Question 1

According to IAS 38/AASB 138 intangible assets that have been established to have finite useful lives:

Accepted Answer

A) should be amortised on a systematic basis over their useful lives 
B) amortised over their legal lives 
C) should not be amortised but tested each year for impairment 
D) should be amortised over a period not exceeding 20 years 
A) should be amortised on a systematic basis over their useful lives 
B) amortised over their legal lives 
C) should not be amortised but tested each year for impairment 
D) should be amortised over a period not exceeding 20 years

Question 2

The statement relating to revaluations of non-current assets that is not true is:

Accepted Answer

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

Question 3

Rachel's Gymnasium purchased some new gym equipment trading in old equipment with a carrying amount of $5 000.Cash of $9 000 was paid to the supplier and a trade-in allowance of $3 000 was granted.The new equipment should be recorded at:

Accepted Answer

A) $14 000 
B) $12 000 
C) $9 000 
D) $6 000 
A) $14 000 
B) $12 000 
C) $9 000 
D) $6 000

Question 4

The balance sheet of Marty Ltd at 31 December 2012 showed: 1.
$\begin{array}{ll}&\$\
\text {Equipment } & 50,000 \
\text { Accumulated Depreciation-Plant } & 35,000\&15,000
\end{array}$ On 1 January 2013 the equipment was sold for $10 000.The accounting entry to record the receipt of the proceeds from the sale of the equipment is:

Accepted Answer

A) Debit bank $10 000; credit proceeds from sale of equipment $10 000 
B) Debit bank $15 000; credit proceeds from sale of equipment $15 000 
C) Debit bank $10,000; credit equipment $10 000 
D) Debit bank $5 000; credit proceeds from sale of equipment $5 000 
A) Debit bank $10 000; credit proceeds from sale of equipment $10 000 
B) Debit bank $15 000; credit proceeds from sale of equipment $15 000 
C) Debit bank $10,000; credit equipment $10 000 
D) Debit bank $5 000; credit proceeds from sale of equipment $5 000

Question 5

G_____________ is defined in IFRS 3/AASB 3 as the 'future economic benefits arising from assets that are not capable of being individually identified and separately recognised'.

Accepted Answer

The answer of G_____________ is defined in IFRS 3/AASB 3...

Question 6

On 31 December 2012 HiRise Ltd's balance sheet shows motor vehicles at a cost price of $200,000 less accumulated depreciation $50,000.HiRise Ltd uses the cost model to value its assets.On 31 December 2012 an estimate is made that the recoverable amount of the vehicles is $120,000.Under IAS 36/AASB 136 the accounting entry to record the write down of the motor vehicles to recoverable amount is:

Accepted Answer

A) Dr.Impairment loss on motor vehicles expense $80,000; cr.Accumulated Depreciation $80,000 
B) Dr.Impairment loss on motor vehicles expense$30,000; cr.Motor Vehicles $30,000 
C) Dr.Impairment loss on motor vehicles expense $30,000; cr.Accumulated Depreciation and Impairment losses $30,000 
D) No entry is required 
A) Dr.Impairment loss on motor vehicles expense $80,000; cr.Accumulated Depreciation $80,000 
B) Dr.Impairment loss on motor vehicles expense$30,000; cr.Motor Vehicles $30,000 
C) Dr.Impairment loss on motor vehicles expense $30,000; cr.Accumulated Depreciation and Impairment losses $30,000 
D) No entry is required

Question 7

Any impairment of goodwill under IAS 36/AASB 136 is recognised as an e__________.

Accepted Answer

The answer of Any impairment of goodwill under IAS 36/AASB...

Question 8

Patents,brand names,franchises and goodwill are all examples of i________________ assets.

Accepted Answer

The answer of Patents,brand names,franchises and goodwill are all examples...

Question 9

The balance sheet of Brown Ltd at 31 December 2012 shows the following: $\begin{array}{ll}&\$\
\text { Plant } & 50,000 \
\text { Accumulated Depreciation-Plant } & 30,000\&20,000
\end{array}$ On 1 January 2013,based on a valuer's estimate of fair value,it was decided to revalue the plant to $35 000.The plant was then assessed to have a further useful life of 3 years and an expected residual amount of $5000.The journal entry in the books of Brown Ltd to record depreciation on plant on a straight-line basis for the half-year ending 30 June 2013 balance date)is: a. Depreciation Expense-Plant$\quad$10,000
$\quad$Accumulated Depreciation-Plant$\quad$10,000
b. Depreciation Expense-Plant$\quad$5,000
$\quad$Accumulated Depreciation-Plant$\quad$5,000
c. Accumulated Depreciation-Plant$\quad$5,000
$\quad$Depreciation Expense-Plant$\quad$5,000
d. Depreciation Expense-Plant$\quad$7,500
$\quad$Accumulated Depreciation-Plant$\quad$7,500

Accepted Answer

The answer of The balance sheet of Brown Ltd at...

