1.

Your answer

2. What is the gain or loss on exchange to be recorded by Zambia Company?

Your answer

3.

Your answer

4. In the books of Senegal Company, what is the gain or loss on exchange?

Your answer

5. Sierra Leone Company will debit Equipment at what amount?

Your answer

6. In the books of Sierra Leone Company, what is the gain or loss on exchange?

Your answer

7.

Your answer

8. What is the gain or loss on exchange?

Your answer

9.
Your answer

10. What is the gain or loss on exchange?

Your answer

11. Assuming the fair value of asset given is unknown and the trade in value approach is used. What
amount is debited to Equipment?

Your answer

12. Refer to number 11. What is the gain or loss on exchange?

Your answer

13.

Your answer

14. What is the gain or loss on exchange?

Your answer

15.
Your answer

16. What is the gain or loss on exchange?

Your answer

17. An equipment is purchased by Scorpio Company for P448,000 invoice price (VAT INCLUSIVE), terms
2/15, n/30. Payment was made on the 20th day after the invoice date. What is the cost of the
equipment?

Your answer

18.

Your answer
19. S Company paid P500,000 and gave a plot of undeveloped land with carrying amount of P3,200,000
and a fair value of P4,500,000 to another entity in exchange for a plot of undeveloped land with a fair
value of P5,000,000. The land was carried on the entity’s books at P3,500,000. The configuration of cash
flows from the land acquired is expected to be significantly different from the configuration of cash
flows of the land exchanged. What amount should be recognized as carrying amount of land received in
exchange by S company?

Your answer

20. During the current year, K Company acquired a new equipment in exchange for an old equipment
acquired years ago. The old equipment was purchased for P700,000 and had a carrying amount of
P260,000.On the date of exchange, the old equipment had a fair value of P280,000, in addition, the
entity paid P910,000 cash for the new equipment which had a list price of P1,260,000. The exchange
lacks commercial substance. At what amount should the new equipment be initially recorded?

Your answer

21. At the beginning of current year, S Company traded a delivery truck and paid P200,000 cash for a
tow truck owned by another entity. The delivery truck had an original cost of P2,800,000, accumulated
depreciation of P1,600,000 and an estimated fair value of P1,800,000. The entity estimated the fair
value of the tow truck received to be P2,000,000. The transaction had commercial substance.What
amount of gain or loss should be recognized by S Company?

Your answer

22.

Your answer

23. Albania Company purchased for P5,400,000 including appraiser’s fee of P50,000, a building and the
land on which it is located. The current appraised value is P2,000,000 for the land and P3,000,000 for
the building. The seller’s original cost is P1,400,000 for the land and P2,800,000 for the building. What is
the initial measurement of the land?

Your answer

24. At the beginning of current year, B Company purchased a new machine on deferred payment basis.
A down payment of P100,000 was made and 4 monthly instalments of P250,000 each are to be made.
The cash equivalent price of the machine was P950,000. The entity incurred and paid installation costs
amounting to P30,000. What amount should be capitalized as cost of the machine?

Your answer

25. During the year, S Company purchased a new machine. A P120,000 down payment was made and
three monthly instalments of P360,000. The cash price would have been P1,160,000. The entity paid no
installation charges under the monthly payment plan but P20,000 installation charge would have been
incurred with a cash purchase. What amount should be capitalized as cost of the machine?

Your answer

26.

Your answer

27. C Company purchased equipment by making a down payment of P400,000 and issuing a note
payable for P1,800,000. A payment of P600,000 is to be made at the end of each year for three years.
The applicable rate of interest is 8%. Shipping charge for the equipment of P200,000 and installation
cost of P350,000 were incurred. What is the capitalized cost of equipment?

Your answer

28. C Company buys a van with a list prices of P3,000,000. The dealer grants a 15% reduction in list
prices and an additional 2% cash discount on the net prices if payment is made in 30 days. Irrecoverable
taxes amount to P40,000 and the entity paid an extra P30,000 to have special horn installed. What
amount should be recorded as initial cost of the van?

Your answer

29.

Your answer

30. At the end of the current year, what is the total carrying amount of note payable?

Your answer

31. At the beginning of the current year, A Company purchased a new machine on a deferred payment
basis.A down payment of P200,000 was made and four annual instalments of P600,000 each are to be
made every year-end. The cash equivalent price of the machine was 2,300,000. Due to an employee
strike, the entity could not install the machine immediately and thus incurred P30,000 of storage cost.
Cost of installation excluding the storage cost amounted to P80,000. What is the initial amount to be
capitalized as the cost of the new machine?

