1. Statement 1: In some cases, a building that is being used partly as an owner-occupied property and partly as held for rentals, under operating lease, is presented in the statement of financial position as partly PPE and partly investment property.

Statement 2: Heidel Co. exchanges a piece of land for another land with Sol Co. Heidel classifies the land as investment property. The land given to Sol has a fair value of P20 while the land received from Sol has a fair value of P24. Heidel Co. paid P3 cash to Sol on the exchange. Heidel Co. shall initially recognize the land received from Sol at P23.

A. FALSE; TRUE

B. TRUE; FALSE

C.FALSE; FALSE

D.TRUE; TRUE.

2.Goods out on consignment are:

A. recorded in a consignment out account which is an inventory account

B. All of these

C. Included in the consignee's inventory

D. Recorded in a consignment in account which is an inventory account

3.ABC granted an 8%, 3-year, P6,000,000 loan to DEF Company on January 1, 2016. The interest on the loan is payable every December 31. ABC incurred P520,600 of direct origination cost but an origination fee of P200,000 was charged against DEF Company. The effective rate on the loan as a result of the origination fee and cost is now 6%.

What is the carrying value of the loan on december 31, 2017 in ABC's accounting books?

A. P6,320,000*

B. P6,000,000

C. Answer not given

D. P6,113,026

E. P6,219,836

4.ABC Company purchased from DEF Corporation a P400,000, 8%, five-year note that requires five annual year-end installments payments of P100,180. The note was discounted to yield 9% rate to ABC. At the date of purchase, ABC recorded the note at its present value of P389,700.

A. P100,900

B. P111,200

C. P160,000

D. Answer not given

E. P180,000

5.Dirt Corporation schedule of depreciable assets at December 31, 20x7 was as follows:

Asset Cost Accum. Dep'n Acquisition date Residual value

A 100,000 64,000 20x6 20,000

B 55,000 36,000 20x5 10,000

C 70,000 33,600 20x5 14,000

Dirt takes a full year's depreciation expense in the year of an asset's acquisition and no depreciation expense in the year of an asset's disposition. The estimated useful life of each depreciable asset is 5 years.

Dirt depreciates asset C by the straight-line method. On June 30, 20x8, Dirt sold asset C for P28,000 cash. How much gain (loss) should Dirt record in 2008 on the disposal of asset C?

A. (P2,800)

B. (P5,600)

C. P2,800

D. Answer not given

E. (P8,400)

6.On June 30, 2018, ABC Co. purchased 25% of the outstanding ordinary shares of DEF Co. at a total cost of P2,100,000. The book value of DEF's net assets on acquisition date was P7.2 million. For the following reasons, ABC was willing to pay more than book value for the DEF shares:

DEF has depreciable assets with a current fair value of P180,000 more than their book value. These assets have a remaining useful life of 10 years.

DEF owns a tract of land with a current fair value of P900,000 more than its carrying amount.

All other identifiable tangible and intangible assets of DEF have current fair values that are equal to their carrying amounts.

DEF reported a net income of P1,620,000, earned evenly during the current year ended December 31, 2018. Also in the current year, it declared and paid cash dividends of P315,000 to its ordinary shareholders. Market value of DEF's ordinary shares at December 31, 2018, is P9 million. ABC's financial year-end is December 31.

What amount should ABC report in its December 31, statement of financial position as its investment in DEF under the fair value method?

A.P 2,100,000

B.P 2,221,500

C.Answer not given

D.P 2,250,000

E.P 2,070,000

7.On June 30, 2018, ABC Co. purchased 25% of the outstanding ordinary shares of DEF Co. at a total cost of P2,100,000. The book value of DEF's net assets on acquisition date was P7.2 million. For the following reasons, ABC was willing to pay more than book value for the DEF shares:

DEF has depreciable assets with a current fair value of P180,000 more than their book value. These assets have a remaining useful life of 10 years.

DEF owns a tract of land with a current fair value of P900,000 more than its carrying amount.

All other identifiable tangible and intangible assets of DEF have current fair values that are equal to their carrying amounts.

DEF reported a net income of P1,620,000, earned evenly during the current year ended December 31, 2018. Also in the current year, it declared and paid cash dividends of P315,000 to its ordinary shareholders. Market value of DEF's ordinary shares at December 31, 2018, is P9 million. ABC's financial year-end is December 31.

What is the total amount of goodwill of DEF based on the price paid by ABC?

A.P 300,000

B.P1,080,000

C.P 30,000

D.Answer not given

E.P 120,000

8.On August 31, 2017, ABC Company purchased the following fair value through other comprehensive income equity securities:

Security Cost Fair value December 31, 2017

D P96,000 P84,000

E 152,000 158,000

F 162,000 146,000

On December 31, 2017, ABC reclassified its investment in security F from fair value through other comprehensive income to held for trading securities. What total amount of loss on these securities should be included in ABC's income statement for the year ended December 31, 2017?

A.P28,000

B.P0

C.P16,000

D.Answer not given

E.P22,000