ACCTG 23 SEMIFINAL EXAM

Investment property are

• Identifiable non-monetary assets without physical substance

• Properties held to earn rentals or for capital appreciation or both

• Assets held for sale in the ordinary courses of business

• Tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and are expected to be used during more than one period

Which of the following is(are) incorrect if the owner uses part of the property for its own use, part to earn rentals or for capital appreciation?

• If the portions can be sold or leased out separately, they are accounted for separately

• If the portions can be sold or leased out separately, the part that is rented out is investment property

• If the portions cannot be sold or leased out separately, the property is investment property even if the owner-occupied portion is significant

• All of the above

Which statement is correct regarding separation of property and classification as investment property in accordance with PIC Q and A No. 2017-10?

• To separately account for the portions of a property, the property must be in a state and condition to enable it to be disposed of separately at the end of the reporting period

• If the property requires sub-division before the portions could be disposed of separately, then those parts are not a accounted for separately until such sub-division occurs

• Both a and b

• Neither a nor b

Which of the following is(are) incorrect if the entity provides ancillary services to the occupants of a property held by the entity?

• The appropriateness of classification as investment property is determined by the significance of the services provided

• If the services provided are relatively insignificant component of the arrangement as whole (for instance, the building owner supplies security and maintenance services to the lessee), then the entity may treat the property as investment property

• Where the service provided are more significant (such as in the case of an owner-managed hotel), the property should be classified as investment property

• All of the statements are correct

In accordance with PIC Q and A No. 2017-6, which of the following collector’s items (e.g paintings, rare items, vintage items, classic cars) can be accounted for in accordance with PAS 40?

• Collector’s items for administrative or aesthetic purposes.

• Collector’s items for short-term investment purposes. The entity also trades these collector’s items in the ordinary course of business.

• Collector’s items for long-term investment purposes. The entity does not trade these collector’s items in the ordinary course of business.

• All of the above

An owned investment property shall be recognized as an asset when, and only when: (a) it is probable that the future economic benefits that are associated with the investment property will flow to the entity, (b) the cost of the investment property can be measure reliably. This principle applies to

• Cost incurred initially to acquire an investment property

• Costs incurred subsequently to add to, replace part of, or a service a property.

• Both a and b

• Neither a nor b

Which statement is incorrect regarding the use fair value model?

• After initial recognition, an entity shall be measure all of its investment property at fair value

• A gain or loss from a change in the fair value of investment property shall be recognized in profit or loss for the period in which it arises.

• There is a rebuttable presumption that an entity can reliably measure the fair value of an investment property on a continuing basis

• A change from the fair value model to the cost model likely results in a more relevant presentation

Depreciation, if applicable is recognized under (a)cost model; (b) fair value model

• YES, YES

• YES, NO

• NO, YES

• NO, NO

If fair value of an investment property can be measured reliably without undue cost or effort, the entity

• Must use the fair model

• May not use the cost model

• Must use the cost model

• Must disclose the fair value of the investment property

PAS 40 requires to all entities

• Measure the fair value of an investment property

• Measure the fair value of investment property on the basis of a valuation by an independent valuer who holds a recognized and relevant professional qualification

• Both a and b

• Neither a nor b