e pTER 32 CHA proPER. TY, pLANT AND FOU, nt are tangible assets wp ion oF supply of go hich ap administrative purnoges Od re than one period, An a. The property, plant and equipment are Langible assets with physical substance ‘The property, plant and equipment are used in- product or supply of gous and services, for rental purposes and administrative purposes. for ce. Thep: ¢ and equipment are expected.to he over a pel re than one year. need QUESTION 32-2 Explain the treatment of spare parts and servicing equipment. ANSWER 82-2 Most spare parts and servicing equij i ig equipment are usually carried 8 inventory and recognized as an expense when consumed. However, major equi " 4 Spare parts and standby equipment qualify as property, plant and equi iy expen J ipment when the entil ta them during more then one period ae Spare i fi ti Propertatts and servicing equipment are accounted for a8 perty, plant and e i period ne ne equipment and depreciated over a time ‘roveding the useful life of the related asset. 338 roperty, Plant and equipment ‘an asset shall be measted f° Qualify initial for I at eoet. re class of propery, plan ont apply ment. cost of property, plant and equigny R 32-4 ice, including import dui S canes, aftr deducing trade nant ctly attributable to bringing the asset tote eat dition necessary for it to be capable ao nator intended by gianagement Pate a d restoring the site on which mn for which an entity incurs, The 31 when the ilen is acquired. QUESTION 82-5 iaplain dinectly attributable vosts ANSWER 32-5 ples of directly attributable cots indude: isi from the f employee benefits arising directly ‘tion of property, plant and equipment ¢ delivery and handling cost d. Installation and assembly cost e. Professional fees the aseet is functioning property Exam { Cost of testing whether 388QUESTION 32-6 Give examples of costs tha recognized as element of equipment. ANSWER 32-6 ynired:on credit is equal to the inuoiee Cro ant regardless of whether the discount ip us ia ot 5 is not taken, itis charged'to purchase discount oun shown as other expense, ts and rebates are generally considered as soot Most and not as income. : Son ’ Examples of costs that are expensed rather than a8 clement of cost of property, plant and Catipmeng ng & Cost of opening a new facility ». Cost of introducing a new product cost of advertising and promotion ©. Cost of conducting business in a new locatio, OF Service, includ ea 4 mg TION 32-9 oes : in DoF with Qu cost of asset acquired by installment. ass of customer, including cost of staff training * gplain the . ee &. Administration and other geneva) overhead eget 32-9 ee & Cost incurred while an item capable or Operating in thy ANSWER ied by installment is equal to he into ney tended by management has yer tn be brought tof property acquires [hi use or is operated at less than full capacity The orjoe equivalent. £ Initial operating lose cosh P jment price over the cash price is 8. Cost of relocatin, se of’ the install cher the credit period. 6 OF reorganizing part or all of an entity cose of mse ‘ operations. ‘Rogaine. as interest expe ice, the cost of the asset : 7 ‘ lished cash price, t payments using QUESTION 32.7 When there nae Cle erie: : equal to the Preset ees: eo Explain the cost of new asset acquired under She market rate of : &caah purchase, ANSWER 32.7 : QUESTION 82:10, 7s» by suing share CaP The cost of t Baglin the cost of ON Property acquired by dj ' includes the cash pata ttited by direct cash purchase d Paid plus all divectiy attributgt NSWER 32-10- fy the anu ‘equal 10 bringing the asset to the location and condition for the . roperty is acquired an at en amount intended use, such as freight, installation and testi ‘Where are property shell be meanit~ ¥ the sting cost, capital, be in the order of P paca Various assets are acquired for a lump sum price, the the followi a ‘received, tal cost is allocated to the indivi ‘3 of the property! i relative an ea © individual assets based on their a. Bair value oF the share capital. pital 5 the: wb, Bale vie or stated value of 2on 32-1 of asset scauired by issuing bony 5, 2 b. Pair ¥ cc. Fave a QUESTION $212 Explain the cost of asset acquired in an exchange, ANSWER 82-12 iran asset is acquired in an exchange with If an asset pe cost of the asset is equal to the commer «oie value of asset