Question 1

Which of the following statements about goodwill is correct?

Accepted Answer

A)  Goodwill is classified as a current asset. 
B)  Goodwill can be purchased or sold as a separate item. 
C)  Under IFRS 3/AASB 3 goodwill must be amortised. 
D)  Goodwill arises from many factors, such as customer confidence, superior management and a favourable location. 
A)  Goodwill is classified as a current asset. 
B)  Goodwill can be purchased or sold as a separate item. 
C)  Under IFRS 3/AASB 3 goodwill must be amortised. 
D)  Goodwill arises from many factors, such as customer confidence, superior management and a favourable location.

Question 2

An asset's recoverable amount is the:

Accepted Answer

A)  lower of an its fair value and its net realisable value. 
B)  higher of its fair value less costs to sell, and its value in use. 
C)  amount expected to be received from the disposal of the asset. 
D)  amount expected to be recovered from the use of the asset. 
A)  lower of an its fair value and its net realisable value. 
B)  higher of its fair value less costs to sell, and its value in use. 
C)  amount expected to be received from the disposal of the asset. 
D)  amount expected to be recovered from the use of the asset.

Question 3

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

Accepted Answer

A)  DR expense on revaluation of asset; CR asset 
B)  DR asset; CR expense on the revaluation of asset 
C)  DR revaluation surplus reserve; CR asset 
D)  DR asset; CR revaluation surplus reserve 
A)  DR expense on revaluation of asset; CR asset 
B)  DR asset; CR expense on the revaluation of asset 
C)  DR revaluation surplus reserve; CR asset 
D)  DR asset; CR revaluation surplus reserve

Question 4

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)  profit. 
B)  net fair value. 
C)  revaluation surplus. 
D)  purchased goodwill. 
A)  profit. 
B)  net fair value. 
C)  revaluation surplus. 
D)  purchased goodwill.

Question 5

The correct accounting entry to amortise an intangible asset over its useful life is:

Accepted Answer

A)  DR Amortisation expense; CR Asset 
B)  DR Accumulated amortisation; CR Amortisation of asset 
C)  DR Amortisation expense; CR Accumulated depreciation 
D)  DR Amortisation expense; CR Accumulated amortisation 
A)  DR Amortisation expense; CR Asset 
B)  DR Accumulated amortisation; CR Amortisation of asset 
C)  DR Amortisation expense; CR Accumulated depreciation 
D)  DR Amortisation expense; CR Accumulated amortisation

Question 6

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

Accepted Answer

A)  None of the above 
B)  I and III only 
C)  II and III only 
D)  I, II and III 
A)  None of the above 
B)  I and III only 
C)  II and III only 
D)  I, II and III

Question 7

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

Accepted Answer

A)  It is only used for items valued at less than $1000 each. 
B)  A single depreciation rate is applied to the average cost of a functional group of assets. 
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)  It is only used for items valued at less than $1000 each. 
B)  A single depreciation rate is applied to the average cost of a functional group of assets. 
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 8

Which of the following statements relating to the composite-rate depreciation approach is not correct?

Accepted Answer

A)  Composite-rate depreciation always uses the straight-line method of depreciation. 
B)  It is often used in practice by business entities with many similar assets in the one class. 
C)  A single average depreciation rate is applied to the average of the beginning and ending balances of a functional group of assets. 
D)  No gain or loss is recognised on the disposal of individual assets within the composite group. 
A)  Composite-rate depreciation always uses the straight-line method of depreciation. 
B)  It is often used in practice by business entities with many similar assets in the one class. 
C)  A single average depreciation rate is applied to the average of the beginning and ending balances of a functional group of assets. 
D)  No gain or loss is recognised on the disposal of individual assets within the composite group.

Question 9

In accounting standard IAS 16/AASB 116, a downward revaluation is now known as a:

Accepted Answer

A)  revaluation decrement. 
B)  revaluation depletion. 
C)  revaluation increment. 
D)  revaluation decrease. 
A)  revaluation decrement. 
B)  revaluation depletion. 
C)  revaluation increment. 
D)  revaluation decrease.

Question 10

On 31 December 2019 a machine with a cost of $150 000 has accumulated depreciation written off of $90 000. If the machine was sold for $80 000 on 1 January 2020 how much will be recognised to the account "Carrying amount on the disposal of machinery"?

