Icare 08 Far First PB

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
iCare Batch 8- 1st Preboard Examination

in Financial Accounting and Reporting
1. The sum of reportable segment’s external sales must be at least equal to what percent of total
operating segment’s external sales?
a. 60% c. 50%
b. 75% d.65%
2. Operating segments that do not meet any of the quantitative thresholds

a. Cannot be considered reportable.
b. May be considered reportable and separately disclosed if management believes that
information about the segment would be useful to the statement users.
c. May be considered reportable and separately disclosed if the information is for internal use
only.
d. May be considered reportable and separately disclosed if this is the practice within the
economic environment.
3. A 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, the sale
should qualify for recognition as a completed sale within
a. Six months from the statement of financial position date.
b. Six months from the date of classification as held for sale.
c. One year from the statement of financial position date.
d. One year from the date of classification as held for sale.
4. 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.
a. Disposal group c. Noncurrent asset
b. Discontinued operation d. Cash generating unit
5. Which statement is incorrect concerning the presentation of the discontinued operation in the
statement of financial position?
a. Assets of the component held for sale are presented separately under current assets.
b. Assets of the component held for sale are measured at the lower between fair value less cost
of disposal and carrying amount.
c. Liabilities of the component held for sale are presented separately under current liabilities.
d. Depreciable assets of the component held for sale shall be depreciated.
6. At the end of the current year, an entity had cash accounts at three different banks. One
account is segregated solely for payment into a bond sinking fund. A second account, used for
branch operations, is overdrawn. The third account, used for regular corporate operations, has a
positive balance. How should these accounts be reported?
a. The segregated and regular accounts should be reported as current assets net of the overdraft.
b. The segregated account should be reported as a noncurrent asset, the regular account should
be reported as a current asset, and the overdraft should be reported as a current liability.
c. The segregated and regular accounts should be reported as current assets and the overdraft
should be reported as a current liability.
1|P a g e RSORIANO/BVILLALUZ/JBAUTISTA/JABIERA
No. 125 Brgy. San Sebastian
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Telephone : (043) 723 8412
d. The segregated account should be reported as a noncurrent asset and the regular account
should be reported as a current asset net of the overdraft.
7. Which of the following should not be considered cash?

a. IOUs c. Coin and currency
b. Petty cash fund d. Money orders
8. Noncurrent asset classified as held for sale shall be presented as

a. Current asset c. Noncurrent investment
b. Other noncurrent asset d. Property, plant and equipment
9. What is the presentation of the results from discontinued operation in the income statement?
a. The entity shall disclose a single amount on the face of the income statement below the income
from continuing operations.
b. The amounts from discontinued operations shall be broken down over each category of
revenue and expense.
c. Discontinued operations shall be shown as a movement on retained earnings.
d. Discontinued operations shall be shown as a line item after gross income with the related tax
being shown as part of income tax expense.
10. The term chief operating decision maker

a. Refers to a manager with a specific title.
b. Must be disclosed by title in the financial reporting for segments.
c. Must be described in the disclosures for the financial reporting for segments.
d. Refers to a function of allocating resources to the operating segments and assessing their
performance.
11. Results of discontinued operation shall include the following, except

a. Revenues and expenses from operations c. Expected gain
b. Impairment loss d. Loss from disposal of assets
12. A compensating balance

