Frs 15 Tangible Fixed Assets

Topics: Balance sheet, Asset, Generally Accepted Accounting Principles Pages: 1 (509 words) Published: February 27, 2011
FRS 15 ‘Tangible fixed assets‘

FRS 15 was issued in February 1999 and sets out the principles of accounting for tangible fixed assets, with the exception of investment properties. The objective of the FRS is to ensure that tangible fixed assets are accounted for on a consistent basis. Fixed assets are held in our company for the profit of their use not from their resale. Tangible fixed assets should be capitalized when they are ready for use, which means when its physical completion is complete. FRS 15 deals with three issues regarding tangible fixed assets: •their initial measurement;

their revaluation;
their depreciation.
A tangible fixed asset should initially be measured at cost. FRS permits a choice as to whether tangible fixed assets are stated at cost or at revalued amount. However, where an enterprise chooses to adopt a policy of revaluing some assets, all assets of the same class, a similar nature or function must be revalued. The FRS also contains requirements that ensure that the valuations are kept up to date. The basic principles of the FRS 15 approach to revaluation can be summarized as follows: •Where a policy of revaluation is adopted it should be applied to all assets in an individual class (e.g. land and buildings) but need not be applied to all classes of assets. •Where an asset is revalued it should be carried at its current value at the balance sheet date. The standard does not insist on full annual revaluations but requires full revaluation every five years, interim valuation in year 3 and interim valuations in years 1,2 and 4 if a material change in value is likely. •Revaluation gains are normally recognised only in the Statement of Total Recognised Gains and Losses. Gains are only recognised in the Profit and Loss account where they reverse previous losses on revaluation on the same asset. •Appropriate bases of valuation for different types of assets are set out in the standard. ACCA Studant Accountant, John Craner...
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