Question 11 pts
Imus company acquired two items of machinery as follows:
 On December 30, 2020, Imus Company purchased a machine in exchange for a
noninterest-bearing note requiring three payments of P1,000,000. The first
payment was made on December 30, 2020, and the others are due annually on
December 30. The prevailing rate of interest for this type of note at date of
issuance was 12%. The present value of an ordinary annuity of 1 at 12% is 1.69
for two periods and 2.40 for three periods. The new machine was damaged
during its installation and the repair cost amounted to P50,000.
 On January 1, 2020, Imus Company acquired used machinery by issuing to the
seller a three-year noninterest-bearing note for P3,000,000. In recent borrowing,
Imus has paid a 12% interest for this type of note. The present value of 1 at 12%
for 3 years is 0.71
What is the total cost of the machinery?
Group of answer choices
P4,870,000
P4,530,000
P4,580,000
P4,820,000
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Question 21 pts
Lively Inc. received a consolidated grant of 120 million. Three-fourths of the grant is to
be utilized to purchase a college building for students from underdeveloped or
developing countries. The balance of the grant is for subsidizing the tuition costs of
those students for four years from the date of grant.
The college building, which costs P100 million, will be depreciated using the straight –
line method over 10 years. Assuming that the tuition subsidy will be offered evenly over
the period of 4 years, the amount that should be recognized as income at the end of the
year 1 is
Group of answer choices
P12.0 million
P10.0 million
P17.5 million
P16.5 million
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Question 31 pts
The Royal Furniture Mfg. Co. fabricated furniture and fixtures for its office use in the
company’s plant during 2020. The following data were taken from the company’s
records:
Materials
Direct
labor
Finished goods
P100,800 P151,200
Office furniture
&fixture
67,200
50,500
Factory overhead amounted to P134,000. Normal production of finished goods results
to 420 units. Due to the fabrication of office furniture and fixtures, finished goods
produced totaled 294 units only in 2020. The assets are to be charged with the
overhead which would have been apportioned to the 126 units which were not
produced.
What is the total cost of office furniture and fixtures?
Group of answer choices
P157,900
P175,029
P117,600
P251,600
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Question 41 pts
Altitude Company purchased a plot of land for P2,000,000 as a plant site. There was a
small office building on the plot, conservatively appraised at P700,000 which the
company will continue to use with some modification and renovation.
The company constructed a new the plant on the newly acquired land. Below are items
that may be included in the property, plant and equipment accounts.
Materials and supplies
P3,000,000
Excavation
100,000
Labor on construction
2,500,000
Cost remodeling office building
200,000
Legal cost of conveying land
10,000
Imputed interest on corporation own money used during construction
120,000
Cash discounts on materials purchased, not taken
60,000
Supervision by management
70,000
Compensation insurance premium for workers
20,000
Clerical and other expenses related to construction
30,000
Paving of streets and sidewalks
40,000
Plans and specifications
140,000
Payment for claim for injuries not covered by insurance
25,000
Legal cost of injury claim
15,000
Saving on construction
200,000
The land should be reported at
Group of answer choices
P1,350,000
P1,410,000
P1,300,000
P1,310,000
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Question 51 pts
Aquator Motor Sales exchanged a car for a computer to be used as a noncurrent
operating asset. The following information relates to this exchange that took place on
July 31, 2020:
Carrying amount of the car
Listed selling price of the car
P30,000
45,000
Fair value of the computer
Cash difference paid by Aquator
43,000
5,000
On July 31, 2020, how much profit should Aquator recognize on this exchange?
