Accounting for Property, Plant, and Equipment Costs

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Which of the following costs are directly attributable and capitalizable when acquiring property, plant, and equipment?

Administration and other general overhead costs

Cost of site preparation (correct)

Costs of opening a new facility

Costs of advertising and promotion

What is an example of a cost that does not qualify for recognition when acquiring property, plant, and equipment?

Costs of conducting business in a new location (correct)

Costs of relocating part of an entity's operations

Costs of employee benefits

Professional fees

Which cost incurred while an item is capable of operating but not yet brought into use is not eligible for capitalization?

Costs of testing asset functionality

Professional fees

Initial operating losses (correct)

Installation and assembly cost

What type of costs related to acquiring property, plant, and equipment are considered expensed and not capitalized?

Costs of introducing a new product or service Signup and view all the answers

When an entity acquires property, plant, and equipment, which cost element is considered directly attributable and capitalizable?

Installation and assembly cost Signup and view all the answers

Which of the following costs is considered directly attributable to acquiring property, plant, and equipment?

Initial delivery and handling costs Signup and view all the answers

When should a government grant be recognized according to PAS 20?

When there is reasonable assurance that the entity will comply with the conditions attached to the grant. Signup and view all the answers

How should a government grant related to an asset be accounted for?

Recognized as income on a systematic basis over the useful life of the asset. Signup and view all the answers

What is required for a government grant to be recognized as income according to PAS 20?

The entity must systematically recognize the related costs as expenses over time. Signup and view all the answers

How should a government grant related to a specific asset be presented?

By deducting the grant in arriving at the carrying amount of the asset Signup and view all the answers

What should be done with a government grant related to an asset whose primary condition is that the entity constructs a long-term asset?

Recognized as income on a systematic basis over time. Signup and view all the answers

According to PAS 16, paragraph 67, when should the carrying amount of an item of property, plant, and equipment be derecognized?

On disposal or when no future economic benefits are expected Signup and view all the answers

Which of the following costs are considered directly attributable costs under PAS 20?

Costs that are specifically identifiable with the project Signup and view all the answers

How should fully depreciated property be treated in the accounts?

Its carrying amount is immediately written off Signup and view all the answers

In accounting for a government grant under PAS 20, which of the following costs would not qualify for recognition?

Costs incurred before receiving the grant Signup and view all the answers

What is the treatment of gain or loss from derecognition of an asset?

Included in profit or loss Signup and view all the answers

How are costs not qualifying for recognition typically treated?

Recognized as an expense immediately Signup and view all the answers

What is the appropriate accounting treatment for a government grant related to income?

Included in profit or loss, under 'other income' Signup and view all the answers

Accounting for Property, Plant, and Equipment Costs

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