Impairment Revaluation and Intangibles Acctg 3 Intermediate Accounting I

12/17/2020 Impairment, Revaluation and Intangibles: Acctg 3: Intermediate Accounting I
Impairment, Revaluation and Intangibles

Due No due date Points 50 Questions 53
Available Dec 17 at 8am - Dec 21 at 11:59pm 5 days Time Limit 120 Minutes
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Last Name, First Name, M.I.
ou Answered
Tiu, Sofia, L.
orrect Answers 1
https://canvas.instructure.com/courses/2278803/quizzes/6707919 1/47
Student No.
ou Answered
1190133
orrect Answers 1
Course
(BSA/BSM-A)
ou Answered
BSA
orrect Answers 1
An asset with a carrying amount of P 60,000,000 in the January 1, 2022

statement of financial position was determined to be impaired. Given
below are the expected net cash inflow data for the asset which will be
received at year-end
Estimated Tax
Net cash inflow (net of tax payments
payments)
2022 P 12,600,000 P 2,600,000
2023 10,200,000 2,200,000
2024 7,700,000 1,700,000
2025 5,500,000 1,500,000
2026 3,100,000 1,100,000
The appropriate discount rate is 10 %.
End of Year Present value factors are as follows:
1 .909
2 .826
3 .751
4 .683
5 .621
The asset’s fair value less cost to sell is P 20,000,000.
How much is the impairment loss?
ou Answered P 40,000,000
P 35,822,000
orrect Answer P 21,492,200
P 68,657,100

Estimated Tax
payments)
2022 P 12,600,000 P 2,600,000
2023 10,200,000 2,200,000
2024 7,700,000 1,700,000
2025 5,500,000 1,500,000
2026 3,100,000 1,100,000
1 .909
2 .826
3 .751
4 .683
5 .621
How much is the value in use of the asset?
P 31,342,900
P 24,178,000

Estimated Tax
payments)
2022 P 12,600,000 P 2,600,000
2023 10,200,000 2,200,000

2024 7,700,000 1,700,000
2025 5,500,000 1,500,000
2026 3,100,000 1,100,000
1 .909
2 .826
3 .751
4 .683
5 .621
What is the recoverable value of the asset?
P 31,342,900
P 24,178,000
XYZ Co. had the following balances on the date of the sale of its building:
Building P 60,000,000
Accumulated depreciation 50,000,000
Revaluation surplus 5,000,000
Periodic piecemeal realization of

1,000,000
revaluation surplus
The company sold the building for cash at P 13,000,000.
Immediately after the sale of the building, the balance of the revaluation
surplus should
P 5,000,000
P 4,000,000
cannot be determined
Correct! P0
XYZ Co. had the following balances on the date of the sale of its building:
Building P 60,000,000
Accumulated depreciation 50,000,000
Revaluation surplus 5,000,000
Periodic piecemeal realization of

1,000,000
revaluation surplus
The company sold the building for cash at P 13,000,000.
How much is the gain on sale of building, if any?
Correct!
P 3,000,000
P 2,000,000
P 1,000,000
P 1,500,000
Smashing Co. owns an equipment costing P 5,200,000 with original

residual value of P 400,000. The life of the asset is 10 years and was
depreciated using the straight-line method. The equipment has a
replacement cost of P 8,000,000 with residual value of P 200,000. The
age of the asset is 4 years. The appraisal of the equipment showed a total
revised useful life of 12 years and the company decided to carry the
equipment at revalued amount.
Smashing Co. should initially report revaluation surplus in its stockholders’

equity at
P 1,680,000
P 6,680,000
Correct!
P 1,600,000
P 2,600,000

The subsequent annual depreciation should be
P 385,000
orrect Answer
P 585,000
P 780,000
ou Answered P 975,000

The depreciable sound value on the date of the revaluation is
P 7,800,000
P 3,080,000

The piecemeal realization of the revaluation surplus is
P 175,000
Correct!
P 200,000
P 350,000
P 133,333
On January 1, 2022, the historical balances of the land and building of

