IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

Wiley IFRS: Practical Implementation Guide and Workbook

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MULTlPLE·CHOICE QUESTIONS 1. Which of the following is not dealt with by lAS 4l? (a) The accounting for biological assets. (b) The initial measurement of agricultural pro– duce harvested from the entity's biological assets. (c) The processing of agricultural produce after harvesting. (d) The accounting treatment of government grants received in respect of biological as– sets. Answer: (c) 2. Where there is a long aging or maturation pro– cess after harvest, the accounting for such products should be dealt with by (a) lAS 41. (b) lAS 2, Inventory. (c) lAS 16, Property, Plant, and Equipment. (d) lAS 40, Investment Property . Answer: (b) 3, Generally speaking, biological assets relating to agricultural activity should be measured using (a) Historical cost. (b) Historical cost less depreciation less impair– ment. Answer: (c) 4. Entity A had a plantation forest that is likely to be harvested and sold in 30 years . The income should be accounted for in the following way: (a) No income should be reported until first har– vest and sale in 30 years . (b) Income should be measured annually and re– ported using a fair value approach that rec– ognizes and measures biological growth. (c) The eventual sale proceeds should be esti– mated and matched to the profit and loss ac– count over the 30-year period. (d) The plantation forest should be valued every (c) A fair value approach. (d) Net realizable value.

(c) Cost less accumulated depreciation and ac– cumulated impairment losses . (d) Net realizable value. Answer: (c) 7. Which of the following costs are not included in point-of-sale costs? (a) Commissions to brokers and dealers. (b) Levies by regulatory agencies. (c) Transfer taxes and duties. (d) Transport and other costs necessary to get the assets to a market. Answer: (d) 8. Which of the following values is unlikely to be used in fair value measurement? (a) Quoted price in a market. (b) The most recent market transaction price. (c) The present value of the expected net cash flows from the assets . (d) External independent valuation. Answer: (d) 9. A gain or loss arising on the initial recognition of a biological asset and from a change in the fair value less estimated point-of-sale costs of a biological asset should be included in (a) The net profit or loss for the period. (b) The statement of recognized gains and losses. Answer: (a) 10. When agricultural produce is harvested, the har– vest should be accounted for by using lAS 2, Invento– ries, or another applicable International Accounting Standard. For the purposes of that Standard, cost at the date of harvest is deemed to be (a) Its fair value less estimated point-of-sale costs at point of harvest. (b) The historical cost of the harvest. (c) The historical cost less accumulated impair– ment losses. (d) Market value. Answer: (a) 11. Contract prices are not necessarily relevant in determining fair value, and the fair value of a biologi– cal asset or agricultural produce is not adjusted be– cause of the existence of a contract. Answer: (a) 12. Land that is related to agricultural activity IS valued (a) At fair value. (b) In accordance with lAS 16, Property, Plant, and Equipment, or lAS 40, Investment Property. (c) At fair value in combination with the bio– logical asset that is being grown on the land. (c) A separate revaluation reserve. (d) A capital reserve within equity , (a) True . (b) False.

5 years and the increase in value should be shown in the statement of recognized gains and losses .

Answer: (b) 5. Regarding the choice of measurement basis used for valuing biological assets, lAS 41 (a) Sets out several ways of measuring fair value.

(b) Recommends the use of historical cost. (c) Recommends the use of current cost. (d) Recommends the use of present value.

Answer: (a) 6. Where the fair value of the biological asset can– not be determined reliably, the biological asset should be measured at (a) Cost. (b) Cost less accumulated depreciation.