PAMANTASAN NG LUNGSOD NG MAYNILA
Intramuros Manila
MOCK FINALS EXAM
Intermediate Accounting 1/CFAS
1. An unrealized holding gain or loss on a trading
debt investment is the difference between the
investment’s
A. Fair Value and original cost.
B. Fair Value and amortized cost.
C. Face Value and amortized cost.
D. Face Value and original cost.
2. All of the following are requirements for disclosures
related to financial instruments except
A. Combining or netting the fair value of separate
financial instruments.
B. Disclosing the fair value and related carrying
value of the instruments.
C. Distinguishing between financial instruments held
or issued for purposes other than Trading.
D. Displaying as a separate classification of other
comprehensive income the net gain/loss on derivative
instruments designated in cash flow hedges.
3. If the entity uses part of a building for its own use
and rents the remainder, how should this be treated?
A. All as investment property under PAS 40 –
investment property
B. All under PAS 16 – property, plant and equipment
C. It will depend on the discretion of the company
D. Account for separately under PAS 40 –
investment property and PAS 16 – property, plant and
equipment
4. All of the following are requirements for disclosures
related to financial instruments except
A. Combining or netting the fair value of separate
financial instruments.
B. Disclosing the fair value and related carrying
value of the instruments.
SET A
C. Distinguishing between financial instruments held
or issued for purposes other than Trading.
D. Displaying as a separate classification of other
comprehensive income the net gain/loss on derivative
instruments designated in cash flow hedges.
5. Match the investment accounting approach with
the correct valuation approach:
Investm Not held-for-collection Held-for-collection
ent
A. Amortized cost Amortized cost
B. Fair value Amortized cost
C. Fair value Fair value
D. Amortized cost Fair value
6. The Equity method is not required when the
associate has been acquired and held with a view to
disposal within what time period?
A. Six months from the end of reporting period.
B. Twelve months from the end of reporting period.
C. Twelve months from date of classification as
held for sale.
D. In the near future.
7. Which statement is incorrect concerning the
equity method?
A. The investment is initially recorded at cost.
B. The investment in associate is increased or
decreased by the investor's share of the profit or
loss of the investor after the date of acquisition.
C. The investor’s share of the profit or loss of the
investee is recognized in the investor’s profit or loss.
D. Dividends received from the investee are
accounted for as dividend income.
8. Goodwill arising from an investment in associate
is
A. Included in the carrying amount of the
investment and amortized over the useful life
B. Included in the carrying amount of the
investment and not amortized
C. Charged to retained earnings
D. Charged to expense immediately
9. The equity method is not applicable under all of
the following circumstances, except
A. The investor is a wholly-owned subsidiary
B. The investor’s debt and equity instruments are
not traded
C. The investor is in the process of filing financial
statements with a regulatory body for the purpose of
issuing debt and equity instruments in a public
market
D. The ultimate parent of the investor produces
consolidated financial statements
10.The excess of investor’s share of the net fair
value of the associate’s net assets over the cost of
the investment is
A. Included in the determination of the investor’s
share of the associate’s profit or loss in the period in
which the investment is acquired
B. Exclude in the determination of the investor’s
share, but include in other comprehensive income
C. Ignored since there is no relevance for any
period.
D. A deferred gain
11. An investor uses the equity method to account
30% investment. Amortization of the investor’s share
of the excess fair value over carrying amount of
depreciable asset at the date of the purchase shall
be reported in the investor’s income statement as
part of
A. Other Expense
B. Depreciation Expense
C. Equity in earnings of investor
D. Amortization of Goodwill
12. If before operation, a machinery acquired had an
initial operating loss, The initial operating loss should
be:
a.Capitalized as part of the cost of the plant.
b.Expensed and charged to the income statement.
c.Deferred and amortized over a reasonable period.
d. Charged to retained earnings.
13. The following statements are true about depreciation
period except:
a.Depreciable amount of an asset shall be allocated
on a systemic basis over the useful life.
b.Depreciation of an asset begins when it is
available for use.
c.Depreciation ceases when the asset is
derecognized.
d.Depreciation does not cease when the asset
becomes idle indefinitely.
14. The following statements are true about real
property taxes except:
a. It is an outright expense.
b.If unpaid real property taxes are assumed by the
buyer, the taxes are capitalized only up to the date
of acquisition.
c.Capitalizable to the land account because it
increases the value of the land.
d. Taxes paid after the date of acquisition are treated
as an expense.
15. PAS 16 requires a business to review the
depreciation method and the useful life and residual
value estimated at the end of each year. A change in
any of these is accounted for using
a. a specific transitional provision of a PFRS
b. prospective application
c. retrospective application
d. either a or b
16. When an item of property, plant and equipment
is acquired by issuing equity shares, which of the
following is the best basis for establishing the
historical cost of the acquired asset?
