Question 1

Accounting standard IAS 16/AASB 116:

Accepted Answer

A) requires all assets to be revalued every five years. 
B) requires all assets to be revalued every three years. 
C) requires all assets to be revalued yearly. 
D) does not require an entity to revalue its assets. 
A) requires all assets to be revalued every five years. 
B) requires all assets to be revalued every three years. 
C) requires all assets to be revalued yearly. 
D) does not require an entity to revalue its assets.

Question 2

The basic accounting entry for a revaluation decrease of a non-depreciable asset that is not a reversal of an original increase is which of the following?

Accepted Answer

A) Debit expense on revaluation of asset; credit asset 
B) Debit asset; credit expense on the revaluation of asset 
C) Debit revaluation surplus reserve; credit asset 
D) Debit asset; credit revaluation surplus reserve 
A) Debit expense on revaluation of asset; credit asset 
B) Debit asset; credit expense on the revaluation of asset 
C) Debit revaluation surplus reserve; credit asset 
D) Debit asset; credit revaluation surplus reserve

Question 3

How many of these are mineral resources?
-Oil
-Coal
-Natural gas
-Uranium

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 4

IFRS 3/AASB 3 requires that if the amount paid for a business is less than the sum of the fair value of the net identifiable assets acquired,and this is a genuine bargain purchase, then the difference is to be:

Accepted Answer

A) taken directly to an equity account. 
B) recognised immediately as a gain in the income statement. 
C) offset against any goodwill previously acquired. 
D) used to reduce the value of the monetary assets acquired. 
A) taken directly to an equity account. 
B) recognised immediately as a gain in the income statement. 
C) offset against any goodwill previously acquired. 
D) used to reduce the value of the monetary assets acquired.

Question 5

A motor vehicle,which had a carrying amount at the end of the financial year 2011/12 of $18 000,was disposed of on 1 November 2012.Depreciation was calculated on the vehicle at 20% per annum using the diminishing-balance method.What was the depreciation expense charged for the first 4 months of the financial year 2012/13, before the asset was sold?

Accepted Answer

A) $18 000 
B) $0 
C) $3600 
D) $1200 
A) $18 000 
B) $0 
C) $3600 
D) $1200

Question 6

Which statement is not correct?

Accepted Answer

A) If an asset is scrapped as worthless before it is fully depreciated its original cost represents an expense on disposal. 
B) If an asset is scrapped as worthless before it is fully depreciated its carrying amount represents an expense on disposal. 
C) An amount paid to remove an asset that is scrapped before it is fully depreciated is an addition to the expense recorded on its disposal. 
D) When an asset is scrapped during the year an entry should be made to record depreciation expense for the portion of the year before scrapping. 
A) If an asset is scrapped as worthless before it is fully depreciated its original cost represents an expense on disposal. 
B) If an asset is scrapped as worthless before it is fully depreciated its carrying amount represents an expense on disposal. 
C) An amount paid to remove an asset that is scrapped before it is fully depreciated is an addition to the expense recorded on its disposal. 
D) When an asset is scrapped during the year an entry should be made to record depreciation expense for the portion of the year before scrapping.

Question 7

On 31 December 2013 a printing machine with a cost of $380 000 has accumulated depreciation written off of $140 000.If it is sold for $220 000 on 1 January 2014 what will be the net effect of the sale on the income statement?

Accepted Answer

A) $20 000 profit 
B) $20 000 loss 
C) $160 000 loss 
D) $80 000 profit 
A) $20 000 profit 
B) $20 000 loss 
C) $160 000 loss 
D) $80 000 profit

Question 8

A coal mine was purchased for $400 000.Estimated production is 20 000 000 tons of coal after which the mine will be sold for $40 000.During a recent year 6 500 000 tons of coal were produced and sold.Amortisation for the year would be:

Accepted Answer

A) $117 000. 
B) $130 000. 
C) $143 000. 
D) $150 000. 
A) $117 000. 
B) $130 000. 
C) $143 000. 
D) $150 000.

Question 9

On 1 June 2015 Blender Company acquired for $300 000 cash the business of Madcap Inc.The carrying amount of Madcap Inc's net assets at the time of the acquisition was $255 000 while independent valuers calculated their fair value at $275 000.Blender Company should debit 'Goodwill' for the amount of:

Accepted Answer

A) $0. 
B) $15 000. 
C) $25 000. 
D) $45 000. 
A) $0. 
B) $15 000. 
C) $25 000. 
D) $45 000.

Question 10

Under IAS 38/AASB 138,which statement concerning internally generated intangible assets is not true?

