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chapter 31

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Chapter 31 1. Property, plant and equipment are defined as A: Tangible assets held to earn rentals. 2. An SME must measure property, plant and equipment after initial recognition at A: Cost less any accumulated depreciation less any accumulated impairment loss 3. On Jan 1 2014, an SME acquired a machine at certain cost. The machine was installed and ready for use intended by management on Feb 1, 2014. However because of unexpected delay in retraining the staff to operate the machine, production began on March 1, 2014. When must the entity start to depreciate the machine? A: February 1, 2014 4. What depreciation method is most appropriate for the significant part of an aircraft? A: Production method based on air miles flown for the jet engine and straight line method for all other parts 5. An entity shall measure government grant at A: The fair value of the asset received or receivable 6. An SME must recognized a government grant that does not impose specified future performance conditions A: In income when the grant proceeds are receivable 7. An SME must recognized a government grant that does impose specified future performance conditions A: In income only when the performance conditions are met 8. An SME must recognize the government grant received before the income recognition criteria are satisfied A: As a liability 9. Borrowing costs are defined as A: Interests and other costs that an entity incurs in connection with the borrowing funds 10. Borrowing costs do not include A: Dividends declared to equity holders 11. An SME must recognized all borrowing costs A: As an expensed when incurred 12. An SME shall capitalized all of the following as cost of property, plant and equipment, except

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Chapter 311. Property, plant and equipment are defned asA: Tangible assets held to earn rentals.2. An S! must measure property, plant and equipmenta"ter initial re#ognition atA:Cost less any a##umulated depre#iation less any a##umulated impairment loss3. $n %an 1 2&1', an S! a#quired a ma#hine at #ertain#ost. The ma#hine (as installed and ready "or use intended by management on )eb 1, 2&1'. *o(e+er be#ause o" une,pe#ted delay in retraining the sta- tooperate the ma#hine, produ#tion began on ar#h 1, 2&1'. .hen must the entity start to depre#iate the ma#hine/A: )ebruary 1, 2&1''. .hat depre#iation method is most appropriate "or the signif#ant part o" an air#ra"t/A: Produ#tion method based on air miles 0o(n "or the 1et engine and straight line method "or all other parts2. An entity shall measure go+ernment grant atA: The "air +alue o" the asset re#ei+ed or re#ei+able3. An S! must re#ogni4ed a go+ernment grant that does not impose spe#ifed "uture per"orman#e #onditionsA: 5n in#ome (hen the grant pro#eeds are re#ei+able6. An S! must re#ogni4ed a go+ernment grant that does impose spe#ifed "uture per"orman#e #onditionsA: 5n in#ome only (hen the per"orman#e #onditions are met7. An S! must re#ogni4e the go+ernment grant re#ei+ed be"ore the in#ome re#ognition #riteria are satisfed A: As a liability8. 9orro(ing #osts are defned asA: 5nterests and other #osts that an entity in#urs in #onne#tion (ith the borro(ing "unds1&. 9orro(ing #osts do not in#lude A: :i+idends de#lared to equity holders11. An S! must re#ogni4ed all borro(ing #ostsA: As an e,pensed (hen in#urred 12. An S! shall #apitali4ed all o" the "ollo(ing as #ost o"property, plant and equipment, e,#eptA: Transport #ost13. .hi#h o" the "ollo(ing is a dis#losure requirement in relatin to borro(ing #ost under P);S "or S!s/A: Total fnan#e #ost re#ogni4ed as e,pense


Chapter 31

Chapter (31)

Chapter 31

31.Chapter 31