Group of answer choices
P13,000
P0
P10,000
P8,000
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Question 61 pts
White Airlines sold a used jet aircraft to Brown Company for P800,000, accepting a fiveyear 6% note for the entire amount. Brown’s incremental borrowing rate was 14%. The
annual payment of principal and interest on the note was to be P189,930. The aircraft
could have been sold at an established cash price of P651,460. The present value of an
ordinary annuity of P1 at 8% for five periods is 3.99. the aircraft should be capitalized on
Brown’s book at
Group of answer choices
P757,820
P651,460
P949,650
P800,000
Cash paid for equipment, including VAT of P9,600
P89
Costs of transporting machine – insurance and transport
3,00
Labor costs of installation by expert fitter
5,00
Labor costs of testing equipment
4,00
Insurance costs for 2020
1,50
Costs of training for personnel who will use the machine
2,50
Costs of safety rails and platforms surrounding machine
6,00
Costs of water devices to keep machine cool
8,00
Costs of adjustments to machine to make it operate more efficiently
7,50
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Question 71 pts
Newcastle Ltd uses many kinds of machines in its operations. It constructs some of
these machines itself and acquires others from manufacturers. The following
information relates to machine A that it has recorded in during 2020.
Determine the amount at which machine A should be recorded in the records of
Newcastle Ltd.
Group of answer choices
P113,500
P121,500
P113,500
P116,000
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Question 81 pts
During 2020, King Company made the following expenditures relating to its plant and
building:
Continuing and frequent repairs
P40,000
Repainted the plant building
10,000
Major improvements to the electrical wiring system
32,000
Partial replacement of roof tiles
14,000
How much should be charged to repairs and maintenance expense in 2020?
Group of answer choices
P54,000
P82,000
P64,000
P96,000
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Question 91 pts
On January 1, 2020, Kontratista Corp. began construction of homes for those families
that were hit by the tsunami disaster and were homeless. The construction is expected
to take 3.5 years. It is being financed by issuance of bonds for P7 million at 12% per
annum. The bonds were issued at the beginning of the construction. The bonds carry a
1.5% issuance cost. The project is also financed by issuance of P3 million share capital
with a 14% cost of capital. How much should be capitalized as borrowing cost in 2020?
(use straight line amortization method)
Group of answer choices
P1,290,000
P1,260,000
P870,000
P840,000
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Question 101 pts
During 2020, Grant Industries, Inc. construed a new manufacturing facility at a cost of
P12,000,000. The weighted average accumulated expenditures for 2020 were
calculated to be P5,400,000. The company had the following debt outstanding at
December 31, 2020:
 10%, five year note to finance construction of the manufacturing facility, dated
January 1, 2020, P3,600,000.
 12%, 20-year bonds issued at par on April 30, 2016, P8,400,000.
 8%, six-year note payable, dated March 1, 2019, P1,800,000.
Determine the amount of interest to be capitalized by Grant Industries for 2020.
Group of answer choices
P557,280
P563,295
P591,840
P360,000
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Question 111 pts
On January 1, 2019, Indang Company received a grant of P50 million from the US
government for the construction of a laboratory and research facility with an estimated
cost of P60 million and useful life of 25 years. The facility was completed in early 2020.
Indang Company should include in its 2020 income statement an income from the
government at
Group of answer choices
P0
P50,000,000
P2,400,000
P2,000,000
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Question 121 pts
On September 1, 2020, Ron Corporation issued 10,000 shares of its P25 par treasury
ordinary shares for a parcel of land intended as a future plant site. The treasury shares
were acquired by Ron at a cost of P30 per share. Ron’s ordinary share had a fair
market value of P40 per share on September 1, 2020. Ron received P50,000 from the
sale of scrap when an existing structure on the site was razed. At what amount should
the land be carried?
Group of answer choices
P300,000
P350,000
P400,000
P250,000
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Question 131 pts
Lodi Department Stores, Inc., constructs its own stores. Management’s policy is to
include interest as part of the cost of new store just being completed. Additional
information follows:
Total construction expenditures:
January 2, 2019
May 1, 2019
P 600,000
600,000
November 1, 2019
500,000
March 1, 2020
700,000
September 1, 2020
400,000
December 31, 2020
500,000
P3,300,000
Outstanding company debt:
Mortgage related directly to new store; interest rate, 12%; term, 5 years from beginning
of construction P1,000,000
General liability:
Bonds issued just prior to construction of store; interest rate, 10% for 10 years P
500,000
Bonds issued just prior to construction; interest rate, 8%, mature in 5 years
P1,000,000
Estimated cost of equity capital - 14%
The capitalizable borrowing cost for 2019 is
Group of answer choices
P127,222
P122,850
P125,667
P120,000
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Question 141 pts
Altitude Company purchased a plot of land for P2,000,000 as a plant site. There was a
small office building on the plot, conservatively appraised at P700,000 which the
company will continue to use with some modification and renovation.
