International Accounting: Analysis of Accounts, IAS 16, IAS 36, IAS 38

This document provides an analysis of accounts, along with explanations of IAS 16, IAS 36, and IAS 38 in the context of international accounting. It covers topics such as chart of accounts, fixed assets, impairment of assets, and intangible assets.

International
Accounting

Table of Contents
TASK..................................................................................................................................3
Question 1. Accounting:.................................................................................................3
Question 2. IAS 16- Fixed Assets:.................................................................................5
Question 3. IAS 36. Impairment of assets:....................................................................6
Question 4. IAS 38. Intangible Assets:..........................................................................7
REFERENCES................................................................................................................10

TASK
Question 1. Accounting:
Following is analysis of all the accounts through chart of accounts including
codes, as follows:
Chart of Accounts
Account Name Code Financial
Statement Group Sub-Group Normally
Bank Account 100 Balance
sheet
Current
assets
Cash and cash
equivalents Debit
Short term Investments 110 Balance
sheet
Current
assets
Short term
marketable
securities
Debit
Accounts receivable-
Debtors 120 Balance
sheet
Current
assets
Accounts
receivable Debit
Finished goods 130 Balance
sheet
Current
assets Inventory Debit
Constructions 140 Balance
sheet
Long term
assets
Property, plant
and equipment Debit
ICT Equipment 150 Balance
sheet
Long term
assets
Property, plant
and equipment Debit
Furniture 160 Balance
sheet
Long term
assets
Property, plant
and equipment Debit
Transport 170 Balance
sheet
Long term
assets
Property, plant
and equipment Debit
Cumulative depreciation
IM 180 Balance
sheet
Long term
assets
Property, plant
and equipment Credit

Industrial Propriety 190 Balance
sheet
Long term
assets
Intellectual
property Debit
Industrial Propriety
amortization 200 Balance
sheet
Long term
assets
Intellectual
property Credit
Accounts payable-
Suppliers 210 Balance
sheet
Current
liabilities
Accounts
payable Credit
Accounts payable-
Creditors 220 Balance
sheet
Current
liabilities
Other current
liabilities Credit
Short term debts 230 Balance
sheet
Current
liabilities
Short term
debts Credit
Long-term debt to
institutions 240 Balance
sheet
Long-term
liabilities Mortgages Credit
Common stock 250 Balance
sheet Equity Capital Credit
Social Legal Reserve 260 Balance
sheet Equity Retained
earnings Credit
Retained Earning- Profit
and Loss 270 Balance
sheet Equity Retained
earnings Credit
Particulars Code Debit Credit
Bank Account 100 € 225000
Short term Investments 110 € 9000
Accounts receivable- Debtors 120 € 236200
Finished goods 130 € 60850
Constructions 140 € 3900000
ICT Equipment 150 € 9000

Furniture 160 € 70000
Transport 170 € 35000
Cumulative depreciation IM 180 € 122000
Industrial Propriety 190 € 40500
Industrial Propriety amortization 200 € 5000
Accounts payable-Suppliers 210 € 200000
Accounts payable-Creditors 220 € 3560
Short term debts 230 € 38000
Long-term debt to institutions 240 € 710000
Common stock 250 € 3000000
Social Legal Reserve 260 € 348180
Retained Earning- Profit and Loss 270 € 158810
€ 4585550 € 4585550
Question 2. IAS 16- Fixed Assets:
Given Facts:
 Price of Printer: 25,000 euros
 Additional expenses:
 Installation and assembly: 3000 euros
 Transportation and delivery: 1150 euros
 VAT: 21%
 Payment of the amounts is made by bank check.
 Costs of dismantling and rehabilitation: 5,000 euros
 Weekly maintenance: 250 euros per month
Computations as per IAS 16:
Initial cost of the acquisition:

IAS 16 Property plant and equipment (PPE) explains accounting classification for
properties plants and equipments. Normally, PPEs are assessed at cost, then either
determined utilizing cost or re-evaluation model, as well as depreciated such that the
depreciable amount is apportioned over total useful life on systematic basis. IAS 16's
goal is to suggest the property plant, and equipment accounting treatments. The
primary issues are valuation of these assets the assessment of its carrying values, and
depreciation costs and consequences of impairments to be assessed against them.
Recognition:
PPE objects must be regarded as assets if they are likely to:
 The potential economic advantages or future-economic-benefits of assets are
likely to contribute to the company and
 Cost of such asset can be assessed/measured reliably.
The concept of recognition extends to all expenditures of property plant and
equipment at time of their incurrence. Such costs involve costs originally expended to
purchase or build an item of PPE, and costs eventually incurred to incorporate, install,
repair or maintain a portion of it.
Initial measurement:
An item of property, plant and equipment should initially be recorded at cost.
Cost includes all costs necessary to bring the asset to working condition for its intended
use. This would include not only its original purchase price but also costs of site
preparation, delivery and handling, installation, related professional fees for architects
and engineers, and the estimated cost of dismantling and removing the asset and
restoring the site (Svoboda and Bohušová, 2017). Based on above provision of IAS 16,
following are several computations in context of Graphic Arts corporation, as follows:
Initial cost of acquisition:
Description Amount
Purchase Price of Printer € 25000
Installation and assembly costs € 3000
Transportation and delivery € 1150
Total € 29150

