Question 1

Property, plant and equipment includes items that are:

Accepted Answer

A)  intangible 
B)  held for resale 
C)  expected to be used up during the current period 
D)  held for rental to others. 
A)  intangible 
B)  held for resale 
C)  expected to be used up during the current period 
D)  held for rental to others.

Question 2

Depreciation is a process that is designed to:

Accepted Answer

A)  reduce the carrying amount of an asset to reflect the diminishing fair value of the asset; 
B)  spread the cost of an asset across a period no greater than 5 years; 
C)  reflect the change in value of an asset as a result of obsolescence; 
D)  allocate the cost of an asset across its useful life to an entity. 
A)  reduce the carrying amount of an asset to reflect the diminishing fair value of the asset; 
B)  spread the cost of an asset across a period no greater than 5 years; 
C)  reflect the change in value of an asset as a result of obsolescence; 
D)  allocate the cost of an asset across its useful life to an entity.

Question 3

An entity acquired an item of Plant in exchange for an item of Equipment. The Equipment has a carrying value of $5000 and a fair value of $6000. The journal entry to record the acquisition of the Plant will show:

Accepted Answer

A)  a loss on acquisition of $1000; 
B)  proceeds on sale of Equipment of $1000; 
C)  a gain on sale of $1000; 
D)  proceeds on sale of Plant of $1000. 
A)  a loss on acquisition of $1000; 
B)  proceeds on sale of Equipment of $1000; 
C)  a gain on sale of $1000; 
D)  proceeds on sale of Plant of $1000.

Question 4

ABC Limited acquired an item of plant on 1 July 2012 for $80 000. The estimated useful life of the plant at acquisition date was 5 years and the residual value $5000. The company sold the plant on 1 January 2016 for $30 000. The journal entry to reflect the sale is:

Accepted Answer

A)  $\begin{array}{lll}
\text { DR Cash } & \$ 30000 & \
\text { DR Accumulated depreciation } & \$ 56000 & \
\text { CR Plant } & & \$ 80000 \
\text { CR Gain on sale } & & \$ 6000
\end{array}$ 
B) $\begin{array} { l l l } 
\text { DR Cash } & \$ 30000 & \
\text { CR Proceeds on sale } & & \$ 30000 \
\text { DR Carrying amount of plant } & \$ 27500 & \
\text { CR Plant } & & \$ 27500
\end{array}$ 
C)  $\begin{array} { l r } \text { DR Cash } & \$ 30,000 \ \text { DR Loss on sale } & \$ 2500\\text { CR Plant }&\$32,500 \end{array}$ 
D)  $\begin{array} { l r r } 
\text { DR Cash } & \$ 30,000 & \
\text { DR Accumulated depreciation } & \$ 52,500 & \
\text { CR Plant } & \$ 80,000 \
\text { CR Gain on sale } & \$ 2500
\end{array}$ 
A)  $\begin{array}{lll}
\text { DR Cash } & \$ 30000 & \
\text { DR Accumulated depreciation } & \$ 56000 & \
\text { CR Plant } & & \$ 80000 \
\text { CR Gain on sale } & & \$ 6000
\end{array}$ 
B) $\begin{array} { l l l } 
\text { DR Cash } & \$ 30000 & \
\text { CR Proceeds on sale } & & \$ 30000 \
\text { DR Carrying amount of plant } & \$ 27500 & \
\text { CR Plant } & & \$ 27500
\end{array}$ 
C)  $\begin{array} { l r } \text { DR Cash } & \$ 30,000 \ \text { DR Loss on sale } & \$ 2500\\text { CR Plant }&\$32,500 \end{array}$ 
D)  $\begin{array} { l r r } 
\text { DR Cash } & \$ 30,000 & \
\text { DR Accumulated depreciation } & \$ 52,500 & \
\text { CR Plant } & \$ 80,000 \
\text { CR Gain on sale } & \$ 2500
\end{array}$

Question 5

When applying a revaluation measurement model to assets, the model:

Accepted Answer

A)  applies to the entire class of non-current assets; 
B)  may only be applied to current assets; 
C)  is applied permanently and may not be changed; 
D)  is applied to individual assets within a class of non-current assets. 
A)  applies to the entire class of non-current assets; 
B)  may only be applied to current assets; 
C)  is applied permanently and may not be changed; 
D)  is applied to individual assets within a class of non-current assets.

Question 6

Which of the following statements is NOT correct in relation to disclosure of property, plant & equipment balances?

Accepted Answer

A)  Paragraph 79 of IAS 16 contains disclosure that are encouraged, but not required in relation to property, plant & equipment. 
B)  An entity must disclose the useful life estimates for each class of assets. 
C)  A summary of movements in the revaluation surplus is required to be disclosed. 
D)  Information on assets carried at revalued amounts must be disclosed on an individual asset basis. 
A)  Paragraph 79 of IAS 16 contains disclosure that are encouraged, but not required in relation to property, plant & equipment. 
B)  An entity must disclose the useful life estimates for each class of assets. 
C)  A summary of movements in the revaluation surplus is required to be disclosed. 
D)  Information on assets carried at revalued amounts must be disclosed on an individual asset basis.

