P1-2 - Quiz Financial Accounting 3 PDF

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Quiz Part 1THEORYIn order for a noncurrent asset to be classified as held for sale, the sale must be highly probable. What is the meaning of highly probable?1 pointA. The future sale is likely to occur B. The future sale is more likely than not to occur C. The sale is certain D. The probability is h...

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Quiz Part 1 THEORY In order for a noncurrent asset to be classified as held for sale, the sale must be highly probable. What is the meaning of highly probable? 1 point

A. The future sale is likely to occur B. The future sale is more likely than not to occur C. The sale is certain D. The probability is higher than more likely than not

Which criterion does not have to be met in order for an operation to be classified as discontinued?

1 point

The operation shall represent a separate major line of business or geographical area. The operation is part of a single plan to dispose of a separate major line of business or geographical area. The operation is a subsidiary acquired exclusively with a view to resale The operation must be sold within three months of the year-end

An entity classified a noncurrent asset accounted for under the cost model as held for sale at the current year-end. Because no offers were received at an acceptable price, the entity decided at the end of next year not to sell the asset but to continue to use it. The asset shall be measured at the end of next year at what amount?

1 point

A. The lower of carrying amount and recoverable amount B. The higher of carrying amount and recoverable amount C. The lower of carrying amount on the basis that the asset had never been classified as held for sale and recoverable amount D. The higher of carrying amount on the basis that the asset had never been classified as held for sale and recoverable amount

When an entity discontinued an operation and disposed of the discontinued operation, the transaction should be reported in the income statement as 1 point

A prior period error Other income and expense item An amount after income from continuing operations and before net income A bulk sale of assets included in income from continuing operations

Which of the following criteria is not required for the results of a component of an entity to be classified as discontinued operation? 1 point

Management must have entered into a sale agreement. The component is available for immediate sale The operations and cash flows of the component shall be eliminated from the operations of the entity as a result of the disposal The entity shall not have any significant continuing involvement in the operations of the components after disposal.

An entity recently moved to a new building. The old building is being actively marketed for sale and the entity expects to complete the sale in four months. Which statement is incorrect regarding the old building? 1 point

A. It will be reclassified as an asset held for sale B. It will be classified as a current asset C. It will no longer be depreciated D. It will be measured at historical cost

The noncurrent asset or disposal group is classified as held for sale when the asset is available for immediate sale in the present condition and the sale is highly probable. For the sale to be highly probable, which of the following statements is incorrect?

1 point

A. Management must be committed to a plan to sell the asset. B. An active program to locate a buyer and complete the plan must have been initiated. C. The asset must be actively marketed for sale at a reasonable price in relation to the fair value. D. The sale is expected to qualify for recognition as a completed sale within two years from the date of classification of the asset as "held for sale"

Which is a requirement for a component of an entity to be classified as a discontinued operation? 1 point

The activities must cease permanently prior to the financial statements being authorized for issue The component must be a reportable segment The assets must have been classified as held for sale in the previous financial statements The component must have been a cash generating unit while being held for use

Which should be considered as discontinued operation? 1 point

The operations and cash flows of a component have been eliminated from the ongoing operations of the entity as a result of a disposal transaction The entity continues to have a significant continuing involvement in the operations of a component after the disposal transaction The entity outsources the manufacturing operations of a component and sells the manufacturing facility of the component but continues to sell the product All of these should be considered as discontinued operations.

