1. What is the relationship between present value and liability?

a. Present value is used to measure certain liabilities.

b. Present value is not used to measure liabilities.
c. Present value is used to measure all liabilities
d. Present value is used to measure current liabilities.

2. When shares are issued for property, the best evidence of fair value may be any of the following, except
a. The price of the shares quoted on the stock exchange
b. The fair value of the property received
c. The average book value of the outstanding shares
d. The selling price of the shares in a recent transaction

3. On January 1, 2023 Ganda Company was incorporated with the following authorized capitalization:
Ordinary share capital, no par, P100 stated value 20,000,000
Preference share capital, 10%, P50 par 10,000,000
During 2023, the entity issued 150,000 ordinary shares at P120 per share and 50,000 preference
shares at P60 per share. On December 20, 2023, subscriptions for 20,000 preference shares were
received at P100 per share. The subscribed shares are to be paid for on January 20, 2024. Net income
for the year 2023 is P5,000,000.
What amount of total shareholder’s equity should Ganda report on December 31, 2023?
a. 28,000,000
b. 23,000,000
c. 26,000,000
d. 21,000,000

4. On December 31, 2023, Amab Company cancelled 10,000 shares of P25 par value held in treasury at an
average cost of P130 per share. Before recording the cancellation of the treasury shares, the entity had
the following balances:
Share capital 1,250,000
Share premium – original issue 250,000
Share premium – treasury shares 150,000
Retained earnings 1,800,000
Treasury shares 1,300,000
Which of the following is true?
a. Due to the retirement of treasury shares, total equity is reduced by P1,300,000.
b. Due to the retirement of treasury shares, total equity is increased by P1,300,000.
c. Retained earnings of P850,000 is debited.
d. Share premium – original issue of P250,000 is debited

5. On January 1, 2023, GEM Company entered into a ten-year lease agreement with another entity for
industrial equipment. Annual lease payments of P1,000,000 are payable every December 31 of each
year. The lessor expected a 10% return on the lease, which is the implicit rate in the lease. The
equipment is expected to have an estimated useful life of 12 years. The contract contains a purchase
option that is reasonably certain to be exercised. The exercise price of the purchase option is P500,000.
The present value of an ordinary annuity of 1 at 10% for 10 periods is 6.14 and the present value of 1 at
10% for 10 periods is 0.39. What amount should be reported as lease liability on December 31, 2023?
a. 6,335,000
b. 6,140,000
c. 5,754,000
d. 5,968,500

6. An entity leased property for a period of 10 years. Lease payment dates coincide with the end of the
reporting period. How is the lease liability presented in the statement of financial position at the end of the
second year?
a. Partly current liability, partly noncurrent liability
b. Entirely current liability
c. Entirely noncurrent liability
d. Entirely noncurrent asset

7. Equity – settled share-based payment transactions of a small entity are measured at

a. Net asset value
b. Fair value
c. Liquidation value
d. Assessed value
8. Bonds payable not designated at fair value through profit or loss shall be measured initially at
a. Fair value
b. Fair value plus bond issue cost
c. Fair value minus bond issue cost
d. Face amount

9. Under international accounting standard, the valuation method used for bonds payable is
a. Historical cost
b. Discounted cash flow valuation at current yield rate
c. Maturity amount
d. Discounted cash flow valuation at yield rate at issuance

10. Hagrid Company started business in 2022. It sells computers with a three-year warranty. The entity
estimated its warranty cost as a percentage of peso sales. Based on past experience, it is estimated that
3% will be repaired during the first year of warranty, 5% will be repaired during the second year of
warranty and 10% will be repaired in the third year. In 2022 and 2023, the entity reported sales of
P10,000,000 and P20,000,000 respectively. The entity incurred actual repair cost of P400,000 and
P2,000,000 in 2022 and 2023 respectively. Sales and repairs occur evenly throughout the period.
What is the adjusted warranty liability on December 31, 2023 after testing its adequacy?
a. 3,000,000
b. 4,150,000
c. 4,275,000
d. 3,150,000

11. Which is not a component of other comprehensive income?

a.Remeasurement of defined benefit plan
b. Treasury shares at cost
c. Foreign currency translation adjustment
d. Revaluation surplus

