1. Which is incorrect concerning self-constructed asset?

a. The cost of self-constructed asset is determined using the same principles as for an acquired asset b. Any internal profits from construction are eliminated in arriving at the cost of selfconstructed asset c. The cost of abnormal amounts of wasted material, labor or other resources incurred in the production of a self-constructed asset is included in the cost of asset d. If an entity makes similar assets for sale in the normal course of business, the cost of the asset is usually the same as the cost of constructing an asset. 2. Which statement is incorrect concerning government grants? a. Grants in recognition of specific expenses shall be recognized as income over the period of the related expense b. Grants related to depreciable assets shall be recognized as income over the periods and in proportion to the depreciation of the related assets c. Grants related to nondepreciable assets requiring fulfillment of certain conditions shall be recognized as income over the periods which bear the cost of meeting the conditions d. Grants that become receivable as compensation for expenses or losses already incurred shall be recognized as adjustment of retained earnings. 3. In the case of grants related to an asset, which is the accounting treatment? a. Record the grant at a nominal value in the first year and write it off in the subsequent year. b. Either set up the grant as deferred income or deduct it in arriving at the carrying amount of the asset c. Record the grant at fair value in the first e\year and take it to income in the subsequent year. d. Take it to the income statement and disclose it as an extraordinary gain. 4. In the case of grants related to income, which the accounting treatment? a. Credit the grant to general reserve under shareholders equity b. Present the grant in the income statement as other income or as a separate line item, or deduct it from the related expense c. Credit the grant to retained earnings on the balance sheet d. Credit the grant to sales or other revenue from operations. 5. The essence of government assistance is that no quantifiable value can be reasonably placed upon it. Examples of government assistance include all of the following, except a. Free technical or marketing advice b. Provision of guarantee c. Loans at NIL or low interest rates d. Indirect benefits such as provision of infrastructure in a development area where the entity is located or the imposition of trading constraints on competitors.

6. When computing the amount of interest cost to be capitalized, the concept of avoidable interest refers to a. The total interest cost actually incurred b. A cost of capital charge for stockholders equity c. That portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made d. That portion of average accumulated expenditures on which no interest cost was incurred

7. Which of the following may not be eligible for capitalization as borrowing costs? a. Interest on bonds issued to finance construction of a qualifying asset b. Amortization of discount or premium or ancillary cost relating to borrowings that qualify for capitalization c. Imputed cost of equity d. Exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to interest cost pertaining to a qualifying asset 8. Capitalization of borrowing costs a. Shall be suspended during temporary period of delay b. May be suspended only during extended period of delay in which active development is delayed c. Should never be suspended once capitalization commences d. Shall be suspended only during extended period of delay in which active development is delayed

9. Which is incorrect concerning the residual value of an item of property, plant and equipment? a. The depreciable amount of an asset is determined after deducting the residual value of ` the asset b. In practice, the residual value of an asset is often insignificant and therefore is immaterial in the calculation of the depreciable amount c. The residual value of an asset may increase to an amount equal or greater than the assets carrying amount d. The residual value of an asset shall be reviewed at least at each financial year-end and if expectation differs from previous estimate, the change shall be accounted for as a change in accounting policy

10. For purposes of revaluation, if there is no market-based evidence of fair value because of the specialized nature of the item of property, plant and equipment and the item is rarely sold, the estimate of fair value is equal to a. Replacement cost b. Depreciated replacement cost c. Current cost d. Historical cost restated in terms of the current price level