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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–
til construction is complete and then it is ac–
counted for under lAS 40,
Investment Prop–
erty.
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
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
(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is permanently withdrawn from use.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)