A member commented that staff should consider in their paper the items that are classified as liabilities but would be settled in equity e. The principle when classifying a liability as current or non-current is based on whether the principal amount is paid within 12 months or after 12 month.
A member highlighted that when a company has the right to refinance its loan but the terms are determined by the bank, that right to refinance seems to be worthless.
Staff said in this case management would have to exercise their judgement to determine what rights the company has and the effect on the classification of the loan. Another member highlighted that this would create new and additional problems.
A member said the real issue to be resolved is that the standard is inconsistent in the classification of a liability when looking at the relevant paragraphs in IAS 1 on current liabilities and non —current liabilities.
In addition, consideration must be given to post balance sheet events. Management intent is important as are the terms of the loan. The board agreed with staff that debt expected to be refinanced with the same lender on the same or similar terms should be classified as non-current debt. Another member raised the question to the board that if a loan with a bank had material adverse covenants that are outside the control of the entity should this be classified as conditional.
Another question raised was if a company was refinancing its loan with the same lender but the terms were materiality different to the former. With the latter, the board agreed that the refinanced loan should be treated as a new loan and therefore the current balance should be treated as a current liability. A further comment was that if a company obtains a waiver before the reporting date which leads to a material change in the terms then disclosure of this would be required.
Some members disagreed with the table presented by staff in their paper paragraph number 91 in particular with scenario b and c. The views reflected by staff seemed to contradict the ideas behind IAS In addition, a board member pointed out that paragraph 69A of IAS 1 deals with these sorts of situations i.
Staff disagreed as they felt that the conditions at balance sheet take precedence and only disclosure was required. The board generally agreed that post balance sheet events need to be considered but IAS 1 should only go the extent of providing a link to IAS The discursive elements should be in IAS See Legal for additional copyright and other legal information.
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When a non-current asset is acquired, the double-entry is: Purchase price — after deducting trade discounts and rebates and adding duties and non-refundable taxes. Cost directly attributable to bring the asset to its location and to make it available for its intended use. Initial delivery and handling costs b.
Installation and assembly costs c. Costs of testing whether the asset is working properly d. When a non-current asset is sold, there is likely to be a profit or loss on disposal.
The purpose of this paper is to address the meanings of current and noncurrent assets while stating their differences. The paper will also include what the order of liquidity is and how it applies to the balance sheet. Current and Noncurrent Assets Paper Current Assets Current assets, also .
This paper will define current and non-current assets, differentiate between the two, the order of liquidity and how the order of liquidity applies to the balance sheet. A current asset is defined as “receivables, inventory, work in process, or cash, that is constantly flowing in and out of an organization in the normal course of its business.
University of PhoenixOctober 12, ACC/IntroductionThe purpose of this paper is to conduct a comparison of current and noncurrent assets; in addition this paper will also explain order of liquidity and how the liquidity applies to the balance shee 1/5(1). View Essay - CUrrent and Non-Current Assets Paper from BUSINESS xmgt at University of Phoenix. CURRENT AND NON CURRENT ASSETS PAPER Current and Non Current Assets Nicky Morgan ACC/ December.
Current and Noncurrent Assets Paper ACC/ October 23, Current and Noncurrent Assets Paper When an individual starts a business understanding financial statements are vital to tracking the company profits and losses. The company decisions are often decided by the figures and statistics. Current and Noncurrent Assets PaperACC/ – Week OneInstructor’s Name: IntroductionCurrent and non-current assets are important items to evaluate a balance sheet. The following paper evaluates the meaning and differences between current and non-current assets. In addition to that, the paper will describe the order of liquidity and its application in a balance sheet.A.