Once a Class of Non-Current Assets Has Been Revalued,AASB 116

question 21

Multiple Choice

Once a class of non-current assets has been revalued,AASB 116 requires that:

• A) Directors continue to revalue the class of assets on an ad hoc basis.
• B) Revaluations must be undertaken regularly enough to ensure that the carrying amount of each asset in the class of assets does not differ materially from its fair value at reporting date.
• C) All assets in the class must be revalued every 3 years.
• D) Revaluations must be undertaken regularly enough to ensure that the carrying amount of the class of assets does not differ from its fair value at reporting date.

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Definitions:

Straight-Line Depreciation

A method of allocating an asset's cost evenly throughout its useful life.

Salvage Value

The estimated residual value of an asset after its useful life is over and it has been fully depreciated.

Accounting Rate of Return

A financial metric used to assess the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.

Cost of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.