Your answer

32. D Company acquired several fixtures for a new building, including display cases, shelves and hanging
racks. The invoice price of the fixtures was P700,000. The entity received a 2% cash discount by paying
within the discount period. Freight and insurance during shipment totaled P3,000. Costs of assembling
and installing fixtures were P5,000. While installing a display case, a new employee carelessly broke a
glass top. This top was replaced at a cost of P2,000. What total amount should be recorded as cost of
the fixtures?

Your answer

33. At the beginning of current year, F Company issued 100,000 treasury shares with P25 par value for a
parcel of land to be held as an investment property. The treasury shares were previously acquired at a
cost of P30 per share. On the date of acquisition, the share had a fair value of P40. The entity received
P50,000 from the sale of scrap when an existing unusable structure on the site was immediately razed.
What is the initial measurement of the land held as investment property?

Your answer

34.

Your answer

35. What is the cost of the land?

Your answer

36. What is the cost of machinery?

Your answer
37. At the beginning of the current year, H Company exchanged an old packaging machine, which cost
P1,200,000 and was 50% depreciated, for a used machine and paid a cash difference of P160,000. The
fair value of the old packaging machine was determined to be P700,000. What is the cost of the new
asset acquired?

Your answer

38. At the beginning of the current year, I Company exchanged an old machine, with carrying amount of
P390,000 and a fair value of P350,000, and paid P100,000 cash for another used machine having a list
price of P500,000. At what amount should be the machine acquired in the exchange be recorded?

Your answer

39. At the beginning of the current year, J Company traded in an old machine having a carrying amount
of P1,680,000 and paid a cash difference of P600,000 for a new machine having a cash price of
P2,050,000.What amount of gain or loss should be recognized on the exchange?

Your answer

40. During the current year, L Company paid a P400,000 and exchanged inventory which has a carrying
amount of P2,000,000 and a fair value of P2,100,000 for other inventory in the same line of business
with fair value of P2,500,000. What is the initial measurement of the new inventory received in
exchange?

Your answer

41.
Your answer

42.

a. II and III

b. III only

c. III and IV

d. I and IV

e. None

43.

a. I only

b. I and II

c. I and III

d. II and III

e. III and IV

f. III only

g. None
44. Which of the following is incorrect?

a. An entity shall not classify as held for sale a noncurrent asset that is to be abandoned.

b. Temporary idle activity or abandonment does not preclude depreciating the asset since future
benefits are consumed not only through usage, but also through wear and tear, and obsolescence.

c. Noncurrent asset to be abandoned includes an item of PPE that is to be used until the end of the
economic life.

d. A noncurrent asset that is to be abandoned shall not be classified as held for sale because the carrying
amount would be recovered principally through continuing use.

e. Incidental or intervening operations (which occur before or during the construction or development
activities) are necessary to bring a PPE item to the location and condition for the intended use.

45.

Your answer

46.

Your answer
47.

Your answer

48.

Your answer

49.

Your answer
50.

Your answer

51.

Your answer

52. Assume that there is NO KNOWN CASH PRICE for the machine. The rate of interest prevailing at that
time for similar obligations is 12%. What is the cost of the machine?

Your answer

53.
a. Only Statement 1 is correct.

b. Only Statement 2 is correct.

c. Both statements are correct.

d. Both statements are incorrect.

54.

Your answer
55.

Your answer

56.
Your answer

57.

Your answer

58.
Your answer

59.

Your answer

60.
Your answer

61.
Your answer

62.

Your answer

63.
Your answer

64.

Your answer
65.

Your answer

66. T Company replaced a portion of a building for P2,500,000. Prior to replacement, the building and
accumulated depreciation accounts were : building P9,000,000 (life 25 years), accumulated depreciation
P1,800,000 (age 5 years). Separate identification of the replaced part is not practicable. The appropriate
discount rate is 5%. What is the subsequent annual depreciation?

Your answer

67. S Company replaced a portion of a building for P2,500,000. Before the replacement, the building and
accumulated depreciation accounts were : Building P9,000,000 (life 25 years), Accumulated depreciation
P1,800,000 (age 5 years). The portion of the building replaced had an original cost of P2,000,000. What
is the carrying amount of the building after recording the subsequent annual depreciation?

Your answer

68.
Your answer

69.

Your answer

70.
Your answer

71.

Your answer

72.
Your answer

73.

Your answer

74.
Your answer

75. Which of the following would ordinarily be treated as a revenue expenditure rather than a capital
expenditure?

a. Cost of servicing and overhaul to restore or maintain the originally assessed standard of performance

b. The replacement of a major component of building

c. An addition to an existing building

d. Cost of improvement that is expected to provide discernible future benefit.