Flashcards for:
3) Accounting Course: Introduction to Specific Issues

The case studies in the video concerning fair value accounting and impairment test focused on Italian companies such as Prada and Ferragamo, examining the application of these principles in practice.

Understanding different accounting standards and methods is essential for accurate financial reporting and compliance.

Fair value accounting principles are more beneficial in contexts where it is important to reflect the current market conditions and asset worth accurately at the reporting date.

Companies might face challenges such as determining an accurate current market price for unique or non-liquid assets, volatility in financial statements, and increased complexity in reporting when applying fair value accounting.

The lecture discussed IAS 16, IAS 36, and IAS 38.

The video featuring Singapore Airlines discussed the amortization process applied over time to non-current assets.

Historical cost accounting helps ensure consistency and comparability in financial statements.

The primary focus of IAS 16 is on the accounting treatment for property, plant, and equipment.

Historical cost accounting records asset values based on the original purchase price.

The main purpose of an impairment test is to assess if an asset's carrying amount exceeds its recoverable amount.

Fair value accounting values assets at current market prices, providing a more accurate reflection of an asset's worth at the reporting date, unlike historical cost accounting which records at original purchase price.

Under IAS 38, financial reporting of assets, especially intangible assets, involves recognizing and measuring them based on their ability to generate future economic benefits.

If an asset is found to be impaired, its value is written down to its recoverable amount.

An impairment test would be necessary when there is an indication that an asset's value has dropped significantly, such as sustained losses, significant technological advancements reducing product relevance, or adverse regulatory changes.

Amortization affects the financial statements by allocating the cost of non-current assets over their useful life, impacting both the balance sheet and income statement.