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The CARTel prepared the following post-closing trial balance at year-end:

Property plant and equipment
Intangible assets
Investment in associate
Deferred tax assets
Inventory
Trade receivables
Cash on hand
Equity investments held at FVTPL
Equity investments not held for trading
Investment in bonds
Demand deposit in bank
Receivable from employees
Receivable from associates
Bank loans
Employee benefits
Finance lease payables
Trade payables
Warranty obligation
Rent payable
Interest payables
Current tax liability
Bank overdraft
Share capital

2,400,000
850,000
1,100,000
40,000
500,000
600,000
1,150,000
550,000
500,000
400,000
200,000
10,000
300,000
1,100,000
250,000
400,000
550,000
20,000
10,000
20,000
210,000
40,000
4,000,000

What is the total amount of financial assets?

a. 4,810,000
b. 3,710,000
c. 3,750,000
d. 3,160,000
What is the total amount of financial liabilities?
a. 2,330,000
b. 2,120,000
c. 1,720,000
d. 1,930,000
What is the total shareholders equity?
a. 4,000,000
b. 8,600,000
c. 6,000,000
d. 2,600,000
Jude Medina Buenavista Grande III Company provided the following trial balance on December
31, 2015 which has been adjusted for income tax expense:
Cash
Accounts receivable, net
Cost in excess of billings on long-term contracts
Billings in excess of cost on long-term contracts
Prepaid taxes
Property, plant and equipment, net
Note payable - noncurrent
Share capital
Share premium
Retained earnings unappropriated
Retained earnings restricted for notes payable
Earnings from long-term contracts

600,000
3,500,000
1,600,000
700,000
450,000
1,510,000

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1,620,000
750,000
2,030,000
900,000
160,000
6,680,000

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Costs and expenses

5,180,000
12,840,000 12,840,000
The entity used the percentage of completion method to account for long-term construction
contracts for financial statement and income tax purposes. All receivables on these contracts are
considered to be collectible within 12 months.
During 2015, estimated tax payments of P450,000 were charged to prepaid taxes. The entity has
not recorded income tax expense. There were no temporary or permanent differences. The tax
rate is 30%.
On December 31, 2015, what amount should be reported as
Total retained earnings
a. 1,950,000
b. 2,110,000
c. 2,400,000
d. 2,560,000
Total noncurrent liabilities
a. 1,620,000
b. 1,780,000
c. 2,320,000
d. 2,560,000
Total current assets
a. 5,000,000
b. 4,100,000
c. 5,700,000
d. 6,225,000
Total shareholders equity
a. 2,780,000
b. 3,840,000
c. 4,890,000
d. 5,340,000
Questions 36 to 37 are based on the following:
M n M & Associates presented the following items in its current year statement of
comprehensive income:
Remeasurement gain from defined benefit plans using
fair value method
Gains from equity instruments measured at FVTOCI
Translation gains
Effective gains on a cash flow hedge instruments
Ineffective gains on a cash flow hedge instruments
Revaluation surplus
Impairment loss

500,000
300,000
200,000
500,000
400,000
200,000
100,000

1.

What amount should be presented in the other comprehensive income?

a.
b.
c.
d.

2,100,000
1,700,000
1,500,000
1,200,000

2.

What amount should be presented in the profit or loss?

a.

500,000

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b. 800,000
c. 300,000
d. 1,000,000
Questions 38 to 41 are based on the following:
Hello KT & Co., an investment entity, provided the following data for the current year:
Dividend income from investments
Distribution income from trusts
Interest income from deposits
Income from bank treasury bills
Unrealized gain on derivative contracts
Income from dealing in securities and derivatives held for trading
Write-down on securities and derivatives held for trading
Other income
Finance costs
Administrative staff costs
Sundry administrative costs
Income tax expense

9,200,000
500,000
700,000
100,000
400,000
600,000
150,000
250,000
300,000
3,800,000
1,200,000
1,700,000

What is the total income before tax?

