PROBLEM 3

On July 1, 2020, Manuel Corporation purchased machinery worth P 8,000,000. Terms: P 500,000 down payment, the balance on three equal annual payments every July 1 of each year. The cash price of the machinery is P 6,000,000. A promissory note is issued for the installment balance.

1.What is the carrying amount of machinery at December 31, 2020? [ Select ] ["7,500,000","6,500,000", "8,500,000"]

PROBLEM 4

Chot acquired a tract of land with an existing building in exchange for 20,000 ordinary shares of P 10 par value with a market price of P 20 per share on the date of acquisition. The last tax bill assessed value of P 200,000 for the land and P 120,000 for the building. However, the land has a fair value of P 550,000 and the building has no determinable fair value. Shortly, after acquisition, the building was razed at a cost of P 9,000 in anticipation of a new building construction.

1.What is the cost assigned to land?

[ Select ] ["400,000", "409,000", "559,000", "550,000"]

2.Assuming the fair value of the land is not available, what would be the cost of the land?

[ Select ] ["550,000", "400,000", "409,000", "559,000"]

PROBLEM 6 (Adapted from Auditing Textbook)

On December 15, 2020, Tenorio Company amd Jason Company exchanged equipment. The following data are available on the exchange.