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    Nayra Dizon
    The document contains multiple choice questions regarding the calculation of depreciation and impairment loss for various companies. The questions provide historical cost information, purchase details, estimates of useful life and salvage value for assets such as land, buildings, machinery, equipment, and convenience store buildings. Candidates are asked to calculate figures such as depletion amount, impairment loss, depreciation expense, and carrying amounts based on the details provided for each asset.

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    Quiz

    Uploaded by

    Nayra Dizon
    85 views3 pages
    The document contains multiple choice questions regarding the calculation of depreciation and impairment loss for various companies. The questions provide historical cost information, purchase details, estimates of useful life and salvage value for assets such as land, buildings, machinery, equipment, and convenience store buildings. Candidates are asked to calculate figures such as depletion amount, impairment loss, depreciation expense, and carrying amounts based on the details provided for each asset.

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    Applied Auditing

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    The document contains multiple choice questions regarding the calculation of depreciation and impairment loss for various companies. The questions provide historical cost information, purchase details, estimates of useful life and salvage value for assets such as land, buildings, machinery, equipment, and convenience store buildings. Candidates are asked to calculate figures such as depletion amount, impairment loss, depreciation expense, and carrying amounts based on the details provided for each asset.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    85 views3 pages

    Quiz

    Uploaded by

    Nayra Dizon
    The document contains multiple choice questions regarding the calculation of depreciation and impairment loss for various companies. The questions provide historical cost information, purchase details, estimates of useful life and salvage value for assets such as land, buildings, machinery, equipment, and convenience store buildings. Candidates are asked to calculate figures such as depletion amount, impairment loss, depreciation expense, and carrying amounts based on the details provided for each asset.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Name: Score:

    Section: Date:
    Quiz No. 1

    Andres Corporation purchased land for 6,000,000. The Company expected


    to extract 1 million tons of mine from this land over the next 20
    years at which time, residual value shall be zero. During the first 2
    years of the mine’s operations, 30,000 tons were mined each year and
    sold for P80 per ton. The estimate of the total remaining capacity of
    the mine was raised to 1,200,000 tons at the start of the third year
    and the residual value was estimated to be P480,000. During the third
    year, 50,000 tons were mined and sold for P85 per ton.
    How much would be the depletion for the third year?
    a. 215,000 c. 225,000
    b. 227,500 d. 235,000

    Bonifacio Co. purchased 4 convenience store buildings on January 1,


    2003 for a total of 22,000,000. The buildings have been depreciated
    using the straight line method with 20-year useful life and 5%
    residual value. As of January 1, 2010, Bonifacio has converted the
    buildings into internet learning centers. Because of the change in the
    use of the buildings, Bonifacio is evaluating the buildings for
    possible impairment. Bonifacio estimates that the buildings have a
    remaining useful life of 10 years and that their residual value will
    be zero and net cash inflow from each building will be 500,000 per
    year and appropriate discount rate that reflects current market
    assessments of time value of money is 12%. Present value of annuity or
    the discount rate for 10 periods is 5.65. The fair value less cost to
    sell of the four buildings is not clearly determinable.
    What amount of impairment loss, if any, should be recognized?
    a. None c. 4,435,000
    b. 3,385,000 d. 5,560,000
    Below are the historical cost balances of Property, Plant and
    Equipment of Jose Company at January 1, 2014:

    Land 14,000,000
    Buildings and improvements 84,000,000
    Machinery and equipment 112,000,000
    Total 210,000,000
    Accumulated Depreciation:
    Buildings and improvements 10,500,000
    Machinery and equipment 28,000,000 38,500,000
    Net book value 171,500,000

    An appraisal was made for all of Jose’s PPE on the same date. The
    appraisal report disclosed the following:
    Fair Values Remaining Useful Life
    Land 28,000,000
    Buildings and Improvements 126,000,000 18 years
    Machinery and equipment 126,000,000 7 years

    There were no additions or disposals during 2014. Depreciation


    expenses is computed based on a straight line method. The estimated
    useful life applied to buildings and improvements was 20 years and 10
    years for machinery and equipment. The appraisal was recorded by Jose
    on December 15, 2014 only.
    How much should be the depreciation expense of Jose for the year ended
    December 31, 2014?
    a. 15,400,000 c. 20,800,000
    b. 18,900,000 d. 25,000,000

    On January 1, 2014, Rizal Company bought machinery under a contract


    that required a down payment of 50,000, plus 24 monthly payments of
    25,000 each, for total cash payments of 650,000. The cash price
    equivalent of the machinery was 550,000. The machinery has an
    estimated useful life of 10 years and estimated salvage value of
    25,000. Rizal uses the straight line method of depreciation.
    How much should Rizal report in its 2014 profit or loss as
    depreciation for the machinery?
    a. 52,500 c. 62,500
    b. 55,000 d. 65,000

    Apolinario Company purchased an equipment for 540,000 on January 2,


    2013. The equipment has an estimated salvage value of 60,000 and an
    estimated useful life of 5 years. The equipment is being depreciated
    using the sum of years digits method.

    What is the carrying amount of the equipment on December 31, 2014?


    a. 156,000 c. 380,000
    b. 252,000 d. 412,000

    On January 3, 2013, Mabini Company purchased factory equipment for


    4,000,000. Estimated salvage value was 160,000. Estimated useful life
    is 10 years and will be depreciated using double declining balance
    method.
    What amount of depreciation to be recognized in year 2014?
    a. 384,000 c. 640,000
    b. 614,400 d. 768,000

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