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TOA1M-1407
NON-FINANCIAL ASSETS
PAS 41 AGRICULTURE
7. When agricultural produce is harvested, .the harvest shall be accounted for by using PAS 2,
Inventories, or another applicable PFRS. For the purpose of that standard, cost at the date of
harvest is deemed to be
A. Historical cost of the harvest
B. Historical cost less accumulated impairment losses
C. Market value
D. FV less cost to sell at the point of harvest
10. Where there is a production cycle of more than one year for a biological asset, PAS 41
encourages separate disclosure of
A. Physical change only C. Total change in value
B. Price change only D. Physical change and price change
12. Regarding the choice of measurement basis used for measuring biological assets, PAS 41
A. Sets out several ways of measuring fair value
B. Recommends the use of historical cost
C. Recommends the use of current cost
D. Recommends the use of present value.
13. A required disclosure for biological assets.
I. Aggregate gain or loss arising during the current period on initial recognition of
biological assets and agricultural produce and from the change in fair value less costs to
sell of biological assets.
II. Description of each group of biological assets
A. I only C. Both land Il
B. Il only D. Neither I nor Il
16. Measurement of inventories at the lower of cost and net realizable value is done
A. On an item by item basis
B. On an aggregate basis
C. On a first-in, first-out basis
D. On an arbitrary basis
19. Harvested agricultural crops or extracted mineral ores assured to be sold under a forward
contract or government guarantee are measured at
A. Higher of cost and net realizable value C. Lower of cost and net realizable value
B. Fair value less costs to sell D. Net realizable value
20. The original cost of an inventory item is below both replacement cost and net realizable
value. The net realizable value less normal profit margin is below the original cost. Per PAS 2,
the inventory item should be valued at
A. Replacement cost C. Net realizable value less normal profit margin
B. Net realizable value D. Original cost
22. Where there is a long aging or maturation process after harvest, the accounting for such
products should be dealt with by
A. PAS 41 C. PAS 16
B. PAS2 D. PAS 40 I 3
23. Entity A had a plantation forest that is likely to be harvested and sold in 30 years. The
income should be accounted for in the following way:
A. No income should be reported until first harvest and sale in 30 years.
B. Income should be measured annually and reported using a fair value approach that
recognizes and measures biological growth.
C. The eventual sale proceeds should be estimated and matched to the profit and loss
account over the 30-year period.
D. The plantation forest should be valued every 5 years and the increase in value should be
shown in the statement of recognized gains and losses.
24. Where the fair value of the biological asset cannot be determined reliably, the biological
asset should be measured at
A. Cost
B. Cost less accumulated depreciation
C. Cost less accumulated depreciation and accumulated impairment losses
D. Net realizable value
25. Under PFRS, which of the following inventory items are not valued at the lower of cost or
net realizable value?
A. Manufactured inventory items C. Biological inventory items
B. Retail inventory items D. Industrial inventory items
26. Which of the following attributes would not be used to measure inventory?
1. Assets intended to be held and used for productive purposes may suffer from impairment in
each of the following circumstances except
A. A change in the way the assets are used or physical change in the assets
B. Asset costs incurred exceed the original amounts planned
C. Discounted expected future cash flows and interest charges are less than the carrying
amount of the asset
D. A significant adverse change in legal factors that might affect the assets fair value
2. Under the reporting requirements for impaired assets, impairment losses for assets to be held
and used shall be reported
A. As an extraordinary item
B. As a component of discontinued operations
C. As a component of income from continuing operations
D. As a change in accounting estimate
3. Sloan Corporation is performing its annual test of the impairment of goodwill for its Financing
reporting unit. It has determined that the fair value of the unit exceeds it carrying value. Which
of the following is correct concerning this test of impairment?
A. Impairment is not indicated and no additional analysis is necessary.
B. Goodwill should be written down as impaired.
C. The assets and liabilities should be valued to determine if there has been an impairment
of goodwill.
D. Goodwill should be retested at the entity level.
4. For companies that prepare financial statements in accordance with PAS 16, property, plant
and equipment should be valued using which models?
A. The cost model or the revaluation model
B. The cost model or the fair value model
C. The cost or the fair value through profit or loss model
D. The revaluation model or the fair value model
5. For companies that are SMEs, property, plant and equipment., should be valued using which
models?