What is the presentation of the results from discontinued operation in the income statement? 1 point

The entity shall disclose a single amount on the face of the income statement below the income from continuing operations. The amounts from discontinued operations shall be broken down over each category of revenue and expense. Discontinued operations shall be shown as a line item after gross income with the related tax being shown as part of income tax expense. Discontinued operations shall be shown as a movement on retained earnings

When a component of an entity was discontinued during the current year, the loss on discontinued operation should 1 point

Exclude the associated employee relocation cost Exclude operating loss for the period Include associated employee termination cost Exclude associated lease cancellation cost

When a component of a business has been discontinued during the year, the component's operating loss of the current period should included in 1 point

Income statement as part of revenue and expenses Income statement as part of the loss on the discontinued operations Income from continuing operations Retained earnings

A noncurrent asset that is to be abandoned shall not be classified as held for sale because 1 point

A. The carrying amount will be recovered principally through continuing use B. The noncurrent asset is difficult to value C. It is unlikely that the noncurrent asset will be sold within twelve months D. It is unlikely that there will be an active market for the noncurrent asset

How should the assets and liabilities of a disposal group classified as held for sale be shown in the statement of financial position? 1 point

A. The assets and liabilities shall be offset and presented as a single amount B. The assets of the disposal group shall be shown separately as current assets and the liabilities of the disposal group shall be shown separately as current liabilities. C. The assets and liabilities shall be presented as a single amount and as a deduction from equity D. There should be no separate disclosure of assets and liabilities that form part of a disposal group

An entity shall measure a noncurrent asset or disposal group classified as held for sale at 1 point

A. Carrying amount

B. Fair value less cost of disposal C. Lower of carrying amount and fair value less cost of disposal D. Higher of carrying amount and fair value less cost of disposal

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. 1 point

A. Disposal group B. Discontinued operation C. Noncurrent asset D. Cash generating unit

When a component of a business has been discontinued during the year, the loss on discontinued operation should 1 point

Include operating loss of the current period Exclude operating loss during the period Be classified an extraordinary item Be classified an operating item

What is the treatment of any gain on a subsequent increase in the fair value less cost of disposal of a noncurrent asset classified as held for sale? 1 point

A. The gain shall be recognized in full B. The gain shall not be recognized

C. The gain shall be recognized but not in excess of the cumulative impairment loss previously recognized D. The gain shall be recognized but only in retained earnings

Which statement is incorrect concerning the presentation of the discontinued operation in the statement of financial position? 1 point

Assets of the component held for sale are presented separately under current assets Assets of the component held for sale are measured at the lower between fair value less cost of disposal and carrying amount Liabilities of the component held for sale are presented separately under current liabilities Depreciable assets of the component held for sale shall be depreciated

An entity shall classify a noncurrent asset or disposal group held for sale when 1 pointthe sale

A. The carrying amount of the asset or disposal group will be recovered through a sale transaction B. The carrying amount of the asset or disposal group will be recovered through continuing use C. The noncurrent asset or disposal group is to be abandoned D. The noncurrent asset or disposal group is idle or retired from active use

An entity manufactures and sells household products. The entity experienced losses associated with the small appliance group. Operations and cash flows for this group can be clearly distinguished from the rest of the entity's operations. The entity decided to sell the small appliance group as a discontinued operation? 1 point

When the entity classifies it as held for sale When the entity receives an offer for the segment When the entity first sells any of the assets of the segment When the entity sells the majority of the assets of the segment

Which disposal could qualify as discontinued operation? 1 point

Disposal of a component that is similar in nature to other components but has operations and cash flows distinguishable from the rest of the entity. Disposal of a component due to a major change in business strategy Disposal of a small component within the current business strategy. Disposal of a component with distinguishable operations and cash flows from the rest of the entity

When an entity decided to sell a business component, the gain on the disposal should be 1 point

Presented as other income Presented as an adjustment to retained earnings Netted against the loss from operations of the component as a part of discontinued operation Included in other comprehensive income

Quiz 8 - Part 2

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PROBLEM 1. WRITE THE NUMBERS WITH COMMA(S) AND WITHOUT PESO SIGN.

