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Wiley IFRS: Practical Implementation Guide and Workbook
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.
(c) A fair value approach.
(d) Net realizable value.
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
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.
(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.
(c) A separate revaluation reserve.
(d) A capital reserve within
equity ,
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.
(a)
True .
(b) False.
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.