1.May Company is planning to dispose of a collection of assets. The entity designates these assets as a disposal group.

The carrying amount of these assets immediately before classification as held for sale was P5,000,000. Upon being classified as held for sale, the assets had a fair value of P4,000,000. The entity feels that it would cost P 200,000 to sell the disposal group. What would be the carrying amount of the disposal group after its classification as held for sale? a.5,000,000 b.4,000,000 c. 3,800,000 d. 4,800,000

2.Leonora Company is indebted to a bank under a 6,000,000, 10% three-year note dated December 31, 2006. Because of financial difficulties, Leonora owed accrued interest of P600,000 on the note at December 31, 2009. Under a debt restructuring on December 31, 2009, the bank agreed to settle the note and accrued interest for a tract of land having a fair value of P 5,000,000. The acquisition cost of the land is 3,000,000. In its 2009 income statement, Leonora should report gain on extinguishment of debt at a.2,000,000 b.3,000,000 c. 3,600,000 d. 1,600,000

3.Angelie Company was incorporated on January 01,2009, with proceeds from the issuance of P25,000,000 in share capital and borrowed funds of P7,000,000. During the first year of operations, revenue from sales and consulting amounted to P 50,000,000, and operating costs and expenses totaled P 42,000,000. On December 15, Angelie declared a P5,000,000 cash dividend payable to shareholders on January 15, 2010. No additional activities affected owners equity in 2009. The entitys liabilities increased to P 10,000,000 by December 31, 2009. On December 31, 2009, Total assets should be reported at a.38,000,000 c. 35,000,000 b.43,000,000 d. 23,000,000 4.For the purpose of stating the working capital of HP Company on December 31, 2009, the following data are submitted: Cash in bank, net of bank overdraft of 500,000 Petty cash ( Unreplenished petty cash expenses, P10,000) Notes receivable Accounts receivable, net of accounts with credit balances Of 1,500,000 Inventory Bond sinking fund Deferred charges Accounts payable, net of accounts with debit balances Of 1,000,000 Notes payable 5,000,000 50,000 4,000,000 6,000,000 3,000,000 2,000,000 250,000 7,000,000 4,000,000

Bonds payable due on june 30, 2010 Accrued expenses 1. The total current assets on December 31, 2009 should be a.22,040,000 c. 21,040,000 b.23,040,000 d. 23,290,000 2. The total current liabilities on December 31, 2019 should be a. 14,500,000 c.14,500,000 b. 16,500,000 d. 15,500,000

2,000,000 500,000

5.On January 01, 2006, Genius Company purchased a machine forP5,000,000 and depreciated it by the straight-line method using an estimated useful life of ten years with no residual value. On January 01, 2009, Genius determined that the machine had a useful life of 8 years from the date of acquisition and will have a residual value of P 500,000. An accounting change was made in 2009 to reflect these additional data. The accumulated depreciation for this machine on December 31, 2009 should be a.2,100,000 b.2,200,000 c. 2,000,000 d. 1,875,000

6.On January 1, 2007, UM Company purchased for P6,000,000 a machine with a useful life of 5 years and residual value of P600,000. The machine was depreciated by double declining balance method and the accumulated depreciation of the machine was P 3, 840,000 on December 31, 2008. UM changed to the straight line method on January 1, 2009 and the residual value did not change. In its 2009 income statement, what amount should morena report as depreciation for this machine? a.720,000 c. 432,000 b.520,000 d. 312,000 7.On January 1, 2009, Kelly Company sold equipment with a carrying amount of P 7,000,000 in exchange for P 9,000,000 non-interest bearing note due January 1, 2012. There was no established exchange price for the equipment. The prevailing interest rate for this note on January 1, 2009 was 10%. The present value of 1 at 10% for three periods is 0.75. 1.In its 2009 income statement, what amount should be reported as gain or loss on sale of equipment? a. 2,000,000 gain c.250,000 gain b. 2,250,000 gain d. 250,000 loss 2. In the 2010 income statement, what amount should be reported as interest income? a. 675,000 c. 832,500 b. 742,500 d. 900,000

8. Samriah factored 5,000,0000 of accounts receivable to a finance company on July 1, 2009. Control was surrendered by Samriah. The Finance Company7 assessed a fee of 5% and retains a holdback equal to 10% of the accounts receivable. In addition, the finance company charged 12% computed on weighted average time to maturity of the receivables of 30 days. 1. Samriah Company will receive and record cash of a.4,250,000 c.4700,685 b.4,200,000 d.4,200,685 2. Asuming all receivables are collected, Samriah Companys cost of factoring the receivables would be a.250,000 c.49,315 b.299,315 d.0 8.MJ Company signed a 12 year lease for a building. MJ has an option to renew the lease for an additional 6-year period on or before January 1, 2011. During January 2009, MJ made substantial improvements to the buiding. The cost of the improvements was P 4,500,000 with an estimated useful life of 10 years. At December 31, 2009, MJ intended to exercise the renewal option. MJ has taken a full years depreciation on this improvement. On December 31,2009, The carrying amount of this leasehold improvement should be a. 4,500,000 c.4,200,000 b. 4,050,000 d.4,000,000