Question 7

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:
$\begin{array} { l r r } 
\text { Plant (at cost) } & \$ 500,000 & \
\text { Less Accumulated Depreciation } & \underline { 300,000 } & \$ 200,000
\end{array}$

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 necessary to record the revaluation of plant (ignoring any tax effect) at 30 June 2013 in accordance with IAS 16 Property, Plant and Equipment is:

Accepted Answer

A) $\begin{array}{llll}
\text { Accumulated depreciation - Plant } & \mathrm{Dr} & 300,000 & \
\text { Plant } & \mathrm{Cr} & 300,000\\
\text { Plant } & \mathrm{Dr} & 150,000 & \
\quad \text { Gain on revaluation - OCI } & \mathrm{Cr} &  150,000
\end{array}$ 
B) $\begin{array} { l l l l } 
\text { Plant } & \mathrm { Dr } & 150,000 & \
\text { Gain on revaluation - OCI } & \mathrm { Cr } & 150,000
\end{array}$ 
C) $\begin{array} { c l l l } 
\text { Gain on revaluation - OCI } & \mathrm { Dr } & 150,000 & \
\text { Asset revaluation surplus } & \mathrm { Cr } & & 150,000
\end{array}$ 
D) $\begin{array} { l l l l } 
\text { Plant } & \mathrm { Dr } & 150,000 & \
\text { Gain on revaluation - OCI } & \mathrm { Dr } & 150,000 & \
\text { Accumulated depreciation - Plant } & \mathrm { Cr } & & 300,000
\end{array}$ 
A) $\begin{array}{llll}
\text { Accumulated depreciation - Plant } & \mathrm{Dr} & 300,000 & \
\text { Plant } & \mathrm{Cr} & 300,000\\
\text { Plant } & \mathrm{Dr} & 150,000 & \
\quad \text { Gain on revaluation - OCI } & \mathrm{Cr} &  150,000
\end{array}$ 
B) $\begin{array} { l l l l } 
\text { Plant } & \mathrm { Dr } & 150,000 & \
\text { Gain on revaluation - OCI } & \mathrm { Cr } & 150,000
\end{array}$ 
C) $\begin{array} { c l l l } 
\text { Gain on revaluation - OCI } & \mathrm { Dr } & 150,000 & \
\text { Asset revaluation surplus } & \mathrm { Cr } & & 150,000
\end{array}$ 
D) $\begin{array} { l l l l } 
\text { Plant } & \mathrm { Dr } & 150,000 & \
\text { Gain on revaluation - OCI } & \mathrm { Dr } & 150,000 & \
\text { Accumulated depreciation - Plant } & \mathrm { Cr } & & 300,000
\end{array}$

Property, plant and equipment includes items that are:

Depreciation is a process that is designed to:

An entity acquired an item of Plant in exchange for an item of Equipment. The Equipment has a carrying value of $5000 and a fair value of $6000. The journal entry to record the acquisition of the Plant will show:

ABC Limited acquired an item of plant on 1 July 2012 for $80 000. The estimated useful life of the plant at acquisition date was 5 years and the residual value $5000. The company sold the plant on 1 January 2016 for $30 000. The journal entry to reflect the sale is:

When applying a revaluation measurement model to assets, the model:

Which of the following statements is NOT correct in relation to disclosure of property, plant & equipment balances?

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Shareholders Equity: Share Capital and Reserves

Fair Value Measurement

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Translation of the Financial Statements of Foreign Entities

Employee Benefits

Inventories

Leases

Understanding Australian Accounting Standards

Impairment of Assets

Accounting for Mineral Resources

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Business Combinations

Consolidation: Principles and Accounting Requirements

Consolidation: Intragroup Transactions

Consolidation: Non Controlling Interest

Joint Arrangements

Associates and Joint Ventures

Filters

Exam 13: Property, Plant and Equipment

Property, plant and equipment includes items that are:

Depreciation is a process that is designed to:

An entity acquired an item of Plant in exchange for an item of Equipment. The Equipment has a carrying value of $5000 and a fair value of $6000. The journal entry to record the acquisition of the Plant will show:

ABC Limited acquired an item of plant on 1 July 2012 for $80 000. The estimated useful life of the plant at acquisition date was 5 years and the residual value $5000. The company sold the plant on 1 January 2016 for $30 000. The journal entry to reflect the sale is:

When applying a revaluation measurement model to assets, the model:

Which of the following statements is NOT correct in relation to disclosure of property, plant & equipment balances?

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Shareholders Equity: Share Capital and Reserves

Fair Value Measurement

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Translation of the Financial Statements of Foreign Entities

Employee Benefits

Inventories

Leases

Understanding Australian Accounting Standards

Impairment of Assets

Accounting for Mineral Resources

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Business Combinations

Consolidation: Principles and Accounting Requirements

Consolidation: Intragroup Transactions

Consolidation: Non Controlling Interest

Joint Arrangements

Associates and Joint Ventures

Filters