DRILLS

Biological Assets

1. The following information pertains to the agricultural activity of BLACKPINK CORPORATION for the year ended December 31, 2021:
Fruit Trees 300,000
Picked Fruit 100,000
Animals related to recreational activities 350,000
Dairy cattle 200,000
Bottled milk 120,000
Lumber and logs 180,000
Land used in agricultural activity 600,000
Coffee plants 170,000
Harvested coffee beans 60,000
Peanut plants 160,000
Plants with dual use 450,000
Wooden furniture 130,000
Oil palms 200,000
Palm oil 70,000
Sheep 90,000
Wool 40,000
Pigs 150,000
Carcasses 85,000
Cured ham 70,000
Maize plants 175,000
Trees in lumber plantation 420,000
Roads to gain access in the lumber plantation 550,000

REQUIREMENTS: Determine the total amount of the following:

a. Biological Assets under PAS 41
b. Agricultural Produce under PAS 41
c. Property, Plant and Equipment under PAS 16
d. Inventory under PAS 2

2. On January 1, 2021, the biological assets of NEWJEANS CORPORATION consists of ten 2-year old animals with fair value less costs to
sell of P10,000 each for a total of P100,000.

Transactions during the year include:

 One animal aged 2.5 years was purchased on July 1, 2021 for P10,800
 One animal was born on July 1, 2021
 No animals were sold or disposed of during the period

Per unit fair values less costs to sell are as follows:

July 1, 2021
New born animal P7,000
2.5 years old animal 10,800
December 31, 2021
New born animal 7,200
0.5 year old animal 8,000
2 year old animal 10,500
2.5 year old animal 11,100
3 year old animal 12,000

REQUIREMENTS: Compute the following:

a. Change in Fair Value less Costs to Sell due to PRICE CHANGE
b. Change in Fair Value less Costs to Sell due to PHYSICAL CHANGE
Property, Plant and Equipment

3. TREASURE CORPORATION presented the following information related to its long term assets account as of December 31, 2021:
Equipment leased out under operating lease P400,000
Land related to agricultural activity 300,000
Bearer plants related to agricultural activity 450,000
Animals related to recreational activities 250,000
Cows and livestock related to agricultural activity 150,000
Plants used for landscaping purposes 140,000
Servicing equipment – long term in nature 200,000
Patents 240,000
Franchise 160,000
Farm houses – for livestock purposes 330,000
Environment equipment – required for DENR Accreditation 750,000
Land held for capital appreciation 280,000
Land leased out under operating lease 370,000
Exploration and evaluation assets 180,000
Land brought with undetermined use 250,000

REQUIREMENT: How much is the total amount of Property, Plant and Equipment (PPE)?

4. During the current year, IVE CORPORATION acquired a new machine with the following details;
Cash paid for machine including VAT of P48,000 P448,000
Cost of transporting machine 20,000
Cost of installation by expert fitter 30,000
Labor of testing machine 25,000
Materials used and damaged as a result of testing the machine 15,000
Cost of training for personnel who will use the machine 15,000
Cost of safety rails and platforms surrounding the machine 80,000
Cost of water device to keep the machine cool 50,000
Cost of adjustment to machine to make it more efficient to operate 40,000
Estimated dismantling cost be incurred as required by contract 50,000
Insurance for one year 20,000
Safety inspection cost prior to use 20,000

REQUIREMENT: How much is the initial cost of the new equipment of IVE CORPORATION?

5. On January 1, 2021, SEVENTEEN CORPORATION acquired a factory machine for P672,000, VAT-inclusive. Other related costs are as
follows:
Freight Cost 60,000
Insurance for one year 40,000
Installation and testing 20,000
Commission to broker 30,000
The machine has a residual value of P70,000 at the end of its 5 year useful life. It was also estimated that the machine can produce
up to 160,000 units of product over its useful life. Actual units produced for 2021 was 25,000 units.

REQUIREMENT: Determine the depreciation expense for 2021 using the following depreciation methods:
a. Straight line method d. 150% declining balance method
b. Output method e. Double declining balance method
c. SYD Method

Intangible Assets

6. During the current year, NCT CORPORATION incurred costs to develop and produce a computer software product as follows:
Completion of detailed program design P2,600,000
Other testing costs after establishment of technological feasibility 4,000,000
Costs of producing product masters for training materials 3,000,000
Duplication of computer software and training materials from product masters 5,000,000
Packaging product 1,800,000
 REQUIREMENTS:
a. What amount should be reported in inventory?
b. What total amount of the costs incurred should be expensed immediately?
c. What amount should be capitalized as software cost, subject to amortization?

7. On January 1, 2021, ITZY CORPORATION acquired an intangible asset with a remaining legal life of 10 years and remaining useful life
of 15 years amounting to P12,000,000. The entity’s management estimated a residual value of P1,000,000.
REQUIREMENTS:
a. What is the amortization expense for the year 2021?
b. Assuming in early 2023. ITZY CORPORATION determined that the economic benefits of the intangible asset would not last longer
than 6 years from the date of acquisition. What is the amortization expense for the year 2023?

8. On January 1, 2021, BIG COMPANY signed an agreement to operate as a franchisee of BANG COMPANY for an initial franchise fee of
P12,000,000. The same date, BIG COMPANY paid 4,000,000 and agreed to pay the balance in four equal annual payments of
2,000,000 beginning January 1, 2022.

BIG COMPANY can borrow at 14% for a loan of this type. The present value factors at 14% are as follows:
Present value of 1 at 14% for four periods 0.59
Present value of an ordinary annuity of 1 at 14% for four periods 2.91

REQUIREMENT: What is the acquisition cost of the franchise?

Investments

9. On March 15, 2021, BTS CORPORATION bought 10% of the 300,000 outstanding shares of TXT CORPORATION for P14.40 per share.
It was known to BTS that TXT declared a cash dividend per share amounting to P2.40 per share at the beginning of the current month
to be distributed on March 31, 2021, the date of record of which is on March 20, 2021. The market price of TXT shares on December
31, 2021 is P20 and cost to sell of the shares is P1.50.

REQUIREMENTS:
1. Assuming the shares are held for trading, what is the balance of investment in equity securities on December 31, 2021 and the
net amount to be presented in profit or loss in 2021?
2. Assuming the shares are NOT held for trading, what is the balance of investment in equity securities on December 31, 2021 and
the net amount to be presented in profit or loss in 2021?

10. On January 1, 2021, EXO CORPORATION acquired 25,000 ordinary shares out of the 100,000 outstanding ordinary shares of ENHYPEN
CORPORATION for P320,000. On that date, the equity of ENHYPEN is as follows:
Share Capital (P5 par value) P500,000
Share Premium 200,000
Retained Earnings 300,000
Total Shareholder’s Equity P1,000,000

It was determined that the following investee asset’s carrying amount differ from their fair values on that date:
Assets Carrying Amount Fair Value Remaining Life
Building P200,000 P300,000 10 years
Inventories 100,000 150,000 N/A*
Computer Software 150,000 100,000 5 years
*all inventories were sold during the year

During 2021, ENHYPEN reported the following in its statement of comprehensive income:
Profit or Loss P250,000
Revaluation Surplus 100,000
Unrealized loss on FVOCI Investments 50,000

In addition, ENHYPEN declared and paid P50,000 cash dividends during the year.

REQUIREMENTS:
a. How much is the goodwill from the acquisition?
b. What is the balance of the investment account on December 31, 2021?
11. On January 1, 2021, TWICE CORPORATION purchased 10% P2,500,000 bonds at the market rate of interest of 12%. The related bond
issue cost incurred by TWICE amounted to P125,000. The bonds will mature 4 years after.

REQUIREMENT: What is the purchase price of the bonds under the following scenarios?
a. The bonds acquired are term bonds
b. The bonds acquired are serial bonds

12. BLINK CORPORATION and its subsidiaries own the following properties as of December 31, 2021;
Building under construction to be rented out under operating lease P700,000
Vacant building but held to be leased out under operating lease 300,000
Equipment leased out under operating lease 200,000
Building occupied by its employee paying a market rent 200,000
Land held for undetermined future use 600,000
Factory machine leased out under operating lease 100,000
10-storey building (first 6 floors are rented out under operating lease, other floor 1,000,000
used as office space)(a)
Building leased out under operating lease (b) 500,000
Building that is leased to another entity under a finance lease 300,000
Land rented out to JENNIE INC. (a subsidiary) 400,000
Equipment rented out to LISA INC. (a subsidiary) 300,000
Land held for sale in the ordinary course of business 700,000
Building rented out to JISOO INC. (an associate) 400,000
Land held for long term capital appreciation 300,000
Constructed building to be used as office building 400,000
Building constructed in behalf of ROSÉ INC. 500,000
Office building awaiting disposal 100,000
Other information:
a. The portions of the building could be rented out separately.
b. The company provides significant ancillary services to its tenants.
c. Intracompany leases made to related parties (subsidiaries and associates) were all classified as operating leases.

REQUREMENTS:
a. What is the total investment property that should be reported in the consolidated statement of financial position of BLINK
CORPORATION and its subsidiaries?
b. What is the total investment property that should be reported in the separate statement of financial position of BLINK
CORPORATION and its subsidiaries?

13. RED VELVET CORPORATION reported the following funds on December 31, 2021:
Petty Cash Fund P150,000
Payroll Fund 900,000
Contingency Fund 600,000
Cash Surrender Value 450,000
Investment in Debt Securities (@ FVPL) 1,200,000
Investment in Equity Securities (@ FVOCI) 1,050,000
Investment Property (Cost Model) 1,500,000
Investment Property (Fair Value Model) 1,350,000
Advances to Subsidiary 600,000
Travel Fund 200,000
Revolving Fund 300,000
Bonds Payable (due in 2022) 4,500,000

REQUIREMENT: How much is to be reported as long-term investment in the statement of financial position as of December 31, 2021?