Property Plant and Equipment Paper 3

1

In which of the following situations is the units-of-production method of depreciation most appropriate?






2

Under IFRS, according to the revaluation model, an item of property, plant, and equipment must be carried at






3

Merry Co. purchased a machine costing $125,000 for its manufacturing operations and paid shipping costs of $20,000. Merry spent an additional $10,000 testing and preparing the machine for use. What amount should Merry record as the cost of the machine?






4

According to IFRS, which accounting policy may an entity apply to measure investment property in periods subsequent to initial recognition?






5

An expenditure to install an improved electrical system is a Capital Expenditure Revenue Expenditure






6

"Brown Systems began operating January 1 and spent $900,000 in the first month of operations on the following items:"
January advertising campaign $40,000
Computer equipment 280,000
12-month insurance policy 120,000
January building rent 60,000
January salaries 340,000
Office supplies 10,000
Automobile 30,000
January utilities 20,000
Total $900,000
The total cash expenditures that should be capitalized as property, plant, and equipment is






7

An entity sells a piece of machinery, for cash, prior to the end of its estimated useful life. The sale price is less than the carrying amount of the asset on the date of sale. The entry that the entity uses to record the sale is






8

An entity purchased a machine for $700,000. The machine was depreciated using the straight-line method and had a residual value of $40,000. The machine was sold on December 31, Year 1. The accumulated depreciation related to the machine was $495,000 on that date. The entity reported a gain on the sale of the machine of $75,000 in its income statement for the fiscal year ending December 31, Year 1. The selling price of the machine was






9

What is the journal entry recorded upon the sale of an item of property, plant, and equipment (PPE) that was sold for cash in excess of its carrying amount?






10

An entity sold a depreciable asset in the middle of the fifth year of its estimated 10-year useful life. The original cost of the asset was $100,000, and it was being depreciated on the straight-line basis. If the asset was sold for $80,000, the gain on the sale will be






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