The company constructed a new the plant on the newly acquired land. Below are items
that may be included in the property, plant and equipment accounts.
Materials and supplies
P3,000,000
Excavation
100,000
Labor on construction
2,500,000
Cost remodeling office building
200,000
Legal cost of conveying land
10,000
Imputed interest on corporation own money used during construction 120,000
Cash discounts on materials purchased, not taken
60,000
Supervision by management
70,000
Compensation insurance premium for workers
20,000
Clerical and other expenses related to construction
30,000
Paving of streets and sidewalks
40,000
Plans and specifications
140,000
Payment for claim for injuries not covered by insurance
25,000
Legal cost of injury claim
15,000
Saving on construction
200,000
The factory building should be reported at
Group of answer choices
P5,600,000
P5,800,000
P5,720,000
P5,920,000
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Question 151 pts
Lodi Department Stores, Inc., constructs its own stores. Management’s policy is to
include interest as part of the cost of new store just being completed. Additional
information follows:
Total construction expenditures:
January 2, 2019
May 1, 2019
P 600,000
600,000
November 1, 2019
500,000
March 1, 2020
700,000
September 1, 2020
400,000
December 31, 2020
500,000
P3,300,000
Outstanding company debt:
Mortgage related directly to new store; interest rate, 12%; term, 5 years from beginning
of construction P1,000,000
General liability:
Bonds issued just prior to construction of store; interest rate, 10% for 10 years P
500,000
Bonds issued just prior to construction; interest rate, 8%, mature in 5 years
P1,000,000
Estimated cost of equity capital - 14%
The capitalizable borrowing cost for 2020 is
Group of answer choices
P253,938
P250,000
P274,233
P120,000
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Question 161 pts
On May 1, 2020, Lenny Corporation purchased for P690,000 a tract of land on which a
warehouse and office building were located. The following data were collected
concerning the property:
Current
Vendor’s original
assessed valuation cost
Land
P280,000
P180,000
Warehouse
320,000
315,000
Office building 200,000
129,000
Determine the appropriate amount that Lenny should charge to land.
Group of answer choices
P280,000
P199,000
P241,500
P690,000
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Question 171 pts
In January 2020 Bell Company exchanged an old machine, with a book value of
P39,000 and a fair value of P35,000, and paid P10,000 cash for a similar used machine
having a list of P50,000. The transaction has commercial substance. At what amount
should the machine acquired in the exchange be recorded on the books of Bell?
Group of answer choices
P45,000
P49,000
P50,000
P46,000
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Question 181 pts
On January 1, 2020, Carmona Company received a grant of P50 million from the British
government in order to defray safety and environmental costs within the area where the
enterprise is located. The safety and environmental costs are expected to be incurred
over 4 years, respectively, P4 million, P8 million, P12 million and P16 million. How much
income from the government grant should be recognized in 2020?
Group of answer choices
P0
P50,000,000
P 5,000,000
P12,500,000
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Question 191 pts
Amble, Inc. exchange a truck with a carrying amount of P12,000 and a fair value of
P20,000 for a truck and P2,500 cash. The cash flows from the new truck are not
expected to be significantly different from the cash flows of the old truck. The fair value
of the truck received was P17,500. At what amount should Amble record the truck
received in the exchange?
Group of answer choices
P17,500
P7,000
P10,500
P9,500
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Question 201 pts
Maragondon Company had the following borrowings during 2020. The borrowings were
made for general purposes but the proceeds were used in part to finance the
construction of a new building:
Principal
Interest
12% bank loan
P10,000,000 P1,200,000
15% long-term
loan
20,000,000 3,000,000
The construction began on January 1, 2020 and was completed on December 31, 2020.
