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Question 1 of 194
1. Question
1. Residual value is specifically:
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Question 2 of 194
2. Question
2. Useful life of an asset refers to the life:
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Question 3 of 194
3. Question
3. Spare parts and servicing equipment are usually accounted for as:
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Question 4 of 194
4. Question
4. Individually-insignificant items, such as moulds, tools and dies may be:
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Question 5 of 194
5. Question
5. Repairs and maintenance costs are normally:
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Question 6 of 194
6. Question
6. If the costs of a major inspection (for example, aircraft) are capitalised:
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Question 7 of 194
7. Question
7. Elements of cost are: (i) The purchase price (ii) Any costs directly attributable to bringing the asset to the location (iii) The initial estimate of the costs of dismantling, and removing the item (iv) Overheads of the purchasing department relating to the buy of the asset.
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Question 8 of 194
8. Question
8. Directly attributable costs include: (i) staff costs arising directly from the construction, or acquisition, of the item of property, plant and equipment; (ii) site preparation costs; (iii) initial delivery and handling costs; (iv) costs of testing whether the asset is functioning properly, after deducting the net proceeds from any samples, or sundry income; and (v) professional fees. (vi) costs of opening a new facility; (vii) costs of introducing a new product, or service (including costs of advertising and promotional activities); (viii) costs of running a business in a new location, or with a new class of customer (including costs of staff training); and (ix) administration and other general overhead costs.
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Question 9 of 194
9. Question
9. Recognition of costs (to be capitalised) ceases when:
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Question 10 of 194
10. Question
10. The following costs should be accounted for as: (i) costs incurred while an item, capable of operating in the manner intended by management, has yet to be brought into use, or is operated at less than full capacity; (ii) initial operating losses, such as those incurred while demand for the item’s output builds up; and (iii) costs of relocating, or reorganising part, or all, of an undertaking’s operations.
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Question 11 of 194
11. Question
11. Incidental income and expenses (such as using a site as a temporary car park) should be:
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Question 12 of 194
12. Question
12. Internal profits generated, when creating a self-constructed asset, should be:
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Question 13 of 194
13. Question
13. If payment for a fixed asset is deferred beyond normal credit terms, any additional payment above the cash cost of the asset will be accounted for as:
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Question 14 of 194
14. Question
14. If one or more assets are exchanged for a new asset, the new asset is valued at:
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Question 15 of 194
15. Question
15. In the case of an exchange of assets, if the acquired asset cannot be valued:
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Question 16 of 194
16. Question
16. An undertaking can choose either the cost model or the revaluation model, as its accounting policy, it must apply the chosen model to:
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Question 17 of 194
17. Question
17. Using the cost model, the asset in accounted for at:
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Question 18 of 194
18. Question
18. Using the revaluation model, can fair values be estimated, if there is no market-based evidence?
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Question 19 of 194
19. Question
19. Revaluations are required:
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Question 20 of 194
20. Question
20. When an item is revalued, any accumulated depreciation at the date of the revaluation is treated in which of the following ways:
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Question 21 of 194
21. Question
21. Examples of separate classes of fixed assets are: (i) land. (ii) land and buildings. (iii) machinery. (iv) ships. (v) aircraft. (vi) motor vehicles. (vii) furniture and fixtures. (viii) office equipment. (ix ) stationery
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Question 22 of 194
22. Question
22. A class of assets may be revalued on a rolling basis, provided:
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Question 23 of 194
23. Question
23. If an asset’s carrying amount is increased by revaluation, the increase is;
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Question 24 of 194
24. Question
24. If an asset’s carrying amount is decreased by revaluation and there is no revaluation reserve, the decrease should be:
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Question 25 of 194
25. Question
25. Transfers of amounts between Equity – Revaluation Reserve and retained earnings are allowed
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Question 26 of 194
26. Question
26. Depreciation charges for a period are recorded:
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Question 27 of 194
27. Question
27. Changes in the estimated useful life should:
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Question 28 of 194
28. Question
28. The carrying value of your asset is $10. Its fair value is $12. Do you continue depreciation?
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Question 29 of 194
29. Question
29. The carrying value of your asset equals the residual value. Do you continue to depreciate it?
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Question 30 of 194
30. Question
30. Regular repair and maintenance preserves the value of your hotel. Do you continue to depreciate it?
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Question 31 of 194
31. Question
31. Your asset has a residual value. Do you continue to depreciate it?
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Question 32 of 194
32. Question
32. Depreciation can cease when an asset is idle.
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Question 33 of 194
33. Question
33. In determining the useful life of an asset, consider: (i) Expected usage of the asset. (ii) Expected physical wear and tear. (iii) Technical, or commercial obsolescence. (iv) Legal, or similar, limits on the use of the asset. (v) Interest rates.
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Question 34 of 194
34. Question
34. Land and buildings are separate assets, as:
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Question 35 of 194
35. Question
35. You buy land and building. The land is revalued at double its cost. Do you continue to depreciate the building?
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Question 36 of 194
36. Question
36. If your land is leased under a finance lease, do you depreciate it?
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Question 37 of 194
37. Question
37. A variety of depreciation methods can be used. These methods include the straight-line method, the diminishing balance method and the units of production method. The choice of depreciation method is governed by:
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Question 38 of 194
38. Question
38. Compensation from third parties for items impaired, lost or sequestrated should be recorded as income:
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Question 39 of 194
39. Question
39. The carrying amount of an item of PPE will be derecognised:
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Question 40 of 194
40. Question
40. A gain on the sale of an asset should be recorded as:
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Question 41 of 194
41. Question
41. The gain, or loss, arising on the sale of an asset is:
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Question 42 of 194
42. Question
42. Which of the following items qualifies as property, plant and equipment?
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Question 43 of 194
43. Question
43. The “carrying amount” of an item of property, plant and equipment generally refers to:
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Question 44 of 194
44. Question
44. A company pays £40,000 to replace a major component of a factory machine. The faulty component that is replaced is sold for £2,000. The carrying amount of the machine just before this replacement occurs is £450,000, of which £10,000 relates to the faulty component that is being replaced. The revised carrying amount of the machine after the replacement occurs and the profit or loss on disposal of the faulty component are:
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Question 45 of 194
45. Question
45. Which of the following would not be included in the cost of an item of property, plant and equipment?
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Question 46 of 194
46. Question
47. Depreciation is defined as the fall in value of an asset during an accounting period. True or False?
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Question 47 of 194
47. Question
48. On 1 January 2015, a company which prepares financial statements to 31 December each year buys an item of equipment for £20,000. Useful life is estimated to be six years and residual value is expected to be approximately £1,500.
The company uses the diminishing balance method of depreciation at a rate of 35% per annum.
To the nearest pound, the depreciation of this item for the year to 31 December 2016 would be:CorrectIncorrect -
Question 48 of 194
48. Question
49. Borrowing costs that are directly attributable to the acquisition of a qualifying asset must be capitalised as part of the cost of that asset. True or False?
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Question 49 of 194
49. Question
50. A company has the following general borrowings outstanding throughout the whole of an accounting year:
6.5% Bank loan of £400,000
8% Bank loan of £800,000
If a qualifying asset costing £50,000 is funded out of these general borrowings, the capitalisation rate that should be used is:CorrectIncorrect -
Question 50 of 194
50. Question
51. If investment property is measured using the fair value model, a gain arising from a change in the fair value of an investment property must be:
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Question 51 of 194
51. Question
52. If a company adopts the revaluation method in relation to an item of property, plant and equipment, it is no longer necessary to charge depreciation in relation to that item. True or False?
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Question 52 of 194
52. Question
53. On 1 January 2015, a company which prepares financial statements to 31 December acquires an item of equipment and receives a government grant of 20% of the item’s cost. The item cost £30,000 and has an expected useful life of seven years with a residual value of approximately £4,000.
The item is depreciated on the diminishing balance basis at a rate of 25% per annum.
The amount of the grant that should be recognised as income in the year to 31 December 2016 is:CorrectIncorrect -
Question 53 of 194
53. Question
54. In accordance with IAS 36 Impairment of Assets, which one of the following statements is correct?
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Question 54 of 194
54. Question
55. In accordance with IAS 36 Impairment of Assets, which one of the following statements could be an indicator that an asset may be impaired?
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Question 55 of 194
55. Question
56. In accordance with IAS 36 Impairment of Assets, which one of the following situations is most likely to be an impairment indicator?
