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Midterm Exam 41-49
Midterm Exam 41-49
Midterm Exam 41-49
Fragile Company used the direct method tom prepare the statement of cash flows. The entity had the following cash flows
during the current year:
Cash receipts from issuance of ordinary shares 4,000,000
Cash receipts from customers 2,000,000
Cash receipts from dividends 300,000
Cash receipts from repayment of loan made to another entity 2,200,000
Cash payments for wages and other operating expenses 1,200,000
Cash payments for insurance 100,000
Cash payments for dividends 200,000
Cash payments for taxes 400,000
Cash payment to purchase land 800,000
Cash balance – beginning 3,500,000
What amount should be reported as cash balance at year-end?
3,500,000
9,300,000
5,500,000
5,800,000
Question 42
Blue Company purchased a machine on January 1, 2016 for P6,000,000. At the date of acquisition, the machine had a life of
six years with no residual value. The machine was depreciated on a straight-line basis.
On January 1, 2019, the entity determined that the machine had a useful life of eight years from the date of
acquisition with no residual value.
Question 43
On January 1, 2015, Flax Company purchased a machine for P5,280,000 and depreciated it by the straight-line method using
an estimated useful life of eight years with no residual value.
On January 1, 2018, the entity determined that the machine had a useful life of six years from the date of acquisition and the
residual value was P480,000.
What is the accumulated depreciation for the machine on December 31, 2018?
2,920,000
3,080,000
3,200,000
3,520,000
Question 44
Josey Company entered into a contract to acquire a new machine which had a cash price of P2,000,000.
Down payment 400,000
Note payable in 3 equal annual installments 1,200,000
20,000 ordinary shares with a par value of P25 and
fair value of P40 per share 800,000
2,400,000
Prior to use, installation cost of P50,000 was incurred. The machine has an estimated residual value of P100,000.
Question 45
Precious Company had the following property acquisitions during the current year:
Acquired a tract of land in exchange for 50,000 shares of Precious Company with P100 par value that had a market
price of P120 per share on the date of acquisition. The last property tax bill indicated assessed value of P2,400,000
for the land.
Received land from a major shareholder as an inducement to locate a plant in the city. No payment was required but
the entity paid P50,000 for legal expenses for land transfer. The land is fairly valued at P1,200,000.
What is the total increase in land as a result of the acquisitions?
7,200,000
6,000,000
7,050,000
6,100,000
Question 46
At the beginning of current year, Sagada Company received a grant of P25,000,000 from the American government in order to
defray safety and environmental costs within the area where the entity is located.
The safety and environmental costs are expected to be incurred over four year, respectively, P2,000,000, P4,000,000,
P6,000,000 and P8,000,000.
What amount of grant income should be recognized for the current year?
25,000,000
2,000,000
2,500,000
6,250,000
Question 47
At the beginning of current year, Barlig Company is granted a large tract of land in the Cordillera region by the Philippine
government. The fair value of the land is P40,000,000. The entity is required by the grant to construct chemical research
facility and employ only personnel residing in the Cordillera region.
The estimated cost of the facility is P45,000,000 with useful life of 10 years. The chemical research facility was completed and
ready for the intended use at the end of current year.
What amount of grant income should be recognized for the current year?
40,000,000
4,500,000
4,000,000
0
Question 48
Peach Company purchased a machine for P7,000,000 on January 1, 2019 and received a government grant of P1,000,000
toward the capital cost.
The machine is to be depreciated on a straight-line basis over 5 years and estimated to have a residual value of P500,000 at
the end of this period.
What is the carrying amount/Book Value of the asset on December 31, 2020?
4,200,000
5,700,000
4,400,000
3,900,000
Question 49
Peach Company purchased a machine for P7,000,000 on January 1, 2019 and received a government
grant of P1,000,000 toward the capital cost.
The machine is to be depreciated on a straight-line basis over 5 years and estimated to have a residual
value of P500,000 at the end of this period.