fin. acc. pre-acquisition[1]

fin. acc. pre-acquisition[1] - inventory located in the...

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FINANCIAL ACCOUNTING TEST BANK PPE ACQUISITION 1. On October 1, 2005, Bitoy Company purchased a machine for P250,000 that was placed in service on November 30, 2005. Bitoy incurred additional costs for this machine, as follows: Shipping 10,000 Installation 15,000 Testing 35,000 In Bitoy’s December 31, 2005 balance sheet, the machine’s cost should be reported at a. 250000 b. 295,000 c. 300,000 d. 310,000 2. On August 1, 2006, Bamco purchased a new machine on a deferred payment basis. A down payment of P100,000 was made and the balance is payable in P100,000 annually for 4 years. The current interest is 12%.The present value of an annuity at 12% for 5 years is 3.04 and the present value of an amount at the end of 5 th year at 12% is .064. The same machine could be acquired on cash basis at P400,000. Bamco should record the machine at a. 500,000 b. 400,000 c. 403,735 d. 303,735 EXCHANGE 1. To save transportation costs, X acquired its needed equipment in exchange of its
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Unformatted text preview: inventory located in the suppliers business place. The equipment acquired has cash price of P650,000. The inventory of X has cost of P550,000, and X paid P80,000 cash for the difference in fair value of the two assets in exchange. In the books of X, the exchange is to be accounted as resulting to a. gain of P20,000 b. loss of P20,000 c. gain of P30,000 d. loss of P30,000 2. X issued 100,000 of its common shares in the treasury stocks, in exchange for a delivery truck. The treasury stocks with P10 par were selling at P12 at date of exchange. The treasury shares were previously acquired at cost of P11/share. The delivery truck has cash price of P1,250,000. In the books of X, the exchange will result to a. gain of P150,000 b. loss of P50,000 c. gain of P50,000 d. no gain/no loss...
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