6/What is the main feature of the cost model in asset measurement?

Select one: a. The gross carrying amount of an asset is unchanged over its useful life b. Depreciation is not measured c. Assets are impaired each year based on estimated useful life d. None of the above are correct

What is the immediate accounting consequence of the acquisition of a depreciable asset?

Select one:

a.

Cash flow measurement

b.

Holding assets for sale

c.

Prepayment of depreciation expense

d.

Statement of financial position classification

AASB 116 specifies that if an item of property, plant and equipment is sold, then the gain or loss on disposal is measured as the difference between:

Select one:

a.

the re-valued amount at the time of disposal and the net proceeds from disposal

b.

the adjusted carrying amount at the time of disposal and the net proceeds from disposal

c.

no response is correct

d.

the carrying amount at the time of disposal and the net proceeds from disposal

Depreciable amount is defined in AASB 116 as:

Select one:

a.

the cost of an asset, or other amount substituted for cost, less accumulated depreciation

b.

the cost of an asset, or other amount substituted for cost, less its residual value

c.

no response is correct

d.

the allocation of the cost of an asset, or other amount substituted for cost, over its useful life

Assume that an asset was bought at a cost of $50 000. It is expected that the asset will have a useful life of 10 years with the straight-line depreciation method being used. At the beginning of year 5 the total useful life is re-estimated downward to 8 years. Under AASB 116 the annual depreciation expense for the final years of useful life is:

Select one:

a.

$3000

b.

$5000

c.

$7500

d.

$4500