Accepted Answer

A)  $80 000 
B)  $150 000 
C)  $60 000 
D)  $90 000 
A)  $80 000 
B)  $150 000 
C)  $60 000 
D)  $90 000

Question 11

Which of the following are mineral resources?
I. Oil
II. Coal
III. Natural gas
IV. Uranium

Accepted Answer

A)  I and III only 
B)  I, II, III and IV 
C)  II and III only 
D)  I, II and III only 
A)  I and III only 
B)  I, II, III and IV 
C)  II and III only 
D)  I, II and III only

Question 12

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

Accepted Answer

A)  amortised over their legal lives. 
B)  should be amortised over a period not exceeding 10 years. 
C)  should be amortised on a systematic basis over their useful lives. 
D)  should not be amortised but tested each year for impairment. 
A)  amortised over their legal lives. 
B)  should be amortised over a period not exceeding 10 years. 
C)  should be amortised on a systematic basis over their useful lives. 
D)  should not be amortised but tested each year for impairment.

Question 13

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

Accepted Answer

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

Question 14

Which statement relating to revaluations of non-current assets is incorrect?

Accepted Answer

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

Question 15

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

Accepted Answer

A)  replacement value. 
B)  fair value less costs to sell. 
C)  historical cost less costs to sell. 
D)  estimated market value less costs to sell. 
A)  replacement value. 
B)  fair value less costs to sell. 
C)  historical cost less costs to sell. 
D)  estimated market value less costs to sell.

Question 16

What type of account is a revaluation surplus?

Accepted Answer

A)  Income 
B)  Equity 
C)  Asset 
D)  Liability 
A)  Income 
B)  Equity 
C)  Asset 
D)  Liability

Question 17

Which of the following pairs of terms match?
I. Non-current fixed assets and depreciation
II. Natural resources and amortisation
III. Intangible assets and depletion
IV. Land and depreciation

Accepted Answer

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

Question 18

The gain or loss on disposal of a non-current asset is calculated as the difference between:

Accepted Answer

A)  fair value and selling price. 
B)  replacement value and selling price. 
C)  selling price and carrying amount. 
D)  fair market value and accumulated depreciation. 
A)  fair value and selling price. 
B)  replacement value and selling price. 
C)  selling price and carrying amount. 
D)  fair market value and accumulated depreciation.

Question 19

Which of the following is not an example of an intangible asset?
I. Trademark
II. Goodwill
III. Licences
IV. Oil and gas reserves

Accepted Answer

A)  II and III only 
B)  III only 
C)  I, II and IV only 
D)  IV only 
A)  II and III only 
B)  III only 
C)  I, II and IV only 
D)  IV only

Question 20

What is the name given to the higher of an asset's fair value less costs to sell, and its value in use?

Accepted Answer

A)  recoverable amount 
B)  carrying amount 
C)  fair value amount 
D)  written down value 
A)  recoverable amount 
B)  carrying amount 
C)  fair value amount 
D)  written down value

Exam 15: Non-Current Assets: Revaluation, Disposal and Other Aspects

Which of the following statements about goodwill is correct?

An asset's recoverable amount is the:

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

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

The correct accounting entry to amortise an intangible asset over its useful life is:

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

Which of the following statements relating to the composite-rate depreciation approach is not correct?

In accounting standard IAS 16/AASB 116, a downward revaluation is now known as a:

On 31 December 2019 a machine with a cost of $150 000 has accumulated depreciation written off of $90 000. If the machine was sold for $80 000 on 1 January 2020 how much will be recognised to the account "Carrying amount on the disposal of machinery"?

Which of the following are mineral resources? I. Oil II. Coal III. Natural gas IV. Uranium

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

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

Which statement relating to revaluations of non-current assets is incorrect?

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

What type of account is a revaluation surplus?

Which of the following pairs of terms match? I. Non-current fixed assets and depreciation II. Natural resources and amortisation III. Intangible assets and depletion IV. Land and depreciation

The gain or loss on disposal of a non-current asset is calculated as the difference between:

Which of the following is not an example of an intangible asset? I. Trademark II. Goodwill III. Licences IV. Oil and gas reserves

What is the name given to the higher of an asset's fair value less costs to sell, and its value in use?

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

Accounting for Manufacturing

Cost Accounting Systems

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis, Profitability Analysis and Capital Budgeting

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