PAS 16

How should each part of an item of property, plant and equipment with a significant cost be depreciated?

• In groups based on location

• Individually

• Based on the total cost of the item

• Together as a whole

What is the carrying amount of an asset?

• The original purchase price

• The cost minus accumulated depreciation and impairment losses

• The fair value at the measurement date

• The estimated future selling price

When should the cost of an item of property, plant and equipment be recognised as an asset?

• When it is probable that future economic benefits will flow to the entity and the cost can be measured reliably

• When it is sold

• When it is acquired

• When it is used for production purposes

How should the cost of an item of property, plant and equipment be measured?

• At the estimated future selling price

• At the original purchase price

• At the fair value at the end of the reporting period

• At the cash price equivalent at the recognition date

What is the purpose of depreciating separately the significant parts of an item of property, plant, and equipment?

• To reflect the consumption pattern and useful life of each part

• To group all parts together for depreciation

• To complicate the accounting process

• To avoid calculating depreciation

When does the depreciation of an asset begin?

• When it is retired from active use

• When it is fully depreciated

• When it is available for use

• When it is acquired

What factors are considered in determining the useful life of an asset?

• Expected revenue and market demand

• Technical obsolescence and inflation

• Legal limits on use and selling price

• Expected usage and physical wear and tear

How should the depreciable amount of an asset be allocated?

• Based on the acquisition cost

• Based on the residual value only

• On a systematic basis over its useful life

• Randomly over its useful life

What is the purpose of disclosing the depreciation methods used in financial statements?

• To confuse users of financial statements

• To hide information from stakeholders

• To avoid transparency in accounting

• To allow stakeholders to review management policies

When should an entity review the depreciation method applied to an asset?

• Only when there is a change in management

• At least at each financial year-end

• Every 5 years

• Never, once a method is selected