Question 1

When an asset is sold the gain or loss on disposal is the difference between the:

Accepted Answer

A) proceeds of sale and the original cost of the asset. 
B) proceeds of sale and the carrying amount of the asset. 
C) proceeds of sale and the fair value of the asset. 
D) original cost and the accumulated depreciation of the asset. 
A) proceeds of sale and the original cost of the asset. 
B) proceeds of sale and the carrying amount of the asset. 
C) proceeds of sale and the fair value of the asset. 
D) original cost and the accumulated depreciation of the asset. B

Question 2

HK Ltd's balance sheet at 30 June 2015 disclosed the following.
$
Buildings 450 000
Less accumulated depreciation 120 000
330 000
On 1 July 2015 the director of HK decided to revalue the buildings to a fair value of $400 000.The general journal entry to record the revaluation is which of the following?

Accepted Answer

A) Debit gain on revaluation $70 000; credit buildings $70 000 
B) Debit accumulated depreciation buildings $70 000; credit gain on revaluation $70 000 
C) Debit accumulated depreciation buildings $120 000; credit gain on revaluation $70 000; credit buildings $50 000 
D) Debit accumulated depreciation buildings $120 000; credit income account $70 000; credit buildings $50 000 
A) Debit gain on revaluation $70 000; credit buildings $70 000 
B) Debit accumulated depreciation buildings $70 000; credit gain on revaluation $70 000 
C) Debit accumulated depreciation buildings $120 000; credit gain on revaluation $70 000; credit buildings $50 000 
D) Debit accumulated depreciation buildings $120 000; credit income account $70 000; credit buildings $50 000 C

Question 3

Which statement about goodwill is true?

Accepted Answer

A) Goodwill can be purchased or sold as a separate item. 
B) Goodwill arises from many factors,such as customer confidence,superior management and a favourable location. 
C) Under IFRS 3/AASB 3 goodwill must be amortised. 
D) Goodwill is classified as a current asset. 
A) Goodwill can be purchased or sold as a separate item. 
B) Goodwill arises from many factors,such as customer confidence,superior management and a favourable location. 
C) Under IFRS 3/AASB 3 goodwill must be amortised. 
D) Goodwill is classified as a current asset. B

Question 4

Recoverable amount is the:

Accepted Answer

A) higher of an asset's fair value less costs to sell,and its value in use. 
B) amount expected to be received from the disposal of the asset. 
C) amount expected to be recovered from the use of the asset. 
D) trade-in or expected amount to be received from the disposal of the asset. 
A) higher of an asset's fair value less costs to sell,and its value in use. 
B) amount expected to be received from the disposal of the asset. 
C) amount expected to be recovered from the use of the asset. 
D) trade-in or expected amount to be received from the disposal of the asset.

Question 5

Which of these are not examples of biological assets?

Accepted Answer

A) Wool and wine 
B) Trees in a pine plantation,coffee bushes on a coffee plantation 
C) Sheep and cattle 
D) Planted wheat and grape vines 
A) Wool and wine 
B) Trees in a pine plantation,coffee bushes on a coffee plantation 
C) Sheep and cattle 
D) Planted wheat and grape vines

Question 6

In rare cases the cost of purchasing a business combination may be less than the sum of the fair values of the identifiable assets and liabilities acquired (bargain purchase).Which of the following statements concerning the requirements of IFRS 3/AASB 3 in this situation is true?

Accepted Answer

A) The buyer and the seller must adjust the value to the consideration to eliminate the bargain purchase. 
B) Any bargain purchase difference should be eliminated by adjusting the values of the assets acquired as it is not possible to recognise a bargain purchase. 
C) A genuine bargain purchase should be recognised immediately as a gain that is an addition to profit. 
D) A genuine bargain purchase should be recognised progressively as an addition to profit over a 20 year period. 
A) The buyer and the seller must adjust the value to the consideration to eliminate the bargain purchase. 
B) Any bargain purchase difference should be eliminated by adjusting the values of the assets acquired as it is not possible to recognise a bargain purchase. 
C) A genuine bargain purchase should be recognised immediately as a gain that is an addition to profit. 
D) A genuine bargain purchase should be recognised progressively as an addition to profit over a 20 year period.

