NCA QUIZ 3 |FINAL EXAM, COMPLETE WITH CORRECT ANSWERS
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ACCOUNTANC 123
Institution
ACCOUNTANC 123
NCA QUIZ 3 |FINAL EXAM, COMPLETE WITH CORRECT ANSWERS
1. Noncurrent asset or disposal group is classified as “held for sale” when the asset is available for immediate sale and the sale is highly probable. For the sale to be highly probable, (choose the incorrect one)
a. Management must be c...
complete with correct answers 1 noncurrent asset or disposal group is classified as “held for sale” when the asset is available for immediate sale and the sale is highly prob
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NCA QUIZ 3 |FINAL EXAM, COMPLETE WITH CORRECT ANSWERS
1. Noncurrent asset or disposal group is classified as “held for sale” when the asset is
available for immediate sale and the sale is highly probable. For the sale to be highly
probable, (choose the incorrect one)
a. Management must be committed to a plan to sell the asset
b. An active program to locate a buyer and the complete the plan must have been
initiated.
c. The asset must be actively marketed for sale at a reasonable price in relation
to its current fair value.
d. The sale is expected qualify for recognition as a completed sale within two
years from the date of classification of the asset as “held for sale”.
2. An asset which ceases to be classified as held for sale should be measured at the
lower of its carrying amount before being classified as held for sale (less any
depreciation that would normally have been charged in the meantime) and:
a. Fair value less costs to sell at the date of the decision not to sell
b. Value in use at the date of the decision not to sell
c. The higher of fair value less costs to sell and value in use at the date of the
decision not to sell
d. The lower of fair value less costs to sell and value in use at the date of the
decision not to sell
3. An entity recently moved to a new building. The old building is being actively
marketed for sale, and the entity expects to complete the sale in four months. Which
of the following statements is incorrect regarding the old building?
a. It will no longer be depreciated.
b. It will be valued at historical cost.
c. It will be classified as a current asset.
d. It will be reclassified as an asset held for sale.
4. An entity shall classify a non-current asset as held for sale if
a. its carrying amount will be recovered through a sale transaction or continuing
use.
b. its carrying amount will be recovered through a sale transaction.
c. its carrying amount will be recovered through continuing use.
d. if the asset is intended to be disposed of through a sale transaction or
abandonment.
5. An entity shall classify a noncurrent asset or disposal group as “held for sale” when
a. The carrying amount of the asset or disposal group will be recovered
through a sale transaction
b. The carrying amount of the asset or disposal group will be recovered through
continuing use.
c. The noncurrent asset or disposal group is to be abandoned.
d. The noncurrent asset or disposal group is idle or retired from active use.
, 6. Noncurrent asset classified as held for sale shall be presented in the statement
of financial position as
a. Current asset
b. Other noncurrent asset
c. Noncurrent investment
d. Property, plant and equipment
7. What is the treatment of any gain on a subsequent increase in the fair value less
cost to sell of a noncurrent assets classified as held for sale?
a. The gain should not be recognized.
b. The gain should be recognized in full.
c. The gain should be recognized but not in excess of the cumulative
impairment loss previously recognized.
d. The gain should be recognized in other comprehensive income.
8. An item of property, plant and equipment qualifies to be reported as "Held for Sale".
Its fair value less cost to sell exceeds its carrying amount at the date it is reclassified
as Held for Sale. For accounting purposes, such an excess shall
a. not be accounted for.
b. be recognized as gain in profit or loss.
c. be recognized as gain in other comprehensive income and transferred to
profit or loss at the date of actual disposal.
d. be credited directly to retained earnings.
9. Under PFRS 5 - Non - Current Assets Held for Sale and Discontinued
Operations, which statement is true in relation to asset held for sale?
a. The sale is highly probable and the asset is available for immediate sale in
the present location and condition.
b. To be classified as an asset held for sale, the sale must be expected to be
completed within twelve months after the end of reporting period.
c. An asset that meets the criteria as held for sale after the end of reporting
period but before authorization of financial statements should be measured
at the W current year - end at the lower of carrying amount and fair value
less cost of disposal.
d. All of these statements are true.
10. An entity moved to a new building. The old building is being actively marketed for
sale, and the entity expects to complete the sale in four months. Which of the
following statements is incorrect regarding the old building?
a. It will be reclassified as an asset held for sale.
b. It will be measured at historical cost.
c. It will no longer be depreciated
d. It will be classified as a current asset.
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