Test Bank
George Fisher
Intermediate Accounting
Volume 1
4e
Kin Lo
George Fisher
All Chapters Arranged Reverse: 10-1
,Intermediate Accounting, Vol 1, 4e (Lo/Fisher)
Chapter 10 Applications of Fair Value to Non-Current Assets
Learning Objective 1
1) Which statement is correct?
A) The revaluation model is required for non-current assets under IFRS.
B) The revaluation model is required for non-current assets under ASPE.
C) The revaluation model is optional for non-current assets under IFRS.
D) The revaluation model is optional for non-current assets under ASPE.
Answer: C
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
2) Which is correct with respect to the accounting treatment under the cost or revaluation model?
A) Companies can choose to apply the revaluation model to each individual PPE or intangible asset
under IFRS.
B) Companies can choose to apply the revaluation model to each class of PPE or intangible asset under
IFRS.
C) Companies can choose to apply the revaluation model to each individual PPE or intangible asset
under ASPE.
D) Companies can choose to apply the revaluation model to each class PPE or intangible asset under
ASPE.
Answer: B
Diff: 3 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
3) Which statement describes the "revaluation model"?
A) A model which keeps the carrying value of an asset and adjusts for depreciation and impairment.
B) A model which restates the value of an asset at each measurement date.
C) A model which restates the carrying value of an asset to the asset's fair value on the date of
revaluation.
D) A model which values the asset based on its productive capacity.
Answer: C
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
1
.
,4) How should a revaluation entry generally NOT be booked?
A) Using the "proportional method."
B) Adjusting the difference between fair value and carrying value to profit and loss.
C) Adjusting the carrying value and accumulated depreciation by the same percentage so that the
carrying amount equals fair value after revaluation.
D) Restating the gross carrying amount to fair value and removing the accumulated depreciation.
Answer: B
Diff: 1 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
5) Which statement describes the "historical cost model"?
A) A model which keeps the carrying value of an asset and adjusts for depreciation and impairment.
B) A model which restates the value of an asset at each measurement date.
C) A model which restates the carrying value of an asset to the asset's fair value on the date of
revaluation.
D) A model which values the asset based on its productive capacity.
Answer: A
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
6) How is revaluation of non-current assets accounted for?
A) Revaluation surplus is always booked to profit and loss.
B) Revaluation loss is booked to other comprehensive income.
C) Cumulative revaluation loss is booked to profit and loss.
D) Revaluation surplus is not recognized in other comprehensive income.
Answer: C
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
7) How is a revaluation loss on non-current assets accounted for?
A) Revaluation loss is booked to profit and loss.
B) Revaluation loss is booked to other comprehensive income.
C) Revaluation loss is booked to profit and loss or to other comprehensive income, depending on any
pre-existing revaluation surplus.
D) Revaluation loss is not recognized in other comprehensive income.
Answer: C
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
2
.
, 8) Grover Inc wishes to use the revaluation model for this property:
Before Revaluation
Building Gross Value 120,000
Building Accumulated Depreciation 40,000
Net carrying value 80,000
The fair value for the property is $100,000. What amount would be booked to the "accumulated
depreciation" account if Grover chooses to use the proportional method to record the revaluation?
A) $0
B) $10,000 debit.
C) $10,000 credit.
D) $20,000 credit.
Answer: C
Explanation: C) Amount of revaluation = (100 - 80) / 80 = 25% revaluation gain/credit
Proportional increase in accumulated depreciation = 40,000 × 25% = 10,000 credit
Diff: 2 Type: MC
Skill: Computational
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
9) Smith Inc wishes to use the revaluation model for this property:
Before Revaluation
Building Gross Value 120,000
Building Accumulated Depreciation 40,000
Net carrying value 80,000
The fair value for the property is $150,000. What amount would be booked to the "accumulated
depreciation" account if Smith chooses to use the proportional method to record the revaluation?
A) $0
B) $35,000 debit.
C) $35,000 credit.
D) $70,000 credit.
Answer: C
Explanation: C) Amount of revaluation = (150 - 80) / 80 = 87.5% revaluation gain/credit
Proportional increase in accumulated depreciation = 40,000 × 87.5% = 35,000 credit
Diff: 2 Type: MC
Skill: Computational
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
3
.
George Fisher
Intermediate Accounting
Volume 1
4e
Kin Lo
George Fisher
All Chapters Arranged Reverse: 10-1
,Intermediate Accounting, Vol 1, 4e (Lo/Fisher)
Chapter 10 Applications of Fair Value to Non-Current Assets
Learning Objective 1
1) Which statement is correct?
A) The revaluation model is required for non-current assets under IFRS.
B) The revaluation model is required for non-current assets under ASPE.
C) The revaluation model is optional for non-current assets under IFRS.
D) The revaluation model is optional for non-current assets under ASPE.
Answer: C
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
2) Which is correct with respect to the accounting treatment under the cost or revaluation model?
A) Companies can choose to apply the revaluation model to each individual PPE or intangible asset
under IFRS.
B) Companies can choose to apply the revaluation model to each class of PPE or intangible asset under
IFRS.
C) Companies can choose to apply the revaluation model to each individual PPE or intangible asset
under ASPE.
D) Companies can choose to apply the revaluation model to each class PPE or intangible asset under
ASPE.
Answer: B
Diff: 3 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
3) Which statement describes the "revaluation model"?
A) A model which keeps the carrying value of an asset and adjusts for depreciation and impairment.
B) A model which restates the value of an asset at each measurement date.
C) A model which restates the carrying value of an asset to the asset's fair value on the date of
revaluation.
D) A model which values the asset based on its productive capacity.
Answer: C
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
1
.
,4) How should a revaluation entry generally NOT be booked?
A) Using the "proportional method."
B) Adjusting the difference between fair value and carrying value to profit and loss.
C) Adjusting the carrying value and accumulated depreciation by the same percentage so that the
carrying amount equals fair value after revaluation.
D) Restating the gross carrying amount to fair value and removing the accumulated depreciation.
Answer: B
Diff: 1 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
5) Which statement describes the "historical cost model"?
A) A model which keeps the carrying value of an asset and adjusts for depreciation and impairment.
B) A model which restates the value of an asset at each measurement date.
C) A model which restates the carrying value of an asset to the asset's fair value on the date of
revaluation.
D) A model which values the asset based on its productive capacity.
Answer: A
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
6) How is revaluation of non-current assets accounted for?
A) Revaluation surplus is always booked to profit and loss.
B) Revaluation loss is booked to other comprehensive income.
C) Cumulative revaluation loss is booked to profit and loss.
D) Revaluation surplus is not recognized in other comprehensive income.
Answer: C
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
7) How is a revaluation loss on non-current assets accounted for?
A) Revaluation loss is booked to profit and loss.
B) Revaluation loss is booked to other comprehensive income.
C) Revaluation loss is booked to profit and loss or to other comprehensive income, depending on any
pre-existing revaluation surplus.
D) Revaluation loss is not recognized in other comprehensive income.
Answer: C
Diff: 2 Type: MC
Skill: Conceptual
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
2
.
, 8) Grover Inc wishes to use the revaluation model for this property:
Before Revaluation
Building Gross Value 120,000
Building Accumulated Depreciation 40,000
Net carrying value 80,000
The fair value for the property is $100,000. What amount would be booked to the "accumulated
depreciation" account if Grover chooses to use the proportional method to record the revaluation?
A) $0
B) $10,000 debit.
C) $10,000 credit.
D) $20,000 credit.
Answer: C
Explanation: C) Amount of revaluation = (100 - 80) / 80 = 25% revaluation gain/credit
Proportional increase in accumulated depreciation = 40,000 × 25% = 10,000 credit
Diff: 2 Type: MC
Skill: Computational
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
9) Smith Inc wishes to use the revaluation model for this property:
Before Revaluation
Building Gross Value 120,000
Building Accumulated Depreciation 40,000
Net carrying value 80,000
The fair value for the property is $150,000. What amount would be booked to the "accumulated
depreciation" account if Smith chooses to use the proportional method to record the revaluation?
A) $0
B) $35,000 debit.
C) $35,000 credit.
D) $70,000 credit.
Answer: C
Explanation: C) Amount of revaluation = (150 - 80) / 80 = 87.5% revaluation gain/credit
Proportional increase in accumulated depreciation = 40,000 × 87.5% = 35,000 credit
Diff: 2 Type: MC
Skill: Computational
Objective: 10.1 Apply the revaluation model of accounting for non-current assets.
3
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