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CANNON BALL REVIEW PART 3

I. PPE – INITIAL MEASUREMENT
a) Elements of cost are purchase price, costs directly attributable to operate the asset and
estimate of the costs of dismantling and removing the item and restoring the site on which it is
located.
b) If PPE is acquired by paying cash, the amount paid shall be capitalized. If two or more assets are
acquired at a single price, the purchase price shall be allocated by using the relative fair value
method. If only one asset has a determinable FV, that asset is measured at fair value and the
excess is the cost of the asset with an unknown FV.
c) If PPE is acquired by issuing shares the Asset shall be measured by the order of priority: 1st FV of
asset, 2nd FV of shares, 3rd Par value of stated value of shares.
d) If PPE is acquired by issuing bonds payable the Asset shall be measured by the order of priority:
1st FV of bonds, 2nd FV of the asset, 3rd Face value of Bonds Payable.
e) If PPE is acquired through a donation it shall be measured at the fair value of the asset.
However, any cost to transfer the title is deducted from the donated capital account and not
capitalized.
f) If PPE is acquired by an exchange the New Asset is measured by the order of priority: 1 st FV of
asset given, 2nd FV of asset received and 3rd BV of asset given. However, adjustments for cash
paid (plus) and cash received (minus) shall be made.
g) If PPE is acquired on account that is subject to a cash discount, the amount to be capitalized is
the net amount regardless whether the discount is taken or not.
h) If PPE is acquired through long-term financing the amount capitalized is the cash price. If the
cash price is not provided, the present value of cash flows shall be used.
i) If the exchange transaction lacks commercial substance, the new asset is measured at the book
value of the asset given.
j) If the asset is self-constructed, the asset is measured at the total cost incurred to construct the
asset meaning materials, labor and allocated overhead. Profits from savings shall not be
recognized as income. Also borrowing cost from funds borrowed is required to be capitalized.

Problems

1. Jacklord made the following individual cash purchases:

Land and building 6,000,000
Machinery and office equipment 1,800,000
Delivery equipment 500,000
The question of apportioning the cost of the purchases between the assets arose. An appraisal was made
which disclosed the following values:
Land 1,000,000
Building 3,000,000
Machinery 800,000
Office equipment 400,000
Delivery equipment 350,000

How much is the cost of the machinery purchased by Jacklord?

a. 1,200,000
b. 1,800,000
c. 1,000,000
d. 800,000
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2. Heighten Company acquired the assets of Jorge Company, which had discontinued operations. The following
values of the property are available:
Book Fair
Land 600,000 1,000,000
Building 3,600,000 5,000,000
Machinery 1,500,000 2,000,000
Heighten Company gave 60,000 shares of its P100 par value ordinary shares in exchange. The shares had a
quoted price of P200 per share on that date of purchase of the property. How much is the cost of the building
that Heighten purchased?
a. 5,000,000
b. 2,000,000
c. 1,500,000
d. 1,000,000

3. Leah Company acquired a welding machine with an invoice price of P3,360,000 subject to a cash discount of
5% which was not taken. Leah incurred freight and insurance during shipment of P50,000 and testing and in-
stallation cost of P200,000. Leah also incurred cost of P20,000 in removing the old welding machine prior to the
installation of the new one. Welding supplies were acquired at a cost of P100,000. The VAT on the acquisition
is P360,000. What is the cost of the welding machine?
a. 3,100,000
b. 3,250,000
c. 3,220,000
d. 3,400,000

