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Answer :
MCQ 1: Investment under IAS 40 is recognized at cost initially, but it is retained in the books at fair market value (FMV) after initial recognition. Option B
MCQ 2: Goodwill, an intangible asset under IAS 38, is amortized over its useful life. Option C
MCQ 3: Intangible assets under IAS 38 are not classified as PPE and can be generated internally in some cases, but not all. Option B
MCQ 1: According to IAS 40, the accounting standard for investment property, the correct answer is (B) "investment is retained in the books at fair market value (FMV)." Under IAS 40, investment properties are initially recognized at cost, which includes the purchase price and any directly attributable costs.
However, after initial recognition, investment properties are required to be measured at fair value, which is the amount for which the property could be exchanged between knowledgeable, willing parties in an arm's length transaction.
MCQ 2: In the context of IAS 38, which deals with the accounting for intangible assets, the correct answer is (C) "Goodwill is amortized." Goodwill is an intangible asset that represents the future economic benefits arising from an entity's reputation, brand, customer base, and other factors.
Goodwill is not classified as property, plant, and equipment (PPE) but rather as an intangible asset. Unlike tangible assets, such as buildings or machinery, goodwill is not subject to depreciation. Instead, it is subject to impairment testing and is amortized over its useful life.
MCQ 3: Under IAS 38, intangible assets are not classified as PPE. Therefore, the correct answer is (B) "cannot be generated internally." Intangible assets are assets that lack physical substance but have identifiable future economic benefits.
While some intangible assets can be generated internally, such as research and development costs that are capitalized, not all intangible assets can be generated internally. Examples of intangible assets that cannot be generated internally include patents, trademarks, and copyrights, which typically need to be acquired or obtained through legal means.
Option B
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