given plus cash payment —on th of the payor. © Part by. Fair value of asset given minus the cash réce the part of the recipient. ved ~ on it the exchange transaction lacks commerci Ui patance, the cost of the acquired asset is metured out ‘a. Carrying amount of asset given plus cash gene pon payment on be Canying amount of asset given minus cash Fecei the part of the recipient =o No gain or loss is recognized wh No goin or Iss is recognized when the exchange lacks Commercial substance is a new noti i tc notion and is defined as the event or transaction causing the cash flows i of the entity to change significantly by reason of the exchange. . An : exchange transaction has commercial substance when the cash flows of the asset - oa calling icer ened | significantly from the 392 ION 82-18 counting fc ‘ na aol Amen FE, tn 32-18 cont, TFRS dovs not ada PUGS explicitly addnesoes Os or stn” » GAAP provides that contribu ment grant, ders shall be recorded at the Fair we me with te, edit ewok incurred in connection °° Fvepistvation foes and legal fe 8,3 \ fad capital account, ‘egal fers shal bec season ig hat such exp vatie of the asset. ensee Ho not intreise or en ven, directly attributable cost ine owever: e costs incurred over, asset tothe locati ed nepessary to te all be capitalized ion and condition br ti eae lippine GAAP further provides that donati napa eaupment from nascar some olan red estes and Uerefre regal ate QUESTION 82-14 pxplain the cost of self-constructed pro equipment. operty, plant and ANSWER 32-14 ‘The cost of self-constructed property, plant nd equipment eal Tide direct cost of materials, direct labor cal arene incl’ ad specifically identifiable or traceable to the construction. PAS 16, paragraph 22, provides that the co of abuormal amount of wasted material, Jabor or overhead jnourred in the production of self-constructed asset i8 not included in the cost ‘of the asset. Any internal profit or. saving on arriving at the cost of self constructed esetple choice (PAS 16) not a characteristic oF pe, upment ae ‘sed wate pment are and atyan one year. 4 ¥ by and equipment a6 eubjegy | should an entity Use to nege model Spment? hare raluation mode] (he fair value through OCI mode} wr the fair value model , plant and equipment compriges gy ept ‘and nonrefundable purchase taxes \sectly attributable in bringing the asset jp fasta and condition for the intended use f the cost of dismantling the asset ihe entity has no present obligation. 5, Which cost should be expensed immediately? a. Cost of opening a new facility 1. Cost ofintroducing a new product or aervice, including cost of advertising and promotional activities «. Cost of omdueting business in a new location 4. All of these are expensed immediately ANSWER 32-15 eg ee a QUeSTION 8248 Mula choog gay onmonetary exchange . 1. Avot exchanged Unless” * ¥°¢nized at fie a Exchange has commere, _ Fair value is not determinate assets are simi © Tho eooots ane da Nang cost of property, plant and en : Tohange is measured'at then’ TPDient scquived in an Fair value of the asset gi / bh Fair value of the asset tecsveits cath Payment, e cl . Which exchange has commereial sui : Exchange of assets with no ai flows. 20 difference in future cash a. b. Exchange yy entities in the same line of business, ce a. Exchange of assets with difference in fate Exchange of assets that causes the enitis lone ore essentially the same economic position Fora nonmonetary exchange, the conf; zi includes which of the following? =" "#ton feash ows a, The implicit rate, maturity date and amount of loan b. The visk, timing and amount of cash flows of the assets c. The entity-specific value of the asset d. The estimated present value of the.assets exchanged ANSWER 82-16 J. b oa aa 4 5bpice (APRS) « not capitalized j . pment? Ho fhe og, from a purchasing “ he asset works corte ling cost ectly, e for installation urity for a machine j Pie cast of the machine 24 by, ‘multiplied by What time value pula of nag 4. The inital operating Joss should be ' and amortized over @ reasonable peri b Der and aerged t0 the income staternent 4, Rapeizod as part of the cost of plant, & Ghirged to retained earnings. the proper treatment of freight and interest og ‘ va and the ‘cost of imported machinery? on the oth freight and interest are capitalized, & Pibrest may be capitalized but freight is expensed, Freight is capitalized but interest cannot be capitalize 4. Both freight and interest are expensed. 