Add: VAT @ 21% € 6121.5
Total Cost of Acquisition € 35271.5
Costs of dismantling and rehabilitation € 5000
The initial cost of the acquisition € 40271.5
Computation of the amortization fees:
Initial cost of the acquisition: € 40271.5
Useful life of the printer: 10 Years
Amortisation Fees: € 40271.5 / 10 years = € 4027.15
The costs derived from daily maintenance:
Specialised maintenance: € 250 per month
Cost of daily maintenance: (€ 250 * 12 months)/365 = € 8.2192
Question 3. IAS 36. Impairment of assets:
The core intention of application of provisions of IAS 36 which deals with
Impairment of Assets, is to insure that organisation's assets should be carried out at not
more-than assets' recoverable sum. If carrying value of any asset exceeds aggregate
amount which could be obtained by use or sale of asset, then asset is damaged and law
allows a corporation to provide for loss of impairment. Impairment loss is sum by which
asset or cash-generating-unit (CGU)'s amount of carrying balance exceeds assets'
recoverable amount. Recoverable sum of asset or any CGU is greater of its fair-value,
less costs-to-sales and the asset's value-in-use. IAS 36 further specifies the
circumstances where impairment loss may be reversed by a corporation. Many assets
are often not protected by the regulation because these are usually assets managed by
other rules, such as financial-assets handled under IAS 39 (André, Dionysiou and
Tsalavoutas, 2018). Based on above provisions of standard and given information here
below are some calculation for assessment of impairment loss, as follows:
Impairment Loss Of The Asset At The End Of 2020

Camera 1 Camera 2 Camera 3 Accessories
Carrying Amount € 1750 € 3500 € 1950 € 4550
Recoverable Amount € 575 € 1500 € 750 € 2200
Impairment Loss € 1175 € 2000 € 1200 € 2350
Question 4. IAS 38. Intangible Assets:
Intangible assets should be stated at revalued figure (on the basis of fair value)
deducted by subsequent figure of amortisation as well as impairment losses when fair
value should be ascertained by reference of market.
Under this standard revaluation model is specified in which revaluation increases
figures are recognized in OCI or (other-comprehensive income) and reserved in a
specific reserve account named "revaluation surplus account" under head of equity
other than amount they reverses any revaluation decrease amount in previously
recognized in P&L. In case revalued intangible-asset have definite life-period and thus,
being periodically amortised (Vetoshkina and Tukhvatullin, 2014). Based on discussed
provisions of IAS 138, here are accounting entries to recognise patent amount, as
follows:
On March 1, 2016 Obtained Patent 7,500 euros
December 31, 2016 Fair value of the patent 9,000 euros
December 31, 2017 Fair value of the patent 8,000 euros
Accounting entries:
Date Particulars Amount (Debit) Amount (Credit)
March 1, 2016 Patent Account
Dr.
€ 7500

To Bank Account € 7500
(Being patent acquired)
December 31,
2016
Patent Account
Dr.
To Revaluation Surplus-
Patent
€ 1500
€ 1500
(Being patent increased after
revaluation)
December 31,
2017
Revaluation Surplus- Patent
Dr.
€ 1000
To Patent Account € 1000
(Being patent decreased after
revaluation)

REFERENCES
Books and Journals:
Svoboda, P. and Bohušová, H., 2017. Amendments to IAS 16 and IAS 41: Are there
any differences between plant and animal from a financial reporting point of
view?. Acta Universitatis Agriculturae et Silviculturae Mendelianae
Brunensis, 65(1), pp.327-337.
André, P., Dionysiou, D. and Tsalavoutas, I., 2018. Mandated disclosures under IAS 36
Impairment of Assets and IAS 38 Intangible Assets: value relevance and impact
on analysts’ forecasts. Applied Economics, 50(7), pp.707-725.
Vetoshkina, E.Y. and Tukhvatullin, R.S., 2014. The problem of accounting for the costs
incurred after the initial recognition of an intangible asset. Mediterranean
Journal of Social Sciences, 5(24), p.52.