a. If legally restricted and related to a short-term loan = Current Asset.
b. Must be included in cash and cash equivalent.
c. If not legally restricted as to withdrawal = Current Asset.
d. If legally restricted and related to a long-term loan = Current Asset.
13. Deposits in foreign bank which are subject to foreign exchange restriction should be classified
a. Separately as noncurrent asset with appropriate disclosure.
b. Separately as current asset with appropriate disclosure.
c. Be written off as a loss.
d. As part of cash and cash equivalents.
14. All of the following can be classified as cash and cash equivalents, except
a. Equity investments
b. Bank overdraft
c. Redeemable preference shares acquired and due in 60 days
d. Commercial papers held and due for repayment in 90 days
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15. If the balance shown in the bank statement is less than the correct cash balance and neither
the entity nor the bank has made any errors, there must be
a. Deposits in transit c. Deposits credited by the bank
b. Bank charges d. Outstanding checks
Problems 16-17:
During the current year, an entity reported total revenue of operating segments at P90,000,000.
Included in this total revenue was sales revenue to external customers amounting to
P25,000,000.
16. Under PFRS 8, the amount of external revenue to be reported by reportable segments should
be at least
a. 25,000,000 c. 67,500,000
b. 18,750,000 d. 48,750,000
17. Under PFRS 8, the amount of revenue needed to be reported as reportable segment should
be at least
a. 2,500,000 c. 9,000,000
b. 7,500,000 d. 67,500,000
18. An entity and its divisions are engaged solely in manufacturing. The following data pertain to
the industries for the year ended December 31, 2019:
Segment Operating Profit (Loss)
A 20,000,000
B (10,000,000)
C (6,000,000)
D (9,000,000)
E 3,000,000
To be a reportable segment, the segment profit or loss should be at least what amount?
a. 2,300,000 c. 2,000,000
b. 2,500,000 d. 4,800,000
Problems 19-20:
An entity has two divisions: Cars and Clothing. Both qualify as business components. In 2020,
the entity decided to dispose of the assets and liabilities of division Clothing and it is probable
that the disposal will be completed early 2021. The revenue and expenses of the entity for 2020
and 2019 are as follows:
2020 2019
Sales – Cars 5,000,000 4,600,000
Total expenses – Cars 4,400,000 4,100,000
Sales – Clothing 3,500,000 5,100,000
Total expense – Clothing 3,900,000 4,500,000
During the later part of 2020, the entity disposed of a portion of division Clothing and recognized
pretax loss of P2,000,000 on the disposal. The income tax rate is 30%.
19. What amount of loss from discontinued operation should the entity report in 2020?
a. 1,800,000 c. 1,680,000
b. 1,260,000 d. 2,400,000
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20. What amount of net loss should the entity report in 2020?
a. 1,800,000 c. 1,680,000
b. 1,260,000 d. 2,400,000
21. On December 31, 2019, an entity classified a noncurrent asset as held for sale. Such asset
was recorded appropriately at P4,500,000. During 2020, there were no willing buyers and thus
on December 31, 2020, the entity decided to continue using the asset. On such date, the carrying
amount as if the asset was never classified as held for sale was P4,000,000, the fair value less
cost of disposal was P3,700,000 and the value in use was P4,200,000.
What amount of loss on reclassification should be recognized on December 31, 2020?
a. 500,000 c. 200,000
b. 800,000 d. 300,000
22. On December 31, 2021, Company I reported cash account balance per ledger of P9,500,000
which included the following:
Cash in bank – demand deposit 3,000,000
Time deposit – 30 days 500,000
NSF check of customer 200,000
Money market placement due on June 30, 2022 2,000,000
Savings deposit 1,000,000
IOU from an employee 300,000
Pension fund 1,500,000
Customer check dated January 31, 2022 600,000
Customer check outstanding for 18 months 400,000
Total 9,500,000
• Check of P100,000 in payment of accounts payable was dated and recorded on December
31, 2021 but mailed to creditors on January 15, 2022.
• Check of P300,000 dated January 31, 2022 in payment of accounts payable was recorded
and mailed December 31, 2021.
• The cash receipts journal was held open until January 15, 2022, during which time
P200,000 was collected and recorded on December 31, 2021.
What total amount should be reported as cash and cash equivalents on December 31, 2021?
a. 6,700,000 c. 5,100,000
b. 4,700,000 d. 4,900,000
23. On December 31, 2021, Company M reported cash of P9,950,000 which comprised the
following:
Undeposited collections 600,000
Cash in bank – BDO checking account 4,000,000
Undeposited NSF check received from customer, dated 12/1/2021 150,000
Undeposited check from a customer, dated 1/15/2022 250,000
Cash in bank – BDO fund for payroll 1,000,000
Cash in bank – BDO money market instrument, 90 days 2,000,000
Cash in foreign bank restricted 1,500,000
Cash in bank – BDO value added tax account 450,000
Total 9,950,000
On December 31, 2021, what total amount should be reported as cash and cash equivalents?
a. 8,200,000 c. 7,600,000
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b. 8,050,000 d. 6,050,000
Problems 24-27:
ABC Company provided the following information for the current year-end:
Sales 5,000,000
Cost of goods sold 2,500,000
Pretax measurement gain on actuarial valuation 900,000
Pretax foreign translation adjustment – credit 600,000
Distribution cost 1,100,000
Administrative cost 450,000
Impairment loss on asset held for sale 300,000
Pretax loss on disposal of a major division 150,000
Income tax rate 30%
24. What amount should be reported by ABC Company as income from continuing operations?
a. 350,000 c. 1,190,000
b. 455,000 d. 1,085,000
25. What amount should be reported by ABC Company as loss from discontinued operations?
a. 0 c. 105,000
b. 150,000 d. 315,000
26. What amount should be reported by ABC Company as net income?

