Transfers into and out of investment property may only occur when management intentions have changed regarding the intended use of the property, such that the definition of investment property will no longer be met, or the definition will be met when it previously had not been met.

(Indicate whether the statement above is true or false)

Consider the following three properties in context of IAS 40 Investment property:

1. A property is held by Adam, a lessee, as a right-of-use asset. Adam uses the property to earn rental income. The lease is accounted for by the lessor as a finance lease, on the basis that ownership of the property will transfer to Adam at the end of the lease.

2. A property is held by Eve, a lessee, as a right-of-use asset. Eve uses the property to earn rental income, The lease is accounted for by the lessor an operating lease, on the basis that ownership of the property will not transfer to Eve at the end of the lease.

3. A property is held by Cain, a lessee, but where Cain expenses the property rentals in terms of the recognition exemption allowed in IFRS 16 (i.e. Cain does not account for the property as a right-of-use asset). Cain uses the property to earn rental income. The lease is accounted for by the lessor an operating lease, on the basis that ownership of the property will not transfer to Cain at the end of the lease.

(Choose one correct option only)

Consider the following statements in context of IAS 40 Investment property:

1. Investment property includes plant and machinery from which rental income is earned or which is held for capital appreciation.

2. Land held for undetermined use would qualify as investment property.

3. Buildings owned and leased to a third party under a finance lease would qualify as investment property.

4. Property occupied by employees who pay rent at market rates would qualify as investment property.

(Choose one correct option only)

Consider the following statements in context of IAS 40 Investment property:

1. Investment property may be measured in terms of either the cost model or fair value model, where this choice is an accounting policy choice.

2. When measuring investment property using the cost model, we must always depreciate the asset and test it for impairments in terms of IAS 36 Impairment of assets.

3. The subsequent measurement models are selected on a property-by-property basis, i.e. some investment properties can be measured using the cost model despite others being measured using the fair value model.

4. When the fair value model is applied, all investment property must be measured at fair value, regardless of whether the fair value is reliably measurable on a continuing basis.

(Choose one correct option only)

Mango Limited purchased a leading chutney brand from a competitor on 1 October 20X8 for N$450 000. The brand has an estimated useful life of 25 years and zero residual value. In order to maintain the brand’s premium market position, Mango Limited have incurred marketing costs of N$50 000 from 1 October 20X8 to 28 February 20X9, the end of the financial year.

What amount is recognised as an intangible asset on the statement of financial position of Mango Limited at 28 February 20X9?

(Choose one correct option only)

Abba Limited purchased an investment property on 1 January 2024 for N$500 000. It incurs the following costs upon purchase:

• transfer duty of N$50 000

• start-up costs of N$10 000, which were necessary to bring the property to the condition necessary for it to be used to earn rental income

• improvements to building totalling N$70 000

• repairs to damage caused by builders who were doing the improvements, of N$30 000.

The amount at which the building is initially measured is:

(Choose one correct option only)

Intangible assets with an indefinite useful life:

(Choose one correct option only)

An entity invests N$500 000 in staff training costs once every three years. Management believed that the training gives employees a competitive advantage.

The correct accounting treatment for these costs are:

(Choose one correct option only)

Consider the following statements relating to issues regarding amortisation in terms of IAS 38 Intangible Assets:

1. Not all intangible assets are amortised, as some have indefinite useful lives.

2. The residual value used when amortising an intangible asset is generally zero

3. All intangible assets must be amortised using the straight-line method

4. Intangible assets are amortised over the asset’s economic useful life starting from the date it is first available for use.

Consider the following statements relating to IAS 38 Intangible Assets:

1. Intangible assets are always initially measured at cost.

2. When measuring the fair value of intangible assets, it is always done in terms of an active market.

3. The two measurement models that may be used to subsequently measure intangible assets include the cost model and the fair value model.

4. The revaluation model is generally considered to be impractical for the subsequent measurement of intangible assets.

(Choose one correct option only)