When is a cost really new?

Article Abstract:

The Accounting Standards Committee (ASC) will issue an exposure draft on accounting for fixed assets that contains a flawed proposal for the treatment of revaluations. The proposed ASC treatment is that revaluations, the revalued amount of a fixed asset, should be regarded as new costs and diminutions of fixed assets' values should be charged to the profit and loss (P&L) account. When an asset that has been revalued is sold, the profit or loss must be recalculated as the difference between the carrying value of the asset and the proceeds, thus transferring the surplus from the revaluation reserve to the P&L account. These changes run contrary to accepted accounting practice, and the ASC should reexamine its proposal. There is no justification for charging depreciation on the revaluation element of fixed assets to P&L account; it should be charged to the revaluation reserve.

Laws, regulations and rules, Fixed assets

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In anticipation of a maiden standard

Article Abstract:

The Accounting Standards Board (ASB) is finalizing its first standard, which is concerned with accounting for cash flow statements. The ASB's standard will be based on the Accounting Standards Committee's Exposure Draft (ED) 54, "Cash Flow Statements", which was promulgated to replace Statement of Standard Accounting Practice 10, "Statements of Source and Application of Funds". The ASB's standard is likely to be based on separating cash flows into financing, investing, and operating components. ED 54 lacked the recommendation that cash flow statements be based on actual transactions and legal form, a principle that the ASB would be wise to adopt.

Accounting Standards Board, Cash flow

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