AUDIT ASSURANCE ACTIVITY 1

Which of the following does not considered a cost of an item of property, plant, and equipment under PAS 16

• Purchase price (net of discount taken or not)

• Installation costs and assembly costs

• Initial delivery and handling costs

• Irrecoverable purchase taxes

Under PAS 16, which of the following statements is true regarding the measurement of property, plant, and equipment after the initial recognition?

• Cost model is the only allowed model for subsequent measurement.

• Revaluation model is the only allowed model for subsequent measurement.

• An entity can choose between the Cost model and Revaluation model.

• Either the Cost model or the revaluation model can be used, but only if approved by the regulatory authority.

How should the cost of major inspection of property, plant, equipment be accounted for under PAS 16?

• Capitalizable

• Recognize as a separate expense

• Record as a liability until inspection is complete.

• Depreciate the cost over the useful life of the asset.

If an equipment is acquired by issuing shares, the cost of the equipment is:

• Equal to the fair value of the shares

• Equal to the fair value of the equipment received

• Par value of the shares

• Carrying amount of the equipment

The change of depreciation from one method to another method is accounted as:

• Change in accounting policy

• Retrospective application

• Change in accounting estimates

• Retrospective restatement