Exam 9: Property, Plant and Equipment

On 30 June 2014,Walters Limited had an item of plant with an original cost of $140 000 and accumulated depreciation of $56 000.At this date,the fair value of the plant was $100 000.The net effect of the journal entries necessary to record the revaluation of the plant by Walters to fair value on 30 June 2014 in accordance with AASB 116 Property,Plant and Equipment is which of the following?

Items of property,plant and equipment may only be derecognised if they are sold.

Depreciation is an accounting process which involves a systematic allocation of the depreciable amount of an asset over its useful life.

For the purpose of the initial recognition of an item of property,plant and equipment,the date on which the fair values should be measured is referred to as the:

Under AASB 116 Property,Plant and Equipment,the purpose of calculating the depreciation charge for a period on an item of property,plant and equipment is to measure:

The revaluation model must be applied to classes of assets.

For the purposes of recognising an item of property,plant and equipment,the acquisition date is defined in AASB 3 Business Combination as the date:

When a property,plant and equipment asset is derecognised through sale,any associated asset revaluation surplus must always be transferred to retained earnings.

When changing from the revaluation to the cost model of measurement for non-current assets,the model must be applied:

On 1 July 2009,Barba Limited acquired an item of equipment for $105 000 which it depreciated using the straight line basis.The equipment had an estimated useful life of 10 years and its residual value was $15 000.The carrying amount of the equipment in the financial statements dated 30 June 2014 is:

On 30 June 2014,Walters Limited had an item of plant with an original cost of $140 000 and accumulated depreciation of $56 000.At this date,the fair value of the plant was $100 000 and Walters Limited revalued the plant.Assuming a tax rate of 30%,the tax effect of the revaluation would be recorded as which of the following?

Costs of testing whether an asset is functioning property should be capitalised into the initial cost of the asset under AASB 116 Property,Plant and Equipment.

Costs of removal or dismantling an asset at the end of its useful life are measured on a present value basis and capitalised into the initial cost of the asset.

Where an entity acquires a bundle of assets and the total cost of the assets is greater than the sum of the fair values of the assets acquired,a bargain purchase has been made.

Which of the following depreciation methods is most appropriate when the asset's benefits are expected to be received evenly over its useful life?

Which of the following are not examples of directly attributable costs that should be included in the cost of acquisition for property,plant and equipment?

Expenditure designed to improve the quality of the output of an asset are capitalised into the cost of the asset in accordance with paragraph 7 of AASB 116 Property,Plant and Equipment.

A revaluation increment reversing a previous revaluation decrement must be credited to the profit or loss.

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

Once an entity has selected a depreciation method to use to depreciate an asset,it must use that same method for the entire useful life of the asset.