SAMPLE: 1,000,000

2. FOR GAINS OR LOSSES, WRITE THE AMOUNT AS IS IF GAIN BUT IF LOSS PLACE IT IN A ( )

SAMPLE: (10000)

Yuto Uemura accounted for noncurrent assets using the cost model. On October 1, 2020, the entity classified an equipment as held for sale. At that date, the carrying amount of the equipment was P2,000,000. The fair value less cost of disposal is P1,700,000. On Febuary 10, 2021 the asset was sold for P1,750,000. What amount is impairment loss? (300,000)

MARQUEE On December 31, 2020, what is the measurement of the subsidiary which is considered as a disposal group classified as held for sale? 8,500,000

HARLET What amount should be reported as pretax loss from the discontinued segment for 2020? (1,000,000)

Ichigo purchased an equipment for P5,000,000 on July 1, 2019. The equipment had a useful life of 5 years with no residual value. On December 31, 2020, the entity classified the equipment as held for sale. On such date the fair value was P3,500,000 and the cost of disposal of the equipment was 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 equipment but to continue to use it. On December 31, 2021, the fair value was P2,800,000 less cost of disposal was P200,000. What is the measurement of the equipment held for sale? 3,300,000

JAZZ What amount should Jazz Company report as income or loss for 2020? Indicate whether income or loss after the amount. Sample: 1,000 income 4,900 income

Mutsumi Tamura accounted for noncurrent assets using the cost model. On October 1, 2020, the entity classified an equipment as held for sale. The equipment cost was P3,000,000 which was acquired last January 1, 2018 with 5 years estimated useful life. At that date, the fair value was P1,200,000 and the cost of disposal is P100,000. On December 31, 2020 the asset was sold for P1,000,000. What is the amount of gain or loss recognized in the 2020 Income Statement? (350,000) not sure

Impairment loss 250,000 Loss on sale 100,000 Total loss 350,000

ZeroTwo accounted for noncurrent assets using the cost model. On June 1, 2020, the entity classified an equipment as held for sale. At that date, the carrying amount of the equipment was P4,000,000. The fair value less cost of

disposal is P4,100,000. On January 10, 2021 the asset was sold for P4,070,000. What amount is realized gain or loss? 70,000

Yuto Uemura accounted for noncurrent assets using the cost model. On October 1, 2020, the entity classified an equipment as held for sale. At that date, the carrying amount of the equipment was P2,000,000. The fair value less cost of disposal is P1,700,000. On Febuary 10, 2021 the asset was sold for P1,750,000. What amount is realized gain or loss? 50,000

On October 1, 2020 Lann Company approved a formal plan to sell a business segment. The sale will occur on March 31, 2021. The segment had income of P2,500,000 from January 1 to September 30 and P500,000 for the quarter ended December 31, 2020. On December 31, 2020, the carrying amount of the assets of the segment was P4,000,000 and the fair value less cost of disposal was P3,500,000. The income tax rate is 30%. What amount should be reported as income from the discontinued segment for 2020? 1,750,000

ZeroTwo accounted for noncurrent assets using the cost model. On June 1, 2020, the entity classified an equipment as held for sale. At that date, the carrying amount of the equipment was P4,000,000. The fair value less cost of disposal is P4,100,000. On January 10, 2021 the asset was sold for P4,070,000. What amount should the equipment held for sale be measured on June 1, 2020? 4,100,000

Ayane Sakura accounts for noncurrent assets using the revaluation model. On June 1, 2020, the entity classified a land as held for sale. At that date the land had a carrying amount of of P8,000,000 with a revaluation surplus of P1,000,000. The fair value was P8,500,000 and the cost of disposal was P300,000. On December 31, 2020 the fair value was P8,400,000 and the cost of disposal was P350,000. On April 18, 2021 the land was sold for

P8,500,000. What is the adjusted carrying amount of land on December 31, 2020? 8,050,000

Purple Company has correctly classified the packaging operation as a disposal group held for sale and as discontinued operation. For the year ended December 31, 2020, this disposal group incurred trading loss after tax of P4,000,000 and the loss on remeasuring it to fair value less cost of disposal was P2,500,000. What total amount of the disposal group's losses should be included in profit or loss for the year ended December 31, 2020? (6,500,000)

