PROBLEM 1: TRUE OR FALSE1. Land held for a currently undecided future use or forspeculation should be reported in the property, plant, andequipment section of the statement of financial position.2. According to PAS 16, an item of PPE acquired throughpurchase is initially recognized at fair value.3. Decommissioning and restoration costs are included in thecost of a PPE only if the entity has a present obligation forsuch costs.4 Costs incurred after a PPE is operating in the manneroriginally intended by management are capitalized.5. Costs incurred that are directly attributable to the acquisitionof a PPE may be capitalized in full as cost of the asset orallocated in part to normal operations.5. When the cost of a self-constructed asset is greater than thecost to acquire it from outside sources, the difference isrecognized as loss if there is reliable evidence indicating thatthe cost is materially excessive because of constructioninefficiencies or failures.7. If the fair value of the asset given up in an exchangetransaction that has commercial substance is not reliablydeterminable, the asset received is measured at its fair value,adjusted for any cash received or paid in the exchange.3. If a party in an exchange transaction recognizes gain, thispresupposes a loss on the part of the other contracting party.9. PPE acquired by issuing securities are always recognized atthe fair value of the securities issued.10. A PPE acquired from donation is initially recognized at thefair value of the asset given up.

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ROBLEM 1: TRUE UR FALSE Land held for a currently undecided future use or for speculation should be reported in the property, plant, and equipment section of the statement of financial position. According to PAS 16, an item of PPE acquired through purchase is initially recognized at fair value. Decommissioning and restoration costs are included in the cost of a PPE only if the entity has a present obligation for such costs.

ROBLEM 1: TRUE UR FALSE Land held for a currently undecided future use or for speculation should be reported in the property, plant, and equipment section of the statement of financial position. According to PAS 16, an item of PPE acquired through purchase is initially recognized at fair value. Decommissioning and restoration costs are included in the cost of a PPE only if the entity has a present obligation for such costs.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

PROBLEM 1: TRUE OR FALSE
1. Land held for a currently undecided future use or for
speculation should be reported in the property, plant, and
equipment section of the statement of financial position.
2. According to PAS 16, an item of PPE acquired through
purchase is initially recognized at fair value.
3. Decommissioning and restoration costs are included in the
cost of a PPE only if the entity has a present obligation for
such costs.
4 Costs incurred after a PPE is operating in the manner
originally intended by management are capitalized.
5. Costs incurred that are directly attributable to the acquisition
of a PPE may be capitalized in full as cost of the asset or
allocated in part to normal operations.
5. When the cost of a self-constructed asset is greater than the
cost to acquire it from outside sources, the difference is
recognized as loss if there is reliable evidence indicating that
the cost is materially excessive because of construction
inefficiencies or failures.
7. If the fair value of the asset given up in an exchange
transaction that has commercial substance is not reliably
determinable, the asset received is measured at its fair value,
adjusted for any cash received or paid in the exchange.
3. If a party in an exchange transaction recognizes gain, this
presupposes a loss on the part of the other contracting party.
9. PPE acquired by issuing securities are always recognized at
the fair value of the securities issued.
10. A PPE acquired from donation is initially recognized at the
fair value of the asset given up.

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