Expenditures on the building were made as follows:
January 1
P8,000,000
June 30
8,000,000
December 31
4,000,000
The capitalizable borrowing cost is
Group of answer choices
P1,620,000
P1,400,000
P1,680,000
P4,200,000
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Question 211 pts
During 2020 Dasmariñas Company installed a production assembly line to manufacture.
In 2020 Dasmariñas purchased a new machine and rearranged the assembly line to
install this machine. The rearrangement did not increase the estimated useful life of the
assembly line but it did result in significantly more efficient production. The following
expenditures were incurred in connection with this project:
Machine
Labor to install new machine
P5,000,000
400,000
Parts added in rearranging the assembly line to provide future benefits
Labor and overhead to rearrange the assembly line
2,000,000
600,000
What amount of the above expenditures should be capitalized in 2010?
Group of answer choices
P7,400,000
P5,400,000
P8,000,000
P2,600,000
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Question 221 pts
Citimart Inc. was granted a parcel of land by a local government authority. The condition
attached to this grant was that Citimart Inc. should clean up this land and lay roads by
employing laborers from the village in which the land is located. The entire operation will
take three years and is estimated to cost P100 million. This amount will be spent in this
way: P20 million each in the first and second years and P60 million in the third year. The
fair value of this land is currently P120 million. How much should be recognized as
income from government grant at the end of the first year?
Group of answer choices
P0
P20,000,000
P24,000,000
P40,000,000
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Question 231 pts
Sunflower Company acquired some new equipment. The following data have been
made available to you:
List price of the equipment
Cash discount available but not taken on purchase
Freight paid on the new equipment
Cost of removing the old equipment
Installation costs of the new equipment
Testing costs before the equipment was put regular operation (including P120 in wages of the regular equipment
operator)
Loss on premature retirement of the old equipment
Estimated cost of manufacturing similar equipment in the company’s own plant, including overhead
What amount should be capitalized as the cost of the new equipment?
Group of answer choices
P28,865
P14,775
P14,975
P15,065
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Question 241 pts
A used delivery truck was traded in for a new truck. Information relating to the trucks
follows:
Used truck:
Cost
P1,600,000
Accumulated depreciation
1,200,000
Estimated current fair value
320,000
New truck:
List price
2,000,000
Cash price without trade-in
1,900,000
Cash price with trade-in
1,560,000
The amount that should be capitalized as the cost of the new truck is
Group of answer choices
P1,880,000
P1,560,000
P1,900,000
P1,960,000
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Question 251 pts
During 2020, Cavite Company made the following property, plant and equipment
expenditures:
Land and building acquired from Bacoor Company
Repairs made to the building
Special tax assessment
Remodeling of office space including new partitions and walls
In exchange for the land and building acquired from Bacoor, Cavite issued 60,000, P100
par value, ordinary shares. On the date of purchase, the shares had a market value of
P150 per share and the land and building had fair value of P2,000,000 and P6,000,000
respectively.
During the year, Cavite also received land from a shareholder to facilitate the
construction of a plant in the city. Cavite paid P100,000 for the land transfer and
charged this amount to legal expenses. The land is fairly valued at P1,500,000.
The cost of the land and building acquired should respectively be
Group of answer choices
P3,500,000, and P6,750,000
P3,800,000, and P7,450,000
P3,550,000, and P6,700,000
P9,000,000
300,000
50,000
400,000
P3,500,000, and P6,400,000
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Question 261 pts
On March 1, 2022, Mr. Right Co. traded in an old machine having a carrying amount of
P 1,600,000 and paid a cash difference of P 600,000 for a new machine having a total
cash price of P 2,000,000.
What is the cost of the new asset?