a. 11,200,000
b. 10,750,000
c. 11,350,000
d. 11,600,000
What is the total amount of expense before tax?
a. 5,300,000
b. 5,450,000
c. 7,000,000
d. 5,000,000
What is the net income for the year?
a. 4,600,000
b. 4,200,000
c. 3,700,000
d. 4,100,000
What is the comprehensive income for the year?
a. 4,200,000
b. 4,600,000
c. 3,800,000
d. 5,900,000
Jude Abragan Company provided the following information for the current year:
Income from continuing operation
Income from discontinued operation
Unrealized gain on financial asset - FVTPL
Unrealized loss on equity investment - FVOCI
Unrealized gain on debt investment - FVOCI
Unrealized gain on future contracts designated as cash flow hedge
Translation loss
Remeasurement gain
Loss on credit risk of financial liability - FVTPL
Revaluation surplus during the year

4,000,000
500,000
800,000
1,000,000
1,200,000
400,000
200,000
600,000
300,000
2,500,000

What amount should be presented in the income statement?

a. 4,500,000

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b.
c.
d.

7,700,000
8,500,000
7,200,000

What amount should be presented in the income statement?

a. 4,500,000
b. 7,700,000
c. 8,500,000
d. 7,200,000
What amount should be presented in the comprehensive income?
a. 4,500,000
b. 7,700,000
c. 8,500,000
d. 7,200,000
Mamsy Company reported the following components of other comprehensive income for the
current year:
Unrealized loss on future contract designated as cash flow hedge
Revaluation surplus during the year
Unrealized gain on nontrading equity investment measured at FVOCI
Remeasurement gain on employee benefits
Gain on translation of financial statements of a foreign operation
Loss from charge in fair value attributable to credit risk of a
financial liability designated at FVTPL.

500,000
350,000
150,000
120,000
150,000
200,000

In preparing the statement of comprehensive income, what net amount should be reported as
components of other comprehensive income that may not be recycled to profit or loss?
a.
b.
c.
d.

350,000
420,000
620,000
470,000

Casey Companys net income is P7,410,000 for the current year. The auditor raised questions
with regard to the following accounts:
Unrealized loss on equity investments at FVOCI
Gain on early retirement of bonds payable
Adjustment to profit of prior period for error in depreciation, net of tax effect
Loss from fire
Gain from change in fair value attributable to the credit risk
of financial liability designated at FVTPL

(540,000)
2,200,000
(750,000)
(1,400,000)
500,000

What amount should be presented as adjusted net income?

a. 6,500,000
b. 7,200,000
c. 8,200,000
d. 8,700,000
Dumb Companys year-end is December 31, 2015 and the 2015 financial statements were
authorized for issue on March 31, 2016. The entity had the following events:
On February 1, 2016, the entity determined that the total cost of an equipment purchased is
P3,700,000. The equipment was purchased on November 21, 2015 but unrecorded on
December 31, 2015.
On March 15, 2016, the entity discovered that the 2015 depreciation expense was overstated
by P470,000.
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On March 20,2016, the entity issued P100,000 ordinary shares at par of P10 per share.
On March 27, 2016, the entity filed a case against another entity for present infringement.
Legal counsel assessed that it is probable that the entity will win the case for an amount of
P550,000.
What amount should be replaced as adjusting events on December 31, 2015?
a.
b.
c.
d.

4, 720,000
5,170,000
4,170,000
3,700,000

On July 1, 2015, RR Company decided to discontinue its electronic division. Analysis of the
records for the year disclosed the following relative to the electronic division:
Operating loss for the year
Loss on disposal of some assets during 2015
Expected loss in 2016
Expected gain in 2016
What amount should be reported as pretax loss from discontinued operation in 2015?
a. 8,000,000
b. 8,500,000
c. 9,500,000
d. 7,500,000
ABC Company identified the following segments for the current year:
Segment
A
B
C
D
E
F

Revenue
Profit
10,000,000
1,750,000
8,000,000
1,400,000
6,000,000
1,200,000
3,000,000
550,000
4,000,000
575,000
2,000,000
525,000

Assets
20,000,000
17,500,000
12,500,000
7,500,000
5,500,000
3,000,000

What are the reportable segments?

a. Segments A, B and C
b. Segment A, B, C, and D
c. Segments A, B, C, D and E
d. Segments A, B, C, D, E and F
DEF Company identified the following segments for the current year:
Combined profits of segments reporting profits
Combined loss of segments reporting loss
Combined profit and loss of all segments

6,000,000
(4,000,000)
(2,000,000)

