10/19/22, 7:13 AM BSA-3B / AE 17 - INTERMEDIATE ACCOUNTING 3 - https://usa.neolms.

com/student_quiz_assignment/submissions/36015500

Home

BSA-3B / AE 17 - INTERMEDIATE ACCOUNTING 3

Standalone assignment

AE 17 - Midterm Assignment 2

Submissions

Here are your latest answers:

Question 1

An entity manufactures and sells household products. The entity experienced losses associated with its small appliance
group. Operations and cash flows for this group can be clearly distinguished from the rest of the entity's operations. What
is the earliest point at which the entity shall report the small appliance group as a discontinued operation?

Response: When the entity classified it as held for sale.

Correct answer: When the entity classified it as held for sale.

Score:
1 out of 1
Yes

Question 2

On November 1, 2019, the management of Blue Company committed to a plan to dispose of a major subsidiary. The
disposal meets the requirements for classification as discontinued operations. The carrying amount of the subsidiary was
P8,000,000 and management estimated the fair value less cost to sell to be P6,500,000. For 2019,the subsidiary had a
loss of P2,000,000. Income tax rate is 30%. What amount should be presented as pretax loss from discontinued
operations for 2019? ANSWER: _____.

Response: 3500000

Correct answer: 3500000

Score:
3 out of 3
Yes

Question 3

A component of an entity is classified as discontinued operation when it has been disposed of or is classified as held for
sale and

Response: All of the above.

Correct answer: All of the above.

Score:
1 out of 1
Yes

https://usa.neolms.com/student_quiz_assignment/submissions/36015500 1/6
10/19/22, 7:13 AM BSA-3B / AE 17 - INTERMEDIATE ACCOUNTING 3 - https://usa.neolms.com/student_quiz_assignment/submissions/36015500

Question 4

Zebra Company is a diversified entity with nationwide interests in commercial real estate development, banking, mining
and food distribution. The food distribution division was deemed to be inconsistent with the long-term direction of the
entity. On October 1, 2020 the board of directors voted to approve the disposal of this division. The sale is expected to
occur in August 2021. The food distribution had the following revenue and expenses in 2020: January 1 to September
30, revenue of P35, 000, 000 and expenses of P27, 000, 000; October 1 to December 31, revenue of P15, 000, 000
and expenses of P10, 000, 000. The carrying amount of the division's net assets on December 31, 2020 was P56, 000,
000 and the fair value less cost of disposal was P58, 000, 000. The sale contract requires Zebra to terminate certain
employees incurring an expected termination cost of P4, 000, 000 to be paid by December 15, 2021. The income tax
rate is 30%. In the income statement for the year ended December 31, 2020, what amount should be reported as
income from discontinued operation?

Response: 6, 300, 000

Correct answer: None of these

Score:
0 out of 3
No

Question 5

Clara Company purchased equipment for P5, 000, 000 on January 1, 2018 with a useful life of 10 years and no
residual value. On January 1, 2020, the entity classified the asset as held for sale. The fair value of the equipment on
January 1, 2020 is P3, 300, 000 and the cost of disposal is P100, 000. On December 31, 2020, the fair value of the
equipment is P3, 800, 000 and the cost of disposal is P200, 000. On December 31, 2020, the entity believed that the
criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to
continue to use it.
What is the measurement of the equipment that ceases as held for sale on December 31, 2020?

Response: 3, 500, 000

Correct answer: 3, 500, 000

Score:
3 out of 3
Yes

Question 6

Which of the following appropriately describes a 'component of an entity'?

Response: It comprises of a subsidiary, a major line of business or geographical segment, whose operations and cash flows
can be clearly distinguished, operationally and for financial reporting purposes from the rest of the entity.

Correct answer: It comprises of a subsidiary, a major line of business or geographical segment, whose operations and cash
flows can be clearly distinguished, operationally and for financial reporting purposes from the rest of the entity.

Score:
1 out of 1
Yes

Question 7

https://usa.neolms.com/student_quiz_assignment/submissions/36015500 2/6
10/19/22, 7:13 AM BSA-3B / AE 17 - INTERMEDIATE ACCOUNTING 3 - https://usa.neolms.com/student_quiz_assignment/submissions/36015500

Statement 1: PFRS 5 allows the retroactive classification as a discontinued operation when the discontinued criteria are
met after the end of the reporting period.
Statement 2: The results of discontinued operation shall be presented as a single amount, net of tax, in the income
statement below the income from continuing operations.

Response: Statement 2 is correct.

Correct answer: Statement 2 is correct.

Score:
1 out of 1
Yes

Question 8

If there is a decision not to sell the noncurrent asset or the criteria for being classified as held for sale may no longer be
met, the entity shall measure such current asset at

Response: Lower between the carrying amount before the asset was classified as held for sale adjusted for depreciation
that would have been recognized if the asset had not been classified as held for sale and the recoverable amount at the
date of the subsequent decision not to sell.

Correct answer: Lower between the carrying amount before the asset was classified as held for sale adjusted for
depreciation that would have been recognized if the asset had not been classified as held for sale and the recoverable
amount at the date of the subsequent decision not to sell.

Score:
1 out of 1
Yes

Question 9

Which of the following statements relating to PFRS 5 is incorrect?

Response: If after the write-down, there is an increase in the fair value less cost to sell, the entity may recognize a gain
even in excess of any impairment loss previously recognized.

Correct answer: If after the write-down, there is an increase in the fair value less cost to sell, the entity may recognize a
gain even in excess of any impairment loss previously recognized.

