Public Sector Accounting and Reporting II cheat sheet

Accounting for assets and liabilities

• Financial instruments are measured at amortised cost, at fair value through surplus or deficit, or at fair value through net assets, depending on the entity's business model and the instrument's cash-flow characteristics.
• A cash-generating asset is impaired when its carrying amount exceeds its recoverable amount, the higher of fair value less costs to sell and value in use.
• A non-cash-generating asset is held to deliver a service, not to earn cash, so its impairment is measured on service potential, for example by depreciated replacement cost.
• Under the right-of-use model a lessee recognises a right-of-use asset and a lease liability for most leases, then charges interest and depreciation instead of a single rental expense.
• A lessor still classifies each lease as operating or finance, depending on whether substantially all the risks and rewards of ownership are transferred.