PPE Quiz
Under the cost model, subsequent to initial recognition as an asset, an item of
property, plant and equipment shall be carried at
Revalued amount less accumulated depreciation and any accumulated impairment loss
Revalued amount
Cost less accumulated depreciation and any accumulated impairment loss
Cost
Which of the following is the most appropriate policy as regards the allocation of joint
overhead cost to plant and equipment constructed by the entity for its own use?
Assign a proportionate share of overhead to the construction on the same basis as that
used for the assignment to normal production
Assign overhead equal to the amount that would have been assigned to production that is
curtailed because of the construction.
Assign no overhead
Assign only variable overhead
Capitalization of borrowing cost
Shall be suspended only during extended period of delay in which active development is
delayed.
Shall be suspended during temporary period of delay
Shall never be suspended once capitalization commences
May be suspended only during extended period of delay in which active development is delayed
Entities are encouraged to disclose all the following information in relation to property,
plant and equipment, except
The fair value of property, plant and equipment that is not materially different from
carrying amount when the cost model is used.
The carrying amount of temporarily idle property, plant and equipment
The gross carrying amount of fully depreciated property, plant and equipment still in use
The carrying amount of property, plant and equipment classified as held for sale.
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?
Historical cost of the asset is zero since noncash is paid in the acquisition
Fair value of the asset received or the fair value of the shares issued, whichever is more
readily determinable
Historical cost of a similar asset acquired in another transaction by the buyer
Historical cost of the asset to the seller
In an exchange of assets, an entity received equipment with a fair value equal to the
carrying amount of equipment given up. The entity also contributed cash. As a result
of the exchange, the entity shall recognize
A loss determined by the proportion of cash paid to the total transaction value
A gain determined by the proportion of cash paid to the total transaction value
Neither gain nor loss
A loss equal to the cash given up
The cost of an item of property, plant, and equipment acquired in a nonmonetary
exchange is measured at the
Carrying amount of the asset received
Carrying amount of the asset given up
Fair value of the asset given up
Fair value of the asset received
The cost of the land shall include all the following except
Property tax after date of acquisition assumed by the purchaser
Commission related to acquisition
Property tax to date of acquisition assumed by the purchaser
Cost of survey
Which of the following terms best describes the removal of an asset from an entity's
statement of financial position?
Derecognition
Depreciation
Writeoff
Impairment
If the qualifying asset is financed by specific borrowing, the capitalizable borrowing
cost is equal to
Actual borrowing cost incurred up to completion of asset minus any investment income
from the temporary investment of the borrowing
Actual borrowing cost incurred
Actual borrowing cost incurred up to completion of asset
Zero
If the present value of a note issued in exchange for a plant asset is less than its face
amount, the difference shall be
Amortized as interest expense over the life of the note
Amortized as interest expense over the life of the asset
Included in the cost of the asset
Included in interest expense in the year of issuance
Grants related to depreciable assets are usually recognized as income
Over the useful life of the assets and in proportion to the depreciation of the assets
Over the useful life of the assets using sum of years' digits
Immediately
Over the useful life of the assets using straight line
Which disclosure is not required by PAS 20?
The nature and extent of government grant recognized in the financial statements and an
indication of other form of government assistance from which the entity has directly benefited.
Unfulfilled conditions and other contingencies attaching to government assistance.
The name of the government agency that gave the grant along with the date of sanction of
the grant by the government agency and the date when cash was received in case of
monetary grant.
The accounting policy adopted for government grant including method of presentation adopted in
the financial statements.
When an entity purchases land with a building on it and immediately tears down the
building so that the land can be used for the construction of a plant, the cost incurred
to tear down the building shall be
Added to the cost of the plant
Added to the cost of the land
Expensed as incurred
Amortized over the estimated time period between the tearing down of the building and the
completion of the plant
Grants in recognition of specific costs are recognized as income
Over a maximum of 5 years using sum of years digits
Immediately
Over a maximum of 5 years using straight line
Over the same period as the relevant expense
A government grant that becomes receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate financial support to the entity
with no future related costs should be recognized as income
Over a maximum of 5 years using straight line
When received
Of the period in which it becomes receivable
Over a maximum of 10 years using straight line
Costs directly attributable to bringing the asset to the location and condition for its
intended use include all of the following, except
Cost of employee benefit not arising directly from the construction and acquisition of
property, plant and equipment
Installation and assembly cost
Delivery and handling cost
Cost of site preparation
Major spare parts and standby equipment which are expected to be used over a
period of more than one year shall be classified as
Expense
Property, plant and equipment
Noncurrent investment
Inventory
Which type of expenditure occurs when an entity installs a higher capacity boiler to
heat its plant?
Addition
Ordinary repair and maintenance
Rearrangement
Betterment
For purposes of capitalization of borrowing cost, which of the following is not a
qualifying asset?
Investment property
Asset ready for its intended use
Power generation facility
Manufacturing plant