IA 1 - Revaluation (CHAP 31)

Question 1

What is the basis of revaluation of property plant and equipment?

a. Fair value
b. Depreciated replacement cost
c. Replacement cost
d. Fair value and depreciated replacement cost

Answer 1

d. Fair value and depreciated replacement cost

Question 2

When accounting for property, plant and equipment, an entity

a. Must use the cost model.

b. May elect to use the cost model or the revaluation model on any individual asset.

c. May elect to use the cost model or the revaluation model on any asset class.

d. Must use the cost model for land.

Answer 2

c. May elect to use the cost model or the revaluation model on any asset class.

Question 3

Under the revaluation model

a. Assets must be revalued quarterly

b. Assets must be revalued annually

c. Assets must be revalued biannually

d. There is no rule regarding the frequency of revaluation

Answer 3

d. There is no rule regarding the frequency of revaluation

Question 4

When the revaluation model is used for reporting property, plant and equipment, the gain should be included in

a. Retained earnings

b. Revaluation gain in the income statement

c. Revaluation surplus

d. An extraordinary gain in the income statement

Answer 4

c. Revaluation surplus

Question 5

The revaluation surplus realized because of the use or disposal of the asset is transferred directly to

a. Retained earnings
b. Income
c. Share capital
d. Share premium

Answer 5

a. Retained earnings