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Final Exam Reviewer Accounting 2
Final Exam Reviewer Accounting 2
Final Exam Reviewer Accounting 2
PROBLEM – PART 2
1. During the current year, several requisitions/transactions occurred related to these farm
animals as follows:
Carrying amount on January 1, 2021
2 cows – 2 year old P100,000 each
Purchases on June 30, 2021:
2 – carabaos (6 months old) P30,000 each
2- Dairy Cattle (1 year old) 5,000 each
On December 31, 2021, cows gave birth to 2 calves.
No animals were sold during the year.
Fair value less cost of disposal on December 31, 2021 (each):
3 – year old cow 110,000
1- year old carabao 40,000
1.5 – year old cattle 7,500
New born calf 30,000
Required:
1. Prepare journal entries for the current year to recognize the transaction relating
to biological asset.
2. What amount of gain on biological asset should be reported in the current year?
3. What is the carrying amount of biological asset at year-end
2. The Bentham Company purchased an investment property on 1 January 2018 for a cost of
PHP220,000. The property had a useful life of 40 years and at 31 December 2020 had a fair value
of PHP300,000.
On 1 January 2021 the property was sold for net proceeds of PHP290,000. Bentham uses the cost
model to account for investment properties. What is the gain or loss to be recognized in profit or
loss for the year ended 31 December 2021 regarding the disposal of the property, according to
IAS40 Investment property? __________________
3. The Markab Company has acquired a trademark relating to the introduction of a new manufacturing
process. The costs incurred were as follows:
Cost of trademark PHP 3,500,000
Expenditure on promoting the new product PHP 50,000
Employee benefits relating to the testing of the
proper functioning of the new process PHP 200,000
According to IAS38 Intangible assets, what is the total cost that should be capitalized as an
intangible non-current asset in respect of the new process? ________________
4. On 1 January 2021 The Hamerkop Company borrowed PHP6 million at an annual interest rate of
10% to finance the costs of building an electricity generating plant. Construction commenced on 1
January 2021 and cost PHP6 million. Not all the cash borrowed was used immediately, so interest
income of PHP80,000 was generated by temporarily investing some of the borrowed funds prior to
use. The project was completed on 30 November 2021. What is the carrying amount of the plant
at 30 November 2021? __________