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IFRS exam 2 questions & answers 2024/2025 R179,57
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IFRS exam 2 questions & answers 2024/2025
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IFRS exam 2 questions & answers 2024/2025 1. Which of the following standards will allow companies to choose between capitalizing and expensing borrowing costs incurred during the construction of a fixed asset? a. US GAAP b. IFRS c. Both US GAAP and IFRS. d. None of the above. - ANSWERSd ...

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  • September 8, 2024
  • 15
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • ifrs exam 2 questions answers

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  • IFRS

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IFRS exam 2 questions & answers
2024/2025

1. Which of the following standards will allow companies to choose between capitalizing and expensing
borrowing costs incurred during the construction of a fixed asset?

a. US GAAP

b. IFRS

c. Both US GAAP and IFRS.

d. None of the above. - ANSWERSd



2. Which of the following standards allows a company to revalue its PP&E after acquisition? a. US GAAP

b. IFRS

c. Both US GAAP and IFRS. d. None of the above. - ANSWERSb



3. A French company reporting using IFRS purchased its only building on January 1, 2009, for
€20,000,000. The building has a 20-year useful life with no net salvage value. The building is being
depreciated on a straight-line basis. Assume the company intends to revalue the building to its
December 31, 2012, fair value of €17,000,000. What is the amount of the entry and the account affected
to reflect this revaluation?

a. €0 - No gain should be recorded.

b. €3,000,000 Loss - should be record as expense in the income statement.

c. €3,000,000 Gain - should be recorded in the income statement.

d. €1,000,000 Gain - should be recorded in the income statement.

e. €1,000,000 Gain - should be recorded as credit through OCI to revaluation surplus. - ANSWERSe



A company owns a piece of equipment with a net cost of $30,000 (cost of $50,000 net of accumulated
depreciation of $20,000). There are indicators that this equipment is impaired. The expected net future
undiscounted cash flows are $31,000. The expected net future discounted cash flows are $28,000. The
fair value of the equipment is $25,000 and selling costs are minimal.

A. What is the impairment loss for the company using US GAAP?

, a. $0

b. $2,000

c. $5,000

d. None of the above. - ANSWERSa



4. A company owns a piece of equipment with a net cost of $30,000 (cost of $50,000 net of accumulated
depreciation of $20,000). There are indicators that this equipment is impaired. The expected net future
undiscounted cash flows are $31,000. The expected net future discounted cash flows are $28,000. The
fair value of the equipment is $25,000 and selling costs are minimal.



What is the impairment loss using IFRS?

a. $0

b. $2,000

c. $5,000

d. None of the above. - ANSWERSb



A company uses the cost method for all of its fixed assets. A machine was purchased on January 1, 2009,
for $100,000. The company believes the machine will not have any net salvage value at the end of its 10-
year useful life. The machine is depreciated using the straight-line depreciation method. At December
31, 2010, the machine is deemed impaired and written down by $24,000. At December 31, 2012, the fair
value of the machine is $70,000 and selling costs are minimal.

A. What is the recorded net value of this machine on December 31, 2012, using IFRS?

a. $42,000

b. $60,000

c. $70,000

d. None of the above. - ANSWERSa



A company uses the cost method for all of its fixed assets. A machine was purchased on January 1, 2009,
for $100,000. The company believes the machine will not have any net salvage value at the end of its 10-
year useful life. The machine is depreciated using the straight-line depreciation method. At December
31, 2010, the machine is deemed impaired and written down by $24,000. At December 31, 2012, the fair
value of the machine is $70,000 and selling costs are minimal.

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