CFA Level I, Finan­cial Repor­ting and Ana­ly­sis, Long-Lived Assets, Reco­gni­ti­on and Measurement

CFA Level I, Finan­cial Repor­ting and Ana­ly­sis, Long-Lived Assets

When tal­king about the balan­ce sheet, we always need to consider: 

  • reco­gni­ti­on,
  • mea­su­re­ment,
    • indi­cial mea­su­re­ment, and 
    • sub­se­quent measurement.

In regard to reco­gni­ti­on, we need to deci­de on whe­ther or not to capi­ta­li­ze some­thing, i.e. put it into the balan­ce sheet, or not capi­ta­li­ze it, i.e. put­ting it into the inco­me statement. 

Mea­su­re­ment tells us with hoch much of some­thing should be capi­ta­li­zed. Initi­al  mea­su­re­ment is about cost, sub­se­quent mea­su­re­ment needs to take into account the wri­ting down of assets.

Wri­ting down of an asset means that you are ack­now­led­ging that it is depre­cia­ting (in the case of tan­gi­ble assets) or amor­ti­sed (in the case of intan­gi­ble assets). Depre­cia­ti­on or amor­tiz­a­ti­on will allo­ca­te the initi­al cost to the use­ful life of the asset. In the case of unfo­re­see­ab­le events that lead to a reco­ver­a­ble amount strict­ly infe­ri­or to the book value of an asset, we need to have an impairment.


Find all important aspects of Finan­cial Repor­ting and Ana­ly­sis, Long-Lived Assets in the fol­lowing Mind­Map:

All Lam­bert Mind­Maps for CFA Level 1 and Level 2 can be purcha­sed on

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