Information pertaining to four different companies follows:

On January 1, 2016, David Corporation acquired a building at a cost of P22 million. The building
has
been depreciated using straight-line on the basis of a 20-year life, with a residual value of P2
million.
On January 1, 2021, an appraisal of the building by professional and competent appraisers
reported a
fair value of P 20 million with an estimated residual value of p3 million and a remaining useful
life of
10 years. It is the company's policy to transfer a portion of the revaluation surplus to retained
earnings
while the asset is being used by the company. Assume that the accumulated depreciation of the
revalued asset is restated proportionately with the change in the gross carrying amount of the
asset.
Netrix Company’s outstanding share capital consisted of the following: 8% Preference share
capital,
15,000 shares, ₱100 par, cumulative and fully participating. Ordinary share capital, 100,000
shares,
₱10 par. There were no dividends in arrears prior to the declaration of cash dividends. On
December
15, the board of directors of Netrix Company declared cash dividends of ₱300,000.
The statement of financial position of Vinton Company shows cash of P237,390. The following
items
were found to comprise this amount: Cash in Metrobank, per bank statement (outstanding
checks as
of year-end total P5,200) – P99,320; Savings account at Far East Bank – P30,800; Petty cash
fund
(including expense receipts of P250) – P1,500; Cash on hand (undeposited sales receipts) –
P4,200;
Sinking fund cash – P20,000; Cash in foreign bank (in equivalent pesos) – P62,000; Customer’s
checks on hand: Traveler’s checks – P4,450 and certified check – P3,120; 90-day BSP treasury
bills –
P12,000.
A new drug named “CORONA PILL” was introduced by Ranny Inc. onto the market in
December 1,
2021. Ranny Inc.’s financial year ends on December 31, 2021. It was the only company that
was
permitted to manufacture this patented drug. The drug is used by patients suffering from
breathing
disorder. On March 31, 2022, after the drug was introduced, more than 1,000 patients died.
After a
series of investigations, authorities discovered that when this drug was simultaneously used
with
“NCOV TABLET,” a drug used to cure malaria, the patient’s blood would clot and the patient
suffered a stroke. A lawsuit for P100, 000, 000 has been filed against Ranny Inc. The financial
statements were authorized for issuance on April 30, 2022.
46. How much is the revaluation surplus recognized by David at January 1, 2021?
a. P2,700,00
b. P3,000,000
c. P4,000,000
d. P5,000,000
Fair value, January 1, 2021 P20,000,000
Carrying value, January 1, 2021
Cost P22,000,000
Accumulated depreciation
(22M – 2M)/20 = 1.0M; 1.0M x 5 years 5,000,000 17,000,000
Revaluation surplus recognized in the accounts P 3,000,000
47. How much is the annual depreciation charge by David for the building after revaluation?
a. P1,000,000
b. P1,700,000
c. P2,000,000