When the revaluation model is used for reporting property, plant and equipment, the gain or loss, should be included in ‘a. Income for the period Gain from revaluation in the income statement An extraordinary gain or loss in the income statement dd. Arevaluation surplus account in other comprehensive income Under the revaluation model for accounting for property, plant and equipment a. Asset must be revalued quarterly . Asset must be revalued biannually Asset must be revalued annually 4, There sno rule regarding the frequency of Revaluation When an entity chooses the revaluation model as the accounting policy for measuring property, plant and equipment, which of the following statements is correct? a. Revaluation of property, plant and equipment must be made at least every three years. 1b. When an assets revalued, the entire class of property, plant and equipment to which that asset belongs must be revalued Increase in an asset's carrying amount as a result of the first revaluation must be recognized as a component of profit or loss dd. When an asset's revalued, individual asset within a class of property, plant and equipment ‘to which that asset belongs can be revalued When a balance is carried in an ‘asset revaluation surplus’ account in relation to an asset that has. bbeen derecognized, its acceptable under PAS 16 to ‘Transfer the balance to retained earnings ‘Transfer the balance to share capital’ account ‘Transfer the balance to a provision account for future asset revaluations Recognize the balance in profit or loss of the period in which the asset was derecognized pore5. Which statement is incorrect concerning the class of property, plant and equipment to be revalued? b When an item of property, plant and equipment is revalued, the entire class property, plant and equipment to which that asset belongs shall be revalued ‘Aclass of property, plant and equipment s a grouping of assets of a similar nature and use Inn entity's operation ‘The items within & class of property, plant and equipment are revalued selectively ‘A class of assets may be revalued on a rolling basis provided revaluation of the class of assets is completed within a short period of time and provided the revaluations are kept up to date 6. Anasset is impaired when b. c a. Its recoverable amount exceeds its carrying amount Its carrying amount exceeds its recoverable amount Its fair value less costs to sells less than its value in use Its net selling price is less than its value in use 7. Recoverable amount is ‘The amount at which an asset is recognized in the balance sheet after deducting accumulated depreciation and accumulated impairment losses The higher of an asset's fair value less costs to sell and its value in use 4. ‘The amount obtainable from the sale of an asset in a bargained transaction between knowledgeable, willing parties ‘The discounted present value of estimated future cash flows 18. Which statement is incorrect in determining recoverable amount? IF the carrying amount is less than fair value less costs to sell or value in-use, it is not necessary to calculate the other amount If fair value less costs to sell cannot be determined, then recoverable amount is value in For assets to be disposed of, recoverable amount is fair value less costs to sell4. None of the above 9. Fair value less cost to sell is |. The amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing partes less cost of disposal IL The present value of future cash flows expected to be derived from an asset a tonly © Both! and it b. lonly dd. Neither | nor it 10, Value in use of an asset is equal to the: ‘a, Undiscounted future net cash flows from the use of the asset 'b. Undiscounted future net cash flows from the use and eventual disposition of the asset Discounted future net cash flows from the use of the asset, ._ Discounted future net cash flows from the use and eventual disposition of the asset 11. Under PAS 36, the impairment rules for long-lived assets apply to all ofthe following except a Land Building currently used in the business 'b. Financial instruments 4d. Minicomputers used to run a production process 12. An entity has determined that the fair value of a cash generating unit exceeds carrying amount. Which of the following statements is correct concerning this test of impairment? Goodwill should be written down as impaired Goodwill should be retested at the entity level Impairment is not indicated, and no additional analysis is necessary ‘The assets and liabilities should be valued to determine if there has been an impairment of goodwill aoge 13. Under the reporting requirements for impaired assets, impairment losses for assets to be held and used shall be reported a. Asanextraordinary item b. Asa component of discontinued operations cc. Asa.component of income from continuing operations d. Asa change in accounting estimate 14. Acash generating unit is ‘a. The smallest business segment 'b. Any group of assets that generates cash flows . Any group of assets that is reported separately to management d._ The smallest group of assets that generates independent cash flows from continuing use 15. Where cash generating unit is disposed of, any goodwill associated shall Be written off against retained profits 'b. Be included in the calculation of gain or loss . Not be included in the calculation of gain or loss d._ Not be written off to the income statement entirely11. On danuary 4, 2021, the historical balances othe land and building of Roberto Company are: Cost ‘Accumulated depreciation Land 50,000,000 Buiding 200,000,000 90,000,000 ‘The land and building were appraised on same date and the revaluation revealed the following: Appraised vave Land 70009,000 surging +315,000,000 ‘There were no additions or disposals during 2021. Depreciation is computed on the straight line. ‘The estimated life ofthe building is20 years. ‘Question 1: The depreciation of the building for 2021 should be 3. 22,5000 «e. P15,000,000 '. 25,750,000 1. P10,500.000, ‘Question 2: The December 31, 2021 statement of financial position should show revaluation surplus at a. P117,500,000 . P105,000,000 125,000,000 . P118,750,000On June 30, 2024, an entity teported the folowing information: Equipmentat cost, 30,000,000 ‘Accumulated depreciation 10,500,000 “The equipment wes meacured using the cost model snd depreciated on a straight line basis over 10-year period. On December 31, 2021, the management decided to change the batis of mezsuring the equipment from the cost madel tothe revaluation model. The equipment was revaluedto the fair value of P27,000,000 with remaining useful life of S years. The income tax rate s 30%. What amount should be reported as revaluation surplus on December 31, 2021? ‘a. P7,500,000 c P6,300000 b. P5,250,000 4. 9,000,000 On January 1, 2017, the Jesus Corporation purchased a machine for P1,300,000 which it installed ina rented factory. It is depreciating the machine over 12 years by the straight-line method to a residual value of 100,000. Late in 2021, becouse of increasing competition in the industry, the ‘company believes that its asset may be impaired and wil have a remaining useful life of 5 years, ‘over whichit estimates the asset will produce total cash inflows of P2,000,000 and wil incur total ‘cash outflows of P1,650,000. The cach flowsare independent of the company's other activities and ‘will occur evenly each year. The company's discount rate is 10%. The PV of ordinary annuity of P1 ‘at 10% 5 periods is 3.7908. The fair value of the machine is P280,000. The cost to sell the machine {is P40,000. The impairment oss to be recognized in 2021 profit or loss is ‘2 P560,000 P582,855 b. P534,caa 6 70