Question 1

Carrying amount of equipment is what type of account?

Accepted Answer

A) Asset 
B) Negative asset 
C) Expense 
D) Negative expense 
A) Asset 
B) Negative asset 
C) Expense 
D) Negative expense

Question 2

Goodwill is defined in IFRS 3/AASB 3 Business Combinations as:

Accepted Answer

A) an asset having no physical substance. 
B) an asset not specifically brought to account. 
C) the benefits of a favourable reputation. 
D) future economic benefits arising from assets that are not capable of being individually identified and separately recognised. 
A) an asset having no physical substance. 
B) an asset not specifically brought to account. 
C) the benefits of a favourable reputation. 
D) future economic benefits arising from assets that are not capable of being individually identified and separately recognised.

Question 3

What is the basic accounting entry for an initial revaluation decrease of a non-depreciable asset?

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 4

Which statement relating to the composite-rate depreciation approach is not true?

Accepted Answer

A) A single depreciation rate is applied to the average cost of a functional group of assets. 
B) It is only used for items valued at less than $500 each. 
C) The composite rate is applied to the average of the beginning and ending balances in the asset account for the year. 
D) It is often used in practice by business entities with many similar assets in the one class. 
A) A single depreciation rate is applied to the average cost of a functional group of assets. 
B) It is only used for items valued at less than $500 each. 
C) The composite rate is applied to the average of the beginning and ending balances in the asset account for the year. 
D) It is often used in practice by business entities with many similar assets in the one class.

Question 5

Which statement concerning the accounting treatment of intangible assets under IAS 38/AASB 138 is true?

Accepted Answer

A) Goodwill can be purchased or sold as a separate asset. 
B) Any internally generated trademark or brand name can be recognised as an asset. 
C) IAS 38/AASB 138 accepts the view that some intangible assets have unlimited lives and therefore should not be amortised. 
D) An intangible asset is defined as an asset without physical substance. 
A) Goodwill can be purchased or sold as a separate asset. 
B) Any internally generated trademark or brand name can be recognised as an asset. 
C) IAS 38/AASB 138 accepts the view that some intangible assets have unlimited lives and therefore should not be amortised. 
D) An intangible asset is defined as an asset without physical substance.

Question 6

Under IAS 41/AASB 141 the basis for recording biological assets in the accounting records is:

Accepted Answer

A) net fair value. 
B) market value. 
C) historical cost. 
D) replacement value. 
A) net fair value. 
B) market value. 
C) historical cost. 
D) replacement value.

Question 7

Proceeds from the sale of equipment is what type of account?

Accepted Answer

A) Liability 
B) Income 
C) Expense 
D) Negative asset 
A) Liability 
B) Income 
C) Expense 
D) Negative asset

Question 8

Revaluations that occur must be upward or downward from an asset's:

Accepted Answer

A) carrying amount. 
B) net realisable value. 
C) lower of cost and net realisable value. 
D) original cost. 
A) carrying amount. 
B) net realisable value. 
C) lower of cost and net realisable value. 
D) original cost.

Question 9

The carrying amount of a depreciable,non-current asset is its:

Accepted Answer

A) historic cost. 
B) cost less residual amount. 
C) cost or revalued amount less accumulated depreciation. 
D) net realisable value. 
A) historic cost. 
B) cost less residual amount. 
C) cost or revalued amount less accumulated depreciation. 
D) net realisable value.

Question 10

Which statement relating to mineral resources is untrue?

Accepted Answer

A) Accounting for mineral resources is governed by IAS 16/AASB 116. 
B) The cost at which mineral resources are recorded may include amounts spent on exploration and development. 
C) As the mineral resource asset is used up its cost is proportionately transferred to an amortisation (depletion)expense account. 
D) The most common approach to the calculation of the depletion of mineral resources is the reducing-balance method. 
A) Accounting for mineral resources is governed by IAS 16/AASB 116. 
B) The cost at which mineral resources are recorded may include amounts spent on exploration and development. 
C) As the mineral resource asset is used up its cost is proportionately transferred to an amortisation (depletion)expense account. 
D) The most common approach to the calculation of the depletion of mineral resources is the reducing-balance method.

