Question 1

Which one of the following is a major argument against the recognition of heritage assets in financial terms?

Accepted Answer

A)  Heritage assets generate positive cash inflows. 
B)  Heritage assets generate negative cash out flows. 
C)  Heritage assets are cost neutral. 
D)  None of the given answers are correct. 
A)  Heritage assets generate positive cash inflows. 
B)  Heritage assets generate negative cash out flows. 
C)  Heritage assets are cost neutral. 
D)  None of the given answers are correct. B

Question 2

In accordance with AASB 141 Agriculture,biological assets may be classified as part of property,plant and equipment in the statement of financial position.

Accepted Answer

A) True 
 B)False  False

Question 3

Methods that have been used to provide a valuation of heritage assets include:

Accepted Answer

A)  contingent-valuation method and the nominal or notional value. 
B)  travel-cost method and adjusting the market values of nearby privately held properties. 
C)  the net present value of the adjusted cash-flow method and the arbitrary allocation of cost method. 
D)  contingent-valuation method and the nominal or notional value and travel-cost method and adjusting the market values of nearby privately held properties. 
A)  contingent-valuation method and the nominal or notional value. 
B)  travel-cost method and adjusting the market values of nearby privately held properties. 
C)  the net present value of the adjusted cash-flow method and the arbitrary allocation of cost method. 
D)  contingent-valuation method and the nominal or notional value and travel-cost method and adjusting the market values of nearby privately held properties. D

Question 4

Discuss how biological assets should be presented in the statement of financial position that is in accordance with AASB 141.

Accepted Answer

According to AASB 141, biological assets

Question 5

When valuing assets,the travel-cost method (TCM)uses the costs incurred by individuals travelling to a particular location plus:

Accepted Answer

A)  the opportunity cost of leisure alternatives forgone. 
B)  opportunity costs of wages forgone. 
C)  average costs of all trips made by the traveller. 
D)  none of the given answers. 
A)  the opportunity cost of leisure alternatives forgone. 
B)  opportunity costs of wages forgone. 
C)  average costs of all trips made by the traveller. 
D)  none of the given answers.

Question 6

According to AAS 29 government departments should put a financial value on their heritage assets for the purpose of disclosure in general-purpose financial reports.

Accepted Answer

A) True 
 B)False

Question 7

Nerang Orange Farms Ltd has orange trees that on 30 June 2012 had a fair value of $1 600 000.On 30 April 2013,oranges with an estimated market value of $300 000 were picked.The costs of picking,sorting and packing paid in cash amount to $150 000.The oranges were sold on the same day for $310 000.An independent valuation on 30 June 2013 reports that the estimated fair value of the orange trees is $1 500 000.What is the journal entry to recognise the harvest of oranges on 30 April 2013?

Accepted Answer

A) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Inventory—oranges } & \$ 310000 & \
\hline \mathrm { Cr } & \text { Revenue-harvest of oranges } & & \$ 310000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Inventory-oranges } & \$ 300000 & \
\hline \mathrm { Cr } & \text { Revenue-harvest of oranges } & & \$ 150000 \
\hline \mathrm { CR } & \text { Cash } & & \$ 150000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Inventory–oranges } & \$ 310000 & \
\hline \mathrm { Cr } & \text { Orange farm (asset) } & & \$ 310000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Orange farm (asset) } & \$ 300000 & \
\hline \mathrm { Cr } & \text { Revenue-harvest of oranges } & & \$ 150000 \
\hline \mathrm { CR } & \text { Cash } & & \$ 150000 \
\hline
\end{array}$$ 
A) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Inventory—oranges } & \$ 310000 & \
\hline \mathrm { Cr } & \text { Revenue-harvest of oranges } & & \$ 310000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Inventory-oranges } & \$ 300000 & \
\hline \mathrm { Cr } & \text { Revenue-harvest of oranges } & & \$ 150000 \
\hline \mathrm { CR } & \text { Cash } & & \$ 150000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Inventory–oranges } & \$ 310000 & \
\hline \mathrm { Cr } & \text { Orange farm (asset) } & & \$ 310000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Orange farm (asset) } & \$ 300000 & \
\hline \mathrm { Cr } & \text { Revenue-harvest of oranges } & & \$ 150000 \
\hline \mathrm { CR } & \text { Cash } & & \$ 150000 \
\hline
\end{array}$$

Question 8

Which of the following statements is correct with respect to accounting for biological assets as required in AASB 141?

