Question

In relation to the measurement of an asset, the amount of consideration given to acquire the...

In relation to the measurement of an asset, the amount of consideration given to acquire the asset at its acquisition date is known as its:

historical cost.

present value.

realisable value.

current cost.

When making a transfer from a general reserve to retained earnings, which of the following journals could be used?

"DR General reserve, CR Share capital"

"DR General reserve, CR Retained earnings"

"DR Share capital, CR General reserve"

"DR Retained earnings, CR General reserve"
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Answer #1

Part 1) OPTION A-----Historical Cost

The amount of consideration given to acquire the asset at acquisition date is historical cost. It is the value of an asset which is recorded at its original cost when acquired by the enterprise.

Part 2) Option B----- DR General Reserve, CR Retained Earnings

Above Journal to be used in case of transferring balance from general reserve to Retained Earnings, since General reserve is debited as balance is deducted from same and Retained Earnings Credited as balance is credited in same.

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