Question 0001
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.
Question 0002
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
Question 0003
Spare parts and servicing equipment that can be used only in
connection with an item of property, plant, and equipment are
accounted for as property, plant, and equipment and depreciated over
a. Their useful life
b. The useful life of the related assets
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
Question 0004
What valuation model should an entity use to measure property, plant,
and equipment?
a. Revaluation model to fair value model
b. Cost model of revaluation model
c. Cost model or fair value through profit or loss model
d. Cost model or fair value model
Question 0005
The cost of property, plant and equipment comprises all of the
following, except
a. Purchase price
b. Import duties and non-refundable 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
Question 0006
Costs directly attributable to bring the asset to the location and
condition for the intended use include all, except
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
Question 0007
Which cost should be expensed immediately?
a. Cost of opening a new facility
b. Cost of introducing a new product or service, including the cost of
advertising and promotional activities
c. Cost of conducting business in a new location
d. All of the foregoing
Question 0008
Which cost should be expensed immediately?
a. Administrative overhead
b. Initial operating loss
c. Cost of reorganizing part of an entity's operation
d. All of these are expensed immediately
Question 0009
A nonmonetary exchange is recognized at fair value of the asset
exchanged unless
a. Exchange has commercial substance
b. Fair value is not determinable
c. The assets are similar in nature
d. The assets are dissimilar
Question 0010
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
Question 0011
The cost of property, plant and equipment acquired in an 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 cash payment
Question 0012
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
Question 0013
For nonmonetary exchange, the configuration of cash flows includes
which of the following?
a. The implicit rate, the maturity date of the loan, and amount of loan
b. The risk, timing, and amount of cash flows of the assets
c. The entity-specific value of the asset
d. The estimated present value of the assets exchanged
Question 0014
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 of asset given
b. Fair value of asset received
c. Either the fair value of asset received or the fair value of asset given
d. Neither the fair value of asset received or the fair value of asset
given
Question 0015
Which statement is true concerning acquisition of property, plant and
equipment by self-construction?
a. The cost of self-constructed asset is determined using the same
principles as for an acquired asset
b. Any internal profit is eliminated in arriving at the cost of selfconstructed asset
c. The cost of abnormal amount of wasted material is not included in
the cost of the asset
d. All of the foregoing
Question 0016
The carrying amount of property, plant and equipment shall be
derecognized
a. On disposal
b. When no future economic benefits are expected from the use of the
asset
c. On acquisition
d. On disposal and when no future economic benefits are expected
from the use of the asset
Question 0017
Entities are encouraged to disclose all of the following in relation to
property, plant and equipment, except
a. The carrying amount of temporarily idle property, plant and
equipment
b. The gross carrying amount of fully depreciated property, plant and
equipment still in use
c. The carrying amount of property, plant and equipment classified as
held for sale
d. The fair value of property, plant and equipment that is not materially
different from carrying amount when the cost model is used
Question 0018
Which of the following is not capitalized into the cost of property, plant
and equipment?
a. Cost of excess materials from a purchasing error
b. Cost of testing whether the asset works correctly
c. Initial delivery and handling cost
d. Cost of preparing the site for installation
Question 0019
An entity purchased machinery that it does not have to pay until after
three years The total payment on maturity will include both principal
and interest. The cost of the machine would be the total payment
multiplied by what time value of money concept?
a. PV of annuity of 1
b. PV of 1
c. Future amount of annuity of 1
d. Future amount of 1
Question 0020
The initial operating loss should be
a. Deferred and amortized over a reasonable period
b. Expensed and charged to the income statement
c. Capitalized as part of the cost of plant
d. Charged to retained earnings