Exam 11: Property, Plant and Equipment

Depreciation is a process that is designed to:

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

Which of the following is an argument to support the use of the revaluation model of accounting for property, plant & equipment?

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:

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:

Property, plant and equipment are assets that:

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:

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

IAS 16 requires disclosure, for each class of property, plant and equipment:

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

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

Use the following information to answer questions 14 and 15 An extract of a company's draft statement of financial position at 30 June 2012 discloses the following: 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:

Costs that may be included in the cost of acquisition of Property, plant and equipment assets include:

Under IAS 16, the depreciation charge for a period reflects:

Revaluations under IAS 16 Property, Plant and Equipment apply to:

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:

Property, plant and equipment includes items that are:

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

Use the following information to answer questions 14 and 15 An extract of a company's draft statement of financial position at 30 June 2012 discloses the following: 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:

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: