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

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FA – May 2012 – L1 – SB – Q5 – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

Recording journal entries for three trade-in options for machinery and selecting the most viable option.

Question

Fancy Enterprises has machinery that cost N750,000 with an accumulated depreciation of N510,000. The firm is contemplating acquiring new machinery to replace the old one. The new machinery has a catalog price of N1,290,000 and attracts a 12% trade discount. The following options are available:

(i) Trade in the old machinery and add cash of N895,200.
(ii) Trade in the old machinery and add cash of N600,000.
(iii) Trade in the old machinery and add cash of N1,080,000.

You are required to:

(a) Record journal entries for each of the options, considering the information provided above.
(b) Which of the options is economically viable for the firm to acquire the new machinery?
(14 Marks)

Answer

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Tags: Depreciation, Journal Entries, Machinery Trade-In
Level: Level 1

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

FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculating the cost of a moulding machine to be stated in the financial statement.

Question

Ishola & Sons Limited purchased a moulding machine for N2,550,000 from Japan, the transport expenses amounted to N250,000, installation cost amounted to N150,000, and the annual maintenance is N170,000. At what cost will the moulding machine be stated in the statement of financial position?

Answer

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Tags: Asset Valuation, Financial Position, machinery
Level: Level 1

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

FA – May 2012 – L1 – SA – Q7 – Accounting for Property, Plant, and Equipment (IAS 16)

Identifying the correct accounting entry for an increase in asset value due to revaluation.

Question

Which accounting entries should be raised to record an increase in the value of assets on revaluation by the partners?

A. Debit revaluation account and credit partners’ capital account
B. Debit partners’ capital account and credit revaluation account
C. Debit revaluation account and credit partners’ current account
D. Debit revaluation account and credit assets account
E. Debit assets account and credit revaluation account.

Answer

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Tags: Asset Valuation, Partnership Accounts, Revaluation
Level: Level 1

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

FA – May 2012 – L1 – SA – Q5 – Accounting for Property, Plant, and Equipment (IAS 16)

Identifying features of non-current assets under IAS 16.

Question

According to IAS 16 – “Accounting for Property, Plant and Equipment” all of the following are features of non-current assets EXCEPT where they are:

A. Held by an enterprise for use in the production or supply of goods and services
B. Expected to be used on a continuing basis
C. Intended for sale in the ordinary course of business
D. Financed by leasehold rights
E. Held for rental to others, or for administration purpose.

Answer

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

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

FA – Nov 2011 – L1 – SA – Q17 – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

This question asks for the term used to describe the amount agreed to be paid by a tenant to a landlord.

Question

The amount agreed to be paid by a tenant to a landlord for the use of his property for economic reasons is known as?

Answer

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Tags: Rent, Tenancy
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2011

FA – Nov 2020 – L1 – SA – Q18 – Accounting for Property, Plant, and Equipment (IAS 16)

Determines the correct journal entry for the credit purchase of property, plant, and equipment (PPE).

Question

Which of the following journal entries correctly records the credit purchase of property, plant, and equipment (PPE)?

Account to be Debited	Account to be Credited
A. PPE register	Purchases ledger control
B. Purchase ledger control	PPE
C. Bank	PPE
D. PPE	Supplier of PPE
E. PPE	PPE disposal

Answer

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Tags: Credit Purchase, Journal Entries, PPE
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q14 – Accounting for Property, Plant, and Equipment (IAS 16)

Identifies an item to be classified as capital expenditure.

Question

Which of the following should be classified as capital expenditure?
A. Penalty paid to a supplier for late payment in respect of plant supplied
B. Interest payable on loan used exclusively for the production of self-constructed PPE
C. Staff training cost on the use of equipment
D. Legal fees on debt recovery
E. Bonuses to production operatives

Answer

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Tags: Capital Expenditure, Expense Classification
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2020

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

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

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

FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for when the carrying amount of an asset exceeds its recoverable amount under IAS 16.

Question

In accordance with IAS 16 (Property, Plant and Equipment), the amount by which the carrying amount of an asset exceeds its recoverable amount is called ____________.

Answer

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Tags: Asset Valuation, IAS 16, Impairment Loss
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q25 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for a new value resulting from revaluation under IAS 16.

Question

According to IAS 16 (Property, Plant, and Equipment), the new value as a result of a revaluation exercise carried out on property, plant, and equipment, within the context of the historical cost system is called ____________.

Answer

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Tags: and Equipment, IAS 16, Plant, Property, Revaluation
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2013

FA – May 2012 – L1 – SB – Q5 – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

Recording journal entries for three trade-in options for machinery and selecting the most viable option.

Question

(i) Trade in the old machinery and add cash of N895,200.
(ii) Trade in the old machinery and add cash of N600,000.
(iii) Trade in the old machinery and add cash of N1,080,000.

You are required to:

(a) Record journal entries for each of the options, considering the information provided above.
(b) Which of the options is economically viable for the firm to acquire the new machinery?
(14 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Journal Entries, Machinery Trade-In
Level: Level 1

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

FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculating the cost of a moulding machine to be stated in the financial statement.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Valuation, Financial Position, machinery
Level: Level 1

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

FA – May 2012 – L1 – SA – Q7 – Accounting for Property, Plant, and Equipment (IAS 16)

Identifying the correct accounting entry for an increase in asset value due to revaluation.

Question

Which accounting entries should be raised to record an increase in the value of assets on revaluation by the partners?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Valuation, Partnership Accounts, Revaluation
Level: Level 1

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

FA – May 2012 – L1 – SA – Q5 – Accounting for Property, Plant, and Equipment (IAS 16)

Identifying features of non-current assets under IAS 16.

Question

According to IAS 16 – “Accounting for Property, Plant and Equipment” all of the following are features of non-current assets EXCEPT where they are:

Answer

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

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

FA – Nov 2011 – L1 – SA – Q17 – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16

This question asks for the term used to describe the amount agreed to be paid by a tenant to a landlord.

Question

The amount agreed to be paid by a tenant to a landlord for the use of his property for economic reasons is known as?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Rent, Tenancy
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2011

FA – Nov 2020 – L1 – SA – Q18 – Accounting for Property, Plant, and Equipment (IAS 16)

Determines the correct journal entry for the credit purchase of property, plant, and equipment (PPE).

Question

Which of the following journal entries correctly records the credit purchase of property, plant, and equipment (PPE)?

Account to be Debited	Account to be Credited
A. PPE register	Purchases ledger control
B. Purchase ledger control	PPE
C. Bank	PPE
D. PPE	Supplier of PPE
E. PPE	PPE disposal

Answer

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Tags: Credit Purchase, Journal Entries, PPE
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q14 – Accounting for Property, Plant, and Equipment (IAS 16)

Identifies an item to be classified as capital expenditure.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Expenditure, Expense Classification
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2020

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

Find Related Questions by Tags, levels, etc.

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

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

FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for when the carrying amount of an asset exceeds its recoverable amount under IAS 16.

Question

In accordance with IAS 16 (Property, Plant and Equipment), the amount by which the carrying amount of an asset exceeds its recoverable amount is called ____________.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Valuation, IAS 16, Impairment Loss
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q25 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for a new value resulting from revaluation under IAS 16.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: and Equipment, IAS 16, Plant, Property, Revaluation
Level: Level 1