5, The cos of property, plant and equipment comprises the purchase price and a, The implied interest on the debt financing '. The fair value of any noncash asset surrendered ¢. The estimated residual value of the asset d. All directly attributable costs nécessary to. bring the asset to the location and condition for the intended use ANSWER 32-17 L a a) 4 Bd 11 ON 82-18 Multiple choice azop A on property is acquired by j Adapted) ben fest basis for cotati aaeting Sa ha 5 vistorival cost of the akst tg ghee to ana Totorical cost of simil seller ebetralue of the asset recast waje value of shares issued a plant asset ia acquired by def ‘tion generally does not, as ‘Payment, which, ‘mputation of interest? “@** the need to eonaifey poninerest Weaning ee deferred obligation is The face amount of the de! : a, The far alue of the Plant snk ton su the present value of a note 5. HME fe less than the face toned i xno alan a. Jncuded in the eat ofthe ast {Amortized as interest expense over b. Amortized as interest expense Gye the Wc cts ok . Included in interest expense in the year of issuance 4, Aplant asset purchased under a deferred payment A T,000 per yoat for five youre ie mpasul et a P50,000 & 550,000 plus imputed interest >. BY of P10, 000 annuity for five years at an imputed interst & Future value of a P10,000 annuity for five years 5, Am asset purchased under a deferred payment contract fr fn Os66 Bede tame of purchase and 10,00 ot the end ot ach of the next 5 years is measured at ‘a. The present value of a ‘10,000 ordinary annuity b. P60,000 : ¢. P60,000 plus imputed interest 4. P60,000 less imputed interest ANSWER 82-18 le 2 a 3.3 Company © 2, Sut Company a b. c a 8. Solen Comp: nized recoain “erence between the d and the car Fetal] Mg difference between the rete cat Pig the difference between the fai, sunt of the car Yalyg is not fair value ofthe asset it received as a loss ‘The air value ofthe asset it received as a gain pegs camrying amount of the asset it received as alge pas searrying amount ofthe asset it received as a gain any and Nolse Company exchanged truck with Poa alue in excess of carrying amount. In addition, Solen ld Nolse to compensate for the difference in truck fair value. ‘te a consequence of the exchange, Solen shall recognize a b © ‘A gain equal to the difference between the fair value and carrying amount of the truck given * ‘Again determined by the proportion of cash paid to the total consideration A loss determined by the proportion of cash paid to the total consideration a |. Neither a gain nor a loss Company and Talse fair value , Slate shall recogni re ain equal to the differen , A Othe carrying amount or eereen the ag (gain in an amount deters 228 given YAlug b ed to total considerann® PS the rata in an amount determing hoa ved to total consideration by the ratio of jer gain nor a logs ‘cash, exchange transaction th, cil SUbBLARC is acount fy SOCAL to bang asi of fair difference between the fai unt of the asset transferred ig Value anid carrying loss. *cognized a8 gain or a8 since no cash was exchanged, the fair value of g : value ofthe transferred and the fair value of the cree ait asset received are ‘Thus, the excéss of the carrying am: transferred over its fair value is want a ths ni ae ‘The excess of the fair value of the truck given by Solen over the carrying amount is recognized as gain. 4a . ‘The excess of the fair value of the land given by Slate over the carrying amount is recognized as gain. 309! Smee (i APTER 34 EF. ROWING Costs QUESTION 384-1 Explain borrowing costs. ANSWER 34-1 PAS 28, paragraph 5, defines borrowing costs as interest and } other costs that an entity incurs in connection with borrowing of funds. This definition encompasses interest on all types of porrowing, including finance leases and ancillary costs incurred in connection with the arrangement of borrowing. a. Interest calculated using the effective interest method ce charge with respect to finance leasee e difference arising from foreign currency ded as an adjustment to interest cost b. Finan & Exchang {, borrowing regar’ JUESTION 34-2 on accounting for borrowing cost. ‘ANSWER 84-2 | PAS 23, paragraph 8, mandates the following rules on rowing cost: If the borrowing is directly attributable to the acquisition, construction or production of a qualifying asset, the . borrowing cost is required to be capitalized as cost of the asset. All other borrowing costs shall be expensed as incurred. 