a. 1,085,000 c. 1,190,000
b. 455,000 d. 350,000
27. What amount should be reported by ABC Company as comprehensive income?

a. 1,400,000 c. 1,610,000
b. 1,850,000 d. 1,355,000
Problems 28-29:
During the current year, Jade Company reported total revenue of operating segments at
P60,000,000. Included in this total revenue was sales revenue to external customers amounting
to P20,000,000.
28. What minimum amount of revenue should be met for Jade Company classify a segment as
reportable?
a. 45,000,000 c. 4,000,000
b. 2,000,000 d. 6,000,000
29. What minimum amount of external revenue should Jade Company report for reportable
segments?
a. 20,000,000 c. 30,000,000
b. 15,000,000 d. 45,000,000
Problems 30-31:
Brandy Company purchased equipment for P5,000,000 on January 1, 2019 with a useful life of
10 years and no residual value. On December 31, 2020, the entity classified the equipment as
held for sale. The fair value of the equipment on December 31, 2020 was P3,300,000 and the
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Telephone : (043) 723 8412
cost of disposal P100,000. On December 31, 2021, the fair value of the equipment was
P3,800,000 and the cost of disposal P200,000. On December 31, 2021, 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.
30. What amount should Brandy Company recognize as impairment loss during 2020?
a. 1,700,000 c. 1,800,000
b. 800,000 d. 700,000
31. What amount should Brandy Company recognize as gain on reclassification in 2021?
a. 800,000 c. 400,000
b. 300,000 d. 0
Problems 32-33 :
On July 1, 2021, Whisky Company had an equipment with cost of P5,000,000 and accumulated
depreciation of P3,000,000. On that date, the entity classified the equipment as held for sale. On
same date, the equipment had an estimated selling price of P1,300,000, estimated selling cost of
P100,000 and remaining life of 4 years. On December 31, 2021, the estimated selling price of the
equipment had increased to P1,500,000 with estimated selling cost of P50,000.
32. What amount should Whisky Company recognize as impairment loss during 2021?
a. 3,800,000 c. 3,700,000
b. 700,000 d. 800,000
33. What amount should Whisky Company recognize as gain on reversal of impairment for 2021?
a. 800,000 c. 200,000
b. 250,000 d. 300,000
Problems 34-35:
Blue Company reported the following information for the year ended December 31, 2021.
Sales 7,750,000
Administrative expenses 700,000
Loss on sale of equipment 100,000
Sales commissions 500,000
Interest revenue 450,000
Freight out 150,000
Loss on early extinguishment of long-term debt 200,000
Doubtful accounts expense 150,000
At year-end, Blue Company committed to a plan to discontinue the operations of Underwear

Division. Blue Company estimated that the division’s operating loss for 2022 would be P500,000.
The fair value of the facilities of the division was P200,000 less than carrying amount on December
31, 2021. The division’s operating loss for 2021 was P1,400,000 and the division was actually
sold for P300,000 less than carrying amount in 2022. The income tax rate is 25%.
34. What amount should Blue Company report as loss from discontinued operations for 2021?
a. 1,600,000 c. 1,900,000
b. 1,200,000 d. 1,425,000
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35. What amount should Blue Company report as net income for 2021?
a. 3,000,000 c. 1,425,000
b. 1,800,000 d. 1,575,000
36. Once an accounting standard has been established

A. The standard is not reviewed.
B. No revisions should be made to the standard.
C. The task of reviewing the standard is delegated to a national organization of CPAs.
D. The standard is continually reviewed to see if modification is necessary.
37. The purpose of the International Accounting Standards Board is to