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Question 56 of 194
56. Question
57. The IAS 36 Impairment of Assets impairment test for an individual asset requires that the carrying amount of the asset be compared with its recoverable amount. According to IAS 36, ‘recoverable amount’ is described as the higher of two items.
Which of the following items are included in the definition of recoverable amount? Select which one of the following options is correct.
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Question 57 of 194
57. Question
58. Roller Ltd (Roller) is testing an asset for impairment. The carrying amount of the asset is $85 000. The following data has been obtained by Roller in relation to the asset.
- Future cash flows expected to be derived from the asset, $100 000.
- Estimated fair value of the asset, $80 000.
- Present value of future cash flows expected to be derived from the asset, $60 000.
- Costs of disposal for the asset, $2000.
In accordance with IAS 36 Impairment of Assets, what is the recoverable amount of the asset? Select which one of the following is correct.
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Question 58 of 194
58. Question
59. The accountant for a manufacturing company is determining the value in use of an item of equipment. In accordance with IAS 36 Impairment of Assets, which one of the following items should be included in the determination of the equipment’s value in use?
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Question 59 of 194
59. Question
63. The following information relates to three cash generating units.
CGU A
$000
CGU B
$000
CGU C
$000
Total
$000
Carrying amount prior to allocation of corporate asset
1 000
2 000
4 000
7 000
Allocatio n of corporate asset (building)
150
200
350
700
Carrying amount after corporate asset allocation
1 150
2 200
4 350
7 700
Recoverable amount
1 500
1 800
3 850
In accordance with IAS 36 Impairment of Assets, what is the amount (to the nearest thousand) of the impairment loss that would be allocated to the corporate asset (building)?
Select which one of the following is correct.
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Question 60 of 194
60. Question
64. In accordance with IAS 36 Impairment of Assets, how should an impairment loss for a cash generating unit (CGU) that includes goodwill be allocated?
Select which one of the following is correct.
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Question 61 of 194
61. Question
66. In accordance with IAS 36 Impairment of Assets, when determining the fair value of an asset less costs of disposal or its value in use, which one of the following statements is correct?
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Question 62 of 194
62. Question
67. In accordance with IAS 36 Impairment of Assets, when identifying a cash-generating unit (CGU), which one of the following statements is correct?
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Question 63 of 194
63. Question
68. The following statements have been made in relation to the impairment of cash generating units (CGUs) and corporate assets. Select which two of the following are correct.
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Question 64 of 194
64. Question
69. Your asset is impaired: its ‘fair value less costs to sell’ = loss of $4k and its ‘value in use’ = $6k. Which value do you use?
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Question 65 of 194
65. Question
70. Your asset is impaired: its ‘fair value less costs to sell’ = loss of $4k and its ‘value in use’ = loss of $2k. Which value do you use?
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Question 66 of 194
66. Question
71. The carrying value of your cash-generating unit = Assets $10m + Goodwill $3m And Its ‘value in use’ = $11m You should:
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Question 67 of 194
67. Question
72. For impairment testing a cash-generating unit is
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Question 68 of 194
68. Question
73. Costs of disposal are:
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Question 69 of 194
69. Question
74. An asset is impaired if:
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Question 70 of 194
70. Question
75. Goodwill should be tested for impairment
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Question 71 of 194
71. Question
76. Value-in-use is
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Question 72 of 194
72. Question
77. IAS 36 applies to which of the following assets
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Question 73 of 194
73. Question
78. If the fair value less costs to sell cannot be determined
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Question 74 of 194
74. Question
79. Carrying amount is the amount at which an asset is recognised __________.
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Question 75 of 194
75. Question
80. Which of the following terms does this statement define: “the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount”?
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Question 76 of 194
76. Question
81. Which of the following statements do agree with IAS 36?
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Question 77 of 194
77. Question
82. The existence of which of the following in the entity’s internal reporting does indicate that an asset may be impaired?
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Question 78 of 194
78. Question
83. Which of the following is not an external indication of impairment?
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Question 79 of 194
79. Question
84. An impairment loss is:
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Question 80 of 194
80. Question
85. Which of the following is not an external indication of impairment?
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Question 81 of 194
81. Question
86. An asset’s recoverable amount is equal to:
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Question 82 of 194
82. Question
87. An asset’s carrying amount is £25,000. Its fair value less costs of disposal is £15,000 and its value in use is £19,000. There is an impairment loss of:
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Question 83 of 194
83. Question
88. How often should goodwill acquired in a business combination be tested for impairment?
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Question 84 of 194
84. Question
89. The IAS36 definition of “corporate assets” specifically excludes goodwill. True or False?
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Question 85 of 194
85. Question
90. The carrying amount of a CGU is £900,000. This consists of goodwill £250,000 and property, plant and equipment £650,000. The CGU has a recoverable amount of only £520,000. How is the impairment loss allocated between the assets of the CGU?
