Which statement on property, plant and equipment (PPE) is true? * PPE items may include assets lacking physical substance Assets held for sale shall be classified as PPE while unsold As long as an item of PPE provides benefit, regardless of measurability of its cost, it shall be recognized in the books When the amount is immaterial, an item may be expensed outright rather than capitalized as PPE none of the above

Which statement on property, plant and equipment (PPE) is true? * PPE items may include assets lacking physical substance Assets held for sale shall be classified as PPE while unsold As long as an item of PPE provides benefit, regardless of measurability of its cost, it shall be recognized in the books When the amount is immaterial, an item may be expensed outright rather than capitalized as PPE none of the above

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 12MCQ

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Which statement on property, plant and equipment (PPE) is true? * a. PPE items may include assets lacking physical substance b. Assets held for sale shall be classified as PPE while unsold c. As long as an item of PPE provides benefit, regardless of measurability of its cost, it shall be recognized in the books d. When the amount is immaterial, an item may be expensed outright rather than capitalized as PPE e. none of the above
1. 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…
Which of the following statements are correct? I. IAS 16 Property, plant and equipment requires entities to disclose the purchase date of each asset II. The carrying amount of a non-current asset is the cost or valuation of that asset less accumulated depreciation III. IAS 16 Property, plant and equipment permits entities to make a transfer from the revaluation surplus to retained earnings for excess depreciation on revalue assets IV. Once decided, the useful life of a non-current asset should not be changed
What costs are capitalized, or added to the asset account when acquiring property and equipment? A. Only the ticketed list price of the asset purchased. B. Any cost that is considered normal and necessary to get the asset into position and condition to be used. C. The lower of cost or net realizable value. D. Any of the above are allowed by U.S. GAAP as the cost to capitalize when acquiring property and equipment.
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…
Indicate whether each of the following statements is true or false. The recoverable amount used to impairment test a long-lived tangible asset is defined as the asset’s fair value less costs to sell. After an impairment loss is recorded, the recoverable amount becomes the basis for the impaired asset and is used to calculate depreciation in future periods. Land acquired for resale or disposal is more appropriately classified as inventory rather than property, plant and equipment.
Transfers from investment property to property, plant and equipment are appropriate a. The entity can never transfer property into another classification on the balance sheet Once it is classified as investment property. b. When there is change of use. c. Only when the entity adopts the fair value model under IAS 38. d. Based on the entity’s discretion.
The key characteristic for theclassification of an asset as ‘held for sale’ is that the carrying amount ofthe asset must _________________. a Be lower than initial cost of the asset. b Be higher than its net realizable value. c Principally be recovered through continuing use. d Principally be recovered through a sale transaction.
Statement 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 original cost.Statement 2: Any gain or loss from the disposal of the investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or lossStatement 3: If owner-occupied property is transferred to investment property that is to be carried at fair value, the difference between the carrying amount of the property and its fair value shall be included in profit or loss.Statement 4: If an entity determines that the fair value of an investment property is not reliably determinable on a continuing basis, the entity shall measure that investment property using the revaluation model. A. Only two of the statements are true. B. All statements are true. C. Only one of the statements is true. D. Only three…
Statement 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 original cost.Statement 2: Any gain or loss from the disposal of the investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or lossStatement 3: If owner-occupied property is transferred to investment property that is to be carried at fair value, the difference between the carrying amount of the property and its fair value shall be included in profit or loss.Statement 4: If an entity determines that the fair value of an investment property is not reliably determinable on a continuing basis, the entity shall measure that investment property using the revaluation model. All statements are true. Only two of the statements are true. Only three of the statements are true. All statements are…
1. IAS 36 applies to which of the following assets? (a) Inventories. (b) Financial assets. (c) Assets held for sale. (d) Property, plant, and equipment. 2. Value-in-use is (a) The market value. (b) The discounted present value of future cash flows arising from use of the asset and from its disposal. (c) The higher of an asset’s fair value less cost to sell and its market value. (d) The amount at which the asset is recognized in the balance sheet. 3. If the fair value less costs to sell cannot be determined (a) The asset is not impaired. (b) The recoverable amount is the value-in-use. (c) The net realizable value is used. (d) The carrying value of the asset remains the same. 4. If assets are to be disposed of (a) The recoverable amount is the fair value less costs to sell. (b) The recoverable amount is the value-in-use. (c) The asset is not impaired. (d) The recoverable amount is the carrying value. 5. Estimates of future cash flows normally would cover projections over a maximum…
According to IFRS, all of the following pieces of information about intangible assets mustbe disclosed in a company’s financial statements and footnotes except for:A. fair value.B. impairment loss.C. amortization rate.