Question 1

Distinguish between ownership from control and discuss how this is may affect the definition of an asset.

Accepted Answer

A reporting entity does not have to have

Question 2

Land and buildings may be valued at:

Accepted Answer

A) recoverable amount. 
B) opportunity cost. 
C) fair value. 
D) recoverable amount or fair value. 
A) recoverable amount. 
B) opportunity cost. 
C) fair value. 
D) recoverable amount or fair value.

Question 3

Discuss the recognition rules of assets purchased in one lump-sum payment.

Accepted Answer

Where a number of individual items of pr

Question 4

Using the cost model outlined in IAS 16 to measure property,plant and equipment at acquisition,which of the following costs would not be included?

Accepted Answer

A) directly attributable costs 
B) initial estimates of dismantling and removal costs 
C) 12-month servicing plan 
D) purchase price 
A) directly attributable costs 
B) initial estimates of dismantling and removal costs 
C) 12-month servicing plan 
D) purchase price

Question 5

For an asset to be recognised it is essential that it be acquired by purchase or exchange of another asset.

Accepted Answer

A) True 
 B)False

Question 6

Applying the asset recognition criteria,which of the following accounting treatments are incorrect?

Accepted Answer

A) Transfer duties were included in the cost of acquisition of the photocopier. 
B) Monthly servicing of the photocopier was capitalised. 
C) Monthly servicing of the photocopier was expensed. 
D) Replacement of a minor component part of the photocopier was expensed. 
A) Transfer duties were included in the cost of acquisition of the photocopier. 
B) Monthly servicing of the photocopier was capitalised. 
C) Monthly servicing of the photocopier was expensed. 
D) Replacement of a minor component part of the photocopier was expensed.

Question 7

IAS 1 requires,as a minimum,certain line items to be included on the face of the statement of financial position .Additional line items may be disclosed based on an assessment of:

Accepted Answer

A) the nature and liquidity of assets. 
B) the functions of the assets within the entity. 
C) the amounts, nature and timing of liabilities. 
D) all of the given answers. 
A) the nature and liquidity of assets. 
B) the functions of the assets within the entity. 
C) the amounts, nature and timing of liabilities. 
D) all of the given answers.

Question 8

Mona Lisa is an example of a heritage asset.

Accepted Answer

A) True 
 B)False

Question 9

Certain classes of property,plant and equipment,for example,aircraft,might comprise a number of individual component parts.How does IAS 16 paragraph 43 require these components to be accounted for?

Accepted Answer

A) The components can be measured as one asset. 
B) There is a prescribed unit of measurement for recognition that must be followed. 
C) Only one depreciation rate can be used for the asset. 
D) Each component with a significant cost must be depreciated separately. 
A) The components can be measured as one asset. 
B) There is a prescribed unit of measurement for recognition that must be followed. 
C) Only one depreciation rate can be used for the asset. 
D) Each component with a significant cost must be depreciated separately.

Question 10

If an asset's carrying amount is less than its recoverable amount,the increase in value is recognised as a gain.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following measurement bases are acceptable for property,plant and equipment?

Accepted Answer

A) historical cost 
B) revaluation model 
C) fair value model 
D) historical cost and revaluation model 
A) historical cost 
B) revaluation model 
C) fair value model 
D) historical cost and revaluation model

Question 12

The accountant in preparation for the financial statement for the year 2013 realised an error in the determination of recoverable amounts in last year's financial statements.This error had it been detected in 2012 would have required the recognition of impairment losses amounting to £500 000.To comply with IAS 8 Accounting Policies,Changes in Accounting Estimates and Errors,the accountant should:

Accepted Answer

A) make a prospective change to the 2013 figures, on the basis that he has made an error in 2012. 
B) make a prospective change to the 2013 figures, on the basis that he is making a change to an estimate in 2012. 
C) make a retrospective change to the 2013 figures, on the basis that that this is a change in accounting estimates. 
D) make a retrospective change to the 2013 figures, on the basis that he has made an error in 2012. 
A) make a prospective change to the 2013 figures, on the basis that he has made an error in 2012. 
B) make a prospective change to the 2013 figures, on the basis that he is making a change to an estimate in 2012. 
C) make a retrospective change to the 2013 figures, on the basis that that this is a change in accounting estimates. 
D) make a retrospective change to the 2013 figures, on the basis that he has made an error in 2012.

Question 13

Discuss various measurement rules that can be adopted for measurement of assets.

Accepted Answer

For an asset to be recognised,it is requ

Question 14

The description of 'probable' in the IASB Conceptual Framework means that:

Accepted Answer

A) Assessments of the degree of uncertainty attaching to the flow of economic benefits are made on the basis of evidence. 
B) Assets will be recognised if the expected probability of future benefits arising is less than 50%. 
C) A high degree of professional judgment may be required in preparing accounting reports. 
D) Assessments of the degree of uncertainty and a high degree of professional judgment may be required in preparing accounting reports. 
A) Assessments of the degree of uncertainty attaching to the flow of economic benefits are made on the basis of evidence. 
B) Assets will be recognised if the expected probability of future benefits arising is less than 50%. 
C) A high degree of professional judgment may be required in preparing accounting reports. 
D) Assessments of the degree of uncertainty and a high degree of professional judgment may be required in preparing accounting reports.