407QUESTION 34-8 Explain a qualifying asset for pu capitalization. Purposes of bortons ‘Ing ANSWER 84-8 PAS 23, paragraph 5, defines a quali that necessarily takes a substanteet eine 2680 simppesean fakes substantia period oft BO a Qualifying assets include: aly Manufacturing plant . Power generation facili elntenglle amet, 4. Investment property 8 cay * Qualifying ‘sisots for alifying for pury ‘aptsbration donot ince the lone a. Asset measured at fair value, ‘ ob. Inventor ‘ OLTOWINE Cos, zation rate. However, the raid capitalis TASS eto ha ne capitalization mae, : a tot mn rat na beraihtal borrowine cost He interest rate i Mas outstanding 4yoet, ivided by is equal to the '€ during the period the total general Mant §8 Provided for gon, ™ income, is not dedticny investme, No specific oy: "espeet to ioenta QUESTION 34.5 explain the capitalizable interest from specific by ANSWER 845 JAS 23, paragraph 12, pro PA fie borrowing, the cap Uezual borrowing cos period minus any is favestment of the speci Note that any investment borrowing is dedu QUESTION 34-6 When shall capitalization of borrowing cost commence? ANSWER 34-6 PAS 23, paragraph 17, provides that th forrowing cost shall commence when all con a. When the entity incurs expenditures for the asset. b. When the entity incurs borrowing cost. c. When the entity undertake: ies that are necessary to prepare the asset for the intended use or sale. QUESTION 34-7 Explain the suspension of capitalization of borrowing cost. ANSWER 34-7 PAS 23, paragraph 20, provides that capitalization of borrowing cost. shalt ‘be suspended during extended period in which active development is interrupted. However, capitalization of borrowing cost is not normally: suepended during a period when substantial technical and administrative work is being carried out. Capitalization of borrowing cost is not also suspended when a temporary delay is a necessary part of the process of getting an asset ready for the ‘intended use or sale.QUESTION 34-8 Explain the cessation of capitalization of borrowin, 1B Cos ANSWER 848 : PAS 23, paragraph 22, provides that capitalizati : ti ont shall i ‘whe subetantilly all the activition boring A 6 Prepare ualfying asset the intended use or sae? compl re An asset is normally ready for the in tended ui fhe physical construction ofthe asset is ‘complesgrten ugh routine administrative work might still conte °° te, QUESTION 34-9 Explain the disclosures related to borrowing cost. ANSWER 84-9 PAS 23, Paragraph 26, , Pa pro i the following in relation Chee shall disclose f Zhe amount of borrowing cost capitalized during the b. The capitalizatio mn. rate used to determi borrowing coot eligible for capitalization, n° Out ‘©. Segregation of quatifyi; required to 10 Ne asset from other assets is not 410 — QUESTION 34-10 Multiple choice (PAS 23) 1, Borrowing costs are defined as a. Interest expense using the effective interes E Finance charges in respect of finance lense, Exchange differences arising from foreign currency borrowings to the extent that these are regarded as ‘an adjustment to interest cost. |. Interest and other costa that an entity incurs in connection with borrowing of funds e. Which statement is true concerning capitalization of borrowing cost? I. If the borrowing is directly attributable to a qualifying asset, the borrowing cost is required to be capitalized as cost of the asset. If the borrowing is not directly attributable to a ‘qualifying asset, the borrowing cost shall be expensed ag incurred. a. Tonly b. Monly ¢. Both I and II a. Neither I nor IT Borrowing costs can be capitalized as cost of the asset when = a. The asset is a qualifying asset. ' b. The asset is a qualifying asset and it is not probable that the borrowing costs ‘will result in future economic benefits to the entity. : ‘The asset is 2 qualifying asset and it is probable that the 7 in future economic benefits anIfthe qualifying aset is financed by specig, © te eaallschls eescene cor equal t9 a. Actual borrowing cost incurred b, Actual borrowing cost incurred up to completion ¢. Actual borrowing cost incurred up to completion ° iy minus any investment income from the <2? fant investment of the borrowing Porary d. Zero ie boomin i, 5. Which of the following assets could be treated as 6. 