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Martin Corp. values its inventory by using the retail method (FIFO basis, lower of cost or NRV). The following information is available for the year just ended:At what amount would Martin report its ending inventory? A. P117, B. P113, C. P119, D. P112,On January 1, 2016, Mogul Company acquired equip...

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Martin Corp. values its inventory by using the retail method (FIFO basis, lower of cost or NRV). The following information is available for the year just ended:

At what amount would Martin report its ending inventory? A. P117,600 B. P113,400 C. P119,000 D. P112,000 On January 1, 2016, Mogul Company acquired equipment to be used in the manufacturing operations. The equipment had an estimated useful life of 10 years and an estimated residual value of P50,000. The depreciation applicable to this equipment was P240,000 for 2018 computed under the sum of years’ digits method. What was the acquisition cost of the equipment? A. 1,650,000 B. 2,450,000 C. 2,400,000 D. 1,700,000 Which of the following items should be included in a company's inventory at the statement of financial position date? A. Goods received from another company for sale on consignment B. Goods in transit which were purchased f.o.b. destination C. None of these D. Goods sold to a customer which are being held for the customer to call for at his or her convenience Towsey Manufacturing acquired a new milling machine on April 1, 2012. The machine has a special component that requires replacement before the end of the useful life. The asset was originally recorded in two accounts, one representing the main unit and the other for the special component. Depreciation is recorded by the straight-line method to the nearest month, residual values being disregarded. On April 1, 2018, the special component is scrapped and is replaced with a similar component. This component is expected to have a residual value of approximately 25% of cost at the end of the useful life of the main unit, and because of its materiality, the residual value will be considered in calculating depreciation. Specific asset information is as follows

What is the depreciation charge to be recognized for the year 2018? A. P8,800 B. P5,930 C. P6,775 D. P9,100 The following are costs excluded from the cost of inventories, except A. Import duties B. Storage costs, unless those costs are necessary in the production process before a further production stage C. Abnormal amounts of wasted materials, labor or other production costs D. Administrative overheads that do not contribute to bringing inventories to their present location and condition An entity imported machinery to install in its new factory before year-end. However, due to circumstances beyond its control, the machinery was delayed by a few months but reached the factory premises before year-end. While this was happening, the entity learned from the bank that it was being charged interest on the loan it had taken to fund the cost of the plant. What is the proper treatment of freight and interest expense under PAS 16? A. Interest may be capitalized but freight should be expressed B. Both expenses should be capitalized C. Both expenses should be expensed D. Freight charges should be capitalized but interest cannot be capitalized under these circumstances This organization is dedicated to ensuring that the global markets can operate in an efficient and effective basis A. International Financial Reporting Standards Foundation B. International Organization of Securities Commissions C. International Accounting Standards Board D. Financial Accounting Standards Board On January 1, 2013, Farm Company planted trees on its land. The entity purchased the land two years ago at a cost of P1,000,000. The trees were considered bearer plants and had accumulated cost of P500,000 on December 31,2017. By January 1, 2018, the trees had matured and were expected to bear produce for a period of 5 years.

On December 31 ,2018 the trees produced fruit and the fair value less cost of disposal on such date was P50,000. There was no harvest during 2018. On December 31, 2019, the fruits were harvested and the fair value less cost of disposal on such date was P75,000. What is the carrying amount of the biological asset on December 31, 2018? A. II, III and IV only B. I and II only C. I, II, III and IV D. II and IV only Which of the following are bearer plants? A. Plants cultivated to be harvested as agricultural produce. B. None of the choices C. Annual crops D. Plants cultivated to produce agricultural produce when there is more than a remote likelihood that the entity will also harvest and sell the plant as agricultural produce, other than as incidental scrap sales Which of the following is (are) true about biological assets? A. Biological assets must be valued at cost B. Biological assets do not generally have future economic benefits C. All of the choices D. Biological assets are living animals or plants and must be disclosed as a separate item on the balance sheet Computer software for a computer-controlled machine tool that cannot operate without that specific software is treated a A. Property, plant and equipment B. Investment property C. Other non-current asset D. Intangible asset A newly set up dot-com entity has engaged you as its financial advisor. The entity has recently completed one of its highly publicized research and development projects and seeks your advice on the accuracy of the following statements made by one of its stakeholders. Which one is true? A. Costs incurred during the “research phase” can be capitalized B. Costs incurred during the “development phase” can be capitalized if criteria such as technical feasibility of the project being established are met C. Training costs of technicians used in research can be capitalized D. Designing of jigs and tools qualify as research activities Campbell Corp. exchanged delivery trucks with Highway, Inc. Campbell’s truck originally cost P2,300,000, its accumulated depreciation was P2,000,000, and its fair value was P500,000. Highway’s