Ichigo purchased an equipment for P5,000,000 on July 1, 2019. The equipment had a useful life of 5 years with no residual value. On December 31, 2020, the entity classified the equipment as held for sale. On such date the fair value was P3,500,000 and the cost of disposal of the equipment was 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 equipment but to continue to use it. On December 31, 2021, the fair value was P2,800,000 less cost of disposal was P200,000. What is the amount of impairment loss? (200,000)

Ayane Sakura accounts for noncurrent assets using the revaluation model. On June 1, 2020, the entity classified a land as held for sale. At that date the land had a carrying amount of of P8,000,000 with a revaluation surplus of P1,000,000. The fair value was P8,500,000 and the cost of disposal was P300,000. On December 31, 2020 the fair value was P8,400,000 and the cost of disposal was P350,000. On April 18, 2021 the land was sold for P8,500,000. What is the amount of impairment loss if any on 2020? (450,000)

On December 31, 2020, Green Co. committed to a plan to dispose of a business component's assets. The disposal meets the requirements to be classified as discontinued operation. On that date, the entity estimated that the loss from the disposition of the assets would be P700,000 and the component's operating loss was P200,000. What amount of pretax loss should be reported for discontinued operation for 2020? (900,000)

Mutsumi Tamura accounted for noncurrent assets using the cost model. On October 1, 2020, the entity classified an equipment as held for sale. The equipment cost was P3,000,000 which was acquired last January 1, 2018 with 5 years estimated useful life. At that date, the fair value was P1,200,000 and the cost of disposal is P100,000. On December 31, 2020 the asset was sold for P1,000,000. At what amount is the equipment held for sale be measured? 1,100,000 Ichigo purchased an equipment for P5,000,000 on July 1, 2019. The equipment had a useful life of 5 years with no residual value. On December 31, 2020, the entity classified the equipment as held for sale. On such date the fair value was P3,500,000 and the cost of disposal of the equipment was 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 equipment but to continue to use it. On December 31, 2021, the fair value was P2,800,000 less cost of disposal was P200,000. What is the measurement of the equipment reclassified on December 2021? 2,500,000 Ichigo purchased an equipment for P5,000,000 on July 1, 2019. The equipment had a useful life of 5 years with no residual value. On December 31, 2020, the entity classified the equipment as held for sale. On such date the fair value was P3,500,000 and the cost of disposal of the equipment was 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 equipment but to continue to use it. On December 31, 2021, the fair value was P2,800,000 less cost of disposal was P200,000. What is the amount of gain or loss on reclassification on 2021? (800,000)

Ayane Sakura accounts for noncurrent assets using the revaluation model. On June 1, 2020, the entity classified a land as held for sale. At that date the land had a carrying amount of of P8,000,000 with a revaluation surplus of P1,000,000. The fair value was P8,500,000 and the cost of disposal was P300,000. On December 31, 2020 the fair value was P8,400,000 and the cost of disposal was P350,000. On April 18, 2021 the land was sold for P8,500,000. What is the realized gain or loss on sale of land? 450,000

What amount should be reported as loss from discontinued operation in 2020 assuming income tax rate of 30%? (5,950,000)

Ayane Sakura accounts for noncurrent assets using the revaluation model. On June 1, 2020, the entity classified a land as held for sale. At that date the land had a carrying amount of of P8,000,000 with a revaluation surplus of

P1,000,000. The fair value was P8,500,000 and the cost of disposal was P300,000. On December 31, 2020 the fair value was P8,400,000 and the cost of disposal was P350,000. On April 18, 2021 the land was sold for P8,500,000. What is the adjusted carrying amount of land on June 1, 2020? 8,200,000

On September 30, 2020, when the carrying amount of a major subsidiary wa...