A. issue enforceable standards which regulate the financial accounting and reporting of
multinational corporations.
B. develop a uniform currency in which the financial transactions of companies
through-out the world would be measured.
C. promote uniform accounting standards among countries of the world.
D. arbitrate accounting disputes between auditors and international companies.
38. The following statements pertains to Continuing Professional Education (CPE):

I. Under the new BOA resolution, all CPAs shall earn at least 120 CPD units every
three years for the renewal of their CPA license.
II. In case a CPA earned CPD units in excess of the required CPD units, any excess
units earned is not allowed to be carried over to the next three-year period.
Based on the foregoing statements…

A. Both statements are true
B. Both statements are false
C. The first statement is true while the second statement is false
D. The first statement is false while the second statement is true
39. Which of the following is true regarding the Conceptual Framework?

A. The Conceptual Framework constitutes the highest level of authority.
B. The Conceptual Framework is also an accounting standard.
C. Revisions of the Conceptual Framework will automatically lead to changes to the
accounting standards.
D. Revisions of the Conceptual Framework will not automatically lead to changes to the
accounting standards.
40. First statement: Relevance and faithful representation are the two primary qualities that
make accounting information useful for decision making.
Second statement: Users of financial statements are assumed to need no knowledge of
business and financial accounting matters to understand information contained in
financial statements.
A. Both statements are true
B. Both statements are false
C. The first statement is true while the second statement is false
D. The first statement is false while the second statement is true
41. Adjusting entries are often prepared

A. after the balance sheet date but dated as of the balance sheet date.
B. after the balance sheet date and dated after the balance sheet date.
C. before the balance sheet date but dated as of the balance sheet date.
D. before the balance sheet date and dated after the balance sheet date.
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42. A reversing entry should never be made for an adjusting entry that
A. accrues unrecorded revenue.
B. adjusts expired costs from an asset account to an expense account.
C. accrues unrecorded expenses.
D. adjusts unexpired costs from an expense account to an asset account.
43. Sergio Co.’s rent income account on December 31, 2024 has a credit balance of P240,000
composed of the following:
▪ Rental for three months ending March 31, 2024, P45,000.
▪ A credit of P195,000 representing advance rental payment for one year
beginning April 1, 2024.
The December 31, 2024, adjusting entry will require a debit to rent income and a credit
to unearned rent of:
A. 48,750
B. 146,250
C. 191,250
D. 195,000
44. The term comprehensive income

A. Is synonymous with the term gross income.
B. Is synonymous with the term net income.
C. Is the net change in equity for the period.
D. Includes all changes in equity except those resulting from investments by and
distributions to owners.
45. The standard of adequate disclosure is best described by which of the following?
A. Disclosure of any financial fact significant enough to influence the judgment of a
primary user.
B. Enough information should be disclosed in order that a prospective investor can
make a wise decision.
C. Information about each account balance appearing in the financial statements is
included in the notes.
D. All of the foregoing statements
For the next two (2) items:

Palermo Company provided the following data on December 31, 2024:
Cash in bank, net of P500,000 bank overdraft 5,000,000

Petty cash (including unreplenished petty cash expenses, P10,000) 50,000
Notes receivable – trade (collectible within 18 months) 4,000,000
Accounts receivable, net of customers’ accounts with credit balances of 6,000,000
P1,500,000
Inventory 3,000,000
Bond sinking fund 3,000,000
Total current assets 21,050,000
Accounts payable, net of suppliers’ accounts with debit balance of 7,000,000

P1,000,000
Notes payable – trade 4,000,000
Bonds payable due June 30, 2025 3,000,000
Accrued expenses 2,000,000
Total current liabilities 16,000,000
46. What amount should be reported as total current assets on December 31, 2024?
A. 24,040,000 B. 23,040,000 C. 21,040,000 D. 20,040,000
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47. What amount should be reported as total current liabilities on December 31, 2024?
A. 19,000,000 B. 17,500,000 C. 17,000,000 D. 16,000,000
48. Damian Company provided the following information for the current year:
Sales 19,000,000
Interest income 500,000
Gain on sale of equipment 200,000
Revaluation surplus during the current 2,400,000
year
Investment income – equity method 700,000
Interest expense 300,000
Selling costs 1,000,000
General and administrative expenses 600,000
Translation loss on foreign operation 400,000
Income tax expense 1,900,000
What is the net income for the current year?