4. Basil Company acquired two items of machinery as follows:

▪ On December 30, 2017, Basil Company purchased a machine in exchange for a non-interest-
bearing note requiring three payments of P1,000,000. The first payment was made on December 30,
2018, and the others are due annually on December 30. The prevailing rate of interest for this type
of note at date of issuance was 12%. The present value of an ordinary annuity of 1 at 12% is 1.69 for
two periods and 2.40 for three periods. The new machine was damaged during its installation and
the repair cost amounted to P50,000.
▪ On January 1, 2017, Basil Company acquired used machinery by issuing the seller a three-year,
noninterest-bearing note for P4,000,000. In recent borrowing, Basil has paid a 12% interest for this
type of note. The present value of 1 at 12% for 3 years is .71.
What is the total cost of the machinery?
a. 4,820,000
b. 4,530,000
c. 4,580,000
d. 5,240,000
5. During 2017, Harlem Company made the following property, plant and equipment expenditures:
Land and building acquired from Jameson Company 9,000,000
Repairs made to the building 300,000
Special tax assessment 50,000
Remodeling of office space including new partitions and walls 400,000
In exchange for the land and building acquired from Jameson, Harlem issued 60,000 shares of its P100 par
value ordinary shares. On the date of purchase, the stock had a market value of P150 per share and the land
and building had fair value of P2,000,000 and P6,000,000 respectively.
During the year, Harlem also received land from a shareholder to facilitate the construction of a plant in the city.
Harlem paid P100,000 for the land transfer and charged this amount to legal expenses. The land is fairly valued
at P1,500,000. What is the cost of the land and building acquired?
a. 3,800,000, and 7,450,000
b. 3,550,000, and 6,700,000
c. 3,500,000, and 6,400,000
d. 3,500,000, and 6,750,000
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6. In December 2017, Nash Company exchanged an old machine, which cost P6,000,000 and 50% depreciated,
for a used machine and paid a cash difference of P1,500,000. The fair value of the old machine was deter-
mined to be P2,000,000. What amount should Nash record the machine?
a. 6,000,000
b. 2,000,000
c. 3,500,000
d. 3,000,000
7. Marian Company and Xenia Company are fuel oil distributors. To facilitate the delivery of oil to customers, Mar-
ian and Xenia exchanged ownership of 5,000 barrels of oil without physically moving the oil. Marian paid Xenia
P2,000,000 to compensate for a difference in the grade of oil. It was reliably determined that the exchange
lacks commercial substance because the configuration of the cash flows of the asset received does not dif-
fer from the configuration of the cash flows of the asset transferred. On the date of exchange, cost and fair
value of oil were:
Marian Company Xenia Company
Cost 45,000,000 40,000,000
Fair value 51,000,000 53,000,000
1. What amount should Marian Company record the oil inventory received in exchange?
a. 45,000,000
b. 47,000,000
c. 51,000,000
d. 53,000,000
2. What amount should Xenia Company record the oil inventory received in exchange?
a. 40,000,000
b. 38,000,000
c. 42,000,000
d. 51,000,000

ANSWERS: A, A, A, D, B, C, B, D

II. Government Grants

a) Assistance by government in the form of transfers of resources to an entity in return for past or future com-
pliance with certain conditions relating to the operating activities of the entity. They exclude those forms of
government assistance which cannot reasonably have a value placed upon them and transactions with gov-
ernment which cannot be distinguished from the normal trading transactions of the entity.
b) Grants for the purpose of specific expenses – This should be deferred and recognized as income in the
same period as the relevant expense.
c) Grants related to depreciable assets are usually recognized as income over the periods and in the propor-
tions in which depreciation on those assets is charged. Either by deducting the grant from the cost of the
asset or as deferred income.
d) Grants related to non-depreciable assets may also require the fulfillment of certain obligations and would
then be recognized as income over the periods which bear the cost of meeting the obligations. As an exam-
ple, a grant of land may be conditional upon the erection of a building on the site and it may be appropriate to
recognize it as income over the life of the building.
e) A government grant that becomes receivable as compensation for expenses or losses already incurred or
for the purpose of giving immediate financial support to the entity with no future related costs shall be recog-
nized as income of the period in which it becomes receivable.
f) Repayment of Government Grant
• If a grant becomes repayable, it should be treated as a change in estimate.
• If the grant is recorded as a deferred income, the repayment should be applied first against any related
unamortized deferred income (the balance of the deferred income), and the difference shall be recognized
as expense.
• Where the original grant related to an asset, the repayment should be treated as increasing the carrying
amount of the asset or reducing the deferred income balance.
• The cumulative depreciation which would have been charged had the grant not been received should be
charged as depreciation expense.
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Problems

