Reference no: EM132927049

Questions -

Q1. The initial application of a policy to revalue assets in accordance with PAS 16, Property, Plant & Equipment

a. Must be treated as an extraordinary event.

b. Must be accounted for as a change in accounting policy.

c. Must not be accounted for as a change in accounting policy.

d. May be accounted for in accordance with the requirements of the Conceptual Framework.

Q2. If the reporting entity chooses to switch from the cost model to the revaluation model for property, plant and equipment, the periodic depreciation charge usually will

a. Decrease. b. Increase. c. No longer required. d. Not affected

Q3. Booster Co purchased the building on 1 January 2010 for P1,250,000. At acquisition, the useful life of the building was 50 years. Depreciation is calculated on a straight-line basis. On 1 January 2020, the building was revalued to P1,600,000. Booster Co. has a policy of transferring excess depreciation on revaluation from a revaluation surplus to retained earnings. Assuming no further revaluations take place, what is the balance on the revaluation surplus on 31 December 2020?

Q4. At 1 January 2020, the revaluation surplus of Bloxden was P1,257,000. This was in respect of the company's head office. During the year to 31 December 2020, the value of the head office increased by a further P82,000. In the same period, the company's factory suffered an impairment of P90,000. What is the value of the revaluation surplus on 31 December 2020? Use the following information for the next two questions: The following figures have been extracted from the accounting records of the Twitch Corporation on December 31, 2019: Cost Accumulated Depreciation 25-year leasehold factory P50,000,000 P10,000,000 15-year leasehold factory 30,000,000 10,000,000 On January 1, 2020 Twitch had its two leasehold factories revalued (for the first time) by an independent surveyor as follows: 25-year leasehold P52,000,000 15-year leasehold 18,000,000 Twitch depreciates its leaseholds on a straight-line basis over the life of the lease. The directors of Twitch are disappointed in the value placed on the 15-year leasehold. The surveyor has said that the fall in its value is due mainly to its unfavorable location, but in time the surveyor expects its value to increase. The directors are committed to incorporating the revalued amount of the 25-year leasehold into their financial statements, but wish to retain the historical cost basis for the 15-year leasehold.

Q5. The carrying amount of leasehold factories as of December 31, 2020 should be

Q6. The revaluation surplus as of December 31, 2020 should be

Q7. When an entity chooses the revaluation model as its accounting policy for measuring property, plant and equipment, which of the following statements is correct?

a. Revaluation of property, plants and equipment must be made at least every three years.

b. When an asset is revalued, the entire class of property, plant and equipment to which that asset belongs must be revalued.

c. Increases in an asset's carrying value as a result of the first revaluation must be recognized as a component of profit or loss.

d. When an asset is revalued, individual assets within a class of property, plant and equipment to which that asset belongs can be revalued.