kishmaan/Desktop/December%202014%20Final%20Exams%20(1) pdf A. Indicate whether c

Question

kishmaan/Desktop/December%202014%20Final%20Exams%20(1) pdf A. Indicate whether cach of the following statement is Truc or False s marks LIf the carrying amount of an item of PPE is greater than the recoverable amount, no impairment I Depreciation is like other expenses in that it reduces net income and involves a current cash I1... Uhlike other methods of depreciation, the declining balance method does not deduct the loss is recorded outflow residual value in computing the depreciable base. Assets held primarily for sale ordisposal should be reported at the lower of cost or net rcalizable value and no depreciation is taken. VAmortization, depreciation and depletion each refer to the process of allocating the cost of mineral resources. PPE and intangible assets respectively B. On January 1,2012. Corona Company, a small machine-tool manufacturer, acquired for $1,260,00 piece of new industrial equipment. The new equipment was estimated to have a usetul lifc of 5 years, and the residual value was

Explanation / Answer

S.No Particulars True / False Reason 1 If the Carrying Amount of an item of PPE is greater than the recoverable amount, No is recognised False As per Definition if IAS 36 Impairment Loss is the the amount by which the carrying amount of an asset or cash-generating unit exceeds its recoverable amount 2 Depreciation is like other expenses in that it reduces net income and involves a current cash outflow False depreciation is like other expenses in that it reduces net income BUT doest NOT involves a current cash outflow 3 Unlike other methods of depreciation, the declining balance method does not deduct the residual value in computing the depreciable base True 4 Asset held primarily for sale or disposal should be reported at the lower of cost or net realizable value and no depreciation is taken True As per IFRS 5 Asset held primarily for sale or disposal are not depreciated and reported at lower of carrying amount and fair value less costs to sell 5 Amortization, depreciation and depletion each refer to the process of allocating the cost of mineral resources, PPE and Intangible assets respectively False Depreciation is a means of allocating the cost of a material asset over its useful life, and depletion is used to allocate the cost of extracting natural resources from the Earth and is the actual physical depletion of a natural resource by a company. Amortization is the deduction of capital expenses over a specified time period, typically the life of an asset.

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