INTERMEDIATE ACCOUNTING 1B MILLAN

1. An entity determined that the electronics division is a cash generating unit. The entity calculated the value in use of the division at P8,000,000. The carrying amounts of the assets are building P5,000,000, equipment P3,000,000 and inventory P2,000,000. The entity also determined that the fair value less cost of disposal of the building is P4,500,000.

What is the impairment loss on building?

A.P750,000

B.0

C.P1,000,000

D.P500,000

2. On January 1, 2018, the Jettrific Company took out a loan of 26 million in order to finance the renovation of a building. The renovation work started on the same date. The loan carried interest at 10%. Work on the building was substantially complete on October 31, 2018. The loan was repaid on December 31, 2018 and P180,000 investment income was earned in the period to October 31 on those parts of the loan not yet used for renovation.

According to PAS 23, what is the total amount of borrowing costs to be included in the cost of the building?

A.2,600,000

B.2,420,000

C.2,166,667

D.1,986,667

3. An entity incurred the following research and development costs in the current year:

Material used in research and development projects400,000

Equipment acquired that will have alternate future use in future research and

development projects2,000,000

Depreciation on above equipment500,000

Personnel costs of persons involved in R&D projects1,000,000

Consulting fees paid to outsiders for R&D Projects100

Indirect costs reasonably allocable to R&D projects200,000

What amount of research and development costs should be expensed in the current year?

A.3,500,000

B.1,700,000

C.2,200,000

D.1,500,000

4. The Kuala Lumpur Company's accounting policy with respect to investment properties is to measure them at fair value at the end of each reporting period. One of its investment properties was measured at P800,000 on 31 December 2018.

The property had been acquired on January 1, 2018 for a total for a total of P760,000, made up of P690,000 paid to the vendor, P30,000 paid to the local authority as property transfer tax and P40,000 paid to professional advisers.

In accordance, with PAS40 Investment Property, the amount to gain to be recognized in profit or loss in the year ended December 31, 2018 in respect of the property is

A.P40,000

B.P80,000

C.P70,000

D.P110,000

5. An entity determined that the electronics division is a cash generating unit. The entity calculated the value in use of the division at P8,000,000. The carrying amounts of the assets are building P5,000,000, equipment P3,000,000 and inventory P2,000,000. The entity also determined that the fair value less cost of disposal of the building is P4,500,000.

What is the impairment loss on equipment?

A.P450,000

B.P900,000

C.P600,000

D.0

6. Solano Company is considering the appropriate classification of the following items:

Land held for long-term capital appreciationP15,000,000

Land held for undecided future useP30,000,000

Building leased out under an operating leaseP75,000,000

Vacant building held to be leased out under an operating leaseP8,000,000

Property held for use in production or supply of goods or servicesP6,000,000

Property held for administrative purposesP9,000,000

Property held for sale in the ordinary course of businessP2,000,00

Construction or development for saleP3,000,000

Property being developed or constructed on behalf of third partiesP12,000,000

Property held by for future use as owner-occupied propertyP4,000,000

Property held for future development and subsequent use as

Owner-occupied propertyP4,400,000

Property occupied by employeesP3,600,000

Owner-occupied property awaiting disposalP750,000

Property that is being constructed or developed using

For use as in investment propertyP12,000,000

Existing investment property that is redeveloped for

Continuing use as investment propertyP24,000,000

Building held for administrative purposes and leased out under

Operating lease(60% is for administrative purposes)P15,000,000

Building leased out under an operating lease(the entity supplies security and maintenance services to the lessees)P30,000,000

How much is the total amount that would be normally be reported as investment property?

A.P188 million

B.P200 million

C.P158 million

D.P170 million