A. The cost model or the revaluation model
B. he cost model or the fair value model
C. The cost model only
D. The revaluation model r the fair value model
6. When the revaluation model is used for reporting plant, property, and equipment, the gain or
loss should be included in
A. Income for the period
B. Gain from revaluation on, the income statement
C. A revaluation surplus account is other comprehensive income
D. An extraordinary gain or loss on, the income statement
7. Under PAS 38, what valuation methods are used for intangible assets?
A. The cost model or the revaluation model
B. The cost model or the fair value model
C. The cost or the fair value through profit or loss model
D. The revaluation model or the fair value model
8. Under PAS 16, when accounting for plant, property, and equipment, a company
A. Must use the cost model for presenting the assets
B. May elect to use the cost model or the revaluation model on any individual asset
C. May elect to use the cost model or the revaluation model on any asset class
D. Must use the cost model for land
9. Under PAS 38, an- entity that acquires an intangible asset may use the revaluation model for
subsequent measurement only if
A. The useful life of the intangible asset can be reliably determined.
B. An active market exists forth intangible asset.
C. The cost of the intangible asset can be measured reliably.
D. The intangible asset is a monetary asset.
10. Under the PAS 16, revaluation model for accounting for plant, property, and equipment
A. Assets must be revaluated quarterly
B. Assets must be revaluated annually
C. Assets must be revaluated biannually
D. There are no rules regarding the frequency of revaluation.
11. Under PAS 36, intangible assets with indefinite lives are tested for impairment
A. Quarterly at the quarterly reporting date
B. Annually at the annual reporting date
C. Biannually at the reporting date.
D. There are no guidelines defining when intangible assets are tested for impairment.
12. Under PAS 36, an intangible asset is considered to be impaired if its carrying value is greater
than its recoverable amount. The recoverable amount is
A. Its historical cost
B. Its net selling price
C. The greater of its net selling price or its value in use
D. Its replacement cost
2. These are assistance by government in the form of transfers of resources to an entity in return
for past or future compliance with certain conditions relating to the operating activities of the
entity.
A. Government assistance. C. Government subvention
B. Government grants D. Government premium
3. These are government grants whose primary condition is that an entity qualifying for them
should purchase, construct or otherwise acquire long-term assets.
A. Government assistance C. Grants related to income
B. Government grants D. Grants related to assets
5, These are loans which the lender undertakes to waive repayment of under certain prescribed
conditions.
A. Grants related to income C. Forgivable loans
B. Grants related to assets D. Simple loans
6. Government grants, including non-monetary grants at fair value, shall not be recognized until
there is reasonable assurance that:
A. Government grants shall be recognized in profit or loss on a systematic basis over the
periods in which the entity recognizes as expenses the related costs for which the grants
are intended to compensate.
B. Grants related to depreciable assets are usually recognized in profit or loss over the
periods and in the proportions in which depreciation expense on those assets is
recognized.
C. Grants related to non-depreciable assets may also require the fulfillment of certain
obligations and would be recognized in profit or loss over the periods that bear the cost of
meeting the obligations.
D. 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 shall be recognized in profit or loss after meeting certain
conditions.
10. In the case of grants related to an asset, which of these accounting treatments (statement of
financial position presentation) is prescribed by PAS 20?
A. Record the grant at a nominal value in the first year and write it off in the subsequent
year.
B. Either set up the grant as deferred income or deduct it in arriving at the carrying amount
of the asset.
C. Record the grant at fair value in the first year and take it to income in the subsequent
year.
D. Take it to the income statement and disclose it as an extraordinary gain.
11. In the case of grants related to income, which of these accounting treatments is prescribed by
PAS 20?
A. Credit the grant to general reserve under shareholders equity.
B. Present the grant in the income statement as other income or as a separate line item, or
deduct it from the related expense.
C. Credit the grant to retained earnings on the statement of financial position.
D. Credit the grant to sales or other revenue from operations in the income statement.
13. Which of the following is not specifically excluded from the purview of PAS 20?
A. Government participation in ownership of the entity
B. Government grant covered by PAS 41
C. Government assistance provided in the form of tax benefits
D. Forgivable loan from the government
14. When government grants related to income become repayable due to nonfulfillment of a
condition attaching to it, the repayment: (choose the incorrect statement)
A. Should be treated as a change in accounting estimate
B. Should be accounted for prospectively
C. Should be first applied against any unamortized deferred income
D. Should be recognized as a debit to retained earnings to the extent that the repayment
exceeds any such deferred income
17. Which disclosure is not required by Section 24, PFRS for SMEs on Government Grants?
A. The accounting policy adopted for government grant including the methods of
presentation adopted in the financial statements
B. Unfulfilled conditions and other contingencies attaching to government assistance
C. Other form of government assistance from which the entity has directly benefited.
D. The nature of government grant recognized in the financial statements
1. Which of the following noncurrent assets may not be classified as Investment property?
A. Land C. Machinery
B. B. Building D. All of them may qualify
2. Which of the following is not an investment property?
A. Land held for long-term capital appreciation
B. Land held for currently undetermined use
C. Land held as a future plant site
D. Land developed for use as investment property
3. If the entity has not determined that it will use the land either as owner-occupied of for short
term sale, the land is classified as
A. Owner-occupied property C. Noncurrent asset held for sale
B. Investment property D. Other noncurrent asset
5. A property interest that is held by a lessee under an operating lease may be classified and
accounted for as an investment property provided the following criteria are met: (choose the
exception)
A. The property meets the definition of investment property
B. The operating lease is accounted for as if it were a finance lease
C. The lessee uses the FV model in measuring the property interest
D. The lessee uses either the cost or FV model in measuring the property interest
6. An entity shall choose which model as its accounting policy for its investment property?
A. Fair value model C. Revaluation model
B. Cost model D. Either a or b
8. Linden Corporation has investment property that is held to earn rental income. Linden
prepares for its financial statements in accordance with PFRS. Linden uses the fair value mode
for reporting the investment property. Which of the following is true?
