1.

The production method of depreciation results in

a. Constant charge over the life of the asset
b. Decreasing charge over the life of the asset
c. Increasing charge over the life of the asset.
d. Variable charge based on the expected use or output of the asset.

2. For purposes of revaluation, if there is no market-based evidence of fair value because

of the specialized nature of the item of property, plant and equipment and the item is
rarely sold, the estimate of fair value is equal to
a. Replacement cost
b. Depreciated replacement cost
c. Current cost
d. Historical cost restated in terms of the current price level

3. Which of the following terms best describes the cost (or an amount substituted for cost)
of an asset less its residual value?
a. Revalued amount
b. Carrying amount
c. Recoverable amount
d. Depreciable amount

4. An asset has a nine-year useful life and is to be depreciated under the sum-of-the-years’
digits method. The annual depreciation expense would be the same as that under the
straight line depreciation method in
a. the third year in the life of the asset
b. the fifth year of the life of the asset
c. the seventh year of the life of the asset
d. the ninth year of the life of the asset

5. All of the following factors need to be considered in determining the useful life of an
asset, except
a. Expected usage of asset
b. Expected physical wear and tear
c. Technical obsolescence
d. Residual value
6. For items within a class of property, plant and equipment with insignificant changes in
fair value, revaluations are necessary only every
a. Five years
b. Ten years
c. Three to five years
d. Five to ten years

7. If an asset’s carrying amount is decreased as a result of revaluation, the decrease shall

be
a. Recognized in profit or loss after deducting any revaluation surplus
previously recognized
b. Debited directly to revaluation loss as component of other comprehensive
income
c. Retained earnings
d. Debited directly to equity under the heading unrealized loss.

8. What is the allocation of an impairment loss recognized for a cash generating unit?
a. Across the assets of the unit based on carrying amount.
b. Across the assets of the unit based on fair value.
c. First, to any goodwill, and the balance to the other assets on a prorata basis
based fair value.
d. First, to any goodwill, and the balance to the other assets on a prorata
basis based on carrying amount.

9. The recoverable amount of an asset or cash generating unit is the

a. Fair value less cost to sell
b. Value in use
c. Higher between fair value less cost to sell and value in use
d. Lower between fair value less cost to sell and value in use

10. Which of the following depreciation methods is not an accelerated method?

a. Double declining balance
b. Straight line
c. Sum-of-the-years’ digits
d. 150% declining balance