Reference no: EM133121661

Questions -

Q1. A depreciable asset has an estimated 15% salvage value. Under what method/s would the carrying amount of the asset be equal its residual value at the end of its useful life?

a. Sum-of-the-years' digits method and double declining balance method

b. Straight-line method and declining balance method

c. Sum-of-the-years' digits method and straight line method

Q2. Which of the following statements is INCORRECT relating to impairment of property, plant and equipment items?

a. An impairment loss is the excess of an asset's recoverable amount over the its carrying amount.

b. An impairment loss is recognized immediately as an expense in the statement of comprehensive income for an asset that is measured using the cost model.

c. After recognition of an impairment loss, the depreciation charge for the asset should be adjusted in future periods to allocate the asset's revised carrying amount, less its residual value, if any, on a systematic basis over its remaining useful life.

d. Value in use is measured as the present value or discounted value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

Q3. The SYD method of depreciation is being used for a machine with a six-year estimated useful life. What would be the fraction applied to the depreciable cost to be depreciated in the fourth year of use?

a. 4/21

b. 3/6

c. 3/21

d. 4/6