shared via CourseHero com This study resource was This study source was downloaded by 100000817391530 from CourseHero com on 07 21 2021 00 24 24 GMT 05 00 https www coursehero com file 50919559 Chapter 6 PAS 16 PropertyPlant Equipmentdoc UNIVERSITY OF PERPETUAL HELP SYSTEM DALTACALAMBA CAMPUS BRGY PACIANO RIZAL CALAMBA CITY LAGUNA PHILIPPINESChapter 6 PAS 16 PROPERTY PLANDT EQUIPEMNT EDMUND E HILARIO CPA MBA SYNTHESIS IN FIN ACCTG THEORY 1St SEMESTER 2019 2020 A Property Plant Equipment1 Which is not major characteristic of property plant assetequipment a The property plan and equipment are tangibleassets b The property plant and equipment are used inbusiness c The property plant and equipment are expected tobe used over a period of more than one yeard The property plan and equipment are subjectto depreciation 2 An item pf property plan and equipment shall berecognized as an asset when I It is probable that future economic benefitsassociation with the asset will flow to the entityII The cost of the asset to the entity be measuredreliably a I onlyc I onlyb Both I and IId Neither I nor II3 Major spare parts and standby equipment which areexpected to be used a period of more than one year shallbe classified asa Property plan and equipmentb Inventoryc Noncurrent investmentd Expense4 Which statement is correct concerning recognition ofproperty plant and equipment I Most spare parts and servicing equipment are usuallycarried as inventory and recognized as expensewhen consumed II If the spare parts and servicing equipment can beused only in connection with an item of property plan and equipment and their use is expected to beirregular they are accounted for as property plantand equipment and are depreciated over their usefullife of the related asset whichever is shorter a I onlyc II onlyb Both I and IId Neither I nor II5 Under the cost model subsequent to initial recognition asan asset an item of property plant and equipment shallbe carried at a Costb Revalued amountc Cost less accumulated depreciation and anyaccumulated impairment lossd Revalued amount less accumulated depreciation andany accumulated impairment loss6 The cost of an item of property plant and equipmentcomprises its purchase price including import duties andnonrefundable purchase taxes and a The implied interest on the debt to finance thepurchase b The market value of any noncash asset surrenderedto acquire the asset c The estimated residual value of the assetd All directly attributable costs necessary tobring the asset to working condition for itsintended use 7 Directly attributable costs include all of the followingexcepta Cost of site preparation initial delivery handling andinstallationb Professional fees such as for architects and engineersc Estimated cost of dismantling and removing theasset and restoring the site for which the entity has apresent obligationd Cost incurred while an item capable ofoperating for its intended use has yet to bebrought into use or is operated at less thancapacity8 When payment item of property plan equipment isdeferred beyond normal credit terms the differencebetween the cash price equivalent and the total paymentshall be recognized asa Interest expense of the current yearb Component of cost of the property plant andequipment c Interest expense over the credit period d Interest expense over the life of the asset9 Which is incorrect concerning acquisition of an item ofproperty plant and equipment by self construction a The cost of self constructed asset is determinedusing the same principle as for an acquired assetb Any internal profit is eliminated in arriving at the costof self constructed assetc The cost of abnormal amount of wastedmaterial labor and other resources incurred inthe production of self constructed asset isincluded in the cost of the assetd The cost of normal amount of wasted material laborand other resources incurred in the production of self constructed asset is included in the cost of theasset 10 Which of the following is the most appropriate policy asregards the allocation of joint overhead cost to plant andequipment constructed by the entity for its own use a Assign no overhead b Assign only variable overheadc Assign overhead equal to the amount that wouldhave been assigned to production that is curtailedbecause of the constructiond Assign a proportionate share of overhead tothe construction on the same basis as thatused for the assignment to normal production 11 It is the present value of cash flows an entity expects toarise at the end continuing use of an asset and from itsdisposal at the end of its useful life or expects to incurwhen settling a liabilitya Entity specific valuec Fair valueb Value in used Discounted value12 The cost of an item of property plant and equipmentacquired in a nonmonetary exchange is measured at the a Carrying amount of the asset given upb Fair value of the asset given up c Carrying amount of the asset receivedd Fair value of the asset received13 The cost an item of property plant and equipment that isacquired in exchange for combination of monetary andnonmonetary asset is measured at the a Fair value of the asset given up plus theamount of any cash or cash equipmenttransferred b Fair value of the asset received plus the amount ofany cash or cash equivalent transferred c Book value of the asset given up plus the amount ofany cash or cash equivalent transferredd Book value of the asset received plus the amount ofany cash or cash equivalent14 If an entity is able to determine reliability the fair value ofthe asset received and the fair value of the asset givenup in an exchange transaction of the asset acquired ismeasured at a Fair value of asset given upb Fair value asset received c Either the fair value of asset received or the fairvalue of asset given upd Neither item fair value of asset received nor the fairvalue of asset given up15 If an item of property plant and equipment is acquired inexchange for a nonmonetary asset and the exchangelacks commercial substance the cost the asset acquiredis measured ata Fair value of the asset given give up Page 1 of 8 shared via CourseHero com This study resource was This study source was downloaded by 100000817391530 from CourseHero com on 07 21 2021 00 24 24 GMT 05 00 https www coursehero com file 50919559 Chapter 6 PAS 16 PropertyPlant Equipmentdoc UNIVERSITY OF PERPETUAL HELP SYSTEM DALTACALAMBA CAMPUS BRGY PACIANO RIZAL CALAMBA CITY LAGUNA PHILIPPINESChapter 6 PAS 16 PROPERTY PLANDT EQUIPEMNT