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Questions and Answers
Which of the following costs should be included in the initial measurement of property, plant, and equipment?
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?
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?
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?
Which of the following is an example of an asset that does not qualify for interest capitalization?
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Which of the following assets typically does not qualify for interest capitalization?
Which of the following assets typically does not qualify for interest capitalization?
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What type of asset is usually ineligible for interest capitalization?
What type of asset is usually ineligible for interest capitalization?
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