Reference no: EM133017869
Questions -
Q1. On January 1, 2011, Roem Company changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted P500,000 increase in the January 1, 2011 inventory. The income tax rate 30%. The cumulative effect of the accounting chnage should be reported by Roem in its 2011
a. Retained earnings statement as a P350,000 addition to the beginning balance.
b. Income statement a P350,000 cumulative effect of accounting change
c. Retained earning statement as P500,000 addition to the beginning balance.
d. Income statement as P500,00 cumulative effecvt of accounting change.
Q2. On January 1, 2011, the management of Milan Company determined that a revision in the estimate associated with the depreciation of storage facilities was appropriate. The facilities, purchased on January 1, 2009, for P600,000, had been depreciated using the straight line method with an estimated residual value of P600,000 and an estimated useful lige of 20 years. Management has determined that the expected remaining useful life of the storage facilitis is 10 years and the estimatedd residual value is P800,000. What is the depreciation for 2017?
a. 270,000
b. 546,000
c. 466,000
d. 582,500
Q3. On January 1, 2010, Aker Company acquired a machine at a cost of P2,000,000. The machine is depreciated on the straight line method over a five-year period with no residual value. Because of a bookkeeping error, no depreciation was recognized in Aker's 2010 financial statements. The over sight was discovered during the preperation of Aker's 2011 financial Statements. What is the depreciation expense on the machine for 2011?
a. 800,000
b. 400,000
c. 500,000
d. 0
Q4. Universal Company failed to accrue warranty cost of P100,00 in its December 31,2010 financial statements. In addition, a changer from straight live to accelerated depreciation made at the beginning of 2011 resulted in a cumulative effect of P60,000 on Universal retained earnings. What amount before tax should Universal report as prior period error in 2011?
a. 100,000
b. 160,000
c. 60,000
d. 0