Chapter 10: Non-current assets and depreciation

Question 1

What is the reasoning behind charging depreciation in historical cost accounting?

Answer 1

To match the cost of the non-current asset with the revenue that the asset generates

Question 2

True or false: Internally generated goodwill should not be capitalised

Answer 2

True

Question 3

True or false: Purchased goodwill should normally be amortised through the statement of profit or loss

Answer 3

False: Purchased goodwill is retained through the statement of financial position subject to an impairment review

Question 4

True or false: Development expenditure must be capitalised if certain conditions are met

Answer 4

True