PAS 40 - Investment Property

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a.) Biological assets related to agricultural activity

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a.) Biological assets related to agricultural activity

PAS 40 shall be applied in the recognition, measurement, and disclosure of investment property except for:

a.) Biological assets related to agricultural activity b.) Land held for long-term capital appreciation c.) A building that is vacant but is held to be leased out under one or more operating leases d.) Property that is being constructed or developed for future use as an investment property

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c.) Mineral rights and mineral reserves such as oil, natural gas, and similar non-regenerative resources

PAS 40 shall be applied in the recognition, measurement, and disclosure of investment property except for:

a.) A building that is vacant but is held to be leased out under one or more operating leases b.) Land held for long-term capital appreciation c.) Mineral rights and mineral reserves such as oil, natural gas, and similar non-regenerative resources d.) A building owned by the entity and leased out under one or more operating leases

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Investment Property

It is property held to earn rentals or for capital appreciation or both

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False

T/F - Investment property is property used in production or supply of goods or services or for administrative purposes

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False

T/F - Investment property is property held for sale in the ordinary course of business

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b.) I, II, III, V, and VI

I - Land held for long-term capital appreciation II - Land held for currently undetermined use III - A building owned by the entity and leased out under one or more operating leases IV - Land used in production V - A building that is vacant but is held to be leased out under one or more operating leases VI - Property that is being constructed or developed for future use as an investment property

Which of the following are examples of investment property?

a.) all of the above b.) I, II, III, V, and VI c.) I, II, III, IV, and V d.) II, III, IV, V, and VI

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c.) I, II, III, and IV

I - Property intended for sale in the ordinary course of business or in the process of construction or development for such sale II - Owner-occupied properties including property held for future use as owner-occupied III - Property that is leased to another entity under a finance lease IV - Biological assets related to agricultural activity V - Land held for long-term capital appreciation

Which of the following are beyond the scope of PAS 40?

a.) all of the above b.) I, II, III, and V c.) I, II, III, and IV d.) I, II, and V

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True

T/F - An investment property shall be recognized as an asset when it is probable that the future economic benefits that are associated with the investment property will flow to the entity

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True

T/F - An investment property shall be recognized as an asset when the cost of the investment property can be measured reliably

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False

T/F - An investment property is still recognized as an asset even when the cost of the investment property cannot be measured reliably

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True

T/F - In unusual circumstances where it would be concluded that the owner's receipt of the economic benefits would be less than probable, the cost will be expensed

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True

T/F - If a portion of a property is used to earn rentals while the other portion is held for use in the production of supply for goods or services, and the portions could be sold/leased out separately, then each portion will be classified separately (investment property and owner-occupied)

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False

T/F - If a portion of a property is used to earn rentals while the other portion is held for use in the production of supply for goods or services, and the portions could be sold/leased out separately, then each portion will be classified as one (investment property)

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True

T/F - If a portion of a property is used to earn rentals while the other portion is held for use in the production of supply for goods or services, and the portions could not be separated, the entity should consider the intention of the significant portion and classify the whole property accordingly

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True

T/F - If a portion of a property is used to earn rentals while the other portion is held for use in the production of supply for goods or services, and the significant portion is for rental then it will be classified as an investment property

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Owner-occupied Property

It is a property held for use in the production or supply of goods or services or for administrative purposes

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True

T/F - If the ancillary service is only insignificant to the arrangement, the property will be treated as an investment property

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False

T/F - If the ancillary service is only insignificant to the arrangement, the property will be treated as owner-occupied

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True

T/F - If the ancillary service is significant to the arrangement, the property will be treated as owner-occupied

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False

T/F - If the ancillary service is significant to the arrangement, the property will be treated as an investment property

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True

T/F - Properties leased to, and occupied by, its parents or another subsidiary will be classified as owner-occupied in the consolidated financial statement as it is viewed from the perspective of the group

