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On January 1, 2016, Bianca Company purchased an equipment with a cost of
P1,000,000. It is expected that this equipment will be used for 5 years and have a
residual value at that time of P100,000. It is also expected that this equipment can
produce 150,000 units of Bianca’s products. In 2016 and 2017, this equipment
produced 20,000 and 25,000 units respectively.
What is the accumulated depreciation on this equipment on December 31, 2017 under
the straight-line method of depreciation?

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The correct answer is: 360,000

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An entity purchased a tract of land as an investment property. The entity razed an old
building on the property.

Purchase price of land and old bldg. 4,000,000

Fair value of old building 300,000
Demolition of old building 200,000
Proceeds from sale of salvaged materials 20,000
Legal fees for purchase contract 150,000
Title guarantee insurance 50,000
Payment of property taxes in arrears on land 100,000
Option paid for an alternative land not acquired 30,000
Special assessments for city improvements 120,000
What is the cost of the land?

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The correct answer is: 4,300,000

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What is my favorite squid game character
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The correct answer is: ALI ABDUL

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An entity had the following property acquisitions during the current year:
•        Acquired a tract of land in exchange for 50,000 ordinary shares of P100 par value
with market price of PI50 per share on the date of acquisition. The last property tax bill
indicated assessed value of 4,000,000 for the land. However, the land has a fair value of
P6, 000,000.
•        Received land as donation 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, 000,000.
•        Acquired a machine with an invoice price of P3, 000,000 subject to cash discount
of 10% which was not taken. The entity incurred cost of P50, 000 in removing the old
welding machine prior to the installation of the new one. Machine supplies were
acquired at a cost of P150, 000
•        During the early part of current year, the entity purchased a machine for P500, 000
down and four monthly instalments of P1, 250,000. The cash price of the machine was
P4, 700,000.
·         At the beginning of current year, the entity purchased a machine for P2, 000,000 in
exchange for a noninterest bearing note requiring four annual payments of P500, 000.
The first payment was made at the end of current year
·         The rate of interest for this note at date of issuance was 10%. The present value of
an ordinary annuity of 1 at 10% is 3.17 for four periods. The present value of an annuity
of 1 in advance at 10% is 3.49 for four periods.
·         At the beginning of current year, the entity acquired a machine by issuing a four-
year noninterest bearing note for P2, 000,000. The entity 10% interest for this type of
note. The present value of 1 at 10% for 4 years is 0.68.
·         During the year, the entity exchanged an old machine, costing P3, 000,000 and
50% depreciated, for a used machine and paid cash difference of P500, 000. The fair
value of the old machine was determined to be P1, 800,000.
What is the total cost of machinery acquired? 

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The correct answer is: 12,645,000

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An entity purchased a tract of land as a factory site. An old building was demolished
and construction began on new building.
Purchase price of land and old bldg. 4,500,000
Fair value of old building 250,000
Demolition of old building 300,000
Title insurance and legal fees to purchase land 200,000
Architect fee 950,000
New building construction cost 8,000,000
Survey before construction 100,000
Building permit 150,000
Excavation cost 200,000
Liability insurance during construction 100,000
New fence surrounding new building 100,000
Driveways, parking bays and safety lighting 550,000
Cost of trees, shrubs and other landscaping 300,000

Cost of NEW BUILDING?

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The correct answer is: 9,700,000

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Betty Company and James Company are fuel oil distributors. To facilitate the delivery of
oil to customers, the two entitities exchanged ownership of barrels of oil without
physically moving the oil. Betty paid James P1, 500,000 to compensate for a difference
in the grade of oil. It was reliably determined that the configuration of the cash flows of
the asset received  does not differ from the configuration of the cash flows of the asset
transferred. On the date of exchange, the oil inventory of Betty has a carrying amount of
P5, 000,000 and fair value of P7, 000,000. The oil inventory of James has a carrying
amount of P6, 000,000 and fair value of P8, 500,000.
What amount should Betty record as cost of oil inventory received in exchange? 