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Question 86 of 194
86. Question
91. An asset is expected to generate cash inflows of £20,000 per annum for each of the next three years and then to be scrapped. These cash inflows will occur at the end of each year. The asset will generate no cash outflows. Using a discounting rate of 10% per annum, what is the asset’s value in use?
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Question 87 of 194
87. Question
92. Which of the following is not an internal indication of the fact that an impairment loss has now decreased or no longer exists?
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Question 88 of 194
88. Question
93. A previously-recognised impairment loss relating to goodwill should be reversed if there is evidence that the loss no longer exists. True or False?
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Question 89 of 194
89. Question
94. The carrying amount of a CGU is £525,000. This consists of goodwill £75,000, development costs £150,000 and property, plant and equipment £300,000. The CGU has a recoverable amount of £330,000.
What is the carrying amount of the property, plant and equipment after the impairment loss has been allocated?
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Question 90 of 194
90. Question
95. An asset has a carrying amount of £22,500 and is expected to yield cash flows of £8,000 per annum for the next three years. The asset’s fair value less costs of disposal is £17,200.
Assuming that all cash flows occur at the end of the year concerned and that the appropriate discount rate is 7%, the amount of the impairment loss is:
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Question 91 of 194
91. Question
96. Self-Starter Sports Ltd (Self-Starter Sports) internally developed several assets. Which one of the following internally generated assets should be recognised in accordance with IAS 38 Intangible Assets? Assume that the expected future economic benefits of the internally generated assets are probable and the cost of the asset can be measured reliably.
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Question 92 of 194
92. Question
97. A newly set up dot-com entity has engaged you as its financial advisor. The entity has recently completed one of its highly publicized research and development projects and seeks your advice on the accuracy of the following statements made by one of its stakeholders. Which one is it?
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Question 93 of 194
93. Question
98. Which item listed below does not qualify as an intangible asset?
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Question 94 of 194
94. Question
99. Which of the following items qualify as an intangible asset under IAS 38?
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Question 95 of 194
95. Question
100. Once recognized, intangible assets can be carried at:
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Question 96 of 194
96. Question
101. Which of the following disclosures is not required by IAS 38?
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Question 97 of 194
97. Question
102. The definition of an intangible asset comprises: (i) Identifiability (ii) Control over a resource (iii) Existence of future benefits (iv) Residual value
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Question 98 of 194
98. Question
103. An undertaking can choose either the cost option or the revaluation option, as its accounting policy. It must apply the chosen model to:
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Question 99 of 194
99. Question
104. Using the revaluation option, can fair values be estimated, if there is no market-based evidence?
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Question 100 of 194
100. Question
105. Control is:
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Question 101 of 194
101. Question
106. Research costs can be capitalised:
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Question 102 of 194
102. Question
107. Which of the following assets is not an intangible asset?
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Question 103 of 194
103. Question
108. Which of the following statements, relating to intangible assets is / are correct?
- Research on market potential, prior to launching a product, can be capitalised
- Applied research, calculated to achieve a stated aim, can be capitalised.
- An asset should never be capitalised if it has no physical existence
- A resource, though intangible, may be capitalised, if it qualifies to be capitalised if it is identifiable and meets the capitalisation criteria
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Question 104 of 194
104. Question
109. Which of the following qualities should an asset possess for it to qualify for recognition as an asset?
- It should have physical existence
- It should be within the entity’s control
- It should always be separable i.e. realizable without selling the whole business
- There should be a probability of future economic benefit from it
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Question 105 of 194
105. Question
110. Which of the following intangibles is the only one which may be capitalised, at least initially, though (i) it is not separable (ii) there is no active market in it and (iii) flow of economic benefit from it is not probable
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Question 106 of 194
106. Question
111. A company paid £10 million to acquire a reputed brand name. Although there is no active market in that asset it is permitted to report the brand name as an asset for which two of the following reasons?
