Question

In: Accounting

What are the major information elements that firms are required to report in their footnotes related...

What are the major information elements that firms are required to report in their footnotes related to PPE and natural resources?

Solutions

Expert Solution

1. PPE stands for Property Plant & Equipment. Apart from the finacial information reported in Financial Statements, the following is also to be reported in footnotes:

(a) Restrictions on title and pledges as security of property, plant, and equipment and contractual agreements to acquire property, plant, and equipment.

(b) Date of revaluation If the revaluation model is used .  Details of how the fair value was obtained, the carrying amount under the cost model, and the revaluation surplus must be disclosed.

(c) For each class of property, plant, and equipment, a company must disclose the measurement bases, the depreciation method, the useful lives (or, equivalently, the depreciation rate) used, the gross carrying amount and the accumulated depreciation at the beginning and end of the period, and a reconciliation of the carrying amount at the beginning and end of the period.

(d) For each class of intangible asset, a company must disclose whether the useful lives are indefinite or finite.

(e)  If an asset has an indefinite life, the company must disclose the carrying amount of the asset and why it is considered to have an indefinite life.

(f) Amount of Gross carrying amount along with Accmulated Depreciation is also to be disclosed in footnotes.

2. Natural resources can be defined as Oil, Gas etc. These resouces can be  renewable or non renewable.Following information should be reported in footnotes:

(a) Nature of Natural Resources used and longlivety of such .

(b) Governmental Policies on usage of such resources.

(c) Cost incurred for acquiring such resources.

(d) Useful life of such resources.

(e) Research & development undertaken on such resources.


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