Under IAS 16, when is an item of property, plant and equipment recognized as an asset?
Correct answer: B. When benefits are probable and cost is measurable reliably
- A. When it is purchased with cash only
- B. When benefits are probable and cost is measurable reliably
- C. When its market value rises above original cost
- D. When management expects it to last for one year
Explanation
Recognition requires probable future economic benefits and a cost that can be measured reliably. Cash purchase is not essential, and a rise in market value does not create the initial recognition criterion.
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About Depreciation and Non-Current Assets
Non-current assets are long-term resources recorded at cost and reduced by accumulated depreciation to show their carrying amount. Coverage includes straight-line and reducing-balance methods, residual value, useful life, depreciation adjustments, capital and revenue expenditure, and the profit or loss arising when an asset is disposed of.
Practise Depreciation and Non-Current Assets
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