Understanding Residual Value in Accounting
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Questions and Answers

Which term best describes the systematic allocation over its useful life of the cost of an asset, or other amount substituted for cost, less its residual value?

  • Value in use
  • Depreciation (correct)
  • Impairment
  • Derecognition
  • According to IAS16, which of the following should be included in the cost of an item of property, plant and equipment?

  • Costs of training staff on the new asset
  • Apportioned general overhead costs
  • Installation and assembly costs
  • Initial delivery and handling costs (correct)
  • What best describes the amount at which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction?

  • Realisable value
  • Fair value (correct)
  • Residual value
  • Value in use
  • Per IAS16, which statement regarding non-current assets is correct?

    <p>Land and buildings are accounted for separately, even when acquired together</p> Signup and view all the answers

    What refers to the removal of an asset from an entity's statement of financial position?

    <p>Derecognition</p> Signup and view all the answers

    What best describes the term 'residual value'?

    <p>The estimated net amount currently obtainable if the asset were at the end of its useful life</p> Signup and view all the answers

    Which term best describes the cost of an asset less its residual value?

    <p>Depreciable amount</p> Signup and view all the answers

    What best describes the carrying amount of an asset?

    <p>The amount at which the asset is recognized in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses</p> Signup and view all the answers

    Which term best describes the removal of an asset from an entity's statement of financial position?

    <p>Derecognition</p> Signup and view all the answers

    What best describes the term 'depreciation'?

    <p>Allocating the cost of an asset over its useful life</p> Signup and view all the answers

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