7. qualifying asset? asset forthe puspose of capitalizing borrowing wc ing a. Investment property ‘b. Investment in financial instrument ¢. Inventory that is manufactured or produced quantity on a repetitive basis and takes a cri Period of time to get ready for use or sale 4. Biological asset in tango ibstantial If the qualifying asset is financed by general borrowing, the capitalizable borrowing cost is equal te a. Actual borrowing cost incurred b. Total expenditures on the asset multiplied by capitalization rate &: Average expenditures on capitalization rate or whichever is lower d. Average expenditures on the asset multiplied by a caraiization rate or wetual borrowing cost ineunod whichever is higher the asset multiplied by a actual borrowing cost incurred, Which of the following is not a condition that must be Satisfied before inte test capitalization can begin on a a. Interest is being incurred, : b. Expenditures for the asset have been made. ¢. The interest d. rate is @ the cost of capital ‘qual to or greater than the cost Activities necessary to get the asset ready’ fo¥ the intended use are in progress, an yr atieltietiaaienamaateeee Capitalization of borrowing cost 3.6 suspended during temporary period of delay. e Sa siapended only during extended period of delay p May ch active development is delayed, in ever be suspended. ' a oat be scpenied only during send period of delay : hich active development is delayed. the period of time during which intorest must be capitalized g. The ds when a ‘The asset is substantially complete anid ready for the intended use. name er interest is being inew a rae is abandoned, sold or fully ae Ae tivities that are necessary to get the assr 3S ne intended use have begun. a to nt in relation jisclosure requireme! 1s not a disclo 10. Which ie mot borrowing cost? ting pley adopted fo Drevin osunt of borrowing cost captain di be eygacion of qualifying aset from ae a © eeertelization rate used {2 determine 1 : Sa cue cligible for capitaliza ANSWER 34-10 a 6 6 feof . 8. Ee se sa 10 a3QUESTION 34-11 Multiple choice (IFRs) 1. Which of the following may not be considereg a asset? alify, b. An expensive private jet that can be purchz local vendor. ased from 4 ¢. Atoll bridge that usually takes more than a year to, 4. A ship that normally takes one to two years to contd 2 Assets that qualify for interest capitalization include a. Asset under construction for an entity's use, b. Asset that is ready for the intended use. c. Asset that is not currently being used. 4. All of these assets qualify for interest capitalization, 3. Which of the following costs may not be eligibl capitalization as borrowing cost? oe a. Interest on bonds issued to finance the constructio be f qualif fying asset. a. mortization of discount or premium relating t borrowings that qualify for capitalization, | ©. Imputed cost of equity. 4. Exchange difference arising from foreign currency borrowing regarded as an adjustment to interest cost Pertaining to a qualifying asset. 4. Which statement about the capitalization of borrowing cost ‘as part of the cost of a qualifying asset is true? . a. If funds come from general borrowings, the amount to be capitalized is based on the weighted average amo capenie ted at amount tion always continues until the asset is to use, lization always commences as soon as 4. Gipenditure ofthe asset in incurred. | | Capitalization always commences a8 800n as interest on relevant borrowings is being incurred. a4 a | | | | When computi 6 pitalized, the The total intere: 5. A-cost of capital ¢. That portion of been incurred if not been made. 4. That portion of average accumulated expenditures on which no interest cost was incurred. entity can commence capitalization of borrowing cost ‘ ae Tew construction project when ‘Loan interest relating to the p: ioereg ite pla ig commences. thnicai site plannin : be Teeanditures on the projet start to be incurred. d_. Construction work commences. 