Question 11

King Ltd acquired the business of Prince Ltd for a cash payment of $480 000.The carrying amount of Prince Ltd's assets at the time of purchase was $490 000 while the independent fair value was $460 000.There were no liabilities.What is the value of the purchased goodwill recorded by King Ltd?

Accepted Answer

A) $(10 000) 
B) $0 
C) $20 000 
D) 30 000 
A) $(10 000) 
B) $0 
C) $20 000 
D) 30 000

Question 12

Which is the true statement?

Accepted Answer

A) A revaluation decrease should occur if a non-current asset's carrying amount is less than its fair value. 
B) An initial revaluation decrease should be treated as a debit to the revaluation surplus reserve. 
C) An initial revaluation decrease should be treated as a debit against the current period's profit or loss. 
D) An initial revaluation decrease should be disclosed in the profit report as a reduction in other comprehensive income. 
A) A revaluation decrease should occur if a non-current asset's carrying amount is less than its fair value. 
B) An initial revaluation decrease should be treated as a debit to the revaluation surplus reserve. 
C) An initial revaluation decrease should be treated as a debit against the current period's profit or loss. 
D) An initial revaluation decrease should be disclosed in the profit report as a reduction in other comprehensive income.

Question 13

Assume that a machine with a cost of $9000 has accumulated depreciation of $4800 on the date of its disposal.If it was traded-in for $4000 on a new machine and the balance of $2000 was paid in cash what is the profit or loss on disposal of the old machine? (Ignore GST.)

Accepted Answer

A) $2000 loss 
B) $200 loss 
C) $800 gain 
D) $3800 loss 
A) $2000 loss 
B) $200 loss 
C) $800 gain 
D) $3800 loss

Question 14

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.The accounting entry to record the closing of the equipment and the accumulated depreciation of equipment accounts is which of the following?

Accepted Answer

A) Debit accumulated depreciation equipment $63 000; credit equipment $63 000 
B) Debit accumulated depreciation equipment $63 000; debit carrying amount of equipment $17 000; credit equipment $80 000 
C) Debit bank $15 000; credit carrying amount of equipment $15 000 
D) Debit accumulated depreciation equipment $17 000; credit equipment $17 000 
A) Debit accumulated depreciation equipment $63 000; credit equipment $63 000 
B) Debit accumulated depreciation equipment $63 000; debit carrying amount of equipment $17 000; credit equipment $80 000 
C) Debit bank $15 000; credit carrying amount of equipment $15 000 
D) Debit accumulated depreciation equipment $17 000; credit equipment $17 000

Question 15

On 31 December 2014 an aeroplane with a cost of $200 000 has accumulated depreciation written off of $90 000.If it was sold for $130 000 on 1 January 2015 how much will be recorded as the expense carrying-value on the disposal of the plane?

Accepted Answer

A) $200 000 
B) $130 000 
C) $110 000 
D) $90 000 
A) $200 000 
B) $130 000 
C) $110 000 
D) $90 000

Question 16

Which of these does not contribute to the value of purchased goodwill?

Accepted Answer

A) Superior management 
B) Favourable location 
C) Customer loyalty 
D) A franchise 
A) Superior management 
B) Favourable location 
C) Customer loyalty 
D) A franchise

Question 17

Which pairing of non-current assets and acquisition value does not match?

Accepted Answer

A) Identifiable intangible assets and cost 
B) Goodwill and cost of the business combination less the sum of the fair values of the net assets acquired 
C) Mineral resources and cost 
D) Biological assets and agricultural produce and cost 
A) Identifiable intangible assets and cost 
B) Goodwill and cost of the business combination less the sum of the fair values of the net assets acquired 
C) Mineral resources and cost 
D) Biological assets and agricultural produce and cost

Question 18

Which of these is not an example of an intangible asset?
i.Trademark
ii.Oil and gas reserves
iii.Licences
iv.Goodwill

Accepted Answer

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

Question 19

The balance sheet of Brown Ltd at 31 December 2014 shows the following.
$
Plant 50 000
Accumulated depreciation - plant 30 000
20 000
On 1 January 2015,based on a valuer's estimate of fair value,it was decided to revalue the plant to $35 000.This was the first time the asset had been revalued.
The journal entry to record the revaluation is which of the following?

