Exam 4: An Overview of Accounting for Assets

O'Brien's Construction Plc exchanged equipment that had a book value of £40 000 for a truck that had a book value (in the other entity's books)of £38 000.The fair value of the equipment is £45 000 and the fair value of the truck is £48 000.Further cost incurred to prepare the truck for use by O'Briens was £700 for signage.What is the acquisition cost of the truck?

Bruno Enterprises has constructed a heavy weight hydraulic lifter that it plans to use in maintaining and repairing its fleet of 18 wheeler trucks.The costs to build the lifter were wages of €11 000,raw materials of €19 000,depreciation of €4 000 and supplies of €1 000.Wages have not yet been paid.The equipment is judged to have probable future economic benefits of greater than its cost.What would be the accounting entry to record this event?

The class of assets that is to be valued at lower than cost or net realisable value is:

Advertising costs are not typically capitalised because:

When an asset's recoverable amount is less than the asset's cost,the asset's cost must be written down to recognise an impairment loss.

Which of the following are considered to be an asset?

IAS 1 indicates that when presenting a statement of financial position,an entity should:

If an asset's 'value in use' exceeds its market value then:

Current generally accepted accounting practices require one approach to measurement to be applied to all classes of assets.

If it is not probable that expenditure will generate future benefits,the accounting treatment should be:

It is expected that the service potential of a non-current asset will decline over time.The appropriate accounting treatment is to:

For an asset to be recognised,it is required to possess a cost or other value that can be measured exactly.

Borrowing costs may include amortisations of discounts or premiums related to borrowings.

Which of the following items are required to calculate 'value in use' of an asset?

IAS 1's definition of current assets and further discussion at paragraph 59 will:

The term 'probable' is described in the IASB Conceptual Framework as meaning that the chance of the future economic benefits arising is more likely rather than less likely.

The opportunistic view under PAT predicts managers to prefer capitalisation over expensing.Discuss.

The classification of assets into current or non-current in the statement of financial position will provide useful information on the short-term solvency of the entity:

The sum of the total assets of an entity will typically reflect their cost under current generally accepted accounting practices.

Discuss the accounting treatment for restoration costs with respect to acquisition of assets.