Exam 13: Property, Plant and Equipment

After an item of Property, plant and equipment has been initially recognised at cost it may be measured using the following measurement method:

Wilson Limited applied the straight-line method of depreciation to its non-current assets. The cost of the buildings was $640 000, the depreciable amount is $560 000, the residual value is $80 000 and the useful life is 8 years. The annual depreciation charge is:

When a company recognises a depreciation credit resulting from a review of the estimated residual value of a depreciable asset, the depreciation debit should be recognised in accumulated depreciation and the depreciation credit should be recognised:

Under AASB 116, the depreciation charge for a period reflects:

Jackson Limited acquired a bundle of assets for a cash consideration of $200 000. The fair values of the assets on date of acquisition was as follows: Building $132 000, Furniture $88 000. The appropriate journal entry to record this acquisition is:

AASB 116 requires disclosure, for each class of property, plant and equipment:

Subsequent to the initial recognition of an asset an entity has a choice on the measurement basis to be adopted. The choice is between:

When an asset is sold the resulting gain or loss is:

Speculator Limited acquired a parcel of land for $50 000. This amount is also the tax base of the land. Two years after acquisition date the building was revalued to $80 000. The tax rate is 30%. The appropriate journal entry to recognise the net effect of the revaluation is:

Replicator Limited acquired an item of Plant with an expected useful life of 5 years. Expected total production output over this period was: Year 1, 35 000 units; Year 2, 35 000 units; Year 3, 18 000 units; Year 4, 12 000 units. The asset cost $ 100 000 and associated installation costs amounted to $20 000 and residual value is $5000. The amount of depreciation charged in the first year is:

Property, plant and equipment are assets that:

The cost of property, plant and equipment is only recognised as an asset if it is probable that the future economic benefits will flow to the entity and if:

Use the following information to answer questions An extract of a company's draft statement of financial position at 30 June 2012 discloses the following: Plant (at cost) \ 500,000 Less Accumulated Depreciation \ 200,000 On 30 June 2013 the company assessed the fair value of the plant to be $350 000. At 30 June 2014, the carrying amount of the Plant was $250 000. The tax rate is 30%. Depreciation rates are 10% p.a. (accounting) and 12.5% p.a. (tax) using the straight-line method. -The journal entries to adjust for the tax effect of the revaluation at 30 June 2013 is:

Revaluations under AASB 116 Property, Plant and Equipment apply to:

A non-current Property, plant and equipment asset is depreciated using the straight-line method. The asset was revalued upwards after four years of use. There is no change in the remaining useful life of six years or to the residual value. Which of the following relationships reflects the effect of the revaluation on the prospective depreciation of the asset? Depreciation Rate Annual depreciation Expense a. Same Higher b. Same Same c. Higher Higher d. Higher Same

For the purposes of recognising a non-current property, plant and equipment asset the acquisition date is determined as the date:

Troubadour Limited had an existing revaluation surplus in respect to an item of Plant that had been derecognised. An appropriate journal entry to transfer the surplus to retained earnings would include:

The cost of an item of property, plant and equipment is only recognised if the cost of the item can be reliably measured and if:

Under the cost model, after initial recognition of a Property, plant and equipment asset the item must be carried at its:

A change in accounting policy from the revaluation model to the cost model requires a retrospective adjustment to the: