POLYTECHINIC UNIVERSITY OF THE PHILIPPINES

College of Accountancy and Finance

ACCO 201: Intermediate Accounting 2
Midterm Departmental Examination
1st Semester AY 2024-2025

NAME: __________________________________________ PROGRAM, YEAR AND SECTION: _____________

Instruction: Choose the letter of the best answer and shade the answer sheet properly. God bless!

THEORIES (1pt. each)

1. Which of the following must be excluded in inventory
I. Goods held on consignment
II. Goods out on consignment
III. Goods out on approval
IV. Inventories in the hands of an agency
a. I only b. II only c. I, III, and IV d. II, III, and IV

2. Goods on consignment must be included in the inventory of

a. The consignee c. Neither the consignor nor the consignee
b. The consignor d. Both the consignor and consignee

3. Which of the following shall be included in the cost of inventories?

a. Freight costs of goods purchased FOB destination
b. Storage costs of finished goods
c. Abnormal amounts of wasted materials, labor, and other production costs.
d. None of the above are inventoriable costs

4. Which of the following is included in the initial measurement of inventories?

a. Purchase cost that includes purchase price, import duties, freight, handling, and other costs directly related in the
acquisition of finished goods, materials and services.
b. Other costs related to bringing the inventory to their present location and condition
c. Cost of conversion
d. All of the above

5. Which of the following should not be included in inventory?

a. Materials to be used in production by a manufacturing firm.
b. Land held for sale by a real estate firm
c. Shares and bonds held for sale by a brokerage firm
d. All of these are included in inventory

6. In periodic inventory system that uses the weighted average cost flow method, the beginning inventory is:
a. net purchases minus the ending inventory
b. net purchases minus the cost of goods sold
c. total goods available for sale minus the net purchases
d. total goods available for sale minus the cost of goods sold

7. According to PAS 2 on Inventories, an entity should use the same cost formula for inventories that:
a. Have similar nature and use within the entity
b. Are stored in the same geographical location
c. Have different types but similar tax implications
d. Have different end-use purposes in separate operating segments

8. When is the specific identification method appropriate for assigning inventory costs?
a. When items are ordinarily interchangeable
b. When items are produced and segregated for a specific project
c. When items have a similar nature and use to the entity
d. When the FIFO method is not applicable

9. The inventory allocation method that assigns the most recent costs to ending inventory and the oldest costs to cost of
goods sold is the ________.
a. specific identification method c. moving-average method
b. LIFO method d. FIFO method

10. All of the following are common reasons for estimating the cost of goods on hand except:
a. Inventories were destroyed by fire.
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 b. Preparation of interim financial reports.
c. Validation for physical count reasonableness
d. Mere request by a division within the company.

11. Which of the following is true regarding the conservative retail inventory method?
a. The cost-to-retail ratio considers only the current purchases.
b. The cost-to-retail ratio considers the beginning inventory, all markups and markdowns, and their related
cancellations.
c. The cost-to-retail ratio considers the beginning inventory, all markups, and their related cancellations.
d. The cost-to-retail ratio considers the beginning inventory, all markdowns, and their related cancellations.

12. Which of the following is true?

a. The use of the retail inventory method requires that records be kept and include beginning inventory at cost and at
retail price.
b. The use of the retail inventory method requires that records be kept and include purchases during the period at cost
and at retail price.
c. The use of the retail inventory method requires that records be kept and include any adjustments to the original
retail price such as markups and markdowns and related cancellations.
d. All options are correct.

