On 31 December 2012 HiRise Ltd's Balance Sheet Shows Motor

question 26

Multiple Choice

On 31 December 2012 HiRise Ltd's balance sheet shows motor vehicles at a cost price of $200,000 less accumulated depreciation $50,000.HiRise Ltd uses the cost model to value its assets.On 31 December 2012 an estimate is made that the recoverable amount of the vehicles is $120,000.Under IAS 36/AASB 136 the accounting entry to record the write down of the motor vehicles to recoverable amount is:

• A)Dr.Impairment loss on motor vehicles expense $80,000; cr.Accumulated Depreciation $80,000
• B)Dr.Impairment loss on motor vehicles expense$30,000; cr.Motor Vehicles $30,000
• C)Dr.Impairment loss on motor vehicles expense $30,000; cr.Accumulated Depreciation and Impairment losses $30,000
• D)No entry is required

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Definitions:

Inferior Good

A type of good for which demand decreases as the income of individuals increases, inversely related to income levels.

Substitutes

Goods or services that can be used in place of each other, where an increase in the price of one leads to an increase in the demand for the other.

Demand Curve

A visual chart that illustrates the connection between the cost of an item and the amount consumers are willing to buy at those costs.

Demand Curve

A chart that illustrates how the quantity of a product that consumers are ready to buy varies with its price.