ACCA AA · Chapter 11 · Question 11 of 12
Which of the following procedures best tests the valuation of additions to property, plant and equipment?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Agreeing the cost of a sample of additions to purchase invoices and checking that only directly attributable costs have been capitalised
Explanation
Agreeing cost to invoices and reviewing what has been capitalised confirms the amount recorded is correct under IAS 16. Physical inspection tests existence, and reviewing the repairs account tests completeness of additions. A depreciation comparison is an analytical procedure on the charge, not on the cost of additions.
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