Under IAS 16 When an Asset Is Revalued and the Gross

question 1

Multiple Choice

Under IAS 16 when an asset is revalued and the gross method is used,accumulated depreciation:

• A)must be written back to profit.
• B)must be closed off to reduce the asset account.
• C)is ignored during revaluation as it has not effect on carrying amount.
• D)should be increased by the same proportion as the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals the revalued amount.

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Definitions:

Automated Shaper

Machinery equipped with computer numerical control (CNC) to shape materials into specific designs with minimal human intervention.

Unused Capacity

Refers to the available production or service facility resources that are not currently being used.

Predetermined Overhead Rate

A rate used in cost accounting to allocate manufacturing overhead costs to products based on a planned level of activity or driver, such as machine hours or labor hours.

Machine-Hours

A measure of production volume or activity based on the number of hours machines are in operation.