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ACCA Strategic Professional · Strategic Business Reporting (International)

Non-current Assets for ACCA SBR: Chapter Guide

Non-current assets in SBR cover how you recognise, measure, impair, reclassify and disclose long-term assets under IFRS. You solve questions by identifying the asset type, choosing the right standard, applying its measurement rule to the scenario, and explaining the effect on profit and the statement of financial position.

What this chapter covers

This chapter groups the standards on long-term assets. IAS 16 covers property, plant and equipment. IAS 23 covers borrowing costs that can be capitalised. IAS 36 covers impairment. IAS 38 covers intangibles, and it links to goodwill. IAS 40 covers investment property. IFRS 5 covers assets held for sale. IAS 20 covers government grants. IFRS 13 gives the fair value rules used across several of these standards.

The standards connect closely. A revalued asset may be impaired. A borrowing cost may be capitalised into a self-constructed asset. An asset may move from use to held for sale and stop being depreciated. Fair value under IFRS 13 sits behind revaluation, investment property and the measurement of held-for-sale assets.

The chapter also feeds the rest of the paper. In the group accounting question, you adjust subsidiary assets to fair value at acquisition, test goodwill for impairment and deal with intangibles acquired in a business combination. In the written questions, you are asked to explain and justify a treatment, not just calculate it.

Non-current assets appear in almost every SBR sitting, either as a standalone scenario question or as an adjustment inside the group question. The calculations are usually short, but the marks come from applying the rule to messy facts and explaining the effect on the financial statements. Examiners also reward professional skills, such as challenging an aggressive treatment or advising a director on a judgement. If you know these standards well, you gain marks quickly and free up time for harder areas.

Non-current assets: topics in the order to study them

  1. 1IAS 16 Property, Plant and EquipmentIt is the base standard: recognition, cost, depreciation and revaluation that the other topics build on.
  2. 2IAS 23 Borrowing CostsIt extends the cost of an asset under IAS 16 by adding capitalised interest on qualifying assets.
  3. 3IAS 36 Impairment of AssetsOnce you can measure carrying amounts, you can test them against recoverable amount.
  4. 4IAS 38 Intangible Assets and GoodwillIt follows impairment because intangibles and goodwill are often tested for impairment, and it uses similar recognition ideas to IAS 16.
  5. 5IAS 40 Investment PropertyIt contrasts with IAS 16 by offering a fair value model, so learn it after the owner-occupied rules.
  6. 6IFRS 5 Non-current Assets Held for SaleIt deals with reclassification, which needs the earlier measurement rules to make sense.
  7. 7IAS 20 Government GrantsIt is a short standard that adjusts the cost or income of assets already covered.
  8. 8IFRS 13 Fair Value MeasurementStudy it last to pull together the fair value ideas used in revaluation, investment property, held-for-sale assets and acquisitions.

How to prepare Non-current assets

Aim to learn each rule, then practise applying it to scenarios and writing short explanations. Use this sequence.

  1. Learn the core rules of each standard in your own words: recognition, initial measurement, subsequent measurement and disclosure.
  2. Practise the standard calculations: depreciation, revaluation surplus, capitalised interest, impairment loss and held-for-sale write-downs.
  3. Work out where each rule changes profit or loss, other comprehensive income and the statement of financial position, and write that effect down every time.
  4. Attempt past scenario questions under time pressure, and write one-paragraph explanations for each treatment, using the scenario facts.
  5. Practise linking topics, for example an impaired revalued asset or a grant-funded asset moving to held for sale.
  6. Add the group angle: fair value adjustments at acquisition, goodwill impairment and acquired intangibles.
  7. Finish by reviewing your errors and keep a one-page list of rules and traps for revision.

Common mistakes in Non-current assets

  • Continuing to depreciate an asset after it is classified as held for sale.

    Fix: Check the IFRS 5 conditions first. If they are met, stop depreciation and measure at the lower of carrying amount and fair value less costs to sell.

  • Putting every revaluation decrease through profit or loss.

    Fix: Track the revaluation surplus for each asset and offset the decrease against it first.

  • Using the wrong measure as recoverable amount in impairment tests.

    Fix: Always compute both measures where available and take the higher. Compare that to carrying amount.

  • Capitalising all development or borrowing costs without checking the criteria.

    Fix: List the IAS 38 criteria and the IAS 23 qualifying asset and timing conditions, and test the scenario against each one.

  • Giving a calculation with no explanation of the reporting effect.

    Fix: After each number, state the standard applied, the reason and the effect on profit and the statement of financial position.

  • Ignoring the fair value hierarchy and market participant view in IFRS 13 questions.

    Fix: Frame fair value as an exit price to market participants and identify the inputs used and their level in the hierarchy.

Last-day revision: Non-current assets

  • IAS 16: cost includes purchase price, directly attributable costs and initial estimate of dismantling costs.
  • Depreciate each significant component separately over its own useful life.
  • Revaluation increase goes to OCI and revaluation surplus unless it reverses an earlier loss in profit or loss; a decrease first reduces any surplus on that asset.
  • IAS 23: capitalise borrowing costs on qualifying assets from the start of activity until the asset is ready for use or sale.
  • IAS 36: impairment loss = carrying amount minus recoverable amount, where recoverable amount is the higher of fair value less costs of disposal and value in use.
  • Goodwill and intangibles with indefinite lives are tested for impairment at least annually; an impairment loss on goodwill is never reversed.
  • An impairment loss is allocated first to goodwill, then to other assets pro rata.
  • IAS 38: research costs are expensed; development costs are capitalised only when the recognition criteria are met.
  • IAS 40: choose the cost model or fair value model; under fair value, gains and losses go to profit or loss and no depreciation is charged.
  • IFRS 5: held-for-sale assets are measured at the lower of carrying amount and fair value less costs to sell, and are not depreciated.
  • IAS 20: grants are recognised when there is reasonable assurance of compliance and receipt, and are matched to the related costs.
  • IFRS 13: fair value is an exit price in an orderly transaction between market participants at the measurement date.

Non-current assets practice questions

Non-current assets in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Non-current assets: frequently asked questions

Which non-current asset standards matter most for SBR?

IAS 16, IAS 36, IAS 38 and IFRS 5 are the most commonly tested, along with IFRS 13 for fair value. IAS 40, IAS 23 and IAS 20 are shorter but still appear in scenarios. Learn all of them, because the questions often combine several.

Do I need to do calculations or just explain the treatment?

You need both. SBR questions usually ask you to calculate the effect on the financial statements and also to discuss the appropriateness of a treatment. Explanation and professional skills carry marks, so do not stop at the numbers.

How does this chapter link to group accounting?

In a business combination, you measure the subsidiary's assets at fair value using IFRS 13 ideas, recognise acquired intangibles, and test goodwill for impairment under IAS 36. Strong knowledge here makes the consolidation adjustments easier.

Where should I start if I have limited study time?

Start with IAS 16 and IAS 36, as they carry the main rules and calculations. Then cover IAS 38, IFRS 5 and IFRS 13. Leave the shorter standards until you are comfortable with these.