1. On January 1, 2017 Union Company received a grant of P10,000,000 from the British government in order to
defray safety and environmental costs within the area where the enterprise is located. The safety and envi-
ronmental costs are expected to be incurred over four years, respectively, P1,000,000, P2,000,000, P2,000,000
and P3,000,000. How much income from the government grant should be recognized in 2017?
a. 2,000,000
b. 1,000,000
c. 10,000,000
d. 1,250,000

VII. On January 1, 2017, Carroll Company received a grant of P1,000,000 from the Philippine Government for
the construction of a laboratory and research facility with a total cost of P6 million and a useful life 5
years and no residual value. The facility was completed in early of 2017. Carroll Company recorded
the grant as deferred revenue upon the receipt.

1. What should Carroll Company include in its 2017 income statement an income from the government grant?
a. 500,000
b. 100,000
c. 200,000
d. 240,000

2. If the grant becomes repayable in full in 2019 because Carroll is not able to comply with the conditions re-
quired for the grant, what is the amount of loss to be recognized in the income statement?
a. 1,000,000
b. 600,000
c. 400,000
d. 500,000

3. Assuming that Carroll Company recorded the grant as a deduction towards the capital cost of the asset,
what is the depreciation expense to be recorded in 2017?
a. 1,200,000
b. 1,000,000
c. 900,000
d. 800,000

ANSWERS: D, C, C, C

III. LAND AND BUILDING

a) If land and building is acquired at a single price and the old building is not usable, the entire cost is capital-
ized as land only.
b) If the old building is usable, for example it has a determinable fair value. The entire purchase price is allo-
cated between the two elements regardless whether the old building has a future use or not.
c) The demolition cost of the old building shall be capitalized as cost of the new building to be constructed net
of the salvage value from scrap.
d) The allocated cost of the old building capitalized shall be written off as a loss if the property is classified as
either PPE or Investment Property but capitalized if the property is Inventory.
e) Other cost of the land shall include direct cost such as nonrecoverable taxes and title search including cost of
survey, option money for land that is acquired, unpaid taxes and mortgages assumed, special assessment
and cost of permanent improvements such as the cost of filling, grading, levelling and landscaping.
f) Payments to tenants of existing lease contracts are now capitalized as cost of the new building.
g) Temporary improvements meaning concrete structures that are subject to depreciation and may be replaced
sometime in the future is capitalized as land improvement.
h) This includes the cost of trees, plants and other landscaping. However, in US GAAP they are capitalized as
land. But not in Philippine GAAP where it is land improvements.
 PAGE 5
P1. The following expenditures were incurred by Pinky Company in 2017:
Purchase of land with existing building 10,500,000
Fair value of old building 500,000
Land survey 400,000
Fees for title search for title of land 300,000
Building permit 250,000
Temporary quarters for construction crews 100,000
Payments of tenants of old building for vacating the premises 600,000
Payment to demolition company to raze the old building and clean up 400,000
Excavating basement 350,000
Special assessment tax for street project 60,000
Salvage value of materials from old building 110,000
Damages awarded for injuries sustained in construction 90,000
Costs of construction 20,000,000
Cost of paving parking lot adjoining the building 180,000
Cost of shrubs, trees and other landscaping 40,000
1. What is the cost of the land?
a. 11,860,000 c. 11,690,000
b. 11,750,000 d. 10,760,000
2. What is the cost of the building?
a. 20,700,000 c. 20,970,000
b. 20,880,000 d. 21,590,000
P2. Land and an old building was acquired from a seller by Casio Company at 4,000,000 as the new location for an
expansion office south of Metro Manila. The land had a fair value of P4,050,000 and the building had a fair
value of P450,000. The old building was also demolished at the end of the reporting period at a cost of
P100,000. Additional cost incurred in connection with the land, applicable taxes and other cost are as follows:
Title search and insurance 200,000
Documentary stamp tax 70,000
Transfer Tax 25,000
Land registration fees 15,000
Construction materials purchased in advance for construction 2,000,000
Proceeds of scrap from old building 30,000
Perimeter fencing 50,000
Cost of signage and other land improvements 140,000
Cost of drainage works and building plumbing 150,000
Filling, leveling and landscaping 300,000
1. What is the total cost of the land?
a. 4,410,000 c. 3,800,000
b. 4,160,000 d. 4,210,000
2. What is the total cost of the land improvements?
a. 640,000 c. 560,000
b. 190,000 d. 490,000
P3. Paula Company has purchased land for construction of buildings to be held for sale in the ordinary course of
business. The following costs were incurred in purchasing the property and constructing the building:
Land and building purchase price 2,500,000
Fair value of the old building on the land 300,000
Payment of delinquent property taxes 100,000
Title search and insurance 50,000
Special assessment for city improvements water and sewer 150,000
Building permit 30,000
Cost to destroy existing building (P10,000 worth of salvaged
material sold as scrap) 60,000
Contract cost of new building 7,000,000
Land improvements 500,000
Sidewalks and parking lot 200,000
 PAGE 6

