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    Quiz - IAS 16 - Property, Plant and Equipment: (A) (B) (C) (D)

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    furqan
    This document contains a quiz with 6 multiple choice questions regarding accounting for property, plant, and equipment (PPE) according to IAS 16. The questions cover topics such as: depreciating components of an aircraft over different useful lives, accounting for revaluation surpluses of PPE, when to begin depreciating self-constructed assets, accounting for falls in the value of revalued PPE, and calculating depreciation when the estimated residual value changes.

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    Quiz - IAS 16 - Property, Plant and Equipment: (A) (B) (C) (D)

    Uploaded by

    furqan
    2K views2 pages
    This document contains a quiz with 6 multiple choice questions regarding accounting for property, plant, and equipment (PPE) according to IAS 16. The questions cover topics such as: depreciating components of an aircraft over different useful lives, accounting for revaluation surpluses of PPE, when to begin depreciating self-constructed assets, accounting for falls in the value of revalued PPE, and calculating depreciation when the estimated residual value changes.

    Original Description:

    Practice Question for ACCA P2 IAS 16 Property, Plant and Equipment

    Original Title

    IAS 16 P2 Practice

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    This document contains a quiz with 6 multiple choice questions regarding accounting for property, plant, and equipment (PPE) according to IAS 16. The questions cover topics such as: depreciating components of an aircraft over different useful lives, accounting for revaluation surpluses of PPE, when to begin depreciating self-constructed assets, accounting for falls in the value of revalued PPE, and calculating depreciation when the estimated residual value changes.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views2 pages

    Quiz - IAS 16 - Property, Plant and Equipment: (A) (B) (C) (D)

    Uploaded by

    furqan
    This document contains a quiz with 6 multiple choice questions regarding accounting for property, plant, and equipment (PPE) according to IAS 16. The questions cover topics such as: depreciating components of an aircraft over different useful lives, accounting for revaluation surpluses of PPE, when to begin depreciating self-constructed assets, accounting for falls in the value of revalued PPE, and calculating depreciation when the estimated residual value changes.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Quiz - IAS 16 Property, Plant and

    Equipment
    1) Multipart has purchased a budget airline and is discussing the way in
    which it should depreciate the aircraft as aircraft have a lifespan of 10
    years, engines have a lifespan of seven years and tyres have a lifespan
    of 18 months. The aircraft should be depreciated on a straight-line
    basis over
    (a) 1.5 years useful life
    (b)Seven years useful life of the engine, 1.5 years useful life of the
    tyres, and 10 years useful life applied to the balance
    (c) Seven years useful life
    (d)10 years composite useful life

    2) IAS 16 requires a revaluation surplus resulting from initial revaluation


    of PPE to be treated in one of the following ways (a) Credited to retained earnings as an unrealised gain
    (b)Released to the income statement over the life of the PPE
    (c) Debited to the class of PPE that is being revalued and credited to a
    equity
    (d)Credited to long-term provisions and added to the PPE

    3) An entity constructs a machine for its own use. Construction is started


    on 1 January 2009 and is completed on 1 March 2009. The machine is
    installed on 1 April 2009 and the entity does not begin using the
    machine until 1 May 2009. The entity should begin charging
    depreciation on (a) 1 April 2009
    (b)1 March 2009
    (c) 1 January 2009
    (d)1 May 2009

    4) An entity has a policy of revaluing its PPE. An asset cost $5m on 1


    January 2008 and has a useful life of five years and is depreciated on a
    straight-line basis to a zero residual value. The value of the asset at 31

    December 2008 was $3.8m. The fall in value will be accounted for as
    follows
    (a) Depreciation $1m to income statement and fall in value of $200,000
    to the reserves
    (b)Depreciation $1m and fall in value of $200,000 both to the income
    statement
    (c) Depreciation $1m to the income statement and fall in value of
    $200,000 ignored until there is a revaluation surplus
    (d)Depreciation $1m and fall in value of $200,000 both to the reserves

    5) An entity has a policy of revaluing its PPE. An asset cost $15m on 1


    January 2008, has a useful life of 15 years and is depreciated on a
    straight-line basis to a zero residual value. The value of the asset at 31
    December 2008 was $14.5m. At 31 December 2009, the market value
    of the asset was $12.5m. The accounting entry at 31 December 2009
    would be
    (a) Depreciation $1m to income statement, fall in value of $0.5m
    charged to revaluation reserve and $0.5m to the income statement
    (b)Depreciation $1m to income statement, fall in value of $0.96m to
    the income statement
    (c) Depreciation $1.04m to income statement, fall in value of $0.96m
    charged to revaluation reserve
    (d)Depreciation $1.04m to income statement, fall in value of $0.5m
    charged to revaluation reserve and $0.46m to the income
    statement
    6) An asset was purchased for $1m on 1 January 2011. At the date of
    purchase the asset had an estimated useful economic life of 5 years
    and an estimated residual value of $100,000. At the end of the year
    following purchase the residual value estimate was revised to
    $120,000. What is the appropriate depreciation charge for the year
    ended 31 December 2011 in respect of this asset?
    (a) $200,000
    (b)$180,000
    (c) $156,000
    (d) $176,000

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