1.Statement I: PAS38 does not require a specific amortization method that entities shall use. However, if no other amortization method best reflects the pattern of consumption of the economic benefits from the use of intangible asset, then the entities shall use the straight line method of amortization/

Statement II: PAS38 does not prohibit the use of an amortization method that is based on revenue.

A.TRUE, FALSE

B.TRUE,TRUE

C.FALSE, FALSE

D.FALSE, TRUE

2.Statement I: Under the effective interest method, the amortization of the bond discount increases the carrying amount of the financial asset.

Statement II: If the face amount of a investment in bonds exceeds its carrying amount, the excess is called a discount

A.TRUE, FALSE

B.TRUE,TRUE

C.FALSE, FALSE

D. FALSE, TRUE

3.Statement I: Subsequent changes in the fair value of a financial asset measured at amortized cost are ignored.

Statement II: According to PFRS 9 Financial Instruments financial assets measured at amortized cost are initially measured at fair value.

A.FALSE, FALSE

B.TRUE, TRUE

C.TRUE, FALSE

D.FALSE, TRUE

4.Statement 1: Investment properties measured under the fair value model are not depreciated even if the investment property is depreciable, e.g Building.

Statement 2: Tupper Co replaces the escalator in its building that is classified as investment property. The newly installed escalator has a cost of 1M while the carrying amount of the old escalator that was replaced is P200K. Tupper Co shall recognize loss of P800K from the replacement of the old escalator

A.TRUE, TRUE

B.FALSE, FALSE

C.TRUE, FALSE

D.FALSE, TRUE

5.Statement 1. R Co. receives a 3-year, noninterest-bearing note of P1,000,000. R Co. determined that the effective interest rate on the transaction is 10%. The initial carrying amount of the note receivable is computed as P1,000,000 x PV of 1 @10%, n=3/

Statement 2. Wet Co. received a noninterest-bearing note of P3,000,000. The note is collectible in three equal annual installments of P1,000,000, due at the end of each year. Wet Co. determines that the effective interest on the transactions is 10%. The initial carrying amount of the note receivable is computed as P1,000,000 x PV of 1 @ 10%, n=3.

A.FALSE; FALSE

B.TRUE; FALSE

C.TRUE; TRUE

D.FALSE; TRUE

6.Supporting records of ABC CORP's trading securities portfolio show the following debt and equity securities:

Security Cost. Fair Value

400 Ordinary shares Con Co. P254,400 P243,000

P800,000 Tip Co. 7% bonds 796,500 774,000

P1,200,000 Turk Co. 7 % bonds 1,207,500 1,218,900

Totals P2,258,500 P2,235,900

Interest dates on the bonds are January 1 and July 1. ABC Corp uses the income approach to record the purchase of bonds with the accrued interest. During 2017 and 2018, ABC completed the following transactions related to trading securities:

2017

Jan 1 Received semiannual interest on bonds. Assume that the appropriate adjusting entry was made on December 31, 2016.

April 1 Sold P600,000 of 7 % Turk bonds at 102 plus accrued interest.

May 21 Received dividend of P1.25 per share on the Con ordinary share capital. The dividend had not been recorded on the declaration date.

Jul 1 Received semiannual interest on bonds and then sold the 7% Tip bonds at 97 1/2

Aug 25 Purchased 200 shares of New, Inc. ordinary share capital at P580 per share plus brokerage fees of P500.

Nov 1 Purchased P500,000 of 8% Tol Co. bonds at 101 plus accrued interest. Brokerage fees were P1,250. Interest dates are January 1 and July 1.

Dec 31 Market price of securities were:

Con ordinary share P550

7 Turk bonds 101

8% Tol bonds 101

New ordinary share P538.75

2018

Jan 2 Recorded the receipt of semiannual interest on bonds

Feb 1 Sold the remaining 7 Turk bonds at 101 plus accrued interest.

What is the total interest and dividend income for 2017?

A.P91,417

B.P98,804

C.answer not given

D.P164,416

E.P125, 166