11/15/21, 4:11 PM QUIZ 2 - COURSE OUTCOME 3

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Statement 1: Land held by real estate agents are part of the inventory. 1 point
Statement 2: Supplies directly attributable to the performance of a service
are part of the inventories.

Both are True

Both are False

True, False

False, True

Clear selection

All of the statements regarding cash generating unit with goodwill are true 1 point
except:
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except:

Goodwill does not generate cash flow independently from other assets.

The recoverable amount of goodwill as an individual asset is cannot be determined.

Impairment loss recognized for goodwill shall not be reversed in a subsequent period.

All of the statements are true

Clear selection

What amount should be capitalized as cost of the land? 1 point

4,200,000

4,150,000

4,050,000

4,400,000

Clear selection

The approximate value of the inventory is then compared to the net 1 point
realizable value of the inventory, the lower between these amounts is the
value that will be presented in the statement of financial position.

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TRUE

FALSE

Clear selection

XYZ Company has a gross profit rate based on sales of 25% and the 1 point
following data aboutthe company’s net sales of the current year are as
follows: Sales 133,500; Sales returns and allowances 2,300; Sales discounts
1,500. How much was the company’s cost of goods sold? (Ignore the
pesos sign.)

98,400

Statement 1: Trade discounts are deduction from the list price that is 1 point
recorded in the books. Statement 2: Cash discounts encourage prompt
payment.

Both are True

Both are False

True, False

False, True

Clear selection

Figaro Company acquired land and paid in fully by issuing P600 000 10%
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Figaro Company acquired land and paid in fully by issuing P600,000 10% 1 point
bonds payable and 40,000 ordinary shares with par value of P10. The share
was selling at P19 and the bonds were trading at 102. What amount should
be recorded as cost of the land?

988,000

1,000,000

1,372,000

1,387,200

Clear selection

The cost of purchase of inventory includes all, except? 1 point

Purchase Price

Irrecoverable Taxes

Trade Discount

Freight

Clear selection

On January 1, 2019, N Company purchased factory equipment for 1 point

5,000,000 and received a government grant for the acquisition cost of

1,000,000. The factory equipment has an estimated useful life on 10 years
and the entity uses straight line method. How much grant income shall be
recognized in 2019?

100,000

125,000

115,000

200,000

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Clear selection

Statement 1: Storage cost of goods in process is an inventoriable cost. 1 point

Statement 2: Storage cost of raw materials is an inventoriable cost.

Both are True

Both are False

True, False

False, True

Clear selection

El Company determined the following information for an inventory at year- 1 point

end: Historical cost 2,100,000 Replacement cost 1,500,000 NRV 1,850,000
Fair value 1,900,000 What amount should be reported as inventory at year-
end?

2,100,000

1,500,000

1,850,000

1,900,000

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Clear selection

What is the effect of net markups on the cost-retail ratio when using 1 point

conventional retail approach?

Increases the cost-retail ratio

No effect on the cost-retail ratio

Depends on the amount of the net markdowns

Decreases the cost-retail ratio

Clear selection

Under the SYD method, depreciation is computed by applying a series of 1 point

fractions to the depreciable amount of the asset.

TRUE

FALSE

Clear selection

Which of the following is NOT an indicator of impairment? 1 point

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Advances in the technological environment in which an asset is employed have an

adverse impact on its future use

An increase in interest rates which increases the discount rate an entity uses

The carrying amount of an entity’s net assets is higher than the entity’s number of
shares in issue multiplied by its share price

The estimated net realizable value of inventory has been reduced due to fire damage
although this value is greater than its carrying amount

Clear selection

Which cost should be expensed immediately? 1 point

Cost of Direct Labor

Cost of Direct Materials

Salaries of Office Employees

Freight in for goods purchased

Clear selection

Statement 1: Goods purchased FOB Shipping point, the seller is still the 1 point
owner. Statement 2: Goods sold FOB Shipping point, the seller is still the
owner.

Both are True

Both are False

True, False

False, True

Clear selection

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Government grant shall be recognized when there is reasonable assurance 1 point

that

The entity will comply with conditions of the grant

The grant will be received

The grant must be received

Both a and b

Clear selection

Under the replacement method, the original cost is retained in the books. 1 point
When the asset is replaced, the cost of replacing the asset is charged to
expense.

TRUE

FALSE

Clear selection

Merchandising inventory include 1 point

Goods placed in production

Goods in transit sold FOB Destination

Raw Materials

Factory Supplies

Clear selection

It is an action by the government designed to provide an economic benefit 1 point

specific to an entity and for which the government cannot reasonably
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specific to an entity and for which the government cannot reasonably
place a value

Government Grant

Government assistance

Government takeover

Government benefit

Clear selection

What is the amount of impairment loss? 1 point

1,400,000

1,500,000

1,650,000

1,100,000

Clear selection

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Under the declining balance method, residual value of the asset is 1 point

considered initially.