Group of answer choices
P 1,400,000
P 2,000,000
P 1,800,000
P 1,600,000
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Question 271 pts
The following transactions pertain to the general borrowings made during 2022 by
Victory Co. in connection with the construction of the company’s new warehouse:
Principal
8 % bank loan
Borrowing
costs
P 2,400,000 P 192,000
6 % short-term
1,600,000
note
96,000
8 % long-term
note
160,000
2,000,000
The construction started on January 1, 2022 and the warehouse was completed on
December 31, 2008. Expenditures on the warehouse were as follows:
Jan 15
P 400,000
Mar 31
1,000,000
Jun 30
1,200,000
Sep 30
1,000,000
Dec 31
400,000
What is the capitalization rate?
Group of answer choices
8.15 %
7.47 %
7.85 %
8.35 %
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Question 281 pts
Night Co. bought a new machine and agreed to pay for it in equal annual installments of
P 500,000 at the end of the next five years.
Assume that the present value of a prevailing interest rate at 15 % for five periods is
3.35. The future amount of an ordinary annuity of 1 at 15 % for five periods is 6.74. The
present value of 1 at 15 % for five periods is 0.5.
How much should Night record as the cost of the machine?
Group of answer choices
P 1,675,000
P 1,250,000
P 2,500,000
P 3,370,000
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Question 291 pts
On January 1, 2022, Motley Co. borrowed P 3,500,000 at an interest rate of 12 %
specifically for the construction of its new building. Interest earned from the temporary
investment f the proceeds of the loan prior to their disbursement amounted to P 60,000.
Motley also had the following other loans in 2022 which were borrowed for general
purposes. The proceeds of these loans were used in part for the construction of the
building.
Principa
l
Borrowing
cost
10 % shortterm loan
P
4,200,000
12 % longterm loan
3,700,000 460,000
P 350,000
The construction began January 1, 2022 and the building was completed on December
31, 2022. Expenditures on the building were made as follows:
Jan 15
P1000000
Mar 31
2,500,000
Jun 30
3,000,000
Sep 30
2,500,000
Dec 31
1,000,000
The capitalization rate is (Round off to the nearest one percent)?
Group of answer choices
11 %
10 %
9%
12 %
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Question 301 pts
On January 1, 2022, Nash Co. received a grant of P 20,000,000 from the Japanese
government to compensate for massive losses incurred because of a recent flood. The
grant requires no fulfillment of certain conditions. The grant was made for the purpose
of giving immediate financial support to the entity. It will take Nash three years to fully
recover from the flood. How much income from the government grant should be
recognized by Nash in 2022?
Group of answer choices
P 20 million
P 10 million
P0
P 6,666,667
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Question 311 pts
In October 2022, Ship Co. exchanged a used packaging machine having a book value
of P 240,000 for a new machine and paid a cash difference of P 30,000. The marker
value of the used packaging machine was determined to be P 280,000.
In its income statement for the year ended December 31, 2022, how much gain should
Ship recognize n this exchange, assuming the exchange is considered with commercial
substance?
Group of answer choices
P 10,000
P0
P 30,000
P 40,000
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Question 321 pts
Mighty Co. purchased an equipment under a deferred payment contract on December
31, 2008. Under the terms of the contract, Mighty is required to make eight annual
payments of P 490,000 each beginning December 31, 2009. The applicable interest rate
is 8 %. The present value factors for 8 % are 0.5402 and 5.7466.
What is the purchase price of the equipment?
Group of answer choices
P 4,862,165
not given
P 2,815,834
P 3,920,000
P 3,041,150
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Question 331 pts
Star Co. owns a tract of land which it purchased in 2023 for P 3,000,000. The land is
held as future plant site and has a fair market value of P 4,800,000 on March 1, 2026.
Struck Co. also owns a tract of land held as future plant site. Struck paid P 4,200,000
for the land in 2024 and the land has a fair market value of P 6,000,000 on March 1,
2026. On this date, Star exchanged its land and paid P 1,200,000 cash for the land
owned by Struck. As a result of this transaction, the entity’s specific value was not
affected by the above exchange.
How much should Star record the land acquired in the exchange?
Group of answer choices
P 5,400,000
P 4,200,000
P 6,000,000
P 4,800,000
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Question 341 pts
On August 1, 2022, Flight Co. purchased a new machine on a deferred payment basis.
A down payment of P 200,000 was made and 4 annual installments of P 600,000 each
are to be made beginning on September 1, 2022. Due to an employee strike, Flight
could not install the machine immediately, thus, incurred P 3,000 of storage cost. Cost
of installation (excluding the storage cost) amounted to P 20,000. The cash price of the
machine was P 2,300,000.
How much should be capitalized as cost of the machine?
Group of answer choices
P 2,320,000
P 2,300,000
P 2,323,000
P 2,600,000
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Question 351 pts
On January 1, 2022, Motley Co. borrowed P 3,500,000 at an interest rate of 12 %
specifically for the construction of its new building. Interest earned from the temporary
investment f the proceeds of the loan prior to their disbursement amounted to P 60,000.
Motley also had the following other loans in 2022 which were borrowed for general
purposes. The proceeds of these loans were used in part for the construction of the
building.
Principa
l
Borrowing
cost
10 % shortterm loan
P
4,200,000
12 % longterm loan
3,700,000 460,000
P 350,000
The construction began January 1, 2022 and the building was completed on December
31, 2022. Expenditures on the building were made as follows:
Jan 15
P1000000
Mar 31
2,500,000
Jun 30
3,000,000
Sep 30
2,500,000
Dec 31
1,000,000
How much is the average expenditures?
Group of answer choices
P 5,250,000
P 5,000,000
P 5,400,000
P 4,920,000
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Question 361 pts
Light Co. has recently purchased a computer system for its office. The following
information were gathered in relation to the acquisition of the unit:
P
152,000
List price
Trade discount and rebates
56,000
taken
Installation and assembly
3,200
cost
Initial delivery and
handling cost
6,400
Purchase discount
2%
What is the acquisition cost of the new computer?
Group of answer choices
P 103,680
P 160,600
P 94,080
P 105,680
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Question 371 pts
The following transactions pertain to the general borrowings made during 2022 by
Victory Co. in connection with the construction of the company’s new warehouse:
Principal
Borrowing
costs
8 % bank loan
P 2,400,000 P 192,000
6 % short-term
1,600,000
note
96,000
8 % long-term
note
160,000
2,000,000
The construction started on January 1, 2022 and the warehouse was completed on
December 31, 2008. Expenditures on the warehouse were as follows:
Jan 15
P 400,000
Mar 31
1,000,000
Jun 30
1,200,000
Sep 30
1,000,000
Dec 31
400,000
What is the amount of the average expenditures?
Group of answer choices
P 1,850,000
P 2,125,000
P 2,250,000
P 2,000,000
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Question 381 pts
On January 2, 2022, Milestone Co. was granted a loan of P 2,000,000 at an interest
rate of 10 % specifically to finance the construction of its new building. Availments from
the loan were made quarterly in equal amounts. Total borrowing costs amounted to P
125,000. Prior to their disbursements, the proceeds were temporarily placed in a special
savings account and earned interest income amounting to P 20,000. The building was
completed on December 31 of the same year.
How much should Milestone capitalize as borrowing costs?
Group of answer choices
P 105,000
P 200,000
P 195,000
P 125,000
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Question 391 pts
On March 1, 2022, Mr. Right Co. traded in an old machine having a carrying amount of
P 1,600,000 and paid a cash difference of P 600,000 for a new machine having a total
cash price of P 2,000,000.
On March 1, 2022, what amount of loss should Mr. Right recognize on this exchange?
Group of answer choices
P 400,000
P 600,000
P 200,000
P0
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Question 401 pts
In June 2022, Plane Co. an old packaging machine, which had a cost of P 1,200,000
and was 50 % depreciated, for a non-monetary asset. The market value of the old
packaging machine was determined to be P 700,000.
What is the cost of the new asset acquired?
Group of answer choices
P 600,000
P 660,000
P 860,000
P 700,000
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Question 411 pts
On February 1, 2020, Nelson Corporation purchased a parcel of land as a factory site
for $200,000. An old building on the property was demolished, and construction began
on a new building which was completed on November 1, 2020. Costs incurred during
this period are listed below:
Demolition of old
building
$
Architect's fees
35,000
Legal fees for title
investigation and
purchase contract
5,000
Construction costs
1,090,000
20,000
(Salvaged materials resulting from demolition were sold for $10,000.)
