Question 1

When does an entity use the "cost less any depreciation" approach for biological assets?

Accepted Answer

A) At time of initial recognition upon acquisition. 
B) If the entity cannot obtain fair value information. 
C) At time of subsequent measurement on each balance sheet. 
D) If the entity can obtain fair value information. 
A) At time of initial recognition upon acquisition. 
B) If the entity cannot obtain fair value information. 
C) At time of subsequent measurement on each balance sheet. 
D) If the entity can obtain fair value information.

Question 2

When is a "disposal group" classified as held for sale?

Accepted Answer

A) When a component of an entity either has been disposed of or is classified as held for sale. 
B) When the group of assets is both available for sale and expected to sell within a year. 
C) When a group of assets and liabilities are to be disposed in several transactions. 
D) When the carrying value for a group of current assets will be recovered through sale rather than continuing use. 
A) When a component of an entity either has been disposed of or is classified as held for sale. 
B) When the group of assets is both available for sale and expected to sell within a year. 
C) When a group of assets and liabilities are to be disposed in several transactions. 
D) When the carrying value for a group of current assets will be recovered through sale rather than continuing use.

Question 3

Which of the following is correct with respect to when the impairment test must be performed?

Accepted Answer

A) An annual test is required for definite lived assets under IFRS. 
B) An annual test is required for definite lived assets under ASPE. 
C) An annual test is required for indefinite lived assets under IFRS. 
D) An annual test is required for indefinite lived assets under ASPE. 
A) An annual test is required for definite lived assets under IFRS. 
B) An annual test is required for definite lived assets under ASPE. 
C) An annual test is required for indefinite lived assets under IFRS. 
D) An annual test is required for indefinite lived assets under ASPE.

Question 4

Which is an exception to the rule: "test for impairment only if there are indicators for impairment"?

Accepted Answer

A) Intangible assets with indefinite lives. 
B) Intangible assets with definite lives. 
C) Internally generated goodwill. 
D) Tangible assets with definite lives. 
A) Intangible assets with indefinite lives. 
B) Intangible assets with definite lives. 
C) Internally generated goodwill. 
D) Tangible assets with definite lives.

Question 5

Smith Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | } 
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 120,000 \
\hline \text { Building Accumulated Depreciation } & 60,000 \
\hline \text { Net carrying value } & 60,000 \
\hline
\end{array}$$ The fair value for the property is $150,000. What amount would be booked to the "accumulated depreciation" account if Smith chooses to use the elimination method to record the revaluation?

Accepted Answer

A) $60,000 debit. 
B) $60,000 credit. 
C) $90,000 credit. 
D) $150,000 debit. 
A) $60,000 debit. 
B) $60,000 credit. 
C) $90,000 credit. 
D) $150,000 debit.

Question 6

Which of the following is correct with respect to "investment properties"?

Accepted Answer

A) These are land or buildings used for production or administrative purposes of the business. 
B) These are land, buildings or machinery used for production or administrative purposes of the business. 
C) These are land or buildings used for rental income purposes of the business. 
D) These are land, buildings or machinery used for rental income purposes of the business. 
A) These are land or buildings used for production or administrative purposes of the business. 
B) These are land, buildings or machinery used for production or administrative purposes of the business. 
C) These are land or buildings used for rental income purposes of the business. 
D) These are land, buildings or machinery used for rental income purposes of the business.

Question 7

Wilson Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | } 
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 120,000 \
\hline \text { Building Accumulated Depreciation } & 40,000 \
\hline \text { Net carrying value } & 80,000 \
\hline
\end{array}$$ The fair value for the property is $40,000. Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years, how much would be booked to accumulated depreciation in the year subsequent to the revaluation?

Accepted Answer

A) $8,000 credit. 
B) $8,000 debit. 
C) $16,000 credit. 
D) $16,000 debit. 
A) $8,000 credit. 
B) $8,000 debit. 
C) $16,000 credit. 
D) $16,000 debit.

Question 8

Smith Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | } 
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 120,000 \
\hline \text { Building Accumulated Depreciation } & 60,000 \
\hline \text { Net carrying value } & 60,000 \
\hline
\end{array}$$ The fair value for the property is $150,000. Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years, how much depreciation expense would be recorded in the year subsequent to the revaluation?

Accepted Answer

A) $12,000 debit. 
B) $12,000 credit. 
C) $30,000 credit. 
D) $30,000 debit. 
A) $12,000 debit. 
B) $12,000 credit. 
C) $30,000 credit. 
D) $30,000 debit.

Question 9

Which of the following is correct with respect to the "impairment loss"?

Accepted Answer

A) It is defined as the carrying amount less recoverable amount under IFRS. 
B) It is defined as the carrying amount less recoverable amount under ASPE. 
C) Under IFRS, it is defined as the sum of the undiscounted cash flows expected from use of the asset. 
D) Under ASPE, it is defined as the sum of the undiscounted cash flows expected from use of the asset. 
A) It is defined as the carrying amount less recoverable amount under IFRS. 
B) It is defined as the carrying amount less recoverable amount under ASPE. 
C) Under IFRS, it is defined as the sum of the undiscounted cash flows expected from use of the asset. 
D) Under ASPE, it is defined as the sum of the undiscounted cash flows expected from use of the asset.

Question 10

Explain why non-current assets held for sale are recorded at the lower of carrying value and fair value less costs to sell.

Accepted Answer

Non-current assets held for sale should

Question 11

What is "fair value less costs to sell"?

Accepted Answer

A) The present value of the future cash flows expected to be derived from an asset. 
B) The amount obtainable from the sale of an asset in an arm's-length transaction less the costs of disposal. 
C) The higher of an asset's fair value less costs to sell and its value in use. 
D) The amount obtainable from the sale of an asset in an arm's-length transaction between knowledgeable, willing parties. 
A) The present value of the future cash flows expected to be derived from an asset. 
B) The amount obtainable from the sale of an asset in an arm's-length transaction less the costs of disposal. 
C) The higher of an asset's fair value less costs to sell and its value in use. 
D) The amount obtainable from the sale of an asset in an arm's-length transaction between knowledgeable, willing parties.

Question 12

What is "agricultural activity"?

Accepted Answer

A) The harvested product of biological assets. 
B) A living animal or plant. 
C) The transformation of biological assets. 
D) Planting, harvesting and marketing produce. 
A) The harvested product of biological assets. 
B) A living animal or plant. 
C) The transformation of biological assets. 
D) Planting, harvesting and marketing produce.

Question 13

Wilson Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | } 
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 120,000 \
\hline \text { Building Accumulated Depreciation } & 40,000 \
\hline \text { Net carrying value } & 80,000 \
\hline
\end{array}$$ The fair value for the property is $40,000. Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years, how much depreciation expense would be recorded in the year subsequent to the revaluation?

Accepted Answer

A) 8,000 credit. 
B) 8,000 debit. 
C) 16,000 credit. 
D) 16,000 debit. 
A) 8,000 credit. 
B) 8,000 debit. 
C) 16,000 credit. 
D) 16,000 debit.

Question 14

What is "value in use"?

Accepted Answer

A) The present value of the future cash flows expected to be derived from an asset. 
B) The amount obtainable from the sale of an asset in an arm's-length transaction less the costs of disposal. 
C) The higher of an asset's fair value less costs to sell and its value in use. 
D) The lower of an asset's fair value less costs to sell and its value in use. 
A) The present value of the future cash flows expected to be derived from an asset. 
B) The amount obtainable from the sale of an asset in an arm's-length transaction less the costs of disposal. 
C) The higher of an asset's fair value less costs to sell and its value in use. 
D) The lower of an asset's fair value less costs to sell and its value in use.

Question 15

Information about the PPE for Jeffery Inc. is provided below. Determine the balance sheet presentation under the cost and fair value model for each year. Ignore the impact of income taxes and assume that a full year depreciation is taken each year using the straight-line method.
 $\begin{array}{|l|l|l|l|l|} 
\hline & \text { Purchase Price } & \begin{array}{l}
\hline\text { Fair value at the } \ 
\text { end of Year 1 }
\end{array} & \begin{array}{l}
\text { Fair value at the } \
\text { end of Year } 2
\end{array} & \begin{array}{l}
\text { Fair value at the } \
\text { end of Year 3 }
\end{array} \
\hline \text { Land } & 10 \text { million } & 12 \text { million } & 14 \text { million } & 13 \text { million } \
\hline \text { Building - 20 year } & & & & \
\text { useful life } & 40 \text { million } & 45 \text { million } & 40 \text { million } & 45 \text { million } \
\hline \text { Machinery - 5 year } & & & & \
\text { useful life } & 5 \text { million } & 4.8 \text { million } & 3.5 \text { million } & 2.7 \text { million }\
\hline
\end{array}$

$$\begin{array} { | l | l | l | l | } 
\hline & \text { Year } 1 & \text { Year } 2 & \text { Year } 3 \
\hline \text { Fralance Sheet } & & & \
\hline \text { Land } & & & \
\hline \text { Fuilding } & & & \
\hline \text { Machinery } & & & \
\hline \text { Total Depreciation } & & & \
\hline \text { Net effect on equity } & & & \
\text { for the year } & & & \
\hline
\end{array}$$

Accepted Answer

Under the

Question 16

What impairment, if any, exists on these product lines? $$\begin{array} { | l | r | r| } 
\hline & \text { Product A } & \text { Product B } \
\hline \text { Original cost } & \$ 7,200,000 & \$ 12,000,000 \
\hline \text { Accumulated depreciation } & 2,500,000 & 4,000,000 \
\hline \text { Fair value } & 5,000,000 & 8,000,000 \
\hline \text { Costs to sell } & 100,000 & 350,000 \
\hline \text { Value in use } & 4,375,000 & 7,500,00 \
\hline
\end{array}$$

