IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

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Wiley IFR S: Practical Implementation Guide and Workbook

MULTI PLE-CHOICE QUESTIONS 1. A gain arising from a change in the fair value of an investment property for which an entity has opted to use the fair value model is recognized in (a) Net profit or loss for the year. (b) Genera l reserve in the shareholders' equity. (c) Valuation reserve in the shareholders' eq- uity. (d) None of the above. Answer: (a) 2. An investment property should be measured ini– tially at (a) Cost. (b) Cost less accumulated impairment losses. (c) Depreciable cost less accumulated impair– ment losses. (d) Fair value less accumu lated impairment losses. Answer : (a) 3. The applicab le lFRS/l AS for a property being constructed or developed for future use as investment property is (a) lAS 2, Inventories, until construction is complete and then it is accounted for under lAS 40, Investment Property. (b) lAS 40, Investment Property. (c) lAS II , Construction Contracts, until con– struction is complet e and then it is ac– counted for under lAS 40, Investment Prop– erty. (d) lAS 16, Property, Plant, and Equipment, un– Answer: (d) 4. In case of property held under an operating lease and classified as investment property (a) The entity has to account for the investment property under the cost model only. (b) The entity has to use the fair value model only. (c) The entity has the choice between the cost model and the fair value model. (d) The entity needs only to disclose the fair value and can use the cost model under lAS 38. Answer: (b) 5. Transfers from investment property to property, plant, and equipment are appropriate (a) When there is change of use. (b) Based on the entity' s discretion . (c) Only when the entity adopts the fair value model under lAS 38. (d) The entity can never transfer property into til construction is complete and then it is ac– counted for under lAS 40, Investment Prop– erty.

(a) It is disposed to a third party. (b) It is permanently withdrawn from use. (c) No future economic benefits are expected from its disposal. (d) In all of the above cases. Answer : (d) 7. An entity has a factory that has been shut down for a year due to various reasons, including worker unrest and strike. The entity plans to sell this factory. It should (a) Classify the factory as investment property . (b) Classify the factory as propert y held for sale in the ordinary course of business under lAS 2. (c) Classify the factory as property, plant, and equipment under lAS 16. (d) Write off the net book value and disclose that fact in the footnote s to the financial statements. Answer : (b)

another classification on the balance sheet once it is classified as investment propert y.

Answer : (a) 6. An investment property is derecognized (elimi– nated from the balance sheet) when