Module 7 · FRA

Analysis of Long-Term Assets

EN: Capitalize vs expense, depreciation methods, impairment, intangibles.
VN: Vốn hóa vs ghi nhận chi phí, các phương pháp khấu hao, suy giảm giá trị, tài sản vô hình.

1. Capitalize vs Expense Concept

About: Capitalize: future benefit > 1 yr → asset, depreciated. Expense: period cost, full charge now. Capitalize → higher near-term NI but lower future. R&D: US expenses all; IFRS capitalizes development phase.Tóm tắt: Vốn hóa (>1 năm) vs ghi nhận chi phí. Vốn hóa → NI cao gần, thấp xa. R&D: US expense hết, IFRS vốn hóa development.

Capitalize Future economic benefits > 1 period — increases asset, depreciated over useful life. Higher NI in early years.
Expense Period cost — full charge to current P&L. Lower NI now, higher in later years.
R&D US GAAP: expense all R&D. IFRS: research expensed; development capitalized when criteria met.

2. Depreciation Methods Core

About: Straight-line (constant), DDB (accelerated, 2/N × NBV), Units-of-production (usage-based). Method choice affects timing of expense — total depreciation over life is the same.Tóm tắt: SL (đều), DDB (nhanh), Units-of-prod (theo sử dụng). Phương pháp ảnh hưởng thời điểm chi phí, tổng vẫn như nhau.

\[ \text{Straight-line} = \frac{\text{Cost} - \text{Salvage}}{\text{Useful life}} \] \[ \text{DDB}_t = \text{NBV}_{t-1} \times \frac{2}{\text{Useful life}} \] \[ \text{Units-of-prod.} = \frac{\text{Cost} - \text{Salvage}}{\text{Total est. units}} \times \text{Units this period} \]

Effect on financial statements

Accelerated Higher dep. early → lower NI early; lower depreciation in later years → higher NI later.
Straight-line Constant expense.

Practice problem

Equipment costs $50,000, salvage $5,000, useful life 5 years. Compute year-1 SL and DDB depreciation.

Show solution

SL = (50,000 − 5,000)/5 = $9,000

DDB Y1 = 50,000 × (2/5) = $20,000

SL = $9,000 / DDB = $20,000

3. Impairment Core

About: Asset's recoverable amount falls below carrying value → write down. IFRS: one-step, reversible (except GW). US GAAP: two-step (undiscounted CF test first), no reversal.Tóm tắt: Giá trị thu hồi < CV → ghi giảm. IFRS 1 bước, đảo được. US GAAP 2 bước, không đảo.

IFRS — one step

Impair if Carrying value > Recoverable amount (max of FV − costs to sell, value in use).
Loss Carrying − Recoverable.
Reversal Allowed (except goodwill).

US GAAP — two steps

Test Carrying value > undiscounted future CF → impaired.
Loss Carrying − Fair value.
Reversal Not allowed.

4. Revaluation Model (IFRS only) Concept

About: IFRS only. Carry asset at fair value periodically. Increases through OCI (revaluation surplus); decreases through P&L (after offsetting prior surplus). US GAAP prohibits revaluation.Tóm tắt: Chỉ IFRS. Ghi nhận theo fair value. Tăng qua OCI, giảm qua P&L. US GAAP cấm.

Up Increase recorded in OCI (revaluation surplus).
Down Decrease through P&L (after offsetting prior surplus).
US GAAP Revaluation NOT permitted.