TRUE OR FALSE

1. Inventories are tangible assets held for sale in the ordinary course of business, in the process of production, or in the form of materials or supplies to be consumed in the production process or in the rendering of service.
2. The costs of conversion of inventories include costs directly related to the units of production such as direct labor, and a systematic allocation of variable production overhead.
3. The retail method is often used in the retail industry for measuring inventories of large numbers of rapidly changing items with similar margins for which it is impracticable to use other costing methods.
4. In the gross profit method, if the sales, reduced to the cost basis, are deducted from the sum of the opening inventory plus purchases, the result is the amount of inventory on hand.
5. Where the fair value of the biological asset cannot be determined reliably on initial recognition, the biological asset should be measured at Cost less accumulated depreciation and accumulated impairment losses.
6. Auditors conduct cut-off tests on purchases to test if payments made during the reporting period are paid by the client.
7. The auditor is least concerned on determining the selling prices of inventories over verifying quantities on hand.
8. The confirmation of inventory balances stored in other locations achieves the audit objective of verifying the accuracy of recorded inventory.
9. The physical inspection of assets and tracing it back to inventory records meets the audit objective of completeness.
10. The auditor conducts essentially the same audit procedures for current assets and non current assets.
11. PAS 16 applies to property, plant and equipment used to develop or maintain biological assets and mineral rights and mineral resources.
12. The cost capitalizable to the asset is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
13. Items used to safeguard PPE are not capitalized as it is not necessary for an entity to obtain the future economic benefits from its other assets.
14. The cost of an asset does not include costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
15. Costs incurred while an item capable of operating in the manner intended by management has yet to be brought into use or is operated at less than full capacity are usually not capitalized.
16. Depreciation of an asset begins when the asset is actually used.
17. The difference between the net disposal proceeds and the carrying amount of the item is recognized as other income in profit or loss.
18. The amount the entity estimates it would receive currently for the asset if the asset were already of the age and in the condition expected at the end of its useful life is the residual value.
19. Under the revaluation model, an item of property, plant and equipment or intangible asset whose fair value can be measured reliably shall be carried at the fair value at the date of revaluation.
20. The revaluation is recognized in the books of the company by accounting for the increase in profit or loss to extent that it reverses a revaluation decrease of the same asset previously recognized in profit or loss.