Pcu_prelim_intacc 3_part 1
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PHILIPPINE CHRISTIAN UNIVERSITY - DASMARINAS CITY
INTERMEDIATE ACCOUNTING 3 - PRELIM
MULTIPLE CHOICE: Choose the best answer. Show your solutions. NO ERASURES.
Clara Company purchased equipment for 5,000 on January 1, 2017 with a useful life of 10 years and no residual value.
On December 31, 2018, the entity classified the equipment as held for sale. The fair value of
the equipment on December 31, 2018 was 3,300,000 and the cost of disposal 100,000.
On December 31, 2019, the fair value of the equipment was 3,800,000 and the cost of
disposal 200,000. The value in use was determined to be 3,300,000.
On December 31, 2019, the entity believed the the criteria for classification as held for sale
can no longer be met.
Accordingly, the entity decided not to sell the asset but continue to use it.
1. What is the impairment loss to be recognized on December 31, 2018?
a. 1,300,000
b. 800,000
c. 700,000
d. 0
2. What is the measurement of the equipment that ceases as held for sale on December 31, 2019?
a. 3,200,000
b. 4,000,000
c. 3,500,000
d. 3,600,000
3. What amount should be reconized in profit or loss as a result of the reclassification in 2019?
a. 800,000
b. 300,000
c. 400,000
d. 0
Affiable Company purchased an equipment for 5,000,000 on January 1, 2017. The equipment had a useful life of 5 years with no residual value.
On December 31, 2017, the entity classified the equipment as held for sale. On such date, the fair value less cost of disposal of the equipment was 3,500,000.
On December 31, 2018, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the equipment but to continue use it.
On December 31, 2018, the fair value less cost of disposal of the equipment was 2,700,000.
4. What is the carrying amount of the equipment on December 31, 2017 before classification as held for sale?
a. 5,000,000
b. 4,000,000
c. 3,500,000
d. 4,500,000
5. What amount of impairment loss should be recognized in 2017?
a. 1,500,000
b. 1,000,000
c. 500,000
d. 0
6. What amount should be included in profit or loss in 2018 as a result of the reclassification of the equipment to property, plant and equipment?
a. 800,000 gain
b. 800,000 loss
c. 300,000 gain
d. 300,000 loss
7. What is the adjusted carrying amount of the equipment on December 31, 2019?
a. 2,700,000
b.1,800,000
c. 2,000,000
d. 3,000,000
Surreal Company accounted for concurrent assets using the revaluation model. On October 1, 2017, the entity classified a land as held for sale.
At that date, the carrying amount of the land was 5,000,000 and the balance in the revaluation surplus was 1,500,000.
At the same date, the fair value of the land was estimated at 5,500,000 and the cost of disposal at 100,000.
On December 31, 2017, the fair value less cost of disposal of the land did not change. The land was sold on January 31, 2018 for 6,000,000.
8. What is the impairment loss in 2017?
a. 100,000
b. 500,000
c. 400,000
d. 0
9. What is the adjusted carrying amount of the land on December 31, 2017?
a. 5,000,0000
b. 5,500,000
c. 5,400,000
d. 3,500,000
10. What amount should be reported as gain on disposal of land in 2018?
a. 1,000,000
b. 2,600,000
c. 500,000
d. 600,000
11. What amount of OCI is reclassified to retained earnings in 2018?
a. 1,500,000
b. 2,000,000
c. 500,000
d. 0
Yanxi Company provided the following data for the current year:
Retained earnings, January 1 Dividends declared Sales Dividend income Inventory, January 1 Purchases Salaries Contribution to employees’ pension fund Delivery Miscellaneous expense Doubtful accounts expense
3,000,000
1,000,000
8,350,000
100,000
1,000,000
3,700,000
1,540,000
280,000
205,000
125,000
10,000
Depreciation expense Loss on sale of investment Income from discontinued operation, net of tax Income tax expense Inventory on December 31 at cost Net realisable value of inventory
85,000
100,000
500,000
105,000
850,000
700,000
12. What is cost of goods sold?
a. 3,850,000
b. 4,000,000
c. 4,150,000
d. 4,700,000
13. What is the total amount of expenses before income tax?
a. 2,345,000
b. 2,065,000
c. 2,450,000
d. 2,245,000
14. What is the net income for the current year?
a. 2,000,000
b. 2,500,000
c. 1,500,000
d. 2,650,000
15. What is the balance of retained earnings on December 31?
a. 4,000,000
b. 4,500,000
c. 3,500,000
d. 4,650,000
Achael Company provided the following information for the current year?
Sales Interest revenue Gain on sale of equipment Revaluation surplus during the year Share of profit of associate Cost of goods sold Finance cost Distributions cost Administrative expenses Translation loss on foreign operation Income tax expense
9,500,000
250,000
100,000
1,200,000
350,000
6,000,000
150,000
500,000
300,000
200,000
950,000
16. What is the net income for the current year?
a. b. c. d.
2,300,000
3,300,000
4,200,000
2,100,000
Petite Company reported the following current assets on December 31, 2017:
Cash Accounts Receivable Inventory, including goods received on
consignment 200,000 Bond investment at fair value through other
comprehensive income Prepaid expenses, including a deposit of 50,000
made on inventory to be delivered in 18 months Total current assets
5,000,000
2,000,000
Cash in general checking account Cash fund to be used to retire bonds payable in 2019 Cash held to pay value added taxes Total cash
3,500,000
1,000,000
500,000
5,000,000
800,000
1,000,000
150,000
8,950,000
17. What total amount of current assets should be reported on December 31, 2017?
a. b. c. d.
6,750,000
6,700,000
7,700,000
7,750,000
Reesse Company was incorporated on January 1, 2017 with 5,000,000 form the issuance of share capital and borrowed funds of 1,500,000. During the first year, net income was 2,500,000.
On December 15, the entity paid a 500,000 cash dividend. On December 31, 2017, the liabilities had increased to 1,800,000.
18. On December 31, 2017, what amount should be reported as total
a. b. c. d.
6,500,000
9,300,000
8,800,000
6,800,000
American Company reported the following current assets at year-end:
Cash
4,500,000
Accounts receivable Notes receivable, net of discounted note 500,000 Inventory
7,500,000
2,000,000
4,000,000
Accounts receivable comprised the following:
Trade accounts receivable Allowance for doubtful accounts Selling price of American Company’s unsold goods
sent to Tarsier Company on consignment at
150% of cost and excluded from American’s
ending inventory
5,000,000
( 500,000)
3,000,000
7,500,000
19. What amount should be reported as total current assets at year-end?
a. 17,000,000
b. 17,500,000
c. 15,000,000
d. 16,500,000
Liberty Company reported the following current assets at year-end:
Cash Accounts receivable Inventory
700,000
1,200,000
600,000
An examination of the accounts receivable revealed the following:
Trade accounts Allowance for doubtful accounts Claim against shipper for goods lost in transit Selling price of unsold goods sent out on
consignment at 130% of cost and not included
in ending inventory Total accounts receivable
930,000
( 20,000)
30,000
260,000
1,200,000
20. What total amount should be reported as current assets at year-end?
a. 2,440,000
b. 2,210,000
c. 2,500,000
d. 2,240,000
Part 1
INTERMEDIATE ACCOUNTING 3 - PRELIM
MULTIPLE CHOICE: Choose the best answer. Show your solutions. NO ERASURES.
Clara Company purchased equipment for 5,000 on January 1, 2017 with a useful life of 10 years and no residual value.
On December 31, 2018, the entity classified the equipment as held for sale. The fair value of
the equipment on December 31, 2018 was 3,300,000 and the cost of disposal 100,000.
On December 31, 2019, the fair value of the equipment was 3,800,000 and the cost of
disposal 200,000. The value in use was determined to be 3,300,000.
On December 31, 2019, the entity believed the the criteria for classification as held for sale
can no longer be met.
Accordingly, the entity decided not to sell the asset but continue to use it.
1. What is the impairment loss to be recognized on December 31, 2018?
a. 1,300,000
b. 800,000
c. 700,000
d. 0
2. What is the measurement of the equipment that ceases as held for sale on December 31, 2019?
a. 3,200,000
b. 4,000,000
c. 3,500,000
d. 3,600,000
3. What amount should be reconized in profit or loss as a result of the reclassification in 2019?
a. 800,000
b. 300,000
c. 400,000
d. 0
Affiable Company purchased an equipment for 5,000,000 on January 1, 2017. The equipment had a useful life of 5 years with no residual value.
On December 31, 2017, the entity classified the equipment as held for sale. On such date, the fair value less cost of disposal of the equipment was 3,500,000.
On December 31, 2018, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the equipment but to continue use it.
On December 31, 2018, the fair value less cost of disposal of the equipment was 2,700,000.
4. What is the carrying amount of the equipment on December 31, 2017 before classification as held for sale?
a. 5,000,000
b. 4,000,000
c. 3,500,000
d. 4,500,000
5. What amount of impairment loss should be recognized in 2017?
a. 1,500,000
b. 1,000,000
c. 500,000
d. 0
6. What amount should be included in profit or loss in 2018 as a result of the reclassification of the equipment to property, plant and equipment?
a. 800,000 gain
b. 800,000 loss
c. 300,000 gain
d. 300,000 loss
7. What is the adjusted carrying amount of the equipment on December 31, 2019?
a. 2,700,000
b.1,800,000
c. 2,000,000
d. 3,000,000
Surreal Company accounted for concurrent assets using the revaluation model. On October 1, 2017, the entity classified a land as held for sale.