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The correct answer is: 6,500,000
Question 7
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An entity purchased equipment on January 1, 2017 for P5, 000,000. The equipment had
a useful life of 5 years and residual value of P600, 000. The policy is to depreciate 5-
year assets using the 200% declining method for the first 2 years and then switch to
straight line.
Accumulated depreciation on December 31, 2019? 

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The correct answer is: 3,600,000

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1. On January 1, 2016, Bianca Company purchased an equipment with a cost of
P1,000,000. It is expected that this equipment will be used for 5 years and have a
residual value at that time of P100,000. It is also expected that this equipment can
produce 150,000 units of Bianca’s products. In 2016 and 2017, this equipment produced
20,000 and 25,000 units respectively.
What is the accumulated depreciation on this equipment on December 31, 2017 under
the production method of depreciation?

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The correct answer is: 270,000
Question 9
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An  entity takes a full depreciation in the year of acquisition and no depreciation in the
year of disposition. Data relating to a depreciable asset on December 31, 2016 are cost
of P1,100,000, residual value of P200, 000, accumulated depreciation of P720,000 and
useful life of 5 years. The asset was acquired on July 1, 2014.
 Using the same depreciation method in 2014, 2015 and 2016, what is the depreciation in 2017?

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The correct answer is: 120,000

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The following expenditures were incurred by Pinky Company in 2017:
Purchase of land with existing building 10,500,000
Fair value of old building 500,000
Land survey 400,000
Fees for title search for title of land 300,000
Building permit 250,000
Temporary quarters for construction crews 100,000
Payments of tenants of old building for vacating the premises 600,000
Payment to demolition company to raze the old building and clean up 400,000
Excavating basement 350,000
Special assessment tax for street project 60,000
Salvage value of materials from old building 110,000
Damages awarded for injuries sustained in construction 90,000
Costs of construction 20,000,000
Cost of paving parking lot adjoining the building 180,000
Cost of shrubs, trees and other landscaping 40,000
What is the cost of the land?

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The correct answer is: 10,760,000

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Betty Company and James Company are fuel oil distributors. To facilitate the delivery of
oil to customers, the two entitities exchanged ownership of barrels of oil without
physically moving the oil. Betty paid James P1, 500,000 to compensate for a difference
in the grade of oil. It was reliably determined that the configuration of the cash flows of
the asset received  does not differ from the configuration of the cash flows of the asset
transferred. On the date of exchange, the oil inventory of Betty has a carrying amount of
P5, 000,000 and fair value of P7, 000,000. The oil inventory of James has a carrying
amount of P6, 000,000 and fair value of P8, 500,000.
What amount should James record as cost of oil inventory received in exchange? 

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The correct answer is: 4,500,000

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On January 1, 2016, Bianca Company purchased equipment with a cost of P1,000,000. It
is expected that this equipment will be used for 5 years and have a residual value at that
time of P100,000. It is also expected that this equipment can produce 150,000 units of
Bianca’s products. In 2016 and 2017, this equipment produced 20,000 and 25,000 units
respectively.
What is the accumulated depreciation on this equipment on December 31, 2017 under
the double-declining balance method of depreciation?

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The correct answer is: 640,000

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On January 1, 2016, Bianca Company purchased equipment with a cost of P1,000,000. It
is expected that this equipment will be used for 5 years and have a residual value at that
time of P100,000. It is also expected that this equipment can produce 150,000 units of
Bianca’s products. In 2016 and 2017, this equipment produced 20,000 and 25,000 units
respectively.
What is the accumulated depreciation on this equipment on December 31, 2017, under
the SYD method of depreciation?

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The correct answer is: 540,000

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An entity purchased equipment which was installed and put into service on July 1, 2017
at a total cost of P6,000,000. Residual value was estimated at P800,000. The equipment
is being depreciated over five years using 150% declining method.
What is the depreciation for 2018?

