FA – Nov 2012 – L1 – SA – Q9 – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

Identifying what does not lead to improvement of property, plant, and equipment.

Question

Which of these may NOT lead to improvement in respect of Property, Plant and Equipment?

A. Extension of economic life of the asset
B. Repairs and maintenance of asset
C. Increased quality of output
D. Faster production
E. Reduced operating costs

Answer

B. Repairs and maintenance of asset

Explanation:
The correct answer is B because repairs and maintenance typically aim to restore an asset to its original condition rather than improving it. Improvement refers to extending the asset’s useful life, increasing its output, or reducing costs.

Tags: Equipment, Improvements, Plant, Property
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2012

Uploader: Theophilus