At that date, the carrying amount of the land was 5,000,000 and the balance in the revaluation surplus was 1,500,000.
At the same date, the fair value of the land was estimated at 5,500,000 and the cost of disposal at 100,000.
On December 31, 2017, the fair value less cost of disposal of the land did not change. The land was sold on January 31, 2018 for 6,000,000.
8. What is the impairment loss in 2017?
a. 100,000
b. 500,000
c. 400,000
d. 0
9. What is the adjusted carrying amount of the land on December 31, 2017?
a. 5,000,0000
b. 5,500,000
c. 5,400,000
d. 3,500,000
10. What amount should be reported as gain on disposal of land in 2018?
a. 1,000,000
b. 2,600,000
c. 500,000
d. 600,000
11. What amount of OCI is reclassified to retained earnings in 2018?
a. 1,500,000
b. 2,000,000
c. 500,000
d. 0
Yanxi Company provided the following data for the current year:
Retained earnings, January 1 Dividends declared Sales Dividend income Inventory, January 1 Purchases Salaries Contribution to employees’ pension fund Delivery Miscellaneous expense Doubtful accounts expense
3,000,000
1,000,000
8,350,000
100,000
1,000,000
3,700,000
1,540,000
280,000
205,000
125,000
10,000
Depreciation expense Loss on sale of investment Income from discontinued operation, net of tax Income tax expense Inventory on December 31 at cost Net realisable value of inventory
85,000
100,000
500,000
105,000
850,000
700,000
12. What is cost of goods sold?
a. 3,850,000
b. 4,000,000
c. 4,150,000
d. 4,700,000
13. What is the total amount of expenses before income tax?
a. 2,345,000
b. 2,065,000
c. 2,450,000
d. 2,245,000
14. What is the net income for the current year?
a. 2,000,000
b. 2,500,000
c. 1,500,000
d. 2,650,000
15. What is the balance of retained earnings on December 31?
a. 4,000,000
b. 4,500,000
c. 3,500,000
d. 4,650,000
Achael Company provided the following information for the current year?
Sales Interest revenue Gain on sale of equipment Revaluation surplus during the year Share of profit of associate Cost of goods sold Finance cost Distributions cost Administrative expenses Translation loss on foreign operation Income tax expense
9,500,000
250,000
100,000
1,200,000
350,000
6,000,000
150,000
500,000
300,000
200,000
950,000
16. What is the net income for the current year?
a. b. c. d.
2,300,000
3,300,000
4,200,000
2,100,000
Petite Company reported the following current assets on December 31, 2017:
Cash Accounts Receivable Inventory, including goods received on
consignment 200,000 Bond investment at fair value through other
comprehensive income Prepaid expenses, including a deposit of 50,000
made on inventory to be delivered in 18 months Total current assets
5,000,000
2,000,000
Cash in general checking account Cash fund to be used to retire bonds payable in 2019 Cash held to pay value added taxes Total cash
3,500,000
1,000,000
500,000
5,000,000
800,000
1,000,000
150,000
8,950,000
17. What total amount of current assets should be reported on December 31, 2017?
a. b. c. d.
6,750,000
6,700,000
7,700,000
7,750,000
Reesse Company was incorporated on January 1, 2017 with 5,000,000 form the issuance of share capital and borrowed funds of 1,500,000. During the first year, net income was 2,500,000.
On December 15, the entity paid a 500,000 cash dividend. On December 31, 2017, the liabilities had increased to 1,800,000.
18. On December 31, 2017, what amount should be reported as total
a. b. c. d.
6,500,000
9,300,000
8,800,000
6,800,000
American Company reported the following current assets at year-end:
Cash
4,500,000
Accounts receivable Notes receivable, net of discounted note 500,000 Inventory
7,500,000
2,000,000
4,000,000
Accounts receivable comprised the following:
Trade accounts receivable Allowance for doubtful accounts Selling price of American Company’s unsold goods
sent to Tarsier Company on consignment at
150% of cost and excluded from American’s
ending inventory
5,000,000
( 500,000)
3,000,000
7,500,000
19. What amount should be reported as total current assets at year-end?
a. 17,000,000
b. 17,500,000
c. 15,000,000
d. 16,500,000
Liberty Company reported the following current assets at year-end:
Cash Accounts receivable Inventory
700,000
1,200,000
600,000
An examination of the accounts receivable revealed the following:
Trade accounts Allowance for doubtful accounts Claim against shipper for goods lost in transit Selling price of unsold goods sent out on
consignment at 130% of cost and not included
in ending inventory Total accounts receivable
930,000
( 20,000)
30,000
260,000
1,200,000
20. What total amount should be reported as current assets at year-end?
a. 2,440,000
b. 2,210,000
c. 2,500,000
d. 2,240,000
Part 1
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