8, Interest revenue earned on specific borrowing for qualifying asset a. Reduces the cost b. Reduces interet starts to be a qualifying asset. nse reported in the income statement . Increases equity. ; i. Mune be credited to intrest income ANSWER 34-11 Lb Ba 2 a 6c Be 7.8 4a Ba es a6CHAPTER 30 NVESTMENT PROPERTy q yESTION 30-1 pefine ‘an investment property, ANSWER 30-1 iment property i8 defined as pro tie of a building or both) held by per ond building or ander a finance lease to earn rentals or for ae the lessee or both. appreciation In other words, only land and building can quali investment property. An equipment or any ee cannot qualify as investment property. An investment property is not held: a For use in the production or supply of goods or services for administrative purposes. b. Fer sale in the ordinary course of business. QUESTION 30-2 Define an owner-occupied property: ANSWER 30-2 yoperty held by an owner or by An owner. : j ates occupied property 18 pr ‘, juctiont oF lessee fade a fnance lease for use ne “pply of goods or services, or for adm!" 963question 30-3 investment Property. cine exanplee : ANSWER 3° -term capital appreciation held oot atly undetermined use 2 ‘held for @ currently 4 2 gree lei ou era ey 4 ete tats oan ba held to be leased ou * operating lease = Tr pats being constructed or developed : investment property for future use a8 QUESTION 30-4 : ive examples of aseeta not considered as investment property, ANSWER 30-4 a. Owner-occupied property or property held for use in the production or supply of goods or services or for administrative purposes Property held for future use as owner-occupied property Property held for future development and subsequent use as owner-occupied property 4. Property occupied by employees, whe expres ‘pay ia at market rate . Owner-occupied property awaiting disposal raed held for sale in the ordinary course-of business ao process of construction or development for such . : : coe being constructed or developed on behalf of Provety that 4 Dost that is leased to another entity under a finance ther or not the question 30-5 «a the treatment of property ¢ ssf tly ownercocupied ot on answer 30-5 sain properties m or for appreci ufoturing oF a +S partly investment ‘lude a portion the at is held to and another portion that is helf nistrative purposes, . Cert rentals for a™ ions could be sold or lea these portions col leased out se oy shall account the portions separately iemeoes ty and owner-occupied property. 2 proper! ‘yporti 1d not be sold separatel If the portions erty i arately, the property is javestment property if only an insignfican portion is weld inetranufacturing or administrative purposes, when ancillary services are provided by the entity ta the Wispants of the property and these services ae a relatively ceeignificont component of the arrangement, the property jz treated ae investment property. - be where the owner of an office building d maintenance services to the lessees ‘An example would leased out as offices is investment provides security an ‘The building being property. However, if the services provided are a mor significant component of the arrangement, the property is treated as owner-occupied property. ° For example, if an entity owns and manages & hotest te provided to guests are @ significant comp arrangement as a whole. Therefore, the hotel is treated rather than investment property: 65 as owner-occupied property,on 30-6 ead quest reatvent of property an afte, ANSWER 90-6 see of the individual entity tive of the Mer subsidiary ox it Ong From the PeeP ec od to al te i property. arent conser tive of the group However, ft rd foil statements, the pty Ys eed ss ouner-occupied Proper’). QUESTION 30-7 pany ae te condone for Ee FECOENILON of inv property? : =~ ANSWER 80-7 Trvaiment property sell bo recognized 88 20 280t When gy aly when: This probable that the future economic bei a Its pied with the investment property erat that ae entity. fo the Tha cost ofthe investment property ean be messure QUESTION 30-8 plain the initial measurement of investment property, ANSWER 80-8 A ren ee ats tis none Pe tye en pine te ss _- st mea - property is deferred, the cost i Sogn a re a a et ly at cost ic gTION 80-9 Qv the subsequent measurement of; Po ph 30-9 ahall choose cither of the ¢, fol SDE py, tity ; ‘pn enti" policy and shall low se ug 5 paliy = opply that Dolicy’, ait a4 art of itg pe del value mo ® investment property is carried at fai, fair Spe oi ‘oe gen in fair value are included in pot ge YO With io