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The correct answer is: 1,530,000

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An entity purchased a tract of land as a factory site. An old building was demolished
and construction began on new building.
Purchase price of land and old bldg. 4,500,000
Fair value of old building 250,000
Demolition of old building 300,000
Title insurance and legal fees to purchase land 200,000
Architect fee 950,000
New building construction cost 8,000,000
Survey before construction 100,000
Building permit 150,000
Excavation cost 200,000
Liability insurance during construction 100,000
New fence surrounding new building 100,000
Driveways, parking bays and safety lighting 550,000
Cost of trees, shrubs and other landscaping 300,000

Cost of land? 
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The correct answer is: 4,500,000

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On April 1, 2017, an entity purchased machinery for P3,300,000. The machinery has an
estimated useful life of 5 years with residual value of P300,000. Depreciation is
computed by SYD method.
What is the depreciation for 2018?

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The correct answer is: 850,000

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An entity purchased a tract of land as a factory site. An old building was demolished
and construction began on new building.
Purchase price of land and old bldg. 4,500,000
Fair value of old building 250,000
Demolition of old building 300,000
Title insurance and legal fees to purchase land 200,000
Architect fee 950,000
New building construction cost 8,000,000
Survey before construction 100,000
Building permit 150,000
Excavation cost 200,000
Liability insurance during construction 100,000
New fence surrounding new building 100,000
Driveways, parking bays and safety lighting 550,000
Cost of trees, shrubs and other landscaping 300,000

Cost of land improvements

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The correct answer is: 950,000

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On September 1, 2015, an entity  purchased a new machine on a deferred payment
basis. A down payment of P200,000 was made and 4 annual installments of P600,000
each are to be made beginning on September 1, 2016. The cash equivalent price of the
machine was P2,300,000. Due to an employee strike, the entity could not install the
machine immediately and thus incurred P30,000 of storage cost. Cost of installation
excluding the storage cost amounted to P80,000. What is the total cost of the machine?
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The correct answer is: 2,380,000

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An entity had the following property acquisitions during the current year:
•        Acquired a tract of land in exchange for 50,000 ordinary shares of P100 par value
with market price of PI50 per share on the date of acquisition. The last property tax bill
indicated assessed value of 4,000,000 for the land. However, the land has a fair value of
P6, 000,000.
•        Received land as donation 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, 000,000.
•        Acquired a machine with an invoice price of P3, 000,000 subject to cash discount
of 10% which was not taken. The entity incurred cost of P50, 000 in removing the old
welding machine prior to the installation of the new one. Machine supplies were
acquired at a cost of P150, 000
•        During the early part of current year, the entity purchased a machine for P500, 000
down and four monthly instalments of P1, 250,000. The cash price of the machine was
P4, 700,000.
·         At the beginning of current year, the entity purchased a machine for P2, 000,000 in
exchange for a noninterest bearing note requiring four annual payments of P500, 000.
The first payment was made at the end of current year
·         The rate of interest for this note at date of issuance was 10%. The present value of
an ordinary annuity of 1 at 10% is 3.17 for four periods. The present value of an annuity
of 1 in advance at 10% is 3.49 for four periods.
·         At the beginning of current year, the entity acquired a machine by issuing a four-
year noninterest bearing note for P2, 000,000. The entity 10% interest for this type of
note. The present value of 1 at 10% for 4 years is 0.68.
·         During the year, the entity exchanged an old machine, costing P3, 000,000 and
50% depreciated, for a used machine and paid cash difference of P500, 000. The fair
value of the old machine was determined to be P1, 800,000.
What amount of interest expense should be reported for the current year as a result of
machinery acquisition? 