Accepted Answer

A)  $$\begin{array} { | l | l | } 
\hline \text { Product A } & \text { Product B } \
\hline \$ 0 & \$ 0 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | } 
\hline \text { Product A } & \text { Product B } \
\hline 325,000 &0 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | } 
\hline \text { Product A } & \text { Product B } \
\hline 0 & 350,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | l | } 
\hline \text { Product A } & \text { Product B } \
\hline 325,000 & 350,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | l | } 
\hline \text { Product A } & \text { Product B } \
\hline \$ 0 & \$ 0 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | } 
\hline \text { Product A } & \text { Product B } \
\hline 325,000 &0 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | } 
\hline \text { Product A } & \text { Product B } \
\hline 0 & 350,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | l | } 
\hline \text { Product A } & \text { Product B } \
\hline 325,000 & 350,000 \
\hline
\end{array}$$

Question 17

On December 31, 2021, CA Inc. had a machine with an original cost of $20,000 and accumulated depreciation of $5,000. An impairment test on that date indicated that the machine had a value in use of $12,000 and a fair value of $10,000 (no disposal costs). What impairment loss is recorded for fiscal 2021?

Accepted Answer

A) $3,000 
B) $5,000 
C) $8,000 
D) $10,000 
A) $3,000 
B) $5,000 
C) $8,000 
D) $10,000

Question 18

Explain how non-current assets such as definite lived intangibles, indefinite lived intangibles and goodwill are tested for impairment under IFRS.

Accepted Answer

•An enterprise should annually search fo

Question 19

When does agricultural activity end?

Accepted Answer

A) To the point just before harvest. 
B) To the point of harvest. 
C) To the point of sale to wholesaler. 
D) To the point of sale to final customer. 
A) To the point just before harvest. 
B) To the point of harvest. 
C) To the point of sale to wholesaler. 
D) To the point of sale to final customer.

Question 20

Grover Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | } 
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 120,000 \
\hline \text { Building Accumulated Depreciation } & 40,000 \
\hline \text { Net carrying value } & 80,000 \
\hline
\end{array}$$
-According to the table above.The fair value for the property is $100,000. What amount would be booked to the "accumulated depreciation" account if Grover chooses to use the proportional method to record the revaluation?

Accepted Answer

A) $0 
B) $10,000 debit. 
C) $10,000 credit. 
D) $20,000 credit. 
A) $0 
B) $10,000 debit. 
C) $10,000 credit. 
D) $20,000 credit.

When does an entity use the "cost less any depreciation" approach for biological assets?

When is a "disposal group" classified as held for sale?

Which of the following is correct with respect to when the impairment test must be performed?

Which is an exception to the rule: "test for impairment only if there are indicators for impairment"?

Which of the following is correct with respect to "investment properties"?

Which of the following is correct with respect to the "impairment loss"?

Explain why non-current assets held for sale are recorded at the lower of carrying value and fair value less costs to sell.

What is "fair value less costs to sell"?

What is "agricultural activity"?

What is "value in use"?

What impairment, if any, exists on these product lines? Product A Product B Original cost \ 7,200,000 \ 12,000,000 Accumulated depreciation 2,500,000 4,000,000 Fair value 5,000,000 8,000,000 Costs to sell 100,000 350,000 Value in use 4,375,000 7,500,00

Explain how non-current assets such as definite lived intangibles, indefinite lived intangibles and goodwill are tested for impairment under IFRS.

When does agricultural activity end?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Accrual Accounting

Revenue and Recognition

Cash and Receivables

Inventories

Financial Assets

Property, Plant and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Filters

Exam 10: Applications of Fair Value to Non-Current Assets

When does an entity use the "cost less any depreciation" approach for biological assets?

When is a "disposal group" classified as held for sale?

Which of the following is correct with respect to when the impairment test must be performed?

Which is an exception to the rule: "test for impairment only if there are indicators for impairment"?

Which of the following is correct with respect to "investment properties"?

Which of the following is correct with respect to the "impairment loss"?

Explain why non-current assets held for sale are recorded at the lower of carrying value and fair value less costs to sell.

What is "fair value less costs to sell"?

What is "agricultural activity"?

What is "value in use"?

What impairment, if any, exists on these product lines? Product A Product B Original cost \ 7,200,000 \ 12,000,000 Accumulated depreciation 2,500,000 4,000,000 Fair value 5,000,000 8,000,000 Costs to sell 100,000 350,000 Value in use 4,375,000 7,500,00

Explain how non-current assets such as definite lived intangibles, indefinite lived intangibles and goodwill are tested for impairment under IFRS.

When does agricultural activity end?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Accrual Accounting

Revenue and Recognition

Cash and Receivables

Inventories

Financial Assets

Property, Plant and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Filters