Question 7

According to IAS 38/AASB 138 intangible assets that have been established to have finite useful lives:

Accepted Answer

A) should be amortised on a systematic basis over their useful lives. 
B) amortised over their legal lives. 
C) should not be amortised but tested each year for impairment. 
D) should be amortised over a period not exceeding 20 years. 
A) should be amortised on a systematic basis over their useful lives. 
B) amortised over their legal lives. 
C) should not be amortised but tested each year for impairment. 
D) should be amortised over a period not exceeding 20 years.

Question 8

Billy's Computer Shop purchased some new equipment trading in old equipment with a carrying amount of $10 000.Cash of $9000 was paid to the supplier and a trade-in allowance of $7000 was granted.The new equipment should be recorded at:

Accepted Answer

A) $19 000. 
B) $16 000. 
C) $9000. 
D) $7000. 
A) $19 000. 
B) $16 000. 
C) $9000. 
D) $7000.

Question 9

The balance sheet of Doorbell Ltd at 31 December 2014 showed:
$
Equipment 80 000
Accumulated depreciation of equipment 63 000
17 000
On 1 January 2015 the equipment was sold for $15 000.What is the accounting entry to record the receipt of the proceeds from the sale of the equipment?

Accepted Answer

A) Debit bank $15 000; credit proceeds from sale of equipment $15 000 
B) Debit bank $17 000; credit proceeds from sale of equipment $17 000 
C) Debit bank $15 000; credit equipment $15 000 
D) Debit bank $2000; credit proceeds from sale of equipment $2000 
A) Debit bank $15 000; credit proceeds from sale of equipment $15 000 
B) Debit bank $17 000; credit proceeds from sale of equipment $17 000 
C) Debit bank $15 000; credit equipment $15 000 
D) Debit bank $2000; credit proceeds from sale of equipment $2000

Question 10

Accounting standard IAS 16/AASB 116 requires what basis of valuation to be used if assets are valued at other than cost?

Accepted Answer

A) Market value 
B) Fair value 
C) No basis of valuation is specified 
D) The lower of cost and net realisable value 
A) Market value 
B) Fair value 
C) No basis of valuation is specified 
D) The lower of cost and net realisable value

Question 11

Which statement concerning revaluations that reverse prior adjustments in value is untrue?

Accepted Answer

A) A revaluation decrease that reverses a previous increase should be recognised as a decrease in other comprehensive income to the extent of any credit balance existing in the revaluation surplus reserve account. 
B) A revaluation increase that reverses a previous decrease should be recognised in the income statement to the extent that it reverses any previously downward revaluation of the same asset. 
C) A debit to a revaluation surplus reserve account that is a reversal of a previous revaluation increase should not exceed the amount of the original credit. 
D) When a change in valuation is a reversal of a previous revaluation accumulated depreciation does not have to be written off against the asset before the revaluation is recorded. 
A) A revaluation decrease that reverses a previous increase should be recognised as a decrease in other comprehensive income to the extent of any credit balance existing in the revaluation surplus reserve account. 
B) A revaluation increase that reverses a previous decrease should be recognised in the income statement to the extent that it reverses any previously downward revaluation of the same asset. 
C) A debit to a revaluation surplus reserve account that is a reversal of a previous revaluation increase should not exceed the amount of the original credit. 
D) When a change in valuation is a reversal of a previous revaluation accumulated depreciation does not have to be written off against the asset before the revaluation is recorded.

Question 12

Midlothian Ltd uses composite-rate depreciation rate at 12.5% p.a.for its office equipment.The office equipment account had a $17 000 balance of the beginning of the period and a $33 000 balance at the end of the accounting period.The annual charge for depreciation is:

Accepted Answer

A) $2062. 
B) $4125. 
C) $3125. 
D) $6250. 
A) $2062. 
B) $4125. 
C) $3125. 
D) $6250.

Question 13

The excess of the purchase price of a business over the fair values of the identifiable net assets acquired is a measure of:

Accepted Answer

A) fair value. 
B) revaluation surplus. 
C) purchased goodwill. 
D) improvements. 
A) fair value. 
B) revaluation surplus. 
C) purchased goodwill. 
D) improvements.

