FINAL EXAMINATION
1. Research Costs incurred internally to create intangibles are *
Capitalized
Capitalized if they have an indefinite useful life
Not Capitalized
Not treated as expenses in the period they occured
2. Fair Value of Assets are more reliable when *
There are prices of similar items in an inactive market
There are quoted market prices for similar items in an active market
There are prices of identical items in an inactive market
There quoted market prices for identical items in an active market
3. Which of the following is not a change in accounting principle? *
A change from average to FIFO for inventory valuation
A change from cost model to fair value model for Investment Property items
Using a different method of depreciation for new plant assets
A change from completed-contract to percentage-of-completion
4. A specific intangible asset was purchased at cost amounting P200,000 on January
1, 2020. The standard for this specific intangible asset states that it should be
amortized over its useful life or 20 year legal life whichever is lower. The said
intangible asset has a 10 year useful life. Compute for the carrying amount of the
Intangible Asset at December 31, 2020. Answer must be in this format: P120,000 *
180,000
5. IAS 33 presents 2 types of Earnings per share, they are *
Price Earnings per share and Basic Earnings per share
Basic Earnings per Share and Dilluted Earnings per share
Basic Earnings per share and Profit earnings per Share
Dilluted Earnings pef share and Price Earnings per share
6. An entity shall present a complete set of financial statements (including comparative
information) at least *
Annually
Every three to five years
Every two years
Quarterly
7. How should trade discounts be dealt with when valuing inventories at the lower of
cost and net realizable value (NRV), according to IAS 2 Inventories? *
Added to cost
Deducted from cost
Deducted at arriving to NRV
Ignored
8. Under Direct Method of Computing Cash Flows, noncash items are *
All of the choices are incorrect
Neither Added nor Deducted
Deducted from the Income Figure
Either Added or Deducted form the Income figure depending on the nature of the
noncash item
9. Which of the following are treated as change in accounting policy? I. Change from
SYD to double declining method of depreciation II. Change in the percent use in
estimating bad debts *
Neither I nor II
Both I and II
II only
I only
10. Property, Plant and Equipments: *
May include living plants and animals
Always depreciated. In addition, LAND, being a PPE, is also depreciated
Always non living and immovable
Never Depreciated
11. Not a common feature of agricultural activity, per PAS 41 *
Biological Assets have the Capability of Change like Physical Change
Changes in Biological Assets can be measured
Changes in Biological Assets can be Managed
Changes in Biological Assets can be prevented
12. Capricorn Company carried a provision of P 200,000 in its draft financial statements
to 31 March 2017 in relation to an unresolved court case. On 27 April 2017, when
the financial statements to 31 March 2017 had not yet been authorized for issue, the
case was settled and the court decided the final total damages payable by Capricorn
to be P 280,000. Per IAS 10 Events after the reporting period, what should be the
accounting treatment in relation to this event? *
Disclose P 80,000
Disclose P 280,000
Adjust P 80,000
Adjust P 280,000
13. If an entity has not determined that it will use the land for administrative or
production purposes or for short-term sale in the ordinary course of business, the
land is regarded as held for *
Sale
PPE
Capital Appreciation
Disposal
14. The Conceptual Framework should *
Lead to uniformity of financial statements among entities within the same industry,
Guide the PICPA in developing generally accepted accounting standards
Define the basic objectives, terms and concepts of accounting
Eliminate alternative accounting principles and methods
15. They have an interest in information about the continuance of an entity especially
when they have a long-term involvement with or are dependent on the entity *
Government and their agencies
Public
Customers
Employees
16. Adjusting events after the reporting period include all of the following, except *
The sale of inventories after the reporting period may give evidence about their net
realizable value at the end of the reporting period
The settlement of a court case after the issuance of the financial statements that
confirms that the entity has a present obligation
The bankruptcy of a customer that occurs after the reporting period usually confirms
that a loss existed at the end of the reporting period on a trade receivable and that
the entity needs to adjust the carrying amount of the trade receivable
The receipt of Information after the reporting period Indicating that an asset was
impairedat the end of the reporting period, or that the amount of a previously
recognized impairment loss for that asset needs to be adjusted
17. The overriding criterion by which accounting information can be judged is that of *
Freedom of Bias
Usefulness for decision making
Timeliness
Comparability
18. A provision is *
A probable obligation that is not measurable
A possible obligation as a result of past events that is of uncertain timing or amount
An adjustment to the carrying amount of assets t
A liability of uncertain timing or amount
19. Equity is the *
Residual Interest in the assets of the entity after deducting its liabilities.
