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PEPEPEPPEPE

The document is a practice set from a financial accounting and reporting course regarding accounting for property, plant, and equipment. It contains 9 multiple choice questions about recording assets at purchase price or fair value, calculating depreciation expense using different methods, and accounting for asset exchanges and trade-ins.

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xjammer
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139 views1 page

PEPEPEPPEPE

The document is a practice set from a financial accounting and reporting course regarding accounting for property, plant, and equipment. It contains 9 multiple choice questions about recording assets at purchase price or fair value, calculating depreciation expense using different methods, and accounting for asset exchanges and trade-ins.

Uploaded by

xjammer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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6/12/2019 Search results - Google Drive

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FINANCIAL ACCOUNTING AND REPORTING
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FAR: PROPERTY, PLANT AND EQUIPMENT

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Use the following information for the next two (2) questions:

Shared with me On April 1, 2022, Paci c Corporation purchased for P2,700,000 a tract of land, a warehouse and an o ce building. The
following data were collected regarding the prope y.

Recent Appraised values Vendors’ book value


Land 875,000 700,000
Warehouse 375,000 400,000
Starred FA… n… 1,000,000 975,000 n…
O ce building pet… Fin…
1) What are the appropriate amounts that Paci c should record for the land, warehouse and o ce building, respectively?
Trash
Land Warehouse O ce building Land Warehouse O ce building
A. 700,000 400,000 900,000 C. 945,000 540,000 1,215,000
B. 875,000 375,000 1,000,000 D. 1,050,000 450,000 1,200,000
Storage
2) Assume an estimated useful life of 10 years for the warehouse & o ce building and an estimated salvage value of 10%,
405.8 MB used what is the depreciation expense for the warehouse and o ce building in 2022 under sum-of-years’ digits method?
n… Warehouse O ce building Warehouse O ce building
A. 81,818 218,182 C. 73,636 196,364
B. 61,364 290,909 D. 55,227 147,273

Use the following information for the next two (2) questions:
On May 1, Black Racer Company purchased factory machinery having an installment price of P5,000,000 and a list price of
P4,500,000. The company made a P1,000,000 down payment and issued a 4-year, P4,000,000 non interest bearing note
payable P1,000,000 every May sta ing next year. The prevailing interest rate for similar note is at 6%.
The present value factor of P1 ordinary annuity of 6% for 4 periods 3.4651

3) How much should be the factory machinery be initially recognized?


A. 3,465,100 B. 4,465,100 C. 4,500,000 D. 5,000,000

4) Assuming an estimated useful life of 5-years with a 10% salvage value based on cost, what is the depreciation expense
for the rst year under the 150% declining balance method?
A. 1,350,000 B. 1,339,530 C. 900,000 D. 893,020

5) Doug Airlines sold used jet aircra to Adele Company for P800,000, accepting a ve-year 6% note for the entire
amount. Adele’s incremental borrowing rate was 14%. The annual payment of principal and interest on the note was to
be P189,930. The aircra could have been sold at an estimated cash price of P651,460. The present value of an
ordinary annuity of P1 at 8% for ve periods is 3.99. The air cra should be capitalized on Adele’s books at
A. 949,650 B. 800,000 C. 757,820 D. 651,460

Use the following information for the next two (2) questions:
Below is the information relative to an exchange of asset by Mimz Bernanz Company. The exchange has commercial
substance in Case 1 and without commercial substance in Case 2:
Old Equipment
Book value Fair value Cash paid
Case 1 75,000 85,000 15,000
Cash 2 50,000 75,000 7,000

6) Which of the following would be correct for Mimz Bernanz to record in Case 1?
Record Equipment at Record a gain or loss of Record Equipment at Record a gain or loss of
A. 90,000 Nil C. 75,000 5,000 loss
B. 100,000 10,000 gain D. 90,000 10,000 gain

7) Which of the following would be correct for Mimz Bernanz to record in Case 2?
Record Equipment at Record a gain or loss of Record Equipment at Record a gain or loss of
A. 90,000 Nil C. 75,000 5,000 loss
B. 100,000 10,000 gain D. 90,000 10,000 gain

Use the following information for the next two (2) questions:
On July 1, 2017, Banded Water Company traded in an old machine with a carrying amount of P10,000 for a similar new
machine having a cash price of P32,000, and paid a cash di erence of P19,000.

8) How much should the prope y be initially recognized?


A. 32,000 B. 29,000 C. 22,000 D. 19,000

9) How much is the gain or loss from the trade in transactions?


A. None B. 3,000 C. 7,000 D. 10,000 1 upload complete

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