I.Multiple Choice (PFRS 6: Exploration and Evaluation of Mineral Resources)

1.Harry Company is involved in the exploration for mineral rights. During the current year, the entity incurred the following expenditures:

Exploratory drilling for minerals on site

2,000,000

Road and infrastructures to access exploration site

3,500,000

Expenditures relating to subsequent development of resources

3,400,000

What amount should be initially recognized as exploration asset? a. 2,000,000

b. 5,400,000

c.5,500,000

d. 8,900,000

2.During the current year, Long Company incurred P5,000,000 in exploration cost for each of 20 oil wells drilled in the current year in West Mindanao. Of the 20 wells drilled, 14 were dry holes. The entity used the successful effort method of accounting. None of the oil found is depleted in the current year.

What oil exploration expense should be reported in the income statement for the current year?

a. 50,000,000

b. 30,000,000

c. 70,000,000

a.0

3.Exploration and Evaluation expenditures are incurred

a.When searching for an area that may warrant detailed exploration even though the entity has not yet obtained the legal rights to explore a specific area.

b.When the legal right to explore a specific area has been obtained but the technical feasibility and commercial viability of extracting mineral resource are not yet demonstrable

c.When a specific area is being developed and preparations for commercial extraction are being made

d.In extracting mineral resource and processing the resource to make it marketable or transportable

4.When is an entity required to recognize exploration and evaluation expenditure as an asset?

a.When such expenditure is recoverable in future periods

b.When the technical feasibility and commercial viability of extracting the associated mineral resource have been demonstrated.

c.When required by the entity's accounting policy for recognizing exploration and evaluation asset.

d.Such expenditure is always expensed as incurred.

5.Which measurement model applies to exploration and evaluation of asset subsequent to initial recognition?

a.Cost Model

b.Revaluation Model

c.Cost Models and Revaluation Model

d.Recoverable amount model

II.Multiple Choice - Theories (PFRS 8: Operating Segments)

6.PFRS 8 shall apply to

a.Separate financial statements of an entity only.

b.Consolidated financial statements of a group only.

c.Both the separate financial statements of an entity and the consolidated financial statements of a group.

d.Neither the separate financial statements of an entity nor the consolidated financial statements of a group

7.If a financial report contains both the consolidated financial statements of a parent and the parent's separate financial statements, segment information required in

a.The separate financial statements only

b.The consolidated financial statements only

c.Both the separate and consolidated financial statements

d.Neither the separate nor the consolidated financial statements

8.An operating segment is a component of an entity

I.That engages in business activities from which it is may earn revenue and incur expenses, including revenue and expenses relating to transactions with other components of the same entity.

II.Whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance.

III.For which discrete information is available.

a.I only

b.II only

c.I and III only

d.I, II and III

9.Which may be considered an operating segment?

a.Start-up operations before earning revenue

b.Corporate headquarters that earn revenue

c.Functional department

d.Postemployment benefit plans

10.What is the function of the chief operating decision maker?

a.To allocate resources to the operating segments only.

b.To assess the performance of the operating segments only.

c.To provide general information to financial statement users about operating segments

d.To allocate resources to the operating segments and assess their performance.

11.Who could be the chief operating decision maker?

a.Chief operating officer

b.Chief executive officer

c.Group of executive directors

d.All those mentioned depending on who within the organization is responsible for the allocation of resources and assessing the performance of operating segments.

12.What is the approach prescribed by PFRS 8 in identifying an operating segment?

a.Management approach

b.Risks and rewards approach

c.Matrix approach

d.Geographical segment approach

13.An entity shall disclose information about an operating segment when

a.Its reported external and internal revenue is 10% or more of the combined external revenue of all operating segments

b.Its reported external revenue is 10% or more of the combined external and internal revenue of all operating segments

c.Its reported external revenue is 10% or more of the combined external revenue of all operating segments

d.Its reported external revenue is 10% or more of the combined internal revenue of all operating segments

14.What is the quantitative requirement for the revenue that must be reported by reportable operating segments?

a.The total external and internal revenue of all reportable segments is 75% or more of the entity external revenue.

b.The total external revenue of all reportable segments is 75% or more of entity external and internal revenue.

c.The total external revenue of all reportable segments is 75% or more of the entity external revenue.

d.The total internal revenue of all reportable segments is 75% or more of the entity internal revenue.

15.Operating segments that do not meet any of the quantitative thresholds

a.Cannot be considered reportable.

b.May be considered reportable and separately disclosed if management believes that information about the segment would be useful to the users of the financial statements

c.May be considered reportable and separately disclosed if the information is for internal use only.

d.May be considered reportable and separately disclosed if this is the practice within the economic environment in which the entity operates.