Artem Co prepares financial statements to 30 June each year.

During the year to 30 June 20X5, the company spent $550,000 on new plant as follows:

$'000

Plant cost 525

Delivery to site 3

Building alterations to accommodate the plant 12

Costs of initial testing of the new plant 2

Plant operator training costs 8

Artem Co's fixtures and fittings were purchased on 1 July 20X2 at a cost of $50,000. The directors have depreciated them on a straight-line basis over an estimated useful life of eight years assuming a $5,000 residual value. At 1 July 20X4, the directors realise that the remaining useful life of the fixtures is five years. There is no change to the estimated residual value.

Artem Co began a research project in October 20X3 with the aim of developing a new type of machine. If successful, Artem Co will manufacture the machines and sell them to customers as well as using them in their own production processes. During the year ended 30 June 20X4, costs of $25,000 were incurred on conducting feasibility studies and some market research. During the year ended 30 June 20X5, a further $80,000 was incurred on constructing and testing a prototype of the machine.

Using the pull down list, select what is the depreciation charge for the fixtures and fittings for Artem Co for the year ended 30 June 20X5 in accordance with IAS 16?

Aphrodite Co has a year end of 31 December and operates a factory which makes computer chips for mobile phones. It purchased a machine on 1 July 20X3 for $80,000 which had a useful life of ten years and is depreciated on the straight line basis, time apportioned in the years of acquisition and disposal. The machine was revalued to $81,000 on 1 July 20X4. There was no change to its useful life at that date.

A fire at the factory on 1 October 20X6 damaged the machine leaving it with a lower operating capacity. The accountant considers that Aphrodite Co will need to recognise an impairment loss in relation to this damage. The accountant has ascertained the following information at 1 October 20X6:

(1) The carrying amount of the machine is $60,750.

(2) An equivalent new machine would cost $90,000.

(3) The machine could be sold in its current condition for a gross amount of $45,000. Dismantling costs would amount to $2,000.

(4) In its current condition, the machine could operate for three more years which gives it a value in use figure of $38,685.

In accordance with IAS 16 Property, Plant and Equipment, what is the depreciation charged to Aphrodite Co's profit or loss in respect of the machine for the year ended 31 December 20X4?

Zeus Co. has a year end of 30 June and operates a factory which makes golf equipment. It purchased a machine on 1 January 2013 for Rs.1,60,000 which had a useful life of ten years and is depreciated on the straight line basis, time apportioned in the years of acquisition and disposal. The machine was revalued to Rs.1,62,000 on 1 January 2014, with no change to its useful life at that date.

In accordance with IAS 16 Property, Plant and Equipment, what is the depreciation charged to Zeus Co’s profit or loss in respect of the machine for the year ended 30 June 2014?

The following information has been extracted from Triage Co’s trail balance :

Plant and equipment – cost Rs.72,100

Plant and equipment – accumulated depreciation Rs.28,100

Included within the cost is an item of equipment that was purchased for Rs.10,000 on 30 Sept. 2015

Triage Co’s notes to the financial statements reveal that depreciation is charged at 15% per annum on a reducing balance basis, time apportioned in the years of acquisition and disposal.

In accordance with IAS 16 Property, Plant and Equipment, what is the depreciation charged to Triage Co’s statement of profit or loss in respect of the plant and equipment for the year ended 30 June 2016?

IAS 16 requires a revaluation surplus resulting from initial revaluation of PPE to be treated in one of the following ways –

An entity owns a fleet of company cars and executive vehicles, and has other property and equipment in order to service the fleet. It decided to revalue some of its property, plant and equipment. Which one of the following options complies with IAS 16?

Which of the following statements are correct?

i. IAS 16 Property, plant and equipment requires entities to disclose the purchase date of each asset.

ii. The carrying amount of a non-current asset is the cost or valuation of that asset less accumulated depreciation.

iii. IAS 16 Property, plant and equipment permits entities to make a transfer from the revaluation surplus to retained earnings for excess depreciation on revalued assets.

iv. Once decided, the useful life of a non-current asset should not be changed.

The components of the cost of a major item of equipment are given below: $

Purchase price 780,000

Import duties 117,000

VAT (refundable) 78,000

Site preparation 30,000

Installation 28,000

Testing 10,000

Initial losses before asset reaches planned performance 50,000

Discounted cost of dismantling and removal at end of useful life 40,000

1,133,000

What amount should be recognised as the cost of the asset in accordance with IAS 16 Property, plant and equipment ?

Which of the following  fall within the scope of IAS 41 Agriculture?

(1) Sheep

(2) Wool

(3) Wine

(4) Vines

XYZ Farm purchased 100 turkeys for $10,000 on 17 November 20X1. At the year-end, 31 December 20X1, the estimated sales price of the 100 turkeys was measured at $10,500. The following costs are expected to be incurred in respect to the sale of the turkeys:

$

Transportation cost 700

Interest expense 300

Income taxes related to this sale 1,000

What amount should be recognised for the biological assets in XYZ’s statement of financial position as at 31 December 20X1?

Which TWO of the following are examples of biological assets within the scope of the accounting requirements of IAS 41 Agriculture?

To which of the following items does IAS 41 Agriculture apply?

(i) A change in fair value of a herd of animals relating to the unit price of the animals.

(ii) Logs held in a wood yard.

(iii) Farm land which is used for growing vegetables.

(iv) The cost of developing a new type of crop seed which is resistant to tropical diseases.

Magna owned cattle recorded in the financial statements at $10,500 on 1 January 20X4.

At 31 December 20X4 the cattle have a fair value of $13,000. If Magna sold the cattle,

commission of 2% would be payable.

What is the correct accounting treatment for the cattle at 31 December 20X4 according to

IAS 41 Agriculture?