depreciation is recorded forthe inveatment : reper 4, ost model e investment property is o The mulated depreciation and ay coat td fosses. : Foir volue ofthe investment property sal be diced QuESTION 80-10 plain te fir value of verter proper, ANSWER 30-10 Fir value of an asset is the price that would be resved to Fav the asset in an orderly transaction between market articipants at the measurement dete ‘The price in the principal market used to measure fi atthe investment property shall not be adjus transaction cost that may be incurred upon dispose Equipment such as lift or air-conditioning is often an integral partofa building and is generally included inthe fair value of the investment property. It an office is leased on a furnished basis, the fair value of the office generally includes the fair value of the furniture {he fice toner tal income relates tothe furnished oh ‘The fair value of investment property excludes prepaid oF accrued operating lease income. 7yon 80-11 Seen quest it there is inability to a in the treatmen | Petting by i he ini ional cases the fair value of the investmeny excnton terminate ‘on a continuing basis?” Pe, sional cases, PAS 40, pay exceptionity shall measure such inet! model until the dispos In isnot 78 he der such exceptional cases only, th under suet property shall be assumed tn ign TO, ‘Moreover, ‘value of the investment ragtaph 64 further states Paraarert] shall continue to measure the other invest nt property at fair value. his is notwithstanding the fact that one invest pers ‘tried using the cost model due to exceptions) QUESTION 30-12 Explain the derecognition of investment property. ANSWER 30-12 \ ‘An investment property shall be derecognized: 4. On dispossl. b > > investment property is permanently withdrawn . When i Hit ao roomie benefits are expected from the <;ae tom dapaal of invostment property shall = determined asthe difference between the net disposal procet# ond carrying amount of the investment property. ow gsTION 90-18 sn the condition and measurement ia samen property. Tans to and rom xs 90-18 fer to and from investment ‘pransra change of use. PFOPEY shal be made vin When there i! the entity uses the thet cost model, transer between 1 J vestment prope wner-occupied Brentory shall be made at carrying amouse PT &8¢ nan, a, A transfer from investment prop » tp owner-occupied property or for at fair value which becomes the, subsequent accounting, a If owner-occupied proper property that is to be carries between the fair value and property shall be accounted for as reval Plant. and equipment. uafon of property, 2 4, Ifan inventory is transferred to investment property that js to be carried at fair value, the remeasurement to fair value shall be included in profit or loss. When an investment property under construction is ‘completed and to be carried at fair value, the difference between fair value and carrying amount shall be included in profit or loss.aqavstioN 40.14 Multiple choice (PAS 40) ment «3, Whish stat Ff Property 1d for eale in the ordinary course a ad for use in the production ae bia L goods or gervices and property held for adminig? 28 tig ee held to earn rentals or for capital preg & Property held for capital appreciation iatiog aM. which of the follo owner-occupied PFOP property eld forsale in the ordinary course of Per far ue in the production and se gor or service and property held for administrate best describes investment Prope, tty wing statements best dog erty? Cribeg a Bere purposes F Property held to earn rentals g, Than entity owns and manages hotel and services povided A . fp guests are a significant component Br d. Property held for capital appreciation to esrhole, the hotel is classifi ponent ofthe arrangement Jnvestiment property 4, Investment property includes all of the following, except . : ? : b, Owner-occupied property a. Land béld for long-term capital appreciation Partly investment property and 3. Land held for currently undetermined use _ © property pel ed aaa @. Building owned by the reporting entity and leased out 4, Neither investment property nor owner-occupied under Pon iea lease. property Property held for sale in the otdinary a 4: Which statement is tee concerning property leased tan 4. Which ofthe fllowing is an investment property? ala . L._ From the perspective ofthe individual entity