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11. PFRS 13 defines fair value as current exit price,

whereas depreciated replacement cost measures the

entry price for an asset. In accordance with PIC Q&A

No. 2018-3, when can depreciated replacement cost be

used to measure the fair value of an item of property,

plant and equipment?

a. Only when the entry price equals a current exit

price.

b. Only when the entry price is lower than a current

exit price.

c. Under no circumstances.

d. In all circumstances.

Use the following information for next three questions.

Tyke Corporation has the following information on January

1, 2020 relating to its land and building.

Land P 20,000,000

Building 450,000,000

Accumulated depreciation 75,000,000

There were no additions or disposals during 2020.

Depreciation is computed using straight line method over

15 years for building. On June 30, 2020, the land and

building were revalued as follows:

Replacement cost

Depreciated

replacement cost

Land P 35,000,000 P 35,000,000

Building 600,000,000 480,000,000

12. When an item of property, plant and equipment is

revalued, any accumulated depreciation at the date of

the revaluation is

a. Restated proportionately with the change in the

gross carrying amount of the asset so that the

carrying amount of the asset after revaluation

equals its revalued amount.

b. Eliminated against the gross carrying amount of

the asset and the net amount restated to the

revalued amount of the asset.

c. Either a or b.

d. Neither a nor b.

13. The depreciation expense for the year 2020 is

a. P35 million c. P30 million

b. P40 million d. P32 million

14. The revaluation surplus as of December 31, 2020 is

a. P135 million c. P130 million

b. P125 million d. P127 million

Use the following information for next two questions.

Tycoon Corporation acquired a building on January 1, 2016

at a cost of P50,000,000. The building has an estimated

life of 10 years and residual value of P5,000,000. The

building was revalued on January 1, 2020 and the

revaluation revealed replacement cost of P80,000,000,

residual value of P2,000,000 and revised total life of 12

years.

15. The carrying amount of building as of December 31,

2020 is

a. P28,250,000 c. P48,800,000

b. P42,700,000 d. P42,950,000

16. The revaluation surplus as of December 31, 2020 is

a. P14.0 million c. P14.7 million

b. P15.4 million d. P16.8 million

17. During the current year an entity sold a piece of

equipment used in production. The equipment had

been accounted for using the revaluation method and

details of the accounts and sale are presented below:

Sales price P100,000

Equipment carrying amount (net) 90,000

Revaluation surplus 20,000

Which of the following is correct regarding recording

the sale?

a. The gain that should be recorded in profit and loss

is P30,000

b. The gain that should be recorded in other

comprehensive income is P10,000

c. The gain that should be recorded in other

comprehensive income is P30,000

d. The gain that should be recorded in profit and loss

is P10,000; the P20,000 revaluation surplus may

be transferred to retained earnings.

18. If items of property, plant and equipment are stated at

revalued amounts, the following shall be disclosed

except

a. Whether an independent valuer was involved.

b. For each revalued class of property, plant and

equipment, the carrying amount that would have

been recognized had the assets been carried under

the cost model.

c. The revaluation surplus, indicating the change for

the period and any restrictions on the distribution

of the balance to shareholders.

d. The expected date of the next revaluation.