truck originally cost P2,350,000, its accumulated depreciation was P1,990,000, and its fair value was P570,000. Campbell also paid Highway P70,000 in cash as part of the transaction. The transaction lacks commercial substance. What amount is the new book value for the truck Campbell received? A. P370,000 B. P500,000 C. P300,000 D. P570,000 Minty Corporation’s investment properties included the following items: · Land held as potential plant site, P5,000,000. · A vacant building to be leased out under an operating lease, P20,000,000. · Property held for sale in the ordinary course of its business, P30,000,000. · Property held for administrative purposes, P10,000,000. · A hotel owned and managed, P50,000,000. · A building being leased out to a subsidiary, P8,000,000. · A building, which cannot be sold or leased out separately, used in the production of goods and around 2% of the area being leased out to canteen operators, P2,000,000. How much will be reported as investment properties in Minty Corporation’s separate financial statements? A. P25,000,000 B. P33,000,000 C. P20,000,000 D. P28,000,000 In relation to the amortization of intangible assets, the general rule in PAS 38 Intangibles, is that unless demonstrated otherwise: A. The residual value is presumed to be zero B. The residual need not be reviewed at the end of each annual reporting period C. All intangible assets have a residual value at least equal to the amount of maintenance costs incurred D. The residual value does not enter into the determination of the amortization charge

Which statement is incorrect? A. The chairman of the FRSC should have been or presently a senior practitioner in public accountancy B. The Bureau of Internal Revenue is represented in the FRSC C. The Insurance Commission is represented in the Philippine Interpretations Committee D. Bicol is not a PICPA Geographical Area

The net realizable value of the quantity of inventory held to satisfy firm sales or service contracts is based on the A. General selling prices B. Quoted prices in an active market for identical assets

C. Contract price. D. Quoted prices in an active market for similar assets Gatas Dairy produces milk to sell to local and national ice cream producers. Gatas Dairy began operations on January 1, 2018 by purchasing 840 milk cows for P1,176,000. The company controller had the following information available at year end relating to the cows:

At December 31, 2018, what is the value of the milking cows on Gatas Dairy’s statement of financial position? A. P1,499,000 B. P1,445,000 C. P1,553,000 D. P1,583,000 Which of the following generally provides the best evidence of fair value of an investment property? A. Recent prices on less active markets with adjustments to reflect the changes in economic conditions B. Discounted cash flow projections based on reliable estimates of future cash flows C. Current prices for properties of a different nature or subject to different conditions D. Current prices in an active market for similar property in the same location and condition Contract prices are not necessarily relevant in determining fair value, and the fair value of a biological asset or agricultural produce is not adjusted because of the existence of a contract External independent valuation is an acceptable fair value measurement for biological assets and agricultural produce A. True, False B. True, True C. False, False D. False, True Which statement is correct? A. The Insurance Commission is not represented in the FRSC B. FINEX is the accredited professional organization of CPAs by the PRC. C. The Bangko Sentral ng Pilipinas is not represented in the AASC D. The chairman of the FRSC should have been or presently a senior practitioner in public accountancy. January 1, 2018, Uptown Company disclosed the following balances

