Economic life

Economic life also known as useful life is either Economic life

  1. the period over which an asset is expected to be economically usable by one or more users, or Economic life
  2. the number of production or similar units expected to be obtained from an asset by one or more users. Economic life

Every asset has a lifecycle, which is its useful life from acquisition to disposal. Inevitably, the facilities we manage will outlive their installed building systems. The facility manager is responsible for managing not only the maintenance, but also the replacement of these systems. Additionally, facility managers replace components and systems for the purpose of improving performance or efficiency, which might occur prior to the end of the asset’s Read more

Consolidated financial statements

IFRS 10 Definition of consolidated financial statements

The financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity.

ParentAn entity that controls one or more entities.

The other types of financial statements are unconsolidated financial statements (or company accounts) and combined financial statements.

Single economic entity concept

The concept of a single economic entity is illustrated in the example below:

Example – Single economic entity concept

A subsidiary buys an asset from a third party for CU 100. It subsequently sells the asset on to its parent for CU 130. The subsidiary records a profit

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IAS 2 Example Contractual volume rebates

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IAS 2 Example Contractual volume rebates provides an example calculation with regard to the costs of inventory in combination with contractual volume rebates.

Volume-based discounts should be recognised when it is probable they will be received. When the ‘cost’ for IAS 2 purposes is subject to uncertainties, the most likely cost is used. Therefore rebates that are probable should be deducted from the cost of the inventory and recognised as a prepayment or similar asset.

The probability of obtaining the rebate should be reviewed at future period ends if the arrangement remains open. If receipt is no longer probable, then the prepayment asset should be reversed with a corresponding adjustment to inventories and/or cost of sales as … Read more

Identified asset

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Identified asset, a term from IFRS 16 Leases. Let’s see what it is all about….

An asset is identifiable if it either:

  1. Is separable, i.e., is capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so; or
  2. Arises from binding arrangements (including rights from contracts or other legal rights), regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Note: Even though the definition given requires an intangible asset to be identifiable to distinguish it from goodwill, any goodwill recognised in an … Read more