CA NITIN GOEL AS 10 CH 10I

PROPERTY, PLANT & EQUIPMENT

MCQ’S

1. As per AS 10 (Revised) ‘Property, plant and equipment’, which of the following costs
is not included in the carrying amount of an item of PPE
a. Costs of site preparation
b. Costs of relocating
c. Installation and assembly costs.
d. initial delivery and handling costs

2. As per AS 10 (Revised) ‘Property, Plant and Equipment’, an enterprise holding

investment properties should value Investment property
a. as per fair value
b. under discounted cash flow model.
c. under cost model
d. under cash flow model

3. A plot of land with carrying amount of ₹ 1,00,000 was revalued to ₹ 1,50,000at the
end of Year 2. Subsequently, due to drop in market values, the land was determined to
have a fair value of ₹ 1,30,000 at the end of Year 4. Assuming that the entity adopts
Revaluation Model, what would be the accounting treatment of Revaluation?
a. Initial upward valuation of ₹ 50,000 credited to Revaluation Reserve.
Subsequent downward revaluation of ₹ 20,000 debited to P/L.
b. Initial upward valuation of ₹ 50,000 credited to P/L. Subsequent downward
revaluation of ₹ 20,000 debited to P/L.
c. Initial upward valuation of ₹ 50,000 credited to Revaluation Reserve.
Subsequent downward revaluation of ₹ 20,000 debited to Revaluation Reserve.
d. Initial upward valuation of ₹ 50,000 debited to P/L. Subsequent downward
revaluation of ₹ 20,000 credited to P/L.

4. A plot of land with carrying amount of ₹ 1,00,000 was revalued to ₹ 90,000 at the end
of Year 2. Subsequently, due to increase in market values, the landwas determined
to have a fair value of ₹ 1,05,000 at the end of Year 4. Assuming that the entity adopts
Revaluation Model, what would be the accounting treatment of Revaluation?
a. Initial downward valuation of ₹ 10,000 debited to Revaluation Reserve.
Subsequent upward revaluation of ₹ 15,000 credited to P/L.
b. Initial downward valuation of ₹ 10,000 debited to P/L. Subsequent upward
revaluation of ₹ 15,000 credited to P/L.
c. Initial downward valuation of ₹ 10,000 debited to P/L. Subsequent upward
revaluation of ₹ 10,000 credited to P/L and ₹ 5,000 credited to Revaluation
Reserve.
d. Initial downward valuation of ₹ 10,000 credited to P/L. Subsequent upward
revaluation of ₹ 10,000 debited to P/L and ₹ 5,000 debited to Revaluation
Reserve.

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5. On sale of an asset which was revalued upwards, what would be the treatment of
Revaluation Reserve?
a. The Revaluation Reserve is credited to P/L since the profit on sale of such
asset is now realized.
b. The Revaluation Reserve is credited to Retained Earnings as movement in
reserves without impacting the P/L.
c. No change in Revaluation Reserve since profit on sale of such asset is already
impacting the P/L.
d. The Revaluation Reserve is reduced from the asset value to computeprofit or
loss.

6. A machinery was purchased having an invoice price ₹ 1,18,000 (including GST ₹

18,000) on 1 April 2021. The GST amount is available as input tax credit. The rate of
depreciation is 10% on SLM basis. The depreciation for 2022 -23 would be
a. ₹ 10,000.
b. ₹ 11,800.
c. ₹ 9,000.
d. ₹ 10,500.

7. What does Accounting Standard 10 primarily deal with?

a. Revenue Recognition
b. Property, Plant, and Equipment
c. Leases
d. Contingent Liabilities

8. According to AS 10, how should the cost of property, plant, and equipment be measured
initially?
a. Historical Cost
b. Fair Value
c. Present Value
d. Replacement Cost

9. Under AS 10, which of the following costs should be included in the initial measurement
of property, plant, and equipment?
a. Selling Costs
b. General and Administrative Expenses
c. Borrowing Costs
d. Future Maintenance Costs

10. In what circumstances does AS 10 allow the revaluation of property, plant, and
equipment?
a. Only when required by tax regulations.
b. When there is a significant change in fair value
c. At the discretion of management
d. Only during periods of inflation

11. A company purchases a building costing ₹ 25 Lakhs. It is estimated that the estimated
life of the building will be 30 years but the company is thinking of selling the building
after 20 years when the residual value of the building will be ₹ 25 lakhs. Depreciation
will be

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a. 1,25,000
b. 0
c. 2,50,000
d. None of the above

12. An entity wishes to accelerate its depreciation policy because of changes in the useful
life of the asset. How should the change be dealt with?
a. By retrospective restatement
b. By retrospective application
c. By prospective application
d. By disclosure of an error

Answers:
1. (b)
2. (c)
3. (c)
4. (c)
5. (b)
6. (a)
7. (b)
8. (a)
9. (c)
10. (b)
11. (b)
12. (c)

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