During the current year, the following transactions occurred: ·Land was acquired for ₱2,000,000 cash as a building site. ·A plant facility consisting of land and building was acquired In exchange for 200,000 shares of the entity. On the acquisition date, each share had a quoted price of ₱45 on a stock exchange. Current appraised values for the land and the building, respectively, are ₱2,000,000 and ₱8,000,000. The building has an expected life of 40 years with a ₱200,000 residual value. ·Items of machinery and equipment were purchased at a total cost of ₱4,000,000. Additional costs incurred were freight and unloading of ₱100,000 and installation ₱300,000. The equipment has a useful life of ten years with no residual value. ·Expenditures totaling ₱1,200,000 were made for new parking lot, street and sidewalk at the entity’s various plant locations. These expenditures had an estimated useful life of fifteen years. ·Research and development costs amounted to ₱1,100,000. ·A machine costing ₱200,000 on January 1, 2011 was scrapped on June 30, 2018. Straight line depreciation had been recorded on the basis of a 10-year life with no residual value. ·A machine was sold for ₱500,000 on July 1, 2018. Original cost of the machine sold was ₱700,000 on January 1, 2015, and it was depreciated on the straight line basis over an estimated useful life of eight years and residual value of ₱50,000. What is the total cost of land on December 31, 2018? A. P7,600,000 B. P6,800,000 C. P8,000,000 D. P7,800,000 On January 1, 2013, Farm Company planted trees on its land. The entity purchased the land two years ago at a cost of P1,000,000. The trees were considered bearer plants and had accumulated cost of P500,000 on December 31,2017. By January 1, 2018, the trees had matured and were expected to bear produce for a period of 5 years. On December 31 ,2018 the trees produced fruit and the fair value less cost of disposal on such date was P50,000. There was no harvest during 2018. On December 31, 2019, the fruits were harvested and the fair value less cost of disposal on such date was P75,000. What is the carrying amount of the biological asset on December 31, 2018? A. II, III and IV only B. II and IV only C. I and II only D. I, II, III and IV

The Financial Reporting and Standards Council (FRSC) A. Has the authority to establish the accounting framework to be used by companies under its jurisdiction B. Is the accredited professional organization of CPAs by the PRC. C. Is composed of a chairman and six (6) members D. Establishes generally accepted accounting principles in the Philippines Which statement is incorrect regarding the fair value hierarchy in PFRS 13? A. To increase consistency and comparability in fair value measurements and related disclosures, PFRS 13 establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. B. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs C. Adjustments to arrive at measurements based on fair value, such as costs to sell when measuring fair value less costs to sell, shall be taken into account when determining the level of the fair value hierarchy within which a fair value measurement is categorized. D. The fair value hierarchy prioritizes the inputs to valuation techniques, not the valuation techniques used to measure fair value Muscat Company purchased a patent on January 1, 2012, for P3,570,000.The patent was being amortized over its remaining legal life of 15 years. During 2015 Muscat determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the statement of financial position as patent, net of accumulated amortization, at December 31, 2015? A. P2,618,000 B. P2,520,000 C. P2,142,000 D. P2,448,000 Which of the following distinguishes investment property from owner occupied-property? A. Investment property does not generate cash flows largely independently of the other assets held by an entity B. Investment property is normally classified as a noncurrent asset C. Investment property is held to earn rentals D. Investment property generates cash flows largely independently of the other assets held by an entity On January 1, 2015, Sunflower Company purchased for P240,000 a machine with a useful life of ten years and no salvage value. The machine was depreciated by the double-declining balance method and the carrying amount of the machine was P153,600 on December 31, 2016. Sunflower changed to the straight-line method on January 1, 2017. Sunflower can justify the change. What should be the depreciation expense on this machine for the year ended December 31, 2017? A. P30,720

B. P15,360 C. P24,000 D. P19,200 As generally used in accounting, what is depreciation? A. It is a process of asset valuation for balance sheet purposes B. It applies only to long-lived intangible assets\ C. It is an accounting process which systematically allocates long-lived asset cost to accounting periods D. It is used to indicate a decline in market value of long-lived asset Towsey Manufacturing acquired a new milling machine on April 1, 2011. The machine has a special component that requires replacement before the end of the useful life. The asset was originally recorded in two accounts, one representing the main unit and the other for the special component. Depreciation is recorded by the straight-line method to the nearest month, residual values being disregarded. On April 1, 2017, the special component is scrapped and is replaced with a similar component. This component is expected to have a residual value of approximately 25% of cost at the end of the useful life of the main unit, and because of its materiality, the residual value will be considered in calculating depreciation. Specific asset information is as follows:

What is the depreciation charge to be recognized for the year 2017? A. P5,930 B. P6,775 C. P8,800 D. P9,100 In the 30 June 2017 annual report of Johnston Ltd, the equipment was reported as follows:

The equipment consisted of two machines, machine A and machine B. Machine A had cost P3,000,000 and had a carrying amount of P1,800,000 at 30 June 2017, while machine B had cost P2,000,000 and was

carried at P1,700,000. Both machines are measured using the cost model, and depreciated on a straightline basis over a ten-year period. On 31 December 2017, the directors of Johnston Ltd decided to change the basis of measuring the equipment from the cost model to the revaluation model. Machine A was revalued to P1,800,000 with an expected useful life of six years, and machine B was revalued to P1,550,000 with an expected useful life of five years. The amount to be recognized in profit or loss as a result of the revaluation of assets on December 31, 2017 is A. P(50,000) B. P150,000 C. P100,000 D. P(150,000) Baritone Company counted and reported the ending inventory on December 31, 2018 at P2,000,000. None of the following items were included when the total amount of the ending inventory was computed: What is the correct amount of inventory on December 31, 2018? A. 2,350,000 B. 2,750,000 C. 2,500,000 D. 2,900,000 Dairy Company provided the following information for the current year What is the net income for the current year? A. 650,000 B. 600,000 C. 185,000 D. 130,000 The following are costs excluded from the cost of inventories, except A. Import duties B. Abnormal amounts of wasted materials, labor or other production costs C. Administrative overheads that do not contribute to bringing inventories to their present location and condition

D. Storage costs, unless those costs are necessary in the production process before a further production stage How should sales staff commission be dealt with when valuing inventories at the lower of cost and net realizable value (NRV), according to PAS2 Inventories? A. Deducted in arriving at NRV B. Added to cost C. Deducted from cost D. Ignored Which of the following is (are) true about biological assets? A. Biological assets do not generally have future economic benefits B. Biological assets must be valued at cost C. All of the choices D. Biological assets are living animals or plants and must be disclosed as a separate item on the balance sheet When allocating costs to inventory produced for the period, fixed overhead should be based upon A. The actual amounts of goods produced during the period B. The lowest production level in the last three periods C. The normal capacity of production facilities D. The highest production levels in the last three periods The net realizable value of the quantity of inventory held to satisfy firm sales or service contracts is based on the A. Quoted prices in an active market for identical assets B. General selling prices C. Contract price. D. Quoted prices in an active market for similar assets

Jade Company acquired a new milling machine on April 1, 2012. The machine has a special component that required replacement before the end of the useful life. The asset was originally recorded in two

accounts, one representing the main unit and the other for the special component. Depreciation is recorded by the straight line method and residual value is disregarded. On April 1, 2018, the special component is scrapped and is replaced with a similar component. This new component is expected to have a residual value of approximately 20% of cost at the end of the useful life of the main unit, and because of materiality, the residual value will be considered in calculating depreciation. What is the total depreciation for 2018? A. 1,100,000 B. 1,350,000 C. 1,087,500 D. 1,175,000 Bensol Co. and Sable Co. exchanged similar trucks with fair values in excess of carrying amounts. In addition, Bensol paid Sable to compensate for the difference in truck values. As a consequence of the exchange, Sable recognizes A. A gain determined by the proportion of cash received to the total consideration. B. A loss determined by the proportion of cash received to the total consideration C. A gain equal to the difference between the fair value and carrying amount of the truck given up D. Neither a gain nor a loss

January 1, 2018, Uptown Company disclosed the following balances During the current year, the following transactions occurred: ·

Land was acquired for ₱2,000,000 cash as a building site.

· A plant facility consisting of land and building was acquired In exchange for 200,000 shares of the entity. On t...