Pearl Co. are:
Accumulated
Cost
depreciation
Land P 50,000,000
Building 300,000,000 P 90,000,000
The land and building were appraised on the same date and the
revaluation revealed the following:
Sound value
Land P 70,000,000
Building 315,000,000
There were no additions or disposals during 2022. Depreciation is

computed on the straight-line. The estimated life of the building is 20
years.
The depreciation of the building for 2022 should be
Correct! P 22,500,000
P 15,000,000
P 25,750,000
P 10,500,000

Pearl Co. are:
Accumulated
Cost
depreciation
Land P 50,000,000
Building 300,000,000 P 90,000,000
Sound value
Land P 70,000,000

years.
The December 31, 2022 statement of financial position should show

revaluation surplus at
P 125,000,000
P 119,750,000

Pearl Co. are:
Accumulated
Cost
depreciation
Land P 50,000,000
Building 300,000,000 P 90,000,000
Sound value
Land P 70,000,000

years.
How much should be the 2022 piecemeal realization of the revaluation

surplus?
Correct! P 7,500,000
P 8,392,857
P 8,928,571
P0
Percy Resources Company acquired a tract of land containing an

extractable mineral resource. Percy is required by its purchase contract to
restore the land to a condition suitable for recreational use after it has
extracted the mineral resource. Geological surveys estimate that the
recoverable reserves will be 2,000,000 tons, and that the land will have a
value of $1,200,000 after restoration. Relevant cost information follows:
Land $9,000,000
Estimated restoration costs 1,800,000
If Percy maintains no inventories of extracted material, what should be the

charge to depletion expense per ton of extracted material?
$3.90
$5.40
$4.50
Correct! $4.80
Evenstar Co. has the following information on January 1, 2022 relating to

its property, plant and equipment:
Land P 30,000,000
Accumulated depreciation-building ( 37,500,000)
Machinery 400,000,000
Accumulated depreciation-machine ( 100,000,000)
Book value P 592,500,000

computed using straight-line over 20 years for building and 10 years for
machinery. On June 30, 2022, all of the property, plant and equipment
were revalued as follows:
Replacement cost Sound value
Land P 40,000,000 P 40,000,000
Building 500,000,000 425,000,000
Machinery 650,000,000 455,000,000
What is the revaluation surplus on June 30, 2022?
P 345,000,000
P 920,000,000

Land P 30,000,000

Land P 40,000,000 P 40,000,000
Building 500,000,000 425,000,000
Machinery 650,000,000 455,000,000
What is the total depreciation for 2022?
P 55,000,000
P 66,750,000

Land P 30,000,000

Land P 40,000,000 P 40,000,000
Building 500,000,000 425,000,000
Machinery 650,000,000 455,000,000

The December 31, 2022 statement of financial position should show

revaluation surplus at
P 345,000,000
Correct! 337,500,000
P 355,000,000
P 327,500,000
On January 1, 2019, Pumpkins Co. acquired an equipment for P

1,000,000, with estimated useful life of 10 years. The asset is to be
depreciated on a straight-line basis. On January 1, 2021, it was
ascertained that the recoverable amount of the asset is P 640,000. On
January 1, 2022, it was determined that the recoverable amount of the
asset is P 740,000.
What amounted should be credited to equity through the revaluation

surplus account?
P 180,000
orrect Answer P 40,000
P0
On January 1, 2019, Pumpkins Co. acquired an equipment for P

1,000,000, with estimated useful life of 10 years. The asset is to be
depreciated on a straight-line basis. On January 1, 2021, it was
ascertained that the recoverable amount of the asset is P 640,000. On
January 1, 2022, it was determined that the recoverable amount of the
asset is P 740,000.
What amount should be reported in the income statement as income on

January 1, 2022?
P0
P 40,000
Correct! P 140,000
P 180,000
On January 1, 2017, Zwan Co. acquired a building at cost of P

5,000,000.The building has been depreciated on the basis of a 20-year
life. On January 1, 2022, an appraisal of the building showed its
replacement cost at P 8,000,000 with no change in useful life.
The depreciation for 2022 should be
P 300,000
P 250,000
On January 1, 2017, Zwan Co. acquired a building at cost of P

5,000,000.The building has been depreciated on the basis of a 20-year
life. On January 1, 2022, an appraisal of the building showed its
replacement cost at P 8,000,000 with no change in useful life.
The revaluation that should be shown on the December 31, 2022

statement of financial position is
P 1,850,000
P 2,800,000
On January 1, 2018, Sung Hung Kai Properties Inc. signed a 12 year

lease for warehouse space. Sung Hung Kai has an option to renew lease
for an additional 8 year period on January 1, 2021. Early January 2020,
Sung Hung Kai made substantial improvements to the warehouse. The
cost of these improvements was P540,000 with an estimated useful life of
15 years. At December 31, 2020, Sung Hung Kai intended to exercise the
renewal option. Sung Hung Kai has taken full year on this leasehold
improvement.
On December 31, 2022 statement of financial position, what is the

carrying amount of this leasehold improvement?
ou Answered Php 504,000
orrect Answer Php 432,000
Php 468,000
Php 360,000
A patent right is acquired on January 2021 for P500,000 while it has a

legal life of 15 years, due to rapidly changing technology, management
estimates a life of only 5 years. At January 1, 2022, management is
uncertain that the process can actually be made economically feasible,
and decides to write-down the patent to an estimated market value of
P150,000 with no change in its remaining useful life. On January 1, 2023,
having perfected the related production process, the asset is now
appraised at a sound value of P600,000.
Under the revaluation model, what amount should be reported in the

shareholders’ equity as a result of revaluation?
orrect Answer Php 300,000
none
Php 250,000
A patent right is acquired on January 2021 for P500,000 while it has a

legal life of 15 years, due to rapidly changing technology, management
estimates a life of only 5 years. At January 1, 2022, management is
uncertain that the process can actually be made economically feasible,
and decides to write-down the patent to an estimated market value of
P150,000 with no change in its remaining useful life. On January 1, 2023,
having perfected the related production process, the asset is now
appraised at a sound value of P600,000.
Under the revaluation model, what amount should be reported in the

current year income statement as a result of revaluation?
Php 300,000
Php 250,000
Correct! Php 187,500
none
On June 30, 2022, Madrid Co. exchanged 20,000 shares of XYZ Co. P 30
par value ordinary share for a patent owned by ABC Co. The XYZ stock
was acquired in 2019 at a cost of P 500,000. At the exchange date, the
XYZ stock had a fair value of P 40 per share, and the patent had a net
carrying amount of P 1,000,000 on ABC’s books. Madrid should record
the patent a
P 600,000
Correct!
P 800,000
P 1,800,000
P 500,000
JRM Software Co. is an established computer software company. In 2021,

the firm incurred the following costs in the process of designing,
developing and producing a new software program using IT technology to
access the internet:
Designing and planning P 1,000,000
Code development 1,500,000
Testing 500,000
Production of product master 2,500,000
In 2022, JRM incurred P 1,200,000 in costs to produce the software

program for sale in 2022. The costs of designing and planning code
development and testing were all incurred before the technological
feasibility of the product was established. JRM began marketing the

software program in 2022 and earned revenue of P 2,400,000 in 2022.
JRM estimates that total revenue over the 4-year life of the product will be
P 12,000,000. However, the pattern of revenue from the software product
sale cannot be determined reliably. At the end of 2022, JRM was offered
P 4,000,000 for the rights to distribute the software.
How much of the R and D production costs will be expensed in 2022?
P 3,700,000
P 1,200,000
Brunson Co., a major winery, begins construction of a new facility.

Following are some of the costs incurred in conjunction with the start-up
activities of the new facility:
Production equipment P 8,150,000
Travel costs of salaried employees 400,000
License fees 140,000
Training of local employees for production and

1,200,000
maintenance operations
Advertising costs 850,000
What portion of the organization costs will be expensed?
P0
P 9,750,000
P 1,390,000
Cody Co. incurred the following costs during 2022:
Design of tools, jigs, molds, and dies involving new

P 125,000
technology
Modification of the formulation of a process 160,000
Trouble-shooting in connection with breakdowns during

100,000
commercial production
Adaptation of an existing capability to a particular customer’s

110,000
need as part of a continuing commercial activity
In its 2022 income statement, Cody should report research and

development expense of
P 235,000
Correct! P 285,000
P 160,000
P 125,000
In 2022, Ball Co. incurred the following costs:
Direct costs of doing research and development work
for the government to be reimbursed by the
government unit P
400,000
Research and development costs not included above were:
Depreciation P 300,000
Salaries 700,000
Indirect costs appropriately allocated 200,000
Materials 180,000
What was Ball’s total research and development expense in 2022?
P 1,780,000
P 1,580,000
P 1,080,000
During 2022, Milan Co. incurred P 5,000,000 of research and

development costs in its laboratory to develop a product for which a
patent was granted on July 1, 2022. Legal fees and other costs
associated with the patent totaled P 1,200,000. The estimated economic
life of the patent is 10 years. What amount should the company capitalize
for the patent on July 1, 2022?
P0
P 5,000,000
P 6,200,000
Tanker Oil Co., a development stage enterprise, incurred the following

costs during its first year of operations:
Legal fees for incorporation and other

P 550,000
related matters
Underwriters’ fees for initial stock

400,000
offering
Exploration costs and purchases of 600,000

mineral rights
Tanker had no revenue during its first year of operation. What amount
may Tanker capitalize as organization cost?
P 950,000
orrect Answer P0
P 1,550,000
On July 1, 2022, Istanbul Co. signed an agreement to operate as a

franchisee of Ace Printers for an initial franchise fee of P 12,000,000. On
the same date, Istanbul paid P 4,000,000 and agreed to pay the balance
in four equal annual payments of P 2,000,000 beginning July 1, 2023. The
down payment is not refundable and no future services are required of the
franchisor. Istanbul can borrow at 14 % for a loan of this type. Present and
future value factors are as follows:
Present value of 1 at 14 % for 4 periods 0.59
Future amount of 1 at 14 % for 4 periods 1.69
Present value of an ordinary annuity of 1 at 2.91

14 % for 4 periods
What amount should be recognized by the franchisor as franchise fee

revenue on July 1, 2022?
P0
P 12,000,000
Correct!
P 9,820,000
P 4,000,000
Paris Co. bought Patent A for P 400,000 and Patent B for P 600,000. The
company also paid acquisition costs of P 50,000 for Patent A and P
70,000 for Patent B. Both patents were challenged in legal actions. Paris
paid P 200,000 in legal fees for a successful defense of Patent A and P
300,000 in legal fees for an unsuccessful defense of Patent B.
What amount should Paris capitalize for patents?
P 1,120,000
P 1,620,000
orrect Answer
P 450,000
On January 1, 2022, Deportivo Co. leased land and building from an

unrelated lessor for a ten-year period. The lease has a renewal option for
an additional ten years, but Deportivo has not reached a decision with
regard to the renewal option. In early January of 2022, Deportivo
completed the following improvements to the property:
Description Estimated life Cost
Sales office 10 years P 470,000
Warehouse 25 years 750,000
Parking lot 15 years 180,000
Depreciation of leasehold improvements for 2022 should be
P 122,000
P 89,000
Correct! P 140,000
P 70,000
Information concerning Polaris Co.’s intangibles is as follows:
A. On January 1, 2022, Polaris signed an agreement to operate as a

franchisee for 10 years for an initial franchise fee of P 3,400,000. Of this
amount, P 1,000,000 was paid when the agreement was signed and the
balance payable is payable in four annual payments of P 600,000 each
beginning December 31, 2022. The present value at January 1, 2022 of
the four annual payments discounted at an implicit rate of 15 % is P
1,750,000. The agreement also provides that 5 % of the revenue from the
franchise must be paid to the franchisor annually. Polaris’ revenue from
the franchise for 2022 was P 9,000,000.
B. Trademark was purchased from Aldebaran Co. for P 500,000 on

January 1, 2021. Expenditures for successful litigation in defense of the
trademark totaling P 200,000 were paid on January 1, 2022. Polaris
estimates that the useful life of the trademark will be indefinite.
C. Polaris incurred P 500,000 of experimental costs in its laboratory to

develop a patent that was granted on September 1, 2022. Legal fees and
other costs associated with the registration of the patent totaled P
240,000. Management estimates that the useful life of the patent will be
eight years.
How much is the total acquisition of intangible assets for 2022?
P 3,190,000
P 3,490,000
Information concerning Polaris Co.’s intangibles is as follows:

A. On January 1, 2022, Polaris signed an agreement to operate as a

franchisee for 10 years for an initial franchise fee of P 3,400,000. Of this
amount, P 1,000,000 was paid when the agreement was signed and the
balance payable is payable in four annual payments of P 600,000 each
beginning December 31, 2022. The present value at January 1, 2022 of
the four annual payments discounted at an implicit rate of 15 % is P
1,750,000. The agreement also provides that 5 % of the revenue from the
franchise must be paid to the franchisor annually. Polaris’ revenue from
the franchise for 2022 was P 9,000,000.
B. Trademark was purchased from Aldebaran Co. for P 500,000 on

January 1, 2021. Expenditures for successful litigation in defense of the
trademark totaling P 200,000 were paid on January 1, 2022. Polaris
estimates that the useful life of the trademark will be indefinite.
C. Polaris incurred P 500,000 of experimental costs in its laboratory to

develop a patent that was granted on September 1, 2022. Legal fees and
other costs associated with the registration of the patent totaled P
240,000. Management estimates that the useful life of the patent will be
eight years.
How much is the total amortization for 2022?
Correct! P 285,000
P 295,000
P 300,000
P 305,000
Alpha Co. has provided information on intangible assets as follows:
A. A patent was purchased from Douglas Co. for P 1,500,000 on January

1, 2021. The estimated useful life of the patent is 10 years. The patent
was carried at P 1,350,000 on the books of Douglas Co.
On January 1, 2022, Alpha, because of recent events in the field,

estimates that the remaining life of the patent is only 5 years from January
1, 2022.
B. During 2022, a franchise was purchased from Ebb Co. for P 5,000,000
cash for a definite period of 10 years. In addition, 5 % of revenue from the
franchise must be paid to Ebb. Revenue from the franchise for 2022 was
P 8,000,000.
Alpha estimates the useful life of the franchise to be 10 years and takes
full year’s amortization in the year of purchase.
C. Also in 2022, Alpha incurred R and D costs as follows:
Materials and equipment P 1,200,000
Personnel 1,400,000
Indirect costs 600,000
The R and D costs will be recouped by December 31, 2026. The P

1,200,000 includes equipment of P 900,000 can be used in other
activities. Estimated life of the equipment is 5 years and it was acquired
on January 1, 2022.
How much is the total acquisition of intangible assets for 2022?
P 7,300,000
P0


1, 2022.
P 8,000,000.
Personnel 1,400,000

on January 1, 2022.
How much is the total R and D expense for 2022?
P 3,200,000
P0


1, 2022.
P 8,000,000.
Personnel 1,400,000

on January 1, 2022.
How much is the total amortization expense for 2022?
Correct!
P 770,000
P 630,000
P 500,000
P 520,000
During 2022, Vienna Co. incurred costs to develop and produce a routine,
low-risk computer software product, as follows:
Completion of detailed program design P

1,000,000
Costs incurred for coding and testing to establish

2,000,000
technological feasibility
Other coding costs after establishment of technological

1,500,000
feasibility
Other testing costs after establishment of technological

1,200,000
feasibility
Costs of producing product masters for training materials 1,600,000
Duplication of computer software and training materials from

3,000,000
product master (1,000 units)
Packaging product (600 units) 500,000
What amount should be reported as inventory on December 31, 2022?
P 3,000,000
Correct!
P 3,500,000
P0
P 5,100,000
P
Completion of detailed program design
1,000,000

