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    Prelims Quiz

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    Janine Tupasi
    ABC Company received a $2,500,000 government grant related to a factory building purchased for $14,000,000. The building has a 5-year useful life. In 2021, the grant became repayable due

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    Prelims Quiz

    Uploaded by

    Janine Tupasi
    40 views12 pages
    ABC Company received a $2,500,000 government grant related to a factory building purchased for $14,000,000. The building has a 5-year useful life. In 2021, the grant became repayable due

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    ABC Company received a $2,500,000 government grant related to a factory building purchased for $14,000,000. The building has a 5-year useful life. In 2021, the grant became repayable due

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    40 views12 pages

    Prelims Quiz

    Uploaded by

    Janine Tupasi
    ABC Company received a $2,500,000 government grant related to a factory building purchased for $14,000,000. The building has a 5-year useful life. In 2021, the grant became repayable due

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
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    Dragon Company made the following expenditures relating to its plant assets during 2020: Partial replacement of roof

    tiles,
    improvement to the electrical wirings system, P200,000; major improvement to the ventilating system, P150,000; continuing an
    P120,000. How much should be charged to repairs and maintenance expense in 2020?

    The company acquired a welding machine from supplier offering trade discount of 20%. The machine has an invoice price of P
    to 10% cash discount which was not taken. Cost of freight and insurance during the shipment were P50,000 and installation c
    P200,000. Additional welding supplies were acquired at a cost of P100,000. In addition to the welding machine, company als
    with a cost of P1,000,000. Irrecoverable taxes amounted to P40,000 and special horn installed in the van costing P30,000 wer
    company. Initial registration fee of P10,000 were incurred. What is the total amount to be added in property, plant and e

    On January 1, 2020, ABC Company reported the following property, plant and equipment and transactions during the cu

    a. Land was acquired for P3,000,000. Additionally, to acquire the land the entity paid a P60,000 commission to real estate agen
    was incurred to clear the land for the intended use but not to make room for the construction of new building. During the cour
    land, timber and gravel were recovered and sold for P5,000.

    b. Land with a building was acquired for P5,000,000. The closing statement indicated that the land fair value was P2,500,000
    fair value was P1,500,000. Shortly after acquisition, the building was demolished at cost of P300,000 to make room for cons
    building. The new building was constructed for P3,000,000 including the following costs: Excavation cost, P50,000, Architectu
    Building permit, P40,000 and Imputed interest on funds during construction, P500,000.

    What total cost of building should be reported on December 31, 2020?


    On January 9, 2020, ABC Company issued 60,000 shares with P100 par value in exchange for land and building. The share had
    P150 on the date of purchase of the property. On the same date, one of its existing land has been sold at P2,000,000 and existin
    for P6,000,000. For real tax purposes, the property is assessed at P9,600,000, 60% of which is allocated to building. What is t
    capitalized in the building?

    ABC Company borrowed P10,000,000 at 12% to finance in part the construction of a new building on January 1, 2020 and in
    purposes. The loan is to be repaid commencing the month following completion of the building.

    Expenditures for the completed structure totaled 10,000,000 during the year ended December 31, 2020. These expenditures we
    throughout the year. The entity earned interest of P200,000 for the year on the unexpended portion of the loan. What amoun
    capitalized on December 31, 2020?

    ABC Company traded a used equipment for a newer model from a dealer with a list price of P1,600,000. The old equipment ha
    P1,000,000 and accumulated depreciation of P600,000. The cash price of the new model should have been amounted to P1,40
    does not occurred. In addition to the old equipment traded by ABC, it paid P980,000 to the dealer. What is the amount of g
    exchange? (Use - before the amount to indicate loss)
    ABC Company traded a used equipment for a newer model from a dealer with a list price of P1,600,000. The old equipment ha
    P1,000,000 and accumulated depreciation of P600,000. The cash price of the new model should have been amounted to P1,40
    does not occurred. In addition to the old equipment traded by ABC, it paid P980,000 to the dealer. What is the amount of g
    exchange? (Use - before the amount to indicate loss)

    ABC company started construction on a building on January 1 of the current year and completed construction on December 31
    The entity had only two interest-bearing notes outstanding during the year, and both of these notes were outstanding for all 1
    year. Notes include 6% note incurred specifically for the project amounted to P1,500,000 and 9% long term note amounted
    Average accumulated expenditures amounted to P2,600,000. Ending balance in construction in progress before capitalizatio
    P3,800,000. What is the total cost of the building?

    Answer:
    On January 1, 2020, ABC Company borrowed P2,000,000 at an interest rate of 12% specifically for the construction of a ne
    building. The actual interest cost on this specific borrowing was P240,000 for 2020 and P9,600 incurred as of completion da
    2021 but interest of P10,000 in 2020 was earned from temporary investment of the borrowing proceed, no amount earned in 2

    ABC also had the following other loans outstanding during the construction period which were borrowed for general purposes b
    proceeds were used in part for construction of the building. Other loans include 10% bank loan with principal of P3,000,000 an
    long term loan with principal of P5,000,000.

    The construction began on January 1, 2020 and completed on April 30, 2021. The expenditures on the construction were P1,00
    on January 1, 2020, P1,000,000 on March 31, 2020, P3,000,000 on September 30, 2020 and P1,000,000 on March 1, 2021. W
    the total cost of the new building? Round off borrowing cost in whole number.

    At the beginning of the current year, ABC Company received a consolidated grant of P15,000,000. Three-fourths of the grant w
    utilized to purchase a college building for students from underdeveloped or developing countries. The balance of the grant is
    subsidizing the tuition costs of those students for four years from the date of grant. The amount will be spent P1,000,000 for
    year, P500,000 for second year, P1,125,000 each for third year and fourth year. The building was purchased in early part of Ja
    and is to depreciated using straight line over 10 years. The tuition costs paid in the current year amounted to P2,000,000. W
    amount should recognized as grant income for the current year?
    ABC Company acquired machine and incurred the following costs:

    Cash paid for machine includi 896,000

    Cost of transporting machine 30,000

    Insurance cost 10,000

    Labor cost of personnel


    installed the machine, 30% of
    100,000
    his work time is consumed in
    installing the machine

    Cost of training for personnel


    25,000
    who will use machine

    Parts added to improve


    machine to provide future 70,000
    benefits

    Payment for strengthening the


    50,000
    floor to support the machine

    Cost of removing old machine


    60,000
    that is replaced

    What total amount should be capitalized as cost of the machine?


    ABC Company received a government grant of P2,500,000 related to a factory building that it purchased in January 2020
    from an industrialist identified by the government. If the entity did not purchase the building, which was located in the
    slums of the city, it would have been repossessed by the government agency. The entity purchased the building for
    P14,000,000. The useful life of the building is 5 years with P500,000 residual value. On January 1, 2021, the entire
    amount of the government grant became repayable by reason of non-compliance with conditions attached to the grant. As
    per policy, the entity uses deduction from asset approach. What amount should be recorded as depreciation expense on
    December 31, 2021?
    al replacement of roof tiles, P43,000; major
    em, P150,000; continuing and frequent repair,
    xpense in 2020?

    ne has an invoice price of P2,000,000 subject


    e P50,000 and installation cost amounted to
    ding machine, company also acquired a van
    he van costing P30,000 were incurred by the
    dded in property, plant and equipment?

    nd transactions during the current year:

    mmission to real estate agent. Cost of P15,000


    w building. During the course of clearing the
    00.

    d fair value was P2,500,000 and the building


    ,000 to make room for construction of new
    on cost, P50,000, Architectural fee, P150,000,
    uction, P500,000.
    and building. The share had a quoted price of
    ld at P2,000,000 and existing building is sold
    ocated to building. What is the amount to be

    g on January 1, 2020 and in part for general


    etion of the building.

    020. These expenditures were incurred evenly


    on of the loan. What amount of interest is

    0,000. The old equipment has original cost of


    ave been amounted to P1,400,000 if trade in
    er. What is the amount of gain or -loss on
    onstruction on December 31 of the same year.
    es were outstanding for all 12 months of the
    % long term note amounted to P5,000,000.
    progress before capitalization of interest is
    y for the construction of a new
    ncurred as of completion date in
    ceed, no amount earned in 2021.

    owed for general purposes but the


    h principal of P3,000,000 and 12%

    the construction were P1,000,000


    0,000 on March 1, 2021. What is
    umber.

    Three-fourths of the grant will be


    . The balance of the grant is for
    will be spent P1,000,000 for first
    purchased in early part of January
    amounted to P2,000,000. What
    :
    hased in January 2020
    ch was located in the
    sed the building for
    y 1, 2021, the entire
    tached to the grant. As
    preciation expense on

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