Reference no: EM132595792
Question 1: Evolution Corp. follows the proportional method for revaluation of its property, plant, and equipment. On December 31, 20X3, Evolution paid $200,000 for vacant land and elected to subsequently value it using the revaluation model. It is now December 31, 20X7. A summary of the land's fair value at Evolution's intervening year end follows:
December 31, 20X4 $170,000
December 31, 20X5 $195,000
December 31, 20X6 $190,000
December 31, 20X7 $240,000
How should Evolution report the revaluation of the land on its December 31, 20X7, statement of comprehensive income?
a) Credit $10,000 gain ROL* - profit or loss and $40,000 gain ROL - OCI
b) Credit $40,000 gain ROL - profit or loss and $10,000 gain ROL - OCI
c) Credit $50,000 gain ROL - OCI
d) Credit $50,000 gain ROL - profit or loss *ROL - revaluation of land
Question 2: Which of the following statements regarding the accounting treatment of intangible assets under IFRS is true?
a) All intangible assets have an indefinite useful life.
b) All intangible assets are internally generated.
c) All intangible assets should be tested for impairment.
d) All intangible assets are subsequently measured using the cost model.
Question 3: On August 31, 20X8, Gamma Corp. decided to sell its retail division. Upon review of the relevant facts, Gamma decided to account for this division as a discontinued operation. After the asset group was listed for sale, a broker was able to source an offshore buyer for the unit, and on October 31, 20X8, Gamma received a binding offer. Gamma agreed to pay a higher-than-expected sales commission due to the unique nature of the offer. Gamma prepares monthly financial statements and reports its financial results in accordance with IFRS.
August 31, 20X8
Carrying amount $15,000,000
Fair value 15,400,000
Estimated costs to sell 300,000
October 31, 20X8
Fair value (binding offer price) $15,500,000
Costs to sell (agreed-upon sales commission) 600,000
What amount of impairment loss (recovery), if any, should Gamma report on its October 31 financial statements?
a) ($200,000)
b) $ 0
c) $100,000
d) $200,000