Total claim of the ordinary shareholders
Total amount due by an entity to its creditors
Total amount of cash contributed by the owners of the entity
20. How should sales staff commission be dealt with when valuing inventories at the
lower of cost and net realizablevalue (NRV), according to IAS 2 Inventories? *
Ignored
Deducted from cost
Added to cost
Deducted in arriving at NRV
21. Limitations of the income statement include all of the following except *
Income numbers are affected by the accounting methods employed
Only actual amounts are reported in determining net income.
Income measurement involves judgment
Items that cannot be measured reliably are not reported
29. A specific Investment Property was acquired on March 1, 2020 for P350,000. The
entity opted Fair Value Model in valuing its investment properties. On December 31,
2020, the investment property has a Fair Market Value of P 375,000. On February
2021, the entity decided to sell the asset for P390,000. Compute for the Gain or Loss on
Derecognition to be reported in 2021. Answers must be in this format: P35,000(L) if your
answer is loss or P35,000(G) if your answer is gain * 15,000 G
30. Contingent Liabilities *
Are ignored
Shown in the Statement of Financial Position as one line item for Liabilities
Never shown in the Financial Statements
Are shown in the Notes to Financial Statements as Disclosures
1. The Barader Company purchased a boring machine on 1 January 2016 for P
81,000. The residual value at the end of its life is P 6,000. The machine's useful
life is 3 years. What should be the accumulated depreciation for the year ended
31 December 2017, using the most appropriate depreciation method permitted
by IAS 16 Property, plant and equipment? * 50,000
2. What is the objective of financial statements according to the Framework? *
To prepare and present a balance sheet, an income statement, a cash flow
statement, and a statement of changes equity
To prepare financial statements in accordance with all applicable Standards and
Interpretations
To provide information about the financial position, performance, and changes in
financial position of an entity that is useful to a wide range of users in making
economic decisions
To prepare and present comparable, relevant, reliable, and understandable
information to investors and creditors
3. Change in measurement basis is *
A change in accounting policy
A change in accounting estimate
A correction of error
Not an accounting change
4. Basic Earnings per Share shows which of the following *
How much profits and losses does the company earn in each preference share
How much profits but not losses does the company earn in each ordinary share
None of these
How much profits or losses does the company earn or lose in each ordinary share
5. Which of the following statements best describes the term "depreciation? *
The removal of an asset from an entity's statement of financial position.
The amount by which the recoverable amount of an asset exceeds its carrying
amount
The systematic allocation of an asset's cost less residual value over its useful life
The amount by which the carrying amount of an asset exceeds its recoverable
amount .