12. Dr. Cha Company reported the following shareholder’s equity at year-end:
Cumulative preference share capital – 12%, P50 par, 20,000 shares 1,000,000
Ordinary share capital, P25 par, 100,000 shares 2,500,000
Share premium 200,000
Retained earnings - unappropriated 400,000
Retained earnings - appropriated 100,000
Revaluation surplus 300,000
Dividends on preference shares have not been paid for three years. The preference share has a
liquidating value of P55 and a call price of P68. What is the book value per preference share?
a. 61.00
b. 73.00
c. 76.00
d. 64.00

13. At the beginning of current year, Meemaw Company sold a machine and immediately leased it back.
The following data pertain to the sale and leaseback transaction:
Sale price 40,000,000
Fair value of the machine 45,000,000
Carrying amount of the machine 36.000,000
Annual rental payable at the end of each year 5,000,000
Lease term 3 years
Remaining life of the machine 10 years
Implicit interest rate 6%
PV of an ordinary annuity of 1 at 6% for 5 periods 2.67
What amount should be reported as gain on right transferred to the buyer-lessor?
a. 9,000,000
b. 7,200,000
c. 5,330,000
d. 5,000,000
 14. Dr. Roy Company located business in two jurisdictions, Singapore and Malaysia. In both countries,
the entity had the legal right to offset taxes receivable and taxes payable. The following information
relate to deferred tax assets and liabilities:

How should Lakeshore present deferred tax asset and deferred tax liability at year-end?
a. Deferred tax asset of P1,600,000 and deferred tax liability of P1,800,000
b. No deferred tax asset and deferred tax liability of P2,000,000
c. Deferred tax asset of P400,000 and deferred tax liability of P1,200,000
d. Deferred tax asset of P400,000 and deferred tax liability of P600,000

15. Harry Potter Company reported the following partial income statement after the first year of
operations:

The entity recognizes bad debt expense when doubtful for financial reporting purposes and deductible
only when written off for tax purposes. The amount charged to bad debt expense per book was
P1,200,000. No other differences existed between book income and taxable income except for bad debts.
The income tax rate is 25%. What amount was deducted for bad debts in the tax return for the current
year?
a. 1,560,000
b. 1,200,000
c. 840,000
d. 750,000

16. At the beginning of the current year, McGonagall Company reported the fair value of plan assets at
P12,000,000 and projected benefit obligation at P16,000,000. During the year, the entity made a lump
sum payment to certain plan participants in exchange for their rights to receive specified
postemployment benefits. The lump sum payment was P1,600,000 and the present value of the
defined benefit obligation settled was P2,000,000. In addition, the following data are gathered during
the current year:

What amount should be reported as employee benefit expense?

a. 2,280,000
b. 3,720,000
c. 1,800,000
d. 1,880,000

17. A lessee decreased the carrying amount of a right-of-use asset and recognized a gain in profit or loss.
This is the accounting for which type of lease modification?
a. A lease modification accounted for as a separate lease.
b. A lease modification that decreased the scope of the lease and accounted for as a separate lease.
c. A lease modification that decreased the scope of the lease and not accounted for as a separate lease.
d. A lease modification that increased the scope of the lease and not accounted for as a separate lease.

 The following information relates to the defined benefit pension plan of the Weasley Corp. for the year
ended Dec. 31, 2022:
 At the beginning of year 1, Granger Corp. grants 100 share options to each of its 200 employees. Each
grant is conditional upon the employee remaining in service over the next three years. The entity estimates
that the fair value of each option is P21. On the basis of a weighted average probability, the entity estimates
that 60 employees will leave during the three-year period and therefore forfeit their rights to the share
options.

Suppose that 15 employees leave during year 1. Also suppose that by the end of year 1, the entity’s share
price has dropped, and the entity reprices its share options, and that the repriced share options vest at the
end of year 3. The entity estimates that a further 35 employees will leave during years 2 and 3. During year
2, a further 10 employees leave, and the entity estimates that a further 10 employees will leave during year
3. During year 3, a total of 8 employees leave.

The entity estimates that, at the date of repricing, the fair value of each of the original share options granted
(ie before taking into account the repricing) is P10 and that the fair value of each repriced share option is
P13.

 In 2023, before the Entity P’s 2022 financial statements were approved for issue, a class action lawsuit was
filed against the entity. The lawsuit seeks compensation for a community experiencing health problems
allegedly caused by pollution from the entity’s plant. Legal counsel advised management that there is a 30
per cent chance that the action will be successful. If successful, the court is likely to award the community
compensation of between P1,000,000 and P2,000,000.

