PROBLEM 1: TRUE OR FALSE asset." - 1. PAS 16 defines depreciation as "the decrease in the value of an 2. According to PAS 16, items of PPE are initially measured at cost and subsequently measured using either the cost model evaluation or the fair value modell 3. An entity acquires an asset for P120K. The asset is estimated to have a useful life of 10 years and a residual value of P20K. The straight line depreciation rate based on depreciable amount is 10%. 4. An entity acquires an asset for PIM. A P200K residual value is estimated for the asset. At the end of the asset's useful life, the accumulated depreciation will be equal to P1M. 5. A machine acquired on the 20th of July (and ready for its intended use as at this date) would most likely be depreciated starting on the 1st of August. 6. A change in the depreciation method, useful life or residual value of a PPE is accounted for retrospectively. Fact pattern for the next three items: An item of PPE with a carrying amount of P120K is revalued to its fair value of P200K. 7. The resulting revaluation surplus, gross of tax, is P80K. 8. All the other items within the class of PPE to which the revalued item belongs shall also be revalued. 9. The P80K revaluation gain is recognized in profit or loss. 10. A PPE with a carrying amount of P200K is sold for P180K Disposal costs of P10K were incurred. The loss on the disposal is P20K