Test Bank - Heritage & Biological Assets 9e

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Chapter 09 Testbank

1. AASB 141 does not (and nor did AASB 1037) incorporate the recommendations of RSH (Roberts, Staunton and Hagan) and gains do not have to be broken down into volume changes and price changes.

True   False

2. The agricultural produce of a biological asset is defined in AASB 141 as ‘the harvested produce of the entity’s biological assets’ and would include fruit picked from a fruit tree, wool shorn from a sheep, a felled log and a slaughtered cow.

True   False

3. Why is the determination of, current market value of a heritage asset practically difficult?

A. for some heritage assets no market really exists to determine fair value.

B. as heritage assets are by their nature unique, it is difficult to compare them with similar assets.

C. insurance values of heritage assets may not be available or may not be relevant

D. All of the given answers are correct.

4. Providing financial information about heritage assets:

A. is important as it will benefit all users

B. is irrelevant for financial statement users

C. will result in wasted resources if demand for such information is limited

D. should be done only if the cost of providing the information exceeds the benefits

5. Jaenicke and Glazer (1992) suggest an alternative approach for disclosures by museums within a US context. The proposal is that:

A. museums should present a capitalised figure of each asset held within the museum reconciling the beginning and ending value.

B. museums should present a schedule of changes in the number of items in the collection, reconciling the beginning and ending figures. The dollar figures for total current-period purchases, contributions and sales of collection items should also be disclosed.

C. museums should present a schedule of the nature and type of the heritage asset held and a summary of the cost to maintain the collection in its current condition.

D. museums should present a summary statement showing how grants received and the proceeds from items sold during the period were allocated to the purchase of additional items and the maintenance of the existing collection. Amounts spent on administration and other overheads should be separately detailed to the extent that they are material.

6. Which of the following statements is an argument for measuring heritage assets in financial terms?

A. Assigning a monetary value extends the life of the heritage asset.

B. It would help to ascertain the control over heritage asset.

C. It would enable the management personnel of a reporting entity to demonstrate, in financial terms, their accountability for the resources entrusted to them.

D. None of the given answers are correct.

7. AASB 141 excludes certain biological assets from its scope. Which of the following are excluded?

A. bearer plants

B. assets controlled by the entity

C. agricultural produce

D. None of the given answers are correct.

8. Prior to the implementation of AASB 1037, difficulties in classifying self-generating and regenerating assets resulted in the use of a variety of practices among reporting entities. Those classifications for self-generating and regenerating assets include:

A. inventory

B. property, plant and equipment

C. non-current inventory

D. All of the given answers are correct.

9. Where a biological asset is not separable from other assets:

A. the combined value of the biological asset as well as inseparable asset should be treated as the value of the biological asset

B. the value of the biological asset is determined by using the services of a valuer

C. the fair value of the biological assets should be considered to be nil

D. the value of the assets for which an active market exists should be used to determine the fair value of the biological assets, and the fair values of the non-biological assets should be subtracted

10. The revenue recognition adopted for biological assets as per AASB 141 requires that:

A. the combined gain or loss arising from price and volume change is included in profit or loss for the period in which it arises

B. both volume and price changes should be reflected in reserves

C. volume changes are to be treated through reserves, whereas price increase/decrease is to be treated as profit or loss

D. price increase/decrease to be treated through reserves; whereas, volume changes are to be treated as income/expense

11. What is the accounting treatment for a non-living product of a biological asset in accordance with AASB 141 Agriculture?

A. These products are to be treated the same as all other biological assets and valued accordingly.

B. These products shall be measured at fair value less costs to sell.

C. These products become a special category of biological assets that should be valued at the lower of cost or market value until sold.

D. These products are no longer biological assets but are to be treated as current or non-current assets as appropriate, based on management's intention for the product.

12. Which of the following are within the scope of AASB 141 Agriculture?

A. land related to agricultural activity

B. research and development costs of a biological asset

C. government grants relating to biological assets

D. None of the given answers are correct.

13. The arguments against recognising heritage assets in a financial sense include:

A. heritage assets include economic benefits

B. benefits can be quantified in monetary terms

C. the determination of control is problematic

D. there is no demand for financial information on heritage assets

14. A unique characteristic of biological assets includes that:

A. costs are incurred evenly over the asset’s life

B. there is a correlation between asset expenditure and returns

C. the production (growing cycle) of the assets is very short

D. their natural capacity to grow and/or procreate directly affects the value of the asset

15. When valuing assets, the travel-cost method (TCM) uses the costs incurred by individuals in travelling to a particular location plus:

A. the opportunity cost of leisure alternatives forgone

B. the opportunity costs of wages forgone as a result of the visit

C. the average costs of all trips made by the traveller

D. None of the given answers are correct.

16. In relation to the broad scope of items covered by the label ‘heritage assets’, the UK Accounting Standards Board (2006, p. 18) identifies which of the following as being heritage assets?

