Class discussions - Assignment Example

Discussions Lecturer: Module 7 The accountants use estimates and judgment in valuation of property, plant and equipment bydetermining the fair value of a long term assets (Financial Accounting Standard Board, para360, section, 10). Whereby, long term assets such as property, plant and equipment undergo via depreciation while others like land undergoes via appreciation. Additionally, the value of depreciation may be estimated by using different methods such as; straight line method, declining balance and unit of out put method respectively (Financial Accounting Standard Board, para, 360).

Whereby, Straight line method, allow property, plant and equipments to be depreciated on a uniform basis. On the other hand, declining balance helps to determine the value of an asset whereby; the present value of depreciation is normally lower that the past values (Financial Accounting Standard Board, para360). On the contrary, unit out method utilizes units of assets as a base value rather than periods that an asset had undergone via depreciation. Therefore, this indicates that accountants utilize different valuation methods to come up with a fair and true value of an asset (Financial Accounting Standard Board, para360).

Normally, accountants determine the net realizable values of property, plant and equipment by estimating its future benefits. This means that accountants should use different methodologies and techniques because some assets vary from time to time depending on their nature (Financial Accounting Standard Board, para360). However, accountants should not utilize different methodologies and techniques to prepare misleading information but rather they should use different methodologies and techniques to prepare information that reflects the true value of an asset.

Therefore, it is ethically right to use different methodologies and techniques to determine the true value of an asset. On the other hand, it is ethically wrong and contrary to the accounting conventions to prepare information that may mislead users of accounting information (Financial Accounting Standard Board, para360)Module 8 Intangible assets involve all those assets that do not have a physical existence, such assets include; good will, patents, copyrights, licenses, trademarks franchise to mention just but a few (Financial Accounting Standard Board, para350).

According to FASB intangible assets should be valued at their fair value whereby, commercial substance received should be added or subtracted during valuation. Additionally, all intangible assets that were purchased separately should be capitalized as cost (Financial Accounting Standard Board, para350).This means that qualitative factors should be determined to ascertain whether it will be necessary to carry out an impairment test that may help to determine the amount of intangible asset to be recognized in financial reporting (Financial Accounting Standard Board, para350).

Qualitative test may further be carried out to determine the fair value of intangible assets before it is fully captured in financial reporting (Financial Accounting Standard Board, para350). In above connection, patents, trade marks, franchise and other intangible assets may be amortized using straight line method of amortization (Financial Accounting Standard Board, para350).However, the amortization of some intangible assets such as Copyrights may not exceed a period of forty years. It is important to note that, intangible assets with an indefinite useful life should not be amortized periodically but rather they should be subjected to annual basis (Financial Accounting Standard Board, para350).

However, most industries amortize their intangible assets using straight line method because intangible assets are always available in a company (Financial Accounting Standard Board, para350). Additionally, straight-line method of amortization is easier to understand unlike acceleration method (Financial Accounting Standard Board, para350). Works Cited.Financial Accounting Standard Board. “Accounting Standards Codification: Property, Plants and Equipments”. Retrieved on 19th March 2013.