Under AASB 116 When an Asset Is Revalued and the Gross

question 36

Multiple Choice

Under AASB 116 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.
• E) None of the given answers.

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Definitions:

Investment-Quality

A designation given to securities or investments considered to offer lower risk and stable returns.

Bond Ratings

A system used to evaluate the credit quality and risk level of a bond by assigning grades such as AAA, AA, etc.

Standard & Poor's

A US financial services company known for its stock market indices like the S&P 500, as well as providing credit ratings for borrowers.

Nominal Return

The rate of return on an investment without adjusting for inflation.