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TOA - INVESTMENT PROPERTY

Multiple Choice
Identify the choice that best completes the statement or answers the question.

1. It is defined as property (land or building or part of building or both) by an owner or finance lessee to
earn rentals or for capital appreciation or both.
a. Investment property c. Mining company
b. Owner-occupied property d. Rental company
2. An owner-occupied property is held by an owner or finance lessee
I. For use in the production of goods or services.
II. For administrative purposes.
a. I only c. Both I and II
b. II only d. Neither I and II
3. Investment property includes all of the following, except
a. Land held for long-term capital appreciation
b. Land held for currently undetermined use
c. Building owned by the reporting entity or held by a finance lessee leased out
under one or more operating leases.
d. Property held for sale in the ordinary course of business or in the process of
construction for such sale.
4. Which of the following is an investment property?
a. Property being constructed or developed on behalf of third parties.
b. Property that is being constructed and developed as investment property.
c. Property held for future development and subsequent use as owner-occupied
property.
d. Owner-occupied property awaiting disposal.
5. Which statement is correct if the property is partly investment and partly owner-occupied?
I. If the investment and owner-occupied portions could be sold or leased out separately, the portions
shall be accounted for separately as investment property and owner-occupied property.
II. If the investment and owner-occupied portions could not be sold or leased out separately, the
property is investment property if only an insignificant portion is held for manufacturing or
administrative purposes.
a. I only c. Both I and II
b. II only d. Neither I nor II
6. Which statement is correct concerning property leased to an affiliate?
I. From the perspective of the individual entity that owns it, the property leased to an affiliate is
considered an investment property.
II. From the perspective of the affiliates as a group and for purposes of consolidated financial
statements, the property is treated as owner-occupied property.
a. Both I and II c. I only
b. Neither I nor II d. II only
7. Directly attributable expenditures related to investment property include
a. Professional fees for legal services, property transfer taxes and other transaction
costs.
b. Start up costs.
c. Initial operating losses incurred before the investment property achieves the
planned level of occupancy.
d. Abnormal amounts of wasted material, labor and other resources incurred in
constructing or developing the property.
8. Subsequent to initial recognition, the investment property shall be measured at
a. Fair value
b. Cost less any accumulated depreciation and any accumulated impairment loss
c. Revalued amount
d. Either fair value or cost less any accumulated depreciation and any accumulated
impairment losses
9. When the entity uses the cost model, transfer between investment property, owner-occupied property
and inventory shall be accounted for at
a. Fair value c. Cost
b. Carrying amount d. Assessed value
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10. A transfer from investment property carried at fair value to owner- occupied property shall be accounted
for at
a. Fair value, which becomes the deemed cost for subsequent accounting
b. Carrying amount
c. Historical cost
d. Fair value less cost to sell
11. If owner-occupied property is transferred to investment property that is to be carried at fair value, the
difference between the carrying amount of the property and its fair value shall be
a. Included in profit or loss
b. Included in retained earnings
c. Included in equity
d. Accounted for as revaluation of property, plant and equipment.
12. If an inventory is transferred to investment property that is to be carried at fair value, the remeasurement
to fair value is
a. Included in profit or loss
b. Included in equity
c. Included in retained earnings
d. Accounted for as revaluation of inventory
13. When an investment property under construction is completed and to be carried at fair value, the
difference between the carrying amount and fair value shall be
a. Included in profit or loss
b. Inluded in retained earnings
c. Included in other comprehensive income
d. Accounted for as revaluation of property, plant and equipment
14. A gain arising from a change in the fair value of an investment property for which entity has opted to use
the fair value model is recognized in
a. Profit or loss
b. General reserve in the shareholders’ equity
c. Valuation reserve in the shareholders’ equity
d. Retained profits
15. An investment property shall be measured initially at
a. Cost
b. Cost less accumulated impairment losses
c. Depreciable cost less accumulated impairment losses
d. Fair value less accumulated impairment losses
16. In case of property held under an operating lease and classified as investment property
a. The entity has to account for the investment property under the cost model only.
b. The entity has to use the fair value model only.
c. The entity has the choice between the cost model and the fair value model.
d. The entity needs only to disclose the fair value and can use the cost model.
17. Transfer from investment property to property, plant and equipment is appropriate
a. When there is change of use
b. Based on the entity’s direction
c. Only when the entity adopts the fair value model
d. The entity can never transfer property into another classification once it is
classified as investment.
18. An investment property is derecognized when
a. It is disposed to a third party.
b. It is permanently withdrawn from use.
c. No future economic benefits are expected from its disposal.
d. In all of the above cases.
19. Which of the following statements best describes owner-occupied property?
a. Property held for sale in the ordinary course of business
b. Property held for use in the production and supply of goods or services and
property held for administrative purposes
c. Property held to earn rentals
d. Property held for capital appreciation
20. Which of the following terms best describes property held to earn rentals or for capital appreciation?
a. Freehold property c. Owner-occupied property
b. Leasehold property d. Investment property
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