 The accounting profit before tax for the year ended Dec. 31, 2022 for Dumbledore Corp. amounted to
P18,500 and included:
 Additional information
a) The entity can claim a deduction of P15,000 (15%) for depreciation on equipment, but the motor vehicle
is fully depreciated for tax purposes.
b) The equipment sold during the year had been purchased for P30,000 two years before the date of sale.
c) The entity is subject to 30% tax rate.

18.The prepaid/accrued benefit expense of Weasley Corp. at Dec. 31, 2022 is

a. P2,100,000 c. P1,300,000
b. P2,210,000 d. P1,410,000

19.The amount to be recognized as expense by Granger corp. in year 3 is

a. P400,800 c. P150,750
b. P136,800 d. P145,050

20.In its financial statements for the year ended Dec. 31, 2022, the Entity P should recognize a liability for the
lawsuit of

a. P2,000,000 c. P1,000,000
b. P1,500,000 d. Nil

21. Dumbledore Corp.’s current tax expense for 2022 is

a. P6,030 c. P7,500
b. P6,930 d. P8,040

22.Dumbledore Corp.’s deferred tax expense (benefit) for 2022 is

a. P6,570 c. P(2,430)
b. P(3,270) d. P(1,080)

23. What is the interest rate written on the face of the bond?

a) Coupon rate
b) Nominal rate
c) Stated rate
d) Coupon rate, nominal rate or stated rate

24. Which statement is incorrect concerning a contingent liability?

a) A contingent liability is not recognized.
b) A contingent liability is disclosed only.
c) No disclosure is required for remote contingent liability.
d) A contingent liability is both probable and measurable.

25. Which is correct regarding lease capitalization criteria?

a) The lease transfers ownership to the lessor
b) The lease contains a purchase option.
c) The lease term is equal to at least 75% of the economic life of the underlying assets.
d) The lease payments are 90% of fair value of asset.

26. When an entity amends a pension plan, past service cost should be
a) Treated as a prior period adjustment because no future periods are benefited.
b) Amortized over the remaining service period of employees
c) Recorder in other comprehensive income.
d) Reported as an expense in the period the plan is amended
Use the following information for the next two questions.

An entity is preparing its financial statements in accordance with the PFRS for Small Entities. It acquired an
investment in equity instrument for P500,000 on June 30, 2023. The direct acquisition costs incurred were
P25,000.

On Dec. 31, 2023 the fair value of the instrument was P600,000 and the transaction costs that would be incurred
on sale were estimated at P30,000.

27. If the shares are traded in an active market, the investment should be reported on the Dec. 31, 2023
statement of financial position at
a. P500,000 c. P570,000
b. P525,000 d. P600,000

28. If the shares are not traded in an active market, the investment should be reported on the Dec. 31, 2023
statement of financial position at
a. P500,000 c. P570,000
b. P525,000 d. P600,000

29. An entity was incorporated on Jan. 1, 2022 with proceeds from issuance of shares of P750,000 and
borrowed funds of P 110,000. During the first year of operations, total income amounted to P82,000 and
expenses totaled P64,000. On Dec. 15, the entity declared a P3,000 cash dividend, payable to
shareholders on Jan. 15, 2023. No additional activities affected owners' equity in 2022. The entity's
liabilities increased to P120,000 by Dec. 31, 2022. On the entity's Dec. 31, 2022 statement of financial
position, total assets should be reported at
a. P878,000 c. P882,000
b. P875,000 d. P885,000

30. An entity produces milk to sell to local and national ice cream producers. The entity began operations on
Jan. 1 of the current year by purchasing 840 milk cows for
P1,176,000. The entity’s controller had the following information available at year end relating to the cows:
Carrying value, Jan. 1 P1,176,000
Increase in fair value due to growth
and price changes 365,000
Decrease in fair value due to harvest 42,000
Milk harvested but not yet sold 54,000
At Dec. 31 of the current year, what is the value of the milking cows on the entity’s statement of financial
position?
a. P1,583,000 c. P1,499,000
b. P1,553,000 d. P1,445,000

31. Which statement is correct regarding investment property in accordance with PAS 40?
a. Investment property includes property occupied by an employee paying market rent.
b. Investment property does not generate cash flows largely independently of the other assets held
by an entity.
c. An entity need not disclose the fact the fair value of investment property is not determined on the
basis of a valuation by an independent valuer who holds a recognized and relevant professional
qualification and has recent experience in the location and category of the investment property
being valued.
d. An entity shall disclose the amounts recognized in profit or loss for direct operating
expenses (including repairs and maintenance) arising from investment property that did
not generate rental income during the period.
32. An entity had the following items listed in its trial balance at 12/31/23:

Currency and coins P 650

Balance in checking account 2,600
Customer checks waiting to be deposited 1,200
Treasury bills, purchased on 11/2/23, mature on 4/30/24 3,000
Marketable equity securities 10,200
Commercial paper, purchased on
11/2/23, mature on 1/30/24 5,000
 What amount will the entity include in its year-end statement of financial position as cash and cash
equivalents?
a. P7,450 c. P12,450
b. P9,450 d. P19,650

33. An entity estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts
receivable. During 2023, the entity’s credit sales and collections were P125,000 and P131,000,
respectively. What was the balance of accounts receivable on Jan. 1, 2023, if P180 in accounts
receivable were written off during 2023 and if the allowance account had a balance of P750 on 12/31/23?
a. P 5,820 c. P31,000
b. P25,000 d. P31,180

34. An entity sold a tract of land on July 1, 2022 for P8,000,000 under an installment sale contract. The buyer
signed a 4-year 11% note for P5,600,000 on July 1, 2022, in addition to the down payment of
P2,400,000. The equal annual payments of principal and interest on the note will be P1,805,000 payable on
July 1, 2023, 2024, 2025, and 2026. The land had an established cash price of P8,000,000, and its cost to the
entity was P6,000,000. The collection of the installments on this note is reasonably assured.
The current portion of the installment note receivable on
Dec. 31, 2023 is

a. P1,805,000 c. P1,319,790
b. P1,400,000 d. P1,189,000
35. If an entity neither transfers nor retains substantially all the risks and rewards of ownership of a
transferred asset, and retains control of the transferred asset, the entity shall
a. Derecognize the financial asset and recognize separately as assets or liabilities any rights and
obligations created or retained in the transfer.
b. Continue to recognize the transferred asset in its entirety.
c. Recognize a financial liability for the consideration received.
d. Continue to recognize the transferred asset to the extent of its continuing involvement.
36. When applying a new accounting policy to, or correcting amounts for, a prior period, hindsight may be
used in
a. Making assumptions about what management’s intentions would have been in a prior period.
b. Estimating the amounts recognized, measured or disclosed in a prior period.
c. Both a and b.
d. Neither a nor b.

37. A receipt of P12,600 cash from a customer as a payment on account was incorrectly credited to service
revenue. What is the effect of this error on the financial statements of the company?
a. Assets are understated by P12,600 and equity is understated by P12,600.
b. Assets are overstated by P12,600 and equity is overstated by P12,600.
c. Assets are overstated by P25,200 and equity is overstated by P25,200.
d. Assets are understated by P12,600 and liabilities are
understated by P12,600.

38. The components of other comprehensive income include:

I. Changes in revaluation surplus
II. Remeasurements of defined benefit plans
III. Gains and losses arising from translating the financial statements of a foreign operation
IV. Gains and losses from investments in equity instruments classified as held for trading
V. Ineffective portion of gains and losses on hedging instruments in a cash flow hedge
VI. For particular liabilities designated as at fair value through profit or loss, the amount of the change in fair
value that is attributable to changes in the liability’s credit risk
a. I, II, III, IV, V and VI
b. I, II, III, V and VI
c. I, II, III and VI
d. I, II and III

39. Reclassification adjustments do not arise

a. On disposal of debt instruments classified as financial assets at fair value through OCI.
b. On disposal of a foreign operation.
c. When some hedged forecast cash flow affect profit or loss.
d.On changes in revaluation surplus.

40. Which statement is correct regarding current/noncurrent distinction in an entity’s statement of financial
position?
 a. An entity shall always present current and noncurrent assets, and current and non-current
liabilities, as separate classifications.
b. When a presentation based on liquidity provides information that is reliable and more
relevant, an entity shall present all assets and liabilities in order of liquidity.
c. An entity is not permitted to present some of its assets and liabilities using a current/non-current
classification and others in order of liquidity.
d. An entity shall classify a liability as current when it has a right at the end of the reporting period to
defer settlement of the liability for at least twelve months after the reporting period.