a. Historical cost of the asset to the seller
b. Historical cost of a similar asset acquired in
another transaction by the buyer
c. Fair value of the asset received or the fair
value of the shares issued, whichever is more
readily determinable
d. Historical cost of the asset is zero since
noncash is paid in the acquisition
17. Donated equipment for which the fair value has
been determined shall be recorded as a debit to the
equipment account and a credit to
a. Other Comprehensive income
b. Retained earnings
c. Share Capital
d. Income
18. The following statements are deemed true
about investment property and investment in
associates except one.
A. Transferring an investment from one
classification to another should occur only when
the business model for managing the investment
changes.
B. An impairment loss is a difference between
an investment’s cost and the expected future
cash flows.
C. If the investment and owner-occupied
portions could be sold or leased out
separately, the portions shall be accounted for
separately as an investment property
and owner-occupied property.
D. If the investment and owner-occupied
property portions cannot be sold or leased out
separately, the property is investment property if
only an insignificant portion is
held for manufacturing or administrative
purposes.
19. Which of the following costs incurred
internally to create an intangible asset is
generally expensed?
A. Research and development costs
B. Filing costs
C. Legal costs
D. All of the above
20. Factors considered in determining an
intangible asset’s useful life include all of the
following except
A. The expected use of the asset
B. Any provisions for renewal or extension
of the asset’s legal life
C. The amortization method used
D. Any legal or contractual provisions that
may limit the useful life
21. Borrowing costs can be capitalized as cost
of the asset when
a. The asset is a qualifying asset.
b. The asset is a qualifying asset and it is
not probable that the borrowing costs
will result in future economic benefits to
the entity.
c. The asset is a qualifying asset and it is
probable that the borrowing costs will
result in future economic benefits to the
entity but the costs cannot be measured
reliably.
d. The asset is qualifying asset and it is
probable that borrowing costs will result
in future economic benefits to the entity
and the cost can be measured reliably.
22.Which of the following may not be considered
a qualifying asset?
a. A power generation plant that normally
takes two years to build
b. An expensive private jet that can be
purchased from a vendor.
c. A toll bridge that usually takes more
than a year to build.
d. A ship that normally takes one to two
years to complete.
23. An entity can commence capitalization of
borrowing costs on a new construction project
when
a. Loan interest relating to project starts to
incur
b. Technical site planning commences
c. Expenditures on the project starts to
incur
d. Construction work commences
24. Agricultural Produce as it grows on bearer
plants is measured at year end using
A. Fair value
B. Fair value less cost of disposal
C. Fair value plus cost of disposal
D. Fair value less cost of disposal upon point of
harvest
25. Agricultural Produce harvested is measured
at year end using
A.Fair value
B. Fair value less cost of disposal
C. Fair value plus cost of disposal
D. Fair value less cost of disposal upon point of
harvest
26. On June 30, 2023, Juls, Inc. exchanged
2,000 shares of Seely Corp. P30 par value
common stock for a patent owned by Gore Co.
The Seely stock was acquired in 2023 at a cost
of P55,000. At the exchange date, Seely
common stock had a fair value of P46 per share,
and the patent had a net carrying value of
P110,000 on Gore's books. Juls should record
 the patent at years and on December 31, 2021, had a fair
A. P55,000. value of P6,800,000. On December 31, 2021,
B. P60,000. the property was sold for net proceeds of
C. P92,000. P7,500,000. The entity used the cost model to
account for the investment property.
D. P110,000.
27. Chrissy Co. incurred the following costs
What is the gain to be recognized for 2021
during 2011:
regarding the disposal of the investment
Significant modification to the P160,000
property?
formulation of a chemical product
A. 900,000
Trouble-shooting in connection with 150,000 B. 800,000
breakdowns during commercial
production C. 1,000,000
D. 1,100,000
Cost of exploration of new formulas 200,000
30. FAE Company, a real estate entity, had
Seasonal or other periodic design 185,000 buildings and estates.
changes to existing products
Cost Fair Value
Laboratory research aimed at discovery 225,000
Bldg used for office 60,000,000 40,000,000
of new technology
of administrative
In its income statement for the year ended staff of FAE
December 31, 2011, Chrissy should report
Land held for 30,000,000 50,000,000
research and development expense of
ordinary course of
A. P585,000 business
B. P735,000
On December 31, 2020, the entity had land that
C. P770,000
D. P920,000 was held for sale in the ordinary course of
28. Kara Company purchased new machinery business. the entity decided to hold the land for
on a deferred payment basis. A downpayment of
capital appreciation. The accounting policy is to
P200,000 was made and 6 monthly installments
of P250,000 are to be made at the end of each carry all investment property at fair value.
month. The cash equivalent price of the machine On December 31, 2020, what amount should be
was P1,000,000. Additionally, the entity incurred
recognized in profit or loss as a result of the
P25,000 and P6,000 for insurance while the
machinery is in transit and installation cost transfer of the land to an investment property?
respectively. How much is the cost of the A. 20,000,000
machinery? B. 35,000,000