To qualify as reportable segment, the segment profit or loss should at least be?
a. 200,000 profit
b. 500,000 profit
c. 400,000 loss
d. 600,000 profit
Warren Company provided the following data on December 31. 2015
Petty cash fund
Cash on hand

25,000
500,000
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Current account
Cash in sinking fund
Money market placement
Saving deposit - set aside for dividend payable on June 30,2016

1,250,000
1,500,000
1,000,000
250,000

The petty cash fund included unreplenished petty cash vouchers of P10,000. The cash on hand
included a customer check of P200,000 received on December 15, 2015 but dated January 15,
2016. The sinking fund restricted for the payment of bond payable that is due on July 31, 2017.
What amount of cash and cash equivalents should be reported on December 31, 2015?
a. 1,815,000
b. 2,815,000
c. 3,315,000
d. 4,315,000
Pretty Inse has supplied you with the following list of its bank accounts and cash at December
31, 2016:
Checking account (compensating balance of P15,000 with no restriction), P48,000; Savings
account, 2%, P30,000; Certificate of deposit, 6 months, 10%, due April 20, 2017, P60,000;
Money market (30-day certificate), current rate, 9.7%, P40,000; Payroll account, P20,000;
Certificate of deposit, 3 months, 10% due February 15, 2017, P75,000 and Petty cash, P1,500;
Bills 10,000.
What should be the balance to be reported as Cash Equivalents in the December 31, 2016
statement of financial position of Pretty Inse Corporation?
a. P145,000
c. P224,500
b. P115, 000
d. 125,000
What should be the balance to be reported as Cash and Cash Equivalents in the December 31,
2016 statement of financial position of Pretty Inse Corporation?
a. P145,000
c. P224,500
b. P115, 000
d. 125,000
Lady Tsunade had the following bank reconciliation on June 31, 2015:
Balance per bank statement, June 30
Deposit in transit
Total
Outstanding checks
Balance per book, June 30
The bank statement for the month of July showed the following:
Deposits (including P200,000 note collected for Lady Tsunade)
Disbursements (including P140,000 NSF check and P10,000 debit memos)

3,000,000
400,000
3,400,000
(900,000)
2,500,000
9,000,000
7,000,000

All reconciling items on June 30 cleared through the bank in July. The deposit in transit
amounted to P1,000,000 and the outstanding checks totaled P600,000 on July 31.
What is the cash in bank to be reported on July 31, 2015?
a. 5,000,000
b. 5,400,000
c. 4,600,000
d. 4,900,000
What is the cash in bank balance per ledger on July 31, 2015?
a. 5,400,000
b. 5,350,000
c. 5,550,000
d. 4,500,000
What is the amount of cash receipts per ledger for July?
a. 9,000,000
b. 9,400,000
c. 9,600,000

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d. 8,400,000
What is the amount of cash disbursement per cash ledger for July?
a. 7,000,000
b. 6,550,000
c. 6,850,000
d. 6,700,000
Paolo Company reported current receivables on December 31, 2015 which consisted of the
following:
Trade accounts receivable
Allowance for uncollectible accounts
Claims against shipper for goods lost in transit in November 2015
Selling price of unsold goods sent by Paolo on consignment at 130%
of cost and not included in the ending inventory
Security deposit on lease of warehouse used for storing inventories

930,000
20,000
30,000
260,000
300,000

What is the corrected current net receivables on December 31, 2015

a.
b.
c.
d.

1,500,000
1,200,000
1,240,000
940,000

Pi Incorporated had the following information relating to its accounts receivable:

Accounts receivable, December 31, 2015
Credit sales for 2016
Collection from customer for 2016
Accounts Written off, August 30, 2017
Estimated uncollectible receivables per aging of
receivables, December 31, 2016

P1,950,000
8,100,000
7,125,000
187,500
247,500

What is the total amount of receivable from clients?