Accepted Answer

A) They can only be recognised if their cost can be measured reliably. 
B) It is likely that the cost of internally generated brand names,mastheads and customer lists can be measured reliably. 
C) The tests for recognising internally generated intangibles are more stringent than for recognising internally generated property,plant and equipment. 
D) If patents and copyrights are deemed to be in the research phase all expenditure incurred should be expensed rather than capitalised. 
A) They can only be recognised if their cost can be measured reliably. 
B) It is likely that the cost of internally generated brand names,mastheads and customer lists can be measured reliably. 
C) The tests for recognising internally generated intangibles are more stringent than for recognising internally generated property,plant and equipment. 
D) If patents and copyrights are deemed to be in the research phase all expenditure incurred should be expensed rather than capitalised.

Question 11

When a non-current asset is sold the gain or loss on disposal is the difference between:

Accepted Answer

A) fair market value and accumulated depreciation. 
B) replacement value and selling price. 
C) fair value and selling price. 
D) selling price and carrying amount. 
A) fair market value and accumulated depreciation. 
B) replacement value and selling price. 
C) fair value and selling price. 
D) selling price and carrying amount.

Question 12

A revaluation surplus is what type of account?

Accepted Answer

A) Asset 
B) Liability 
C) Income 
D) Equity 
A) Asset 
B) Liability 
C) Income 
D) Equity

Question 13

If a computer with a fully depreciated cost of $30 000 is discarded as worthless,the accounting entry to record the scrapping is which of the following?

Accepted Answer

A) Debit expense on disposal of asset $30 000; credit computer $30 000 
B) Debit expense on disposal of asset $30 000; credit accumulated depreciation computer $30 000 
C) Debit accumulated depreciation computer $30 000; credit computer $30 000 
D) Debit accumulated depreciation computer $30 000; credit computer $30 000; Debit expense on disposal of asset; credit proceeds of disposal of asset $30 000 
A) Debit expense on disposal of asset $30 000; credit computer $30 000 
B) Debit expense on disposal of asset $30 000; credit accumulated depreciation computer $30 000 
C) Debit accumulated depreciation computer $30 000; credit computer $30 000 
D) Debit accumulated depreciation computer $30 000; credit computer $30 000; Debit expense on disposal of asset; credit proceeds of disposal of asset $30 000

Question 14

Which statement relating to revaluations of non-current assets is not true?

Accepted Answer

A) A revaluation increase is regarded as income to be added to the firm's profit for the year. 
B) Future depreciation charges will be based on the revalued carrying amount of the asset. 
C) Before assets are revalued any existing accumulated depreciation must be written off against the asset account. 
D) A revaluation decrease should be included as a reduction in profit. 
A) A revaluation increase is regarded as income to be added to the firm's profit for the year. 
B) Future depreciation charges will be based on the revalued carrying amount of the asset. 
C) Before assets are revalued any existing accumulated depreciation must be written off against the asset account. 
D) A revaluation decrease should be included as a reduction in profit.

Question 15

Intangible assets may be further classified as:

Accepted Answer

A) identifiable and unidentifiable. 
B) cash and credit. 
C) living and non-living. 
D) physical and non-physical. 
A) identifiable and unidentifiable. 
B) cash and credit. 
C) living and non-living. 
D) physical and non-physical.

Question 16

The pair of terms that match is:
i.Non-current fixed assets and depreciation
ii.Natural resources and amortisation
iii.Intangible assets and depletion
iv.Land and depreciation

Accepted Answer

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

Question 17

Which statement concerning patents is true?

Accepted Answer

A) A patent in Australia gives the holder the exclusive right to produce and sell a particular product for a period of 70 years. 
B) Research costs spent on internal patent development cannot be recognised as an asset under IAS 38/AASB 138. 
C) A patent that is purchased from its holder is debited to an asset account and must be amortised over a 20 year period. 
D) A patent that has been capitalised is shown in the balance sheet on one line at its net value. 
A) A patent in Australia gives the holder the exclusive right to produce and sell a particular product for a period of 70 years. 
B) Research costs spent on internal patent development cannot be recognised as an asset under IAS 38/AASB 138. 
C) A patent that is purchased from its holder is debited to an asset account and must be amortised over a 20 year period. 
D) A patent that has been capitalised is shown in the balance sheet on one line at its net value.

Question 18

How many of these are requirements of IAS 16/AASB 116?
-An entire class of non-current assets must be revalued together.
-If the revaluation model is adopted non-current assets should be revalued to either fair value or the value in use.
-Before a depreciable asset is revalued accumulated depreciation should be written back to the asset account.

