Lesson 6 of 8 · All lessons in this module
- Intangible assets: definition, purchase and business combinations
- Internally developed intangibles and capitalising versus expensingVideo lesson
- Impairment of PPE and intangiblesVideo lesson
- Assets held for sale and impairment reversals
- Derecognition: sale, abandonment, exchange and spin-offVideo lesson
- Disclosures for PPE and intangible assets
- Fixed asset turnover, asset age and reinvestmentVideo lesson
- Integrated cases: a purchase price allocation and the PPE note
Lesson 6 of 8 · 13 min
Disclosures for PPE and intangible assets
The notes on PPE, intangibles and impairments tell an analyst what the company owns, how it measures and depreciates it, what was written down and why, and how sensitive those values are to management's assumptions.
In short
- IFRS, PPE (per class): measurement basis, depreciation method, useful lives or rates, gross carrying amount and accumulated depreciation at the start and end of the period, and a reconciliation of the carrying amount.
- IFRS, intangibles (per class): finite or indefinite life; for finite lives, useful lives or rates, amortisation methods, gross amounts and accumulated amortisation, where amortisation sits in the income statement, and a reconciliation; for indefinite lives, the carrying amount and why the life is indefinite.
- Both: restrictions on title, pledges as security, contractual commitments to buy; under the revaluation model, the revaluation date, how fair value was found, the carrying amount under the cost model and the revaluation surplus.
- US GAAP, PPE: depreciation expense, balances of major classes of depreciable assets, accumulated depreciation (by class or in total) and a description of depreciation methods; no opening-to-closing reconciliation (that is IFRS only).
- US GAAP, intangibles: gross carrying amounts and accumulated amortisation in total and by major class, amortisation expense for the period, and estimated amortisation for each of the next five years.
- Impairment notes give amounts, affected classes and causes, and often the key assumptions and sensitivity of recoverable amounts.
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