
Dear Professional Seniors & Friends,
Warm Greeting!
Here is the Next post of #MCQ on concept based practical professional knowledge on IND AS-16 Property, Plant& Equipment in a unique manner to be self answered by participants. The detailed answer of these MCQs shall be posted next day for the self assessment of the participants.
MCQ 99.1: A Company has a spare part, which it terms as ‘insurance spare’, is required to be used along with equipment and meets the definition of property, plant and equipment.
A. The spare part is required to be recognised as part of that equipment and the depreciation is required to be calculated along with the equipment for which it has been used.
B. The spare part is required to be recognised as property, plant and equipment separately from the equipment and the depreciation is required to be calculated separately for that spare part
C. The spare part should be written off in Profit and Loss Account
D. None of the Above
MCQ 99.2: Wipro Ltd. is covered under Ind AS roadmap and needs to comply Ind AS from financial year 2017-18. It has recorded certain spare parts in its previous GAAP financial statements as a part of inventory. As per paragraph 8 of Ind AS 16, these items meet the definition of ‘property, plant and equipment’ and required to be capitalised as PPE on the date of transition to Ind AS.
A. The entity should apply Ind AS i.e. Ind AS 16 applicable retrospectively to measure the amount that will be recognised for such spare parts on the date of transition to Ind AS.
B. It can continue the carrying values of all its spare parts as recognised in the financial statements as at the date of transition to Ind ASs, measured as per the previous GAAP and use that as its deemed cost as at the date of transition if there is no change in its functional currency
C. Ind As prevent a company to recognise an asset as PPE whose recognition is required by Ind AS on the date of transition
D. None of the Above
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CA Sanjay Kumar Agrawal
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Dear Professional Seniors & Friends,
Warm Greetings!
This post of MCQ is on provisions relating to Indian Accounting Standard 16 (IND AS 16) Property, Plant & Equipment.
Answer MCQ 99.1: B. The spare part is required to be recognised as property, plant and equipment separately from the equipment and the depreciation is required to be calculated separately for that spare part.
Answer MCQ 99.2: A. The entity should apply Ind AS i.e. Ind AS 16 applicable retrospectively to measure the amount that will be recognised for such spare parts on the date of transition to Ind AS.
Practical Analysis for MCQ 99.1:
Practical Analysis for MCQ 99.2:
(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion; you can definitely have your own opinion.)
Sincere Regards!
CA Sanjay Kumar Agrawal
Mobile: 9810116321
To access MCQ posts regularly, please Join Telegram Channel:
https://t.me/caSanjayKumarAgrawal
For All MCQ post please click on:
Webpage: http://www.casanjay.me/
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