2,000,000

1,500,000
feasibility

1,200,000
feasibility

3,000,000
What amount should be capitalized as software cost, subject to

amortization?
P0
P 7,300,000
P 5,300,000
P
Completion of detailed program design
1,000,000

2,000,000

1,500,000
feasibility

1,200,000
feasibility

3,000,000
What amount should be expensed immediately in 2022?
P0
P 1,000,000
P 3,500,000
Correct!
P 3,000,000
We purchased all the outstanding ordinary shares of Shilla Travel

Corporation. Shilla has one asset whose market value exceeds its value
by P10,000. Shilla's Equity is P80,000. We agreed with Shilla that its
excess earnings would last for 10 years and we were granted a 10%
return on our investment. Shillas average income for negotiation purposes
is P40,000 and the industry average rate of return is 30% on market value
of net assets. Using the "present value of excess earnings" approach (or
discounted value method) to the calculation of goodwill, what is the
purchase price paid for Shilla?
Correct! Php169,879
Php79,879
Php220,000
Php 90,000
On January 2, 2021, Creative Technology Corp bought a trademark for

P1,000,000. The remaining legal life at the time of acquisition is 20 years.
The company made a reasonable and reliable estimate that this
trademark will provide additional cash flows to the enterprise for an
indefinite period. During 2024, Waterfront Corp's net cash flows related to
the trademark have been on a decreasing trend. As a result of this, the
company decided to evaluate the trademark for possible impairment. On
December 31, 2024, reliable estimate showed that the present value of
the expected net cash inflows related to the trademark is P480,000.
What amount of impairment loss should the company recognized in

2024?
Php1,000,000
Correct! Php520,000
none
Php480,000
The management of British Petroleum Inc. is planning to sell the

business. Records show the cumulative net earnings for the past 5 years
amounted to P600,000, including non–recurring gain of P50,000. The
appraised value of British Petroleum’s net assets was P800,000.
Assuming that goodwill is determined by capitalizing average annual net

earnings at 10%, how much would be the implied goodwill?
Php350,000
Php200,000
orrect Answer Php300,000
ou Answered Php250,000
Hewlett - Packard Corp (H) is negotiating for the purchase of Taiwan

Semiconductor (TS) Company. HP has the following estimated data on
TS: Average market value of net assets (excluding goodwill), P1,000,000;
future average annual year-end earnings, P210,000. Assuming a discount
rate (or return) expected of 15% and a time projection of any goodwill of
10 years, HP should value the prospective goodwill at (using the present
value approach):
Php53,941
Php1,000,000
Php50,000
Ayala Corp acquired Cheung Kong Corp on January 1. As part of the

acquisition, P1,000,000 in goodwill was recognized; this goodwill was
assigned to Ayala’s Internet Applications reporting unit. During the year,
the Internet Applications reporting unit reported revenues of P1,600,000.
Publicly -traded companies similar to those of the Internet Application unit
had the price to revenue ratios averaging 1.70. The fair values and
carrying values of the assets and the liabilities of the Internet Applications
reporting unit are as follows:
Carrying Values Fair Values
Identifiable assets P3,900,000 P3,800,000
Goodwill 1,000,000 ?
Liabilities 1,300,000 1,300,000
What is the amount of impairment loss on goodwill to be recognized?
Php 0
Php1,000,000
An intangible asset costs P300,000 on January 1, 2021. On January 1,

2022, the asset was evaluated to determine if it was impaired. As of
January 1, 2022, the asset was expected to generate future cash flows of
P25,000 per year (at the end of each year). The appropriate discount rate
is 5%.
What total amount should be charged against income in 2022, assuming

that the asset had a total useful life of 10 years from date of acquisition?
Php 30,000
Correct! Php 112,048
Php 92,304
Php 122,304
An intangible asset costs P300,000 on January 1, 2021. On January 1,