13. Per IAS2 par. 32, states that when a decline in the price of materials indicates that the cost of the finished products
exceeds the net realizable value, the materials are written down to net realizable value.
a. True b. False

14. The amount of any write-down of inventories to net realizable value can be recognized in the period the inventories are
sold.
a. True b. False

15. The net realizable value of the quantity of inventory held to satisfy firm sales or service contracts is based on contract
price.
a. True b. False

16. Ordinarily, biological assets are classified as

a. Separate line item of noncurrent assets c. Part of plant, property and equipment
b. Separate line item of current d. Part of inventories

17. Which of the following shall be included as part of biological assets?

a. Agricultural land
b. Biological assets (other than bearer plants) that are physically attached to agricultural land
c. Intangible assets relating to agricultural activity
d. All of the foregoing

18. Conditional government grants received in respect of biological assets are recognized in profit or loss
a. When the grant becomes receivable .
b. When the conditions have been met.
c. In the proportions in which depreciation expense on those assets is recognized.
d. Any of the foregoing.

19. Which of the following is incorrect regarding gains and losses on subsequent measurement of biological assets and
agricultural produce?
a. A gain or loss on initial recognition of agricultural produce at fair value less costs to sell are included in profit or
loss for the period in which it arises.
b. Changes in fair value less costs to sell of biological assets during a period, are included in profit or loss.
c. Separate disclosure of the two components of change in fair value of biological assets as part physical change
and part price change is required.
d. None of the foregoing

20. Defined by IAS 41 as the process that comprises of growth, degeneration, production, and procreation that cause
qualitative or quantitative changes in a biological asset.
a. Biological transformation c. Biological process
b. Agricultural transformation d. Agricultural process

21. The cost of an item of property, plant and equipment comprises all of the following, except
a. Purchase price after deducting trade discounts, rebates and other similar deductions
b. Any cost directly attributable in bringing the asset to the location and condition for its intended use
c. Import duties and transportation cost to bring the asset to its intended location
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 d. Initial estimate of the cost of dismantling and removing the item and restoring the site, where the entity is not
obliged to restore the site at the end of its life.

22. Costs that are expensed immediately include all of the following except
a. Cost of opening a new facility
b. Cost of testing whether the asset is functioning properly
c. Cost of conducting business in a new location
d. Cost of introducing a new product or service

23. Which of the following statements are true?

a. If the donor is a shareholder, a revenue or gain is recognized at an amount equal to the value of the donated asset.
b. If the donor is a shareholder, the donation is recorded by crediting an appropriately titled additional paid in capital
account.
c. PPE received as donation is recorded at its fair value less cost to sell at the time of donation.
d. All of the above.

24. Statement 1: If shares are issued in exchange for a machine and the fair value of the machine is not available, the
entity will record the machine for the par value of the shares.
Statement 2: If the entity received an unconditional government grant, the entity shall record an unearned revenue which
will become an income once the condition is met.
a. Only Statement 1 is true. c. Both statements are true.
b. Only Statement 2 is true. d. Both statements are false.

25. Normally, the amount of gain or loss in exchanges with commercial substance and involving cash is determined as
a. The difference between the fair value and carrying amount of the PPE given up.
b. The difference between the fair value and carrying amount of the PPE received.
c. The amount of cash received, in this case the exchange should report a gain on exchange.
d. The amount of cash paid, in this case the exchange should report a loss on exchange.

26. For a nonmonetary exchange, the configuration of cash flows includes which of the following?
a. The entity-specific value of the asset.
b. The estimated present value of the assets exchanged.
c. The implicit rate, maturity date, and amount of loan.
d. The risk, timing and amount of cash flows of the assets.

27. Which of the following must be present so that a company may commence the capitalization of its borrowing costs?
a. The company incurs borrowing costs.
b. The company incurs expenditures for the asset.
c. The company undertakes activities that are necessary to prepare the asset for the intended use or sale.
d. All of the above should be present.

28. S1: Capitalization of borrowing cost shall cease during extended period in which active development is interrupted.
S2: Capitalization of borrowing cost shall be suspended when substantially all the activities necessary to prepare the
qualifying asset for the intended use or sale are complete.
a. Both statements are false. c. Only statement 1 is true.
b. Both statements are true. d. Only statement 2 is true.

