Ppe-bio-asset.docx

NAME: ______________________________________

1. During 2018 Dasmariñas Company installed a production assembly line to manufacture furniture. In 2018 Dasmariñas purchased a new machine and rearranged the assembly line to install this machine. The rearrangement did not increase the estimated useful life of the assembly line but it did result in significantly more efficient production. The following expenditures were incurred in connection with this project: Machine Labor to install new machine Parts added in rearranging the assembly line to provide future benefits Labor and overhead to rearrange the assembly line

5,000,000 400,000 2,000,000 600,000

What amount of the above expenditures should be capitalized in 2018? A. 8,000,000 C. 7,400,000 B. 5,400,000 D. 2,600,000

2. A schedule of plant assets owned by Bauan Company is presented below.

Building Machinery Equipment

Cost Scrap 8,800,000 800,000 3,200,000 320,000 640,000

Life 20 years 15 years 5 years

Bauan computes depreciation on the straight line method. The composite life of the assets should be A. 19.8 C. 18.0 B. 13.3 D. 16.0 3. Wilson Co. purchased land as a factory site for P800,000. Wilson paid P80,000 to tear down two buildings on the land. Salvage was sold for P5,400. Legal fees of P3,480 were paid for title investigation and making the purchase. Architect's fees were P31,200. Title insurance cost P2,400, and liability insurance during construction cost P2,600. Excavation cost P10,440. The contractor was paid P2,500,000. An assessment made by the city for pavement was P6,400. Interest costs during construction were P170,000.

5. During self-construction of an asset by Richardson Company, the following were among the costs incurred: Fixed overhead for the year P1,000,000 Portion of P1,000,000 fixed overhead that would be allocated to asset if it were normal production P60,000 Variable overhead attributable to selfconstruction P75,000 What amount of overhead should be included in the cost of the self-constructed asset? A. P1,135,000 C. P75,000 B. P1,075,000 D. P135,000 Temerity Company has different kinds of farm animals on January 1, 2015. During the current year, several acquisitions occurred related to these farm animals. A detailed summary of these transactions is as follows: Carrying amount on January 1: 15 Horses -1 year old 1,000,000 10 Dairy cattle - 2 years old 400,000 8 Carabaos- 2.5 years old 200,000 20 Hogs - 3 years old 500,000 Purchases on June 30: 4 Dairy cattle -1 year old 6 Carabaos - 6 months old

150,000 100,000

Fair value less cost of disposal on December 31 15 Horses - 1 year old 1,200,000 10 Dairy cattle - 2 years old 520,000 8 Carabaos - 2.5 years old 250,000 20 Hogs - 3 years old 550,000 4 Dairy cattle -1 year old 170,000 6 Carabaos - 6 months old 110,000 Fair value less cost of disposal on December 31 15 Horses - 2 years old 1,350,000 10 Dairy cattle - 3 years old 580,000 8 Carabaos - 3.5 years old 290,000 20 Hogs - 4 years old 600,000 4 Dairy cattle - 1.5 years old 200,000 6 Carabaos - 1 year old 140,000 There were no farm animals sold during the year and neither were there any newborns nor deaths.

6. What is the carrying amount of the biological assets on December 31? A. 2,350,000 B. 2,800,000

C. 2,380,000 D. 3,160,000

The cost of the land that should be recorded by Wilson Co. is A. P880,480. C. P889,880. B. P886,880. D. P896,280.

7. What is the gain from change in fair value

4. On January 2, 2010, Stacy Company acquired

8. What is the gain from change in fair value

equipment to be used in its manufacturing operations. The equipment has an estimated useful life of 10 years and an estimated salvage value of P30,000. The depreciation applicable to this equipment was P140,000 for 2013, computed under the sum-of-the-years'-digits method. What was the acquisition cost of the equipment? A. P1,070,000 C. P1,100,000 B. P1,130,000 D. P1,083,333

attributable to price change? A. No Change C. 450,000 B. 810,000 D. 360,000

attributable to physical change? A. No Change C. 450,000 B. 810,000 D. 360,000 Righteous Company provided the following data:  Value of biological asset at acquisition cost on December 31, 2016 6,000,000  Fair valuation surplus on initial recognition at fair value on December 31, 2016 500,000

 

Change in fair value on December 31, 2017 due to growth and price fluctuation 900,000 Decrease in fair value due to harvest 100,000

9. What is the carrying amount of the biological asset on December 31, 2017? A. 6,500,000 B. 7,500,000

C.7,400,000 D.7,300,000

10. What amount of net gain from the change in fair value of biological asset be reported in 2017? A. 900,000 C. 1,400,000 B. 800,000 D. 1,300,000

11. Walsh Retailers purchased merchandise with a list

A physical inventory taken on December 31, 2005 resulted in an ending inventory of P4,500,000. The gross profit on sales remained constant at 30% in recent years. Benguet suspects some inventory may have been taken by a new employee. At December 31, 2005 what is the estimated cost of missing inventory? A. P5,000,000 B. P500,000 C. P4,500,000 D. P - 0 –

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price of P75,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. Walsh should record the cost of this merchandise as A. P52,500. C. P58,500. B. P54,000. D. P75,000.

12. Gonzaga Company uses the weighted average method to determine the cost of its inventory. Gonzaga recorded the following information pertaining to its inventory: Balance 1/1 Sold on 1/15 Purchased on 1/31

Units 160,000 140,000 80,000

Units cost 60

Total cost 9,600,000

90

7,200,000

What amount of inventory should Gonzaga report in its January 31, 2005 balance sheet? Perpetual Periodic A. P8,400,000 P7,000,000 B. P7,000,000 P8,400,000 C. P8,400,000 P7,500,000 D. P7,000,000 P7,500,000 Plank Co. uses the retail inventory method. The following information is available for the current year. Cost Retail Beginning inventory 156,000 244,000 Purchases 590,000 830,000 Freight-in 10,000 — Employee discounts — 4,000 Net markups — 30,000 Net Markdowns — 40,000 Sales — 780,000

13. The ending inventory at retail should be A. 320,000. B. 288,000.

C. 300,000. D. 280,000.

14. The approximate cost of the ending inventory by the conventional retail method is A. 191,800. C. 196,000. B. 189,840. D. 204,960.

15. Benguet Company’s accounting records indicated the following for 2005: Inventory, January 1 Purchases Sales

P6,000,000 20,000,000 30,000,000

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