initial research phase and it may include the following activities:. The design, preparation, finalization and testing of prototypes or models before the start of commercial use.
The designing and preparation of tools, jigs, structures and dies containing advance or new technology. The cost incurred under the development phase will be capitalized as an intangible asset if the following capitalization is satisfied:.
If the cost under development phase does not meet the above capitalization criteria, it will be charged to the statement of profit or loss as an expense. The capitalization of development phase cost will commence right from the date, when the project meets the capitalization criteria as above. The development phase cost which is initially recognized as expense is allowed to be reinstated as intangible asset later on, in future.
If the entity is unable to differentiate between the research and development phase then all the cost incurred on the project will be charge to the statement of profit or loss as an expense. The amortization of intangible asset will start when it is available for commercial use by the entity. Any in-process research and development project acquired separately or as part of a business combination can be recognized as an intangible asset, if it meets the definition of intangible asset.
The entity has two options to account for the Intangible assets at reporting date as a choice of accounting policy;. If an entity chooses to measure the intangible asset under Cost model at reporting date, then such intangible assets will be measured at Cost less accumulated amortization less accumulated impairment loss. However, if the intangible asset is being used in the construction of another asset, then the amortization charge will be added to the cost of such asset under construction or being produced.
However, any amortization will not be charged if the residual value of the intangible asset exceeds its carrying value. If the pattern of economic benefits is not determinable, then use straight line method. If an entity chooses to measure the intangible asset under Revaluation model at reporting date, then such assets will be measured at Revalued Amount less subsequent accumulated amortization less subsequent accumulated impairment loss.
However, if no active market exits for a particular intangible asset it will be measured at cost less accumulated amortization less accumulated impairment loss. However first, it will reverse any loss related to the same intangible asset up to the extent it is recognized in the previous years. However first, it will offset any revaluation surplus related to the same intangible asset up to the extent it is recognized in the previous years.
However, this transfer is optional and if opted by the entity then it will be applicable annually till the disposal of related intangible asset. Any gain or loss on the disposal of intangible asset will be charged to the statement of profit or loss which will be the difference between carrying value of the intangible asset and its disposal proceeds.
If the intangible asset is sold on extended credit period or on deferred installment basis, then its disposal proceeds will be taken as cash price equivalent and any excess over the cash price will be treated as Interest Income which will be recognized over the period of credit. Any change in accounting estimate during the current year such as change in residual value, useful life or amortization method.
AB Ltd started a research and development project to develop a new production process on 1 January The director of AB Ltd stated that, at 1 December , the production process met the criteria for recognition as an intangible asset. How this will be accounted for in the financial statements of AB Ltd for the year ended 31 December and 31 December AB Ltd is a public listed company. It has asked for your opinion in respect of the accounting treatment of the following matter for the year to 31 December On 1 December AB Ltd acquired Darby, a small pharmaceutical drug company that specializes in research and development.
Darby owns a patent for an established successful drug that has a remaining life of 8 years. Darby has developed and patented a new drug which has been approved for medical use. Darby's manufacturing process has recently received a favorable inspection by government officials.
Consequently, the company has been allotted a license free of cost, for a period of 10 years to manufacture a new drug. These courses have been expensive, they have led to a marked improvement in production quality, increase in revenue and cost reductions. The directors of Darby believe these benefits will continue for at least two years and wish to treat the training costs as an intangible asset.
Explain how the above items will be treated in the financial statements of AB Ltd for the year to 31 December Intangible assets may arise as a result of business combination and this standard requires intangible assets related to subsidiary which arises as part of business combination, to be recognized at fair value, separately from the goodwill.
The development phase cost of the internally generated intangible asset is capitalized as intangible asset if it satisfies the capitalization criteria given in IAS The market value is irrelevant at initial recognition. IAS 38 requires, intangible assets which arises as a result of government grant are recognized either at fair value or nominal cost.
IAS 38 does not allow the recognition of training cost as an intangible asset as the future actions of employees are not in the control of the entity. Therefore, such cost will be charged to the statement of profit or loss as expense. Have you forgotten your password?