29. Which of the following statements is the assumption on which straight-line method of depreciation is based?
a. Operating efficiency of the asset decreased in later years
b. Service value declines as a function of time rather than use
c. Service value declines as a function of obsolescence rather than time.
d. Physical wear and tear are more important than economic obsolescence.

30. The sum of the years digits method of depreciation results in a/an:
a. Constant charge over the life of the asset
b. Increasing charge over the asset’s life
c. Decreasing charge over the asset’s life
d. Charge based on the expected use or output of the asset.

PROBLEMS (2pts. each)

31. The inventory account of Buffet Company on December 31, 2023, included the following items:
• Goods out on approval, at sales price (cost, P30,000)- P40,000
• Goods held on consignment- P45,600
• Merchandise out on consignment at sales price (the markup is 40% on cost)- P126,000
• Goods in transit purchased FOB shipping point- P120,000
Based on the above information, the inventory account on December 31, 2023 of Buffet should be reduced by
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 a. P81,500 b. P84,500 c. P87,500 d. P91,600

32. Buffet Company’s inventory on December 31, 2023, amounts to P1,450,000 based on physical count of goods priced
at cost, and before necessary adjustment relating to the following:
• Goods shipped FOB shipping point on December 28, 2023, from a vendor were received on January 5, 2024. The
invoice amounts to P30,000.
• Included in the physical count were goods billed to a customer FOB shipping point on December 31, 2023. These
goods costing P10,000 were picked up by the carrier on January 7, 2024.
What amount should Buffet Company report as inventory on December 31, 2023?
a. P1,470,000 b. P1,480,000 c. P1,520,000 d. P1,550,000

33. The inventory on hand on December 31, 2023 of Buffet Company is valued at a cost of P3,000,000. The following
items were not included in the inventory:
• Goods purchased in transit shipped FOB destination, with invoice price of P 300,000
• Goods sold in transit FOB destination with invoice price of P350,000.
• Goods held on consignment, P120,000
• Goods in transit purchased FOB shipping point with invoice price of P500,000. Freight cost, P20,000
• Goods out on consignment with sales price of P210,000
The company sells goods at 140% of the cost. What is the correct inventory on December 31, 2023?
a. P3,920,000 b. P4,190,000 c. P4,160,000 d. P4,520,000

34. Buffet Company had 10,200 units on October 31,2024, based on physical count of goods on that date. The following
items have not yet been recorded as purchases and sales as of October 31, 2024. They were in transit as of October 31 and
those were received by the buyer the following month.
No. Transaction Terms Number of units
1 Sale FOB destination 650
2 Sale FOB shipping point 500
3 Purchase FOB destination 250
4 Purchase FOB shipping point 300
How many units should be considered as inventory by Buffet Company on October 31, 2024?
a. 10,200 units b. 10,950 units c. 11,000 units d. 11,150 units

Data for item nos. 35 and 36

Buffet Inc. provided the following data for the year 2024:
Beginning Inventory 500 units @P5 each

Purchases:
March 1 200 units @ P7 each
June 10 300 units @ P9 each
October 30 300 units @ P10 each
Sales:
April 25 330 units
July 20 260 units
December 15 440 units
35. If Buffet Inc. uses a perpetual moving average inventory system, compute the cost of goods sold for the year.
a. P2,248.88 b. P7,351.12 c. P9,600.01 d. P6,245.18

36. Using perpetual moving average, what is the unit cost used in the December 15 sales?
a. P5.57 b. P7.11 c. P7.38 d. P8.33

37. Buffet Inc. has the following data available:

Transaction Units Purchased Unit Cost Units Sold
Beginning Inventory 750 P30
Oct. 1 Purchase 325 33
Oct. 10 Sale 425
Oct. 14 Purchase 450 37
Oct. 20 Sale 600
Oct. 22 Purchase 400 38
Oct. 29 Sale 525
If Buffet Inc. uses a perpetual FIFO inventory system, the cost of ending inventory on October 31 is ______.
a. P15,200 b. P14,250 c. P49,875 d. P50,825

