Exam 5: 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:

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

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:

Property, plant and equipment are assets that:

Use the following information to answer this question. 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 300 000 $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 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:

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

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:

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:

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:

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

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:

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

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

Depreciation is a process that is designed to:

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

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

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:

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

Use the following information to answer this question. 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 300 000 $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: