FR B Non-current assets: tangible, intangible and impairment

Written by Fahad Mirza (ACCA)

ACCA · Financial Reporting · 10 questions

Name: ____________________ Date: ____________

Which cost is included in the initial cost of a property, plant and equipment item?
- A Costs of training staff to use it
- B General administration overheads
- C Costs directly attributable to getting the asset ready for use
- D Abnormal waste
Where is a revaluation surplus on a non-current asset recognised?
- A In revenue
- B In cost of sales
- C In finance income
- D In other comprehensive income and held in equity
An asset with a carrying amount of $60,000 and 6 years of life left is revalued to $90,000. What is the annual depreciation after the revaluation?
- A $10,000
- B $15,000
- C $5,000
- D $9,000
Under IAS 38, which of these is not recognised as an intangible asset?
- A Development costs that meet the criteria
- B A purchased licence
- C Internally generated goodwill
- D A purchased patent
Research costs under IAS 38 are:
- A Capitalised as development costs
- B Recognised in equity
- C Expensed when incurred
- D Capitalised and amortised
What is the recoverable amount of an asset?
- A The carrying amount
- B The lower of cost and net realisable value
- C The fair value
- D The higher of fair value less costs of disposal and value in use
A cash-generating unit has a carrying amount of $500,000, including goodwill of $80,000, and a recoverable amount of $380,000. What impairment loss is allocated to goodwill?
- A $80,000
- B $40,000
- C $120,000
- D $0
A cash-generating unit has a carrying amount of $500,000, including goodwill of $80,000, and a recoverable amount of $380,000. How much of the loss is allocated to the other assets?
- A $40,000
- B $80,000
- C $0
- D $120,000
Which statement about reversing impairment losses is correct?
- A Losses are reversed in full always
- B No loss is ever reversed
- C A loss on goodwill is never reversed
- D All losses are reversed
What is investment property?
- A Property used for administration
- B Property held to earn rent or for capital growth
- C Property held for sale in the ordinary course
- D Property used in production

Answer key

1. C, 2. D, 3. B, 4. C, 5. C, 6. D, 7. A, 8. A, 9. C, 10. B

Directly attributable costs are included; general overheads and training are not.
A gain that reverses a previous loss is recognised in profit or loss.
90,000 / 6 = 15,000.
Internally generated goodwill and brands are not recognised.
Only development costs that meet the criteria are capitalised.
It is compared with the carrying amount in an impairment test.
The total loss is $120,000. It is allocated first to goodwill ($80,000) and then to other assets.
The loss of $120,000 less $80,000 for goodwill leaves $40,000, shared pro rata.
Losses on other assets can be reversed up to what the carrying amount would have been.
It is accounted for under IAS 40.