38. The following data were taken from the January 2024 accounting records of Buffet, Inc.
January 1 balance 5,000 lamps at P30 each
January 6 Sold 1,600 lamps
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 January 8 Purchased 1,200 lamps at P32 each
January 14 Sold 1,020 lamps
January 20 Purchased 800 lamps at P34 each
On January 31, it was determined by physical count that 4,200 lamps were on hand. If Buffet Inc. uses a periodic inventory
system, the cost of the inventory using the weighted average cost flow assumption on January 31, 2024 is:
a. P137,760 b. P130,968 c. P129,360 d. P86,240

39. On the night of August 31, 2024, a flood ravaged and destroyed most of the merchandise inventory of Buffet Company.
All goods were completely destroyed except for partially damaged goods that normally sell for P200,000 and that had an
estimated net realizable value of P50,000 and undamaged goods that normally sell for P120,000.
Inventory, January 1 P1,320,000
Net purchases, January through August 31 8,480,000
Net sales, January 1 through August 31 11,200,000
The company had the following gross profit rates in the last three years:
2021 29.0% 2023 23.2%
2022 26.7% 3-year average 25.0%
What is the estimated amount of fire loss on September 30, 2024?
a. P1,250,000 b. P1,260,000 c. P1,390,000 d. P1,240,000

Data for item nos. 40 and 41

Buffet Supermarket provided the following information :
COST RETAIL
Beginning inventory Sales P555,200 P945,000
Sales 5,000,000
Purchases 4,200,000 6,000,000
Normal spoilage 700,000
Abnormal spoilage -theft and casualty loss 386,950 675,000
Freight In 84,250
Mark ups 1,250,000
Mark up cancellations 100,000
Mark down 650,000
Markdown cancellations 80,000
Sales return 200,000
Employee discount 500,000
40. How much is the estimated ending inventory at cost using the average method?
a. P552,500 b. P555,500 c. P559,500 d. P562,500

41. How much is the estimated ending inventory at cost using the FIFO method?
a. P 568,000 b. P 570,000 c. P 561,000 d. P 552,000

42. On November 15, 2024, Buffet Company entered into a commitment to purchase 10,000 ounces of gold on February
15, 2025 at a price of P310 per ounce. On December 31, 2024 the market price of gold is P270 per ounce. On February 15,
2025, the price of gold is P300 per ounce. What amount should be debited to purchases on February 15, 2025?
a. P3,500,000 b. P3,100,000 c. P3,000,000 d. P2,700,000

43. The Buffet Co. had determined its Dec 31, 2024 inventory on a FIFO basis at P210,000. Information pertaining to that
inventory follows:
Estimated selling price P214,000
Estimated cost of disposal 8,000
Normal profit 20,000
Buffet records losses that result from applying the lower of cost and net realizable value rule. How much is the amount of
loss that the company should recognized on December 31, 2024?
a. P4,000 b. P8,000 c. P20,000 d. P24,000

43. The management of Buffet Enterprises, has been using the lower of cost and net realizable value in costing their
inventory. The following are its inventory
• Product E: 250 on hand; cost , P28 each; estimated sales price, P40; estimated distribution cost, P13; normal
profit, 10% of the sales price.
• Product G: 150 on hand; cost, P58 each; estimated sales price, P85; estimated distribution cost, P25; normal
profit, 20% of the sales price.
Using the lower of cost and net realizable value, what are the unit inventory values for product E and G, respectively?
a. P28; P58 b. P27; P60 c. P27; P58 d. P28; P60

44. The December 31, 2024 inventory of Buffet Company consisted of the following products:
Est. disposal Est. Selling Normal

