Reference no: EM132628412

Question 1: On December 31, 2010, Irey Co. has P2,000,000 of short-term notes payable due on February 14, 2011. On January 10, 2011, Irey arranged a line of credit with County Bank which allows Irey to borrow up to P1,500,000 at one percent above the prime rate for three years. On February 2, 2011, Irey borrowed P1,200,000 from County Bank and used P500,000 additional cash to liquidate P1,700,000 of the short-term notes payable. The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2010 statement of financial position which is issued on March 5, 2011 is

a. P0.

b. P800,000.

c. P300,000.

d. P500,000.

Question 2: ABC Company purchased a land for Php800,000 with a useful life of 4 years during 2017 and chooses the revaluation model in accounting for its land. At December 31, 2017 and December 31, 2018, the fair value of the land was P750,000 and P800,000, respectively.

The journal entry to adjust the plant assets to fair value and record revaluation surplus in year one will include a

a. Credit to Revaluation Surplus for P150,000

b. Debit to Accumulated Depreciation for P50,000.

c. Credit to Depreciation Expense for P150,000.

d. Credit to Plant Assets for P150,000.