A. 4,200,000 B. 4,600,000 C. 6,500,000 D. 8,400,000
49. If an entity does not prepare interim financial reports

A. The year-end financial statements are deemed not to comply with accounting
standards.
B. The year-end financial statements’ compliance with accounting standards is not
affected.
C. The year-end financial statements shall not be acceptable under local jurisdiction.
D. Interim financial reports shall be included in the year-end financial statements.
50. Polignac Company prepared the following income statement for the year ended December
31, 2023:
Sales P6,000,000
Cost of goods sold (2,800,000)
Gross profit 3,200,000
Gain on sale of equipment 100,000
Operating expenses (500,000)
Casualty loss due to fire (300,000)
Pre-tax income 2,500,000
Income tax expense (750,000)
Net income P1,750,000
Additional information:
• Third quarter sales were 30% of total sales.
• For interim reporting purposes, a gross profit rate of 40% can be justified.
• Variable operating expenses are allocated in the same proportion as sales.
• Fixed operating expenses are allocated based on passage of time.
• Of the total operating expenses, P400,000 relate to variable expenses and the
remainder relate to fixed expenses.
• The equipment was sold on June 1, 2023.
• The fire casualty loss occurred on September 1, 2023.
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Telephone : (043) 723 8412
What amount should be reported as pre-tax income for the third quarter ended
September 30, 2023?
A. 275,000
B. 300,000
C. 375,000
D. 500,000
51. The following statements pertain to the relationship between interest income and cash
received for interest on notes:
I. The cash received for interest will be greater than interest income when notes
are issued at a discount.
II. The cash received for interest will be lesser than interest income when notes are
issued at a discount.
III. The cash received for interest will be greater than interest income when notes
are issued at a premium.
IV. The cash received for interest will be lesser than interest income when notes are
issued at a premium.
Which of the following correctly describes the relationship between interest income and
cash received for interest?
A. I and III
B. I and IV
C. II and III
D. II and IV
52. Which of the following is true when accounts receivable is factored without recourse?
A. The transaction may be accounted for either as a secured borrowing or as a sale,
depending upon the substance of the transaction.
B. The receivables are used as collateral for a promissory note issued to the factor by
the owner of the receivables.
C. The factor assumes the risk of collectability and absorbs any credit losses in
collecting the receivables.
D. The financing cost (interest expense) should be recognized ratably over the
collection period of the receivables.

CAMILLE Company had the following information relating to its accounts receivable on
December 31, 2024, and for the year ended, December 31, 2025:
Accounts receivable, December 31, 2024 P490,000

Allowance for doubtful accounts, December 45,000
31, 2024
Credit sales for 2025 2,255,000
Discounts granted to customers on account 70,000
Sales returns on credit sales 25,000
Cash collections from customers on account
for 2025, 2,115,000
including P12,000 from previously written-
off accounts
Accounts written off in September 2025 42,000
Interim bad debts were recorded at 1% of net credit sales during the period. The amount
estimated to be uncollectible at year-end was P50,000.
53. The accounts receivable to be reported in the December 31, 2025 statement of financial
position is:
A. 431,000 B. 443,000 C. 455,000 D. 525,000
10 | P a g e RSORIANO/BVILLALUZ/JBAUTISTA/JABIERA
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54. The year-end adjustment to the allowance account is:

A. 0 B. 12,450 C. 13,400 D. 35,000
55. On July 1, 2024, Monk Company finished consultation services and accepted in exchange a
promissory note with a face value of P300,000, a due date of June 30, 2027, and a stated
rate of 5% with interest receivable every June 30 starting June 30, 2025. The fair value of
the services is not readily determinable and the note is not readily marketable. Under the
circumstances, the note is considered to have an appropriate imputed rate of interest of
10%. The total income to be recognized in Monk’s 2024 profit or loss is: (Use four decimal
places for PV factors)
A. 307,500 B. 288,963 C. 275,829 D. 262,694
56. RR Bank loaned EE Company P7,500,000 on January 1, 2021. The terms of the loan were
payment in full on January 1, 2025, plus annual interest payment at 11%. The interest
payment was made as scheduled on January 1, 2022. However, due to financial setbacks,
EE Company was unable to make the 2023 interest payment.
RR Bank considered the loan impaired and projected the cash flows from the loan on
December 31, 2023. The bank accrued the interest on December 31, 2022, but did not
continue to accrue the interest for 2023 due to the impairment of the loan. The
projected cash flows are:
Date of cash Amount projected on December 31, 2023

