PAS 37

1. True or False: An outflow of resources is regarded as probable if the event is more likely
than not to occur, meaning, the probability that the event will occur is greater than the
probability that it will not occur.
Answer: True, probable means more than 50% likely to occur.

2.Which of the following does define the word “provision”

a. A deferred liability
b. A liability of uncertain something or amount
c. A contingent liability
d. A contingent asset
Answer: B. A liability of uncertain something or amount

3.Fill in the blanks; Multiple Choice

An onerous contract is a contract in which __________ of meeting the obligations under the
contract __________ the economic benefits expected to be received under it.
a. Sunk cost; exceed
b. Avoidable costs; less than
c. Opportunity costs; exceed
d. Unavoidable costs; exceed
Answer: D. Unavoidable costs; exceed

4. 1. A contingent asset should be disclosed by note if an inflow of economic benefits is

possible.
2. No disclosure of a contingent liability is required if the possibility of a transfer of
economic benefits arising is remote.
3. Contingent assets must not be recognised in financial statements unless an inflow
of economic benefits is virtually certain to arise.
a. All three statements are correct
b. 1 and 3 only
c. 2 and 3 only
d. None of the above.

Answer: C, because it (statement 1) must be disclosed by note if an inflow of economic benefit

is probable.

5.Describe the PAS 37

Answer: PRESCRIBES THE ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR
PROVISIONS,CONTINGENT LIABILITIES AND CONTINGENT ASSETS TO HELP USERS
UNDERSTAND THEIR NATURE, TIMING AND AMOUNT

6.True or False. The amount recognized as provision should be the best estimate of
expenditure.
Answer: True because provisions are measured at best estimate.
PAS 38

1.According to PAS 38, intangible assets are measured as follows:

Initial Measurement Subsequent Measurement

a. cost fair value
b. cost cost model or revaluation model
c. cost cost model or fair value
d. fair value cost model or revaluation model

2. Describe Intangible assets under PAS 38

Answer: Identifiable non-monetary assets without physical substance.

3. what are the essential elements of an Intangible Assets.

Answer: Identifiability, Control, and Future economic benefits.

4. In presenting the intangible assets in financial statements, is it separated from goodwill or

not? And how it is written and presented in financial position?
Answer: It is presented separate from goodwill and it is aggregated and presented
as one line item under the heading “Intangible Assets” or “other intangible assets” in
financial position.

5. On January 1, 2022, Scarlet registered a patent for a total registration and legal cost of
P800,000. Scarlet estimates that the patent has a remaining useful life of 25 years. How much
will be the carrying amount of the patent in December 31, 2024?
Cost 800,000
Residual amount 0
Depreciable Amount 800,000
Divide: Useful life 25
Annual Amortization Expense 32,000

COST 800,000
LESS: Accumulated Amortization(32,000x3 years) (96,000)
Carrying Amount – 12-31-2024 704,000
PAS 40 INVESTMENT PROPERTY

1. True or False. Investment Property includes land, building, inventory and equipment.
False, kasi land and building lang ang included sa PAS 40. (Pwede mo pa i-elaborate)

2. True or False. Owner-occupied property is considered as an Investment Property.

False, kasi ang Investment Property ay held for rentals and capital appreciation lang.

3. What if the property is partly held to earn rentals or for capital appreciation and partly
owner-occupied?
Una muna, identify muna natin if the property can sold separately or not. Then,
kapag ang property ay pwede ibenta separately, the property is accounted for separately
by portion. Kapag hindi pwede separately, iidentify naman naman natin if significant or
insignificant ang portion na held for owner-occupied. Pag significant, PPE ang entire
property. Kapag insignificant, Invest Property ang entire property. (HABA NIYAN AH
BONGGA YAN HAHAHHAHAHAA)

4. Compute for the amount of the Investment Property:

Land held for long-term capital appreciation 1 000 000
Land held for currently undetermined future use 700 000
Land held for future plant site 600 000
Land held for sale in ordinary use of business 500 000

Land held for long-term capital appreciation 1 000 000

Land held for currently undetermined future use 700 000
Total Investment Property 1 700 000