Accepted Answer

A)  A biological asset may initially be recognised at cost when market-determined prices or value are not available and for which alternative estimates of fair value are not available. 
B)  If a biological asset is initially recognised at cost it should be measured at cost less any accumulated depreciation. 
C)  A biological asset that was initially recognised at fair value less point-of-sale costs may subsequently be recognised at cost when fair value less point-of-sale costs is no longer available. 
D)  A biological asset may initially be recognised at recoverable amount. 
A)  A biological asset may initially be recognised at cost when market-determined prices or value are not available and for which alternative estimates of fair value are not available. 
B)  If a biological asset is initially recognised at cost it should be measured at cost less any accumulated depreciation. 
C)  A biological asset that was initially recognised at fair value less point-of-sale costs may subsequently be recognised at cost when fair value less point-of-sale costs is no longer available. 
D)  A biological asset may initially be recognised at recoverable amount.

Question 9

Parker (1996)has identified a number of quantitative and qualitative performance indicators that he argues provide a broader scope of accountability for managers of heritage assets in museums.The indicators he has proposed include:

Accepted Answer

A)  the quality of experience of visitors. 
B)  the uses made of collections. 
C)  the number of visitors. 
D)  all of the given answers. 
A)  the quality of experience of visitors. 
B)  the uses made of collections. 
C)  the number of visitors. 
D)  all of the given answers.

Question 10

Nerang Orange Farms Ltd has orange trees that on 30 June 2012 had a fair value of $1 600 000.On 30 April 2013 oranges with an estimated market value of $300 000 were picked.The costs of picking,sorting and packing paid in cash amount to $150 000.The oranges were sold on the same day for $310 000.An independent valuation on 30 June 2013 reports that the estimated fair value of the orange trees is $1 500 000. What is the net profit of Nerang Orange Farms Ltd for the year ending 30 June 2013 to conform with the provisions of AASB 141 Agriculture?

Accepted Answer

A)  $60 000 
B)  $210 000 
C)  $300 000 
D)  $310 000 
A)  $60 000 
B)  $210 000 
C)  $300 000 
D)  $310 000

Question 11

Which of the following items would not be covered by AASB 141?

Accepted Answer

A)  dairy cattle 
B)  wine 
C)  vines 
D)  fruit trees 
A)  dairy cattle 
B)  wine 
C)  vines 
D)  fruit trees

Question 12

Which of the following statements is a valid argument for not recognising heritage assets in the statement of financial position?

Accepted Answer

A)  Heritage assets provide economic benefits. 
B)  The identity of the party that ultimately controls the heritage asset is not clear. 
C)  The benefits derived from use of heritage assets are measured reliably. 
D)  Demand for financial information on heritage assets has been clearly established. 
A)  Heritage assets provide economic benefits. 
B)  The identity of the party that ultimately controls the heritage asset is not clear. 
C)  The benefits derived from use of heritage assets are measured reliably. 
D)  Demand for financial information on heritage assets has been clearly established.

Question 13

AASB 141 requires biological assets to be separately classified between 'plant' and 'animals'.

Accepted Answer

A) True 
 B)False

Question 14

AASB 141 states that where no active market exists fair value may be determined by:

Accepted Answer

A)  the most recent market transaction price, irrespective of any changes to economic conditions. 
B)  market prices for similar assets without adjustments to reflect differences. 
C)  sector benchmarks expressed in relevant units for that type of asset. 
D)  using net present values calculated at the current-market determined post-tax rate. 
A)  the most recent market transaction price, irrespective of any changes to economic conditions. 
B)  market prices for similar assets without adjustments to reflect differences. 
C)  sector benchmarks expressed in relevant units for that type of asset. 
D)  using net present values calculated at the current-market determined post-tax rate.

Question 15

One approach to revenue recognition proposed for biological assets is to recognise volume changes as revenue or expense but to treat price changes as an adjustment to equity through a reserve.Arguments that support this approach include:

Accepted Answer

A)  Price changes have not been realised and so should not be recognised in the statement of comprehensive income. 
B)  Treating price changes as a non-distributable reserve protects the operating capability of the entity. 
C)  The biological development of a self-generating and regenerating asset is clearly distinguishable and separately measurable from changes in price. 
D)  The treatment should be equivalent to that used in other reporting standards such as AAS 25 Financial Reporting by Superannuation Funds. 
A)  Price changes have not been realised and so should not be recognised in the statement of comprehensive income. 
B)  Treating price changes as a non-distributable reserve protects the operating capability of the entity. 
C)  The biological development of a self-generating and regenerating asset is clearly distinguishable and separately measurable from changes in price. 
D)  The treatment should be equivalent to that used in other reporting standards such as AAS 25 Financial Reporting by Superannuation Funds.