2022, the asset was evaluated to determine if it was impaired. As of
January 1, 2022, the asset was expected to generate future cash flows of
P25,000 per year (at the end of each year). The appropriate discount rate
is 5%.
What total amount should be charged against income in 2022, assuming

that the asset had a total useful life of 10 years from date of acquisition?
What total amount should be charged against income in 2022 assuming

that as of January 1, 2021, the asset was assumed to have an indefinite
useful life and that as of January 1, 2022, the remaining life was still
indefinite?
orrect Answer Php 0
Php 92,304
Php 122,304
Athens Co. incurred research and development costs in 2022 as follows:
Equipment acquired for use in various research P

and development projects 3,000,000
Depreciation on the above equipment 200,000
Materials used 400,000
Compensation costs of R and D personnel 300,000
Outside R and D consulting fees 100,000
Indirect costs appropriately allocated 200,000
The total R and D costs charged in the 2022 income statement should be
P 900,000
P 1,000,000
P 4,200,000
On June 30, 2022, Aylene Co. purchased goodwill of P 600,000 when it

acquired the net assets of Michael Co. During 2022, Aylene incurred
additional cost of developing goodwill by training Michael’s employees, P
200,000 and hiring additional Michael’s employees, P 150,000. The

December 31, 2022 balance should report goodwill at:
P 950,000
P 800,000
Quiz Score: 26 out of 50

Impairment Revaluation and Intangibles Acctg 3 Intermediate Accounting I

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12/17/2020 Impairment, Revaluation and Intangibles: Acctg 3: Intermediate Accounting I

Impairment, Revaluation and Intangibles

Score for this quiz: 26 out of 50

Last Name, First Name, M.I.

An asset with a carrying amount of P 60,000,000 in the January 1, 2022

2022 P 12,600,000 P 2,600,000

2023 10,200,000 2,200,000

2024 7,700,000 1,700,000

2025 5,500,000 1,500,000

2026 3,100,000 1,100,000

The appropriate discount rate is 10 %.

End of Year Present value factors are as follows:

The asset’s fair value less cost to sell is P 20,000,000.

How much is the impairment loss?

orrect Answer P 21,492,200

An asset with a carrying amount of P 60,000,000 in the January 1, 2022

2022 P 12,600,000 P 2,600,000

2023 10,200,000 2,200,000

2024 7,700,000 1,700,000

2025 5,500,000 1,500,000

2026 3,100,000 1,100,000

The appropriate discount rate is 10 %.

End of Year Present value factors are as follows:

The asset’s fair value less cost to sell is P 20,000,000.

How much is the value in use of the asset?

orrect Answer P 38,507,800

An asset with a carrying amount of P 60,000,000 in the January 1, 2022

2022 P 12,600,000 P 2,600,000

2023 10,200,000 2,200,000

2024 7,700,000 1,700,000

2025 5,500,000 1,500,000

2026 3,100,000 1,100,000

The appropriate discount rate is 10 %.

End of Year Present value factors are as follows:

The asset’s fair value less cost to sell is P 20,000,000.

What is the recoverable value of the asset?

orrect Answer P 38,507,800

Accumulated depreciation 50,000,000

Revaluation surplus 5,000,000

Periodic piecemeal realization of

The company sold the building for cash at P 13,000,000.

Accumulated depreciation 50,000,000

Revaluation surplus 5,000,000

Periodic piecemeal realization of

The company sold the building for cash at P 13,000,000.

How much is the gain on sale of building, if any?

Smashing Co. owns an equipment costing P 5,200,000 with original

Smashing Co. should initially report revaluation surplus in its stockholders’

Smashing Co. owns an equipment costing P 5,200,000 with original

The subsequent annual depreciation should be

Smashing Co. owns an equipment costing P 5,200,000 with original

The depreciable sound value on the date of the revaluation is

orrect Answer P 4,680,000

Smashing Co. owns an equipment costing P 5,200,000 with original

The piecemeal realization of the revaluation surplus is

On January 1, 2022, the historical balances of the land and building of

Building 300,000,000 P 90,000,000

There were no additions or disposals during 2022. Depreciation is

The depreciation of the building for 2022 should be