Question 1

The cost model of accounting for PP&E assets

Accepted Answer

A)  should be applied to investment property only. 
B)  should be applied to other PP&E assets only. 
C)  can be applied to all classes of PP&E including investment property. 
D)  is not appropriate under ASPE. 
A)  should be applied to investment property only. 
B)  should be applied to other PP&E assets only. 
C)  can be applied to all classes of PP&E including investment property. 
D)  is not appropriate under ASPE.

Question 2

When using the revaluation model of accounting for PP&E assets (proportionate method),

Accepted Answer

A)  a Revaluation Surplus account is not used. 
B)  depreciation continues to be charged in the original pattern. 
C)  the asset account and its related contra-asset are both adjusted. 
D)  over the life of the asset, it is possible that there can be a net increase in net income from revaluations. 
A)  a Revaluation Surplus account is not used. 
B)  depreciation continues to be charged in the original pattern. 
C)  the asset account and its related contra-asset are both adjusted. 
D)  over the life of the asset, it is possible that there can be a net increase in net income from revaluations.

Question 3

Under IFRS, biological assets should normally be measured at

Accepted Answer

A)  cost. 
B)  cost less accumulated depreciation. 
C)  fair value. 
D)  fair value less costs to sell. 
A)  cost. 
B)  cost less accumulated depreciation. 
C)  fair value. 
D)  fair value less costs to sell.

Question 4

On January 2, 2020, Neeson Delivery Company traded in an old delivery truck for a newer model. Data relative to the old and new trucks follow: Old Truck
Original cost.....................................................................$9,000
Accumulated depreciation at January 2,2020...................6,000
Fairvalue ...........................................................................3,000
 New Truck
List price..........................................................$\$ 15,000$
Cash price without trade-in..............................14,000
Cash paid with trade-in.....................................11,000 The cost of the new truck for financial accounting purposes is

Accepted Answer

A)  $ 9,000. 
B)  $ 11,000. 
C)  $ 14,000. 
D)  $ 15,000. 
A)  $ 9,000. 
B)  $ 11,000. 
C)  $ 14,000. 
D)  $ 15,000.

Question 5

Costs included in assets
Below is a list of various expenditures that an organization could make. In the columns marked Land, Building, Equipment, and Expensed, indicate by a “+” or “–“ which columns the expenditure would be added to or subtracted from. The first has been done for you as an example.

\[\begin{array} { | l | l | l | l | l | } 
\hline \text { Item } & \text { Land } & \text { Building } & \text { Equipment } & \text { Expensed } \
\hline \text { 0. Construction costs } & & + & & \
\hline \text { 1. Title search } & & & & \
\hline \text { 2. Property transfer tax } & & & & \
\hline \text { 3. Installation of equipment } & & & & \
\hline \text { 4. Soil decontamination costs } & & & & \
\hline \text { 5. Transportation costs of equipment } & & & & \
\hline \text { 6. Labour to construct building } & & & & \
\hline \text { 7. Special foundation for machinery } & & & & \
\hline \text { 8. Damage to machinery while uncrating } & & & & \
\hline \begin{array} { l } 
\text { 9. Proceeds from salvage of old building on } \
\text { land purchased for factory site }
\end{array} & & & & \
\hline \begin{array} { l } 
\text { 10. Property taxes in arrears paid on } \
\text { purchase }
\end{array} & & & & \
\hline \text { 11. Insurance on building after occupancy } & & & & \
\hline \text { 12. Clearing land for factory site } & & & & \
\hline
\end{array}\]

Accepted Answer

The answer of Costs included in assets
Below is a list...

Question 6

When a plant asset is acquired by the issuance of a public company's common shares, the cost of the plant asset is properly measured by the

Accepted Answer

A)  market value of the plant asset. 
B)  original cost of the plant asset. 
C)  book value of the plant asset. 
D)  book value of the shares. 
A)  market value of the plant asset. 
B)  original cost of the plant asset. 
C)  book value of the plant asset. 
D)  book value of the shares.

Question 7

Spock Inc. exchanged merchandise that cost $ 19,000 and normally sold for $ 27,000 for a new delivery truck with a list price of $ 31,000. The delivery truck should be recorded on Spock's books at

Accepted Answer

A)  $ 31,000. 
B)  $ 27,000. 
C)  $ 19,000. 
D)  $ 12,000. 
A)  $ 31,000. 
B)  $ 27,000. 
C)  $ 19,000. 
D)  $ 12,000.