5. Give at least two General Disclosures that the entity do for Investment Property
• Whether an entity uses the fair value model or the cost model.
• The extent to which the fair value of investment property is based on a
valuation by an independent valuer
• amount recognized in profit or loss for rent income and related expenses
• Existence and amounts of restrictions on investment property.
• Contractual obligations to purchase, constructor, develop investment
property or for repairs, maintenance or enhancements
(PILI KA DIYAN PERO UM-ACTING siZ AAAHH HAHAHAHHAHAHAA)

6. Fill in the blanks. Gains or losses arising from changes in fair value are recognized in
_____ or ______.
Profit, Loss
PAS 41 – AGRICULTURE

1. According to PAS 41, biological assets are measured at?

• Biological assets are initially and subsequently measured at fair value less cost
to sell.

2. Which of the following is outside of the scope of PAS 41?

a. Dairy cattle used in the production of milk
b. Chickens used in the production of meat
c. Rice plants and other crops that produce only once
d. Mango trees and other plants that produce agricultural products repeatedly
over a long period of time

3. Reyes company provided the following assets in a forest plantation and farm.
Freestanding Trees P5,000,000 Value of Trees
Land under trees 600,000 PPE
Roads in forests 300,000 PPE
Animal related for recreational activities 1,000,000 PPE
Bearer plants 1,500,000 PPE
Bearer animals 2,000,000 Bearer Biological Assets

What is the total amount of the assets should be classified as biological assets?
Freestanding Trees P5,000,000
Bearer animals 2,000,000
Biological Assets P7,000,000

4. Agricultural activity includes all of the following, except

A. Raising livestock
B. Perennial cropping
C. Aquaculture
D. Ocean fishing

5. A gain or loss arising on the initial recognition of a biological asset and from a change in fair
value less cost of disposal of a biological asset shall be included in Profit or loss for the period.

6. According to PAS 41, bearer plants which are used solely to grow produce over several
periods should be accounted for as and explain why.
• Property, plant and equipment, because the bearer plants are expected to
bear produce for more than one period and only the agricultural produce of the bearer plants
are accounted in PAS 41.

7. Animals related to recreational activities, for example, game parks and zoos, including the
natural breeding of animals in zoos, shall be accounted for under what standards?
• IAS 16- Property, plant and equipment. Not part of PAS 41 because it is not
related to agricultural activities, just for recreational activities.
PFRS 1

1. Define first-time adopter.

Answer: The entity that used or adopt PFRSs for the first time.

2. What is first PFRS financial statements?

Answer: It is the first annual financial statements in which an entity adopts PFRSs,
by an explicit and unreserved statement of compliance with PFRSs.

3. Give two considerations of first PFRS Financial Statements.

Answer: (Choose 2)
• It is not consistent on PFRS and is accordance to other reporting standards
•Did not contain an explicit and unreserved statement of compliance with PFRS; or
•Contain an explicit and unreserved statement of compliance with some but not all
PFRSs; or
•Use some but not all applicable PFRS; or
•Prepared in accordance with PFRS but were used for internal reporting purposes
only; or
•Did not contain a complete set of financial statements as required under PAS 1
Preparation of Financial Statements.
•The entity did not present financial statements in previous periods.

4. When does PFRS 1 requires an entity to prepare and present an opening PFRS statement
of financial position?
Answer: at the date of transition to PFRSs.

5. The accounting policies will be chosen by the entity based on the ____ of PFRS.
Answer: latest version

6. What are the other exceptions to PFRS 1? Give 3 examples.

Answers:
•Derecognition of financial instruments.
•Hedge Accounting
•Business Combinations
•Fair value or revaluation amount as deemed cost.
•Cumulative translation differences.
•Compound financial instruments.

7. AMQ Company uses a calendar year accounting period. In 2021, the entity decides to adopt
the PFRSs for the first time. AMQ Company reports one year comparative information. What
is the date of transition to PFRSs?
Answer: January 1, 2020 because it is the beginning of the earliest period for which
the entity presents full comparative financial information under PFRSs.