PAS 2 (inventories)

Use the following information for the next three questions:

Entity A, a trading entity, buys and sells Product Z. Movements in the inventory of Product Z during
the period are as follows:

Date Transaction Units Unit cost Total cost

Feb. 1 Beginning inventory 100 ₱15 ₱1,500
7 Purchase 300 18 5,400
12 Sale 320
21 Purchase 200 21 4,200

1. How much is the ending inventory under the FIFO cost formula?
a. 6,540
b. 5,840
c. 5,640
d. 4,860

2. How much is the ending inventory under the Weighted Average cost formula? (The average is
calculated on a periodic basis.)
a. 5,180
b. 5,280
c. 5,460
d. 5,580

3. How much is the ending inventory under the Weighted Average cost formula? (The average is
calculated as each additional purchase is made, i.e., ‘moving average’.)
a. 5,860
b. 5,680
c. 5,580
d. 5,380

PAS 16 (PPE)
Use the following information for the next five questions:
Entity A acquires equipment on January 1, 20x1. Information on costs is as follows:

Purchase price, gross of trade discount 1,000,000

Trade discount available 10,000
Freight costs 20,000
Testing costs 30,000
Net disposal proceeds of samples generated
during testing 5,000
Present value of estimated costs of dismantling the
equipment at the end of its useful life 6,209

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 4. How much is the initial cost of the equipment?
a. 1,061,209
b. 1,051,209
c. 1,041,209
d. 1,031,209

5. The equipment has an estimated useful life of 10 years and a residual value of ₱200,000. Entity A
uses the straight line method of depreciation. How much is the carrying amount of the equipment on
December 31, 20x3?
a. 788,846
b. 802,846
c. 795,846
d. 764,846

6. On December 31, 20x3, Entity A revalues the equipment at a fair value of ₱820,000. There is no
change in the residual value and the remaining useful life of the asset. How much is the revaluation
surplus on December 31, 20x3?
a. 17,154
b. 24,154
c. 55,154
d. 31,154

7. How much is the depreciation expense in 20x4?

a. 102,500
b. 117,143
c. 136,667
d. 88,571

8. Entity A sells the equipment for ₱870,000 on January 1, 20x5. Entity A incurs selling costs of ₱20,000
on the sale. How much is the gain (loss) on the sale?
a. 118,571
b. 132,500
c. 147,143
d. 152,673

“The heart of the discerning acquires knowledge, for the ears of the wise seek it
out.” (Proverbs 18:15)

- END –

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