The depreciated value of the old building on the books of the company from which the land was purchased
was P300,000. The old building was never used by Paula. What is the cost of the land and building as inven-
tory?
a. 10,580,000
b. 9,880,000
c. 10,280,000
d. 10,430,000
P4. Razor Company, a newly formed corporation, incurred the following expenditures related to land and building:
Cost of land, which included an old apartment building appraised at P500,000 3,000,000
Fee for title search 100,000
Payment to tenants for vacating old building 500,000
Payment for delinquent property taxes assumed by the purchaser 200,000
Removal of apartment building 50,000
Salvaged materials retained by the demolition company 10,000
Cost of grading, leveling and other landscaping 150,000
Architect fees on new building 200,000
Payment to building contractors 10,000,000
Interest cost on specific borrowing incurred during construction 500,000
Payment of medical bills of employees accidentally injured while inspecting
building construction 180,000
Cost of paving driveway and parking lot 40,000
Fences surrounding the property 20,000
Cost of installing lights in the parking lot 50,000
Premium for insurance on the building during construction 250,000
Cost of open house party to celebrate opening of new building 60,000
1. What is the cost of the land?
a. 3,950,000 c. 4,000,000
b. 3,000,000 d. 2,950,000
2. What is the cost of the building?
a. 11,500,000 c. 10,950,000
b. 10,000,000 d. 10,990,000
P5. Jerald Company uses many kinds of machines in its operation. The company constructs some of these ma-
chines itself and acquires others from manufacturers. The following information relates to a machine that was
acquired on January 1, 2017.
Cash paid for machine, including VAT of P96,000 896,000
Cost of transporting machine 30,000
Labor cost of installment by expert fitter 50,000
Labor cost of testing machine 40,000
Insurance cost for 2017 15,000
Cost of training for personnel who will use the machine 25,000
Cost of safety rails and platform surrounding the machine 60,000
Cost of water device to keep the machine cool 80,000
Cost of adjustment to machine to make it operate more efficiently 75,000
How much should be capitalized as cost of the machine?
a. 1,135,000 c. 1,160,000
b. 1,231,000 d. 1,150,000

