Topics: Asset, Balance sheet, Goodwill Pages: 11 (2277 words) Published: August 22, 2013
Property, Plant and Equiptment
* The property, plant and equipment portion of the Consolidated Balance Sheet of Sterling Homex shows a significant increase from 1970 to 1971. The Major contributor to its drastic increase is the “Buildings” account. From 1,702,924.00 it increased to 4,822,055.00, the movement was not explained in the notes though it may be attributed to the expansion of Homex in 1971. This is the time wherein they doubled their manufacturing facilities and created the U.S. Shelter Corporation, a wholly owned subsidiary, to provide construction and permanent financing for its customers.

Deferred Charges
* Another account in the Balance Sheet that moved drastically is the Deferred Charges account. From 944,109.00 it grew to 2,558,792.00. A noticeable increase is in the Training and professional development and in the Research and development component. Numbers grew from 148,636.00 and 84,496.00 to 491,641.00 and 671,897.00, respectively.

* In the Balance Sheet of Homex, they capitalized Research and development, as well as the training and professional development. As a general rule, reaserch and development and trainings should be expensed rather than capitalized. The reason behind it is because future economic benefits are uncertain and accountants follow a conservative type of approach. However, if it can be shown that these costs have future alternate uses, then a company may capitalize the cost. In this case, the company would capitalize the cost as an asset and then depreciate or amortize the asset over the expected life. Note that personnel, indirect and contract costs can never be capitalized, regardless of whether a future alternative use exists or not. Therefore, the research and development account is properly classified and recorded but the training and professional development was erroneously classified overstating the assets and net income and understating the expense to be recognized during the time it was incurred.

Technical Summary
IAS 38
Intangible Assets
as issued at 1 January 2012. Includes IFRSs with a
n effective date after 1 January 2012 but not the I
FRSs they
will replace.
This extract has been prepared by IFRS Foundation s
taff and has not been approved by the IASB. For th
e requirements
reference must be made to International Financial R
eporting Standards.
The objective of this Standard is to prescribe the
accounting treatment for intangible assets that are
not dealt
with specifically in another Standard. This Standar
d requires an entity to recognise an intangible ass
et if, and
only if, specified criteria are met. The Standard a
lso specifies how to measure the carrying amount of
intangible assets and requires specified disclosure
s about intangible assets.
An intangible asset is an identifiable non-monetary
asset without physical substance.
Recognition and measurement
The recognition of an item as an intangible asset r
equires an entity to demonstrate that the item meet
the definition of an intangible asset; and
the recognition criteria.
This requirement applies to costs incurred initiall
y to acquire or internally generate an intangible a
sset and
those incurred subsequently to add to, replace part
of, or service it.
An asset is identifiable if it either:
is separable, ie is capable of being separated or d
ivided from the entity and sold, transferred, licen
rented or exchanged, either individually or togethe
r with a related contract, identifiable asset or li
regardless of whether the entity intends to do so;
arises from contractual or other legal rights, rega
rdless of whether those rights are transferable or
from the entity or from other rights and obligation
An intangible asset shall be recognised if, and onl
y if:
it is probable that the expected future economic be
nefits that are attributable to the asset will...
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