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

1. If an item of property, plant and equipment which has been recognised as an asset needs regular major inspections, the cost of each inspection is added to the carrying amount of the asset when it occurs.

2. If an item of property, plant and equipment which has been recognised as an asset needs regular major inspections, the cost of each inspection is expensed in the statement of profit or loss when it occurs.

3. Any remaining carrying amount of the cost of the previous inspection is derecognised.

4. Any remaining carrying amount of the cost of the previous inspection is added to the carrying amount of the new inspection.

If a Property, plant and equipment’s carrying amount is decreased as a result of a revaluation, this decrease shall be recognised in profit or loss, except to the extent that it reduces a credit balance in the revaluation surplus account (other comprehensive income/equity).

(Indicate whether the above statement is true or false)

Which of the following item/s do not meet the definition of 'property, plant and equipment' according to IAS 16 Property, plant and Equipment?

1. Vehicles rented out by a car-hire company.

2. Computers used for administration purposes.

3. Equipment used in the factory for less than one year.

4. Machinery used in a factory for more than one year.

5. A patent necessary for manufacturing.

(Choose one correct option only)

Sit-on-Top offers bus tours along the Jurassic Coast. It purchased a bus on 2 January 20X4 for N$170 000. The bus has a total estimated useful life of 5 years. At 31 December 20X5, the end of the 20X5 financial year,

• Similar busses that are new are selling for N$175 000;

• Similar busses that are 1 year old are selling for N$100 000;

• Similar busses that are 5 years old are selling for N$40 000;

• Similar busses that are 4 years old are selling for N$65 000.

For purposes of estimating depreciation for the year ended 31 December 20X5, the residual value of the bus is:

A machine is purchased on 1 January 2022 at a cost of N$200 000. Depreciation is provided on a straight-line basis at 20% per annum with a nil residual value.

On 31 December 2023, the asset is revalued to a fair value of N$180 000. Ignore tax.

The journal/s to record the revaluation using the net replacement value model is:

An entity incurred N$100 000 as the cost of day-to-day servicing of an item of plant during 20X1. Amounts exceeding N$50 000 are considered to be material.

Due to the materiality of the amount, the N$100 000 must be capitalised.

Borrower plc raises a loan of N$100 000 during 20X1. The loan is to be repaid in two instalments, N$40 000 during 20X5 and N$60 000 during 20X6. The reporting date of the company is 31 December.

An agreement is signed on 5 January 20X5 to delay the repayment of the N$40 000 instalment to 20X6. The financial statements are published on 31 January 20X5.

The disclosure required in the financial statements at 31 December 20X4 is as follows:

Choose one correct option only)

A contract for revenue from services of N$100 000 is partially complete and due to the contractual terms and conditions, none of the revenue from the partially complete contract may yet be recognised. The costs of providing the services during the current year is N$40 000. The following journal should be processed:

(Indicate whether the above statement is true or false)

An entity that trades as an antique dealer buys inventory at a cost of N$30 000 on 1 July 20X0. Inventory costing N$10 000 is expected to be sold during 20X1 and inventory costing N$20 000 is expected to be sold during 20X2.

None of this inventory is sold during the year ended 31 December 20X0.

How will this inventory be classified on the statement of financial position at 31 December 20X0?

(Choose only one correct option)

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)