1.) The Shop Co. made the following expenditures during 2012:

Costs to develop computer software for internal use in The Shop’s general management information system - P 500,000 , Costs of market research activities - 375,000

How much of these expenditures should The Shop report as research and development expenses?

A. P 0

B. P 375,000

C. P 500,000

D. P 875,000

2.) An entity on adoption of PAS 41 has reclassified certain assets as biological assets. The total value of the group’s forest assets is P 2,000,000 comprising:

Freestanding trees (consumable)- P 1,700,000

Roads in forests - P 100,000

Land under trees - 200,000

Other trees (bearer) - 800,000

Biological assets amounted to:

3.) For P 200,000, The Farms acquired cattle for meat and dairy production. The fair value of the cattle on this date is P 210,000 and costs to sell the cattle would be P 20,000.

At what amount shall the cattle be recorded?

A. P 180,000

B. P 190,000

C. P 200,000

D. P 210,000

4.) Sprite Company leased equipment on January 1, 2016 with the following information:

Annual rental payable at the end of each year - P600,000

Initial direct cost incurred by lessee - P150,000

Unguaranteed residual value - P200,000

Lease term - 6 years

Useful life of the equipment - 8 years

Implicit interest rate - 10%

PV of an ordinary annuity of 1 at 10% for 6 periods- 4.36

PV of 1 at 10% for 6 periods - 0.56

The lease contains neither transfer of title agreement nor bargain purchase option.

Depreciation expense for 2016 should be:

A. P 461,000

B. P 436,000

C. P 454,667

D. P 427,667