1. It is a government grant whose primary condition is that an entity qualifying for it should purchase, construct or otherwise acquire long term asset

Grant related to income

Government appropriation

Grant related to asset

Government gift

None of the choices

2. The recognition criteria for an intangible asset include which of the following conditions?

In all cases, an entity shall measure agricultural produce at fair value less cost of disposal at the point of harvest.

None of the choices

All of these statements are true regarding agricultural produce.

The fair value measurement of agricultural produce stops at the time of harvest.

The prevailing view is that the fair value of agricultural produce at the point of harvest can always be measured reliably.

3. If the entity uses the fair value model for investment property, which statement is true?

The entity depreciates the equipment using normal depreciation method.

All statements are true

The entity should report the increase in fair value in other comprehensive income for the period.

The entity does not record depreciation on the investment property.

The entity should value the property at cost less accumulated depreciation and impairment.

4. Operating losses incurred during the startup years of a new business should be

Capitalized as a deferred charge and amortized over five years

Accounted for and reported like operating losses of any other business

None of the choices

Written off directly against retained earnings

Capitalized as an intangible asset and amortized over twenty years

5. Which of the following is not considered a borrowing cost?

All of the above are considered borrowing costs

Finance charges in respect of finance leases

Dividends paid on preferred stock

Interest on short-term and long-term borrowings

6. When a qualifying asset is financed by both specific and general borrowings, the interest rate to be used in computing capitalizable borrowing costs attributed to general borrowings should be

none of the choices

the average of the lowest and highest interest rates on the general borrowings

the lowest interest rate on the general borrowings

the highest interest rate on the general borrowings

the weighted average interest rate on general borrowings

7. Under the revised PAS 23, borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset

should be charged to expense when incurred

may be charged to expense or capitalized, depending on the decision of management

none of the choices

should be capitalized as part of the cost of the asset for which the funds borrowed are used

should not be charged to expense nor capitalized

8. What is the acceptable approach in accounting for government grants?

Government grants should be credited directly to retained earnings

Government grants should be credited directly to donated capital

Government grants should be deferred and amortized over a maximum period of 20 years

Government grants should be recognized as income over the periods necessary to match them with the related costs

None of the choices

9. Which statement in relation to intangible assets is true?

Intangible assets acquired in a business combination

Intangible assets with a finite useful life shall be measured initially at cost and tested annually for impairment.

Intangible assets acquired in a business combination shall only be recognized if the assets have already been recognized by the acquiree.

Intangible assets cannot be treated as having an indefinite useful life.

10. Capitalization of borrowing costs

None of the choices

Shall be suspended only during extended periods of delays in which active development is delayed

Should never be suspended once capitalization commences

Shall be suspended during temporary periods of delay

May be suspended only during extended periods of delay in which active development is delayed

11. Which is not a disclosure requirement in relation to borrowing cost?

All are disclosure requirements

Segregation of qualifying asset from other asset

Capitalization rate used to determine the amount of borrowing cost eligible for capitalization

Amount of borrowing cost capitalized during the period

Accounting policy adopted for borrowing cost

12. An entity had a plantation forest that is likely to be harvested and sold in 30 years. The income shall be accounted for in which of the following?

No income shall be reported annually until first harvest and sale in 30 years.

Income shall be measured annually and reported using a fair value approach that recognizes and measures biological growth.

None of the choices

The plantation forest shall be valued every 5 years and the increase in value shall be recognized as component of other comprehensive income.

The eventual sale proceeds shall be estimated and matched to the profit and loss account over the 30-year period.

13. Which research and development costs should be capitalized and amortized?

Labor and material costs incurred in building a prototype model

None of the choices

Administrative salaries allocated to research and development

Research findings purchased from another entity

Cost of testing equipment that will also be used in another separate research and development project scheduled to begin next year

14. Which of the following statements is correct?

All statements are incorrect

Intangible assets used in the operation of a business are always long term

Some intangible assets convey exclusive rights which are represented only by tangible physical substance.

The process of recording the expiration of the economic benefits of an intangible asset is called depletion

Intangible assets are obtained in two ways: acquisition from an external source or internally developed

15. Which statement is incorrect in determining the fair value of an investment property?

An entity shall determine the fair value of investment property by deducting transaction cost that may be incurred upon disposal.

If an office is leased on a furnished basis, the fair value of the office generally includes the fair value of the furniture because the rental income relates to the furnished office.

The fair value of investment property shall reflect market conditions at the end of the reporting period.

The fair value of investment property excludes prepaid or accrued operating lease Income.

All are correct statements