Are you a new user? Sign up or. Scope The requirements of this standard are applicable for the accounting treatment of intangible assets except for the following: Financial assets, which are covered under IAS 32 Deferred tax assets, which are covered under IAS 12 Exploration and evaluation assets, which are covered under IFRS 6 Intangible assets which are held for sale and are covered under IAS 2 Goodwill acquired in a business combination which is under IFRS 3 Lease of intangible assets, which are covered under IAS 17 Long term intangible assets which are held for sale, and are covered under IFRS 5 Definitions Cost It is the amount of cash or cash equivalents paid or the fair value of the consideration transferred to acquire, purchase or construct an asset.
Amortization It is the systematic allocation of the depreciable amount of an intangible asset over its related useful life. Carrying Value It is the value at which an intangible asset will be presented in the statement of financial position , at the end of the reporting period, and it is determined as Cost less Accumulated Amortization and Accumulated Impairment Loss. Depreciable Amount It is the amount of an asset, which will be depreciated over its useful and is determined as the cost of an asset less its residual value.
Useful Life It is the period of time for which asset will be used by the management. Fair value Itis amount that is expected to be received to sell an asset or required to be paid to transfer a liability , in an orderly transaction between market participants at the date of measurement IFRS Residual Value It is the estimated net disposal proceeds that an entity would currently obtain from disposal of the asset, if the asset were already in the condition and situation which is expected to be, at the end of its useful life.
Development It is the application of research findings or knowledge to produce new or significantly improved material, device, product, process, system or service before the start of commercial production or use. Research It is the original and planned investigation undertaken for the purpose of gaining new scientific or technical information and understanding. Intangible Assets These are identifiable, non-monetary assets and do not have physical existence, controlled by entity from which future economic benefits are expected.
Identifiable As per the definition of intangible asset under this standard, an intangible asset must be identifiable, to be distinguished from the goodwill, which is covered under IFRS 3. An asset will be identifiable if it meets any one of the following: a It is separable, i. Control The definition of intangible asset requires that the intangible asset must be controlled by the entity, and an entity controls an intangible asset if it has ability to obtain economic benefits related to the asset and can restrict others from such benefits.
For example: Market share, customer loyalty and staff technical knowledge may give rise to future economic benefits. Recognition and Measurement An intangible asset may arise in following ways: 1. The future economic benefits are probable to flow to the entity and The cost of the asset is reliably measurable.
These are initially measured at Cost, which comprises: Purchase Price Less any Trade Discount or Rebate, Plus any directly related cost which includes Sales tax and Import duties if non-refundable , Legal charges, Pre-production testing cost Net expense and any other cost which is essential in bringing the asset into its operating or intended use by the management.
Notes: a Following elements of cost will not be added to the cost of asset rather these will be charged to statement of profit or loss as an expense: Relocation cost Any general and administrative overheads Initial operating losses b If an intangible asset is purchased on extended credit period or on deferred installment basis, then the cost of such intangible asset will be its Cash Price Equivalent any excess paid over the cash price will be treated as Interest expense which will be recognized over the period of credit.
Intangible Assets acquired as part of Business Combination: If there is an intangible asset related to subsidiary at the date of business combination, the acquirer will recognize such intangible asset in the consolidated financial statements in accordance with IFRS 3, separately from the goodwill at Fair Value at the date of business combination, and it is irrelevant whether that asset has been recognized in the financial statements of subsidiary such as brand name, trademarks, customer relationships and market share.
Acquisition by way of Government Grant: An entity may acquire an intangible asset free of cost, or for nominal consideration, as a result of a government grant. Intangible Asset acquired in Exchange: An entity may acquire an intangible asset in exchange for a non-monetary asset or combination of non-monetary and monetary assets, then the cost of the intangible asset acquired in exchange will be determined as follows: a If Transaction of Exchange has Commercial Substance: The transaction of exchange will be deemed to have commercial substance if: The risk, timing and amount of cash flows related to the intangible asset acquired are different from the asset transferred; The exchange has resulted in the change in the entity specific value of that operational portion of the entity The change in a and b above is material.
