Question Details

Most assets should be valued at cost 



1.	The Duce Company has five plants nationwide that cost $100 million. The current fair value of the plants is $500 million. The plants will be recorded and reported as assets at
a.	$100 million.
b.	$600 million.
c.	$400 million.
d.	$500 million.


	2.	The fair value principle
a.	is one of the two costing principles followed by the IASB.
b.	is more useful than the cost principle for valuing some assets.
c.	dictates that an asset should be valued at the price at which it could be sold.
d.	All of the above.


	3.	Most assets should be valued at cost because fair values
a.	are not useful for decision-making.
b.	may not be representationally faithful.
c.	are not relevant.
d.	may be higher or lower than historical cost.


	4.	Harrod's inc. purchased land for ₤50,000 in 2001. At December 31, 2010, an appraisal determined the fair value of the land is ₤65,000.  If Harrod's follows the cost principle, in the 2010 financial statements, the land will be reported at
		a.	₤50,000 on the statement of financial position.
b.	₤65,000 on the statement of financial position.
c.	₤50,000 on the income statement.
d.	₤65,000 on the income statement.


	5.	Hyundai inc. purchased land for W122,000,000 in 2002. At December 31,2011, an appraisal determined the fair value of the land is W136,000,0000.  If Hyundai follows the cost principle, the land will be reported on the statement of financial position at
a.	W108,000,000.
b.	W122,000,000.
c.	W136,000,000.
d.	W150,000,000.




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