Proposed changes to IAS 16

Multiple-choice questions: In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again

  1. In addition to the exposure draft relating to IAS 16, which other item linked to non-current assets is on the IASB workplan for 2017?

  2. Which of the following statements outlines costs which can initially be capitalised per paragraph 16 of IAS 16?

  3. According to the current treatment under IAS 16, how should costs associated with testing an asset be recorded?

  4. According to the current treatment under IAS 16, how should the proceeds of samples produced during the testing of non-current assets be recorded?

  5. According to the proposed treatment under the IAS 16 exposure draft, how would costs associated with testing an asset (not the production of samples) be recorded?

  6. Which of the following is not true regarding the proposals covered in the exposure draft?

  7. According to the proposed treatment under the IAS 16 exposure draft, how should the proceeds of samples produced during the testing of non-current assets be recorded?

  8. Which, if any, of the following statements is correct? Statement 1 - all costs associated with the testing and production of samples sold during testing will be added to the asset under the proposed IAS 16 exposure draft, or Statement 2 - this change will be applied retrospectively, rather than prospectively -

  9. An item of machinery was under construction during the year, the details of which are shown below. In addition to the costs detailed below, samples were sold during the construction period for $140,000. Construction costs to date = $600,000, Testing costs = $50,000, Cost of samples produced during testing = $70,000. How much should be capitalised as part of property, plant and equipment?

  10. An item of machinery was under construction during the year, the details of which are shown below. In addition to the costs detailed below, samples were sold during the construction period for $140,000. Construction costs to date = $600,000, Testing costs = $50,000, Cost of samples produced during testing = $70,000. How much should be recorded in the profit or loss for the year if the asset remains under construction at the reporting period?