41. Which event after the reporting period would require adjustment?
A. Loss of plant as a result of fire
B. Loss on inventory resulting from flood loss
C. Loss on a lawsuit that outcome of which was deemed uncertain at year-end
D. Change in the market price of investment

42. Which event after the end of reporting period would generally require disclosure?
A. Retirement of key management personnel
B. Settlement of litigation where the event that gave rise to the litigation occurred in a prior period
C. Strike of employees
D. Issue of a large amount of ordinary shares

43. An entity built a new factory building during the current year. Subsequent to the current year-end and
before issuance of financial statements, the building was destroyed by fire and the claim against the
insurance entity proved futile because the cause of the fire was negligence on the part of the caretaker of
the building. What should be reported at the current year-end?
A. Write off the carrying amount of the building.
B. Make a provision for one-half of the carrying amount of the building
C. Make a provision for three-fourths of the carrying amount of the building
D. Disclose the nonadjusting event in the notes to the financial statements

44. The carrying amount of property, plant and equipment subsequent to acquisition is the
A. historical costs less accumulated depreciation
B. revalued amount less accumulate depreciation and accumulated impairment losses thereon
C. fair value less accumulated impairment losses thereon
D. amount at which asset is recognized in Financial Position less accumulated depreciation
and impairment losses thereon

45. Which statement is true concerning acquisition of property, plant and equipment by self-construction?
A. The cost of self-constructed asset is determined using the same principles as for an acquired
asset.
B. Any internal profit is eliminated in arriving at the cost of self-constructed asset.
C. The cost of abnormal amount of wasted material is not included in the cost of the asset.
D. All of the statements are true.

46. If the present value of a note issued in exchange for a plant asset is less than the face amount, the
difference is
A. Included in the cost of the asset
B. Amortized as interest expense over the life of the note
C. Amortized as interest expense over the life of the asset
D. Included in interest expense in the year of issuance.

47. Knoa Company exchanged nonmonetary assets with Vin Company. No cash was exchanged. The
carrying amount of the asset surrendered by Knoa exceeded both the fair value of the asset received
and Vin’s carrying amount of that asset. Knoa should recognize the difference between the carrying
amount of the asset it surrendered and
A. The fair value of the asset it received as a loss
B. The fair value of the asset it received as a gain
C. Vin’s carrying amount of the asset it received as a loss
D. Vin’s carrying amount of the asset it received as a gain
48. Government grant related to nondepreciable asset that requires fulfillment of certain conditions
A. Should not be recognized as income
B. Should be recognized as income immediately
C. Should be recognized as income over 40 years
D. Should be recognized as income over the periods which bear the cost of meeting the
conditions.

49. In the case of grant related to an asset, which of the following accounting treatment is prescribed?
A. Record the grant, at a nominal value in the first year and write it off in subsequent year.
B. Either set up the grant as deferred income or deduct it in arriving at the carrying amount of
the asset.
C. Record the grant at fair value in the first year and take it to income in the subsequent year.
D. Take it to the income statement and disclose it as an extraordinary gain.

50. If the qualifying asset is financed by general borrowing, the capitalizable borrowing cost is equal to
A. Actual borrowing cost incurred
B. Total expenditures on the asset multiplied by a capitalization rate
C. Average expenditures on the asset multiplied by a capitalization rate or actual borrowing cost
incurred, whichever is higher
D. Average expenditures on the asset multiplied by a capitalization rate or actual borrowing
cost incurred, whichever is lower

51. Which statement is the assumption on which straight line depreciation is based?
A. Service value declines as a function of time rather than use.
B. The operating efficiency of the asset decreases in later years.
C. Service value declines as a function of obsolescence rather than time.
D. Physical wear and tear are more important than economic obsolescence.

52. What is the allocation of an impairment loss recognized for a cash generating unit?
A. First to any goodwill, and the balance to the other assets prorate based on fair value
B. First to any goodwill, and the balance to the other assets prorate based on carrying
amount
C. Across the assets of the unit based on fair value
D. Across the assets of the unit based on carrying amount

53. Intangible assets with indefinite useful life are tested for impairment
A. Quarterly at the quarterly reporting date
B. Biannually at the reporting date
C. Annually at the reporting date
D. There is no definite guideline for impairment

54. When an entity successfully defended a patent from infringement by a competitor, the cost of successful
litigation should be
A. Amortized over the legal life of the patent.
B. Amortized over five years.
C. Amortized over the remaining useful life of the patent.
D. Expensed in the period when incurred.

