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When an item of property, plant and equipment is acquired by issuing equity shares, which of the following is the best basis for establishing the historical cost of the acquired asset?
a. Historical cost of a similar asset acquired in another transaction by the buyer |
b. Historical cost of the asset is zero since noncash is paid in the acquisition |
c. Fair value of the asset received or the fair value of the shares issued, whichever is more readily determinable |
d. Historical cost of the asset to the seller |
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- Which of the following statements regarding the acquisition of PP&E is false? A. For a self constructed asset, capitalized interest can exceed actual interest cost. B. If a long-lived asset is acquired and will be paid over a number of years, the time value of money should be considered. C. The general rule of PP&E valuation is to value the asset received at the fair market value of what was given up. D. The acquisition cost of land should include all things that prepared it for it's use including excavation. In interest capitalization related to self constructed assets, all of the following must occur before the capitalization window begins except: A. Expenditures for the assets have been incurred B. Depreciation of the asset being built has been recognized C. Activities that are necessary to get the asset ready for its intended use are in progress D.Interest has to be incurredAll of the following statements are true, except: * a. When property is acquired in exchange for another, its cost is usually determined by reference to the fair value of the asset surrendered b. Property acquired in exchange for shares or other securities of the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evident c. Donation of PPE should be recorded at the fair value of the donated asset d. When a group of assets is acquired for a lump sum price, the lump sum price should be allocated to the individual assets based on their carrying values.Which of the following statements in incorrect? a. Donations of PPE should be recorded at the fair value of the donated asset at the time of donation. b. Property acquired in exchange for shares or other securities in the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evident c. When property is acquired in exchange for another asset without commercial substance, no gain nor loss is recognized d. When a group of assets is acquired for a lump sum price, the total cost should be allocated to the individual assets based on their carrying amounts.
- The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at A) either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company. B) the fair value of the asset received if it is equally reliable as the fair value of the asset given up. C) the fair value of the asset given up, and a gain or loss is recognized. D) the fair value of the asset given up, and a gain but not a loss may be recognized.All of the following statements are true, except: When property is acquired in exchange for another, its cost is usually determined by reference to the fair value of the asset surrendered When a group of assets is acquired for a lump sum price, the lump sum price should be allocated to the individual assets based on their carrying values. Donation of PPE should be recorded at the fair value of the donated asset Property acquired in exchange for shares or other securities of the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evidentWhich of the following statements is/are true concerning property, plant and equipment (PPE)?I. PPE acquired by donation should be recorded at the fair value of the donated asset at the time of donation. II. When a group of assets is acquired for a lump-sum price, the total cost should be allocated to the individual assets based on their carrying amounts.III. Property acquired in exchange for shares or other securities in the enterprise should always be recorded the fair value of the securities issued.IV. When a property is acquired in exchange for another asset and both the fair value of the asset given up and the asset received are clearly determinable, its cost is usually determined by reference to the fair value of the asset given up. V. When an asset is acquired under a deferred payment plan, the asset is recorded at its cash equivalent price. If the cash equivalent price is not reliably determinable, the asset cost if the total of the undiscounted future cash payments required by…
- The cost of property acquired by direct cash purchase includes the cash paid and: A. the implied interest on the debt to finance the purchase.B. the market value of any noncash asset surrendered to acquire the asset.C. the estimated residual value of the asset.D. directly attributable costs of bringing the asset to working condition for its intended use.If the entity uses the fair value model for investment property, which statement is true? a. The entity should value the property at cost less accumulated depreciation and impairment. b. The entity does not record depreciation on the investment property. c. The entity depreciates the equipment using normal depreciation method d. The entity should report the increase in fair value in other comprehensive income for the period.In reference to the downstream or upstream sale of depreciable assets, which of the following statements is correct? A. Gains and losses appear in the parent-company accounts in the year of sale and must be eliminated by the parent company determining its investment income under equity method of accounting. B. The initial effect of unrealized gains and losses from downstream sales of depreciable asset is different from the sale of non-depreciable assets. C. Gains, but not losses, appear in the parent-company accounts in the year of sale and must be eliminated by the parent company in determining its investment income under the equity method of accounting. D. Upstream sales from the subsidiary to the parent company always result in unrealized gains or losses.
- 1. When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the a. original cost. b. fair value. c. carrying amount. d. recoverable amount.2. What could be a valid reason for transfers from investment property to property, plant and equipment? a. When there is a change in use b. based on the accountant's discretion c. When the entity adopts the fair value model d. when there is change in asset's life3. An entity has an investment property that is held for rental income. The entity uses the fair value model for reporting the investment property. Which of the following statement is true? a. changes in fair value are reported in profit or loss in the current period b. changes in fair value are reported as an extraordinary gain c. changes in fair value are reported in other comprehensive income for the period d. changes in fair value are…Net book value is Select one: a. Amount of which an asset is recognized in the balance sheet after deducting any accumulated depreciation. b. Net amount which the entity expects to obtain for an asset at the end of its useful life. c. Amount of cash or cash equivalent paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction. d. Cost of an asset or the amount substituted for cost in the financial statements, less its residual value1. When reclassification is made from owner occupied property to investment property that will be carried at fair value, any excess of the fair value over the carrying amount at the date of transfer is a. ignored. b. recognized as a gain in profit or loss, c. credited to asset revaluation surplus. d. recorded as a credit to a liability account2. Which of the following are valid statements regarding measurement of investment property? I. The best evidence of fair value is current price in an active market for similar property in the same location and condition.II. When items of investment property are measured at fair values, any movement in fair value is credited to other comprehensive income under the heading revaluation surplus.III. An entity shall continue to measure an investment property at fair value until its disposal if it has previously valued the property at fair value.IV. Transaction costs directly attributable to acquisition of investment property are capitalized as…