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Week 3 - Suggested solutions to homework questions Week 3...

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Suggested solutions to homework questions – Week 3 Problem 6.15 Essential characteristics of assets: i Future economic benefit (or service potential) ii Control by the entity iii Occurrence of past transactions or other past events Criteria for asset recognition: a it is probable that the future economic benefits will flow to the entity; and b the asset possesses a cost or other value that can be measured reliably. Essential characteristics Recognition criteria i ii iii a b 1 The purchase of equipment on credit X X X X X 2 receipt of cash from a cash sale X X X X X 3 Payment of a yearly insurance policy in advance X X X X X 4 A department store receives goods from a manufacturer on consignment X X X 5 Land donated to a sporting association X X X X X 6 A grant from the local council to a sporting .... X X X X X 7 Purchase of a patent for cash X X X X X 8 Expenditure on research and development which is .... X X X 9 Hiring a new general manager who has the .... X X X 10 Purchase of BHP shares for cash X X X X X 11 A council swimming pool which ratepayers can .... X X X X X 12 A luxury resort paves a gravel road from the .... X X X X 13 A new printing press is acquired X X X X X 14 A piece of equipment with a no use or scrap value X X X 1 Asset recognised in the balance sheet 2 Asset recognised in the balance sheet
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