Question 8

The fair value model of accounting for PP&E assets

Accepted Answer

A)  recognizes changes in the asset's fair value in other comprehensive income. 
B)  should be applied to investment property only. 
C)  once chosen for one investment property does not have to be applied to all investment property. 
D)  is acceptable under both IFRS and ASPE. 
A)  recognizes changes in the asset's fair value in other comprehensive income. 
B)  should be applied to investment property only. 
C)  once chosen for one investment property does not have to be applied to all investment property. 
D)  is acceptable under both IFRS and ASPE.

Question 9

Fair value model
In February 2020, Jordan Corp. purchased a vineyard in southern Ontario for $ 7.5 million cash. This amount included legal fees of $ 18,000 and property taxes of $ 40,000 (of that amount, $ 30,000 were in arrears). Based on appraisals, the property's year-end fair values were $ 8.2 million at the end of 2020, and $ 8 million at the end of 2021.
Other information:
1.The vineyard qualifies as investment property.
2.Jordan applies the fair value model to all its investment property.
Instructions
Prepare all required journal entries for 2020 and 2021.

Accepted Answer

The answer of Fair value model
In February 2020, Jordan Corp....

Question 10

Bally Ho Inc. traded one of its used trailers (cost $ 15,000, accumulated depreciation $ 13,500) for another used trailer with a fair value of $ 2,400. Bally Ho also paid $ 300 to complete the transaction. Since the exchange will leave Bally Ho in the same economic position, this transaction lacks commercial substance. What is the gain or loss on the exchange?

Accepted Answer

A)  $ 900 gain 
B)  $ 675 gain 
C)  $ 225 loss 
D)  $ 0 (no gain or loss) 
A)  $ 900 gain 
B)  $ 675 gain 
C)  $ 225 loss 
D)  $ 0 (no gain or loss)

Question 11

The costs of land improvements with limited lives, such as a parking lot, are

Accepted Answer

A)  added to the land account. 
B)  recorded in a separate account. 
C)  depreciated over their useful lives. 
D)  recorded in a separate account and depreciated over their useful lives. 
A)  added to the land account. 
B)  recorded in a separate account. 
C)  depreciated over their useful lives. 
D)  recorded in a separate account and depreciated over their useful lives.

Question 12

Difference between proportionate and asset adjustment methods
Explain the difference between the proportionate and asset adjustment methods of accounting when revaluing an asset.

Accepted Answer

The proportionate approach adjusts both

Question 13

Use the following information to solve the following questions:
Egypt Corp. owns equipment that originally cost $ 100,000. At December 31, 2020, the equipment's book value (after 2020 depreciation was booked) is $ 60,000. It is determined that the fair value of the equipment at this date is $ 90,000. Although Egypt's policy is to apply the revaluation model using the proportionate method, this is the first time the company has done it.
-By how much must the accumulated depreciation account be increased (decreased) at December 31, 2020?

Accepted Answer

A)  $ 20,000 
B)  $ 40,000 
C)  $ 60,000 
D)  $ (60,000) 
A)  $ 20,000 
B)  $ 40,000 
C)  $ 60,000 
D)  $ (60,000)

Question 14

Which of the following statements is correct?

Accepted Answer

A)  IFRS allows the cost, revaluation, or fair value models; ASPE allows only the cost model. 
B)  ASPE allows the cost, revaluation, or fair value models; IFRS allows only the cost model. 
C)  Both IFRS and ASPE allow the cost, revaluation, or fair value models. 
D)  IFRS allows the cost, revaluation, or fair value models; ASPE allows only the cost and revaluation models. 
A)  IFRS allows the cost, revaluation, or fair value models; ASPE allows only the cost model. 
B)  ASPE allows the cost, revaluation, or fair value models; IFRS allows only the cost model. 
C)  Both IFRS and ASPE allow the cost, revaluation, or fair value models. 
D)  IFRS allows the cost, revaluation, or fair value models; ASPE allows only the cost and revaluation models.

Question 15

Upshaw Ltd. bought a lift truck with a list price of $ 30,000. The dealer granted a 10% reduction in the list price, and an additional 2% cash discount on the net price when payment was made in 30 days. Provincial sales tax was $ 1,785 and Upshaw paid an extra $ 350 to have a special horn installed. The recorded cost of the truck should be

Accepted Answer

A)  $ 29,135. 
B)  $ 31,535. 
C)  $ 28,595. 
D)  $ 28,552. 
A)  $ 29,135. 
B)  $ 31,535. 
C)  $ 28,595. 
D)  $ 28,552.

