PPE

Question 1

It maybe appropriate to allocate the entire purchase price of land in what scenario?

Answer 1

Existing building is UNUSABLE or is LIKELY TO BE DEMOLISHED right away. (Materiality concept) PIC Q&A NO. 2012-02

Question 2

DEMOLISHED RIGHT AWAY AFTER ACQUISITION:

It is appropriate for the entity to account for the carrying value of the old building as part of the cost of new building if the building _____?

Answer 2

Will be sold as an INVENTORY.

Question 3

FOR INITIAL USE, THEN DEMOLISH IT IN A FUTURE PERIOD.

Answer 3

Carrying amount of the old building will NOT be included in the cost of new building.

Question 4

The costs incurred in relation to demolition (physical tearing down) of the old building to give way for the construction of the replacement building should preferably be ___?

Answer 4

Demolition costs:

CAPITALIZED as part of the cost of NEW BUILDING

Question 5

Depreciation is NOT recognized if

Answer 5

The asset’s residual value exceeds its carrying amount.

RV>CA=Fully depreciated

Question 6

Pag maraming acquisition at disposal, to simplify the computation-set up a policy!

Answer 6

Acquisition=

Disposal=