Ind AS 16 Quiz & Flashcards: Questions & Answers

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Questions and Answers

What is the objective of Ind AS 16?

To provide guidance on revenue recognition
To account for property, plant, and equipment to show information about an entity’s investment and changes in such investment (correct)
To regulate the accounting treatment for financial liabilities
To prescribe the accounting treatment for intangible assets

What is excluded from the scope of Ind AS 16?

Property, plant, and equipment classified as held for sale
Biological assets related to agricultural activity
Recognition and measurement of exploration and evaluation assets
All of the above are excluded (correct)

When does Ind AS 16 not apply to the produce on bearer plants?

When the produce is part of exploration and evaluation assets
When the produce is held for sale
Ind AS 16 always applies to the produce on bearer plants
When the produce is related to agricultural activity other than bearer plants (correct)

Which Standard covers the biological assets related to agricultural activity?

Ind AS 41, Agriculture (D) Signup and view all the answers

In what circumstances does Ind AS 16 not apply to property, plant, and equipment?

When another standard requires or permits a different accounting treatment (C) Signup and view all the answers

What is the fundamental problem in financial reporting addressed by Ind AS 16?

How to periodically account for performance when current expenditures contribute to future periods (D) Signup and view all the answers

Flashcards

Objective of Ind AS 16

To account for property, plant, and equipment, showing how a company invests in these assets and how this investment changes.

What's excluded from Ind AS 16 scope?

Ind AS 16 doesn't apply to items like assets held for sale, exploration for or evaluation of mineral resources, biological assets related to agricultural activity (except for bearer plants), and assets that are accounted for under other standards.

When doesn't Ind AS 16 apply to produce?

Ind AS 16 doesn't apply to produce on bearer plants (like fruit trees) that are part of agricultural activities. Instead, Agricultural activities fall under Ind AS 41.

What standard covers agricultural biological assets?

Ind AS 41, Agriculture, deals with these assets.

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When doesn't Ind AS 16 apply to property, plant, and equipment?

If another standard requires or permits a different accounting treatment, Ind AS 16 doesn't apply.

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What's the main challenge Ind AS 16 addresses?

How to account for expenses that benefit multiple periods? This is the problem addressed by Ind AS 16.

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Study Notes

Objective of Ind AS 16

Establishes principles for recognizing, measuring, and disclosing property, plant, and equipment (PPE) in financial statements.
Aims to enhance comparability and transparency of financial reporting regarding tangible assets.

Exclusions from the Scope of Ind AS 16

Does not apply to biological assets related to agricultural activity, which fall under a different standard.
Special rules for investment property are covered under Ind AS 40, excluding that from Ind AS 16’s provisions.
Exploration and evaluation of mineral resources are governed by Ind AS 106, omitting those from Ind AS 16's scope.

Application of Ind AS 16 to Bearer Plants

Ind AS 16 does not apply when the produce on bearer plants is grown; effects related to harvesting and selling of produce are outside its purview.

Standard for Biological Assets

Ind AS 41 covers biological assets related to agricultural activity, outlining recognition and measurement principles specific to these assets.

Circumstances for Non-Application of Ind AS 16

Ind AS 16 is not applicable to:
- Assets held for sale in the ordinary course of business.
- Certain assets covered under other standards, such as investment properties or mineral resources.

Fundamental Problem Addressed by Ind AS 16

Aims to rectify inconsistencies and inaccuracies in financial reporting related to the treatment of property, plant, and equipment.
Enhances the relevance and reliability of the information presented concerning tangible fixed assets.

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Description

This quiz covers the objective and accounting treatment for property, plant, and equipment as per Ind AS 16. It addresses the challenge in accounting for expenditures that contribute to future periods and aims to provide clear information to users of financial statements.