CAF-1 · Chapter 3 · Question 8 of 15
How should an entity account for a major inspection or overhaul of an item of PPE?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Capitalize it and derecognize any remaining carrying amount of the previous inspection.
Explanation
Subsequent expenditure for a major inspection is capitalized if it meets recognition criteria, and the carrying amount of the previous inspection is derecognized.
More IAS 16 Property, Plant and Equipment MCQs
- Q10If an asset's carrying amount is decreased as a result of an initial revaluation, how is this decrease treated?
- Q11A change in the depreciation method applied to an asset is accounted for as:
- Q12Under IAS 16, which of the following is NOT a required disclosure for each class of PPE?
- Q13When an asset is disposed of, where is the gain or loss on derecognition reported?
- Q14Which of the following best describes the 'depreciable amount' of an asset?