1. Hana Co.

is considering the appropriate classification of the Haha Company ventured into construction of a condominium
following items: in Makati which is rated as the largest state-of-the-art
structure.
Land held for long-term
capital appreciation P15,000,000 The board of directors decided that instead of selling the
Land held for undecided future use 30,000,000 condominium, the entity would hold this property for purposes
Building leased out under of earning rentals by letting out space to business executives
an operating lease 75,000,000 in the area.
Building leased out under
a finance lease 45,000,000 The construction of the condominium was completed and the
Vacant building held to be property was placed in service on January 1, 2019.
leased out under an operating lease 8,000,000
Property held for use in the production The cost of the construction was P50,000,000. The useful
or supply of goods or services 6,000,000 life of the condominium is 25 years and the residual value is
Property held for administrative purposes 9,000,000 P5,000,000.
Property held for sale in the
ordinary course of business 2,000,000 An independent valuation expert provided the following fair
Property held in the process of value at each subsequent year-end:
construction or development for sale 3,000,000
Property held for future use as December 31, 2019 55,000,000
owner- occupied property 4,000,000 December 31, 2020 53,000,000
Property held for future development December 31, 2021 60,000,000
and subsequent use as
owner-occupied property 4,400,000 3. Under the cost model, what amount should be reported
Property occupied by employees 3,600,000 as depreciation of investment property for 2019?
Owner-occupied property a. P1,800,000 c. P2,200,000
awaiting disposal 750,000 b. P2,000,000 d. 0
Property that is being constructed or
developed for use as an 4. Under the fair value model, what amount should be
investment property 12,000,000 recognized as gain from change in fair value in 2019?
Existing investment property that is a. P5,000,000 c. P7,000,000
being redeveloped for continuing use b. P3,000,000 d. 0
as investment property 24,000,000
Building held for administrative purposes,30 Sad Company, a real estate entity, had a building with a
and leased out under operating lease carrying amount of P20,000,000 on December 31, 2019. The
(60% is for administrative purposes) 15,000,000 building was used as offices of the entity's administrative staff.
Building leased out under an
operating lease (the entity supplies security On December 31, 2019, the entity intended to rent out the
and maintenance services to the lessees) 30,000,000 building to independent third parties. The staff will be moved
to a new building purchased early in 2019.
How much is the total amount that would normally be
reported as investment property? On December 31, 2019, the original building had a fair value
a. P200 Million c. P170 Million of P35,000,000.
b. P188 Million d. P158 Million
On December 31, 2019, the entity also had land that was held
2. Like, Inc. and its subsidiaries have provided you, their PFRS for sale in the ordinary course of business.
specialist, with a list of the properties they own:
● Land held by Like, Inc. for undetermined future use, The land had a carrying amount of P10,000,000 and fair value
P5,000,000. of P15,000,000 on December 31, 2019.
● A vacant building owned by Like, Inc. and to be leased
out under an operating lease, P20,000,000. On such a date, the entity decided to hold the land for capital
● Property held by a subsidiary of Like, Inc., a real estate appreciation.
firm, in the ordinary course of its business,
P30,000,000. The accounting policy is to carry investment property at fair
● Property held by Like, Inc. for use in production, value.
P1,000,000.
● A hotel owned by Heart, Inc., a subsidiary of Like, Inc., 5. On December 31, 2019, what amount should be
and for which Sugo, Inc. provides security services for recognized in revaluation surplus as a result of transfer
its guests' belongings, P50,000,000. of the building to investment property?
● A building owned by Like, Inc. being leased out to a. P20,000,000 c. P15,000,000
Status, Inc, a subsidiary of Quirino, Inc., P20,000,000. b. P35,000,000 d. P0

How much will be reported as investment properties in Like, 6. On December 31, 2019, what amount should be
Inc. and its subsidiaries consolidated financial statements? recognized profit or loss as a result of transfer of the land
a. P75,000,000 c. P95,000,000 to investment property?
b. P25,000,000 d. P45,000,000 a. P15,000,000 c. P5,000,000
b. 10,000,000 d. P0
7. Mr. and Mrs. Kim have a lifelong dream of having a farm upon No animals were sold or disposed of during the year.
their retirement. So, Mr. De Leon promised his wife that he
would set up a business related to this. Being a man who Fair value less cost of disposal per unit
always delivers on his promises, he established Jin Farms 2-year old animal on January 1 100
Corp. 2.5-year old animal on July 1 108
Newborn animal on July 1 70
At the end of the reporting period, Ellery (Jin's accountant) is 2-year old animal on December 31 105
considering the proper classification of the following items: 2.5-year old animal on December 31 111
Newborn animal on December 31 72
Fruit trees 3-year old animal on December 31 120
(including the fruits still attached 0.5-year old animal on December 31 80
to the trees valued at P200,000) P900,000
Harvested fruits 400,000 10. What is the fair value of the biological assets on
Grape vines 800,000 December 31?
Dairy cattle 500,000 a. 1,400 c. 1,440.
Harvested milk 50,000 b. 1,320 d. 1,360
Pigs 100,000
Love birds (Given as a gift to 11. What amount of gain from change in fair value of
Kim couple) 2,000 biological assets should be recognized in the current
year?
How much should be classified as biological assets? a. 222 c. 300
a. P1,600,000 c. P800,000 b. 292 d. 332
b. P1,400,000 d. P600,000
12. What is the gain from change in fair value due to price
8. The following pertains to Wild Company's biological assets: change?
a. 292 c. 237
Fair value based on quoted price b. 222 d. 55
in an active market for similar asset P5,100
Fair value based on quoted price
in an active market for identical asset 5,000
Fair value based on unobservable
inputs for the asset 4,900
Selling price in a binding contract
to sell 5,200
Estimated commissions to brokers and
Dealers 500
Estimated transport and other costs
necessary to get asset to the market 300

The entity's biological assets should be valued at

a. P4,600 c. P4,300
b. P4,500 d. P4,200

Bear Company produced milk for sale to local and national ice
cream producers. The entity began operations at the
beginning of current year by purchasing 650 milk cows for
P8,000,000.

The entity provided the following information for the current

year:

Acquisition cost, January 1 P8,000,000

Change in fair value due to
growth and price changes 2,500,000
Decrease in fair value due to harvest 250,000
Milk harvested during the year
but not yet sold 400,000

9. What amount of gain on change in fair value should be

recognized for biological asset in the current year?
a. P2,500,000 c. P2,900,000
b. P2,250,000 d. P2,650,000

At the beginning of the current year, Honey Company had a

herd of 10 2-year old animals.

One animal aged 2.5 years was purchased on July 1 for P108,
and one animal was born on July 1.