BUACC3706 : Financial Accounting The Class of Assets that is to be Valued at Lower than Cost - Accounting and Finance Assignment Help

Assignment Task:

Task:

Question 1. The class of assets that is to be valued at lower than cost or net realisable value is: A. non-current assets. B. debtors. C. self-generating and regenerating assets. D. inventories. Question 2. Which of the following assets are recognised at fair value? A. Biological assets. B. Revalued property, plant equipment. C. Assets under a finance lease. D. Biological assets and revalued property, plant equipment.

Question 3. If an asset's 'value in use' exceeds its market value then: A. an entity should adjust the current carrying amount of the asset to book value. B. it would be expected that the entity would dispose of the asset immediately. C. an impairment loss will need to be recorded. D. it would be expected that the entity would retain the asset.

Question 4. Recoverable amount of an asset is defined in AASB 136 as the higher of its fair value less costs to sell and its value in use. In the case where an asset's carrying amount is less than its recoverable amount, which action is consistent with AASB 136? A. Recognise difference as increase is asset revaluation reserve. B. Recognise difference as impairment loss. C. Recognise difference as gain from reinstatement of asset. D. Leave asset at its carrying amount.

Question 5. Which of the following measurement bases are acceptable for property, plant and equipment? A. Historical cost. B. Revaluation model. C. Fair value model. D. Historical cost and revaluation model. (1805) Semester 1, 2018 BUACC3706 Financial Accounting Page 4 of 21

Question 6. Tea Tree Bay Ltd acquires a Gizmo Machine from Jetsons Ltd for the following consideration. Cash $20,000 Land In the books of Tea Tree Bay Ltd the land is recorded at its cost of $100,000. It has a fair value of $140,000. Tea Tree Bay Ltd also agrees to assume the liability of Jetsons Ltd's bank loan of $30,000 as part of the Gizmo Machine acquisition. Calculate the acquisition cost of the Gizmo Machine. Acquisition Cost ___________________

Question 7. Outside the situation where specific types of provisions are covered in standards, a provision exists when and only when: A. The entity has a present legal, equitable or constructive obligation to make a future sacrifice of economic benefits to other entities as a result of past transactions or other past events; and the amount or timing of the future sacrifice of economic benefits that will be made to satisfy the present obligation is uncertain. B. There is a legal or constructive obligation to make a future sacrifice of economic benefits within the entity as a result of past transactions or other past events, the amount or timing of which is uncertain. C. The entity has a present legal obligation to make a future sacrifice of economic benefits to other entities as a result of past transactions or other past events; and the amount or timing of the future sacrifice of economic benefits that will be made to satisfy the present obligation is uncertain. D. The amount, timing and entity to whom the obligation to sacrifice future economic benefits as a result of a past legal or constructive obligation are unknown. (1805) Semester 1, 2018 BUACC3706 Financial Accounting Page 5 of 21

Question 8. If the entity is offering a higher interest rate on debentures than the market believes is appropriate, the market will: A. be prepared to pay more than the par value of the debentures, offering a discount. B. be prepared to pay less than the par value of the debentures, offering a discount. C. be prepared to pay more than the par value of the debentures, offering a premium. D. be prepared to pay less than the par value of the debentures, offering a premium.

Question 9. In accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets, which of the following statements is correct?

A. Contingent liabilities and provisions are required by AASB 137 to be disclosed in the financial statements.

B. Contingent assets where realisation of economic benefits is probable should be recognised in the financial statements.

C. Constructive obligations are recognised when entities have no realistic alternative to making future sacrifice of economic benefits.

D. Provisions for future necessary repairs and maintenance should be recognised in the financial statements.

Question 10. Evaluate whether the following situations will give rise to a present obligation: I: Bona Bay Ltd is a large manufacturer of surfboards and provides a two year warranty for all its products from the time of purchase by offering to repair or replace the item.

II: Sea Eagle Ltd operates its offshore oil rigs near Curlew Beach. During the reporting period, there was a major oil spill and the company had publicly announced to undertake clean-up of all the contamination that it caused. There is no environmental legislation on oil spills. III: A customer sued Neck Bay Ltd for damages from a faulty product. The company hired a legal team to dispute this claim. IV: Whitehaven Ltd had guaranteed a bank loan to an associated company. In compliance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets, which of the above situations requires recognition in the financial statements?

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