1.For companies that prepare financial statements in accordance with PFRS, plant, property, and equipment should be valued using which models?

a.The revaluation model or the fair value model

b.The cost model or the fair value through profit or loss model

c.The cost model or the revaluation model

d.The cost model or the fair value model

3.Depreciation is best described as

A.Useful life determination

B.Current value allocation

C.Cost allocation

D.Asset valuation

7. Which of the following should not be capitalized as cost of PPE?

A.Installation and assembly cost

B.Replacement of small spare parts

C.Cost of site preparation

D.Replace of building's entire roofing

9.P COMPANY acquired a machine and incurred the following costs:

Cash paid for machine, excluding VAT of P96,000 P896,000

Cost of transportation machine 30,000

Cost of installation 50,000

Cost of testing machine 40,000

Cost of safety rails and platform surrounding machine 60,000

Cost of water device to keep machine cool 80,000

Cost of adjustment to machine to make it operate more efficiently 75,000

Estimated dismantling cost to be incurred as required by contract 65,000

Insurance cost for the current year 15,000

Cost of training personnel who will use the machine 25,000

What total amount should be capitalized as cost of the machine?

A.1,296,000

B.1,200,000

C.1,400,000

D.1,160,000

10.Jayson Co. purchased land as a factory site for P800,000. Jayson paid P80,000 to tear down two buildings on the land. Salvage was sold for P5,400. Legal fees of P3,480 were paid for title investigation and making the purchase. Architect's fees were P31,200. Title insurance cost P2,400. Excavation cost P10,440. The contractor was paid P2,500,000. An assessment made by the city for pavement was P6,400.

The cost of the building that should be recorded by Jayson Co. is

Group of answer choices

A.P2,503,800.

B.P2,574,600.

C.P2,504,840.

D.P2,616,240.

11.ABC COMPANY purchased a P4,000,000 tract of land as an investment property. The entity razed an old building on the property: Demolition of building P200,000; Proceeds from sale of salvaged materials P20,000; Legal fees for purchase contract and recording ownership P150,000; Title guarantee insurance P50,000; Payment of property taxes in arrears P100,000; Option paid for an alternative land not acquired P30,000; and Special assessment for city improvements P120,000. What is the cost of the land?

Group of answer choices

A.4,480,000

B.4,630,000

C.4,420,000

D.4,600,000

12.Neil Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Neil Inc. has a book value of P48,000 and a fair value of P60,000. The asset given up by Armstrong Co. has a book value of P80,000 and a fair value of P76,000. Additional cash of P16,000 is received by Armstrong Co.

What amount should Neil Inc. record for the asset received?

A.P76,000

B.P80,000

C.P60,000

D.P64,000

13.ABC COMPANY entered into a contract to acquire a new machine for the factory. The machine which had a cash price of P2,000,000 was paid as follows:

Down payment 400,000

Note payable in three equal annual instalments 1,200,000

20,000 ordinary shares with a par value of P25 and fair value of P40 per share 800,000

Prior to machine use, installation cost of P50,000 was incurred. The machine has an estimated residual value of P100,000. What is the initial cost of the machine?

A.2,450,000

B.2,400,000

C.2,050,000

D.2,000,000

14.On January 1, 2020, THOU COMPANY purchased machinery for P7,600,000. Residual value was estimated to be P400,000. The machinery is depreciated over eight years using the sum of years' digits method. Depreciation is computed on the basis of the nearest full month. What amount should be recorded as depreciation for 2021?

A.1,477,778

B.1,200,000

C.1,266,667

D.1,400,000

15.On January 1, 2016, Forbes Company purchased equipment at a cost of P100,000. The equipment was estimated to have a salvage value of P10,000 and it is being depreciated over eight years under the sum-of-the-years'-digits method. What should be the charge for depreciation of this equipment for the year ended December 31, 2023?

A.P2,778

B.P5,000

C.P2,500

D.P11,250