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CA Final · Financial Reporting · Ind AS 16 Property, Plant and Equipment

Under Ind AS 16, which statement correctly describes the residual value of an asset?

Residual value is the amount an entity would currently obtain from disposing of the asset, after deducting estimated costs of disposal, if the asset were already as old and in the condition expected at the end of its useful life. It is not carrying amount or recoverable amount.

  1. AEstimated amount currently obtainable on disposal, after deducting estimated disposal costs, if the asset were already of the age and condition expected at the end of its useful lifeCorrect
  2. BOriginal cost less accumulated depreciation at the reporting date
  3. CThe higher of fair value less costs of disposal and value in use
  4. DEstimated scrap value at the end of useful life ignoring disposal costs and using future prices

Explanation

The standard defines residual value as the amount an entity would currently obtain on disposal, after deducting estimated disposal costs, if the asset were already of the age and condition expected at end of life. Option C describes recoverable amount and B describes carrying amount. Option D ignores disposal costs and uses future prices.

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