CAF-1 · Chapter 3 · Question 7 of 15
If an entity acquires a new asset in exchange for an old asset, and the transaction has commercial substance, how is the new asset measured?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) At the fair value of the asset given up, unless the fair value of the asset received is more clearly evident.
Explanation
If an exchange has commercial substance, the new asset is measured at the fair value of the asset given up unless the fair value of the asset received is more clearly evident.
More IAS 16 Property, Plant and Equipment MCQs
- Q9Under the revaluation model, how frequently should revaluations be made?
- 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?