Certificate in International Financial Reporting Revenue, Inventories, and PPE 3

Question 1

Under IAS 36, an impairment loss is recognised when an asset's carrying amount exceeds its:

Accepted Answer

Recoverable amount

Answer

Net realisable value

Answer

Fair value

Answer

Historical cost

Question 2

What is 'value in use' under IAS 36?

Accepted Answer

Present value of future cash flows expected from the asset

Answer

Current market selling price

Answer

Replacement cost of the asset

Answer

Net book value of the asset

Question 3

Under IAS 36, how should an impairment loss for a cash-generating unit (CGU) be allocated?

Accepted Answer

First to goodwill, then pro-rata to other assets

Answer

Pro-rata to all assets including goodwill equally

Answer

First to PPE, then to intangibles

Answer

Only to the asset that triggered the test

Question 4

Under IAS 16, subsequent expenditure on PPE should be capitalised when:

Accepted Answer

It is probable that future economic benefits will flow to the entity and cost can be measured reliably

Answer

It maintains the asset in its current condition

Answer

It is a routine maintenance cost

Answer

It is required by law

Question 5

Under IAS 40, investment property is defined as property held for:

Accepted Answer

Rental income, capital appreciation, or both

Answer

Use in production or supply of goods

Answer

Sale in the ordinary course of business

Answer

Administrative purposes

Question 6

Under IAS 40, which model allows changes in fair value of investment property to be recognised in profit or loss?

Accepted Answer

Fair value model

Answer

Cost model

Answer

Revaluation model

Answer

Impairment model