ACC 301 Theory Question: Comprehensive Response to IAS 16 and Event Classification Questions

300 Level Department of Accountancy exam questions and detailed answers. Download the answers in document format. Correct, detailed, and straightforward answers.

Questions:

(a) According to IAS 16; Property, Plant and Equipment are tangible assets. Briefly explain any five (5) of the following terms in relation to IAS 16:
i. Depreciation ii. Depreciable amount iii. The residual value iv. Fair value v. Cost
vi. Carrying amount vii. Estimated useful life

(b) Classify the following transactions into Adjusting and non-adjusting events:
i. The acquisition or disposal of a major subsidiary.
ii. A fall in the value of an asset after the end of the reporting period, such as a large fall in the market value of some investments owned by the company.
iii. The settlement of a court case after the end of the reporting period.
iv. The receipt of information after the reporting period, indicating that an asset was impaired as at the end of the reporting period.
v. The discovery of fraud or errors showing that the financial statements are incorrect.
vi. The determination after the end of the reporting period of the purchase cost of an asset,
vii. Announcing or commencing the implementation of a major restructuring.
viii. The destruction of a major plant by a fire after the end of the reporting period.

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