- It was so very expensive to acquire
- Its cost has been established by a market transaction
- It is a name of such high market reputation
- Future economic benefits from it are probable because otherwise it would not have been acquired at such a cost.
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Question 107 of 194
107. Question
112. Which of the following intangibles is/ are prohibited from being recognised as an asset?
- Home grown goodwill
- Separately acquired intangible
- Internally generated intangibles
- Goodwill acquired as part of an on-going business
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Question 108 of 194
108. Question
113. For which one or more of the following reasons is the recognition as an asset of an internally generated intangible prohibited?
- Because there may not be an active market for that asset
- Because its cost is usually relatively insignificant
- Because it is difficult to reliably identify the related costs
- Because it is difficult to establish the probability of flow of economic benefits
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Question 109 of 194
109. Question
114. Which one or more of the following is /are essential for recognising an intangible asset (other than goodwill) when a business is acquired as a going concern?
- There is a probability that future economic benefits would arise from it
- It should have been reported as an asset by the business acquired.
- Its value should have been stated on the agreement for buying the business
- There should be a reliable basis for valuing it
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Question 110 of 194
110. Question
115. Which of the following expenses should be capitalised?
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Question 111 of 194
111. Question
116. A company is searching for a white board marker the writings of which, instead of being rubbed off, may be blown out when lecturers breathe on them from a distance. Which of the following expenses incurred by the company qualifies to be classified as development cost?
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Question 112 of 194
112. Question
117. Which of the following need to be established before development costs are capitalised?
- A customer should have ordered the development of the product
- The cost of the product should be reliably identified
- The business should have all necessary resources to complete the project
- The business should be committed to completing the development
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Question 113 of 194
113. Question
118. If a development projects meets with all the conditions stipulated in IAS 38, the requirement of the standard is that the costs of that project?
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Question 114 of 194
114. Question
119. Which of the following are valid reasons for capitalising development costs?
- For properly matching the cost of a development with benefits arising there from
- To ensure that resources available for generating income are fully reported
- Otherwise there will be reluctance to develop new projects
- Otherwise there would be an anomaly between developed asset and purchased one
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Question 115 of 194
115. Question
120. Which of the following are reasons for writing off research & development costs as expenses?
- Poor co-relation between costs and delayed flow of economic benefit
- It may not always be probable that there will be a flow of future economic benefit
- To keep the cost of development a secret from rival companies
- Otherwise the liquidity of the company could be at peril.
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Question 116 of 194
116. Question
121. The cost of goodwill purchased as part of an acquisition of an on going business shall be?
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Question 117 of 194
117. Question
122. Intangible assets, other than goodwill, acquired as part of an on-going business or acquired separately:
- Should be never amortised
- Should be amortised systematically over its estimated useful life
- Should be written off over not more than five years
- Should be reviewed for impairment if their useful life is regarded as indefinite.
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Question 118 of 194
118. Question
123. Which of the following statements with regard to accounting for goodwill and other intangibles is not correct?
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Question 119 of 194
119. Question
124. Subsequent expenditure on brands, mastheads, publishing titles, customer lists and similar items must always be recognised in profit or loss as incurred.
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Question 120 of 194
120. Question
125. Purchased goodwill is shown in the statement of financial position because it has been paid for. It has no tangible substance, and so it is an intangible non-current asset. It is dealt with under:
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Question 121 of 194
121. Question
126. Sandy Ltd (Sandy) measures its investment in Blue Chip Ltd (Blue Chip) shares at fair value. Blue Chip shares are listed and actively traded on the stock exchange. Which one of the following valuations should Sandy use to measure its investment in shares in Blue Chip in its financial statements at 30 June 20X3?
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Question 122 of 194
122. Question
129. Cayenne Ltd (Cayenne) purchases a property on 1 July 20X0 for $100 000. It sells the property on 1 January 20X3 to Snow Ltd (Snow) in exchange for 10 000 shares in Snow. On that date, Snow’s share price is $11 and the fair value of the property is $108 000.
Which one of the following statements is correct?
