Reference no: EM132656228

Problem 1: Assets received through donations may be recorded:

a) Initially at cost and subsequently at cost or fair value.

b) Initially at cost and subsequently at fair value.

c) Initially and subsequently at fair value or cost.

d) Initially and subsequently at fair value.

Problem 2: A recently acquired an asset. According to the manufacturer, the asset was designed to last for 5 years. New and improved models of the asset tend to be released every 4 years. Changes in legislation and consumer preferences suggest the asset may only be viable for 3 years.

A should depreciate the asset over:

a) 3 years, based on commercial viability.

b) 4 years, based on technical change.

c) 4 years, based on the average of the information provided.

d) 5 years, based on the manufacturer's specifications.