1. The fair value model of accounting for PP&E assets
a) recognizes changes in the asset's fair value in other comprehensive income.
b) should be applied to investment property only.
c) once chosen for one investment property does not have to be applied to all investment property.
d) is acceptable under both IFRS and ASPE.
2. A major overhaul made to a machine increased its fair value and its production capacity by 25% without extending the machine's useful life. The cost of the improvement should be
a) expensed.
b) debited to accumulated depreciation.
c) capitalized.
d) allocated between accumulated depreciation and the machine account
3. Borrowing costs that are capitalized should
a) be written off over the remaining term of the debt.
b) be accumulated in a separate deferred charge account and written off straight-line over a 40-year period.
c) not be written off until the related asset is fully depreciated or disposed of.
d) be amortized over the related asset's useful life.
4. Which of the following is NOT included in the IAS16 definition of property, plant, and equipment (PPE)?
a) PPE will be used over more than one accounting period.
b) PPE is held for use in the production of goods and services.
c) PPE can be tangible or intangible.
d) PPE is tangible.