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Chapter 08

1. Northern Airline purchased gate rights at Newark Airport for $2,000,000 with a 5 year legal life, but has the option to extend every 10 years indefinitely. Northern would amortize the gate rights over 15 years. 2. Construction contracts include contracts for services directly related to building an asset, contracts for destroying or restoring an asset, and restoring the environment after demolition. 3. A special purpose statement prepared for an insolvent business to show its financial condition is a statement of affairs. 4. The relationship between parties in a joint arrangement that indicates a joint operation exists is joint control over the activities of the operation. 5. The functional currency is the currency of the primary economic

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164 views

Chapter 08

1. Northern Airline purchased gate rights at Newark Airport for $2,000,000 with a 5 year legal life, but has the option to extend every 10 years indefinitely. Northern would amortize the gate rights over 15 years. 2. Construction contracts include contracts for services directly related to building an asset, contracts for destroying or restoring an asset, and restoring the environment after demolition. 3. A special purpose statement prepared for an insolvent business to show its financial condition is a statement of affairs. 4. The relationship between parties in a joint arrangement that indicates a joint operation exists is joint control over the activities of the operation. 5. The functional currency is the currency of the primary economic

Uploaded by

Karlo D. Recla
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Northern Airline purchase airline gate rights at Newark International


Airport for P2,000,000 with a legal life of five years. However,
Northern has the ability and right to extend the rights every ten years
for an indefinite period of time. Over what period that Northern
amortized the gate rights?
a. 5 years c. 40 years
b. 15 years d. No amortization

2. Construction contracts include


I. Contracts for the rendering of services which are directly
related to the construction of asset
II. Contracts for the destruction or restoration of asset
III. Restoration of the environment following the demolition of asset
a. I and II b. I and III c. II and III d. I, II and
only only only III

3. A special-purpose statement prepared to show financial condition of an


insolvent business is the
a. Charge & Discharge Account c. Realization & Liquidation of
account
b. Deficiency statement d. Statement of affairs

4. The particular relationship between parties that signifies the


existence of a joint arrangement is
a. Significant influence by one party over the party
b. Control over the operating policies of one party by another party
c. Shared influence by two parties over the activities of another party
d. Joint control by the parties over the activities of an operations

5. This is the currency of the primary economic environment in which the


entity operates.
a. Reporting currency c. Presentation
b. Foreign currency d. Functional currency

6. On October 1, 2017 Emelda Co., a Philippine company, purchased


machinery from Grund, a German company, with payment due on April 1,
2018. If Emelda’s 2017 operating income include no foreign exchange
transaction gain or loss, then the transaction could have
a. Resulted in extraordinary gain
b. Been denominated in Philippine peso
c. Cause a foreign currency gain to be reported as a contra account
against the machinery
d. Cause a foreign currency translation gain to be reported as other
comprehensive income

7. Equivalent units of production are equal to the


a. Units completed by a production department in the period
b. Number of units worked on during the period by a production
department
c. Number of whole units that could have been completed if all work of
the period had been used to produced whole units
d. Identifiable units existing at the end of the period in a production
department

8. Scrap is defined as a
a. Finished unit of product that has no sales value
b. Residual of the production process that has limited sales value
c. Residual of the production process that can be reworked for sale as
an irregular unit of product
d. Residual of the production process that has no sales value

9. Which of the following investment is monetary?


a. Equity trading investment c. Available for sale investment
b. Debt trading investment d. Held to maturity investment

10. Consolidation elimination are entered into:

a. Both parent company’s and subsidiary’s accounting records


b. Neither the parent company’s nor the subsidiary’s accounting records
c. The parent company’s accounting records only
d. The subsidiary accounting records

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