flow
December 31, 500,000
2024
December 31, 1,000,000
2025
December 31, 2,000,000
2026
December 31, 4,000,000
2027
The PV of 1 at 11% is 0.90 for one period, 0.81 for two periods, 0.73 for three periods,
and 0.66 for four periods. What is the loan impairment loss for 2023?
A. 2,965,000 B. 2,240,000
C. 5,360,000 D. 2,140,000
57. Tokyo Company received a P40,000 note receivable from a customer on June 30, 2024. The
note, along with interest at 6%, is due on June 30, 2025. On September 30, 2024, Tokyo
discounted the note at BPI. The bank’s discount rate is 10%. What amount of cash did the
company receive from BPI?
A. 40,600 B. 36,000 C. 39,220 D. 36,820
58. Ron Company factors P2,000,000 of its accounts receivables without recourse for a finance
charge of 5%. The finance company retains an amount equal to 10% of the accounts
receivable for possible adjustments. What would be recorded as a gain (loss) on the transfer
of receivables?
A. Loss of P100,000 B. Gain of P100,000
C. Loss of P300,000 D. Loss of P200,000
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Telephone : (043) 723 8412
59. On November 1, 2024, Nairobi Company assigned specific accounts receivable totaling
P30,000,000 as collateral on a P25,000,000, 9% note from BPI. The company will continue
to collect the assigned accounts receivable. In addition to the interest on the note, the bank
also charged a 5% finance fee deducted in advance on the P25,000,000 value of the note.
The November collections of assigned accounts receivable amounted to P12,000,000

less 2% cash discount. On November 30, 2024, the company remitted the collections to
BPI in payment for the interest accrued for the month of November and the note
payable.
The December collections of assigned accounts receivable amounted to P7,840,000, net

of 2% cash discount. On December 31, 2024, the company remitted the collections to
BPI in payment for the interest accrued for the month of December and the note
payable.
What amount should be disclosed as the equity of Nairobi Company in assigned

accounts on December 31, 2024?
A. 4,225,000 B. 4,311,794 C. 4,313,594 D. 4,625,000
Cash Sinking Fund

On January 1, 2018, Catherine Company adopted a plan to accumulate P10,000,000 by
September 1, 2022. The company plans to make four equal annual deposits to a fund that will
earn interest at 10% compounded annually. The company made the first deposit on January 1,
2018.
Future value of 1 at 10% for 4 periods 1.46

Future value of an ordinary annuity of 1 at 10% for 4.64
4 periods
Future value of an annuity of 1 in advance at 10% 5.11
for 4 periods
60. What is the annual deposit to the fund?

A. 1,460,000 B. 1,957,000 C. 2,155,000 D. 2,500,000
61. Assuming the company made the first deposit on December 31, 2018, what amount must
be deposited annually at the compound interest to accumulate the desired amount?
A. 1,460,000 B. 1,957,000 C. 2,155,000 D. 2,500,000
62. In the case of grant related to an asset, which of following accounting treatment is
prescribed?
A. Record the grant at a nominal value in the first year and write it off in the
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.
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63. At the beginning of 2018, JD Company received a grant of P6,000,000 from the Indian
government to compensate for massive losses incurred because of a recent tsunami. The
grant was made for the purpose of giving immediate financial support to the company. It
will take the company two years to reconstruct the structures destroyed by the tsunami.
What amount of grant income should be recognized in 2018?
A. 6,000,000 B. 3,000,000
C. 1,500,000 D. 0
64. Gamora Company purchased equipment for P15,000,000 on January 1, 2018, Gamora
received a government grant of P1,500,000 in respect of this asset on the condition that
Gamora will hire personnel from the depressed area to operate the machine and provide
them livelihood. Gamora’s accounting policy is to treat the grant as a deduction from the
cost of this asset. The equipment has a useful life of 5 years and will use sum-of-the-years
in depreciating the asset. On January 1, 2021, Gamora violated the condition and thus
returned the grant. What is the depreciation on the equipment for the year 2021?
A. 1,800,000 B. 2,700,000 C. 2,800,000 D. 3,200,000
Borrowing Costs
65. Which of the following is not a condition that must be satisfied before interest
capitalization can begin on a qualifying asset?
A. Interest is being incurred.
B. Expenditures for the asset have been made.
C. The interest rate is equal to or greater than the cost of capital.
D. Activities necessary to get the asset ready for the intended use are in progress.
66. Miswa Company commenced construction of a new plant on February 1, 2024. The cost of
P18,000,000 was paid in full to the contractor on February 1, 2024, and was funded from
existing general borrowings. The construction was completed on September 30, 2024.
The borrowings during 2024 comprised the following:
BPI – 6% 8,000,000
Landbank – 10,000,000
6.6%
PNB – 7% 30,000,000
What amount of borrowing cost should be capitalized in relation to the plant?

