F3 M4 PP&E Cost Basis

Question 1

2 rules on capitalized interest:

1. Only capitalize interest on ____, not on the total ____.
2. The amount of capitalized interest is the lower of

Answer 1

Only capitalize interest on money actually spent, not on the total amount borrowed.
The lower of actual interest cost incurred or computed capitalized interest (avoidable interest)

Question 2

Excavation costs are considered part of the cost of _____.

Answer 2

A building

Question 3

Any cost incurred to acquire and make ready a plant asset is ____.

Answer 3

Capitalized

Question 4

The cost of the machine should include all costs that are _____.

Answer 4

Reasonable and necessary to get the asset in the condition or location for its intended use.

Question 5

Leasehold improvements are capitalized at the lesser of ____ vs _____.

Answer 5

Life of improvements vs remaining term of the lease

Question 6

Under IFRS, revaluation gains are recorded where?

Answer 6

Other comprehensive income

Question 7

Under IFRS, if a revalued asset becomes impaired the impairment is recorded where?

Answer 7

First by reducing any revaluation surplus to zero, then to the income statement

Question 8

Under IFRS, if an individual fixed asset is revalued then the entire class of the fixed asset to which the asset belongs must ____.

Answer 8

Be revalued

Question 9

Revaluation losses are reported on what statement?

Answer 9

Income statement

Question 10

Interest should only be capitalized in connection with “_____”

Answer 10

A discrete manufacturing activity

Question 11

Any proceeds from the sale of any existing buildings or scrap are _____ from the cost of the land.

Answer 11

Deducted

Question 12

Whenever assets are purchased requiring fixed payment extending beyond one year, the assets should be valued at _____.

Answer 12

Present value of all future payments

Question 13

What day does depreciation expense begin for equipment being installed?

Answer 13

Date of the installation