Owner occupied Land may be subsequently measured using either the cost model or the revaluation model.

(Indicate whether the above statement is true or false)

The requirements of IAS 16 in relation to depreciation include:

1. Depreciation begins when the asset is capable of operating in the manner intended by management.

2. Depreciation begins when the asset is purchased.

3. Depreciation ceases during periods when the asset is idle.

4. Depreciation does not cease during periods when the asset is idle.

Identify whether the following statement is true or false, and if false, justify your answer: 

The two measurement models allowed under IAS 16 Property, plant and equipment  are the net replacement value method (also known as the elimination method) and the gross replacement value method (proportional restatement method). 

Consider the following statements regarding recoverable amount in context of IAS 36 Impairment of assets:

1. The recoverable amount is the greater of value in use and fair value.

2. The recoverable amount must be calculated annually.

3. When calculating recoverable amount, the costs of disposal that we take into account should not include finance costs and income tax expense.

(Choose the correct option only)

Consider the following statements regarding the calculation of ‘recoverable amount’ in context of IAS 36 Impairment of assets:

1. ‘Value in use’ reflects the present value of the net cash flows from using the asset whereas ‘fair value less cost of disposal’ reflects the present value of the net cash flows from selling the asset.

2. When calculating the value in use of an asset, we should never include cash flows that are based on projections that exceed a 5-year period.

3. When calculating value in use, we must use a pre-tax discount rate.

Consider the following statements in relation to IAS 16, Property plant and equipment:

1. The cost model is required to be used for all items of property, plant & equipment.

2. The revaluation model is required to be used for all items of property, plant and equipment.

3. An entity can use the cost model for some properties and the revaluation model for other properties.

4. An entity can use the cost model for its plant and equipment and the revaluation model for its properties.

Consider the following statements regarding the calculation of ‘recoverable amount’ in context of IAS 36 Impairment of assets:

1. All assets are tested for impairment in terms of IAS 36 Impairment of assets.

2. If an asset is impaired, the decrease in carrying amount will be recognised as an impairment loss in profit or loss.

3. If an asset is impaired, the decrease in carrying amount will be recognised as an impairment loss in other comprehensive income if the asset is measured under the revaluation model.

Identify whether the following statement is true or false: 

When remeasuring a Property, plant and equipment's carrying amount to reflect fair value , using the revaluation model, we must first eliminate any accumulated depreciation against the cost account, that is if we choose to apply the revaluation using the Net Replacement Value method.  

Select the most correct answer/s:

Save-the-Rhino purchased owner occupied land on 1 July 2017 at a cost of N$300 000. The company applies the revaluation model to land and assessments of fair value take place every two years.

On 31 December 2019 the land was revalued to its fair value of N$350 000. On 31 December 2021 the land was revalued again to its fair value of N$400 000. On 31 December 2023 the land had a value in use of N$270 000 and a fair value less costs of disposal of N$285 000, where the costs to sell were negligible.

The fair value adjustment for the year ended 31 December 2023 is disclosed as follow: