I. Multiple Choice - Theories (PFRS 5: Noncurrent Asset Held for Sale and Discontinued<\/p>
Operations)<\/p>
1. It is group of assets to be disposed by sale or otherwise, together as a group in a single<\/p>
transaction, and liabilities directly associated with those assets that will be transferred in the<\/p>
transaction.<\/p>
a. Disposal group<\/p>
b. Discontinued Operations<\/p>
c. Noncurrent asset<\/p>
d. Cash generating unit<\/p>
2. An entity shall classify a noncurrent asset or disposal group as \"held for sale\" when<\/p>
a. The carrying amount of the asset or disposal group will be recovered through a sale<\/p>
transaction.<\/p>
b. The carrying amount of an asset or disposal group will be recovered through continuing<\/p>
use.<\/p>
c. The noncurrent asset or disposal group is to be abandoned.<\/p>
d. The noncurrent asset or disposal group is idle or retired from active use.<\/p>
3. Noncurrent asset or disposal group is classified as \"held for sale\" when the asset is available<\/p>
for immediate sale and the sale is highly probable. For the sale to be highly probable, (choose<\/p>
the incorrect one)<\/p>
a. Management must be committed to a plan to sell the asset.<\/p>
b. An active program to locate a buyer and complete the plan must have been initiated.<\/p>
c. The asset must be actively marketed for sale at a reasonable price in relation to its current<\/p>
fair value.<\/p>
d. The sale is expected to qualify for recognition as a completed sale within two years from<\/p>
the date of classification of the asset as \"held for sale\".<\/p>
4. An entity shall measure a noncurrent asset or disposal group classified as held for sale at<\/p>
a. Carrying amount<\/p>
b. Fair value less cost to sell<\/p>
c. Lower of carrying amount and fair value less cost to sell<\/p>
d. Higher of carrying amount and fair value less cost to sell<\/p>
5. Which statement is incorrect concerning presentation of noncurrent asset or disposal group<\/p>
classified as held for sale?<\/p>
a. An entity shall present a noncurrent asset held for sale and the assets of a disposal group<\/p>
classified as held for sale separately from other assets.<\/p>
b. The liabilities of a disposal group classified as held for sale shall be presented separately<\/p>
from other liabilities.<\/p>
c. The assets and liabilities a disposal group classified as held for sale shall not be offset as<\/p>
a single amount.<\/p>
d. An entity shall depreciate a noncurrent asset classified as held for sale or while it is part<\/p>
of a disposal group classified as held for sale.<\/p>
6. It comprises operations and cash flows that can be clearly distinguished, operationally and for<\/p>
financial reporting purposes from the rest of the entity.<\/p>
a. Component of an entity<\/p>
b. Disposal group<\/p>
c. Business segment<\/p>
d. Corporate asset<\/p>
7. A discontinued operation is a component of an entity that either has been disposed of or is<\/p>
classified as held for sale and<\/p>
I. Represents a separate major line of business or geographical area of operations.<\/p>
II. Is part of a single coordinated plan to dispose of a separate major line of business or<\/p>
geographical area of operations.<\/p>
III. Is a subsidiary acquired exclusively with a view to resale<\/p>
a. I only<\/p>
b. I and II only<\/p>
c. I and III only<\/p>
d. I, II and III<\/p>
8. A component of an entity is classified as a discontinued operation<\/p>
I. When the entity has actually disposed of the operation.<\/p>
II. When the operation meets the criteria to be classified as \"held for sale.\"<\/p>
a. Either I or II<\/p>
b. Neither I nor II<\/p>
c. I only<\/p>
d. II only<\/p>
9. What is the presentation of the results from discontinued operation in the income statement?<\/p>
a. The entity shall disclose a single amount on the face of the income statement below the<\/p>
income from continuing operations.<\/p>
b. The amounts from discontinued operations shall be broken down over each category of<\/p>
revenue and expense.<\/p>
c. Discontinued operations shall be shown as a movement on retained earnings.<\/p>
d. Discontinued operations shall be shown as a line item after gross profit with the taxation<\/p>
being shown as part of income tax expense.<\/p>
10. Which is incorrect concerning the presentation of the discontinued operation in the statement<\/p>
of financial position?<\/p>
a. Assets of the component held for sale are presented separately from all other assets of<\/p>
the entity.<\/p>
b. Assets of the component held for sale are measured at the higher of fair value less cost<\/p>
to sell and their carrying amount.<\/p>
c. Liabilities of the component held for sale are presented separately from all other liabilities<\/p>
of the entity.<\/p>
d. Depreciable assets of the component held for sale shall not be depreciated.<\/p>
II. Multiple Choice - Computation (PFRS 5: Noncurrent Asset Held for Sale and Discontinued<\/p>