Score:
1 out of 1
Yes

Question 10

Which statement is incorrect concerning presentation of noncurrent asset or disposal group classified as held for sale?

Response: Noncurrent assets classified as held for sale shall be depreciated.

Correct answer: Noncurrent assets classified as held for sale shall be depreciated.

Score:
1 out of 1
Yes

Question 11

Noncurrent asset or disposal group is classified as "held for sale" when the asset is available for immediate sale and the
sale is highly probable. For the sale to be highly probable, which one need not be met?

https://usa.neolms.com/student_quiz_assignment/submissions/36015500 3/6
10/19/22, 7:13 AM BSA-3B / AE 17 - INTERMEDIATE ACCOUNTING 3 - https://usa.neolms.com/student_quiz_assignment/submissions/36015500

Response: The sale is expected to qualify for recognition as a 'completed sale' within two years from the date of
classification of the asset as "held for sale".

Correct answer: The sale is expected to qualify for recognition as a 'completed sale' within two years from the date of
classification of the asset as "held for sale".

Score:
1 out of 1
Yes

Question 12

On April 1, 2020, Brandy Company has a machine with a cost of P1, 000, 000 and accumulated depreciation of
P750, 000. On April 1, 2020, the entity classified the machine as "held for sale" and decided to sell the machine within
1 year. On April 1, 2020, the machine had an estimated selling price of P100, 000 and a remaining useful life of 2
years. It is estimated that selling cost associated with the disposal of the machine will be P10, 000. On December 31,
2020, the estimated selling price of the machine had increased to P150, 000 with estimated selling cost of P20, 000.
What amount should be recognized as gain on reversal of impairment on December 31, 2020?

Response: 40, 000

Correct answer: 40, 000

Score:
3 out of 3
Yes

Question 13

Jazz Company operates two restaurants, one in Boracay and one in Dakak. The operations and cash flows of each of the
two restaurants are clearly distinguishable. During 2020, the entity decided to close the restaurant in Dakak and sell the
property. It is probable that the disposal will be completed early next year. The revenue and expenses for 2020 and for
the preceding two years are as follows:

The other expenses do not include income tax expense. During the later part of 2020, the entity sold some of the kitchen
equipment of the Dakak restaurant and recognized a pretax gain of P15, 000 on the disposal. The income tax rate is
30%. What amount should be reported as income or loss from discontinued operation for 2020?

Response: None of these

Correct answer: None of these

Score:
3 out of 3
Yes

Question 14

https://usa.neolms.com/student_quiz_assignment/submissions/36015500 4/6
10/19/22, 7:13 AM BSA-3B / AE 17 - INTERMEDIATE ACCOUNTING 3 - https://usa.neolms.com/student_quiz_assignment/submissions/36015500

PFRS 5 prohibits noncurrent assets that will be abandoned from being classified as held for sale. If the assets to be
abandoned are a major line of business or geographical area of operations, they are reported in discontinued operations
at

Response: The date on which they are actually abandoned.

Correct answer: The date on which they are actually abandoned.

Score:
1 out of 1
Yes

Question 15

On September 30, 2020, when the carrying amount of the net assets of a business segment was P70, 000, 000, Young
Company signed a legally binding contract to sell the business segment. The sale is expected to be completed by January
31, 2021 at a selling price of P60, 000, 000. In addition, prior to January 31, 2021, the sale contract obliges Young
Company to terminate the employment of certain employees of the business segment incurring an expected termination
cost of P2, 000, 000 to be paid on June 30, 2021. The segment revenue and expenses for 2020 were P40, 000, 000
and P45, 000, 000 respectively. Before income tax, what amount should be reported as loss from discontinued
operation for 2020?

Response: None of these

Correct answer: None of these

Score:
3 out of 3
Yes

Question 16

Clara Company purchased equipment for P5, 000, 000 on January 1, 2018 with a useful life of 10 years and no
residual value. On January 1, 2020, the entity classified the asset as held for sale. The fair value of the equipment on
January 1, 2020 is P3, 300, 000 and the cost of disposal is P100, 000. On December 31, 2020, the fair value of the
equipment is P3, 800, 000 and the cost of disposal is P200, 000. On December 31, 2020, the entity believed that the
criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to
continue to use it.
What amount should be recognized in profit or loss as a result of the reclassification in 2020?

Response: 300, 000

Correct answer: 300, 000

Score:
3 out of 3
Yes

Question 17

The following are examples of activities which are considered discontinued operation. Which is the exception?

Response: Shifting of production or marketing activities for a particular line of business from one location to another

Correct answer: Shifting of production or marketing activities for a particular line of business from one location to
another

Score:
1 out of 1
Yes

https://usa.neolms.com/student_quiz_assignment/submissions/36015500 5/6
10/19/22, 7:13 AM BSA-3B / AE 17 - INTERMEDIATE ACCOUNTING 3 - https://usa.neolms.com/student_quiz_assignment/submissions/36015500

Question 18

It is a group of assets to be disposed of by sale or otherwise, together as a group in a single transaction, and liabilities
directly associated with those assets that will be transferred in the transaction.

Response: Disposal group.

Correct answer: Disposal group.

Score:
1 out of 1
Yes

Question 19

With regards the results of discontinued operations presented in the income statement, the following are to be disclosed in
the notes to financial statements, with the exception of

Response: Any gain or loss from the future disposal of the assets and settlement of the liabilities.

Correct answer: Any gain or loss from the future disposal of the assets and settlement of the liabilities.

Score:
1 out of 1
Yes

https://usa.neolms.com/student_quiz_assignment/submissions/36015500 6/6