* Happy Department Store uses the retail inventory method to approximate the lower of cost or market.

The followi

Cost of goods available for sale

net markups (excluded from goods available for sale)
TGAS
Net markdowns (excluded from goods available for sale)
Sales
Ending inventory at retail
Ending inventory at cost

What was the appropriate inventory at the lower of average cost or minute at August 31

An entity cultivates cattle as livestock for meat and sells the cattle to slaughterhouses. On December 31, 2020 the f
costs of sale of P1,500 per heifer. The fair value less costs to sell of the herd on December 31, 2021 is P750,000.

The net amount to be recognized in 2021 profit or loss related to these biological assets is?
Dec. 31, 2021 FV
Dec. 31, 2020 FV

2021 Calves
Ten Heifers Sale price
Cost to sell
FV less cost to sell
Ten Heifers

*
The Night Company imported an equipment at a peso equivalent to P330,000. The company has to pay additional c
intended use include P2,000 transportation cost, P3,000 installation and P1,000 testing and trial run costs.

Equipment
Import duties
Non-refundable taxes
Transport cost
Installation
Testing

*
M Company borrowed P3,000,000 on a 10% note payable to finance a new warehouse which the entity is construc
accumlated expenditures on the new warehouse totaled P4,750,000. What amount of interest should be capitalize
 M Company borrowed P3,000,000 on a 10% note payable to finance a new warehouse which the entity is construc
accumlated expenditures on the new warehouse totaled P4,750,000. What amount of interest should be capitalize
Average expenditures
Less: Specific borrowing
General borrowing
Interest - Gen. borrowing
Interest - specific borrowing

On January 1, 2021, G Company contracted with a contractor to construct a building for P20,000,000. G Company i
The entity made the following payment during 2021:

Jan. 1
Mar. 31
June. 30
Sept. 30
Dec. 31
Average Expenditures
Less: Specific borrowing
General borrowing
Interest - general
Interest - specific
Capitalized

The entity had the following debt outstanding on Dec. 31, 2021:
a. 12% 4-year note dated Jan. 1, 2021, both principal and interest due Dec. 31,
2024, relating specifically to the building project
b. 10% 10 year note dated Dec. 31, 2020 with simple interest and interest
payable annualy on Dec. 31
c. 12% 5-year note dated Dec. 31, 2020 with simple interest and interest
payable annualy on Dec. 31

What total amount of interest should be capitalized as cost of the building on Dec. 31, 2021? (Round two decima

*
B Company exchanged a delivery truck costing P1,000,000 for a parcel of land. The truck had a carrying amount of
The entity gave P600,000 in cash in additionto the truck as part of this transaction. It is expected that the cash flow
different. The previous owner of the land had listed the land for sale at P1,200,000. At what amount should B Comp
 B Company exchanged a delivery truck costing P1,000,000 for a parcel of land. The truck had a carrying amount of
The entity gave P600,000 in cash in additionto the truck as part of this transaction. It is expected that the cash flow
different. The previous owner of the land had listed the land for sale at P1,200,000. At what amount should B Comp
FV of asset given
Cash
Land Cost

* Presented below is the information related to Carny, Incorporated:

Beg. Inventory
Purchases
Purchase returns
Purchase discounts
Freight-in
Mark-ups
Mark-up cancellation
TGAS
Markdowns
Markdown cancellations
Employee discounts granted
Loss from breakage
Sales (net of employee discounts)
Sales return
Ending inventory at retail
Ending inventory at cost
Assuming Carny, Inc. uses the conventional retail inventory method, how much is the ending inventory?

* Sultan Co. uses retail inventory method to estimate its inventory for interim statement puposes. The following data

Beg. Inventory
Net purchases
Net mark-ups
Net markdowns
TGAS
Sales
Sales return
Employee discount
Normal shortage
Ending inventory at retail
Ending inventory at cost
 Sales discount

Estimated cost of ending inventory using average approach is?

*
Night Company bought a new machine and agreed to pay for it in equal annual installment of P500,000 at the end
periods is 0.5
Annual installment
PV of ordinary annuity

* Wishful inventory shows the following information at Dec. 31, 2020

Beg. Inventory:
Cost
Retail
Purchases:
Cost
Retail
Freight-in
Mark-up
Mark-up cancellation
TGAS
Mark down
Mark down cancellation
Sales
Estimated normal shrinkage
Ending inventory at retail

Wishful uses the retail inventory method of valuing its inventory. How much is the estimated ending cost of inve

In 2018, a farmer purchased a mango plantation at P100,000, which approximates its fair value less costs to sell at
not improved, but the trees has mangoes on it worth P42,500. On June 30, 2020, the farmer harvests, at a cost of P
the trees (e.g., fertilizer, water, etc.) amounting to P7,500, P5,000 and P2,500 in the years 2018, 2019 and 2020, re

The carrying amount of the biological assets as of December 31, 2019 is?
 In 2018, a farmer purchased a mango plantation at P100,000, which approximates its fair value less costs to sell at
not improved, but the trees has mangoes on it worth P42,500. On June 30, 2020, the farmer harvests, at a cost of P
the trees (e.g., fertilizer, water, etc.) amounting to P7,500, P5,000 and P2,500 in the years 2018, 2019 and 2020, re

The carrying amount of the biological assets as of December 31, 2019 is?

