Question 1:

Solano Company is considering the appropriate

classification of the following items:

Land held for long-term capital

appreciation

P15,000,000

Land held for undecided future use 30,000,000

Building leased out under an operating

lease

75,000,000

Building leased out under a finance lease 45,000,000

Vacant building held to be leased out

under an operating lease

8,000,000

Property held for use in the production

or supply of goods or services

6,000,000

Property held for administrative

purposes

9,000,000

Property held for sale in the ordinary

course of business

2,000,000

Property held in the process of

construction or development for sale

3,000,000

Property being constructed or developed

on behalf of third parties

12,000,000

Property held for future use as owneroccupied

property

4,000,000

Property held for future development

and subsequent use as owneroccupied

property

4,400,000

Property occupied by employees 3,600,000

Owner-occupied property awaiting

disposal

750,000

Property that is being constructed or

developed for use as an investment

property

12,000,000

Existing investment property that is

being redeveloped for continuing use

as investment property

24,000,000

Building held for administrative purposes

and leased out under operating lease

(60% is for administrative purposes)

15,000,000

Building leased out under an operating

lease (the entity supplies security and

maintenance services to the lessees)

30,000,000

How much is the total amount that would normally be

reported as investment property?

WRONG ANSWERS AND SOLUTION WILL NOT BE RATED

QUestion 2:

Quirino, Inc. and its subsidiaries have provided you,

their PFRS specialist, with a list of the properties they

own:

Land held by Quirino, Inc. for undetermined future

use, P5,000,000.

A vacant building owned by Quirino, Inc. and to be

leased out under an operating lease, P20,000,000.

Property held by a subsidiary of Quirino, Inc., a

real estate firm, in the ordinary course of its

business, P30,000,000.

Property held by Quirino, Inc. for use in

production, P1,000,000.

A hotel owned by Sugo, Inc., a subsidiary of

Quirino, Inc., and for which Sugo, Inc. provides

security services for its guests' belongings,

P50,000,000.

A building owned by Quirino, Inc. being leased out

to Status, Inc, a subsidiary of Quirino, Inc.,

P20,000,000.

How much will be reported as investment properties in

Quirino, Inc. and its subsidiaries consolidated financial

statements?

Question 3:

1. In accordance with PIC Q&A No. 2017-6, which of the

following collector's items (e.g. paintings, rare items,

vintage items, classic cars) can be accounted for in

accordance with PAS 40?

a. Collector's items for administrative or aesthetic

purposes.

b. Collector's items for short-term investment

purposes. The entity also trades these collector's

items in the ordinary course of business.

c. Collector's items for long-term investment purposes.

The entity does not trade these collector's items in

the ordinary course of business.

d. None of these.

2. An owned investment property shall be recognized as

an asset when, and only when: (a) it is probable that

future economic benefits that are associated with the

investment property will flow to the entity; (b) the cost

of the investment property can be measured reliably.

This principle applies to

a. Costs incurred initially to acquire an investment

property.

b. Costs incurred subsequently to add to, replace part

of, or service a property.

c. Both a and b.

d. Neither a nor b.

3. Which statement is incorrect regarding the use of the

fair value model?

a. After initial recognition, an entity shall measure all

of its investment property at fair value.

b. A gain or loss from a change in the fair value of

investment property shall be recognized in profit or

loss for the period in which it arises.

c. There is a rebuttable presumption that an entity

can reliably measure the fair value of an

investment property on a continuing basis.

d. A change from the fair value model to the cost

model likely results in a more relevant

presentation.