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Question 123 of 194
123. Question
130. Which one of the following is a criticism of IAS 40 Investment Property?
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Question 124 of 194
124. Question
131. Investment property can be held by: The owner B. A lessor, under a finance lease C. A lessee, under a finance lease
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Question 125 of 194
125. Question
132. A property that is held by a lessee, under an operating lease, may be held as an investment property, but only if:
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Question 126 of 194
126. Question
133. If property held under an operating lease is classified as investment property:
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Question 127 of 194
127. Question
134. If a property is partly an investment property, and partly owner-occupied, the firm should account for the property:
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Question 128 of 194
128. Question
135. If a firm provides significant ancillary services to tenants in its property:
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Question 129 of 194
129. Question
136. A parent company leases a property to its subsidiary. It may be classified as an investment property in the:
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Question 130 of 194
130. Question
137. Repairs and maintenance costs are normally:
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Question 131 of 194
131. Question
138. If the costs of a major repair (for example, replacement of walls) are capitalised:
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Question 132 of 194
132. Question
139. Elements of cost of an investment are:<br> 1. Its purchase price 2. Legal costs 3. Property transfers taxes 4. Overheads of the property department relating to the purchase of the asset
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Question 133 of 194
133. Question
140. If payment for an investment property is deferred beyond normal credit terms, any additional payment above the cash cost of the asset will be accounted for as:
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Question 134 of 194
134. Question
141. The cost of a property interest held under a lease should be valued at:
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Question 135 of 194
135. Question
142. If one or more assets are exchanged for a new asset, the new asset is valued at:
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Question 136 of 194
136. Question
143. In the case of an exchange of assets, if the acquired asset cannot be valued:
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Question 137 of 194
137. Question
144. An undertaking can choose either the cost model or the revaluation model, as its accounting policy for investment property. It must apply the chosen model to:
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Question 138 of 194
138. Question
145. A gain arising from a change in the fair value of investment property should be recorded:
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Question 139 of 194
139. Question
146. Fair value accounts for future capital expenditure that will improve the property:
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Question 140 of 194
140. Question
147. Using the cost model, the asset in accounted for at:
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Question 141 of 194
141. Question
148. When an undertaking decides to dispose of an investment property without development:
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Question 142 of 194
142. Question
149. If an undertaking begins to redevelop an existing investment property for continued use as investment property:
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Question 143 of 194
143. Question
150. When an undertaking uses the cost model, transfers between investment property, owner-occupied property and inventories:
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Question 144 of 194
144. Question
151. For a transfer from investment property, carried at fair value, to owner-occupied property or inventories, the property’s cost for subsequent accounting is:
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Question 145 of 194
145. Question
152. For a transfer from inventories to investment property that will be carried at fair value, any difference between the fair value of the property at that date and its previous carrying amount is:
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Question 146 of 194
146. Question
153. When an undertaking completes the construction, or development, of a self-built investment property that will be carried at fair value, any difference between the fair value of the property at that date, and its previous carrying amount:
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Question 147 of 194
147. Question
154. Compensation from third parties for items impaired, lost or sequestrated should be recorded as income:
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Question 148 of 194
148. Question
155. The carrying amount of an item is derecognised (written out of the balance sheet/statement of financial position):
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Question 149 of 194
149. Question
156. The gain, or loss, arising on the sale of an asset is:
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Question 150 of 194
150. Question
157. IFRS 5 covers: 1. The classification, measurement and presentation of assets ‘held for sale’ 2. The classification and presentation of discontinued operations 3. The impairment of long-lived assets to be held and used
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Question 151 of 194
151. Question
158. A disposal group, which was part of a cash-generating unit:
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Question 152 of 194
152. Question
159. A firm purchase commitment is an agreement, binding on both parties, that: 1. Specifies all significant terms, including the price and timing of the transactions 2. Includes a disincentive for non-performance, which is sufficiently large to make performance highly probable 3. Is with an unrelated party
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Question 153 of 194
153. Question
160. Recoverable amount is an asset’s:
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Question 154 of 194
154. Question
161. For an asset to be held for sale,: 1. It must be available for immediate sale in its present condition 2. Its sale must be highly probable 3. The management must be committed to a plan to sell the asset 4. The management must have an active programme to locate a buyer 5. The asset must be actively marketed for sale 6. The sale should be expected to be completed within one year from the date of classification 7. The asset should be fully depreciated
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Question 155 of 194
155. Question
162. If the criteria are met after the end of reporting period, an undertaking shall:
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Question 156 of 194
156. Question
163. If a newly acquired asset is ‘held for sale’, the asset or disposal group will be measured at:
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Question 157 of 194
157. Question
164. If the asset or disposal group is acquired as part of a business combination, it shall be measured at:
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Question 158 of 194
158. Question
165. Subsequent re-measurement: Provisions for obsolete inventory and doubtful debts should be reviewed:
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Question 159 of 194
159. Question
166. An adjustment, to the carrying amount of a non-current asset that ceases to be classified as ‘held for sale’, is recorded in:
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Question 160 of 194
160. Question
167. As at 30 September 2013 Dune’s property in its statement of financial position was:
Property at cost (useful life 15 years) $45 million
Accumulated depreciation $6 million
On 1 April 2014, Dune decided to sell the property. The property is being marketed by a property agent at a price of $42 million, which was considered a reasonably achievable price at that date. The expected costs to sell have been agreed at $1 million. Recent market transactions suggest that actual selling prices achieved for this type of property in the current market conditions are 10% less than the price at which they are marketed.
