Which is a major characteristic of property, plant and equipment? [ Select ] ["Acquired and intended for sale by the entity acquiring it.", "Expected to be used for one year.", "Subject to depreciation.", "Without physical existence"]

An item of property, plant and equipment shall be recognized as an asset when [ Select ] ["It is possible that future economic benefits associated with the asset will flow to the entity, and the cost of the asset to the entity can be measured reliably.", "It is possible that future economic benefits associated with the asset will flow to the entity, and the cost of the asset to the entity can be measured accurately.", "It is probable that future economic benefits associated with the asset will flow to the entity, and the cost of the asset to the entity can be measured reliably.", "It is probable that future economic benefits associated with the asset will flow to the entity, and the cost of the asset to the entity can be measured accurately."]

Major spare parts and standby equipment which are expected to be used for one year or less should be classified as [ Select ] ["Property, plant and equipment", "Non-current investment", "Expense", "Inventory"]

The cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and [ Select ] ["The market value of any noncash asset surrendered to acquire the asset.", "All directly attributable costs necessary to bring the asset to working condition for its intended use.", "The implied interest in the debt to finance the purchase.", "The estimated residual value of the asset."]

An entity installed a new production facility and incurred a number of expenses at the point of installation. The entitys accountant is arguing that most expenses do not qualify for capitalization. Included in those expenses are initial operating losses. These should be [ Select ] ["Taken to retained earnings since it is unreasonable to present it as part of the current years income statement.", "Capitalized as part of the cost of plant as a directly attributable cost.", "Expensed and charged to the income statement.", "Deferred and amortized over a reasonable period of time."]

Which of the following terms best describes the removal of an asset from the statement of financial position? [ Select ] ["Write-off", "Depreciation", "Impairment", "Derecognition"]

Which exchange has commercial substance? [ Select ] ["Exchange of assets that causes the entities to remain on essentially the same economic position.", "Exchange of assets with a difference in future cash flows.", "Exchange of assets with no difference in future cash flows.", "Exchange by entities in the same line of business."]

Which should not be considered qualifying assets for purposes of capitalization of borrowing cost? [ Select ] ["Manufacturing plants.", "Power generation facilities.", "Inventories that require a substantial period of time to bring them to a salable condition.", "Inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis over a short period of time."]

What is the acceptable approach in accounting for government grants? [ Select ] ["Government grants should be credited directly to donated capital.", "Government grants should be deferred and amortized over a maximum period of 20 years.", "Government grants should be recognized as income over the periods necessary to match them with the related costs.", "Government grants should be credited directly to retained earnings."]

An entity purchased a certain plant asset under a deferred payment contract. The agreement was to pay P 10,000 per year for five years. The plant assets should be valued at [ Select ] ["P 50,000 plus imputed interest", "Present value of P 10,000 annuity for five years at an imputed interest.", "P 50,000", "Present value of a P 10,000 annuity for fiver years discounted at the bank prime interest rate."]

The term betterment refers to [ Select ] ["An expenditure made to improve existing facilities by increasing its capacity.", "An expenditure made to restore capacity: after abandonment or retirement.", "An expenditure made for new facilities which increase capacity.", "An expenditure made to help ensure continuity of service capacity."]

An improvement made to a machine increased its fair market value and its production capacity by 25% without extending the machines useful life. The cost of the improvement should be [ Select ] ["Expensed", "Capitalized in the Machine account", "Debited to Accumulated Depreciation", "Allocated between accumulated depreciation and the machine account."]

Which of the following expenditures may properly be capitalized? [ Select ] ["Research and development related to a long-term asset which is giving the entity a competitive market advantage.", "Expenditure for massive advertising campaign.", "Title search and other legal costs related to a piece of property which was not acquired.", "Insurance on plant during construction"]

It is the systematic allocation of the depreciable amount of an item of property, plant and equipment. [ Select ] ["Depletion", "Depreciation", "Amortization", "Realization"]

The useful life of an item of property, plant and equipment should be reviewed periodically and if expectations are significantly different from previous estimates, the depreciation charge for [ Select ] ["Prior periods should be adjusted", "Current and future periods should be adjusted.", "Future period only should be adjusted", "Current period only should be adjusted"]

The depreciation method applied to property, plant and equipment shall be reviewed periodically, and if there has been a significant change in the expected pattern of consumption of economic benefits from the assets, the change [ Select ] ["Shall be accounted for as a change in accounting policy.", "Shall be accounted for as correction of a prior period error.", "Shall be accounted for as a change in accounting estimate.", "Shall not be recognized."]

Which of the following depreciation methods is not appropriate for situations involving large number of similar items, each having a small peso amount? [ Select ] ["Composite Method", "Retirement Method", "Replacement Method", "Inventory Method"]