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False

T/F - Properties leased to, and occupied by, its parents or another subsidiary will be classified as an investment property in the consolidated financial statement as it is viewed from the perspective of the group

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True

T/F - Properties leased to, and occupied by, its parents or another subsidiary will be classified as investment property in the separate financial statement as it is viewed from the perspective of the entity that owns it

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False

T/F - Properties leased to, and occupied by, its parents or another subsidiary will be classified as owner-occupied in the separate financial statement as it is viewed from the perspective of the entity that owns it

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True

T/F - An entity can reclassify a property to, or from, investment property

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True

T/F - An entity cannot reclassify a property to, or from, investment property if there is no change in use

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True

T/F - In isolation, management intention does not provide evidence of a change in use

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False

T/F - In isolation, management intention provides enough evidence of a change in use

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d.) investment property to owner-occupied

Commencement of owner-occupation, or of development with a view to owner-occupation are examples of what evidence of a change in use:

a.) Inventories to investment property b.) owner-occupied to investment property c.) investment property to inventory d.) investment property to owner-occupied

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c.) investment property to inventory

Commencement of development with a view to sale is an example of what evidence of a change in use:

a.) Inventories to investment property b.) owner-occupied to investment property c.) investment property to inventory d.) investment property to owner-occupied

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b.) owner-occupied to investment property

end of owner-occupation is an example of what evidence of a change in use:

a.) Inventories to investment property b.) owner-occupied to investment property c.) investment property to inventory d.) investment property to owner-occupied

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a.) Inventories to investment property

Inception of an operating lease to another party is an example of what evidence of a change in use:

a.) Inventories to investment property b.) owner-occupied to investment property c.) investment property to inventory d.) investment property to owner-occupied

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cost

Investment property is measured initially at

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True

T/F - Transaction cost shall be included in the initial measurement

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False

T/F - Transaction cost is not included in the initial measurement

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cost

It is the amount of cash and cash equivalent, or the fair value of other consideration given to acquire an asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognized in accordance with the standard

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a.) cost of purchased investment property

Comprises purchase price and any directly attributable expenditures (professional fees for legal services, property transfer taxes, and other transaction costs):

a.) cost of purchased investment property b.) cost of investment property under deferred payments c.) cost of investment property acquired through exchange

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True

T/F - The cost of an investment property under deferred payments is the cash price equivalent

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c.) interest expense recognized over the credit period

In the cost of an investment property under deferred payments, the difference between the cash price equivalent and the total payments is:

a.) fair value recognized over the credit period b.) fair value recognized over the debit period c.) interest expense recognized over the credit period d.) interest expense recognized over the debit period

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c.) both a and b

In the cost of an investment property acquired through an exchange, the cost is equivalent to the fair value unless:

a.) the exchange lacks commercial substance b.) the fair value of neither the asset received nor given up is reliably measured c.) both a and b d.) none of the above

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True

T/F - Under the cost of an investment property acquired through an exchange, the cost is equivalent to the fair value unless the exchange lacks commercial substance or the fair value of neither the asset received nor given up is reliably measured. If such is the case, the investment property will be measured at the carrying amount of the asset given up

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False

T/F - Under the cost of an investment property acquired through an exchange, the cost is equivalent to the fair value unless the exchange lacks commercial substance or the fair value of neither the asset received nor given up is reliably measured. If such is the case, the investment property will be measured based on the lowest price agreed

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d.) I, II, and III

I - Startup costs II - Operating losses before the investment property achieves the planned level of occupancy III - Abnormal amounts of wasted materials, labor, or other resources in constructing or developing the property IV - Startup costs necessary in bringing the asset to the condition necessary for it to be capable of operating in the manner intended by management

Which of the following costs are not measured as an investment property:

a.) all of the above b.) I and II only c.) II, III, and IV d.) I, II, and III

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True

T/F - Startup costs necessary in bringing the asset to the condition necessary for it to be capable of operating in the manner intended by management are measured as a cost of an investment property