Operations)<\/p>
11. Diana Company accounts for noncurrent assets using the cost model on October 1, 2018, the<\/p>
entity classified a noncurrent asset as held for sale. At that date, the carrying amount was<\/p>
P3,200,000, the fair value was estimated at P2,200,000 and the cost of disposal at P200,000. On<\/p>
December 15,2018 the asset was sold for net proceeds of P1,850,000. What amount should be<\/p>
included as an impairment loss in the statement of comprehensive income for the year ended<\/p>
December 31, 2018?<\/p>
a. 1,000,000<\/p>
b. 1,200,000<\/p>
c. 1,350,000<\/p>
d. 0<\/p>
12. Helen Company accounts for noncurrent assets using the cost-model. On October 30, 2018,<\/p>
the entity classified a noncurrent asset as held for sale. At that date, the carrying amount was<\/p>
P1,500,000, the fair value was estimated at P1,000,000 and the cost of disposal at P150,000. On<\/p>
November 20, 2018, the asset was sold for net proceeds of P800,000. What amount should be<\/p>
included as loss on disposal in the statement of comprehensive income for the year ended<\/p>
December 31, 2018?<\/p>
a. 550,000<\/p>
b. 700,000<\/p>
c. 150,000<\/p>
d. 0<\/p>
13. Coral Company accounts for noncurrent assets using the cost model. On July 31, 2018, the<\/p>
entity classified a noncurrent asset as held for sale. At that date, the carrying amount was<\/p>
P1,450,000, the fair value was estimated as P2,150,000 and the cost of disposal at P150,000.<\/p>
The asset was sold at January 31, 2019 for P2,120,000. At what amount should the asset be<\/p>
measured in the statement of financial position on December 31, 2018?<\/p>
a. 2,000,000<\/p>
b. 2,150,000<\/p>
c. 2,120,000<\/p>
d. 1,450,000<\/p>
Questions 14 and 15 are based on the following information:<\/p>
Mara Company purchased equipment for P5,000,000 on January 1, 2017 with a useful life of 10<\/p>
years and no residual value.<\/p>
On January 1, 2019, the entity classified the asset as held for sale. The fair value of the equipment<\/p>
on January 1, 2019 is P3,300,000 and the cost of disposal is P100,000.<\/p>
On December 31, 2019, the fair value of the equipment is P3,800,000 and the cost of disposal is<\/p>
P200,000<\/p>
On December 31, 2019, the entity believed that the criteria for classification as held for sale can<\/p>
no longer be met. Accordingly, the entity decided not to sell the asset but continue to use it.<\/p>
14. What is the measurement of the equipment that ceases as held for sale on December 31,<\/p>
2019?<\/p>
a. 3,200,000<\/p>
b. 4,000,000<\/p>
c. 3,500,000<\/p>
d. 3,600,000<\/p>
15. What amount should be recognized in profit or loss as result of reclassification in 2019?<\/p>
a. 800,000<\/p>
b. 300,000<\/p>
c. 400,000<\/p>
d. 0<\/p>
16. ABC Company committed to sell the comic book division, a component of the business, on<\/p>
September 1, 2018. The carrying amount of the division was P4,000,000 and the fair value was<\/p>
P3,500,000. The disposal date is expected on June 1, 2019. The division reported an operating<\/p>
loss of P200,000 for the year ended December 31, 2018. Ignoring income tax, what amount<\/p>
should be reported as loss from discontinued operation in 2018?<\/p>
a. 500,000<\/p>
b. 200,000<\/p>
c. 700,000<\/p>
d. 0<\/p>
17. WXY Company decided on August 1, 2018 to dispose of a component of business. The<\/p>
component was sold on November 30, 2018. The income for 2018 included income of P5,000,000<\/p>
from operating the discontinued segment from January 1 to the sale date. The entity incurred a<\/p>
loss on the November 30 sale of P4,500,000. Ignoring income tax, what amount should be<\/p>
reported in the income statement for 2018 as income or loss under \"discontinued operation\"?<\/p>
a. 4,500,000 loss<\/p>
b. 5,000,000 income<\/p>
c. 500,000 loss<\/p>
d. 500,000 income<\/p>
18. Earth Company reported the following data for the current year:<\/p>
Income from continuing operations 700,000<\/p>
Net income 500,000<\/p>
Selling and administrative expenses 2,250,000<\/p>
Income before tax 1,000,000<\/p>
What amount should be reported as income or loss from discontinued operations?<\/p>
a. 700,000 income<\/p>
b. 500,000 income<\/p>
c. 100,000 loss<\/p>
d. 200,000 loss<\/p>
19. Red Company has correctly classified the packaging operations as a disposal group held for<\/p>
sale and as discontinued operation. For the year ended December 31, 2018, this disposal group<\/p>
incurred trading loss after tax of P2,000,000 and the loss on remeasuring it to fair value less cost<\/p>
of disposal was P1,500,000. What total amount of disposal group's losses should be included in<\/p>
profit or loss for the year ended December 31, 2018?<\/p>
a. 3,500,000<\/p>
b. 2,000,000<\/p>
c. 1,500,000<\/p>
d. 0<\/p>
20. On December 31, 2018, XO Company committed to a plan to discontinue operations of<\/p>
Underwear Division. The entity estimated that the division's operating loss for 2019 would be<\/p>
P500,000 and that the fair value of the facilities was P300,000 less than carrying amount on<\/p>
December 31, 2018. The division's operating loss for 2018 was P1,400,000 and the division was<\/p>
actually sold for P400,000 less than carrying amount in 2019. Th tax rate is 30%. What amount<\/p>
should be reported as loss from discontinued operation in 2018?<\/p>
a. 1,700,000<\/p>
b. 1,190,000<\/p>", "transcribed_text": "", "related_book": { "title": "Global Strategy", "isbn": "0357512367, 978-0357512364", "edition": "5th Edition", "authors": "Mike W. Peng", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/649592eaa157d_32303.jpg", "uri": "\/textbooks\/global-strategy-5th-edition-9780357512364", "see_more_uri": "" }, "free_related_book": { "isbn": "1599322986", "uri": "\/textbooks\/investing-for-retirement-the-ultimate-guide-to-not-outliving-your-money-strategies-that-can-help-you-keep-it-simple-keep-it-safe-1st-edition-978-1599322988-256001", "name": "Investing For Retirement The Ultimate Guide To Not Outliving Your Money Strategies That Can Help You Keep It Simple Keep It Safe", "edition": "1st Edition" }, "question_posted": "2024-06-28 03:39:47", "see_more_questions_link": "\/study-help\/questions\/business-economics-2023-September-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/a-lending-institution-supplied-the-following-data-on-loan-approvals", "description": "A lending institution supplied the following data on loan approvals by four loan officers. Use = .05 and test to determine whether the loan approval decision is independent of the loan officer...", "stars": 3 }, { "url": "\/study-help\/psychology\/list-noteworthy-changes-that-were-implemented-in-dsm5-1983011", "description": "List noteworthy changes that were implemented in DSM-5.", "stars": 3 }, { "url": "\/poke-a-hole-in-a-piece-of-cardboard-and-hold", "description": "Poke a hole in a piece of cardboard and hold the cardboard horizontally in the sunlight (as in Figure 1.6). Note the image of the Sun that is cast below. To convince yourself that the round spot of...", "stars": 3.5 }, { "url": "\/study-help\/questions\/prove-that-kcoloring-is-npcomplete-for-all-integers-k-2-9839813", "description": "Prove that k-COLORING is NP-complete for all integers k 2 3. Hint: Use induction to show NP-hardness. You may assume that 3-COLORING is NP-hard", "stars": 3.5 }, { "url": "\/study-help\/questions\/9-lo2i-prepare-an-income-statement-for-virginia-slim-wear-7226340", "description": "9. (LO2.I) Prepare an income statement for Virginia Slim Wear. Take your calculations all the way to computing earnings per share", "stars": 3.5 }, { "url": "\/study-help\/questions\/be-sure-to-follow-the-seven-step-paradigm-when-submitting-1024005", "description": "Be sure to follow the seven step paradigm when submitting this as a collected homework problem: 1. I want to and I can 2. Draw a diagram (if you can't visualize this in a diagram, see the next page)...", "stars": 3.5 }, { "url": "\/study-help\/questions\/directions-perform-an-ethical-penetration-test-on-a-website-of-1011921", "description": "Directions: Perform an ethical penetration test on a website of your choice using one of the following tools. As an option, you can use Kali Linux through Oracle Virtual Box. Nmap:...", "stars": 3.5 }, { "url": "\/study-help\/questions\/the-casual-furniture-company-manufactures-outdoor-furniture-and-incurred-the-1001645", "description": "The Casual Furniture Company manufactures outdoor furniture and incurred the following costs during the month of January: $ Timber 31,998 Wages-assembly line personnel 19,499 Wages-factory supervisor...", "stars": 3.5 }, { "url": "\/study-help\/questions\/a-drug-trial-is-attempted-using-a-real-drug-and-1007480", "description": "A drug trial is attempted using a real drug and a pill made of just sugar. 18 people are given the real drug in hopes of increasing the calcium levels. The increase in calcium level is found to be on...", "stars": 3.5 }, { "url": "\/study-help\/questions\/1-using-the-tqm-philosophy-show-how-disney-or-any-1008873", "description": "1. Using the TQM philosophy show how Disney or any other company can benefit from implementing lean method so that customers can experience their value for money. 2. Provide recommendations on how...", "stars": 3.5 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/answers-must-be-typed-into-the-templates-1post-the-opening-4232383", "next": "\/study-help\/questions\/wonderland-plant-manufactures-computer-chips-expected-demand-for-these-chips-4232385" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": "I. Multiple Choice - Theories (PFRS 5: Noncurrent Asset Held for Sale", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/i-multiple-choice-theories-pfrs-5-noncurrent-asset-held-4232384" } ], "skill_details": { "skill_id": "9", "skill_name": "Accounting", "parent_id": "1" } }1" } }