| cea Review schoo: oF Tue rsaLirPINEs Manila FINANCIAL ACCOUNTING ANDREPORTING — VALISIV/VALDUESCALA/SANTOS/DELA CRUZ | i PROPERTY, PLANT AND EQUIPMENT 1. Anjentity had the following property acquisitions during the current year: | ro * Received land as donation ftom a major shareholder as an inducement to locate plant inthe city. No payment seas required but the entity paid PS0,000 for legal expenses for land transfer. ‘he lands faily valued at P1,000,000. + Acquired land and building in exchange for 20,000 ordinary shares with P100 par value and quoted price of P1S0. The land had a fair value of P2,000,000 but the fair value of the building ‘cannot be rlinbly measured, | * Purchased warehouse building and the land on which it is located for P6,000,000 including appmiser fee of P200,000. The land had an appraised value 2,000,000 and the building 3,000,000. 1. Whats the total eost of land? 5,400,000 b. 5,320,000 5,380,000 4. 5,000,000 2. What isthe total cost of building? a $,980,000 ». 6,100,000, ©. 5,500,000, 4. 4,000,000; 2, Athena Company and Anna Company are fuel oil distributors. To facilitate the delivery of oi to ‘estomers, the two entities exchanged ownership of bares of oil without physically moving the ‘il, Athena paid Anna PI $00,000 to compensate for a difference in the grade of oi. It was reliably determined that the configuration ofthe cashflows ofthe asset received does not differ from the configuration ofthe cashflows of the aset transferred, (On the date of exchange, the oil inventory of Athena has a carying amount of P5,000,000 and fair value of P7,000,000. The ol inventory of Anna has a carrying amount of P6,000,000 and far value of P8,500,000. 1. What amount should Athena record as cost ofthe oi inventory received in exchange? & 4,500,000 . 6,500,000 -e.7/000,000 8,500,000 2. What amount should Anna record as cost of oil inventory received in exchange? 4,500,000 | 6,000,000 7,300,000 8,500,000 eeer 6672Page 2 3. An entity owns « tract of land purchased for P2,000,000 and with fair value of P2,800,000 on the date of exchange, ‘Another entity also owns a tract of land acquired for P3,600,000 and with fair value of P3,800,000 ‘onthe date of exchange, (On the date of exchange. the entity exchanged its lard and paid P1,000,000 for the land owned by the other entity ‘The contigurtion of cash flows trom the land acquired is expected to be significantly different fom the configwation of cashflows ofthe land exchanged 1. Atwhat eimount should the entity tecord the land ecquired in exchange? 2 2,800,000 '. 3,000,000 «. 3,200,000 4. 3,800,000, 2. Wheat amount of gain on exchange should be recognized by the entity? a. 800.000 b. 400,000 . 200,000 4 ° 4. Anentity nad she following machinery acquisitions during the year: * Acquired 9 machine with an invcive price of P3,000,000 subject toa cash discount of 10% which ‘Was not taken. The enlity incised cost of P50,050 ia removing the old machine prior to the insallaion ot th: new one. Machive supplies were acquired atu cost of P150,000, * During the eany purt > current yea, the entity purchased 2 machine for P500,000 down and four ‘ont instalrserts of F,250 000. The cash price ofthe machine was P4, 700,000. * Atthe beginning of cunest year, the entity purchased a mnseaine for P2,000,000 in exchange for Anoninnerest scarivy note reqtiting four payments of F£00,600, The first payment was made at the end uf current yea. ‘The implicit rate of anterest fin this note at die of issuance was 10%, The present value of an onary sonsiny of 1 ot 10h is 3.17 for four periods. The present valve ef an enmuiy of 1 ia advance at 1963.48 for fr oereds * Atthe beginning of camer. yest. the exity acquired 2 machine by issuing a four-year, rnoninterest-hearing note for P2 900,000. The entity hac ax. iriplicit 10% interest for this type of note. The present value of ¥ at 10% for 4 years is 0.68. 1. What isthe total ost of machinery sequired? & 19,503,000 b. 10345,000 ©. 16,045,000 4. 16.685,000, 2. Whet amount of interest expense should be reported for the current year as a result of machinery accuisition? a 1,094,509 b. 1110360 294300 4 800,000 6672Page 3 ‘An entity fabricated equipment fr office use during he curent year, The following data were taken fom the accounting records: Materials Direct labor Finished goods 1,000,000 1,500,000 Office equipment ‘600,000 ‘300,000 Factory overhead amounted to P1,200,000, Normal production of finished good is $0,000 units. Due to the fabrication of the office equipment, finished goods produced totaled 40,000 units only in the current year. The office equipment is to be charged with the overbead which would have been apportioned tothe 10,000 units which were not produced. ‘What isthe toa cost ofthe office equipment? 1,100,000 . 11400,000 © 1340,000 4. 2,340,000 5. An entity purchased a machine for P3,000,000 on January 1, 2019. The entity received 2 goverment grant of P$00,000 in respect ofthis asset. The policy is to depreciate the asset over S years on a straight line basis and to teat the grant as deferred income, On January 1, 2021, the ‘rant became fully repayable because of noncompliance with conditions. What is the loss on repayment of grant in 2021? 500,000 . 300,000 200,000 4. 100,000, ‘An entity purchased @ machine for P6,600,000 on January 1, 2019 and received a government grant ‘of P600,000 towards the capital cost. The policy is to teat the grant asa reduction in the cost of the asset. The machine isto be depreciated on a straight line basis over 5 years with a residual value of| 500,000. On January 1, 2021, the gran became filly repayable because of noncompliance with conditions. 1, What is the depreciation for 2021? 1,460,000 . 1,200,000 ©. 1,220,000 4. 15360,000 2. Whats the depreciation for 20227 1,100,000 1320,000, 1,200,000 1,220,000, aege . On January 1, 2019, an entity ecsved ftom the government a P5,000,000 three-year, 2r0- interest loan evidenced by a promissory note. The prevailing rate of interest for a loan of this type 4s 10% The present value of 1 at 10% i-75 fr te periods, Whats included in the joural entry to ecord the loan and grant? 4. Debit discount on note payable 1,250,000 Gre note payable PS,000,000 ¢. Credit deferred grant income P1,250,000 4. Allofthes are included in the journal eaty END 6672