55. Which of the following is an investment property?

A. Property being constructed or developed on behalf of third party
B. Property that is being constructed and developed as investment property.
C. Property held for future development and subsequent use as owner-occupied property.
D. Owner-occupied property awaiting disposal

56. For which of the following should a provision be recognized?

A. Future operating losses
B. Obligations under insurance contracts
 C. Reductions in fair value of financial instruments
D. Obligations for plant decommissioning costs

57. Contingent assets are usually recognized when

A. Realized
B. Occurrence is reasonably possible and the amount can be reasonably estimated
C. Occurrence is probable and the amount can be reasonably estimated
D. The amount can be reasonably estimated

58. Which of the following items qualify as an intangible asset under PAS 38?
A. Advertising and promotion on the launch of a huge product
B. College tuition fees paid to employees who decide to enroll in an executive M.B.A. program at
Harvard University while working with the company
C. Operating losses during the initial stages of the project
D. Legal costs paid to intellectual property lawyers to register a patent

59. A provision is a liability that is

A. uncertain as to existence, timing or amount
B. uncertain as to timing or amount
C. uncertain as to existence or amount
D. uncertain as to existence but certain as to timing or amount

60. An asset is impaired when

A. Its recoverable amount exceeds its carrying amount.
B. Its carrying amount exceeds its recoverable amount.
C. Its fair value less costs to sell is less than its value in use.
D. Its net selling price is less than its value in use.

61. Which statement best describes investment property?

A. Property held for sale in the ordinary course of business.
B. Property held for use in the production and supply of goods or services and property held for
administrative purposes.
C. Property held to earn rentals or for capital appreciation
D. Property held for capital appreciation

62. 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.

63. Are the following statements true or false, according to PAS 38 Intangible Assets?
1) Intangible assets cannot be treated as having an indefinite useful life.
2) Intangible assets with a finite useful life should be measured at cost and tested annually for
impairment.
Statement (1) Statement (2) Statement (1) Statement (2)

A. False False C. True False

B. False True D. True True

64. Which of the following most accurately reflects the concept of depreciation as used in accounting?
A. The process of charging the decline in value of an economic resource to income in the period in
which the benefit occurred.
B. The process of allocating the cost of tangible assets to expense in a systematic and
rational manner to those periods expected to benefit from the use of the asset.
 C. A method of allocating asset cost to an expense account in a manner which closely matches the
physical deterioration of the tangible asset involved.
D. An accounting concept that allocates the portion of an asset used up during the year to the contra
asset account for the purpose of properly recording the fair market value of tangible assets.

65. Which statement is true in relation to internally generated intangible asset?

A. The cost of internally generated intangible asset comprises all directly attributable costs
necessary to produce and prepare the asset for the intended use.
B. Internally generated goodwill shall not be recognized as an intangible asset.
C. Internally generated brand, masthead, publishing title, and customer list shall not be recognized
as an intangible asset.
D. All of these statements are true.

66. When a property 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
C. Fair value of the asset received
D. Fair value of shares issued

67. An entity purchased a machinery that it does not have to pay until after three years. The total payment on
maturity will include both principal and interest. The cost of the machine would be the total payment
multiplied by what time value of money concept?
A. Present value of annuity of 1
B. Present value of 1
C. Future amount of annuity of 1
D. Future amount of 1

68. Government assistance includes all the following, except

A. Free technical advice
B. Provision of guarantee
C. Government procurement policy that is responsible for a portion of the entity’s sales
D. Improved irrigation water system for the benefit of an entire local community

69. Borrowing costs are defined as

A. Interest expense using the effective interest method
B. Interest and other costs that an entity incurs in connection with borrowing of funds
C. Finance charges in respect of finance leases
D. Exchange differences arising from foreign currency borrowings to the extent that they are
regarded as an adjustment to interest costs

70. Which of the following statements regarding depreciation is true?

A. An asset must be depreciated from the date of purchase to the date of sale
B. The annual depreciation charge shall be constant
C. The total cost must eventually be depreciated
D. If the carrying amount of an asset is less than the residual value, depreciation is not charged
 Pablo Borbon Campus

College of Accountancy, Business, Economics and International Hospitality Management

Rizal Avenue Extension, Batangas City, Philippines +63 43 980-0385 loc. 1124

www.batstate-u.edu.ph cabeihm.pb@g.batstate-u.edu.ph