Important Points for IC 26 - Life Insurance Finance Exam
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Useful life is either (a) the period over which a depreciable asset is expected to be used by the enterprise or (b) number of production units expected to be obtained from the use of assets by the enterprise.
Where the depreciable assets are revalued, the provisions for depreciation should be based on the revalued amount and on the estimate of the remaining useful lives of such assets. In case the revaluation has a material effect on the amount of depreciation, the same should be disclosed separately in the year in which revaluation is carried out.
If any depreciable asset is disposed of, discarded, demolished or destroyed, the net surplus or deficiency, if material, should be disclosed separately.
Fixed asset is an asset held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business.
Fair market value is the price that would be agreed to in an open and unrestricted market between knowledgeable and willing parties dealing at arms length who are fully informed and are not under any compulsion to transact.
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