Nelson should record the cost of the land and new building, respectively, as
Group of answer choices
$210,000 and $1,130,000.
$215,000 and $1,125,000.
$205,000 and $1,135,000.
$210,000 and $1,125,000
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Question 421 pts
On September 10, 2020, Jenks Co. incurred the following costs for one of its printing
presses:
Purchase of attachment - $55,000
Installation of attachment - 5,000
Replacement parts for renovation of press - 18,000
Labor and overhead in connection with renovation of press - 7,000
Neither the attachment nor the renovation increased the estimated useful life of the
press. However, the renovation resulted in significantly increased productivity. What
amount of the costs should be capitalized?
Group of answer choices
$67,000
$85,000.
$0.
$78,000.
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Question 431 pts
On January 1, 2022, Tornado Co. received a grant of P 100 million from the Italian
government for the construction of a research laboratory with an estimated cost of P
120 million and useful life of 5 years. The research laboratory was completed and ready
for its intended use on January 1, 2023. Tornado should include in its 2023 income
statement an income from government grant of how much?
Group of answer choices
24 million
P 100 million
P 20 million
P 120 million
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Question 441 pts
On January 1, 2022, JRM Co. received a grant of P 120 million from the British
government in order to defray safety and enrivonmental costs within the area where the
entity is located. The safety and environmental costs are expected to be incurred over
four years, respectively, P 20 million, P 20 million, P 30 million, and P 30 million. How
much income from the government grant should be recognized in 2022?
Group of answer choices
P 24 million
P0
P 120 million
P 30,000,000
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Question 451 pts
Star Co. owns a tract of land which it purchased in 2023 for P 3,000,000. The land is
held as future plant site and has a fair market value of P 4,800,000 on March 1, 2026.
Struck Co. also owns a tract of land held as future plant site. Struck paid P 4,200,000
for the land in 2024 and the land has a fair market value of P 6,000,000 on March 1,
2026. On this date, Star exchanged its land and paid P 1,200,000 cash for the land
owned by Struck. As a result of this transaction, the entity’s specific value was not
affected by the above exchange.
How much should Star recognize as gain?
Group of answer choices
P0
P 120,000
P 180,000
P 80,000
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Question 461 pts
The following transactions pertain to the general borrowings made during 2022 by
Victory Co. in connection with the construction of the company’s new warehouse:
Principal
8 % bank loan
Borrowing
costs
P 2,400,000 P 192,000
6 % short-term
1,600,000
note
96,000
8 % long-term
note
160,000
2,000,000
The construction started on January 1, 2022 and the warehouse was completed on
December 31, 2008. Expenditures on the warehouse were as follows:
Jan 15
P 400,000
Mar 31
1,000,000
Jun 30
1,200,000
Sep 30
1,000,000
Dec 31
400,000
Using the alternative treatment, how much is the capitalizable borrowing cost of Victory?
Group of answer choices
P 161,300
P 154,320
P 169,850
P 149,400
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Question 471 pts
On January 1, 2022, Motley Co. borrowed P 3,500,000 at an interest rate of 12 %
specifically for the construction of its new building. Interest earned from the temporary
investment f the proceeds of the loan prior to their disbursement amounted to P 60,000.
Motley also had the following other loans in 2022 which were borrowed for general
purposes. The proceeds of these loans were used in part for the construction of the
building.
Principa
l
Borrowing
cost
10 % shortterm loan
P
4,200,000
12 % longterm loan
3,700,000 460,000
P 350,000
The construction began January 1, 2022 and the building was completed on December
31, 2022. Expenditures on the building were made as follows:
Jan 15
P1000000
Mar 31
2,500,000
Jun 30
3,000,000
Sep 30
2,500,000
Dec 31
1,000,000
How much is the capitalizable borrowing cost?
Group of answer choices
P 460,000
P 350,000
P 110,000
P 510,000