CHAPTER 8 QUIZ

Name:________________________________ Yr. & Course: BSA- I _

I. Multiple Choices. Encircle the letter of the best answer.

1. Inventory should be stated at c. revenue from the sale of products or services

a. Lower of cost and fair value
b. Lower of cost and net realizable value
c. Lower of cost and nominal value
d. Lower of cost and net selling price
2. The cost of inventory should not include
a. Purchase price
b. Import duties and other taxes
c. Abnormal amounts of wasted materials
d. Both b and c
3. Where the fair value of biological asset cannot be
determined reliably, the biological asset should be
at
a. cost
b. cost less accumulated depreciation
c. cost less accumulated depreciation and
accumulated impairment loss
d. net realizable value
d. other benefits resulting from the use of asset by
the entity
7. It is the management by an entity of the
biological transformation and harvest of biological
assets for sale or for conversion into agricultural
produce or into additional biological asset
a. Agricultural activity
b. Biological activity
c. Economic activity
d. Development activity
8. Which of the following is not dealt with by PAS
41?
a. The accounting for biological asset
b. The initial measurement of agricultural produce
c. The processing of agricultural produce after
harvesting
d. Government grant in respect of biological asset

4. Biological assets are measured at 9. The impairment approach is only used for
a. cost a. Inventories
b. Lower of cost and net realizable value b. Intangible assets for which an active market
c. Net realizable value exists
d. Fair value less cost of disposal c. Intangible assets with an indefinite useful
life
5. Which of the following confers exclusive right to d. Intangible assets resulting from development
use, manufacture, and sell a product or process for a cost
period without infringement?
a. Franchise c. Copyright 10. Which of the following intangible assets cannot
b. Trademark d. Patent be recognized if it is self- generated?
a. Computer Software
6. The future economic benefits flowing from an b. Patented Technology
intangible asset may include the following; except c. Brands
a. cost savings d. Motion pictures
b. control

II. True or False. Write TRUE if the statement is correct and FALSE if not.

FALSE 1. A manufacturing company has three basic types of inventory.

FALSE 2. Notebook computer is considered as an intangible asset.
TRUE_ 3. In all cases, an entity shall measure agricultural produce at fair value less cost of disposal at the point
of harvest
FALSE 4. Animals in a zoo that do not have active breeding programme rarely sells it will be accounted under
PAS 41.
TRUE 5. Cost of inventory is determined by reducing the sales value of the inventory by the appropriate
percentage gross margin.

III. ESSAY.
1. What are they key attributes of intangible assets? Briefly explain each. (3 points)
 Identifiable- arises from contractual or legal rights
- Separable (capable of being divided, sold, rented, exchange, transferred either
individually or with related contract)
- indicates that there is a market
  Control- implies the power of the entity to obtain the future economic benefits flowing from the
underlying resource and to restrict the access of others to those benefits.
 Future Economic Benefit- potential to contribute, directly or indirectly, to the flow of cash and
cash equivalents to an entity including revenue from sale of products and services, cost savings and
etc.

2. Differentiate limited- life intangibles and intangible assets with indefinite useful lives? (2 points)

 Intangible asset with a definite useful life

Intangible assets for which there is no foreseeable limit on the period of time over
which they are expected to provide cash flows. A company does not amortize an
indefinite- life intangible asset but instead assesses it for impairment at least annually.

 Limited- life intangibles

Intangible assets judged to have a limited useful life, which reflects the periods over
which these assets contribute to cash flows. Company amortize limited- life intangibles by
systematic charges to expense over their useful lives.