ANSWERS: D, D, D, B, A, D, A, A
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IV. BORROWING COST
a) Interest and other costs incurred by an enterprise in connection with the borrowing of funds. Interest
expense calculated using the effective interest method, finance charges in respect of finance leases,
exchange differences arising from foreign currency borrowings to the extent that they are regarded as an
adjustment to interest costs.
b) Borrowing cost is required to be capitalized for Qualifying Assets which are assets that takes a substantial
period of time to get ready for its intended use.
c) If the borrowing cost is from specific borrowings, the amount of the actual interest incurred less investment
income from temporary investments of excess borrowings shall be capitalized.
d) If the borrowing cost is from general borrowings, the amount capitalizable is the weighted average
expenditures times the average capitalization rate. However, the amount of borrowing cost to be capitalized
shall not exceed the actual interest incurred.
e) If it is a combination of both, the specific borrowing is deducted from the weighted average expenditures
before multiplying to the capitalization rate.
f) The second and succeeding periods shall include the cumulative amount capitalized including the borrowing
cost from last year as part of the weighted average expenditures to be weighted at the beginning of the
current year.
g) If the construction is completed before yearend, the denominator to compute for the weighted average
expenditures shall be the number of months of construction instead of 12 calendar months.

Problems

1. Lolita Company entered into a P10,000,000 fixed contract with Constructors Company on January 1, 2017 for
the construction of a new building. On January 1, 2017, Lolita obtained a loan of P10,000,000 at an interest
rate of 12% to finance specifically the construction. Availment from the loan may be made quarterly at unequal
amounts. Actual interest incurred for 2017 was P900,000. Prior to their disbursement, the proceeds from the
loan were temporarily invested and earned interest income of P50,000. The building was completed on De-
cember 31, 2017. Additional costs incurred during the construction were P200,000 for plans, specifications and
blueprint, and P350,000 for architectural design and supervision. What is the total cost of the building?
a. 11,400,000 c. 10,000,000
b. 11,450,000 d. 10,550,000
2. Nada Company had the following borrowings during 2017. The borrowings were made for general purposes but
the proceeds were used in part to finance the construction of a new building:
Principal Interest
12% bank loan 10,000,000 1,200,000
15% long-term loan 20,000,000 3,000,000
The construction began on January 1, 2017 and was completed on December 31, 2017. Expenditures on the
building were made as follows:
January 1 8,000,000
June 30 8,000,000
December 31 4,000,000
What is the amount of borrowing cost to be capitalized?
a. 1,680,000 c. 1,400,000
b. 4,200,000 d. 1,620,000
3. Nida Company had the following loans outstanding during the years 2016 and 2017:
Specific construction loan 2,000,000 10%
General loan 15,000,000 12%
The company began self-construction of a building on January 1, 2016 and was completed on December 31,
2017. The following expenditures were made during 2016 and 2017:
January 1, 2016 2,000,000
July 1, 2016 4,000,000
November 1, 2016 3,000,000
July 1, 2017 1,000,000
10,000,000
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1. What is the total cost of the building on December 31, 2017?
a. 10,000,000 c. 11,700,000
b. 11,660,000 d. 10,840,000
2. What is the 2017 interest expense?
a. 540,000 c. 840,000
b. 960,000 d. 360,000
4. Norma Company had the following outstanding loans during 2016 and 2017:
Specific construction loan – 10% 3,000,000
General loan – 12% 25,000,000
Norma Company began the self-construction of a new building on January 1, 2016 and building was completed
on September 30, 2017. The following expenditures were made in 2016 and 2017:
January 1, 2016 4,000,000
April 1, 2016 5,000,000
December 1, 2016 3,000,000
July 1, 2017 6,000,000
What is the cost of the new building on September 30, 2017?
a. 18,900,000 c. 18,700,000
b. 20,196,000 d. 20,260,000

ANSWERS: A, A, B, C, B

V. DEPRECIATION AND DEPLETION

a) Allocating the depreciable amount (cost less residual value) as expense or cost of another asset (overhead)
over the useful life of the asset.
b) Straight-line method: DA divided by useful life
c) Composite method: Total cost times Composite rate (total annual depreciation divided by total cost) or Total
depreciable amount divided by composite life (total depreciable amount divided by total annual depreciation)
d) If an asset is sold under the composite method, no gain or loss is recognized. The difference between the
proceeds and cost is debited to accumulated depreciation.
e) SYD Method: DA x Remaining Life / SYD (1 plus Life divided by 2 times Life)
f) Double or 150% Declining Method: Cost time 2 over life, Book Value time 2 over life and if the rate is multi-
plied to the book value and a portion of the residual value is depreciated simply deduct the residual value
from the book value.
g) Total cost of the wasting asset is the (1) Acquisition Cost (2) Exploration cost (3) Intangible Development
Cost and (4) PV of the Restoration Cost.
h) Depletion base is total cost less residual value. And the rate under the production or output method is Deple-
tion Base divided by total estimated output.
i) Total Depletion is Rate x Actual current year Output.
j) Depletion Expense or Depletion in Cost of Sales is Rate x Units Sold.
k) Assets subject to depreciation used in the wasting asset is depreciated as follows:
• If the depreciable asset has a future use, the asset is depreciated using its own useful life under the
same depreciation methods for similar assets.
• If the depreciable asset has no future use, but the useful life is shorter than the life of the asset, the asset
will again be depreciated using its own useful life under the same depreciation methods for similar as-
sets. If the life of the wasting asset is shorter, the production method shall be used
• A problem shall arise if there is a shutdown because depreciation on an asset shall not cease because it
is idle. Depreciate the asset using straight-line over its remaining life at the time of shutdown.

Problems

1. On January 1, 2016, Bianca Company purchased an equipment with a cost of P1,000,000. It is expected that
this equipment will be used for 5 years and have a residual value at that time of P100,000. It is also expected
that this equipment can produce 150,000 units of Bianca’s products. In 2016 and 2017, this equipment produced
20,000 and 25,000 units respectively.
 PAGE 9
1. What is the accumulated depreciation on this equipment on December 31, 2017 under the straight-line
method of depreciation?
a. 270,000 c. 540,000
b. 640,000 d. 360,000

2. What is the accumulated depreciation on this equipment on December 31, 2017 under the SYD method of
depreciation?
a. 270,000 c. 540,000
b. 640,000 d. 360,000

3. What is the accumulated depreciation on this equipment on December 31, 2017 under the double-declining
balance method of depreciation?
a. 270,000 c. 540,000
b. 640,000 d. 360,000

4. What is the accumulated depreciation on this equipment on December 31, 2017 under the production meth-
od of depreciation?
a. 270,000 c. 540,000
b. 640,000 d. 360,000

5. During 2014 Macy Company purchased an equipment with a cost of P1,500,000. It is expected that this equip-
ment will be used for 5 years and have a residual value at the end of its useful life of P300,000. It is also ex-
pected that this equipment can produce 200,000 units of Macy’s products. Macy’s policy is to take a full year’s
depreciation in the year of acquisition and no depreciation in the year the asset is sold. In 2014, 2015 and 2016,
this equipment produced 50,000, 30,000 and 40,000 units respectively. Macy sold the equipment early in 2017
for P900,000. What is the gain on sale recognized in 2017?
a. 500,000
b. 320,000
c. 240,000
d. 120,000

6. A schedule of plant assets owned by Oren Company is presented below.

Depreciable Annual Deprecia-
Cost Scrap Life
cost tion
Building 8,800,000 800,000 8,000,000 20 years 400,000
Machinery 3,200,000 320,000 2,880,000 15 years 192,000
Equipment . 640,000 640,000 5 years 128,000
Total 12,640,000 11,520,000 720,000
Oren computes depreciation on the straight-line method. The composite life of the assets should be
a. 19.8
b. 13.3
c. 18.0
d. 16.0

