18 Questions
Which of the following costs are directly attributable and capitalizable when acquiring property, plant, and equipment?
Cost of site preparation
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
Which cost incurred while an item is capable of operating but not yet brought into use is not eligible for capitalization?
Initial operating losses
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
When an entity acquires property, plant, and equipment, which cost element is considered directly attributable and capitalizable?
Installation and assembly cost
Which of the following costs is considered directly attributable to acquiring property, plant, and equipment?
Initial delivery and handling costs
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.
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.
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.
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
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.
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
Which of the following costs are considered directly attributable costs under PAS 20?
Costs that are specifically identifiable with the project
How should fully depreciated property be treated in the accounts?
Its carrying amount is immediately written off
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
What is the treatment of gain or loss from derecognition of an asset?
Included in profit or loss
How are costs not qualifying for recognition typically treated?
Recognized as an expense immediately
What is the appropriate accounting treatment for a government grant related to income?
Included in profit or loss, under 'other income'
Test your knowledge on the costs directly attributable to bringing an asset to the location and condition necessary for it to operate as intended. This quiz covers costs of employee benefits, site preparation, and initial delivery related to property, plant, and equipment.
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