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 3 
A) 0 
B) 1 
C) 2 
D) 3

Question 19

Under the accounting standard dealing with revaluations,IAS 16/AASB 116,an entity is required to:

Accepted Answer

A) adopt either a cost model or a revaluation model. 
B) adopt a revaluation model. 
C) adopt a cost model. 
D) revalue its assets 
A) adopt either a cost model or a revaluation model. 
B) adopt a revaluation model. 
C) adopt a cost model. 
D) revalue its assets

Question 20

On 31 December 2014 an aeroplane with a cost of $200 000 has had accumulated depreciation written off of $170 000.If it was sold for a profit of $30 000 on 1 January 2015 how much was recorded as income from the proceeds of the sale?

Accepted Answer

A) $30 000 
B) $60 000 
C) Nil 
D) $200 000 
A) $30 000 
B) $60 000 
C) Nil 
D) $200 000

Accounting standard IAS 16/AASB 116:

The basic accounting entry for a revaluation decrease of a non-depreciable asset that is not a reversal of an original increase is which of the following?

How many of these are mineral resources? -Oil -Coal -Natural gas -Uranium

IFRS 3/AASB 3 requires that if the amount paid for a business is less than the sum of the fair value of the net identifiable assets acquired,and this is a genuine bargain purchase, then the difference is to be:

Which statement is not correct?

On 31 December 2013 a printing machine with a cost of $380 000 has accumulated depreciation written off of $140 000.If it is sold for $220 000 on 1 January 2014 what will be the net effect of the sale on the income statement?

A coal mine was purchased for $400 000.Estimated production is 20 000 000 tons of coal after which the mine will be sold for $40 000.During a recent year 6 500 000 tons of coal were produced and sold.Amortisation for the year would be:

On 1 June 2015 Blender Company acquired for $300 000 cash the business of Madcap Inc.The carrying amount of Madcap Inc's net assets at the time of the acquisition was $255 000 while independent valuers calculated their fair value at $275 000.Blender Company should debit 'Goodwill' for the amount of:

Under IAS 38/AASB 138,which statement concerning internally generated intangible assets is not true?

When a non-current asset is sold the gain or loss on disposal is the difference between:

A revaluation surplus is what type of account?

If a computer with a fully depreciated cost of $30 000 is discarded as worthless,the accounting entry to record the scrapping is which of the following?

Which statement relating to revaluations of non-current assets is not true?

Intangible assets may be further classified as:

The pair of terms that match is: i.Non-current fixed assets and depreciation ii.Natural resources and amortisation iii.Intangible assets and depletion iv.Land and depreciation

Which statement concerning patents is true?

Under the accounting standard dealing with revaluations,IAS 16/AASB 116,an entity is required to:

On 31 December 2014 an aeroplane with a cost of $200 000 has had accumulated depreciation written off of $170 000.If it was sold for a profit of $30 000 on 1 January 2015 how much was recorded as income from the proceeds of the sale?

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

Accounting standard IAS 16/AASB 116:

The basic accounting entry for a revaluation decrease of a non-depreciable asset that is not a reversal of an original increase is which of the following?

How many of these are mineral resources? -Oil -Coal -Natural gas -Uranium

IFRS 3/AASB 3 requires that if the amount paid for a business is less than the sum of the fair value of the net identifiable assets acquired,and this is a genuine bargain purchase, then the difference is to be:

Which statement is not correct?

On 31 December 2013 a printing machine with a cost of $380 000 has accumulated depreciation written off of $140 000.If it is sold for $220 000 on 1 January 2014 what will be the net effect of the sale on the income statement?

A coal mine was purchased for $400 000.Estimated production is 20 000 000 tons of coal after which the mine will be sold for $40 000.During a recent year 6 500 000 tons of coal were produced and sold.Amortisation for the year would be:

Under IAS 38/AASB 138,which statement concerning internally generated intangible assets is not true?

When a non-current asset is sold the gain or loss on disposal is the difference between:

A revaluation surplus is what type of account?

If a computer with a fully depreciated cost of $30 000 is discarded as worthless,the accounting entry to record the scrapping is which of the following?

Which statement relating to revaluations of non-current assets is not true?

Intangible assets may be further classified as:

The pair of terms that match is: i.Non-current fixed assets and depreciation ii.Natural resources and amortisation iii.Intangible assets and depletion iv.Land and depreciation

Which statement concerning patents is true?

Under the accounting standard dealing with revaluations,IAS 16/AASB 116,an entity is required to:

On 31 December 2014 an aeroplane with a cost of $200 000 has had accumulated depreciation written off of $170 000.If it was sold for a profit of $30 000 on 1 January 2015 how much was recorded as income from the proceeds of the sale?

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