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 Product Unit Cost No. of units Cost/unit Price/ unit Profit on sales
H P27 1,100 P8.50 P 43 20%
E 44 2,100 14.00 51 25%
L 122 3,100 27.00 191 30%
P 20 4,100 5.00 29 10%
The company measures its inventory at lower of cost and net realizable value on a per item by item basis. How much is the
total inventory on December 31, 2024?
a. P565,000 b. P567,600 c. P582,000 d. P582,300

45. Buffet Company is in business of deer farming. A herd of 100 deer is held throughout Year 1. The only change during
the year is the increase in their physical attributes due to ageing from two to three years. The relevant data are as follows:
Fair value of a 2-year old deer at 1 January Year 1 P 3,000
Fair value of a 2-year old deer at 31 December Year 1 3,300
Fair value of a 3-year old deer at December 31 Year 1 4,800
How much is the increase in the fair value of the biological asset due to price change?
a. P30,000 b. P150,000 c. P180,000 d. P480,000

46. Buffet Company provided the following data regarding its biological assets:
Value of biological asset at acquisition cost on January 1, Year 1 P 600,000
Fair valuation surplus on initial recognition at fair value on December 31, Year 1 700,000
Increase in fair value to December 31, Year 2 due to price change 40,000
Increase in fair value to December 31, Year 2 due to physical change 60,000
Decrease in fair value due to harvest 90,000
What is the carrying amount of the biological asset on December 31, Year 2?
a. P1,490,000 b. P1,400,000 c. P1,310,000 d. P1,300,000

47. Buffet Company has reclassified certain assets as biological assets. The forest assets are as follows:
Freestanding trees P5,100,000
Land under trees 600,000
Roads in forests 300,000
In Buffet’s statement of financial portion, what would be the total amount of biological assets?
a. P5,100,000 b. P5,400,000 c. P5,700,000 d. P6,000,000

48. On December 31, Year 1, Buffet Inc. has harvested coffee beans costing P3,000,000 and with fair value less cost to
sell of P3,500,000 at the point harvest. Because of long aging and maturation process after harvest, the harvested coffee
beans were still on hand on December 31, Year 2. On such date, the fair value less cost to sell is P3,900,000 and the net
realizable value is P3,200,000. What is the measurement of the coffee beans inventory on December 31, Year 2?
a. P3,000,000 b. P3,200,000 c. P3,500,000 d. P3,900,000

49. On January 1, 2024, Buffet Corp. acquired a factory equipment. Information about the acquisition of such equipment is
presented below:
List price P400,000
Trade discount 20%
Import duties 12,400
Recoverable taxes 10,000
Insurance paid during delivery of the equipment 15,400
Cost of removing the old equipment 5,000
Cost of installing the new equipment 18,600
The equipment was acquired on account with a term of 2/10, n/30. How much is the initial cost of the factory equipment?
a. P326,000 b. P340,000 c. P360,000 d. P370,000

50. At the beginning of the current year, Buffet Company purchased a parcel of land as a factory site for P500,000. An old
building on the property was demolished to pave the way for the construction of a new building which was completed at
year-end. The following costs were incurred in relation to the new building:
• Legal fee for the title investigation and purchase • Construction cost – 2,725,000
contract – 12,500 • Architect fee – 87,500
• Demolition cost of the old building – P50,000
What amount should be recorded as cost of land?
a. P562,500 b. P550,000 c. P512,500 d. P500,000

For items 51 – 53, use the following information:

On January 1, 2024, Buffet Corporation acquired a machinery from VikingsCompany. The reporting date of Buffet is every
December 31 of each year. The supplier offers the following alternative payment terms:
• Pay the equivalent COD price of P1,400,000 upon purchase.
• Pay P1,500,000 on or before December 31, 2024 but offered a 2/15, n/30 credit term.
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 • Issue a promissory note amounting to P1,500,000 payable after three (3) years.
• Issue shares of stock in exchange for the machinery.
• Exchange inventories with recorded cost of P1,200,000 but fairly valued at P1,250,000.

