Palm Beach Ltd Has Elected to Adopt the Allowed Alternative

question 59

Multiple Choice

Palm Beach Ltd has elected to adopt the allowed alternative treatment to account for some of its property, plant and equipment. The information available for the class of assets the entity wishes to covert to revaluation model follows:

Which of the following statements are correct if Palm Beach Ltd is to comply with AASB 116?

• A) When office equipment is revalued, net profit will increase $10,000.
• B) When machinery is revalued, net profit will increase by $2,500.
• C) When motor vehicles are revalued, net profit will decrease by $16,000.
• D) When all assets are revalued, net profit will increase by $8,500.
• E) When all assets are revalued, net profit will decrease by $18,500 and asset revaluation reserve is increased by 8,500.

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Definitions:

Primacy Effect

A cognitive phenomenon where the first items presented in a series are more likely to be remembered than items presented later on.

First Impressions

First Impressions are the initial thoughts and judgments one forms about another person or situation, often based on limited information but impactful on subsequent perceptions.

Memory

The faculty by which the mind stores and remembers information, critical for learning and the continuity of personal identity.

Flashbulb Memory

A vivid and detailed memory of a significant moment.