Lecture Notes: Accounting Principles and Asset Measurement
Overview
The focus of this lecture is on the measurement and reporting of peak assets using different accounting principles. Key standards and concepts discussed include:
- International Accounting Standards (IAS)
Accounting Principles
1. Historical Cost Accounting
- Definition: Records asset values based on the original purchase price.
- Application: Utilized in financial statements for consistency and comparability.
2. Fair Value Accounting
- Definition: Assets are valued at current market prices.
- Application: Provides a more accurate reflection of an asset’s worth at the reporting date.
Impairment Test
- Purpose: Assess if an asset's carrying amount exceeds its recoverable amount.
- Result: If impaired, the asset's value is written down to its recoverable amount.
Videos and Case Studies
Video 1: Amortization Process
- Case Study: Singapore Airlines
- Focus: How amortization is applied over time to non-current assets.
Video 2: Fair Value Accounting and Impairment Test
- Case Studies: Italian companies such as Prada and Ferragamo.
- Focus: Examining the application of fair value accounting and conducting impairment tests in practice.
Conclusion
Understanding the implications of different accounting standards and methods, such as historical cost versus fair value, is essential for accurate financial reporting and compliance. The case studies provide real-world applications of these principles in various international contexts.