Reference no: EM132544212
Problem 1: In relation to the revaluation of property, plant and equipment, which of the following statements is correct?
A. An initial revaluation increase should be accounted for as a debit entry to the revaluation surplus reserve.
B. A revaluation decrease will be recognised in other comprehensive income.
C. An initial revaluation decrease should be accounted for as a debit entry in the current period's profit or loss.
D. A revaluation decrease will be recognised if a non-current asset's carrying amount is less than its fair value.
Problem 2: If an event or transaction that occurs after reporting date does not relate to conditions that existed at reporting date then:
A. The statement of financial position should not be adjusted but the effects on the statement of profit or loss and other comprehensive income should be reflected in that statement
B. The event or transaction should be disclosed in the notes to the accounts if it is material
C. No action should be taken to report or disclose the event or transaction in the financial reports
D. The event or transaction should be disclosed in the notes as an adjusting event, and the financial statements should be adjusted
Problem 3: At the end of the reporting period, Tik Tok Ltd was awaiting the final details of a court case for damages awarded in its favour. The amount and possible receipt of damages is unknown and will not be decided until the court sits again in several months' time. How is this event dealt with in the preparation of the financial statements?
a. do not recognise or disclose in the financial statements as the possibility of receiving damages is remote
b. recognise as a deferred asset in the balance sheet and re-classify as a non-current asset when the court decision is known
c. recognise as an asset in the financial statements as the receipt of damages is probable
d. disclose in the notes to the financial statements as it is possible that the entity will receive the damages and the court decision is out of its control