A Company Recently Replaced a Significant Part of Equipment Carried

question 26

Multiple Choice

A company recently replaced a significant part of equipment carried at cost.Which action would be consistent with AASB 116?

• A) Include cost of replacement part in the asset's carrying amount without regard for the carrying amount of the part replaced.
• B) Revalue the carrying amount of equipment before recognizing the replacement part purchased.
• C) Derecognise the carrying amount of the part replaced and include cost of replacement part in the asset's carrying amount.
• D) Recognise the cost of replacement part as expense as the cost is a material amount.
• E) None of the given answers

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Definitions:

Compulsion

An uncontrollable urge to perform an act repeatedly, often a symptom of obsessive-compulsive disorder (OCD).

Obsessive-Compulsive Disorder

A mental disorder characterized by unwanted repetitive thoughts (obsessions) and/or actions (compulsions).

Psychogenic Paralysis

A loss of motor function without a physiological cause, arising from psychological factors.

Depression

A mental health disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities, often accompanied by physical symptoms.