Question 15

Financial institutions dealing with investments and other financial instruments prefer which method of measurement for that class of assets?

Accepted Answer

A) historical cost 
B) fair value 
C) present value 
D) net realisable value 
A) historical cost 
B) fair value 
C) present value 
D) net realisable value

Question 16

In a previous period Banshee Plc wrote off its 'dynamic mover' equipment,but new information has shown that it is probable that the future economic benefits exceed its cost of £40 000.What is the appropriate accounting entry?

Accepted Answer

A)  $$\begin{array} { | c | l | l | l | } 
\hline \mathrm { Dr } & \text { Equipment-dynamic mover } & 40000 & \
\hline \mathrm { Cr } & \text { Asset revaluation reserve } & & 40000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Equipment-dynamic mover } & 40000 & \
\hline \mathrm { Cr } & \text { Gain from reversal of previous impairment loss } & & 40000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | l | r | l | } 
\hline \mathrm { Dr } & \text { Write-down of equipment } & 40000 & \
\hline \mathrm { Cr } & \text { Equipment expense } & & 40000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | r | l | } 
\hline \mathrm { Dr } & \text { Equipment-dynamic mover } & 40000 & \
\hline \mathrm { Cr } & \text { Equipment expense } & & 40000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | l | l | l | } 
\hline \mathrm { Dr } & \text { Equipment-dynamic mover } & 40000 & \
\hline \mathrm { Cr } & \text { Asset revaluation reserve } & & 40000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Equipment-dynamic mover } & 40000 & \
\hline \mathrm { Cr } & \text { Gain from reversal of previous impairment loss } & & 40000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | l | r | l | } 
\hline \mathrm { Dr } & \text { Write-down of equipment } & 40000 & \
\hline \mathrm { Cr } & \text { Equipment expense } & & 40000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | r | l | } 
\hline \mathrm { Dr } & \text { Equipment-dynamic mover } & 40000 & \
\hline \mathrm { Cr } & \text { Equipment expense } & & 40000 \
\hline
\end{array}$$

Question 17

IASB 16 states that the cost of property,plant and equipment must include dismantling,removal and site restoration costs.

Accepted Answer

A) True 
 B)False

Question 18

IAS 8 Accounting Policies,Changes in Accounting Estimates and Errors requires material prior period errors to be corrected retrospectively,in the period when the error was discovered.

Accepted Answer

A) True 
 B)False

Question 19

A material prior period error in year ending 2012 was subsequently discovered in 2013.To comply with IAS 8 Accounting Policies,Changes in Accounting Estimates and Errors an entity should:

Accepted Answer

A) reissue the 2012 financial statements with the error corrected. 
B) make a retrospective adjustment in 2012. 
C) make a retrospective adjustment in 2013. 
D) make a prospective adjustment in 2012. 
A) reissue the 2012 financial statements with the error corrected. 
B) make a retrospective adjustment in 2012. 
C) make a retrospective adjustment in 2013. 
D) make a prospective adjustment in 2012.

Question 20

The treatment of repairs and additions to property,plant and equipment can be best described as:

Accepted Answer

A) written off as incurred. 
B) capitalised when it maintains a certain level of service. 
C) capitalised when the asset's estimated useful life is extended. 
D) none of the given answers. 
A) written off as incurred. 
B) capitalised when it maintains a certain level of service. 
C) capitalised when the asset's estimated useful life is extended. 
D) none of the given answers.

Exam 4: An Overview of Accounting for Assets

Distinguish between ownership from control and discuss how this is may affect the definition of an asset.

Land and buildings may be valued at:

Discuss the recognition rules of assets purchased in one lump-sum payment.

Using the cost model outlined in IAS 16 to measure property,plant and equipment at acquisition,which of the following costs would not be included?

For an asset to be recognised it is essential that it be acquired by purchase or exchange of another asset.

Applying the asset recognition criteria,which of the following accounting treatments are incorrect?

IAS 1 requires,as a minimum,certain line items to be included on the face of the statement of financial position .Additional line items may be disclosed based on an assessment of:

Mona Lisa is an example of a heritage asset.

Certain classes of property,plant and equipment,for example,aircraft,might comprise a number of individual component parts.How does IAS 16 paragraph 43 require these components to be accounted for?

If an asset's carrying amount is less than its recoverable amount,the increase in value is recognised as a gain.

Which of the following measurement bases are acceptable for property,plant and equipment?

Discuss various measurement rules that can be adopted for measurement of assets.

The description of 'probable' in the IASB Conceptual Framework means that:

Financial institutions dealing with investments and other financial instruments prefer which method of measurement for that class of assets?

In a previous period Banshee Plc wrote off its 'dynamic mover' equipment,but new information has shown that it is probable that the future economic benefits exceed its cost of £40 000.What is the appropriate accounting entry?

IASB 16 states that the cost of property,plant and equipment must include dismantling,removal and site restoration costs.

IAS 8 Accounting Policies,Changes in Accounting Estimates and Errors requires material prior period errors to be corrected retrospectively,in the period when the error was discovered.

A material prior period error in year ending 2012 was subsequently discovered in 2013.To comply with IAS 8 Accounting Policies,Changes in Accounting Estimates and Errors an entity should:

The treatment of repairs and additions to property,plant and equipment can be best described as:

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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