Question 16

Contingent valuation of heritage will not be effective unless:

Accepted Answer

A)  an accurate description of the item to be valued is given. 
B)  a sample of the society that knows the true value of the asset is chosen. 
C)  the asset to be valued is available for the public to view. 
D)  the asset can actually be purchased in an open market. 
A)  an accurate description of the item to be valued is given. 
B)  a sample of the society that knows the true value of the asset is chosen. 
C)  the asset to be valued is available for the public to view. 
D)  the asset can actually be purchased in an open market.

Question 17

Measuring the value of heritage assets to be reported in the statement of financial position raises difficulties because:

Accepted Answer

A)  While reliable valuations may be made, the cost of maintaining and improving the value of the assets is so high that the capitalisation of these amounts often distorts the valuations. 
B)  The cost of heritage assets is the most reliable measure, but because heritage assets may be very old their carrying value will often be zero under the requirements of AAS 29. 
C)  Obtaining a reliable valuation for heritage assets is problematic because there will generally be no sales or purchases and no valid market comparison to use. 
D)  The cost of obtaining detailed valuations by experts in the area of the specific type of heritage asset is prohibitive for most government departments. 
A)  While reliable valuations may be made, the cost of maintaining and improving the value of the assets is so high that the capitalisation of these amounts often distorts the valuations. 
B)  The cost of heritage assets is the most reliable measure, but because heritage assets may be very old their carrying value will often be zero under the requirements of AAS 29. 
C)  Obtaining a reliable valuation for heritage assets is problematic because there will generally be no sales or purchases and no valid market comparison to use. 
D)  The cost of obtaining detailed valuations by experts in the area of the specific type of heritage asset is prohibitive for most government departments.

Question 18

Unlike heritage assets,there has always been very clear guidance on the treatment of biological assets given their importance in Australia.

Accepted Answer

A) True 
 B)False

Question 19

Examine whether heritage assets satisfy the definition of assets under AASB framework.

Accepted Answer

Heritage assets are non-financial assets

Question 20

Biological assets may be difficult to classify as current or non-current because:

Accepted Answer

A)  The asset may unexpectedly become ill or die. 
B)  The value of the asset may change depending on management's intention. 
C)  The operating cycle of the entity may be unknown. 
D)  The same physical assets may have either a shorter or longer life span depending on management intention. 
A)  The asset may unexpectedly become ill or die. 
B)  The value of the asset may change depending on management's intention. 
C)  The operating cycle of the entity may be unknown. 
D)  The same physical assets may have either a shorter or longer life span depending on management intention.

Exam 9: Accounting for Heritage Assets and Biological Assets

Which one of the following is a major argument against the recognition of heritage assets in financial terms?

In accordance with AASB 141 Agriculture,biological assets may be classified as part of property,plant and equipment in the statement of financial position.

Methods that have been used to provide a valuation of heritage assets include:

Discuss how biological assets should be presented in the statement of financial position that is in accordance with AASB 141.

When valuing assets,the travel-cost method (TCM)uses the costs incurred by individuals travelling to a particular location plus:

According to AAS 29 government departments should put a financial value on their heritage assets for the purpose of disclosure in general-purpose financial reports.

Which of the following statements is correct with respect to accounting for biological assets as required in AASB 141?

Parker (1996)has identified a number of quantitative and qualitative performance indicators that he argues provide a broader scope of accountability for managers of heritage assets in museums.The indicators he has proposed include:

Which of the following items would not be covered by AASB 141?

Which of the following statements is a valid argument for not recognising heritage assets in the statement of financial position?

AASB 141 requires biological assets to be separately classified between 'plant' and 'animals'.

AASB 141 states that where no active market exists fair value may be determined by:

One approach to revenue recognition proposed for biological assets is to recognise volume changes as revenue or expense but to treat price changes as an adjustment to equity through a reserve.Arguments that support this approach include:

Contingent valuation of heritage will not be effective unless:

Measuring the value of heritage assets to be reported in the statement of financial position raises difficulties because:

Unlike heritage assets,there has always been very clear guidance on the treatment of biological assets given their importance in Australia.

Examine whether heritage assets satisfy the definition of assets under AASB framework.

Biological assets may be difficult to classify as current or non-current because:

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Accounting

An Overview of Accounting for Assets

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

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Share-Based Payments

Accounting for Income Taxes

The Statement of Cash Flows

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Events Occurring After the End of the Reporting Period

Segment Reporting

Related Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues IV: Accounting for Changes in the Degree of Ownership of a Subsidiary

Accounting for Equity Investments,including Investments in Associates and Joint Arrangements

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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