ACC206: Financial Reporting MCQ

please help!! urgent, no need for explanations

1. When can an investment property be derecognised under FRS 40 Investment Property?

a. Possible in all the listed options.

b. Only when it is disposed to a third party.

c. Only when no future economic benefits are expected from its disposal.

d. Only when it is permanently withdrawn from use.

2. At the end of its fiscal year, an adverse economic condition caused AA Ltd to perform an impairment test for one of its equipment, for which it originally paid $90 million for. At the end of the fiscal year, it had accumulated depreciation of $27 million on the equipment. The estimated undiscounted future cash flows was $62 million, the estimated discounted future cash flows was $60 million, and the fair value less costs of disposal is $40 million. Under FRS 36 Impairment of Assets, the equipment is:

a. Impaired because its book value exceeds the estimated discounted future cash flows.

b. Impaired because its book value exceeds the estimated undiscounted future cash flows.

c. Not impaired because its book value exceeds estimated discounted future cash flows.

d. Not impaired because its book value exceeds fair value less costs of disposal.

3. At the end of its fiscal year, a triggering event caused AA Ltd to perform an impairment test for one of its manufacturing facilities. The book value at the end of the fiscal year was $65 million, the estimated undiscounted future cash flows was $63 million, the estimated discounted future cash flows was $60 million, and the fair value less costs of disposal is $50 million. Under FRS 36 Impairment of Assets, what is the recoverable amount of the manufacturing facility?

a. $65 million

b. $60 million

c. $63 million

d. $50 million

4. At the end of its fiscal year, an adverse economic condition caused AA Ltd to perform an impairment test for one of its equipment, for which it originally paid $90 million for. At the end of the fiscal year, it had accumulated depreciation of $27 million on the equipment. The estimated undiscounted future cash flows was $62 million, the estimated discounted future cash flows was $60 million, and the fair value less costs of disposal is $40 million. Under FRS 36 Impairment of Assets, what is the recoverable amount of the equipment?

a. $40 million

b. $62 million

c. $63 million

d. $60 million

5. Under FRS 36 Impairment of Assets, when testing for impairment of property, plant and equipment, an impairment loss may be required if the:

a. asset's book value exceeds the discounted sum of expected future cash flows.

b. discounted sum of its expected future cash flows exceeds the asset's book value.

c. None of the listed options.

d. undiscounted sum of expected future cash flows exceeds its book value.

6. Which of the following does not have to be met in order for the operation to be classified as a discontinued operation under FRS 105 Non-current Assets held for sale and Discontinued Operations?

a. The operation is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations.

b. The operation should represent a separate major line of business or geographical area of operations.

c. The operation must be sold within three months of the financial year-end.

d. The operation is a subsidiary acquired exclusively with a view to resale.