Hi, and welcome to part five:
in this HSTalks lecture series
on Analyzing Financial Statements.
My name is David Bond.
In this video, we'll look at
how to account for non-current assets.
are vital to all entities.
Examples of non-current assets
include land and buildings,
brand names, and goodwill.
The two primary topics of non-current assets
and the ones we'll be looking at
in this video
are property, plant, and equipment,
often known as PPE and intangible assets.
But before we get started,
what are PPE and intangible assets?
PPE are tangible items
that are held for use
in the production
or supply of goods or services,
for rental to others,
or for administrative purposes,
and are expected to be used
during more than one period.
Examples of PPE include land,
buildings, machinery, ships,
aircraft, motor vehicles,
office equipment, and so on.
Intangible assets have a shorter definition
and are simply identifiable
without physical substance.
Examples of intangible assets
include goodwill, brand names,
patents, licenses, customer lists, and so on.
Identifiability in short means
the asset is separable from the entity.
For example, the entity could
sell the asset to another entity
without physical substance is the crux of it.
are things you cannot touch.
So whereas a car would be property,
plant, and equipment,
a license to operate that car as a taxi
would be an intangible asset.
One last thing before we get into
the accounting for non-current assets
and that is to check out
the balance sheet of Qantas
to gives us an idea of what we're looking at.
Here, we're looking at the 30th of June 2016
consolidated balance sheet.
There are 16.7 billion of assets
of which 13.2 billion are non-current,
the 2 largest are property,
plan, and equipment with 11.7 billion
and intangible assets with 909 million.
If we turn to notes 11 and 12,
we find more data on these assets.
As you can see from note 11,
aircraft and related components
are the majority of property,
plant, and equipment.
Turning to note 12, software
is the largest intangible asset,
followed by goodwill.
Note that brand names and trademarks
are only worth $26 million.
Given how prominent an airline Qantas is,
this seems quite low,
and we'll come back to that.
At this point, I'm going to look at property,
plant, and equipment
and intangible assets separately.
We'll look at the accounting for
property, plant, and equipment first.