Property

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Questions and Answers

Which of the following costs should be included in the initial measurement of property, plant, and equipment?

  • Current market value of the asset at the time of acquisition
  • Costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management (correct)
  • Costs of regular maintenance after the asset is put into use
  • Costs related to relocating the asset to a different location after initial installation

Which of the following is true regarding the subsequent measurement of property, plant, and equipment?

  • Costs incurred for the day-to-day servicing of the asset are capitalized and included in the subsequent measurement
  • Subsequent measurement is always based on the asset's original cost
  • Property, plant, and equipment are carried at revalued amounts, being the fair value at the revaluation date less any subsequent accumulated depreciation and impairment losses (correct)
  • Subsequent measurement is based on the estimated market value of the asset

What happens to the carrying amount of property, plant, and equipment when there is an indication of impairment?

  • It is reduced to its recoverable amount, and the reduction is recognized as an impairment loss (correct)
  • It is increased by the estimated future cash flows from the continued use of the asset
  • It is adjusted by the original cost of the asset
  • It remains unchanged until the impairment is confirmed by an external auditor

Which of the following is an example of an asset that does not qualify for interest capitalization?

<p>Land held for future use (C)</p> Signup and view all the answers

Which of the following assets typically does not qualify for interest capitalization?

<p>Goodwill acquired in a business combination (B)</p> Signup and view all the answers

What type of asset is usually ineligible for interest capitalization?

<p>Software under development for internal use (B)</p> Signup and view all the answers

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