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False

T/F - Startup costs necessary in bringing the asset to the condition necessary for it to be capable of operating in the manner intended by management are not measured as a cost of an investment property

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True

T/F - Startup costs are not measured as a cost of an investment property

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False

T/F - Costs of day-to-day servicing are part of the carrying amount of investment property

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True

T/F - Costs of day-to-day servicing are not part of the carrying amount of investment property

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True

T/F - The cost of day-to-day servicing is primarily the cost of labor and consumables and may include the cost of minor parts thus these are regarded as "repairs and maintenance" and recognized in the profit or loss

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True

T/F - Costs of replaced parts on an investment property are included in the carrying amount of the investment property if it meets the recognition criteria

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False

T/F - Costs of replaced parts on an investment property are not included in the carrying amount of the investment property

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carrying amount

It is the amount at which an asset is recognized in the statement of financial position

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c.) both a and b

What model or accounting policy can an entity use to subsequently measure an investment property:

a.) fair value model b.) cost model c.) both a and b d.) none of the above

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a.) fair value model

Under this model, the investment property is carried at fair value:

a.) fair value model b.) cost model c.) both a and b d.) none of the above

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b.) cost model

Under this model, the investment property is carried at cost less accumulated depreciation and any accumulated impairment losses

a.) fair value model b.) cost model c.) both a and b d.) none of the above

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fair value

It is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date

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True

T/F - If there is clear evidence that the fair value of the investment property initially acquired is not reliably measurable on a continuing basis, the investment property is measured using the cost model

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a.) in the profit or loss for the period in which it arises

Where is the gain or loss arising from the changes in the fair value measurement every year disclosed:

a.) in the profit or loss for the period in which it arises b.) in the profit or loss for the period in which it retires c.) in the notes to financial statement d.) in the profit or loss for the accounting period

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True

T/F - The lessee will measure the investment property at the fair value of the right-of-use asset and not the underlying property

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False

T/F - The lessee will measure the investment property at the underlying property and not the fair value of the right-of-use asset

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True

T/F - Leases are governed by PFRS 16, and it requires the lessee to initially measure the property as right-of-use at cost

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False

T/F - Leases are governed by PFRS 16, and it requires the lessee to initially measure the property as right-of-use at fair value

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True

T/F - Remeasuring the right-of-use from PFRS 16 at cost to PAS 40 at fair value should only give rise to an initial gain or loss if the fair value is measured at different times.

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False

T/F - If the fair value is measured at different times, remeasuring the right-of-use from PFRS 16 at cost to PAS 40 at fair value will not give rise to an initial gain or loss

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True

T/F - Equipment such as lifts, or air-conditioning is often an integral part of the building thus included as fair value of the investment property rather than part of the property, plant, and equipment account.

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False

T/F - Equipment such as lifts, or air-conditioning is not often an integral part of the building thus excluded as fair value of the investment property and is a part of the property, plant, and equipment account.

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True

T/F - If an office is on a furnished basis, the fair value of the property includes the fair value of the furniture also as income derived from these items also. It should not be a separate asset

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False

T/F - If an office is on a furnished basis, the fair value of the property does not include the fair value of the furniture. It should be a separate asset

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True

T/F - The fair value excludes prepaid or accrued operating lease income because the entity recognizes it as a separate liability or asset

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False

T/F - The fair value includes prepaid or accrued operating lease income because the entity recognizes it as a common liability or asset

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True

T/F - The fair value of investment property held by the lessee as a right-of-use asset is the expected cash flow and must add back any recognized lease liability

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False

T/F - The fair value of investment property held by the lessee as a right-of-use asset is the expected cash flow but must deduct any recognized lease liability

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True

T/F - An investment property previously measured at fair value is not allowed to change it to cost model upon entity's discretion

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False

T/F - An investment property previously measured at fair value is allowed to change it to cost model upon entity's discretion

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True

T/F - If an entity has previously been measured at fair value, it shall continue to measure at fair value until disposal or if the property becomes owner-occupied or becomes an inventory, even if the comparable market transactions become less frequent or market prices become less readily available

