Mastering Property
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Questions and Answers

Which of the following is true about property, plant, and equipment?

  • It is recognized as an asset only when it can yield future economic benefits
  • It is measured initially at fair value
  • It is a tangible non-current asset (correct)
  • It is a current asset

    • What is the purpose of depreciation?

  • To recognize a gain or loss on disposal of an asset
  • To measure the fair value of an asset
  • To increase the carrying amount of an asset
  • To allocate the depreciable amount of an asset over its useful life (correct)

    • When should property, plant, and equipment be derecognized?

  • When it is being rented to others
  • When it is no longer being used (correct)
  • When it is acquired
  • When it is measured at fair value

    • Which of the following is a requirement for recognizing property, plant, and equipment as an asset?

    <p>It must yield future economic benefits</p> Signup and view all the answers

    What is the revaluation model for property, plant, and equipment?

    <p>It involves measuring the asset at fair value</p> Signup and view all the answers

    What is the purpose of residual values and lengths of useful lives review?

    <p>To allocate the depreciable amount of an asset over its useful life</p> Signup and view all the answers

    What is the cost model for investment property?

    <p>It involves measuring the asset at cost</p> Signup and view all the answers

    Which of the following is true about investment property?

    <p>It is held for the purpose of earning rental income or for capital appreciation or both</p> Signup and view all the answers

    What is the treatment for borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset?

    <p>They must be recognized as an asset</p> Signup and view all the answers

    What is the treatment for government grants relating to the acquisition of an asset?

    <p>They must be recognized as revenue</p> Signup and view all the answers

    What is the purpose of recognizing revaluation gains and losses for property, plant, and equipment?

    <p>To reflect changes in the fair value of an asset</p> Signup and view all the answers

    What is the purpose of choosing a depreciation method?

    <p>To allocate the depreciable amount of an asset over its useful life</p> Signup and view all the answers

    Which of the following is a requirement for recognizing property, plant, and equipment as an asset?

    <p>It must be held for use in the production or supply of goods or services</p> Signup and view all the answers

    When should property, plant, and equipment be derecognized?

    <p>When no future economic benefits are expected from it</p> Signup and view all the answers

    What is the purpose of depreciation?

    <p>To allocate the depreciable amount of an asset over its useful life</p> Signup and view all the answers

    What are the two models an entity may apply to measure investment property?

    <p>The cost model and the fair value model</p> Signup and view all the answers

    When should borrowing costs be capitalized as part of the cost of a qualifying asset?

    <p>When they are directly attributable to the acquisition, construction or production of a qualifying asset</p> Signup and view all the answers

    When should revaluation gains be credited to a revaluation reserve?

    <p>When an entity applies the revaluation model</p> Signup and view all the answers

    What is the definition of property, plant and equipment?

    <p>Tangible non-current assets held for use in the production or supply of goods or services, or for rental to others or for administrative purposes</p> Signup and view all the answers

    What should an entity do to choose the best depreciation method for an asset?

    <p>Choose a method that best matches the usage pattern of the asset concerned</p> Signup and view all the answers

    How should government grants relating to the acquisition of an asset be recognized?

    <p>As income over the useful life of that asset</p> Signup and view all the answers

    What are the two models an entity may apply to measure property, plant, and equipment?

    <p>The cost model and the revaluation model</p> Signup and view all the answers

    What are the types of economic benefits that property, plant, and equipment may yield?

    <p>Capital appreciation and rental income</p> Signup and view all the answers

    What should an entity do with other borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset?

    <p>They should be recognized as an expense</p> Signup and view all the answers

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