
BS3142 Pause and Reflect QUIZ
Authored by Debbie Campbell
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12 questions
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1.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
A company sells an asset in 20X2. The company had adopted the revaluation model under IAS 16, Property, Plant and Equipment and held a credit balance in the revaluation surplus at the time of sale. What is the CORRECT treatment for the revaluation surplus following the sale of the asset?
Move the balance to the statement of comprehensive income
Transfer the balance to retained earnings
Transfer the balance to the account of the customer who purchased the asset
Begin to amortise the surplus and transfer a portion to the Statement of Comprehensive Income
Don't know - please explain
2.
MULTIPLE CHOICE QUESTION
5 mins • 1 pt
An asset was purchased at the beginning of 20X4 for £80,000. The accumulated depreciation at the end of 20X7 is £32,000. The company has adopted the straight-line method of depreciation and there is no residual value. At the end of 20X8 the asset was valued at £80,000. The journal entry to record the revaluation SHOULD INCLUDE:
Debit asset cost £40,000
Debit asset cost £32,000
Debit accumulated depreciation £32,000
Debit accumulated depreciation £40,000
Don't know - please explain
3.
MULTIPLE CHOICE QUESTION
5 mins • 1 pt
When performing a revaluation of an asset in 20X2, it is discovered that the fair value is LESS THAN the carrying amount by £50,000. The asset had been revalued once before, in 20X1, where it was discovered to have a fair value £30,000 LESS THAN the carrying amount. How should the £50,000 be accounted for in 20X2?
Debit the revaluation surplus by £50,000
Record a loss on the statement of comprehensive income of £30,000 and debit the revaluation surplus by £20,000
Record a loss on the statement of comprehensive income of £20,000 and debit the revaluation surplus by £30,000
Record a loss in the statement of comprehensive income of £50,000
Don't know - please explain
4.
MULTIPLE CHOICE QUESTION
5 mins • 1 pt
An asset was purchased for £300,000 at the beginning of 20X2 and has been accounted for using the cost method. Depreciation has been calculated at £25,000 a year and is recorded in the year of acquisition. An impairment of £40,000 was recorded at the end of 20X3. At the end of 20X4 there are indications that the conditions giving rise to the impairment have changed. After investigation, it has been determined that the recoverable amount of the asset is £240,000. The carrying value prior to recording an impairment reversal is £190,000. How much is the impairment reversal?
NIL – there is no reversal of impairment to record
£50,000
£35,000
£40,000
Don't know - please explain
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
When performing an impairment review under IAS 36, you discover an asset has a carrying value of £600,000, a ‘fair value less costs of disposal’ of £500,000 and a value-in-use of £400,000. A similar asset can be bought from a retailer for £700,000. What is the amount that the asset should be valued on the statement of financial position:
£500,000
£700,000
£400,000
£600,000
Don't know - please explain
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Which of the following is NOT an indicator of impairment?
A material adverse change in legislation that affects the industry that the company operates in
The carrying value of the company’s net assets is less than the market capitalisation
An unfavourable change in market interest rates
Physical damage to an asset
Don't know - please explain
7.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
A company have received a government grant towards the cost of a new piece of machinery. The company has decided to apply the deferred income method of accounting for the grant as allowable under IAS 20. Which of the following statements is FALSE?
Under the deferred income method, the grant is recorded as a liability on the statement of financial position
Under the deferred income method, the grant is amortised over the useful life of the asset it relates to
The depreciation charge is HIGHER under the deferred income method compared to the net method
The depreciation charge is LOWER under the deferred income method compared to the net method
Don't know - please explain
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