Practical Accounting 1 Review jca

AGRICULTURE- PAS 41
1. Which of the following is an agricultural produce?
a. Yarn b. logs c. cheese d. carcass
2. Bearer plant is a living plant that:
a. Is used in the production or supply of agricultural produce
b. Is expected to bear produce for more than one period
c. Has a remote likelihood of being sold as agricultural produce, except for incidental scrap
sales
d. All of the above
3. Produce growing on bearer plants are
a. Biological assets b. Inventory c. PPE d. Other Asset
4. PAS 41 takes the view that the fair value of agricultural produce at the point of harvest can always
be measured reliably.
All costs related to biological assets that are measured at fair value are recognized as expenses
when incurred, other than costs to purchase such biological assets.
a. False, True b. True, False c. False, False d. True, True
5. The following pertains to Smile Company’s biological assets:
FV based on quoted price in an active market for similar asset P5100
FV based on quoted price in an active market for identical asset 5000
FV based on unobservable inputs for the asset 4900
Selling price in a binding contract to sell 5200
Est commission to broker 500
Est transport costs necessary to bring the asset to the market 300
The entity’s biological assets should be valued at:
a. P4600 b. P4500 c. P4300 d. P4200
6. The following pertains to Frown Company’s biological assets:
Price of the asset in the market P5000
Est commission to broker 500
Est transport costs necessary to bring the asset to the market 300
Selling price in a binding contract to sell 5200
The entity’s biological assets should be valued at:
b. P4700 b. P4500 c. P4400 d. P4200
A herd of 10 2-year old animals were held at January 1. On July 1, one animal aged 2.5 years was
purchased for 108 and one animal was born. No animals were sold or purchased during the period. Per
unit fair value less costs to sell were as follows:
2-year old animal on Jan 1 100
Newborn animal at July 1 70
2.5-year old animal on July 1 108
Newborn animal on Dec 31 72
.5-year old animal on Dec 31 80
2-year old animal on Dec 31 105
2.5-year old animal on Dec 31 111
3-year old animal on Dec 31 120
7. The carrying amount of biological assets as of Dec 31 is
a. 1292 b. 1400 c. 1338 d. 1320
8. The increase in FV of biological assets due to price change is
a. 55 b. 222 c. 53 d. 212
9. The increase in FV of biological assets due to physical change is
a. 70 b. 229 c. 237 d. 167
10. The total value of he entity’s forest assets is P200 million comprising: Freestanding trees; Land
under trees at P20 million; and roads in forests at P10 million. How much should be classified as
biological assets?
a. 200 million b. 170 million c. 190 million d. Nil

PPE- ACQUISITION AND SUBSEQUENT EXPENDITURES- PAS 16

1. The cost of an item of PPE comprises:
Practical Accounting 1 Review jca
i. Purchase price, plus import duties and nonrefundable purchases taxes, after
deducting trade discounts and rebates
ii. Any costs directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by management
iii. Initial estimate of dismantling costs and removing the item and restoring the site, the
obligation for which the entity incurs when the item is acquired or as a consequence
for using the item
a. I, ii, iii b. I and ii c. I and iii d. I only
2. Cabiao co. purchased a new printing machine on December 2, 2018 at an invoice price of P4
million with terms 2/10, net 30. On Dec 10, Cabiao paid the required amount. The installation costs
were P50,000 and the employees received training at a cost if P20,000. A test was undertaken and
cost P5000. What amount should be capitalized as cost of the machine?
a. 4,075,000 b.3,995,000 c. 3,975,000 d. 3, 970, 000
3. Seller co. sold a used asset to Buyer co.. for P800,000, accepting a 5-year 6% note for the entire
amount. Incremental Borrowing rate was 14%. The annual payment of principal and interest on the
note was to be P189,930. The asset could have been sold at an established cash price of
P651,460. The present value of an ordinary annuity of P1 at 8% for 5 periods is 3.99. The asset
should be capitalized on Buyer’s books at:
a. P949,650 b.P800,000 c. P757,820 d. P651,460
Company A had a machine with a carrying amount of P450,000. Company B had a delivery vehicle with a
carrying amount of P300,000. Companies A and B exchanged the machine and vehicle, and Company B
paid an additional P90,000 cash as part of the exchange. Assume that the FV of the delivery vehicle is
P420,000. The exchange has commercial substance.
4. How much gain or loss should be recorded by Company A?
a. 30000 loss b. 60000 gain c. 120000 loss d. 120000 gain
5. How much gain or loss should be recorded by Company B?
a. 30000 loss b. 60000 gain c. 120000 loss d. 120000 gain
Payor and Recipient had an exchange with no commercial substance. The asset given up by Payor had a
book value of P12000 and a FV of P15000. The asset given up by Recipient had a book value of P20000
and a FV of P19000. Boot of P4000 is received by Recipient.
6. Payor should record the asset at:
a. 15000 b. 16000 c. 19000 d. 20000
7. Recipient should record the asset at:
a. 15000 b. 16000 c. 19000 d. 20000
8. An entity acquired a piece of land with existing building with the intention to demolish the old
building right away in order to construct a new building on its site as part of its planned
redevelopment. In accordance with PIC Q and A No. 2012-02, it is appropriate to account for the
carrying value of the old building as part of the cost of the new building if
a. It will be used as owner-occupied property
b. It will be held as investment property
c. It will be sold as inventory
d. None of these situations
9. An entity acquired a piece of land with existing building with the intention to initially use the old
building as owner-occupied property and then demolish and replace it with a new one. In
accordance with PIC Q and A No. 2012-02, it is appropriate to account for the carrying value of the
old building as part of the cost of the new building if
a. It will be used as owner-occupied property
b. It will be held as investment property
c. It will be sold as inventory
d. None of these situations
10. In accordance with PIC Q and A No. 2012-02, demolition costs of the old building to give way for
the construction of a replacement building should preferable be
a. Expensed
b. Capitalized as part of the cost of land
c. Capitalized as land improvements
d. Capitalized as part of the cost of the new building