a. P2,490,000
c. P2,775,000
b. P2,677,500
d. P2,925,000
How should the asset be presented in its 2016 statement of financial position?
a. P2,490,000
c. P2,775,000
b. P2,677,500
d. P2,925,000
Papa Hermes Company received a seven-year zero-interest-bearing note on February 22, 2015,
in exchange for property it sold to Kuya Emman Company. There was no established exchange
price for this property and the note has no ready market. The prevailing rate of interest for this
type was 7% was on February 22, 2016 and 8% on December 31, 2015 and 2016, respectively?
a. 0% and 0%
c. 7% and 7%
b. 7% and 7.7%
d. 7.5% and 8%
On December 31, 2016, Nicolo Gwapito Corporaton sold for P150,000 an old machine having an
original cost of P210,000 and book value of P60,000, the term of the sale were as follows:
P30,000 down payment
P60,000 payable on December 31 each of the next two years
The agreement of sale made no mention of interest; however, 9% would be a fair rate for this
type of transaction. What should be the amount of the notes receivable, net of the un-amortized
discount and gain on sale, respectively on December 31,2016?
a. P105,546 & 75,546
c. P120,000 & P60,000
b. P135,546 & 75,546
d. P211,092 & P90,000

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Cebuano Company provides for doubtful accounts based on 30% of credit sales. The following
data are available for 2016:
Credit sales during 2016
P2,100,00
Allowance for doubtful accounts, 1/1/2016
170,000
Collections of accounts written off
80,000
(customer accounts re-established)
Customer accounts written off
300,000
What is the balance to be presented in the companys statement of financial position?
a. 630,000
c. 500,000
b. 420,000
d. 580,000
What is the amount to be presented in the companys statement of financial performance?
a. 630,000
c. 300,000
b. 420,000
d. 630,000
Bryan Company determined that the net realizable value of accounts receivable on December 31,
2015 based on the aging of accounts receivable was P325,000
Allowance for uncollectible accounts
Uncollectible accounts written off during the year
Uncollectible accounts recovered
Accounts receivable December 31

30,000
18,000
2,000
50,000

What is the uncollectible account expense for the current year?

a. 5,000
b. 11,000
c. 15,000
d. 21,000
On December 30, 2015, Ken Company sold a machine in exchange for a noninterest-bearing
note requiring ten annual payments of P100,000. The first payment was made on December
30,2015. The market interest rate for similar notes at date of issuance was 8%.
Period
9
10

Present value of ordinary

Present Value
0.50
6.25
0.46

annuity of 1 at 8%
6.71

On December 31, 2015, what amount should be reported as note receivable?

a. 450,000
b. 460,000
c. 625,000
d. 671,000
Popong and Company factored P600,000 of accounts receivable. Control was surrendered. The
factor accepted the accounts receivable subject to recourse for nonpayment. The factor assessed a
fee of 3% and retains a holdback equal to 5% of the accounts factored. In addition, the factor
charged 15% interest computed on a weighted-average time to maturity of fifty-four days. The
fair value of the recourse obligation is P9,000. What amount of cash was initially received?
a.
b.
c.
d.

529,685
538,685
547,685
556,685

Anjanette Company purchased P 2,000,000, 8%, five-year note that required five equal annual
year-end payments of P 500,900. The note was discounted to yield 9%. At the date of purchase,

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the entity recorded the note at the present value of P 1, 948,500. The entity did not elect the fair
value option. What is the total interest revenue earned over the life of this note?
a.
b.
c.
d.

504,500
556,000
800,000
900,000

On September 30, 2016 Scianti Boy discounted at the bank a customers P600,000, 6-month,
10% note receivable dated May 31, 2016. The bank discounted the note at 12%.
What amount of gan or loss should Scianti Boy recognize from the transfer assuming the
discounting is treated as a sale?
a. None
b. P2,600

c. P12,600
d. P17,400

What amount of loss from the transfer should Scianti Boy recognize assuming the factoring
agreement is considered as borrowings?
a. None
c. P12,600
b. P2,600
d. P17,400
Wiz Papa Company has the following information pertaining to its merchandise inventory as of
December 31,2016:
Inventory on hand (including merchandise received on consignment of P20,000)
Inventory purchased with a buy back agreement
Merchandise in transit FOB shipping point excluding P5,000 freight cost
Merchandise in transit Free alongside, including delivery cost alongside the
vessel of P6,000 and the cost of shipment P3,000
Merchandise in transit, CIF(excluding insurance costs and freight of P8,000)

