Question 1

The basic accounting entry for an initial revaluation decrease of a non-depreciable asset is:

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 A

Question 2

R_________________ amount is the higher of an asset's fair value less selling costs and its value in use.

Accepted Answer

Recoverable

Question 3

The statement about goodwill that is true is:

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

The true statement is:

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 5

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

Question 6

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 7

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 8

The statement that is not correct is:

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 9

Follies Ltd uses composite-rate depreciation rate at 12.5% p.a.for its office equipment.The Office Equipment account had a $16 000 balance of the beginning of the period and a $24 000 balance at the end of the accounting period.The annual charge for depreciation is:

Accepted Answer

A) $2000 
B) $2500 
C) $3000 
D) $5000 
A) $2000 
B) $2500 
C) $3000 
D) $5000

Question 10

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

Accepted Answer

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

Question 11

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

Question 12

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) Selling price and accumulated depreciation 
C) Fair value and selling price 
D) Selling price and carrying amount 
A) Fair market value and accumulated depreciation 
B) Selling price and accumulated depreciation 
C) Fair value and selling price 
D) Selling price and carrying amount

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:

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

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 15

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).The true statement concerning the requirements of IFRS 3/AASB 3 in this situation is:

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 16

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 17

On 31 December 2012 an aeroplane with a cost of $200 000 has accumulated depreciation written off of $90 000.If it is sold for $130 000 on 1 January 2013 what will be the net effect of the sale on the income statement?

Accepted Answer

A) $20 000 profit 
B) $20 000 loss 
C) $70 000 loss 
D) $40 000 profit 
A) $20 000 profit 
B) $20 000 loss 
C) $70 000 loss 
D) $40 000 profit

Question 18

Biological assets are defined in IAS 41/AASB 141 as l___________ animals or plants.

Accepted Answer

The answer of Biological assets are defined in IAS 41/AASB...

Question 19

IAS 16/AASB 116 define f_______ v__________ as the amount for which an asset could be exchanged between knowledgeable,willing parties in an arm's length transaction.

Accepted Answer

The answer of IAS 16/AASB 116 define f_______ v__________ as...

Question 20

Assume that a machine with a cost of $3000 has accumulated depreciation of $1400 on the date of its disposal.If it was traded-in for $2000 on a new machine and the balance of $1500 was paid in cash what is the profit or loss on disposal of the old machine? Ignore GST.

Accepted Answer

A) $1000 loss 
B) $600 gain 
C) $400 gain 
D) $1200 loss 
A) $1000 loss 
B) $600 gain 
C) $400 gain 
D) $1200 loss

Exam 21: Non-Current Assets: Revaluation,disposal and Other Aspects

The basic accounting entry for an initial revaluation decrease of a non-depreciable asset is:

R_________________ amount is the higher of an asset's fair value less selling costs and its value in use.

The statement about goodwill that is true is:

The true statement is:

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

Intangible assets may be further classified as:

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:

The statement that is not correct is:

Follies Ltd uses composite-rate depreciation rate at 12.5% p.a.for its office equipment.The Office Equipment account had a $16 000 balance of the beginning of the period and a $24 000 balance at the end of the accounting period.The annual charge for depreciation is:

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

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

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

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

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).The true statement concerning the requirements of IFRS 3/AASB 3 in this situation is:

According to IFRS 3/AASB 3 purchased goodwill:

On 31 December 2012 an aeroplane with a cost of $200 000 has accumulated depreciation written off of $90 000.If it is sold for $130 000 on 1 January 2013 what will be the net effect of the sale on the income statement?

Biological assets are defined in IAS 41/AASB 141 as l___________ animals or plants.

IAS 16/AASB 116 define f_______ v__________ as the amount for which an asset could be exchanged between knowledgeable,willing parties in an arm's length transaction.

Assume that a machine with a cost of $3000 has accumulated depreciation of $1400 on the date of its disposal.If it was traded-in for $2000 on a new machine and the balance of $1500 was paid in cash what is the profit or loss on disposal of the old machine? Ignore GST.

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

Accounting for Retailing

Accounting for Systems

Accounting for Manufacturing

Cost Accounting Systems

Cash Management and Internal Control

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis,profitability Analysis and Capital Budgeting

Partnerships: Formation,operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Liabilities

Presentation of Financial Statements

Liabilities

Analysis and Interpretation of Financial Statements

Filters

IAS 16/AASB 116 define f_ v____ as the amount for which an asset could be exchanged between knowledgeable,willing parties in an arm's length transaction.