PROPERTY, PLANT & EQUIPMENT
1. Property, plant and equipment are defined as
a. Tangible assets held for sale in the ordinary course of business
b. Tangible assets held to earn rentals or for capital appreciation
c. Tangible assets held for use in the production or supply of goods
or services or for administrative purposes
d. Tangible assets held for use in the production or supply of goods
or services, for rental to others, or for administrative purposes
and expected to be used during more than one reporting period
2. Which of the following is not a characteristic of property, plant and
equipment?
a. The property, plant and equipment are tangible assets.
b. The property, plant and equipment are used in business.
c. The property, plant and equipment are expected to be used over
a period of more than one year.
d. The property, plant and equipment are subject to depreciation.
3. Spare parts and servicing equipment that can be used only in
connection with an item of property, plant and equipment and
depreciated over
a. Their useful life
b. Their useful life of the related asset
c. Their useful life or the useful life of the related asset, whichever
is longer
d. Their useful life or the useful life of the related asset, whichever
is shorter
4. What valuation model an entity used to measure property, plant and
equipment?
a. The revaluation or the fair value model
b. The cost model or the revaluation model
c. The cost model or the fair value through profit or loss model
d. The cost model or the fair value model
5. The cost of property, plant and equipment comprises of the following,
except
a. Purchase price
b. Import duties and nonrefundable purchase taxes
c. Any cost directly attributable in bringing the asset to the location
and condition for the intended use
d. Initial estimate of the cost of dismantling the asset for which the
entity has no present obligation.
6. Costs directly attributable to bring the asset to the location and
condition for the intended use include all. Except
7.
8.
9.
10.
11.
12.
13.
a. Cost of employee benefit not arising directly from the acquisition
of property, plant and equipment
b. Cost of site preparation
c. Initial delivery and handling cost
d. Installation and assembly cost
Which cost should be expensed immediately?
a. Cost of opening a new facility
b. Cost of introducing a new product or service, including cost of
advertising and promotional activities
c. Cost of conducting business in a new location
d. All of these are expensed immediately
Which cost should be expensed immediately?
a. Administrative overhead
b. Initial operating loss
c. Cost of relocating or reorganizing part or all of an entity’s
operation
d. All of these are expensed immediately
A nonmonetary exchange is recognized at fair value of the asset
exchanged unless
a. Exchange has a commercial substance
b. Fair value is not determinable
c. The assets are similar in nature
d. The assets are dissimilar
In an exchange with commercial substance
a. Gain or loss is recognized entirely.
b. Gain or loss is not recognized.
c. Only gain should be recognized.
d. Only loss should be recognized.
The cost of property, plant and equipment acquired in exchange is
measured at the
a. Fair value of the asset given plus cash payment
b. Fair value of the asset received plus cash payment
c. Carrying amount of the asset given plus cash payment
d. Carrying amount of the asset received plus the cash payment
Which exchange has commercial substance?
a. Exchange of assets with no difference in future cash flows.
b. Exchange by entities in the same line of business
c. Exchange of assets with difference in future cash flows.
d. Exchange of assets that causes the entities to remain in
essentially the same economic position.
For a nonmonetary exchange, the configuration of cash flows
includes which of the following?
a. The implicit rate, maturity date of loan and amount of loan
b. The risk, timing and amount of cash flow of the assets
c. The entity-specific value of the asset
d. The estimated present value of the asset exchanged
14. If an entity is able to determine reliably the fair value of the asset
received and the fair value of the asset given in an exchange
transaction, the cost is measured at
a. Fair value
ANSWER KEY
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
D
D
D
B
D
A
D
D
B
A
A
C
B