FA – May 2018 – L1 – SA – Q10 – Accounting for Property, Plant, and Equipment (IAS 16)

Identifies the correct definition of non-current assets based on their usage.

Question

Which of the following is the definition of non-current assets?
A. Assets held for trading purposes
B. Assets which are used for production and services over a number of years
C. Assets that are expected to be realized within normal operating cycle
D. Assets that are expected to be realized within a year
E. Assets expected to be consumed in ordinary course of business

Answer

Explanation:
Option B is correct because non-current assets are long-term assets used in the production of goods or services, expected to provide economic benefits to the entity over a number of years. They are not held for trading and are not expected to be converted into cash within a short period, unlike current assets.

Tags: Asset Definition, IAS 16, Non-current Assets
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: MAY 2018

Uploader: Theophilus