1. On January 1, 2004, Loyal Company purchased an equipment for P8, 000,000.

The
equipment is depreciated using straight line method based on a useful life of 8 years with
no residual value. On January 1, 2007, after 3 years, the equipment was revalued at a
replacement cost of 12,000,000 with no change in residual value. On June 30, 2007, the
equipment was sold for 10,000,000. What is the effect of the June 30, 2007 transaction to
the retained earnings?
                a.2, 500,000 increase                                                      c. 5,000,000 increase
                b.3,250,000 increase                                                       d. 5,750,000 increase

2. A natural resources property was purchased by Nge Wang Company for 6,000,000. The
output was estimated to be 1,500,000 tons. Nge Wang Company purchased a mining
equipment at a cost of 8,000,000 and has a useful life of 10 years but is capable of
exhausting the resource in8 years. Production is as follows:
                1st Year                                                           150,000 tons
                2nd Year                                                       225,000 tons
rd
                3 Year                                                            None
                4th Year                                                           225,000 tons
What is the carrying amount of the mining equipment at the end of four years?
a.       4,800,000                                                                     c. 4,200,000
b.      4,000,000                                                                     d. 4,500,000

3. Danhag Company has determined its 2008 Net Income is P3,000,000.In the first –time audit
of company financial statements, you determined he following errors:
                P400, 000 revenue received in advanced during 2008was credited to revenue
account.P100, 000 was earned in 2008, P200,00 will be earned in 2009 and the remainder
will be earned in 2010.
                A P150, 000 was recognized as a loss resulting from a change in inventory valuation
method during 2008.
What will be the adjusted Net Income during 2008?
                a.2, 800,000                                                                        c..2, 850,000
                b.3,150,000                                                                         d.2,600,000

 
4. Lathan Company was organized on January 1,2006 with the following capital structures:
                12%Cumulative preference share,P100 par ,with liquidation value of P120,50,000
shares authorized, issued and outstanding 20,000 shares,P2,500,000.
                Ordinary Share Capital, par value P50, authorized 80,000 shares, issued and
outstanding 20,000 shares, P1, 200,000.
The net income for the years December 31, 2006 and December 31, 2007 were P2, 000,000 and
3,000,000, respectively. No dividends were declared. What is the December 31, 2008 book
value per ordinary share?
                a.256                                                                                     c.260
                c.291                                                                                      d.285

 
5. Meninqiuz Company provided the following information for the 2008:
Total Assets at December 31                                                       4,500,000
Share Capital at December 31                                                     2,000,000
Share Premium at December 31                                                   200,000
Treasury Stock (at cost)                                                                300,000
The debt-to-equity ratio is 25% at December 3, 2008. What is the retained earnings
unappropriated on December 31, 2008?
                a.1, 400,000                                                                        c.2, 300,000
                b.1, 100,000                                                                        d.1, 700,000