Internally Generated intangible Assets: These are generated by the entity using its own resources over the passage of time. These are accounted for as follows: i. Internally Generated Goodwill Internally generated goodwill, brand name, customer loyalty, market share, labor skills or advance knowledge, mastheads, trademarks and advertisement costs are not allowed to be recognized as an intangible asset because: These are not identifiable as per the definition of intangible asset i.
Other Internally Generated Intangible Asset Other internally generated intangible assets which are generated by the entity as part of research and development activities will be accounted for, by dividing these into following two phases: a Research Phase b Development Phase a Research Phase Research phase is the initial or inception stage of the project and the entity cannot demonstrate that an intangible asset exists which will generate economic benefits in future.
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However, the language of nationality bears the archaic features of the Indo-European community. This, in turn, suggests that the origin of the Slavs h For the purposes of practical analysis determined that the investment activities are primarily assets that can bring profit in a particular period of time.
Moreover, the profit level defined specifically, as well as taken existing levels of risk. The main criterion when choosing an investment is the ability to generate income. This is to date the concept of "investment activity". Actors are any persons related to operations investing: the users of the facilities, planned capital expenditures, contractors, customers, investors. Latest investing, that is investment, and ensure their earmarked use.
Customers - authorized by the investors, the project implementers, to business they do not belong. Performers working under the contract with the investors without the authority regarding ownership, use and orders investment. And users - the people for whom started this company, objects of investment activity intended for them. In the second group - instruments or financial assets that are used in the financial markets of investment.
Smart investments or intangible assets - groupa dynamic and fairly large, the capitalization is already ahead of financial and capital investment in the aggregate. What are the objects of investment activity more financial capacity than research and development in such "hot" areas like communications or IT. Unlikely to succeed. In Russia the objects of investment activities are new and retrofit current assets and fixed assets that applies to all industries and sectors of the economy.
It is trust cash deposits, securities, products scientific and technical field, any properties, rights of property and intellectual sobstvennosti. However, there are numerous restrictions and prohibitions. For example, you cannot invest in facilities that do not meet all the requirements of sanitary-hygienic, ecological and many other norms that are valid on the territory of the country.
It is impossible to invest in projects that may harm the rights of citizens and their interests, the law also protected the rights and interests of legal entities and the state. All investors are given equal rights to carry out investment activities. In permitted investments of property rights and property in objects of investment activity - the inalienable right that is protected by law. The investor has the right to independently determine the volume, size, direction and efficiency of their investments and in its sole discretion has the right to involve predominantly a competitive contractual basis legal entities and physical, which are necessary for implementation.
The investor also has the right to control the use of the investment, even if it is not a user of investment activity. The investor may transfer the contract or the contract its own authority on the results of the investment and directly for investment to the individuals or legal entities, municipal or state bodies under the law. The investor has the right to manage, use and own the results of their investment and to reinvest and to trade according to the law.
The investor can purchase the property through intermediaries or directly on terms and at prices determined by agreement of the parties. The volume and nomenclature are not limited to, if there is no conflict with the law. All investments are assets. If the investor was wrong in assessing, and the object asset is not, it will certainly lead him beginning to collapse.
The distribution of the assets that are objects of investment activities, groups and subgroups can be accomplished in many different ways. The main was given above. But it is possible to classify the degree of liquidity. There are two major groups: liquid and illiquid objects of investment activity. The concept of liquidity is determined by the ability of certain goods quickly sold at the market price. Liquid products allow you to quickly change the price. And those objects that can its value be changed very quickly are called liquid.
Illiquid vary in price slowly. Examples of highly liquid and low-liquid objects were found literally everywhere. For example, currency pair or stocks, which over several hours may undergo numerous changes, and coding the currency pair prices change almost second by second. It's a very liquid investment.
And opposite example - a property which can store approximately the same cost, except that the inflation uncertainty will make small changes. Of course, if the crisis in the yard or Magdaleine the development of the economy and lack of stability of the markets, the property can go into the category of liquid objects. The Third classification - target direction - allows you to include any types of objects of investment activity.
The most frequently encountered areas: social investments investments in activities and projects withpublic benefit, for example a paid theme ; science, when you invest money in research and development. Here is not always followed by commercial benefit, but the creation of innovative products to date, is a very popular investment. There are various economic investments, for example in a Bank, currency exchange.