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False

T/F - If an entity has previously been measured at fair value, it shall continue to measure at fair value until disposal or if the property becomes owner-occupied or becomes an inventory unless the comparable market transactions become less frequent, or market prices become less readily available

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a.) I, II, III

I - PFRS 5, non-current asset held for sale and discontinued operations II - PFRS 16, leases III - PAS 16, property, plant, and equipment IV - PAS 41, agriculture V - PFRS 15, revenue

If an entity chooses cost model to measure the investment property, it will be measured in accordance with:

a.) I, II, III b.) II, III, IV c.) III, IV, V d.) IV, V, I

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True

T/F - If there is a change of use and the entity is using the cost model, there is no adjustment to the carrying amount if the property is transferred between investment property, owner-occupied, or inventory

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False

T/F - If there is a change of use and the entity is using the cost model, there is an adjustment to the carrying amount if the property is transferred between investment property, owner-occupied, or inventory

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True

T/F - If there is a change of use and the entity is using the fair value model, there is an adjustment to the carrying amount if the property is transferred between investment property, owner-occupied, or inventory

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False

T/F - If there is a change of use and the entity is using the fair value model, there is no adjustment to the carrying amount if the property is transferred between investment property, owner-occupied, or inventory

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True

T/F - For a transfer from investment property carried at fair value to owner-occupied property or inventory, the property's deemed cost for subsequent accounting shall be its fair value at the date of change in use

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False

T/F - For a transfer from investment property carried at fair value to owner-occupied property or inventory, the property's deemed cost for subsequent accounting shall be its original price

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True

T/F - If an owner-occupied property becomes an investment property (fair value), the difference between the carrying amount and the fair value at the date of change in use will be treated the same way as a revaluation in accordance with PAS 16

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False

T/F - If an owner-occupied property becomes an investment property (fair value), the difference between the carrying amount and the fair value at the date of change in use will be treated the same way as a revaluation in accordance with PAS 23

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True

T/F - If an inventory becomes an investment property (fair value), the difference between the carrying amount and the fair value shall be recognized in profit or loss. The transfer is treated as like a sale of inventories

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False

T/F - If an inventory becomes an investment property (fair value), the difference between the carrying amount and the fair value shall be recognized in notes to financial statement

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True

T/F - When an entity completes the construction/development of a self-constructed investment property that will be carried at fair value, any difference between the cost and the fair value shall be recognized in profit or loss

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False

T/F - When an entity completes the construction/development of a self-constructed investment property that will be carried at fair value, any difference between the cost and the fair value shall be recognized in shareholder's equity

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disposal

An investment property shall be derecognized on

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True

T/F - An investment property shall be derecognized when the investment is permanently withdrawn from use and no future economic benefits are expected from its disposal

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False

T/F - An investment property shall be derecognized when the investment is temporarily withdrawn from use and no future economic benefits are expected from its disposal

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False

T/F - An investment property shall be derecognized when the investment is permanently withdrawn from use and future economic benefits are expected from its disposal

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True

T/F - The gain or loss on retirement or disposal of an investment property is the difference between the net disposal proceeds and the carrying amount of the asset

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False

T/F - The gain or loss on retirement or disposal of an investment property is the sum between the net disposal proceeds and the carrying amount of the asset

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True

T/F - The gain or loss on retirement or disposal of investment property shall be recognized in profit or loss

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False

T/F - The gain or loss on retirement or disposal of investment property shall be recognized in shareholder's equity

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True

T/F - Compensation from third parties for an investment property that was impaired, lost, or given up will be recognized in profit or loss when the compensation becomes receivable

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False

T/F - Compensation from third parties for an investment property that was impaired, lost, or given up will not be recognized in profit or loss when the compensation becomes receivable

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True

T/F - When material, the aggregate carrying amount of the entity's investment property should be presented in the statement of financial position under non-current assets

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