QUESTION 19 When a company decreases the estimated useful life of a PP&E asset O a. It is admitting it made a mistake and needs to correct the financial statements affected by this mistake. O b. It will recognize less total depreciation expense than it originally planned. O c. It must revise depreciation expense for future periods only. O d. It must disclose the change in estimate but depreciation expense will not change.
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- 46. Evaluate the following statements: S1. In the sum-of-the-years'-digits method, residual value is not used in the computations of depreciation expense. S2. Straight-line depreciation assumes equal usefulness in each time period, and the periodic charge is not affected by asset productivity or efficiency variations. S3. The residual value of an asset is deducted from the depreciable base when calculating double-declining-balance depreciation. a. True, False, True b. False, True, False c. False, False, True d. False, False, False e. True, True, False f. True, True, True g. False, True, True1. Management of a company wants to inappropriately lower depreciation expense. Assume they are using the straight-line method. Which of the following would lower the company's depreciation expense? a. Increasing the useful life b. Decreasing the useful life C. Decreasing the salvage value34a 34 - Which of the following statements about depreciation is false? a) The asset to be depreciated should be among the assets of the enterprise. B) Proportional depreciation method can be applied for all tangible fixed assets. NS) For a property, plant and equipment to be depreciated, its economic life must be more than one year. D) As a result of use, wear, tear, depreciation or obsolescence must be experienced in the tangible asset. TO) Depreciation is a type of expense that does not require a cash outflow.
- IAS 36 - Impairment of Assets Management of an entity is carrying out an impairment test on an asset. The post tax market rate of return from the asset is 7% and profits are taxed at 30%. Management intends to use the post tax rate of return in discounting the post tax cash flows from the asset of €2 million, as management says it will make no difference to the calculation of value-in-use.Explain whether the use of the post tax rate is acceptable in the above circumstances.Q6. Identify the correct statement in each group? Note: There is one correct answer in each group of 3 - select the appropriate letter(i) If Property, plant and equipment is revalued upwards at the start of the year it will resultin:A. A higher profit for the yearB. No change to profit for the yearC. A lower profit for the year(ii) Property, plant and equipment revaluations:D. The revaluation gain is released to the Statement of profit or loss when the asset is soldE. PPE can only be revalued if a fair value can reliably be determinedF. Where a policy of revaluation is chosen, the asset must be revalued each yearQ1 Which of the following statement (s) is (are) true? (i) When no future economic benefits are no longer expected to flow from an intangible asset, such asset should be derecognized the financial statements of an organization. (ii) When an intangible asset is derecognized, the carrying amount should be written off as a loss in the profit or loss statement at the date of retirement of the asset. (iii) When an intangible asset is sold, the difference between the carrying amount and consideration received is recognized in the profit or loss statement at the date of the sale. (iv) Consideration to be received in the event of sale of an intangible asset should only be cash Select one: a. (ii) and (iv) only b. (i) and (ii) only c. (i) and (iv) only d. (i), (ii) and (iii) only
- QUESTION FOUR An accounting assistant of yours has been criticized over a piece of assessed work that he produced for his study course for the giving the definition of a non-current asset as a “physical asset of substantial cost, owned by the company, which will last for longer than one year”. Required Provide an explanation to your assistant of the weaknesses in his definition of non-current assets when compared to the International Accounting Standards Board’s (IASB) view of assets.True or false ________ 10. Depreciation is charged on all company’s assets. ________ 11. Depreciation is the part of the cost of the fixed asset consumed during the period of use by the firm. ________ 12. The cost of repairs is included in the calculation of depreciation of a fixed asset64 Analyze the following: I – Any gain on a subsequent increase in the fair value less cost of disposal of a noncurrent asset classified as held for sale should always be recognized in full. II – Results from discontinued operation should be presented in the income statement as a single amount on the face of the said statement below the income from continuing operations. III – The total external revenue of all reportable segments should be 75% or more of the entity's external revenue to pass the 75% overall size test for reportable segments. Given these, we can conclude that: Group of answer choices Only statement II is not false. Only statement I is not false. Only statements II and III are not true. Statement III is not false.
- 7. When the residual value of plant and machinery has drastically changed, the entity should a. Change the annual depreciation for the current year and future years b. Retrospectively change the depreciation charge based on the revised residual value c. Ignore the effect of the change on annual depreciation d. Change the depreciation charge and treat it as a correction of error 8. Which of the following is among those listed under PAS 29 as indicators of hyper-inflation? a. People prefer to keep their wealth in monetary assets b. The cumulative inflation rate over five years exceeds or is100% c. The people prefer to keep their wealth in relatively stable foreign currency d. All of the statements are indicators of hyperinflation 9. An entity uses periodic inventory system and neglected to record a purchase of merchandise on account at year end. This merchandise was omitted from the year end physical…Statement 1: The cost of an asset, or other amount substituted for cost, less its residual value is called “depreciation”. Statement 2: And, “depreciation” on the other hand, is the systematic allocation of theamount of depreciation of an asset over its useful life. a. Statement 1 is correct b. Statement 2 is correct c. Both statements are correct d. Both statements are wrong23 S1: Two methods of allocating joint costs to main products are physical measure allocation and market-based allocation.S2: If an intercompany sale of a depreciable asset occurs on the last day of the year and results in a gain to the seller, the asset must be shown on the consolidated balance sheet at its original book value. Group of answer choices False; False False; True True; False True; True