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Property, Plant and Equipment: Problem 10-1: True or False

This document contains sample problems and solutions related to Chapter 10 on property, plant and equipment. It includes multiple choice and true/false questions testing concepts such as depreciation calculation, impairment testing, and accounting for purchases and disposals of PPE. The problems cover initial measurement, subsequent expenditure, impairment loss calculation using different valuation methods, and accounting for government grants related to assets.

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JudithRavello
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535 views

Property, Plant and Equipment: Problem 10-1: True or False

This document contains sample problems and solutions related to Chapter 10 on property, plant and equipment. It includes multiple choice and true/false questions testing concepts such as depreciation calculation, impairment testing, and accounting for purchases and disposals of PPE. The problems cover initial measurement, subsequent expenditure, impairment loss calculation using different valuation methods, and accounting for government grants related to assets.

Uploaded by

JudithRavello
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter 10

Property, Plant and Equipment

PROBLEM 10-1: TRUE OR FALSE


1. TRUE
2. TRUE
3. FALSE
4. FALSE
5. TRUE
6. FALSE
7. TRUE
8. FALSE - ₱3
9. TRUE
10. TRUE
11. TRUE
12. FALSE - ₱2, the carrying amount of the old part replaced.
13. TRUE
14. TRUE
15. FALSE

PROBLEM 10-2: MULTIPLE CHOICE


1. A
2. A
3. B
4. C
5. C
6. A
7. B
8. B
9. A
Solution:
(1M x 95%(a) x 5 (b)/60 (c)) = 79,167 accumulated depreciation
(1M – 79,167) = 920,833
(a) (100% less 5% standard residual value)

(b) (August to December 20x1)

(c) (5 yrs. x 12)

10. D
11. A
12. B
13. D
14. C
15. D

PROBLEM 10-3: MULTIPLE CHOICE


1. A
Solution:
Purchase price 9,000,000
Import duties 200,000
Cash discount not taken (100,000)
Freight costs 800,000
Testing costs 300,000
PV of dismantling costs (120,000 x PV of 1 @12%, n=20) 12,440
Initial measurement 10,212,440

2. A
3. C
4. A – Entity A will recognize the donation upon receipt as a
debit to asset and a credit to liability.
5. C
PROBLEM 10-4: FOR CLASSROOM DISCUSSION
1. D
2. D
3. B (500,000 x 80% x 90% x 98%) + 10,000 + 100,000 + (20,000 x PV
of 1 @10%, n=10) = 470,511

4. B
5. A

6. B (95,000 + 15,000) = 110,000

7. A 95,000 fair value of asset given up – 85,000 carrying amount


= 10,000 gain

8. A

9. B
Solution:
(1M x 95%(a) x 4 (b)/60 (c)) = 63,333
(a) (100% less 5% standard residual value)

(b) (September to December 20x1)

(c) (5 yrs. x 12)

10. B
Solution:
Replacement cost 700,000
Accumulated depreciation - (700K x 95% x 5/10) (332,500)
Depreciated Replacement Cost – Value in use 367,500

Recoverable service amount (VIU - higher) 367,500


Carrying amount (400,000)
Impairment loss (32,500)
11. B
Solution:
Depreciated replacement cost (see solution above) 367,500
Less: Restoration cost (10,000)
Value in use 357,500

Recoverable service amount (VIU - higher) 357,500


Carrying amount (400,000)
Impairment loss (42,500)

12. C
Solution:
Depreciated replacement cost (see solution above) 367,500
Multiply by: 90%
Value in use 330,750

Recoverable service amount (FVLCS - higher) 350,000


Carrying amount (400,000)
Impairment loss (50,000)

13. D
14. C
15. D

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