51. Refer to Buffet Corporation, assume the cash equivalent price does not exist and that the promissory note is non-interest
bearing and the current market rate of interest is 12%. If Buffet agreed to pay on December 31, 2026, at what amount
should Buffet record the machinery? (Round off PV factor to six (6) decimal places and final answer to the nearest
peso.)
a. P1,500,000 b. P1,427,945 c. P1,140,000 d. P1,067,670

52. Refer to Buffet Corporation, assume the cash equivalent price does not exist and Buffet issued 7,000, P200 par value
ordinary share with fair market value of P250/share as of January 1, 2024, in exchange for the machinery. At what amount
should Buffet record the machinery? Round off PV factor to six (6) decimal places and final answer to the nearest peso.
a. P1,427,945 b. P1,400,000 c. P1,500,000 d. P1,750,000

53. Refer to Buffet Corporation, assume the cash equivalent price does not exist and Buffet exchanged inventories with
carrying amount equal to P1,200,000 and fair value as stated above as of January 1, 2024, for the machinery. At what
amount should Buffet record the machinery? Round off PV factor to six (6) decimal places and final answer to the
nearest peso.
a. P1,200,000 b. P1,250,000 c. P1,427,945 d. P1,750,000

54. A shareholder of Buffet Inc. donated an asset with a carrying value on its book for P1,000,000. At the time of donation,
its fair value is P1,500,000 while the cost to sell is P100,000. Which of the following is true about the donation?
a. An entry should be made by Buffet that will credit the income from shareholder’s grant worth P1,400,000
b. The entry should be made to record a credit to Donated Capital for P1,500,000.
c. The entity should record the donated assets at P1,000,000.
d. The entity should record the donated assets at P1,400,000.

55. On January 1, 2024, Buffet Corp. exchanged its delivery truck and P20,000 cash for a factory equipment owned by
Vikings Company. The following information about the involved assets relates to the exchange transaction:
Buffet Corp. Vikings Company
Fair Value P120,000 P140,000
Carrying Amount 130,000 100,000
The exchange transaction has commercial substance. Determine which of the following statements is incorrect.
a. Buffet Corp. should record the factory equipment received at P140,000.
b. Buffet Corp. should record a gain on exchange amounting to P10,000.
c. Vikings Company should record the delivery truck received at P120,000.
d. Vikings Company should record a gain on exchange amounting to P40,000.

56. During 2024, Buffet Company paid P350,000 and exchanged an equipment which has a carrying amount P1,000,000
and a fair value of P1,050,000 for another equipment in the same line of business with fair value of P1,400,000. If the
exchange has the necessary commercial substance, the company should record the new equipment received at:
a. P1,400,000 b. P1,050,000 c. P1,000,000 d. P850,000

57. Buffet Inc. and Life Co. have an exchange with no commercial substance. The asset given up by Buffet Inc. has a book
value of P12,000. The asset given up by Life Co. has a book value of P20,000. Cash of P4,000 is received by Life Co. What
amount should Buffet Inc. record for the asset received?
a. P16,000 b. P19,000 c. P20,000 d. P23,000

58. On January 1, 2024, Buffet Company borrowed P6,000,000 at an annual interest rate of 10% to finance specifically the
cost of building an electricity generating plant. Construction commenced on January 1, 2024 with a cost of P6,000,000. Not
all cash borrowed was used immediately, so interest income of P80,000 was generated by temporarily investing some of the
borrowed amounts prior to use. The project was completed on October 30, 2024. What amount should be reported as cost
of the plant on October 30, 2024?
a. P6,000,000 b. P6,420,000 c. P6,500,000 d. P6,470,000