At 30 September 2014 the property has not been sold.
At what amount should the property be reported in Dune’s statement of financial position as at 30 September 2014?
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Question 161 of 194
161. Question
168. Non-current assets that meet the criteria are presented separately on the Statement of Financial Position within current assets
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Question 162 of 194
162. Question
169. Discontinued operations and operations held for sale shall not be disclosed separately in the statement of financial position at the lower of their carrying value less costs to sell.
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Question 163 of 194
163. Question
170. If a component is not itself a separate major line of business or geographical area of operations then it must be “part of a single co-ordinated plan” to dispose of such a line of business or geographical area of operations. The single plan might relate to:
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Question 164 of 194
164. Question
171. Whilst a non-current asset/disposal group is classified as held for sale it should not be depreciated or amortised.
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Question 165 of 194
165. Question
172. An entity shall apply IFRS 16 to all leases, except leases of right-of-use assets in a sublease.
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Question 166 of 194
166. Question
173. A contract is, or contains, a lease if the contract conveys the right __________ an identified asset for a period of time in exchange for consideration.
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Question 167 of 194
167. Question
174. Which of the following shall a lessee recognise at the commencement date?
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Question 168 of 194
168. Question
175. At the commencement date, a lessee shall measure the right-of-use asset at __________.
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Question 169 of 194
169. Question
176. Which of the following situations would normally lead to a lease being classified as a finance lease?
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Question 170 of 194
170. Question
177. A lease of land which does not transfer legal title to the lessee by the end of the lease term cannot be a finance lease. True or False?
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Question 171 of 194
171. Question
178. In relation to operating leases, which of the following statements is not true?
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Question 172 of 194
172. Question
179. At the commencement of a finance lease, IAS17 requires that the lessee should recognise both an asset and a liability to the lessor. These should be measured at:
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Question 173 of 194
173. Question
180. The total finance charge arising in relation to a finance lease is equal to:
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Question 174 of 194
174. Question
181. On 1 January 2015, a company which prepares financial statements to 31 December each year acquires a machine on a finance lease. The fair value of the machine on 1 January 2015 is £50,000 and the company is required to make three lease payments of £19,753 each. These payments fall due on 31 December 2015, 2016 and 2017. The rate of interest implicit in the lease is 9% per annum.
Calculate the finance charge which should be shown in the company’s financial statements for the year to 31 December 2015 if the total finance charge is allocated to accounting periods using the level spread method.
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Question 175 of 194
175. Question
182. On 1 January 2015, a company which prepares financial statements to 31 December each year acquires a machine on a finance lease. The fair value of the machine on 1 January 2015 is £50,000 and the company is required to make three lease payments of £19,753 each. These payments fall due on 31 December 2015, 2016 and 2017. The rate of interest implicit in the lease is 9% per annum.
Calculate the finance charge which should be shown in the company’s financial statements for the year to 31 December 2015 if the total finance charge is allocated to accounting periods using the sum of digits method.
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Question 176 of 194
176. Question
183. On 1 January 2015, a company which prepares financial statements to 31 December each year acquires a machine on a finance lease. The fair value of the machine on 1 January 2015 is £50,000 and the company is required to make three lease payments of £19,753 each. These payments fall due on 31 December 2015, 2016 and 2017. The rate of interest implicit in the lease is 9% per annum.