A. works of art, antiquities or other exhibits, such as biological and mineral specimens or technological artefacts, typically held in the collections of museums and galleries associated with historical or cultural events

B. collections of rare books, manuscripts and other reference material held by libraries and preserved for their historical and cultural value as a reference source

C. historical monuments such as standing stones and burial mounds

D. All of the given answers are correct.

17. Which among the following standards bodies agree that heritage assets can, and should, be measured and disclosed in financial terms?

A. AASB

B. ASB (UK)

C. IASB

D. All of the given answers are correct.

18. Which of the following are heritage assets?

A. national parks

B. monuments

C. botanical gardens

D. All of the given answers are correct.

19. Heritage assets by their very nature are unique, making measurement:

A. problematic

B. easy

C. impossible

D. None of the given answers are correct.

20. For an asset to be recognised for the purposes of disclosure in a general-purpose financial statement, it must possess a cost or other value that can be reliably measured. What is this a key aspect of?

A. value representation

B. faithful representation

C. cost representation

D. None of the given answers are correct.

21. Value of the biological assets might increase due to the input of ‘free goods’, such as:

A. sun

B. air

C. water

D. All of the given answers are correct.

22. A gain or loss arising on initial recognition of a biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset shall be included in ____________ for the period in which it arises.

A. profit

B. loss

C. profit or loss

D. None of the given answers are correct.

23. AASB 141 does not (and nor did AASB 1037) incorporate the recommendations of RSH and gains do not have to be broken down into volume changes and price changes. What is the combined gain treated as part of?

A. income

B. expense

C. income or expense

D. None of the given answers are correct.

24. It is suggested that an organisation involved in agricultural activities could provide ‘accounts’ of such things as:

A. its use of water and its policies in respect of recycled water

B. the types of waste it creates and how it is dealt with

C. the use of transport and the efforts made to reduce the impacts associated with transportation

D. All of the given answers are correct.

25. Although Roberts, Staunton and Hagan deal predominantly with measurement issues associated with biological assets, they suggest that it would be useful for readers of general-purpose financial statements to be provided with ____________________________________ about the biological assets in the entity’s control.

A. supplementary information of a non-financial nature

B. supplementary information of a financial nature

C. supplementary information of economic benefit

D. None of the given answers are correct.

26. The accounting standard for self-generating and regenerating assets (SGARA) required which of the following to be accounted for on a company’s balance sheet?

A. fish

B. livestock

C. forests

D. All of the given answers are correct.

27. When AASB 1037 and AASB 141 (the ‘old’ and the ‘new’ standards on biological assets) were released, they were the subject of sustained criticism by many working within industries that are affected by the standards. Which of the following member groups was particularly vocal in their criticism?

A. the wine industry

B. fisheries

C. the forestry industry

D. the fashion industry

28. AASB 141 addresses which of the following?

A. biological assets only

B. agricultural produce only

C. biological assets and agricultural produce

D. None of the given answers are correct.

29. The accounting profession is encouraged to seek to play a role in assisting the development of the increasingly important area of accountability relating to which of the following?

A. environmental accounting

B. ethical accounting

C. political accounting

D. strategic accounting

30. The special characteristics of heritage items, including an intention to preserve them for present and future generations, do not result in a present obligation such that an entity has little or no realistic alternative to avoid an outflow of resources. The entity should not therefore recognise a/an:

A. liability

B. asset

C. income

D. cost

31. Discuss an ‘asset’ as defined in the Conceptual Framework.

______________________________________________________________________________

32. Discuss the concept of control as per the Conceptual Framework.

______________________________________________________________________________

33. What should an asset possess to be recognised for the purpose of disclosure in a general-purpose financial statement?

______________________________________________________________________________

34. Discuss the unique characteristics of biological assets.

______________________________________________________________________________

35. From a financial reporting perspective, why is it necessary to know how to account for biological assets?

______________________________________________________________________________

36. What is a heritage asset?

______________________________________________________________________________

37. How shall the agricultural produce from biological assets be measured?

______________________________________________________________________________

38. Do heritage assets seem to comply with the definition of assets provided within the Conceptual Framework?

______________________________________________________________________________

39. Is there general agreement within the accounting community that heritage assets should be measured in monetary terms?

______________________________________________________________________________

40. Discuss the suggested disclosures provided by Jaenicke and Glazer (1992) for museums in a US context.

______________________________________________________________________________

Chapter 09 Testbank