19. Capiz Company has the following information on January 1, 2008 relating to its land and building.

Land 50,000,000
Building 450,000,000
Accumulated depreciation — Building 75,000,000
There were no additions and disposals during 2008. Depreciation is computed using straight line over 15 years for building. On
June 30,2008, the land and building were revalued as follows:
Replacement Cost Sound Value
Land 65,000,000 65,000,000
Building 600,000,000 480,000,000
What is the revaluation surplus on June 30, 2008?
a. 120,000,000 b. 125,000,000 c.135,000,000 d.160,000,000

20. Tatjana Company was granted a patent On January 1, 2005 and appropriately capitalized P4,500,000 of related costs. The
patents estimated useful life was 15 years. During 2009, Tatjana paid P300,000 legal costs in successfully defending an attempted
infringement of the patent. After the legal action was completed, Tatjana sold the patent to the plaintiff for P5,000,000. The sale
was completed on December 31, 2009. Tatjana took a full year’s amortization in 2009. In its 2009 statement of comprehensive
income, what amount should Tatjana report as gain from the sale of the patent?
a. 1,500,000 b. 1,700,000 c. 1,800,000 d. 2,000,000

21. Gisela’s Hear it and Scene It Shop sells a variety of DVD collectibles. Gisela uses premiums as a promotional technique to
sell its merchandise. Customer receive a coupon for each P100 spent on a DVD and may exchange 20 coupons plus P500 for a
DVD with the “director’s commentary”. Gisela pays P800 for each premium and estimates that 60% of the coupons issued to
customers will be redeemed. Gisela’ total sales for 2009 was P25,000,000. A total of 4,000 premiums were purchased during the
year and there were 70,000 coupons redeemed as of December 31, 2009. The balance in the estimate liability for coupons on
January 1, 2009 was P150,000. What is the estimated liability for coupons on December 31, 2009?
a. 1,050,000 b. 1,350,000 c. 1,600,000 d. 1,200,000

22. Due to extreme financial difficulties, Gemalyn Company has negotiated a restructuring of its 10%, P5,000,000 note payable
due on December 31, .2010. The unpaid interest on the note on such date is P500,000. The creditor has agreed to reduce the face
value to P4,000,000, forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from
December 31, 2010. The present value of 1 to 10% for three periods is 0.75 and the present value of an ordinary annuity of 1 at
10% for three periods is 2.49.
What is the gain on extinguishment of debt to be recognized by Gernalyn Company on December 31, 2010?