Question 14

The balance sheet of Brown Ltd at 31 December 2014 shows the following.
$
Plant 80 000
Accumulated depreciation - plant 30 000
50 000
On 1 January 2015,based on a valuer's estimate of fair value,it was decided to revalue the plant to $65 000.The plant was then assessed to have a further useful life of 5 years and an expected residual amount of $5000.What is the journal entry in the books of Brown Ltd to record depreciation on plant on a straight-line basis for the half-year ending 30 June 2015 (balance date)?

Accepted Answer

A) Depreciation expense - plant 12 000 Accumulated depreciation- plant 12 000 
B) Depreciation expense - plant 6 000 Accumulated depreciation - plant 6 000 
C) Accumulated depreciation - plant 6 000 Depreciation expense - plant 6 000 
D) Depreciation expense - plant 6 500 Accumulated depreciation- plant 6 500 
A) Depreciation expense - plant 12 000 Accumulated depreciation- plant 12 000 
B) Depreciation expense - plant 6 000 Accumulated depreciation - plant 6 000 
C) Accumulated depreciation - plant 6 000 Depreciation expense - plant 6 000 
D) Depreciation expense - plant 6 500 Accumulated depreciation- plant 6 500

Question 15

According to IFRS 3/AASB 3 purchased goodwill:

Accepted Answer

A) should be written off immediately on recognition. 
B) should be written off by a systematic charge against profits using the straight-line method,over a period not exceeding 20 years. 
C) should remain in the accounts at cost less any accumulated impairment losses. 
D) should be written off over the useful life of the asset. 
A) should be written off immediately on recognition. 
B) should be written off by a systematic charge against profits using the straight-line method,over a period not exceeding 20 years. 
C) should remain in the accounts at cost less any accumulated impairment losses. 
D) should be written off over the useful life of the asset.

Question 16

In accounting standard IAS 16/AASB 116 a downward revaluation is now known as a:

Accepted Answer

A) revaluation depletion. 
B) revaluation increment. 
C) revaluation decrease. 
D) revaluation decrement. 
A) revaluation depletion. 
B) revaluation increment. 
C) revaluation decrease. 
D) revaluation decrement.

Question 17

Which of these terms have the same meaning in accounting?
i.Carrying amount
ii.Book value
iii.Written down value

Accepted Answer

A) i,ii 
B) ii,iii 
C) i,iii 
D) i,ii,iii 
A) i,ii 
B) ii,iii 
C) i,iii 
D) i,ii,iii

Question 18

What is the accounting entry to amortise an intangible asset over its useful life?

Accepted Answer

A) Debit amortisation expense; credit asset 
B) Debit accumulated amortisation; credit amortisation of asset 
C) Debit amortisation expense; credit accumulated amortisation 
D) Debit amortisation expense; credit accumulated depreciation 
A) Debit amortisation expense; credit asset 
B) Debit accumulated amortisation; credit amortisation of asset 
C) Debit amortisation expense; credit accumulated amortisation 
D) Debit amortisation expense; credit accumulated depreciation

Question 19

Which statement relating to the composite-rate depreciation approach untrue?

Accepted Answer

A) It is often used in practice by business entities with many similar assets in the one class. 
B) A single average depreciation rate is applied to the average of the beginning and ending balances of a functional group of assets. 
C) No gain or loss is recognised on the disposal of individual assets within the composite group. 
D) Composite-rate depreciation always uses the straight-line method of depreciation. 
A) It is often used in practice by business entities with many similar assets in the one class. 
B) A single average depreciation rate is applied to the average of the beginning and ending balances of a functional group of assets. 
C) No gain or loss is recognised on the disposal of individual assets within the composite group. 
D) Composite-rate depreciation always uses the straight-line method of depreciation.

Question 20

Recoverable amount is the:

Accepted Answer

A) higher of an asset's fair value less costs to sell,and its value in use. 
B) amount expected to be received from the disposal of the asset. 
C) amount expected to be recovered from the use of the asset. 
D) lower of an assets fair value and its net realisable value. 
A) higher of an asset's fair value less costs to sell,and its value in use. 
B) amount expected to be received from the disposal of the asset. 
C) amount expected to be recovered from the use of the asset. 
D) lower of an assets fair value and its net realisable value.

When an asset is sold the gain or loss on disposal is the difference between the:

Which statement about goodwill is true?

Recoverable amount is the:

Which of these are not examples of biological assets?

In rare cases the cost of purchasing a business combination may be less than the sum of the fair values of the identifiable assets and liabilities acquired (bargain purchase).Which of the following statements concerning the requirements of IFRS 3/AASB 3 in this situation is true?

According to IAS 38/AASB 138 intangible assets that have been established to have finite useful lives:

Billy's Computer Shop purchased some new equipment trading in old equipment with a carrying amount of $10 000.Cash of $9000 was paid to the supplier and a trade-in allowance of $7000 was granted.The new equipment should be recorded at:

The balance sheet of Doorbell Ltd at 31 December 2014 showed: $ Equipment 80 000 Accumulated depreciation of equipment 63 000 17 000 On 1 January 2015 the equipment was sold for $15 000.What is the accounting entry to record the receipt of the proceeds from the sale of the equipment?

Accounting standard IAS 16/AASB 116 requires what basis of valuation to be used if assets are valued at other than cost?

Which statement concerning revaluations that reverse prior adjustments in value is untrue?

Midlothian Ltd uses composite-rate depreciation rate at 12.5% p.a.for its office equipment.The office equipment account had a $17 000 balance of the beginning of the period and a $33 000 balance at the end of the accounting period.The annual charge for depreciation is:

The excess of the purchase price of a business over the fair values of the identifiable net assets acquired is a measure of:

According to IFRS 3/AASB 3 purchased goodwill:

In accounting standard IAS 16/AASB 116 a downward revaluation is now known as a:

Which of these terms have the same meaning in accounting? i.Carrying amount ii.Book value iii.Written down value

What is the accounting entry to amortise an intangible asset over its useful life?

Which statement relating to the composite-rate depreciation approach untrue?

Recoverable amount is the:

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Partnerships: Formation,operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Cash Management and Control

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Filters

Exam 15: Non-Current Assets: Revaluation,disposal and Other Aspects

When an asset is sold the gain or loss on disposal is the difference between the:

Which statement about goodwill is true?

Recoverable amount is the:

Which of these are not examples of biological assets?

In rare cases the cost of purchasing a business combination may be less than the sum of the fair values of the identifiable assets and liabilities acquired (bargain purchase).Which of the following statements concerning the requirements of IFRS 3/AASB 3 in this situation is true?

According to IAS 38/AASB 138 intangible assets that have been established to have finite useful lives:

Billy's Computer Shop purchased some new equipment trading in old equipment with a carrying amount of $10 000.Cash of $9000 was paid to the supplier and a trade-in allowance of $7000 was granted.The new equipment should be recorded at:

The balance sheet of Doorbell Ltd at 31 December 2014 showed: $ Equipment 80 000 Accumulated depreciation of equipment 63 000 17 000 On 1 January 2015 the equipment was sold for $15 000.What is the accounting entry to record the receipt of the proceeds from the sale of the equipment?

Accounting standard IAS 16/AASB 116 requires what basis of valuation to be used if assets are valued at other than cost?

Which statement concerning revaluations that reverse prior adjustments in value is untrue?

Midlothian Ltd uses composite-rate depreciation rate at 12.5% p.a.for its office equipment.The office equipment account had a $17 000 balance of the beginning of the period and a $33 000 balance at the end of the accounting period.The annual charge for depreciation is:

The excess of the purchase price of a business over the fair values of the identifiable net assets acquired is a measure of:

According to IFRS 3/AASB 3 purchased goodwill:

In accounting standard IAS 16/AASB 116 a downward revaluation is now known as a:

Which of these terms have the same meaning in accounting? i.Carrying amount ii.Book value iii.Written down value

What is the accounting entry to amortise an intangible asset over its useful life?

Which statement relating to the composite-rate depreciation approach untrue?

Recoverable amount is the:

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Partnerships: Formation,operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Cash Management and Control

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Filters