Reference no: EM131822916

What is revaluation of plant assets? When should revaluation be applied?

According to John Wiley & Sons, Inc. (2013), "IFRS uses the term residual value, rather than salvage value, to refer to an owner's estimate of an asset's value at the end of its useful life for that owner." (Slide 71). "IFRS allows companies to revalue plant assets to fair value at the reporting date. Companies that choose to use the revaluation framework must follow revaluation procedures. If revaluation is used, it must be applied to all assets within the same class. Assets that are experiencing rapid price changes must be revalued on an annual basis. Otherwise, less frequent revaluation is acceptable" (John Wiley & Sons Inc., 2013, slide 70)

Some product development expenditures are recorded as development expenses and others as development costs. Explain the difference between these accounts and how a company decides which classification is appropriate.

Some products that are development expenditures for a company or organization can either be recorded as a development expense or a development costs. If something will always be able to be used then it can and should be recorded as an expense, but something like soap or hand sanitizer should be recorded as a costs since it runs out and needs to be replaced. "If a company purchases land to be used in its business, the cost of the land will be reported an asset and will never become an expense. (The reason is that land will never be used up and therefore never depreciated)" ("Accounting Coach", 2004)