Where an Asset's Carrying Amount Based on Its Cost Is

question 33

Multiple Choice

Where an asset's carrying amount based on its cost is written down to its recoverable amount,AASB 136 specifies that:

• A) Since this constitutes a revaluation of the asset, all assets in that class must be revalued.
• B) The amount written down is to be treated as an adjustment to the asset revaluation reserve.
• C) The write-down is not considered to be a revaluation and so the entity is not obliged to revalue that whole class of non-current assets.
• D) To the extent that the asset was revalued upward in the past, the amount of the write-off may be transferred to the asset revaluation reserve and any remaining amount should be expensed.
• E) None of the given answers.

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Definitions:

Premium Bond

A bond sold at a price higher than its face value, typically occurring when it has a higher interest rate than the current market rate.

Face Value

The original value of a financial instrument as indicated on the certificate or instrument itself, equivalent to its par value.

Market

A venue or medium where buyers and sellers come together to exchange goods, services, or financial instruments.

Coupon Rate

The percentage annually paid as interest on a bond, relative to its face value.