Question 27

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Under the inventory standard AASB 102, a new assessment of the net realisable value of inventory items is made:

Select one:

a.

in a general meeting

b.

each period

c.

every two years

d.

weekly

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Question 28

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What are defined as immovable public facilities that are necessary to sustain living standards and concerned with essential services?

Select one:

a.

Infrastructure assets

b.

Current assets

c.

Property, plant and, equipment

d.

Heritage assets

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Question 29

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Which of the following is a main concern raised about the recognition of land under roads?

Select one:

a.

All are main concerns

b.

The costs of recognizing land under roads would exceed the benefits

c.

Land under roads cannot be measured reliably

d.

Uncertainty about which entities control land under roads

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Question 30

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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.

$5000

b.

$4500

c.

$7500

d.

$3000

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Question 31

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Myers Company acquired machinery on January 1, 20X0 which it depreciated under the straight-line method with an estimated life of fifteen years and no salvage value. On January 1, 20X5, Myers estimated that the remaining life of this machinery was six years with no salvage value. How should this change be accounted for by Myers:

Select one:

a.

By continuing to depreciate the machinery over the original fifteen year life

b.

As a prior period adjustment

c.

By setting future annual depreciation equal to one-sixth of the book value on January 1, 20X5

d.

As the cumulative effect of a change in accounting principle in 20X5

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Question 32

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The final approval of accounting standards to apply under the Corporations Act rests with:

Select one:

a.

ASIC

b.

Parliament

c.

The Joint Standing Committee of the Institute of Chartered Accountants in Australia and CPA Australia

d.

AASB

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Question 33

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The item that is not part of manufacturing inventory is:

Select one:

a.

none response is correct, i.e., all are part of manufacturing inventory

b.

work in process

c.

supplies inventory

d.

raw materials

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Question 34

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Market-corroborated inputs are examples of:

Select one:

a.

Items not included on the fair value hierarchy

b.

Level 3 inputs on the fair value hierarchy

c.

Level 2 inputs on the fair value hierarchy

d.

Level 1 inputs on the fair value hierarchy

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Question 35

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Assisting the users to assess the amount, timing and uncertainty associated with an entity's future cash flows is a decision common to:

Select one:

a.

auditors

b.

the not-for-profit sector

c.

standards setters

d.

for-profit sector

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Question 36

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AASB 136 proposes factors that may indicate the existence of asset impairment. Which of the following is not one of those factors?

Select one:

a.

No response is correct, i.e., all are factors that may indicate the existence of impairment

b.

The carrying amount of net assets exceeds the entity's market capitalisation

c.

Changes in interest rates that would reduce fair value calculations involving future cash flows

d.

Evidence of obsolescence or physical damage to an asset

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Question 37

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Assuming prices are decreasing, the first-in-first-out approach to inventory valuation, compared to the average cost approach, will give:

Select one:

a.

a lower profit and a higher closing inventory

b.

a lower profit and a lower closing inventory

c.

a higher profit and a lower closing inventory

d.

a higher profit and a higher closing inventory

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Question 38

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Additional disclosure requirements by the ASX for stock exchange listed companies are all of the following, except:

Select one:

a.

a requirement for the top 300 companies to have an audit committee

b.

reporting of performance indicators such as return on shareholders' equity

c.

a statement of ethical guidelines for employees and management

d.

none of the above, i.e., all are additional requirements for ASX listed companies

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Question 39

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The accounting standard that specifically deals with property, plant and equipment is:

Select one:

a.

AASB 132

b.

AASB 116

c.

AASB 138

d.

AASB 101

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Question 40

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Under AASB 116, the net method of treating accumulated depreciation when assets are re-valued requires:

Select one:

a.

accumulated depreciation to be written back to net profit on the date of re-valuation

b.

accumulated depreciation to be closed to the asset account before re-valuation

c.

accumulated depreciation to be increased by the same proportion as the gross carrying amount of the asset, so the carrying amount of the asset represents its re-valued amount

d.

accumulated depreciation to be ignored at re-valuation