MCQ on Accounting Standard 10 : Accounting for Property, Plant and Equiepment
1. AS 10 (Revised) applies to which of the following assets?
a) Biological assets related to agricultural activity
b) Intangible assets
c) Property, plant, and equipment
d) Inventories
Answer:c) Property, plant, and equipment
2. According to AS 10, the cost of an asset includes:
a) Purchase price including import duties and taxes
b) Trade discounts and rebates
c) Initial estimated dismantling cost
d) Both (a) and (c)
Answer:d) Both (a) and (c)
3.The depreciation of Property, Plant, and Equipment should be recognized as per:**
a) AS 6
b) AS 10 (Revised)
c) AS 26
d) AS 2
Answer:b) AS 10 (Revised)
4. Which of the following costs is not included in the cost of Property, Plant, and Equipment?
a) Administrative overheads that are not directly related to asset acquisition
b) Cost of site preparation
c) Initial delivery and handling charges
d) Professional fees directly attributable to bringing the asset to its location
Answer: a) Administrative overheads that are not directly related to asset acquisition
5. When should the cost of a major inspection of an asset be recognized?
a) When the inspection is performed
b) When the asset is purchased
c) When the future economic benefits of the inspection flow to the entity
d) Never, as it is considered a revenue expense
Answer: c) When the future economic benefits of the inspection flow to the entity
6. Property, Plant, and Equipment should be initially measured at:
a) Cost price
b) Fair value
c) Net realizable value
d) Market value
Answer: a) Cost price
7. If an asset is revalued, what should be done with the revaluation surplus?
a) Transferred to profit and loss account
b) Credited to the revaluation reserve
c) Used for dividend distribution
d) Written off immediately
Answer: b) Credited to the revaluation reserve
8. Depreciation on Property, Plant, and Equipment should be stopped when:
a) The asset is fully depreciated
b) The asset is retired from active use
c) The asset is held for sale under AS 10
d) All of the above
Answer: d) All of the above
9. If an asset is acquired in exchange for another asset, it is recorded at:
a) The fair value of the asset given up
b) The fair value of the asset received
c) The lower of (a) or (b)
d) The cost of the old asset
Answer: c) The lower of (a) or (b)
10. When can the cost of major repairs be capitalized?
a) If it enhances the useful life of the asset
b) If it maintains the asset in good condition
c) If it is done at least once every five years
d) If it is more than 10% of the asset’s cost
Answer: a) If it enhances the useful life of the asset
11. AS 10 (Revised) does not apply to:
a) Investment Property
b) Machinery used for production
c) Buildings used for business operations
d) Vehicles used for delivery services
Answer: a) Investment Property
12. If spare parts are held for use in the production process and are expected to be used for more than one year, they should be classified as:
a) Inventory
b) Property, Plant, and Equipment
c) Intangible Assets
d) Other Current Assets
Answer: b) Property, Plant, and Equipment
13. An asset should be recognized in the books only if:
a) It has a cost of at least ₹10,000
b) It has a remaining life of more than 5 years
c) Future economic benefits are expected to flow to the entity
d) It is physically present and operational
Answer: c) Future economic benefits are expected to flow to the entity
14. When an asset is retired from active use and held for sale, it should be measured at:
a) Carrying amount
b) Lower of carrying amount or fair value less costs to sell
c) Higher of carrying amount or fair value
d) Original cost
Answer: b) Lower of carrying amount or fair value less costs to sell
15. Which of the following is not a component of the cost of a self-constructed asset?
a) Direct material costs
b) Direct labor costs
c) Administrative and general overheads
d) Borrowing costs if applicable
Answer:c) Administrative and general overheads
16. The depreciable amount of an asset is:
a) Cost of the asset only
b) Cost minus accumulated depreciation
c) Cost minus residual value
d) Cost minus fair value
Answer: c) Cost minus residual value
17. The useful life of an asset is determined based on:
a) Management’s estimation
b) Schedule II of the Companies Act, 2013 (for Indian companies)
c) Expected wear and tear from usage
d) All of the above
Answer: d) All of the above
18. Which of the following is not a method of depreciation?
a) Straight Line Method
b) Reducing Balance Method
c) Sum-of-the-Digits Method
d) Inflation-Adjusted Depreciation
Answer: d) Inflation-Adjusted Depreciation
19. When an asset is disposed of, any gain or loss on disposal should be:
a) Adjusted against the revaluation reserve
b) Recognized in the Profit and Loss account
c) Transferred to the general reserve
d) Ignored
Answer: b) Recognized in the Profit and Loss account
20. If an asset is acquired for free or at a nominal amount (e.g., government grant), it should be recorded at:
a) Fair value
b) Re. 1 (nominal value)
c) Zero, as no cost was incurred
d) Replacement cost
Answer: a) Fair value
21) PPE stands for
a)Personal Protective Equipment
b)Property, Plant, and Equipment
c)Public Property Entity
d)Professional Property Establishment
Answer:- b) Property, Plant, and Equipment
22) Live stock, Plants, Crops are consider as PPE
a)True
b)False
Answer :- False
23) Wasting Assets are consider as PPE
a)True
b)False
Answer :- False
24) According to Ind AS 16, the carrying amount of PPE is:
a)Its cost less any accumulated depreciation
b)Its fair value as determined by an independent appraiser
c)Its cost less any accumulated impairment losses
d)Its residual value less any accumulated impairment losses
Answer: c) Its cost less any accumulated impairment losses
25) Under Ind AS 16, after initial recognition, an entity can choose between which two models for measuring PPE?
a)Cost model and Revaluation model
b)Historical cost model and Fair value model
c)Replacement cost model and Net realizable value model
d)Depreciation model and Revaluation model
Answer: a) Cost model and Revaluation model
26) Under AS 10 and Ind AS 16, which of the following is a condition for recognizing an asset as PPE?
e)The asset is to be sold within one year
f)The asset is held for production, supply, or for administrative purposes
g)The asset is not in use
h)The asset is leased to others for rental income
Answer: b) The asset is held for production, supply, or for administrative purposes
27) As per AS 10, Cost of PPE include
a)Purchase Cost
b)Royalty
c)Advertisement
d)Selling Overhead
Answer:- Purchase Cost
28) Under AS 10 and Ind AS 16, the cost of an item of PPE includes all of the following except:
a)Purchase price
b)Legal fees for registration
c)Subsequent expenditure on routine repairs
d)Transportation cost
Answer: c) Subsequent expenditure on routine repairs
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