6. The Motmot Company has partially-completed inventory located in its factory, to
which the following estimates related:. Production costs to complete: P2,000;
Future selling costs: P400; Selling price P2,800. According to IAS 2 Inventories,
what is the net realizable value of Motmot's inventory? Answers must follow this
format: P100 * 400
7. Which of the following is not dealt with by PAS 41? *
The processing of agricultural produce after harvesting
The accounting treatment of government grants received in respect of biological
assets
The Initial Measurement of Biological Assets
The accounting for Biological Assets
8. Investment Properties are: (Choose the correct answer) *
Not Depreciated when Cost Model is used
Usually classified as Noncurrent Assets
Depreciated when Fair Value Model is used
Never Depreciated
9. The entity may choose which of the following when Valuing Investment Property
*
Both Cost Model and Fair Value Model
Either Cost Model or Fair Value Model
Fair Value Model Only
Neither Cost Model nor Fair Value Model
10. Interest and dividends received *
Are cash inflows from operating activities
Could be classified as operating or investing cash flows
Could be classified as operating or financing cash flows
Are cash inflows from financing activities
11. Interested in information about the trends and recent developments in the
prosperity of the entity and its range of activities. *
Customers
Government and their agencies
Public
Employees and unions
12. Financial Assets that are held for trading are generally classified as *
Financial Asset at Fair Value through Profit or Loss
Financial Asset at Fair Value through other conprehensive income
Financial Assets at amortized cost
Financial Assets measured at net realizable value
13. Which one of the following is not required to be presented as minimum
information on the face of the statement of financial position? *
Property, Plant and Equipment
Contingencies
Inventory
Investment Property
14. The Anemone Company owns a number of herds of cattle. Where should
changes in the fair value of a herd of cattle be recognized in the financial
statements, according to IAS41 Agriculture? *
In profit or loss
In statement of cash flows
In notes to financial statement
In statement in changes in owner's equity
15. Which of the Following do not fall in the classification of Financial Assets? *
Financial Assets measured Fair Value Through Profit or Loss
Financial Assets measured Fair Value through other comprehensive income
Financial Assets at amortized cost
Financial Assets measured at net realizable value.
16. Cash flows tell which of the following about the financial structure of a company *
Profitability and Solvency
Liquidity and Profitability
Solvency and Liquidity
Bagsakability and Kabit-Kabitability
17. Price of an identical asset in an inactive market is what level in the fair value
hierarchy? *
Level 1
Level 4
Level 2
Level 3
18. Which of the following may not be a qualifying asset under IAS 23 Borrowing
Cost? *
Power Generation Facilities
Inventories
Financial Assets
Intangible Asset
19. How should administrative costs be treated when measuring inventories? *
Deducted from cost
Deducted at arriving to Net Realizable Value
Added to Cost
Expensed Immediately
20. Which entities are encouraged to provide interim financial reports semi-annually,
to be made available not later than 60 days after the end of the interim period? *
Publicly traded entities
Private corporations
Partnerships
All entities
21. Intangibles with Finite Useful life *
Are Depreciated over its useful life
Are never Amortized
Are intangibles which have undeterminable useful lives
Are never depreciated
22. Bearer plants which will be sold as scrap at the end of its life are classified as *
Intangible assets
Property, plant and equipment,
Biological assets
Inventories
23. Entity's revenue may result from *
Sales
Royalties
Interest
Gain on sale of Building
24. Which of the following is not part of IFRS? *
Conceptual framework for financial reporting
International Financial Reporting Standards
Interpretations issued by the IFRIC and SIC
International Accounting Standards
25. The effect of a change in the expected pattern of consumption of economic
benefit asset shall be included *
In the profit or loss in the period of change
In the profit or loss in the period of change and future periods
In the statement of retained eamings as an adjustment of the beginning balance.
As component of other comprehensive income
26. An entity has an Inventory Costing P500,000 as computed using FIFO Method.
The said inventory has an estimated Selling price of P575,000, estimated cost to
complete amounting P45,000 and Estimated Cost to sell of P45,000. What will be
reported as allowance on inventory writedown in the current year? *
15,000
485,000
530,000
Nothing
27. Enhancing qualitative characteristics of financial reporting that make information
more useful are *
Comparability, verifiability, timeliness, and understandability.
Relevance, reliability, and faithful representation B.
Verifiability, timeliness, understandability and time-period
Completeness, neutrality, and freedom from error
Part II- IASs and IFRSs
Write the appropriate IAS or IFRS Standard for the following items (use international
standards). Example: IAS 23
1. Events after the Reporting period *
2. Intangibles *
3. Presentation of Financial Statements *
Inventories *
Agriculture *
Fair Value Measurement *
Provisions *
Investment Property *
Borrowing Cost *
Interim Financial Reporting *