According to AASB 116,the Specific Elements of the Cost of an Item

question 17

Multiple Choice

According to AASB 116,the specific elements of the cost of an item of property,plant and equipment include:

• A)any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the entity's management
• B)the initial estimate of any costs of dismantling and removing the item and restoring the site on which it is located
• C)purchase price,including import duties and non- refundable purchase taxes,after deducting any trade discounts and rebates
• D)all of the above

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Definitions:

Break-Even Point

The point at which total costs and total revenues are equal, resulting in no net loss or gain for a business.

Shutdown Point

The level of output and price at which a company's revenue just covers its variable costs, below which the company would lose more money if it continued to operate.

Short Run

A period in economic analysis where at least one input is fixed and cannot change, influencing decision-making and production.

Long Run

An economic period sufficiently long enough to allow all inputs or factors of production to be varied or adjusted, as opposed to the short run where some inputs are fixed.