A. Changes in fair value are reported as profit or loss in the current period.
B. Changes in fair value are reported as other comprehensive income for the period.
C. Changes in fair value are reported as an extraordinary gain on the income statement.
D. Changes in fair value are reported as deferred revenue for the period.
10. The applicable PFRS/PAS for a property being constructed or developed for future use as
investment property is
A. PAS 2 C. PAS 11
B. PAS4O D. PAS 16
11. In case of property held under an operating lease and classified as investment property
A. The entity has to account for the investment property under the cost model only.
B. The entity has to use the fair value model only.
C. The entity has the choice between the cost model and the fair value model.
D. The entity needs only to disclose the fair value and can use the cost model under PAS 38.
12. Transfers from investment property to property, plant, and equipment are appropriate
A. When there is change of use
B. Based on the entitys discretion.
C. Only when the entity adopts the fair value model under PAS 38
D. The entity can never transfer property into another classification on the statement of
financial position once it is classified as investment property.
15. An entity owns machinery that it leases out to lessees under an operating lease. The
machinery should be presented on the entitys books as
A. Investment property c. Property and equipment
B. Inventory D. Non-current asset held for sale
16. Which statement in incorrect if the property is partly investment property and partly owner-
occupied?
A. If the investment and owner-occupied portions could be sold or leased out separately, the
portions should be accounted for as investment property and owner-occupied property.
B. B. If the investment and owner-occupied portions could not be sold or leased out
separately, the property is investment property if only an insignificant portion is held for
manufacturing or administrative purposes. .
C. When ancillary services are provided by the enterprise to the occupants of the property
and these services are relatively insignificant component of the arrangement, the property
is investment property.
D. A hotel is normally an investment property because services provided to the guests are an
insignificant component of the arrangement.
1. How should the income from discontinued operations be presented in the income statement?
A. The entity should disclose a single amount on the face of the income statement with
analysis in the notes or a section of the income statement separate from continuing
operations
B. The amounts from discontinued operations should be broken down over each category of
revenue and expense
C. Discontinued operations should be shown as a movement on retained earnings
D. Discontinued operations should be shown as a line item after gross profit with the
taxation being shown as part of income tax expense .
2. How should the assets and liabilities of a disposal group classified as held for sale be shown in
the balance sheet?
A. The assets and liabilities should be offset and presented as a single amount
B. The assets of the disposal group should be shown separately from other assets in the
balance sheet, and the liabilities of the disposal group should be shown separately from
other liabilities in the balance sheet
C. The assets and liabilities should be presented as a single amount and as a deduction from
equity
D. There should be no separate disclosure of assets and liabilities that form part of a disposal
group
3. In order for a noncurrent asset to be classified as held for sale, the sale must be highly
probable.
Highly probable means that
A. The future sale is likely to occur
B. The future sale is more likely than not to occur
C. The sale is certain
D. The probability is higher than more likely than not
4. An entity acquires a subsidiary exclusively with a view to selling it. The subsidiary meets the
criteria to be classified as held for sale. At the balance sheet date, the subsidiary has not yet been
sold, and six months have passed since its acquisition. How will the subsidiary be valued in the
balance sheet at the date of the first financial statements after acquisition?
A. At fair value
B. At the lower of its cost and fair value less cost to sell
C. At carrying value
D. In accordance with applicable PFRS
5. Any gain on a subsequent increase in the fair value less cost to sell of a noncurrent asset
classified as held for sale should be treated as follows: .
A. The gain should be recognized in full
B. The gain should not be recognized
C. The gain should be recognized but not in excess of the cumulative impairment loss
D. The gain should be recognized but only in retained earnings
6. An entity has an asset that was classified as held for sale. However, the criteria for it to remain
as held for sale no longer apply. The entity should therefore.
A. Leave the noncurrent asset in the financial statements at its current carrying value
B. Remeasure the noncurrent asset at fair value
C. Measure the noncurrent asset at the lower of its carrying amount before the asset was
classified as held for sale (as adjusted for subsequent depreciation, amortization, or
revaluations) and its recoverable amount at the date of the decision not to sell
D. Recognize the noncurrent asset at its carrying amount prior to its classification as held for
sale as adjusted for subsequent depreciation, amortization, or revaluations
7. Which of the following criteria do not have to be met in order for an operation to be classified
as discontinued?
A. The operation should represent a separate line of business or geographical area
B. The operation is part of a single plan to dispose of a separate major line of business or
geographical area
C. The operation is a subsidiary acquired exclusively with a view to resale
D. The operation must be sold within three months of the year-end
8. PFRS S states that a noncurrent asset that is to be abandoned should not be classified as held
for sale. The reason for this is because
A. Its carrying amount will be recovered principally through continuing us
B. . It is difficult to value
C. . It is unlikely that the noncurrent asset will be sold within 12 months
D. It is unlikely that there will be an active market for the noncurrent asset