Question 16

When an enterprise is the recipient of a donated asset, the account credited would probably be a(n)

Accepted Answer

A)  equity account. 
B)  revenue account. 
C)  deferred revenue account. 
D)  asset account. 
A)  equity account. 
B)  revenue account. 
C)  deferred revenue account. 
D)  asset account.

Question 17

Borrowing costs that are capitalized should

Accepted Answer

A)  be written off over the remaining term of the debt. 
B)  be accumulated in a separate deferred charge account and written off straight-line over a 40-year period. 
C)  not be written off until the related asset is fully depreciated or disposed of. 
D)  be amortized over the related asset's useful life. 
A)  be written off over the remaining term of the debt. 
B)  be accumulated in a separate deferred charge account and written off straight-line over a 40-year period. 
C)  not be written off until the related asset is fully depreciated or disposed of. 
D)  be amortized over the related asset's useful life.

Question 18

When can the balance in the Revaluation Surplus (OCI) account be transferred to retained earnings?

Accepted Answer

A)  at the end of every year, or when the asset is sold 
B)  whenever a revaluation is performed 
C)  only when the revalued asset is sold 
D)  never 
A)  at the end of every year, or when the asset is sold 
B)  whenever a revaluation is performed 
C)  only when the revalued asset is sold 
D)  never

Question 19

Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is

Accepted Answer

A)  8 ÷ 8. 
B)  8 ÷ 12. 
C)  9 ÷ 12. 
D)  11 ÷ 12. 
A)  8 ÷ 8. 
B)  8 ÷ 12. 
C)  9 ÷ 12. 
D)  11 ÷ 12.

Question 20

Use the following information to solve the following questions: 
On March 1, 2020, Mauritania Ltd. purchased land for $ 270,000 cash, which they intend to use for their new head office. Construction on the office building began on March 1. The following expenditures were incurred for construction:
 $$\begin{array} { l l } 
\text { Date } & \text { Expenditures } \
\text { March } 1,2020 &\$450,000\
\text { April } 1,2020 & \mathbf { 2 5 2 , 0 0 0 } \
\text { May } 1,2020 & 450,000 \
\text { June } 1,2020 & 720,000
\end{array}$$ The office building was completed and ready for occupancy on July 1. To help pay for construction, Mauritania borrowed $ 360,000 on March 1, 2020, on a 9%, three-year note payable. Other than this note, the only other debt outstanding during 2020 was a $ 150,000, 10%, six-year note payable dated January 1, 2019.
-The actual interest cost incurred during 2020 was

Accepted Answer

A)  $ 27,000. 
B)  $ 39,500. 
C)  $ 42,000. 
D)  $ 47,400. 
A)  $ 27,000. 
B)  $ 39,500. 
C)  $ 42,000. 
D)  $ 47,400.

The cost model of accounting for PP&E assets

When using the revaluation model of accounting for PP&E assets (proportionate method),

Under IFRS, biological assets should normally be measured at

When a plant asset is acquired by the issuance of a public company's common shares, the cost of the plant asset is properly measured by the

Spock Inc. exchanged merchandise that cost $ 19,000 and normally sold for $ 27,000 for a new delivery truck with a list price of $ 31,000. The delivery truck should be recorded on Spock's books at

The fair value model of accounting for PP&E assets

The costs of land improvements with limited lives, such as a parking lot, are

Difference between proportionate and asset adjustment methods Explain the difference between the proportionate and asset adjustment methods of accounting when revaluing an asset.

Which of the following statements is correct?

When an enterprise is the recipient of a donated asset, the account credited would probably be a(n)

Borrowing costs that are capitalized should

When can the balance in the Revaluation Surplus (OCI) account be transferred to retained earnings?

Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

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Exam 10: Property, Plant, and Equipment: Accounting Model Basics

The cost model of accounting for PP&E assets

When using the revaluation model of accounting for PP&E assets (proportionate method),

Under IFRS, biological assets should normally be measured at

When a plant asset is acquired by the issuance of a public company's common shares, the cost of the plant asset is properly measured by the

Spock Inc. exchanged merchandise that cost $ 19,000 and normally sold for $ 27,000 for a new delivery truck with a list price of $ 31,000. The delivery truck should be recorded on Spock's books at

The fair value model of accounting for PP&E assets

The costs of land improvements with limited lives, such as a parking lot, are

Difference between proportionate and asset adjustment methods Explain the difference between the proportionate and asset adjustment methods of accounting when revaluing an asset.

Which of the following statements is correct?

When an enterprise is the recipient of a donated asset, the account credited would probably be a(n)

Borrowing costs that are capitalized should

When can the balance in the Revaluation Surplus (OCI) account be transferred to retained earnings?

Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters