Reference no: EM132749204

Questions -

Q1. A plant site donated by a township to a manufacturer that plans to open a new factory should be recorded on the manufacturer's books at

A. the nominal cost of taking title to it.

B. the value assigned to it by the company's directors.

C. its fair value.

D. one peso (since the site cost nothing but should be included in the balance sheet).

Q2. Which of the following should not be capitalized as cost of PPE?

A. Cost of site preparation

B. Installation and assembly cost

C. Replacement of small spare parts

D. Replace of building's entire roofing

Q3. Property, plant and equipment are tanngible items that are:

I. Held for use in the production or supply of goods or services, for rental to others, or for administrative purposes.

II. Properties held to earn rentals or for capital appreciation or both.

III. Expected to be used during more than one period.

A. II and III

B. I and III

C. I and II

D. I, II and III

Q4. Jayson Co. purchased land as a factory site for 800,000. Jayson paid 80,000 to tear down two buildings on the land. Salvage was sold for 5,400. Legal fees of 3,480 were paid for title investigation and making the purchase. Architect's fees were 31,200. Title insurance cost 2,400. Excavation cost 10,440. The contractor was paid 2,500,000. An assessment made by the city for pavement was 6,400.

The cost of the building that should be recorded by Jayson Co. is

A. 2,574,600.

B. 2,503,800.

C. 2,616,240.

D. 2,504,840.

Q5. ABC COMPANY purchased for P4,500,000 a tract of land as a factory site. An old building was demolished and construction began on the new building.

Cost of demolishing old building -300,000

Title insurance and legal fees to purchase land -200,000

Architect fee -950,000

New building construction cost -8,000,000

Survey before construction -50,000

Building permit or payment to city hall for approval of building construction -150,000

Excavation before new construction -200,000

Temporary fence surrounding the construction -100,000

Driveways, parking bays and safety lighting -550,000

Cost of trees, shrubs and other landscaping -250,000

What is the cost of the new building?

A. 9,700,000

B. 9,750,000

C. 9,750,000

D. 9,800,000

Q6. MJE Co. purchased land as a factory site for P800,000. MJE paid P80,000 to tear down two buildings on the land. Salvage was sold for P5,400. Legal fees of P3,480 were paid for title investigation and making the purchase. Architect's fees were P31,200. Title insurance cost P2,400. Excavation cost P10,440. The contractor was paid P2,500,000. An assessment made by the city for pavement was P6,400.

The cost of the land that should be recorded by MJE Co. is

A. P886,880.

B. P812,280.

C. P880,480.

D. P822,720

Q7. ABC COMPANY entered into a contract to acquire a new machine for the factory. The machine which had a cash price of P2,000,000 was paid as follows:

Down payment 400,000

Note payable in three equal annual instalments 1,200,000

20,000 ordinary shares with a par value of P25 and fair value of P40 per share 800,000

Prior to machine use, installation cost of P50,000 was incurred. The machine has an estimated residual value of P100,000. What is the initial cost of the machine?

A. 2,400,000

B. 2,450,000

C. 2,000,000

D. 2,050,000

Q8. ZOEY COMPANY exchanged an old machine, costing P3,000,000 and 50% depreciated, for a used machine and paid a cash difference of P500,000. The fair value of the old machine was determined to be P1,800,000. What amount should be recorded as cost of the machine received in exchange?

A. 2,300,000

B. 2,000,000

C. 1,300,000

D. 1,800,000

Q9. JB Company purchased a depreciable asset for P450,000. The estimated salvage value is P30,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?

A. P52,500

B. P78,750

C. P84,375

D. P112,500

Q10. On January 1, 2020, THOU COMPANY purchased machinery for P7,600,000. Residual value was estimated to be P400,000. The machinery is depreciated over eight years using the sum of years' digits method. Depreciation is computed on the basis of the nearest full month. What amount should be recorded as depreciation for 2021?

A. 1,477,778

B. 1,200,000

C. 1,266,667

D. 1,400,000