TRUE

FALSE

Clear selection

In accordance with IAS 36 Impairment of Assets, which of the following 1 point

explains the impairment of an asset and how to calculate its recoverable
amount?

An asset is impaired when the carrying amount exceeds its recoverable amount and
the recoverable amount is the higher of its fair value less costs of disposal and its
value in use

An asset is impaired when the recoverable amount exceeds its carrying amount and
the recoverable amount is the lower of its fair value less costs of disposal and its
value in use

An asset is impaired when the recoverable amount exceeds its carrying amount and
the recoverable amount is the higher of its fair value less costs of disposal and its
value in use

An asset is impaired when the carrying amount exceeds its recoverable amount and
the recoverable amount is the lower of its fair value less costs of disposal and its
value in use

Clear selection

Which is not part of the inventory? 1 point

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Equipment used in production

Raw Materials

Manufacturing Supplies

Goods in process

Clear selection

A major advantage of the retail inventory method is that it 1 point

provides reliable results in cases where the distribution of items in the inventory is
different from that of items sold during the period.

hides costs from competitors and customers.

gives a more accurate statement of inventory costs than other methods.

provides a method for inventory control and facilitates determination of the periodic
inventory for certain types of companies

Clear selection

Government grant related to non-depreciable asset that requires 1 point

fulfillment of certain condition

Shall not be recognized as income

Shall be recognized as income immediately

Shall be recognized as income over 40 yrs.

Shall be recognized as income over the period which bear the cost of meeting the
condition

Clear selection
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This is government grant whose primary condition is that an entity shall 1 point
purchase or construct the asset

Grant related to asset

Grant related to income

Government gift

Government appropriation

Clear selection

At the beginning of the current year, Teddy Company exchanged an old 1 point
packaging machine, which cost P1,200,000 and was 50% depreciated, for
a used machine and paid a cash difference of P160,000. The fair value of
the old packaging machines was determined to be P700,000. What is the
gain on exchange?

540,000

100,000

60,000

Clear selection

What amount should be recorded as cost of the building? 1 point

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9,505,000

9,490,000

9,250,000

9,530,000

Clear selection

The retail inventory method is based on the assumption that the 1 point

final inventory and the total of goods available for sale contain the same proportion of
high- cost and low-cost ratio goods.

ratio of gross margin to sales is approximately the same each period

ratio of cost to retail changes at a constant rate

proportions of markups and markdowns to selling price are the same.

Clear selection

Which is not a part of inventory? 1 point

Raw Materials

Merchandise held for sale

Goods purchased FOB Shipping point

Goods sold FOB Shipping point

Clear selection

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Cost of Inventories includes all, except? 1 point

Cost of abnormal wastage

Cost of Purchase

Cost of Conversion

Other costs necessary in bring the inventory to its present location

Clear selection

What is the effect of the freight in the cost-retail ratio? 1 point

Increases the cost-retail ratio

No effect on the cost-retail ratio

Depends on the amount of the net markups

Decreases the cost-retail ratio

Clear selection

Conventional approach of estimating inventory considers the markdowns 1 point

from the computation of the cost ratio.

TRUE

FALSE

Clear selection

The depreciation under inventory method is determined as the difference 1 point

between costs of the beginning and ending period after adjustments for
acquisition costs and salvage proceeds from assets retired
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acquisition costs and salvage proceeds from assets retired.

TRUE

FALSE

Clear selection

A government grant that becomes repayable shall be accounted for as 1 point

Change in accounting estimate

Change in accounting policy

Both a and b

Neither a nor b

Clear selection

The abnormal shortages are deducted from cost and retail amounts and to 1 point
be reported as loss.

TRUE

FALSE

Clear selection

If there is a change in the depreciation method or the useful life of an 1 point

asset, the past depreciation charges are adjusted.

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TRUE

FALSE

Clear selection

Which statement is true about the retail inventory method? 1 point

It may not be used to estimate inventories for interim statements.

It may not be used to estimate inventories for annual statements.

It may not be used by auditors.

None of these are correct.

Clear selection

Carmel Corporation sells one product and uses a perpetual inventory 1 point
system. The beginning inventory consisted of 20 units that cost P20 per
unit. During the current month, the company purchased 120 units at P20
each. Sales during the month totaled 90 units for P43 each. What is the
number of units in the ending inventory?

20 units

30 units

50 units

140 units

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Clear selection

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