200,000
100,000
155,000
250,000
175,000

What amount should Wiz Papa Company report as value of its inventory in its 2016 statement of
financial position?
a. P749,000
c. P770,000
b. P767,000
d. P876,000
Information pertaining to the inventory of KALAY Company as of December 31,2016 follows:
A
Historical Cost
Estimated selling price
Estimated cost of disposal
Normal profit margin
Current replacement cost

B
C
P 2,000,000 P2,500,000 P3,500,000
2,200,000 3,600,000 4,000,000
300,000
800,000 600,000
440,000
720,000 800,000
2,500,000 3,000,000
2,700,000

KALAY records losses that result from applying the LCNRV rule, what amount should the
inventory be valued on December 31, 2016?
a. P7,800,000
c. P8,000,000
b. P7,900,000
d. P8,100,000
Joshy Company reported inventory on December 31, 2015 at P1,500,000 based on a physical
count priced at cost and before any necessary adjustment for the following:
Merchandise costing P90,000, shipped FOB shipping from a vendor on December 30, 2015
was received and recorded on January 5, 2016.
Goods in the shipping area were excluded from inventory although shipment was not made
until January 4, 2016. The goods, billed to the customer FOB shipping point on December
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30, 2015, had a cost of P120,000.

What amount should be reported as inventory on December 31, 2015?
a.1,500,000
b.1,590,000
c.1,620,000
d.1,710,000
Mervic Company reported accounts payable on December 31, 2015 at P900,000 before any
necessary year-end adjustments relating to the following:
Goods were in transit from a vendor to Mervic on December 31, 2015. The invoice cost was
P50,000, and the goods were shipped FOB shipping point on December 29, 2015. The goods
were received on January 4, 2016.
Goods shipped FOB shipping point on December 201, 2015 from a vendor Mervic were lost
in transit. The invoice cost was P25,000. On January 5, 2016, Mervic filed a P25,000 claim
against the common carrier.
Goods shipped FOB destination on December 21, 2015 from a vendor to Mervic were
received on January 6, 2016. The invoice cost was P15,000.
What amount should be reported as accounts payable on December 31, 2015?
a. 925,000
b. 940,000
c. 950,000
d. 975,000
Marty Pogi uses the average retail inventory method of determining the value of their inventory.
The following information is made available:
Inventory beginning
Purchases
Freight in
Purchases return
Purchase allowances
Department transfer in
Net Mark-ups
Net Mark-downs
Sales
Sales return
Sales discounts
Employee discounts
Loss from breakage

Cost
1,100,000
15,800,000
400,000
600,000
300,000
400,000

Market
P 2,200,000
26,300,000
1,000,000
800,000
600,000
900,000
24,700,000
350,000

200,000
600,000
50,000

The cost ratio using the average retail inventory method is

a. 58.13%
c. 62%
b. 61.07 %
d. 60%
The estimated ending inventory at retail is
a. P3,000,000
c. P2,800,000
b. P3,600,000
d. P3,650,000
The estimated ending inventory cost is
a. P1,743,945
c. P1,832,143
b. P2,198,571
d. P1,800,000
The estimated cost of good sold is
a. P15,267,857
c. P15,000,000
b. P14,901,429
d. P15,056,055
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If the inventory at retail based on physical count at December 31 is P1,700,000, the estimated
inventory shortage is
a. P780,000
c. P755,709
b. P793,000
d. P-0Walang, Makakapigil, Sakin & Company, an audit firm, would like to know how much should
they record on their books a property invoiced at P500,000 after the seller offered them discounts
of 5%, 2%, 1% and 2/10, net 30.
a. P500,000

b. P451,628

c. P460,845

d. P490,000

The Jude Jeff Deo Company imported a new machine at a peso equivalent of P330,000. The
company has to pay non-refundable purchase taxes of P10,000 and P15,000 VAT. Cost of
transporting the asset was P5,000 and the cost of preparing the asset for its intended use include
P5,000 installation. How much is the initial cost of the machine?
a. P350,000
b. P355,000

c. P360,000
d. P365,000

On October 1, 2016, Bibi Nico Company purchased a machine for P250,000 that was
placed in service on November 30, 2016. Bibi Nico incurred additional costs for this
machine, as follows:
Shipping
Installation
Testing

10,000
15,000
35,000

In Nicos December 31, 2016 balance sheet, the machines cost should be
reported at
a. P250000
c. P300,000
b. P295,000
d. P310,000
During 2016, Kiyen Company made the following expenditures relating to its
plant building:
New paint for the plant building
Major improvements in the electrical wiring
Partial replacement of roof tiles
Continuing and frequent repairs

110,000
100,000
80,000
200,000

How much should be capitalized in the above expenditures

a. 490,000
b. 210,000
c. 180,000
d. 100,000
During the year, Dayag Incorporated made the following expenditures relating to plant building:
Continuing and frequent request repairs
40,000
Repainted the plant building
10,000
Major improvements to the electric wiring system
32,000
Partial replacement of roof tiles
14,000
How much should be charged to repair and maintenance expense?
a. 96,000
b. 82,000
c. 64,000
d. 54,000

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On January 1, year 1, the firm purchased for P2,400,000 a machine with useful life of 10 years,
no scrap value. The machine was depreciated by the double declining balance method and the
carrying amount of the machine was P1,536,000 on December 31, year 2. The firm can justify
the change to straight line method of depreciation effective January 1, year 3.
What would be the depreciation expense for year 3?
a. 307,200
b. 240,000
c. 192,000

d. 153,600

The following account balance relating to property, plant & equipment of Jan Merbs Company
appear on the books on January 1, 2016:
Land
Building
Accumulated depreciation
Machinery
Accumulated depreciation

P2,000,000
15,000,000
3,750,000
3,000,000
1,500,000

Assets have been carried at cost since their acquisition. All assets were acquired on January 1,
2006. The straight line method is used. On January 1, 2016, the entity revalued the property,
plant & equipment. On such date, competent appraisers submitted the following:
Replacement Cost
Land
P5,000,000
Building
25,000,000
Machinery
5,000,000
What is the deprecation for 2016?
a. P 531,250
c. P 525,000
b. P 875,000
d. P 626,000
What is the revaluation surplus on December 31, 2016?
a. P11,500,000
c. P11,150,000
b. P20,250,000
d. None
Christian Company maintains its records under PAS/PFRS. During the current year Christian
sold a piece of equipment used in production. The equipment had been accounted for using the
revaluation method and details of the accounts and sale are presented below.
Sales price
Equipment book value
Revaluation surplus

P100,000
90,000
20,000

Which of the following is correct regarding recording the sale?

a. The gain that should be recorded in profit and loss is P30,000.
b. The gain that should be recorded in other comprehensive income is P10,000.
c. The gain that should be recorded in other comprehensive income is P30,000.
d. The gan that should be recorded in profit and loss is P10,000; the P20,000 revaluation surplus
should be transferred to retained earnings.
An asset was acquired on January 1, 2011 for P1,600,000 and expected to have a 10-year useful
economic life. Straight line method of depreciation will be used. At January 1, 2015 the asset is
appraised as having a sound value of P1,440,000. On January 1, 2017 the asset was appraised at
a sound value of P240,000.
What is the replacement cost of the asset on January 1, 2015?
a. P1,440,000
c.P2,200,000
b. P1,600,000
d. P2,400,000
What is the amount of impairment loss to be recognized on January 1,2017?

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a. None
b. P720,000

c. P320,000
d. P400,000

Patrick Bryan Companys generating-unit has been assessed for impairment and it has been
determined that the unit has incurred an impairment loss of P240,000. The carrying amounts of
the assets were as follows:
Building
Equipment
Land
Fittings

P6,000,000
2,000,000
3,500,000
2,500,000

The cash generating unit has not recorded any amount of goodwill.
What amount of impairment loss should be allocated to the building?
a. P50,000
c. P87,500
b. P62,500
d. P102,857
If the fair value less cost to sell of the building is P5,960,000, what amount of impairment loss
should be allocated to the equipment?
a. P34,286
c. P62,500
b. P50,000
d. P87,500
CARAMELK Co. has equipment with a carrying amount of P800,000. The expected future net
cash flows from the equipment are P815,000, and its fair value is P680,000. The equipment is
expected to be used in operations in the future. What amount (if any) should CARAMELK report
as an impairment should be reported
a.
b.
c.
d.

