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IAS 16 PPE EXAM QUESTIONS & ANSWERS 2024/2025 $7.99
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IAS 16 PPE EXAM QUESTIONS & ANSWERS 2024/2025
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IAS 16 PPE EXAM QUESTIONS & ANSWERS 2024/2025 what is PPE - ANSWERStangible assets that are - held for use to produce goods/services, for rental, or for admin purposes - are expected to be used during more than one period when is the cost of PPE recognized - ANSWERS- probable that future...

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  • September 7, 2024
  • 5
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • ias 16 ppe exam questions answers

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  • IAS 16 PPE
  • IAS 16 PPE

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IAS 16 PPE EXAM QUESTIONS &
ANSWERS 2024/2025

what is PPE - ANSWERStangible assets that are

- held for use to produce goods/services, for rental, or for admin purposes

- are expected to be used during more than one period



when is the cost of PPE recognized - ANSWERS- probable that future economic benefits associated with
the item will flow to the entity

- the cost of the item can be measured reliably



what is the difference between PPE and inventory - ANSWERS- Are held for use to produce/supply goods
and services, for rental to others, or for admin purposes AND

- PPE must be used for more than one period

e.g.

- spare parts/servicing equipment = inventory

- major spare parts/stand-by equipment = PPE when expected to be used more than one period or it

can be used only in connection with an item of PPE



How is PPE measured and recoreded under IFRS - ANSWERSAt cost less depreciation

OR using the revaluation model



What is the revaluation model - ANSWERSat each revaluation date PPE is revalued to fair value

- revalued amount is amortized over the remaining useful life of the PPE

- doesn't have to be done every year (the revaluation) but needs to be frequent enough that carrying
amount doesn't differ materially

- Carrying value under this approach = FV at date of revaluation - acc dep and acc impairment losses

- if one item is revalued the entire class of PPE is revalued at the same date e.g. if one building is
revalued, all buildings need to be revalued

, What are the recognition criteria for PPE - ANSWERS- it is probable that future economic benefits will
flow to the entity AND

- the cost of the item can be measured reliably



Where do gains and losses go under revaluation method - ANSWERSInitial Revaluation

o gains - goes to other comprehensive income - revaluation surplus (OCI)

o loss - goes to profit & loss (P&L)

subsequent revaluation

o gains - goes to P&L to the extent of reversing previous losses; the remainder goes to OCI

o losses - goes to OCI to the extent of reversing gains in OCI; the remainder goes to Net Income



What are the advantages to the revaluation method - ANSWERSHigher asset value = stronger balance

sheet

Better debt to equity

Better comprehensive income if asset

increase in value



What are the disadvantages to the revaluation method - ANSWERSHigher amortization = lower net
income

Losses go through P&L

No benefit on ultimate sale since asset

already valued at FV; little or no gain on

sale of asset on P&L



What costs can be included in PPE (amortized) - ANSWERS- purchase price

- costs directly attributable to bringing the asset to location and condition necessary to use it

- estimate cost of dismantling, removing, or retiring the site where PPE is located (asset retirement
obligation)

- delivery and handling costs

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