Investment Property (True or False)

PAS 40 THEORIES

1. When an entity completes the construction or development of a self-constructed 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 shall be recognised in profit or loss.

2. Investment property is property held (by the owner or by the lessee under a finance lease) for use in the
production or supply of goods or services or for administrative purposes

3. If payment for an investment property is deferred, its cost is the cash price equivalent. The difference between
this amount and the total payments is recognised as interest expense over the life of the property.

4. Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an
arm’s length transaction.

5. In some cases, an entity provides ancillary services to the occupants of a property it holds. An entity treats such a
property as investment property if the services are significant to the arrangement as a whole.

6. An investment property shall be derecognised (eliminated from the statement of financial position) on disposal or
when the investment property is permanently withdrawn from use and no future economic benefits are expected
from its disposal

7. If payment for an investment property is deferred, its cost is the face amount of the debt.

8. If an owner-occupied property becomes an investment property that will be carried at cost, an entity shall apply
PAS 16 up to the date of change in use. The entity shall treat any difference at that date between the carrying
amount of the property in accordance with PAS 16 and its fair value in the same way as a revaluation in
accordance with PAS 16.

9. When an entity completes the construction or development of a self-constructed 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 shall be recognised in retained earnings.

10. If an owner-occupied property becomes an investment property that will be carried at fair value, an entity shall
apply PAS 16 up to the date of change in use. The entity shall treat any difference at that date between the
carrying amount of the property in accordance with PAS 16 and its fair value in the same way as a revaluation in
accordance with PAS 16.\

11. A property interest that is held by a lessee under a finance lease may be classified and accounted for as
investment property if, and only if, the property would otherwise meet the definition of an investment property and
the lessee uses the fair value model.

12. A gain or loss arising from a change in the fair value of investment property shall be recognised in retained
earnings for the period in which it arises.

13. When an entity completes the construction or development of a self-constructed investment property that will be
carried at cost, any difference between the fair value of the property at that date and its previous carrying amount
shall be recognised in profit or loss.
Property, Plant and Equipment (True or False)

PAS 16 THEORIES

1. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be included in
profit or loss when the item is derecognized.

2. Depreciation is recognised even if the fair value of the asset exceeds its carrying amount, as long as the asset’s
carrying amount does not exceed its residual value.

3. In practice, the residual value of an asset is often insignificant and therefore immaterial in the calculation of the
carrying amount.

4. Carrying amount is the amount at which an asset is recognised after deducting accumulated impairment losses.

5. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as
the difference between the net disposal proceeds, if any, and the carrying amount of the item.

6. Entity-specific value is the present value of the cash flows an entity expects to arise from its disposal at the end of
its useful life or expects to incur when settling a liability

7. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life.

8. Major spare parts and stand-by equipment are usually carried as inventory and recognised in profit or loss as
consumed.

9. The depreciation charge for each period shall be recognised in profit or loss but never included in the carrying
amount of another asset.

10. Fair value is the present value of the cash flows an entity expects to arise from the continuing use of an asset and
from its disposal at the end of its useful life or expects to incur when settling a liability.

11. After recognition as an asset, an item of property, plant and equipment whose fair value can be measured reliably
shall be carried at a cost, being its fair value at the date of the revaluation less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.

12. After recognition as an asset, an item of property, plant and equipment whose fair value cannot be measured
reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any
subsequent accumulated depreciation and subsequent accumulated impairment losses.

13. Spare parts and servicing equipment are usually carried as PPE and recognised in profit or loss as consumed.

14. Spare parts and servicing equipment are usually carried as inventory and recognised in profit or loss as
consumed.

15. An entity shall choose either the cost model or the revaluation model as its accounting policy and shall apply that
policy to an entire class of property, plant and equipment.

16. In practice, the residual value of an asset is often insignificant and therefore immaterial in the calculation of the
depreciable amount.

17. Recoverable amount is the lower of an asset’s fair value less costs to sell and its value in use.
18. Depreciation of an asset begins when it is actually used.
Government Grant (True or False)

PAS 20 THEORIES

1. Government grants include those forms of government assistance which cannot reasonably have a value placed
upon them and transactions with government which cannot be distinguished from the normal trading transactions
of the entity.

2. Government grants related to assets, including non-monetary grants at fair value, shall be presented in the
statement of financial position either by setting up the grant as deferred income or by deducting the grant in
arriving at the carrying amount of the asset.

3. Government grants related to assets, including non-monetary grants at fair value, may be presented in the
statement of financial position either by setting up the grant as deferred income or by deducting the grant in
arriving at the carrying amount of the asset.

4. A government grant that becomes receivable as compensation for expenses or losses already incurred or for the
purpose of giving immediate financial support to the entity with no future related costs shall be recognised in
equity of the period in which it becomes receivable.

5. Government grants shall be recognised in profit or loss on a systematic basis over the periods in which the entity
recognizes as expenses the related costs for which the grants are intended to incur.

6. Government grants are assistance by government in the form of transfers of resources to an entity in return for
past or future compliance with certain conditions relating to all activities of the entity.

7. Government grants are assistance by government in the form of transfers of resources to an entity in return for
past or future compliance with certain conditions relating to the operating activities of the entity.

8. Government grants exclude those forms of government assistance which cannot reasonably have a value placed
upon them and transactions with government which cannot be distinguished from the normal trading transactions
of the entity

9. Government assistance are assistance by government in the form of transfers of resources to an entity in return
for past or future compliance with certain conditions relating to the operating activities of the entity.

10. Government grant is action by government designed to provide an economic benefit specific to an entity or range
of entities qualifying under certain criteria.