no impairment should be reported

P 120,000
P 15,000
P 135,000

The following costs were considered in valuing the cost of new building on January 1,2016.
Purchase price of land and old building
Cost of Demolition of Old building
Architects Fee
Cost of materials
Laborers wages
Engineers Fee
Cost of Excavation intended for the new building
Discounts availed for the materials
Scrap Sales, out of the demolition
Legal fees related to the transfer of title
Cost of parking lot
Assessment fees by the Government for the Land
Cost of building permits and other inspection fees

P1,000,000
100,000
150,000
2,500,000
1,500,000
150,000
100,000
25,000
45,000
25,000
100,000
50,000
25,000

The cost allocated to the old building amounted to P500,000. The overhead related to the
construction is 25% of cost of materials and 75% of Direct labor. In addition, the entity incurred
normal spoilages of 10,000.
Moreover, during the course of constructing the building, 2 workers met an accident. These
workers were hospitalized and the entity paid 150,000 as part of the insurance.
How much is the cost of the land?
a. P500,000
c. P550,000
b. P525,000
d. P575,000

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How much is the cost of the new building?

a. P6,683,750
c. P6,458,750
b. P6,465,000
d. P6,583,750
Assuming the construction was finished during the year, how much was expensed during the
year?
a. P500,000
c. P650,000
b. P150,000
d. P810,000
Assuming that if the new building was purchased will be P 7,000,000; how much is the savings
from constructing the building be recognized in the P/L?
a. P316,250
c. P535,000
b. P541,250
d. P -0What amount should be considered as land improvements?
a. P100,000
c. P150,000
b. P-0d. P250,000
Assuming that the building has an estimated useful life of 25 years with a salvage value of
P150,000 and was finished on December 1, 2016, applying PAS 16, how much is the
depreciation to be recognized?
a. P261,350
b. P257,350

c. P21,779
d. P21,446

In June 2016, Jimma Company acquired a machine in exchange for a non-monetary asset with a
cost of P1,200,000 and an accumulated depreciation of P600,000 and paid a cash difference of
P160,000. The market value of the non-monetary asset was determined to be P650,000.
If the exchange has commercial substance, what is the cost of the new asset acquired and the
amount of gain to be recognized, respectively?
a. P440,000 & P50,000
c. P810,000 & P50,000
b. P440,000 & P210,000 d. P810,000 & P210,000
If the exchange lacks the necessary commercial substance, what would be the cost of the new
asset acquired and the amount of gain to be recognized, respectively?
a. P760,000 & P-0c. P810,000 & P50,000
b. P760,00 & P50,000
d. P810,000 & P210,000
To save transportation costs,Hermes acquired its needed equipment in exchange of its inventory
located in the suppliers business place. The equipment acquired has cash price of P650,000. The
inventory of Hermes has cost of P550,000, and Hermes paid P80,000 cash for the difference in
fair value of the two assets in exchange.
In the books of Hermes, the exchange is to be accounted as resulting to
a. gain of P20,000
b. loss of P20,000
c. gain of P30,000
d. loss of P30,000
Gracelle Company borrowed P400,000 on a 10 percent note payable to finance a new warehouse
Gracelle is constructing for its own use. The only other debt on Gracelles books is a P600, 000,
12 percent mortgage payable on an office building. At the end of the current year, average
accumulated expenditures on the new warehouse totaled P475,000.
Gracelle should capitalize interest for the current year in the amount of (use 2 decimal palaces)
a.40, 000
b. 47, 500
c. 49, 000
d. 380,000

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Questions 47 to 50 are based on the following data:

January 1, 2015, R.G. Manabat & Co. Disclosed the following balances:
Land
Land improvements
Buildings
Machinery and equipment

4,000,000
1,300,000
20,000,000
8,000,000

During the current year, the following transactions occurred:

A tract of land was acquired for P2,000,000 cash as a building site.
A plant facility consisting of land and building was acquired in exchange for 200,000 shares of
the entity. On the acquisition date, each share had a quoted price of P45 on a stock exchange. The
plant facility was carried on the sellers books at P1,600,000 for land and P5,400,000 for the
building at the exchange date. Current appraised value for the land and building, respectively, are
P2,000,000 and P8,000,000. The building has an expected life of forty years with a P200,000
residual value.
Items of machinery and equipment were purchased at a total cost of P4,000,000. Additional costs
incurred were freight and unloading P100,000 and installation P300,000. The equipment has a
useful life of ten years with no residual value.
Expenditure totaling P1,200,000 were made for new parking lot, streets and sidewalks at the
entitys various plant locations. These expenditures had an estimated useful life of fifteen years.
Research and development costs were P1,100,000 for the year.
A machine costing P200,000 on January 1, 2008 was scrapped on June 30, 2015. Straight line
depreciation had been recorded on the basis of a 10-year life with no residual value. A machine
was sold for P500,000 on July 1, 2015. Original cot of the machine sold was P700,000 on
January 1, 2012, and it was depreciated on the straight line basis over an estimated useful life of
eight years and a residual value of P50,000.
What is the total cost of the land on December 31, 2015?
a. 7,800,000
b. 7,600,000
c. 8,000,000
d. 6,800,000
What is the total cost of the land improvements on December 31, 2015?
a. 1,200,000
b. 3,600,000
c. 1,300,000
d. 2,500,000
What is the total cost of the building on December 31, 2015?
a. 28,000,000
b. 25,400,000
c. 27,200,000
d. 27,000,000
What is the total cost of the machinery and equipment on December 31, 2015?
a. 12,400,000
b. 11,500,000
c. 11,000,000
d. 11,700,000
A mining property was acquired at cost of P12,000,000. It has estimated life of 5 years. After

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exploration cost of P1,000,000, it was developed at cost of P1,500,000 (intangible). At the end of
its life, the property could be sold for P3,000,000 after restoration cost of P500,000. Confirmed
deposit is at 40,000,000 units. For its 1st year of operation, 7,500,000 units were produced at
production cost of P5,250,000. P7,125,000 of production were sold during the year.
The depletion cost in the inventory is?
a. 112,500
b. 140,625

c. 262,500

d. 2,137,500

What amount of depletion should be included in cost of goods sold?

a. 112,500
b. 140,625
c. 262,500
d. 2,137,500
What is the depletion?
a. 112,500
b. 140,625

c. 262,500

d. 2,137,500

In January 2015, Aldwin Company purchased a mineral mine for P36,000,000 with removable
are estimated by geological survey at P4,000,000 tons. The property has an estimated value of
P3,600,000 after the ore has been extracted. The entity incurred P10,800,000 of development
cost preparing the property to the original condition at an estimated cost of P2,500,000. The
present value of the estimated restoration cost is P1,800,000. During 2015, 400,000 tons were
removed and 300,000 tons were sold.
For the year ended December 31, 2015, what amount of depletion should be included in cost of
goods sold?
a. 4,500,000
b. 3,375,000
c. 4570,000
d. 34275000
For the year ended December 31, 2015, what amount of depletion should be recognized?
a. 4,500,000
b. 3,375,000
c. 4570,000
d. 34275000
Bench Company provided the following data on December 31, 2015:
Unamortized bond issue cost
150,000
Organization cost
200,000
Losses incurred in the early years of the entitys operations
Computer software (integral part of a computer controlled machine)
Patent
1,500,000
Amount set up by the Board of Directors as goodwill
Franchise
2,000,000

500,000
1,000,000
400,000

What total amount of intangible assets should be recognized on December 31, 2015?
a. 3,500,000
b. 4,500,000
c. 3,700,000
d. 3,900,000
Juanico Company provided the following information for 2015:
Current period depreciation on the building housing R and D activities
Cost of market research study
Current period depreciation on a machine used in R and D Activities
Salary of R and D director
Salary of VP who spends 1/4 of his time overseeing R and D activities

1,500,000
1,000,000
500,000
1,200,000
2,400,000

What total amount should be recognized as R and D expense for 2015?

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a.
b.
c.
d.

4,800,000
6,600,000
5,600,000
3,800,000

Elijah Company incurred the following costs during the current year;
Laboratory research aimed at discovery of new knowledge
75,000
Design of tools, jigs, molds, and dies involving new technology
22,000
Quality control during commercial production, including routine testing
35,000
Equipment acquired two years ago, having an estimated useful life of
five years with no residual value, used in various R and D projects entire year
150,000
Research and development services performed by Star Company for Elijah
23,000
Research and development service performed by Elijah Company for Kaye
2,000
What amount of research and development expense should be reported in the current year?
a. 120,000
b. 150,000
c. 187,000
d. 217,000

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