MODULE 24

Name: LENI KIKO PANGILINAN Class Number: BLOCK 3

Section: BSA 1-COC Schedule: 8 AM-11 AM Date: APRIL 13, 2022

ACTIVITY 6

Pretest:6-1

1.According to PAS 16, the selection of an appropriate depreciation method rests upon the entity’s

a. Management.
b. Accountant.
c. Regulator.
d. All of these

2. Which of the following is not one of the essential characteristics of a PPE?

a. Tangible asset
b. Used in business
c. Primarily held for sale
d. Long-term in nature

3. PAS 16 requires an entity to review the depreciation method and the estimates of useful life and
residual value at the end of each year-end. A change in any of these is accounted for using

a. A specific transitional provision of a PFRS.

b. Retrospective application.
c. Prospective application.
d. d. any of these

4. If plotted on a graph (X-axis: time; Y-axis: ₱), the depreciation charges under the straight-line method
would show

a. a straight-line.
b. an upward line sloping to the right.
c. a downward line sloping to the left.
 d. a curvilinear line sloping here and there.

5. Which of the following instances does not preclude an entity from recognizing depreciation during a
certain period?

a. The asset is fully depreciated.

b. The asset is being depreciated using the units of production method and there is no
production during the period.
c. The asset is classified as held for sale under PFRS 5.
d. The asset becomes idle or is taken out of active use.

Use the following information for the next five questions:

Entity A acquires equipment on January 1, 20x1. Information on costs is as follows:

Purchase price, gross of trade discount 1,000,000

Trade discount available 10,000

Freight costs 20,000

Testing costs 30,000

Net disposal proceeds of samples generated during testing 5,000 present value of
estimated costs of dismantling the equipment at the end of its useful life 6,209

6. How much is the initial cost of the equipment?

a. 1,061,209
b. 1,051,209
c. 1,041,209
d. 1,031,209

7. The equipment has an estimated useful life of 10 years and a residual value of ₱200,000. Entity A uses
the straight line method of depreciation. How much is the carrying amount of the equipment on
December 31, 20x3?

a. 788,846
b. 802,846
c. 795,846
d. 764,846

8. On December 31, 20x3, Entity A revalues the equipment at a fair value of ₱820,000. There is no
change in the residual value and the remaining useful life of the asset. How much is the revaluation
surplus on December 31, 20x3?
 a. 17,154
b. 24,154
c. 55,154
d. 31,154

9. How much is the depreciation expense in 20x4?

a. 102,500
b. 117,143
c. 136,667
d. 88,571

10. Entity A sells the equipment for ₱870,000 on January 1, 20x5. Entity A incurs selling costs of ₱20,000
on the sale. How much is the gain (loss) on the sale?

a. 118,571
b. 132,500
c. 147,143
d. 152,673