59. Buffet Company was constructing an asset that qualified for interest capitalization. The construction began at the
beginning of 2024 and was completed at the end of 2024. The construction cost totaled P36,000,000 and was incurred evenly
during 2024. The company had the following outstanding liabilities during the entire year of construction (none of which
were specified for the construction of the qualified asset):
• Loan 1 – 8% 2-year note payable, P18,000,000
• Loan 2 – 9% 3-year bank loan payable, P27,000,000
What amount of borrowing cost shall be capitalized?
a. P1,440,000 b. P2,430,000 c. P1,548,000 d. P2,880,000

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60. Buffet Company had the following loans outstanding for 2024:
Specific construction loan P1,000,000 10%
General loan 10,000,000 12%
The entity began the self-construction of a building on January 1, 2024 and the building was completed on December 31,
2024. The following expenditures were made during the year: January 1 – P1,000,000; July 1 – P2,000,000; November 1 –
P3,000,000. What amount should be reported as cost of the new building?
a. P6,300,000 b. P6,280,000 c. P6,000,000 d. P6,250,000

61. Buffet Company had the following outstanding loans during 2023 and 2024:
Specific construction loan – 10% P1,500,000
General loan – 12% 12,500,000
The company began the self-construction of a new building on January 1, 2023 and the building was completed on June 30,
2024. The following expenditures were made:
January 1, 2023 P2,000,000 December 1, 2023 P1,500,000
March 31, 2023 2,500,000 February 28, 2024 3,000,000
Based on the preceding information, which of the following statements is true?
I. The capitalizable interest for 2023 is P300,000.
II. The capitalizable interest for 2024 is P492,000.
III. The interest expense for 2023 is P1,200,000.
IV. The interest expense for 2024 is P1,008,000.
a. I and IV only b. I and III only c. II and IV only d. II and III only

62. Buffet Company uses sum-of-the-year’s digit method to depreciate equipment purchased July 2024 for P20,000. The
estimated useful life is four years while the residual value is P2,000. What is the Carrying Value of the equipment for year
2027?
a. P5,600 b. P3,600 c. P2,900 d. P900

63. On the first day of its current fiscal year, Buffet Company purchased an equipment costing P 400,000 with a salvage
value of P 80,000. Depreciation expense for the 1st year was P150,000. If Ethan company uses 150% declining balance
method of depreciation, what is the estimated useful life of the asset (rounded to the nearest year)?
a. 2 yrs b. 3 yrs c. 4 yrs d. 5 yrs

64. Buffet Company purchased a boring machine on January 1, 2023 for P162,000. The useful life of the machine is
estimated at three years with a residual value at the end of this period of P12,000. During its useful life, the expected units
of production from the machine are: 2023 – 24,000 units; 2024 – 14,000 units; 2025 – 10,000 units. What should be the
depreciation expense for the year ended December 31, 2024, using the most appropriate depreciation method permitted
by IAS 16, Property, Plant and Equipment?
a. P54,000 b. P50,000 c. P47,250 d. P43,750

65. The following items were listed at cost by Buffet Company and are depreciated according to the straight-line method:
12/31/2023 12/31/2024
Land P 2,000,000.00 P 2,000,000.00
Building 10,560,000.00 10,560,000.00
Machinery & Equipment 5,560,000.00 5,200,000.00
Total P 18,120,000.00 P 17,760,000.00
Accumulated Depreciation 3,200,000.00 3,200,000.00
Net Book Value P 14,920,000.00 P 14,560,000.00
Buffet depreciation expense for 2024 and 2023 were P 440,000 and P 400,000, respectively. Based on the data provided,
what is the debit to accumulated depreciation recorded in 2024?
a. P440,000 b. P400,000 c. P380,000 d. P0

---END OF THE EXAMINATION---

God bless! ☺

Remember Proverbs 3:5-6 “Trust in the Lord with all your heart, and do not lean on your own understanding. In all
your ways acknowledge him, and he will make straight your paths.” Be expectant of what God
prepared for you. The journey to success is never easy but it is all worth it!

Concentrate === Pray === Achieve

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