A. 1,215,000 B. 810,000
C. 911,250 D. 0

Oakley Company had loans outstanding during 2024 and 2025:
Specific construction 2,000,000 10%

loan
General loan 25,000,000 12%
The company began the self-construction of a new building on January 1, 2024, and the
building was completed on December 31, 2025.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Expenditures during 2024 and 2025 were:

January 1, 2024 2,000,000
June 30, 2024 4,000,000
November 1, 3,000,000
2024
July 1, 2025 1,000,000
67. What is the cost of the new building on December 31, 2024?
A. 9,000,000 B. 9,500,000
C. 9,200,000 D. 9,300,000
68. What is the cost of the new building on December 31, 2025?
A. 10,000,000 B. 11,660,000
C. 11,700,000 D. 11,500,000
69. On January 1, 2024, Scott Co. placed an order for equipment. The supplier shipped the
equipment on January 15, 2024 and was received by Scott on February 1, 2024. Installation
and testing were finished on March 1, 2024 and the equipment is available for use on this
date. However, Scott started using the equipment only on May 1, 2024. According to IAS
16, when should Scott start depreciating the equipment?
A. January 15, 2024
B. February 1, 2024
C. March 1, 2024
D. May 1, 2024
70. Benette Company purchased factory equipment, which was installed and put into service on
January 1, 2018 at a total cost of P1,280,000. The equipment is depreciated over eight
years by the double declining balance method with residual value of P80,000. What amount
of depreciation expense should be recorded on the equipment for 2019?
A. 225,000 B. 240,000
C. 300,000 D. 320,000

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No. 125 Brgy.

iCare Batch 8- 1st Preboard Examination

2. Operating segments that do not meet any of the quantitative thresholds

4. It is a group of assets to be disposed of by sale or otherwise, together as a group in a single

7. Which of the following should not be considered cash?

8. Noncurrent asset classified as held for sale shall be presented as

10. The term chief operating decision maker

11. Results of discontinued operation shall include the following, except

12. A compensating balance

26. What amount should be reported by ABC Company as net income?

27. What amount should be reported by ABC Company as comprehensive income?

At year-end, Blue Company committed to a plan to discontinue the operations of Underwear

36. Once an accounting standard has been established

37. The purpose of the International Accounting Standards Board is to

38. The following statements pertains to Continuing Professional Education (CPE):

Based on the foregoing statements…

39. Which of the following is true regarding the Conceptual Framework?

41. Adjusting entries are often prepared

44. The term comprehensive income

For the next two (2) items:

Cash in bank, net of P500,000 bank overdraft 5,000,000

Accounts payable, net of suppliers’ accounts with debit balance of 7,000,000

What is the net income for the current year?

49. If an entity does not prepare interim financial reports

For the next two (2) items:

Accounts receivable, December 31, 2024 P490,000

54. The year-end adjustment to the allowance account is:

Date of cash Amount projected on December 31, 2023

The November collections of assigned accounts receivable amounted to P12,000,000

The December collections of assigned accounts receivable amounted to P7,840,000, net

What amount should be disclosed as the equity of Nairobi Company in assigned

Cash Sinking Fund

Future value of 1 at 10% for 4 periods 1.46

60. What is the annual deposit to the fund?

The borrowings during 2024 comprised the following:

What amount of borrowing cost should be capitalized in relation to the plant?

For the next two (2) items:

Specific construction 2,000,000 10%

Expenditures during 2024 and 2025 were:

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