thatowns a Riot Yin ‘constructed or developed on behalf of it the property cused to an aflite is considered en - investment property. . Property that is being constructed and developed as a props for . pe property IL From the perspective of the affiliates as a group a the . °& Property held for future development and subsequent parposes of consolidated financial stsienet 4, Ns crner-cecupied property property is troated as owner-ocouPie prop Owner-cecupied property awaiting disposal &. Both I and II b, Neither I nor I © Lonly 4. Honlyi related to in, Vestn, c include property sone 68 for legal ipsileee Property teay a. Profosother transaction OS ley al coating He planned level of secure per en of mtd Ae, Labor a, a ee orees incurred in COD B OF developing = property: : : tis incorrect in determining the fajy a mi vy vay shall determine the fair value of in a, An , deducting transaction cost rege ee re oon 7 Equipment such 28 lift or air-conditioning is often & gepal part of a building and is generally included the fair value of investment property. 2 «. Itan office is leased on a furnished basis, the fair vale if the office generally includes the fair value of the _ furntoe Beene the rental income relates to the furnished office. 4, The fair value of investment property excludes prepaid cor accrued operating lease income. 10. Gain or Toss from disposal of investment propety shall be determined as the difference between the a. Net disposal proceeds and carrying amount. +b. Gross disposal proceeds and carrying amount. c. Pair value and carrying amount of the asset. 4. Gross disposal proceeds and fair value of the asset. ANSWER 80-14 - : beg pease wb ha ad a 4b a Be. wae 0-15 Mi question : 'ultiple choice (Rg) io javestment property 1 Cost ® Gost Jess impairment b- Hepreciable amo 6 pair value less g, An inve . Weis disposes tt ip permanen' future ben 4 In all of these .stment property 4. Which additional disclosure muse ‘chooses the cost model? be made when an entity Which disclosure shall be made when the fai 4 Model has been adopted? hen the fair value a. Depreciation method used E The amount of impairment los re c. Useful life oe 4 Net gain or lose from fair value adjustments 5. Under IFRS, assets classified as investment property are a. Held for b, To be sol c, Held for rent a. Held for sale in the ordinary course of business ANSWER 30-15 Sed f. «4a fegunseguent red using hy evaluation model i ae we ‘profit or loss model bh Hale re) or fir value model Gost moe revaluation model fair value model for 2 ibe a a mest da a Changes in fair value are reported in profit the cnet peo 4 i, Moses in fr value az reported 88 an extrroning ty in fair value are reported : Srna fait ae for the period. 4. Guanges in fair wale 872 reported as deferred rev for the period sas tity uses the fair value model fc 9. gmk statement 18 £67 fad ache! _ The entity should value the property at a, The enjated depreciation and. ieomemsaee The entity should report the increase in fair value ther comprehensive income for the period. . «. SM tity depresiates the equipment using norm depreciation method. & The entity does not record depreciation on the investment property. 14, Transfers from investment property to IS lant and equipment are appropriate = a. When there is change of use. b Based on the discretion of management, 5 ie ee rey . The e 3 ranefer property into et Classification once it is classified Peabo nt property: ANSWER 30-16 Le’ ke. ha 48 m4 oN 30-17 Multiple choi @ the entity uses the iy an ex 3s the cost model 1 Wee gent property, owner iran jay shall ae ceed ee ‘ alue Fa Ta mount erty carried : Fe cso i ale the deemed enst ‘ ing amount gevarical cost Base Is cost of disposal ser-occupied property 4. Included in profit ot Toss eluded in retained earings B Included sa eautty a Aceouneg for as revaluation of property, plant and fan inventory i transferred to investment i : tbe cerried at fair value, the plea th et Le 9, Included in profit }. Included in equit > Tholuded in. retained earnings & Gounted for as revaluation of inventors , When investment property under construction is completed ‘and carried at fair value, the ‘difference between fair value ond carrying amount should be a. Disregarded P Recognized in retained earnines 4, Accounted for as revaluation ANSWER 30-17 Lb a: 3.4 4a : m8 oe’