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The correct answer is: 1,094,500
Question 20
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An entity had the following property acquisitions during the current year:
•        Acquired a tract of land in exchange for 50,000 ordinary shares of P100 par value
with market price of PI50 per share on the date of acquisition. The last property tax bill
indicated assessed value of 4,000,000 for the land. However, the land has a fair value of
P6, 000,000.
•        Received land as donation 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, 000,000.
•        Acquired a machine with an invoice price of P3, 000,000 subject to cash discount
of 10% which was not taken. The entity incurred cost of P50, 000 in removing the old
welding machine prior to the installation of the new one. Machine supplies were
acquired at a cost of P150, 000
•        During the early part of current year, the entity purchased a machine for P500, 000
down and four monthly instalments of P1, 250,000. The cash price of the machine was
P4, 700,000.
·         At the beginning of current year, the entity purchased a machine for P2, 000,000 in
exchange for a noninterest bearing note requiring four annual payments of P500, 000.
The first payment was made at the end of current year
·         The rate of interest for this note at date of issuance was 10%. The present value of
an ordinary annuity of 1 at 10% is 3.17 for four periods. The present value of an annuity
of 1 in advance at 10% is 3.49 for four periods.
·         At the beginning of current year, the entity acquired a machine by issuing a four-
year noninterest bearing note for P2, 000,000. The entity 10% interest for this type of
note. The present value of 1 at 10% for 4 years is 0.68.
·         During the year, the entity exchanged an old machine, costing P3, 000,000 and
50% depreciated, for a used machine and paid cash difference of P500, 000. The fair
value of the old machine was determined to be P1, 800,000.
What is the total cost of land acquired? 
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The correct answer is: 7,000,000

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On January 1, 2017, an entity acquired an equipment with useful life of 8 years and
residual value of P300, 000. The depreciation applicable to this equipment was
P900,000 for 2018 using double declining method.
What is the acquisition cost of the equipment? 

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The correct answer is: 4,800,000

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An entity used the composite method of depreciation based on 25% composite rate. On
January 1, 2017, the total cost of equipment was P5,000,000 with total residual value of
P600,000 and accumulated depreciation of P3,000,000. In January 1, 2017, the entity
purchased an equipment for P2,500,000 with no residual value. On December 31, 2017,
an entity sold an equipment costing P1,000,000 for P350,000. The said equipment was
acquired on January 1, 2015 with residual value of P200,000.
What amount of depreciation should be recognized in 2017?

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The correct answer is: 1,625,000
Question 23
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On January1, 2017, an entity acquired an equipment with an estimated useful life of 10
years and estimated residual value of P50,000 The depreciation applicable to this
equipment was P240,000 for 2019 computed under the sum years' digit method.
What was the acquisition cost of the equipment?

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The correct answer is: 1,700,000

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The following expenditures were incurred by Pinky Company in 2017:
Purchase of land with existing building 10,500,000
Fair value of old building 500,000
Land survey 400,000
Fees for title search for title of land 300,000
Building permit 250,000
Temporary quarters for construction crews 100,000
Payments of tenants of old building for vacating the premises 600,000
Payment to demolition company to raze the old building and clean up 400,000
Excavating basement 350,000
Special assessment tax for street project 60,000
Salvage value of materials from old building 110,000
Damages awarded for injuries sustained in construction 90,000
Costs of construction 20,000,000
Cost of paving parking lot adjoining the building 180,000
Cost of shrubs, trees and other landscaping 40,000
What is the cost of the  building?

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The correct answer is: 21,590,000

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On January 1, 2017, an entity purchased a large quantity of personal computers. The
cost of this computer was P6, 000,000. On the date of purchase, the management
estimated that the computers would last approximately 4 years and would have a
residual value at that time of P600, 000. The entity used the double declining balance
method.
During January 2018, the management realized that technological advancements had
made the computer virtually obsolete and that they would have to be replaced.
Management proposed changing the remaining useful life of the computers to 2 years.
What is the depreciation for 2018? 
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The correct answer is: 2,400,000