Calculate the finance charge which should be shown in the company’s financial statements for the year to 31 December 2015 if the total finance charge is allocated to accounting periods using the actuarial method.
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Question 177 of 194
177. Question
184. On 1 January 2015, a company which prepares financial statements to 31 December each year acquires a machine on a finance lease. The fair value of the machine on 1 January 2015 is £50,000 and the company is required to make three lease payments of £19,753 each. These payments fall due on 31 December 2015, 2016 and 2017. The rate of interest implicit in the lease is 9% per annum.
Assuming that the total finance charge is allocated to accounting periods using the actuarial method, calculate the liability to the lessor at 31 December 2015 and show how this should be split between current and non-current liabilities.
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Question 178 of 194
178. Question
185. In the case of a finance lease, the statement of financial position of the lessor shows the leased item as an asset so long as legal title to the item is not transferred to the lessee. True or False?
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Question 179 of 194
179. Question
186. On 1 January 2016, a company entered into a finance lease to acquire an item of equipment and made its first annual payment of £50,000. The fair value of the item on 1 January 2016 was £215,000 and the interest rate implicit in the lease was 8% per annum. On 1 July 2016, the company also made a payment of £12,000 for a one-year lease of a machine, starting on that date. This lease is an operating lease. Ignoring depreciation, calculate the amount that should be recognised as an expense in the year to 31 December 2016 in relation to these two leases.
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Question 180 of 194
180. Question
187. On 1 November 2015, a company entered into a finance lease to acquire a machine and made its first annual payment of £30,000. Three further payments of £30,000 are due on 1 November 2016, 2017 and 2018. The fair value of the machine on 1 November 2015 was £110,000 and the interest rate implicit in the lease is 6% per annum. Calculate the current liability relating to this lease that should be recognised in the company’s financial statements for the year to 31 October 2016.
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Question 181 of 194
181. Question
188. On 1 October 20X4, Flash Co acquired an item of plant under a five-year lease agreement. The plant had a cash purchase cost of $25m. The agreement had an implicit finance cost of 10% per annum and required an immediate deposit of $2m and annual rentals of $6m paid on 30 September each year for five years. What is the current liability for the leased plant in Flash Co’s statement of financial position as at 30 September 20X5?
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Question 182 of 194
182. Question
189. The requirements of IFRS 16 will have significant impacts on key accounting ratios of:
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Question 183 of 194
183. Question
190. The greater recognition of leased assets and lease liabilities on the statement of financial position will:
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Question 184 of 194
184. Question
191. If the fair value of the consideration for the sale of an asset does not equal the fair value of the asset, or if the payments for the lease are not at market rates, an entity shall make the following adjustments to measure the sale proceeds at fair value: I. Any below-market terms shall be accounted for as a prepayment of lease payments; and II. Any above-market terms shall be accounted for as additional financing provided by the buyer-lessor to the seller-lessee.
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Question 185 of 194
185. Question
192. If the transaction does constitute a ‘sale’ under IFRS 15 then the seller-lessee shall recognise only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor.
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Question 186 of 194
186. Question
193. If the transaction does constitute a ‘sale’ under IFRS 15 then the buyer-lessor shall account for the purchase of the asset applying applicable Standards, and for the lease applying the lessor accounting requirements in IFRS 16
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Question 187 of 194
187. Question
194. A short-term lease is a lease that, at the date of commencement, has a term of:
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Question 188 of 194
188. Question
195. A lease that contains a purchase option _______ be a short-term lease
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Question 189 of 194
189. Question
196. Lessees can elect to treat short-term leases by recognising the lease rentals as an expense over the lease term rather than recognizing:
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Question 190 of 194
190. Question
197. Variable lease payments are the payments that depend on an index or a rate are included in the initial measurement of the lease liability and are initially measured using the index or rate as at the commencement date.
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Question 191 of 194
191. Question
198. Variable lease payments that are not included in the measurement of the lease liability are recognised in profit or loss unless the costs are included in the carrying amount of another asset under another Standard.
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Question 192 of 194
192. Question
199. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at:
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Question 193 of 194
193. Question
200. The right-of-use asset is initially measured at:
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Question 194 of 194
194. Question
201. The lease liability is effectively treated as a financial liability which is measured at___________, using the rate of interest implicit in the lease as the effective interest rate.
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