SBR Assets, revenue and leases

ACCA · Strategic Professional · 8 questions

Name: ____________________ Date: ____________

A machine with a carrying amount of $600,000 is revalued to $750,000. Where is the $150,000 recorded?
- A Profit or loss
- B Retained earnings directly
- C Other comprehensive income, accumulated in a revaluation surplus
- D Reduced from other assets
An asset has a carrying amount of $500,000, fair value less costs of disposal of $420,000 and value in use of $450,000. The impairment loss is:
- A $50,000
- B $30,000
- C $80,000
- D $0
An impairment loss on a cash-generating unit is allocated first to:
- A Current assets
- B Inventory
- C Goodwill
- D The largest asset
Under IAS 38, development expenditure is capitalised only when:
- A It is incurred after the year end
- B It relates to research
- C It is more than 10 percent of profit
- D Technical feasibility, intention, ability to use or sell, future benefits, resources and reliable measurement are shown
A non-current asset classified as held for sale is measured at:
- A Fair value only
- B The lower of carrying amount and fair value less costs to sell
- C Value in use
- D Cost
A contract bundles products A and B for $1,000. Their stand-alone selling prices are $900 and $300. The amount allocated to A under IFRS 15 is:
- A $900
- B $750
- C $1,000
- D $500
A lessee has three annual payments of $10,000 in arrears and a discount rate of 10 percent. The initial lease liability is closest to:
- A $24,869
- B $22,000
- C $30,000
- D $27,000
Under IFRS 16, a lessee normally recognises in its statement of financial position:
- A A right-of-use asset and a lease liability
- B A lease expense only
- C The leased asset at fair value only
- D A deferred income balance

Answer key

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

Revaluation gains go to OCI unless they reverse a previous loss on the same asset that went to profit or loss.
Recoverable amount is the higher of 420,000 and 450,000, which is 450,000. The loss is 500,000 - 450,000 = 50,000.
The loss reduces goodwill first and then the other assets pro rata, but not below the individual recoverable amount.
IAS 38 sets six criteria. Research costs are always expensed.
Under IFRS 5, the asset is no longer depreciated and is presented separately.
Allocation is based on relative stand-alone selling prices: 900 / 1,200 x 1,000 = 750.
The present value is 10,000 x (0.9091 + 0.8264 + 0.7513) = about $24,869.
Most leases are on balance sheet, apart from short-term and low-value leases where an exemption is elected.