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Seth Harvey Hendeve IPPPE ME Quiz
Seth Harvey Hendeve IPPPE ME Quiz
Erika Company and its subsidiaries own the following properties that are accounted for in
accordance with
2. Irene Company purchased an investment property on Jan 1, 2019 for P 2,000,000. The
property had a useful life of 40 years and on December 31, 2021 had a fair value of P
3,000,000. On December 31, 2021 , the property was sold for net proceeds of P 2,900,000. The
entity used the cost model to account for the investment property. What is the gain or loss to be
recognized for the year ended December 31, 2021, regarding the disposal of the property.
Price P2,900,000
Carrying Amount 1,850,000
Gain on Disposal of Property P1,050,000
3.On December 1, 2019, Boy Company purchased a P 4,000,000 tract of land for a factory site.
The entity razed an old building on the property and sold the materials salvaged from the
demolition. The entity incurred additional costs and realized salvage proceeds during December
2019 as follows:
Demolition of old building 200,000
Legal fees for purchase contract and recording ownership 150,000
Title guarantee insurance 50,000
Proceeds from sale of salvaged materials 20,000
In the December 31 2019 statement of financial position, what os the carrying amount of the
land?
Price P4,000,000
Legal Fees 150,000
Title guarantee insurance 50,000
Total Cost of Land P4,200,000
4.Jennie Company incurred the following costs at the beginning of the current year:
Cost of land 1,000,000
Cost of building 4,000,000
Remodeling and repairs prior to occupancy 500,000
Escrow fee 100,000
Clearing, leveling and landfill 250,000
Property tax for period prior to acquisition 150,000
Real estate commission 300,000
What is the cost of building?
5. On October 1, 2019, Lisa Company purchased a machine for P 1,260,000 that was placed in
service on November 30, 2019. The entity incurred additional costs for this machine as follows:
Shipping 30,000
Installation 40,000
Testing 50,000
What amount should be reported as machinery?
Price 1,260,000
Shipping 30,000
Installation 40,000
Testing 50,000
Total Cost of Machine 1,380,000
6. Irene Company had the following borrowings during 2019 which were used to finance the
construction of the entity’s new building
Jan 1 400,000
March 31 1,000,000
June 30 1,200,000
September 30 1,000,000
December 31 400,000
7. On August 1, 2019, Jisoo Company purchased a new machine on a deferred payment basis.
A down payment of P 100,000 was made and 4 monthly installments of P 250,000 each are to
be made beginning on September 1, 2019. The cash equivalent price of the machine was P
950,000. The entity incurred and paid installation cost amounting to P 30,000. What is the
amount to be capitalized as cost of the machine?
Cost 950,000
Installation Cost 30,000
Total Cost 980,000
8. Rosie Company exchanged a truck with a carrying amount of P 1,200,000 and a fair value of
P 2,000,000 for a truck and P 200,000 cash. The cash flows from the new truck are not
expected to be significantly different from the cash flows of the old truck. The fair value of the
truck received was P 1,800,000. At what amount should the truck received in the exchange be
recorded?
Blackpink Company purchased a land as a factory site for P 2,400,000. The entity paid P
240,000 to tear down a building on the land. Salvage was sold for P 20,000. Legal fee of 15,000
was paid for the title investigation and making the purchase. Architect fee was P 125,000. Title
insurance was P 10,000 and liability insurance during construction amounted to P 25,000.
Excavation cost was P 40,000. The contractor was paid P 8,800,000. An assessment made by
the city for pavement was P 30,000. Interest cost during construction was P 300,000.
LAND BUILDING
Land Price 2,400,000
Demolition 240,000
Salvage (20,000)
Legal Fee 15,000
Architect Fee 125,000
Insurance 10,000
Liability Insurance 25,000
Excavation Cost 40,000
Contractor 8,800,000
Assessment 30,000
Interest Cost 300,000
9.) 2,455,000 10.) 9,510,000