TRUE OR FALSE No.

After initial recognition, an

entity shall choose which
method to use as
accounting policy for
property, plant and
equipment.
 TRUE OR FALSE No. 2
page 1300 FINACC 1 part 2
When an asset’s carrying
amount is increased due to
revaluation, the revaluation
surplus maybe realized on
the retirement or disposal
of the asset.
 TRUE OR FALSE No. 3
page 1331 of FINACC 1 part 2
Under PFRS 13, the Level 3
inputs in the fair value
hierarchy are the quoted
prices in an active market for
identical assets.
 TRUE OR FALSE No. 4.
-under PAS 36 paragraph 114
Under PAS 36, impairment
loss recognized for an asset
in prior years shall be
reversed if there has been a
change in estimated
recoverable amount.
 TRUE OR FALSE No. 5
page 1337 of FINACC 1 part 2
Although generally, an asset’s
recoverable amount is
determined individually, it can be
determined by estimating the
recoverable amount of the cash
generating unit it belongs to.
 IDENTIFICATION No. 1
How revaluation is carried out
under the proportional
approach.
The accumulated depreciation at the date of
revaluation is restated proportionately with the change
in the gross carrying amount of the asset so that the
carrying amount of the asset after revaluation equals
the revalued amount
 IDENTIFICATION No. 2
The difference between fair value or
depreciated replacement cost minus
the carrying amount of the property,
plant and equipment

REVALUATION SURPLUS
 IDENTIFICATION No. 3

Inputs that are observable

either directly or indirectly, as
stated in PFRS 17, paragraph
72.

LEVEL 2 INPUTS
 IDENTIFICATION No. 4
Assets other than goodwill that
contribute to the future cash flows of
both the cash generating unit under
review and other cash generating units.

CORPORATE
ASSETS
 IDENTIFICATION No. 5
One example of internal source of
information that may lead to
impairment of assets
a. evidence of obsolescence or physical
damage
b. Significant change in the manner or extent
in which the asset is used with an adverse
effect on the entity.
c. Evidence that the economic performance
of an asset will be worse than expected
 PROBLEM SOLVING No. 1 p.690 pract.
1
On January 1, 2012, Ravena Company acquired a
building at cost of Php 5,000,000. The building has
been depreciated on the basis of a 20-year life.
On January 1, 2017, an appraisal of the building
showed replacement cost of Php 8,000,000 with no
change in useful life.
Before income tax, what amount should be
credited to revaluation surplus on January 1, 2017?

A. Php 3,000,000 C. Php 2,750,000

B. Php 2,250,000 D. None of the above
 PROBLEM SOLVING No. 2 p. 695 pract
1
On June 30, 2017, Shark Baby Company reported the following
information:
Equipment at Cost Accumulated Depreciation
Php 5,000,000 Php 1,500,000

The equipment was measured during the cost model and depreciated
on a straight line basis over a 10-year period.
On December 31, 2016 the management decided to change the basis of
measuring the equipment form the cost model to the revaluation
model.
The equipment had a fair value of Php 4,550,000 with remaining useful
life of 5 years on December 31, 2017.
What amount should be reported as revaluation surplus in 2018?
A. Php 1,170,000 C. Php 845,000
B. Php 1,040,000 D. None of the above
 PROBLEM SOLVING No. 3 page 696
pract 1
On January 1, 2012, Baston Company purchased a new
building at a cost of Php 6,000,000. Depreciation was
computed on the straight line basis at 4% per year.

On January 1, 2017, the building had a fair value of Php

8,000,000.

What is the depreciation for 2017?

A. Php 400,000 C. Php 100,000

B. Php 240,000 D. None of the above
 PROBLEM SOLVING No. 4
On January 2, 2017, Laylayan Company owned a machine
having a carrying amount of Php 2,400,000. The machine was
purchased four years earlier for Php 4,000,000. The straight
line depreciation is used.
During December 2017, the entity determined that the
machine suffered permanent impairment and will not be
economically useful after December 31, 2017. The entity sold
the machine for Php 650,000 on January 5, 2018.
What amount should be recognized as impairment loss in
2017?

A. Php 1,350,000 C. Php 2,000,000

B. Php 1,750,000 D. None of the above
 PROBLEM SOLVING No. 5
Noturanus Company had various cash generating units
(CGUs). At year-end, one CGU had the following carrying
amount of assets:
Cash Php 600,000
Inventory Php 1,400,000
Land Php 2,500,000
Plant and Equipment, net Php 7,500,000
Goodwill Php 1,000,000
Total Carrying Amount Php 13,000,000

Management determined the value in use of the CGU at Php

8,500,000.

The fair value less cost of disposal for the inventory is greater
than the carrying amount
 PROBLEM SOLVING No. 5
What is the impairment loss allocated to plant and equipment?

A. Php 3,500,000 C. Php 3,375,000

B. Php 2,625,000 D. None of the above