Accepted Answer

A) Accumulated depreciation - plant 30 000 Plant 15 000
Gain on revaluation plant 15 000 
B) Plant 15 000 Gain on revaluation plant 15 000 
C) Expense on revaluation of plant 15 000 Plant 15 000 
D) Plant 15 000 Expense on revaluation of plant 15 000
Accumulated depreciation - plant 30 000 
A) Accumulated depreciation - plant 30 000 Plant 15 000
Gain on revaluation plant 15 000 
B) Plant 15 000 Gain on revaluation plant 15 000 
C) Expense on revaluation of plant 15 000 Plant 15 000 
D) Plant 15 000 Expense on revaluation of plant 15 000
Accumulated depreciation - plant 30 000

Question 20

Under IAS 36/AASB 136 Impairment of Assets,how many of these statements are true?
-When an asset's carrying amount is less than its recoverable amount the asset is said to suffer impairment.
-Impairment losses are accounted for as a revaluation decrease if the revaluation model is used.
-Impairment losses must be recognised as an expense in that period if the cost model is used.

Accepted Answer

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

Carrying amount of equipment is what type of account?

Goodwill is defined in IFRS 3/AASB 3 Business Combinations as:

What is the basic accounting entry for an initial revaluation decrease of a non-depreciable asset?

Which statement relating to the composite-rate depreciation approach is not true?

Which statement concerning the accounting treatment of intangible assets under IAS 38/AASB 138 is true?

Under IAS 41/AASB 141 the basis for recording biological assets in the accounting records is:

Proceeds from the sale of equipment is what type of account?

Revaluations that occur must be upward or downward from an asset's:

The carrying amount of a depreciable,non-current asset is its:

Which statement relating to mineral resources is untrue?

King Ltd acquired the business of Prince Ltd for a cash payment of $480 000.The carrying amount of Prince Ltd's assets at the time of purchase was $490 000 while the independent fair value was $460 000.There were no liabilities.What is the value of the purchased goodwill recorded by King Ltd?

Which is the true statement?

Assume that a machine with a cost of $9000 has accumulated depreciation of $4800 on the date of its disposal.If it was traded-in for $4000 on a new machine and the balance of $2000 was paid in cash what is the profit or loss on disposal of the old machine? (Ignore GST.)

On 31 December 2014 an aeroplane with a cost of $200 000 has accumulated depreciation written off of $90 000.If it was sold for $130 000 on 1 January 2015 how much will be recorded as the expense carrying-value on the disposal of the plane?

Which of these does not contribute to the value of purchased goodwill?

Which pairing of non-current assets and acquisition value does not match?

Which of these is not an example of an intangible asset? i.Trademark ii.Oil and gas reserves iii.Licences iv.Goodwill

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

Carrying amount of equipment is what type of account?

Goodwill is defined in IFRS 3/AASB 3 Business Combinations as:

What is the basic accounting entry for an initial revaluation decrease of a non-depreciable asset?

Which statement relating to the composite-rate depreciation approach is not true?

Which statement concerning the accounting treatment of intangible assets under IAS 38/AASB 138 is true?

Under IAS 41/AASB 141 the basis for recording biological assets in the accounting records is:

Proceeds from the sale of equipment is what type of account?

Revaluations that occur must be upward or downward from an asset's:

The carrying amount of a depreciable,non-current asset is its:

Which statement relating to mineral resources is untrue?

King Ltd acquired the business of Prince Ltd for a cash payment of $480 000.The carrying amount of Prince Ltd's assets at the time of purchase was $490 000 while the independent fair value was $460 000.There were no liabilities.What is the value of the purchased goodwill recorded by King Ltd?

Which is the true statement?

Assume that a machine with a cost of $9000 has accumulated depreciation of $4800 on the date of its disposal.If it was traded-in for $4000 on a new machine and the balance of $2000 was paid in cash what is the profit or loss on disposal of the old machine? (Ignore GST.)

On 31 December 2014 an aeroplane with a cost of $200 000 has accumulated depreciation written off of $90 000.If it was sold for $130 000 on 1 January 2015 how much will be recorded as the expense carrying-value on the disposal of the plane?

Which of these does not contribute to the value of purchased goodwill?

Which pairing of non-current assets and acquisition value does not match?

Which of these is not an example of an intangible asset? i.Trademark ii.Oil and gas reserves iii.Licences iv.Goodwill

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