Dec. 31, 2018 FV less cost to sell

Trees with mangos

* Light Company has recently purchased a computer system for its office. The following information were gathered in
List price
Trade discount and rebates taken
Installation and assembly cost
Initial delivery and handling cost
Purchase discount
What is the acquisition cost of the new computer?

On Aug. 1, 2020, F Corporation purchased a new machine on a deferred basis. A down payment of P200,000 was m
same type of assets are being traded. Due to an employee strike, F Corporation could not install the machine imme
P2,300,000. How much should be capitalized as cost of the machine?
Cash price

*
On March 31, 2020, Mr. Right Enterprises trade in an old machine having a carrying amount of P1,600,000 and a ca
recognize on this exchange?
Carrying amount
Cash payment
Total value
Cash price of new machine
Loss

* The Boy department store uses a calendar year and FIFO retail inventory method. Information realting to the comp

Beg. Inventory
Purchases
Freight-in
Net mark-ups
Net markdowns
TGAS
Sales
Sales return
Ending inventory at retail
 Freight-out
Sales allowance

What is the ending inventory at cost at Dec. 31?

* J Company acquired a delivery truck and made payment of P2,870,000. The cost of the truck traded was P1,500,00

Price of truck
Charge for extra equipment
Value added tax - recoverable
Insurance for one year
Motor vehicle registration
Total
Trade in value of old truck
Cash paid

Capitalizable
Trade in value of old truck
Capitalizable payment
FV of old truck

What amount should be recorded as cost of the new truck acquired in the exchange?

* C Company exchanged a car from inventory for a computer to be used as along-term asset. The following informati

Carrying amount of the car

List selling price of the car
Fair value of the computer
Cash difference paid by C Company
Capitalizable

a. What amount of gain should be recognized on the exchange?

 b. What amount should be reocrded as cost of the computer acquired in exchange?

*
In October 2020, S Company exchanged a used packaging machine having a book value of P240,000 for a new mach

a. In its income statement for the year ended Dec. 31, 2020, how much gain should S recognize on this exchange,
exchange has commercial substance?

b. On the date exchange, what amount should S company recognize as the cost of the asset received, assuming th
considered with commercial substance?

* M Company had the following outstanding loans during 2021 and 2022.
Specific construction loand
General loan

The entity began the self-construction of a new building on January 1, 2021 and the building was completed on Jun
The following expenditures were made in 2021 and 2022:
Jan. 1, 2021
Apr. 1, 2021
Dec. 1, 2021
Mar. 1, 2022

a. What amount should be reported as cost of the new building on Dec. 31, 2021?
b. What amount should be reported as cost of the new building on June 30, 2022?
c. What amount should be reported as interest for 2022?
 ANSWERS

e lower of cost or market. The following information pertains to the month of August:
Cost Retail
720,000 900,000
100,000
720,000 1,000,000 72.00%
-40,000
-680,000
280,000
201,600.00

at August 31

rhouses. On December 31, 2020 the fair value less costs to sell of the entity's livestock is P500,000. In 2021 five calves were born and the e
n December 31, 2021 is P750,000.

ical assets is?

750,000
-500,000
250,000

15,000
-1,500
13,500
10 135,000.00 385,000

. The company has to pay additional cost of importing the asset such as P10,000 import duties and P15,000 non-refundable purchase taxe
00 testing and trial run costs.

330,000
10,000
15,000
2,000
3,000
1,000 361,000

arehouse which the entity is constructing for own use. The only other debt of the entity is a P6,000,000, 12% mortgage payable on an offic
mount of interest should be capitalized?
 4,750,000
-3,000,000
1,750,000
210,000
300,000.00 510,000

uilding for P20,000,000. G Company is required to make five payments in 2021 with the last payment scheduled on the date of completion

Months outstanding
2,000,000 1.00 2,000,000.00
4,000,000 0.75 3,000,000.00
6,100,000 0.50 3,050,000.00
4,400,000 0.25 1,100,000.00
3,500,000 - -
9,150,000.00
(8,500,000.00)
650,000.00
71,500.00
1,020,000.00
1,091,500.00 For manual checking - due to error encoded formula
1,092,020
Interest

8,500,000 1,020,000.00

6,000,000 600,000.00

7,000,000 840,000.00
13,000,000 1,440,000 0.110769230769
11.00%

n Dec. 31, 2021? (Round two decimal places)

. The truck had a carrying amount of P650,000 and a fair value P500,000.
tion. It is expected that the cash flows from the assets will be significantly
0,000. At what amount should B Company record the land?
 500,000.00
600,000.00
1,100,000.00

