NAME: ______________________________________ 5.

During self-construction of an asset by Richardson

1. During 2018 Dasmariñas Company installed a
production assembly line to manufacture furniture.
In 2018 Dasmariñas purchased a new machine and
rearranged the assembly line to install this machine.
The rearrangement did not increase the estimated
useful life of the assembly line but it did result in
significantly more efficient production. The
following expenditures were incurred in connection
with this project:
Company, the following were among the costs
incurred: Fixed overhead for the year P1,000,000
Portion of P1,000,000 fixed overhead that would be
allocated to asset if it were normal production
P60,000 Variable overhead attributable to self-
construction P75,000 What amount of overhead
should be included in the cost of the self-constructed
asset?
A. P1,135,000 C. P75,000
B. P1,075,000 D. P135,000

Machine 5,000,000 Temerity Company has different kinds of farm

Labor to install new machine 400,000 animals on January 1, 2015. During the current year,
Parts added in rearranging the assembly 2,000,000 several acquisitions occurred related to these farm
line to provide future benefits animals. A detailed summary of these transactions is
Labor and overhead to rearrange the 600,000 as follows:
assembly line Carrying amount on January 1:
15 Horses -1 year old 1,000,000
What amount of the above expenditures should be 10 Dairy cattle - 2 years old 400,000
capitalized in 2018? 8 Carabaos- 2.5 years old 200,000
A. 8,000,000 C. 7,400,000 20 Hogs - 3 years old 500,000
B. 5,400,000 D. 2,600,000
Purchases on June 30:
2. A schedule of plant assets owned by Bauan 4 Dairy cattle -1 year old 150,000
Company is presented below. 6 Carabaos - 6 months old 100,000

Fair value less cost of disposal on December 31

Cost Scrap Life 15 Horses - 1 year old 1,200,000
Building 8,800,000 800,000 20 years 10 Dairy cattle - 2 years old 520,000
Machinery 3,200,000 320,000 15 years 8 Carabaos - 2.5 years old 250,000
20 Hogs - 3 years old 550,000
Equipment 640,000 5 years
4 Dairy cattle -1 year old 170,000
Bauan computes depreciation on the straight 6 Carabaos - 6 months old 110,000
line method. The composite life of the assets
Fair value less cost of disposal on December 31
should be
15 Horses - 2 years old 1,350,000
A. 19.8 C. 18.0 10 Dairy cattle - 3 years old 580,000
B. 13.3 D. 16.0 8 Carabaos - 3.5 years old 290,000
3. Wilson Co. purchased land as a factory site for 20 Hogs - 4 years old 600,000
P800,000. Wilson paid P80,000 to tear down two 4 Dairy cattle - 1.5 years old 200,000
buildings on the land. Salvage was sold for P5,400. 6 Carabaos - 1 year old 140,000
Legal fees of P3,480 were paid for title investigation
and making the purchase. Architect's fees were There were no farm animals sold during the year and
P31,200. Title insurance cost P2,400, and liability neither were there any newborns nor deaths.
insurance during construction cost P2,600.
Excavation cost P10,440. The contractor was paid 6. What is the carrying amount of the biological assets
P2,500,000. An assessment made by the city for on December 31?
pavement was P6,400. Interest costs during A. 2,350,000 C. 2,380,000
construction were P170,000. B. 2,800,000 D. 3,160,000
The cost of the land that should be recorded by 7. What is the gain from change in fair value
Wilson Co. is attributable to price change?
A. P880,480. C. P889,880. A. No Change C. 450,000
B. P886,880. D. P896,280. B. 810,000 D. 360,000
4. On January 2, 2010, Stacy Company acquired 8. What is the gain from change in fair value
equipment to be used in its manufacturing attributable to physical change?
operations. The equipment has an estimated useful A. No Change C. 450,000
life of 10 years and an estimated salvage value of B. 810,000 D. 360,000
P30,000. The depreciation applicable to this
equipment was P140,000 for 2013, computed under Righteous Company provided the following data:
the sum-of-the-years'-digits method. What was the  Value of biological asset at acquisition
acquisition cost of the equipment? cost on December 31, 2016 6,000,000
A. P1,070,000 C. P1,100,000
 Fair valuation surplus on initial recognition
B. P1,130,000 D. P1,083,333
at fair value on December 31, 2016 500,000
 Change in fair value on December 31, 2017 A physical inventory taken on December 31, 2005
due to growth and price fluctuation 900,000 resulted in an ending inventory of P4,500,000. The
 Decrease in fair value due to harvest 100,000 gross profit on sales remained constant at 30% in
recent years. Benguet suspects some inventory may
9. What is the carrying amount of the biological asset have been taken by a new employee. At December
on December 31, 2017? 31, 2005 what is the estimated cost of missing
A. 6,500,000 C.7,400,000 inventory?
B. 7,500,000 D.7,300,000 A. P5,000,000
B. P500,000
10. What amount of net gain from the change in fair C. P4,500,000
value of biological asset be reported in 2017? D. P - 0 –
A. 900,000 C. 1,400,000
B. 800,000 D. 1,300,000

11. Walsh Retailers purchased merchandise with a list - End of Quiz -

price of P75,000, subject to trade discounts of 20%
and 10%, with no cash discounts allowable. Walsh
should record the cost of this merchandise as
A. P52,500. C. P58,500.
B. P54,000. D. P75,000.

12. Gonzaga Company uses the weighted average

method to determine the cost of its inventory.
Gonzaga recorded the following information
pertaining to its inventory:
Units Units cost Total cost
Balance 1/1 160,000 60 9,600,000
Sold on 1/15 140,000
Purchased 80,000 90 7,200,000
on 1/31
What amount of inventory should Gonzaga report in
its January 31, 2005 balance sheet?
Perpetual Periodic
A. P8,400,000 P7,000,000
B. P7,000,000 P8,400,000
C. P8,400,000 P7,500,000
D. P7,000,000 P7,500,000

Plank Co. uses the retail inventory method. The

following information is available for the current
year.
Cost Retail
Beginning inventory 156,000 244,000
Purchases 590,000 830,000
Freight-in 10,000 —
Employee discounts — 4,000
Net markups — 30,000
Net Markdowns — 40,000
Sales — 780,000

13. The ending inventory at retail should be

A. 320,000. C. 300,000.
B. 288,000. D. 280,000.

14. The approximate cost of the ending inventory by the

conventional retail method is
Believe that you can and it will happen.
A. 191,800. C. 196,000.
But don't just believe,
B. 189,840. D. 204,960.
you've also got to put in the work,
and you'll see that there
15. Benguet Company’s accounting records indicated are many opportunities ahead of you.
the following for 2005: Look in the bright side and there are greater things
coming your way! -iCPA
Inventory, January 1 P6,000,000
Purchases 20,000,000
Sales 30,000,000