a. P1,700,000 C. 15,000,000
D. 10,000,000
b. P1,731,000

c. P1,000,000

d. P1,031,000

29. Marco Company purchased an investment

property on January 1, 2020, at a cost of
P8,000,000. The property had a useful life of 10
 b. 440,000 d. 480,000

36.  An entity purchased an equipment for

P5,000,000 and received a government grant of
P500,000 with respect to this asset on January 1,
2023. The asset has a useful life of 5 years,
For items 31-35, refer to the following items
depreciated on a straight line basis, with a
below: residual value of P200,000. How much is the
deferred income from government grant on
- entity purchased the ff equity investments on
December 31, 2024?
Jan 2020.
a.     P400,000
Purchase Transactio Market Value
b.      P300,000
Price n Cost at Yr End c.      P200,000
2020 d.      P450,000
Security A 100,000 10,000 120,000 Refer to these items for 37-40
On January 2, 2021, Arisu Inc. acquired a 15%
Security B 200,000 20,000 150,000 interest in Borderland Corp. by paying
Security C 300,000 30,000 310,000 P8,000,000 for 100,000 ordinary shares. On this
date, the net assets of Borderland Corp. totaled
Only July 1, 2021, The security A was sold for
P40,000,000. The fair values of Borderland
190,000. Corp.’s identifiable assets and liabilities were
31. What loss will be recognized in 2020 in the income equal to their book values. Arisu did not have
statement if the assets were held for trading? the ability to exercise significant influence over
the operating and financial policies of
a. 20,000 c. 40,000
Borderland. Arisu received dividends of P1.40
b. 80,000 d. 0 per share from Borderland on October 1, 2021.
32. Assuming same scenario in 31, What amount of Borderland reported net income of P5,000,000
for the year ended December 31, 2021. Arisu
gain on sale will be recognized as gain on sale for the
classified the investment as at fair value through
2021 income statement. other comprehensive income. Market price for
a. 90,000 c. 60,000 the 100,000 shares was P9,000,000 on
December 31, 2021.
b. 70,000 d. 80,000
Arisu paid P30,000,000 on January 1, 2022 for
33. What unrealized gain\loss will be recognized in 300,000 additional Borderland ordinary shares,
2020 in the income statement if the assets were which represents a 25% interest in Borderland.
The fair value of Borderland Corp.’s identifiable
assigned at FVOCI?
assets, net of liabilities was equal to their book
a. 20,000 c. (40,000) values of P92,000,000. As a result of this
b. (80,000) d. 80,000 additional acquisition., Arisu has the ability to
34. Assuming same scenario in 33, What amount of exercise significant influence over the operating
and financial policies of Borderland. Arisu
adjustment to retained earnings will be for the 2021?
received a dividend of P2.70 per share on
a. 90,000 c. 60,000 October 1, 2022. Borderland reported net
b. 70,000 d. 80,000 income of P6,000,000 for the year ended
December 31, 2022. The investment’s fair value
35. The balance for the investment in equities account
on December 31, 2022 is P45,000,000.
will for 2021 is
a. 490,000 c. 460,000
37. What amount of gain on remeasurement to equipment) 1,300
equity should be reported in the 2022 income
statement? 41.How much is the total cost of the purchased
a. P1,320,000 equipment?
b. P1,080,000 a. 120,900 c. 126,900
c. P1,000,000 b. 119,100 d. 124,100
d. 0
38. How much is the recognized income arising 42. How much is the cost that will be expensed
from the investment classified as FVOCI for year for the year 2022?
end 2021?
a. 1,120,000 a. 6,000 c. 2,800
b.750,000 b. 7,800 d. 0
c.140,000
For items 43-45, pls refer to the following
d.0
questions.
39. How much is the goodwill arising from
the acquisition of additional 300,000 shares on
Xtian Farming Industries purchased dairy cattle
January 1,2022?
at an auction for ₱300,000 on July 1, 2014. Cost
a. 0
of transporting the cattle to the company’s farm
b. P2,400,000
was ₱3,000 and the company would have to
c. P7,000,000
incur cost similar amount of transportation cost if
d. P9,000,000
it was to sell the cattle in the auction, in addition
40. How much is the carrying amount of the
to the auctioneer’s
investment in associate on December 31,2022?
fee of 2% of sales price.
a. P45,000,000
b. P40,320,000
On December 31, 2014, after taking into account
c. P37,680,000
and location, the fair value of the biological
d. P39,000,000
assets had increased to ₱500,000 (that is, the
market price including the cost of transporting
For items 41-42.
the asset).
ABC Company both purchases and constructs
various equipment it uses in its operation. The
43. What amount should the biological assets be
following items were recorded in random order
initially recognized?
during the calendar year 2022.
a. 291,000 c. 300,000
b. 297,000 d. 309,000
Cash paid for equipment, including sales tax of
P5,000 P105,000 44. What amount should the biological assets be
Freight and insurance cost while in transit reported in the December 31, 2014 statement of
financial position?
2,000 a. 500,000 c. 489,000
Cost of moving equipment into place at factory b. 497,000 d. 487,000
3,100
Wage cost for technicians to test equipment 45. What amount of gain or loss should the
6,000 company include in the statement of
Insurance premium paid during the first year of comprehensive income due to the change in the
operation on this equipment 1,500 fair value of the biological assets?
Special plumbing fixtures required for new
equipment 8,000 a. 200,000 c. 196,000
Repair cost incurred in first year (relating to b. 209,000 d. 0