Reference no: EM132600087

Questions -

Q1. On January 1, 2019, an entity received from the government a P 5,000,000 three-year, zero-interest loan evidenced by a promissory note. The prevailing rate of interest for a loan of this type is 10%. The present value of 1 at 10% is .75 for three periods. How much is credited to deferred income upon the receipt of the grant?

Q2. Tangerine Company acquired P3,000,000 face value 10% bonds as financial asset at amortized cost, on June 30, 2018 for P3,210,000, excluding brokerage of P150,000 and accrued interest. The bonds pay interest semiannually on May 1 and November 1. The remaining life of the bonds on the date of acquisition is 3 years. Straight-line amortization is employed. On December 31, 2018, the bonds were sold for P3,500,000 plus accrued interest. What is the gain on the sale of the bonds?

Q3. Broadway Company purchased a building on January 1, 2020 for P10,000,000. The building has been depreciated using the straight-line method with a 25-year useful life and no residual value. On December 31, 2023, Broadway is evaluating the building for possible impairment. The building has a remaining useful life of 15 years and is expected to generate cash inflows of P700,000 per year. The present value of an ordinary annuity of 1 at 8% for 15 periods is 8.56. The fair value of the building on December 31, 2023 is P5,300,000. What amount should be recognized as impairment loss on December 31, 2023?

Q4. On April 1, 2019, an entity purchased machinery for P3,300,000. The machinery has an estimated useful life of five years with residual value of P300,000. Depreciation is computed by the sum of the years' digits method. What is the depreciation expense for 2020? *

Q5. Genuine Company was granted a patent on January 1, 2020, and appropriately capitalized P450,000 of related costs. Genuine was amortizing the patent over its estimated life of 15 years. During 2023, Genuine paid P150,000 in legal costs in successfully defending an attempted infringement of the patent. After the legal action was completed, Genuine sold the patent to the plaintiff for P750,000. Genuine's policy is to take no amortization in the year of disposal. In its 2023 income statement, what amount should Genuine report as gain from sale of patent?