Cost Retall
250,000 390,000
914,500 1,460,000
-60,000 -80,000
-18,000
79,000
120,000
-40,000
1,165,500 1,850,000 0.63
-45,000
20,000
-8,000
-2,500
-1,260,000
97,500
652,000
410,760.00
ch is the ending inventory?

tatement puposes. The following data were provided to you:

Cost Retall
820,000 1,262,800
2,280,000 3,607,200
450,000
-320,000
3,100,000 5,000,000 0.62
-4,350,000
300,000
-100,000
-50,000
800,000
496000
 80,000

al installment of P500,000 at the end of the next five years. Assume that the presume value of a prevailing interest at 15% for five periods

500,000
3.35
1,675,000.00

COST RETAIL
560,000 560,000
1,400,000 1,400,000

4,960,000 4,960,000
10,320,000 10,320,000
150,000 150,000
1,000,000 1,000,000
120,000 -120,000
45.00% 5,670,000 12,600,000
500,000 -500,000
100,000 100,000
10,000,000 -10,000,000
2.5% Sales -250000
1,950,000

is the estimated ending cost of inventory? 877,500.00

ates its fair value less costs to sell at that time. On December 31, 2018, the plantation is valued at P182,500 (fair value less costs to sell). O
20, the farmer harvests, at a cost of P1,500, the mangoes, at which stage the mangoes are valued P57,500 (fair value less costs to sell). Th
in the years 2018, 2019 and 2020, respectively. On December 31, 2020, the farmer also incurs P20,000 direct costs in processing the mang
 182,500.00
42,500.00 225,000.00

ollowing information were gathered in relation to the acquisition of the unit:

152,000
56,000 96,000
3,200 3,200
6,400 6,400
2% -1920
103,680

A down payment of P200,000 was made and 4 annual installment of P600,000 each are to be made beginning on Sept. 1, 2020. Terms of
n could not install the machine immediately, thus, incurred P3,000 of storage costs. Cost of installation (excluding the storage costs) amou

2,320,000

rrying amount of P1,600,000 and a cash difference of P600,000 for a new amchine having a total cash price of P2,000,000. On March 31, 2

1,600,000.00
600,000
2,200,000
-2,000,000
200,000

hod. Information realting to the computation of the inventory at Dec. 31 are as follows:

Cost Retall
320,000 800,000
2,100,000 6,000,000
70,000
400,000
-200,000
2,170,000 6,200,000 35.00%
-5,850,000
50,000
1,200,000
 50,000
30,000

420,000

ost of the truck traded was P1,500,000 with carrying amount of P400,000 and fair value P350,000

2,500,000 2,500,000
150,000 150,000
300,000
100,000
20,000
3,070,000
-200,000
2,870,000

2,650,000
-200,000
2,450,000
350,000 2,800,000

g-term asset. The following information relates to this exchange:

600,000 600,000
900,000
860,000
100,000 100,000
700,000

160,000
 FV of computer 860,000

ook value of P240,000 for a new machine and paid a cash difference of P30,000. The market value of the used packaging machine was det

should S recognize on this exchange, assuming the 40,000

ost of the asset received, assuming the exchange is

280,000
30,000 310,000

3,000,000 10% 300,000.00 Jan. 1, 2021

25,000,000 12% 3,000,000.00 Apr. 1, 2021
oCT. 1, 2021
nd the building was completed on June 30, 2022. Mar. 1, 2022

Jan. 1, 2021 4,000,000 Specific loan

Apr. 1, 2021 5,000,000 General
Dec. 1, 2021 3,000,000 Interest - general
Mar. 1, 2022 6,000,000 Interest - specific
Expenditures - 2021
Cost of new building, Dec. 31, 2021
2022 - cost
Total expenditures as of 2022
Interest - general
Interest - specific
Cost of new building, June 30, 2022

Total interest
Capitalized
Interest Expense
021 five calves were born and the entity sold ten heifers for P15,000 each, incurring

000 non-refundable purchase taxes. Costs of bringing and preparing the asset for its

12% mortgage payable on an office building. At the end of the current year, average
heduled on the date of completion. The building was completed on Dec. 31, 2021

to error encoded formula

Erroneous error in canvas
ng interest at 15% for five periods is 3.35. The present value of 1 at 15% for five

500 (fair value less costs to sell). On December 31, 2019, the value of the trees has
00 (fair value less costs to sell). The farmer incurred costs of growing and cultivating
direct costs in processing the mangoes into delicacies ready for sale to its customers.
ginning on Sept. 1, 2020. Terms of contract is not normal in the industry where the
(excluding the storage costs) amounted to P20,000. The cash price of the machine

ice of P2,000,000. On March 31, 2020, what amount of gain or loss should Mr. Right
e used packaging machine was determined to be P280,000.

machine 310
asset -240
cash -30
40

Average Expenditure - 2021

4000 4000
5000 3750
2000 500

11000 8250
-3,000
5,250
630.00
300
11,000 Average Expenditure -2022
A 11,930.00 11,930.00
6,000 4,000
17,930.00 15,930.00
150 -3,000
775.8 12,930.00
B 18,855.80

3,300
-925.8
C 2,374