On January 1, 2013, Farm Company planted trees on its land.

The entity purchased the land two years ago at a

cost of P1,000,000.

The trees were considered bearer plants and had accumulated cost of P500,000 on December 31,2017. 

By January 1, 2018, the trees had matured and were expected to bear produce for a period of 5 years. 

On December 31 ,2018 the trees produced fruit and the fair value less cost of disposal on such date was
P50,000. There was no harvest during 2018. 

On December 31, 2019, the fruits were harvested and the fair value less cost of disposal on such date was
P75,000. 

What is the carrying amount of the biological asset on December 31, 2018? 

Select one:
A. 
0
B. 
450,000
C. 
550,000
D. 
50,000

Bensol Co. and Sable Co. exchanged similar trucks with fair values in excess of carrying amounts. In addition,
Bensol paid Sable to compensate for the difference in truck values. As a consequence of the exchange, Sable
recognizes
Select one:
A. 
A gain equal to the difference between the fair value and carrying amount of the truck given up
B. 
A gain determined by the proportion of cash received to the total consideration.
C. 
Neither a gain nor a loss
D. 
A loss determined by the proportion of cash received to the total consideration
On January 1, 2018, Divine Company provided the following information relating to the revaluation of an
equipment:

The equipment was sold on December 31, 2018 for P8,000,000.

What amount of gain on sale of equipment should be recognized on December 31, 2018?

Select one:
A. 
P3,000,000
B. 
P3,230,000
C. 
P3,030,000
D. 
P1,050,000

Which of the following is not a bearer plant?

Select one:
A. 
Trees in timber plantation
B. 
Rubber trees
C. 
Tea bushes
D. 
Grape vines

Towsey Manufacturing acquired a new milling machine on April 1, 2012. The machine has a special
component that requires replacement before the end of the useful life. The asset was originally recorded in two
accounts, one representing the main unit and the other for the special component. Depreciation is recorded by
the straight-line method to the nearest month, residual values being disregarded. On April 1, 2018, the special
component is scrapped and is replaced with a similar component. This component is expected to have a
residual value of approximately 25% of cost at the end of the useful life of the main unit, and because of its
materiality, the residual value will be considered in calculating depreciation. Specific asset information is as
follows:

What is the depreciation charge to be recognized for the year 2018?

Select one:
A. 
P5,930
B. 
P6,775
C. 
P8,800
D. 
P9,100

When allocating costs to inventory produced for the period, fixed overhead should be based upon
Select one:
A. 
The highest production levels in the last three periods
B. 
The normal capacity of production facilities
C. 
The actual amounts of goods produced during the period
D. 
The lowest production level in the last three periods

Which statement is incorrect regarding the fair value hierarchy in PFRS 13?
Select one:
A. 
To increase consistency and comparability in fair value measurements and related disclosures, PFRS 13
establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to
measure fair value.
B. 
Adjustments to arrive at measurements based on fair value, such as costs to sell when measuring fair value less
costs to sell, shall be taken into account when determining the level of the fair value hierarchy within which a
fair value measurement is categorized.
C. 
The fair value hierarchy prioritizes the inputs to valuation techniques, not the valuation techniques used to
measure fair value
D. 
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical
assets or liabilities and the lowest priority to unobservable inputs
Jade Company acquired a new milling machine on April 1, 2012. The machine has a special component that
required replacement before the end of the useful life. The asset was originally recorded in two accounts, one
representing the main unit and the other for the special component. Depreciation is recorded by the straight
line method and residual value is disregarded.

On April 1, 2018, the special component is scrapped and is replaced with a similar component. This new
component is expected to have a residual value of approximately 20% of cost at the end of the useful life of the
main unit, and because of materiality, the residual value will be considered in calculating depreciation.

What is the total depreciation for 2018?

Select one:
A. 
1,175,000
B. 
1,350,000
C. 
1,087,500
D. 
1,100,000

Which of the following generally provides the best evidence of fair value of an investment property?
Select one:
A. 
Recent prices on less active markets with adjustments to reflect the changes in economic conditions
B. 
Current prices in an active market for similar property in the same location and condition
C. 
Current prices for properties of a different nature or subject to different conditions
D. 
Discounted cash flow projections based on reliable estimates of future cash flows

How should sales staff commission be dealt with when valuing inventories at the lower of cost and net
realizable value (NRV), according to PAS2 Inventories?
Select one:
A. 
Deducted from cost
B. 
Added to cost
C. 
Ignored
D. 
Deducted in arriving at NRV

On January 1, 2015, Sunflower Company purchased for P240,000 a machine with a useful life of ten years and
no salvage value.  The machine was depreciated by the double-declining balance method and the carrying
amount of the machine was P153,600 on December 31, 2016.  Sunflower changed to the straight-line method
on January 1, 2017.  Sunflower can justify the change.  What should be the depreciation expense on this
machine for the year ended December 31, 2017?
A. 
P30,720
B. 
P19,200
C. 
P15,360
D. 
P24,000

Rubber Soul Co. purchased equipment on 1/1/13 for P500,000, estimating a four-year useful life and no
residual value.  In 2013 and 2014, Rubber Soul depreciated the asset using the sum-of-years'-digits method.  In
2015, Rubber Soul  changed to straight-line depreciation for this equipment.  What depreciation would Rubber
Soul record for the year 2015 on this equipment?

A. 
P150,000
B. 
P125,000
C. 
P75,000
D. 
P175,000
Which statement is incorrect regarding measurement of fair value of investment property on the basis of a
valuation by an independent valuer who holds a recognized and relevant professional qualification and has
recent experience in the location and category of the investment property being valued?
A. 
None of the choices
B. 
An entity shall disclose the extent to which the fair value of investment property is determined on that basis
C. 
An entity need not disclose the fact the fair value of investment property is not determined on that basis.
D. 
An entity is encouraged, but not required, to measure the fair value of investment property on that basis.

If a company constructs a laboratory building to be used as a research and development facility, the cost of the
laboratory building is matched against earnings as

A. 
Depreciation or immediate write-off depending on company policy
B. 
Depreciation deducted as part of research and development costs
C.
Research and development expense in the period(s) of construction
D. 
An expense at such time as productive research and development has been obtained from the facility

Under the revaluation model, how often shall revaluations be made?

A. 
It depends upon the entity’s accounting policy
B. 
Every three or five years
C. 
It depends upon the changes in fair values of the items of property, plant and equipment being revalued
D. 
Annually

Wan acquired Yang, a small company that specializes in pharmaceutical drug research and development for
P35 million.  The fair value of Yang’s net assets was P15 million (excluding any items referred to below).

Yang owns a patent for an established successful drug that has a remaining life of 8 years.  A firm of specialist
advisors, Tantsahan, has estimated the current value of this patent to be P10 million; however, the company is
awaiting the outcome of clinical trials where the drug has been tested to treat a different illness.  If the trials are
successful, the value of the drug is then estimated to be P15 million.  Also included in the company’s balance
sheet is P2 million for medical research that has been conducted on behalf of a client.

Compute the amount of goodwill from this acquisition.

A. 
P20M
B. 
P5M
C. 
P8M
D. 
P3M