Question 10

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 11

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 fair value
.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 12

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 13

The balance sheet of Marty Ltd at 31 December 2012 showed: 1.
$\begin{array}{ll}&\$\
\text {Equipment } & 50,000 \
\text { Accumulated Depreciation-Plant } & 35,000\&15,000
\end{array}$ On 1 January 2013 the equipment was sold for $10 000.The accounting entry to record the closing of the equipment and the accumulated depreciation of equipment accounts is:

Accepted Answer

A) Debit accumulated depreciation equipment $35 000,credit equipment $35 000 
B) Debit accumulated depreciation equipment $35 000,debit carrying amount of equipment $15 000; credit equipment $50 000 
C) Debit bank $10 000,credit carrying amount of equipment $10 000 
D) Debit accumulated depreciation equipment $15 000,credit equipment $15 000 
A) Debit accumulated depreciation equipment $35 000,credit equipment $35 000 
B) Debit accumulated depreciation equipment $35 000,debit carrying amount of equipment $15 000; credit equipment $50 000 
C) Debit bank $10 000,credit carrying amount of equipment $10 000 
D) Debit accumulated depreciation equipment $15 000,credit equipment $15 000

Question 14

When an old asset is used as part-payment on a new asset the old asset is said to be t__________-_______.

Accepted Answer

traded-in

Question 15

Under IAS 41/AASB 141 the basis for measuring biological assets is:

Accepted Answer

A) Historical cost 
B) Fair value less estimated point-of-sale costs 
C) Replacement value 
D) Estimated market value less estimated point-of-sale costs 
A) Historical cost 
B) Fair value less estimated point-of-sale costs 
C) Replacement value 
D) Estimated market value less estimated point-of-sale costs

Question 16

On 1 June 2012 S Company acquired for $145,000 cash the business of G Inc.The carrying amount of G Inc's net assets at the time of the acquisition was $110 000 while independent valuers calculated their fair value at $130 000.S Company should debit 'Goodwill' for the amount of:

Accepted Answer

A) $0 
B) $15 000 
C) $20 000 
D) $35 000 
A) $0 
B) $15 000 
C) $20 000 
D) $35 000

Question 17

The statement relating to the composite-rate depreciation approach that is not true is:

Accepted Answer

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

Question 18

Recoverable amount is:

Accepted Answer

A) The higher of an asset's fair value less costs to sell,and its value in use 
B) The amount expected to be received from the disposal of the asset 
C) The amount expected to be recovered from the use of the asset 
D) The trade-in or expected amount to be received from the disposal of the asset 
A) The higher of an asset's fair value less costs to sell,and its value in use 
B) The amount expected to be received from the disposal of the asset 
C) The amount expected to be recovered from the use of the asset 
D) The trade-in or expected amount to be received from the disposal of the asset

Question 19

The cost or revalued amount of a non-current asset less accumulated depreciation or amortisation is known as its c______________ amount.

Accepted Answer

The answer of The cost or revalued amount of a...

Question 20

Under IAS 38/AASB 138 the statement concerning internally generated intangible assets that is nottrue is:

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

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

According to IAS 38/AASB 138 intangible assets that have been established to have finite useful lives:

The statement relating to revaluations of non-current assets that is not true is:

Rachel's Gymnasium purchased some new gym equipment trading in old equipment with a carrying amount of $5 000.Cash of $9 000 was paid to the supplier and a trade-in allowance of $3 000 was granted.The new equipment should be recorded at:

The balance sheet of Marty Ltd at 31 December 2012 showed: 1. \ Equipment 50,000 Accumulated Depreciation-Plant 35,000 15,000 On 1 January 2013 the equipment was sold for $10 000.The accounting entry to record the receipt of the proceeds from the sale of the equipment is:

G_____________ is defined in IFRS 3/AASB 3 as the 'future economic benefits arising from assets that are not capable of being individually identified and separately recognised'.

Any impairment of goodwill under IAS 36/AASB 136 is recognised as an e__________.

Patents,brand names,franchises and goodwill are all examples of i________________ assets.

Accounting standard IAS 16/AASB 116:

Which statement concerning patents is true?

The balance sheet of Marty Ltd at 31 December 2012 showed: 1. \ Equipment 50,000 Accumulated Depreciation-Plant 35,000 15,000 On 1 January 2013 the equipment was sold for $10 000.The accounting entry to record the closing of the equipment and the accumulated depreciation of equipment accounts is:

When an old asset is used as part-payment on a new asset the old asset is said to be t__________-_______.

Under IAS 41/AASB 141 the basis for measuring biological assets is:

On 1 June 2012 S Company acquired for $145,000 cash the business of G Inc.The carrying amount of G Inc's net assets at the time of the acquisition was $110 000 while independent valuers calculated their fair value at $130 000.S Company should debit 'Goodwill' for the amount of:

The statement relating to the composite-rate depreciation approach that is not true is:

Recoverable amount is:

The cost or revalued amount of a non-current asset less accumulated depreciation or amortisation is known as its c______________ amount.

Under IAS 38/AASB 138 the statement concerning internally generated intangible assets that is nottrue is:

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

When an old asset is used as part-payment on a new asset the old asset is said to be t____-_.