Multiple Choice -Theory (PPE)

1.Which of the following is not a characteristic of property, plant and equipment?

a.The property, plant and equipment are tangible assets.

b.The property, plant and equipment are used in business.

c.The property, plant and equipment are expected to be used over a period of more than a year.

d.The property, plant and equipment are subject to depreciation.

2.What valuation model should an entity use to measure property, plant and equipment?

a.Revaluationmodel and fair value model

b.Cost model and revaluation model

c.Cost model only

d.Cost model and fair value model

3.The cost of property, plant and equipment comprises all of the following, except

a.Purchase price

b.Import duties and nonrefundable purchase taxes

c.Any cost directly attributable in bringing the asset to the location and condition for intended use

d.Initial estimate of the cost of dismantling the asset for which the entity has no present obligation.

4.Which cost should be expensed immediately?

a.Cost of opening a new facility

b.Cost of introducing a new product including cost of advertising and promotional activities

c.Cost of conducting business in a new location

d.All of these are expensed immediately

5.The cost of property, plant and equipment acquired in an exchange is measured at the

a.Fair value of the asset given plus cash payment.

b.Fair value of the asset received plus cash payment.

c.Carrying amount of the asset given plus cash payment.

d.Carrying amount of the asset received plus cash payment.

Multiple Choice -Computation (PPE)

1.Disney Company recently acquired two items of equipment

Acquired a press at an invoice price of P3,000,000 subject to a 5% cash discount which was taken.

Cost of freight and insurance during shipment were P50,000 and installation cost amounted to P200,000.

Acquired a welding machine at an invoice price of P2,000,000 subject to a 10% cash discount which was not taken.Additional welding supplies were acquired at a cost of P100,000.

What is the total increase in the equipment account as a result of the transactions? a. 4,900,000 b.5,000,000c.5,100,000d.5,200,000

2.Best Forwarding Company exchanged a delivery truck costing P1,000,000 for a parcel of land.The truck had a carrying amount of P650,000 and a fair value of P500,000.

The entity gave P600,000 in cash in addition to the truck as part of this transaction.

It is expected that the cash flows from the assets will be significantly different.The previous owner of the land had listed the land for sale at P1,200,000.

At what amount should the company record the land?

a. 1,100,000b.1,250,000c.1,150,000d.1,200,000