7. Ollen Company uses the composite method of depreciation and has a composite rate of 25%. During 2017, it
sold assets with an original cost of P500,000 and a residual value of P100,000 for P300,000 and eventually ac-
quired P900,000 of new assets with a residual value of P150,000. Information regarding the original group of
assets as of January 1, 2017 is presented below:
Total cost 5,000,000
Total residual value 800,000
Accumulated depreciation 1,000,000
What was the depreciation expense recorded by Ollen Company in 2017?
a. 1,000,000
b. 1,312,500
c. 1,350,000
d. 1,100,000
 PAGE 10
8. On April 1, 2016, Ofelia Company bought machinery under a contract that required a down payment of
P500,000 plus 24 monthly payments of P300,000 for total payments of P7,700,000. The cash price of the ma-
chinery was P6,500,000. The machinery has an estimated useful life of four years and estimated residual value
of P500,000. Ofelia uses SYD method of depreciation. In its 2017 income statement, what amount should Ofe-
lia report as depreciation for this machinery?
a. 2,400,000
b. 1,800,000
c. 1,950,000
d. 2,275,000
9. On January 1, 2015, Ozzie purchased a large quantity of laptop computers for their associates. The cost of
these computers was P10,000,000. On the date of purchase, the management estimated that the computers
would last approximately 6 years and would have a residual value at that time of P550,000. The company used
the sum-of-years’ digit method of depreciation. During 2017, the management realized that technological ad-
vancements and the volume of files being uploaded had made the computers virtually obsolete and that they
would have to be replaced sooner. Management decided to depreciate the computers using the double declin-
ing balance method of depreciation with no change in useful life and residual value. What is the depreciation
to be recognized for the year 2017?
a. 2,525,000
b. 2,250,000
c. 1,683,333
d. 1,125,000

10. Mona Company acquired property in 2017, which contains mineral deposit. The acquisition cost of the property
was P20,000,000. Geological estimates indicate that 5,000,000 tons of minerals may be extracted. It is further
estimated that the property can be sold for P5,000,000 following mineral extraction. At a discounted value of
P2,000,000, Mona is legally required to restore the land to a condition appropriate for resale. After acquisition,
the following costs were incurred:
Exploration cost 13,000,000
Development cost related to drilling of wells 10,000,000
Development cost related to production equipment 15,000,000
The company extracted 600,000 tons of the mineral in 2017 and sold 450,000 tons.
1. What is the total depletion for 2017?
a. 4,800,000
b. 3,600,000
c. 5,400,000
d. 4,050,000
2. What is the depletion expense for 2017?
a. 4,800,000
b. 3,600,000
c. 5,400,000
d. 4,050,000
11. Owen Company acquired a mineral right for P30,000,000 in January 2016. The mine has removable ore esti-
mated at 4,000,000 tons. After it has extracted all the ore, Owen will be required by law to restore the land to its
original condition at an estimated cost of P2,000,000. Owen believes that the property can be sold afterwards
for P5,000,000. Early in 2016, roads were constructed and other development costs were incurred to aid in the
extraction and transportation of the mined ore at a cost of P6,000,000. In 2016, 200,000 tons were mined and
sold. On December 31, 2017, a new survey made by a new mining engineer indicated that 5,000,000 tons were
available for mining. In 2017, 225,000 tons were mined and only 150,000 tons were sold. How much depletion
was included in the 2017 cost of sales?
a. 1,350,000
b. 1,410,750
c. 940,500
d. 900,000
 PAGE 11
12. On July 1, 2017 Olga Company purchased rights to a mine. The total purchase price was P50,000,000 of which
P5,000,000 was allocated to the land. Estimated reserves were 6,000,000. Olga expects to extract and sell
100,000 tons per month. Olga Company purchased new equipment on July 1, 2017 for P21,000,000 with esti-
mated life of 8 years. However, after all the resource is removed, the equipment will be of no use and will be
sold for P3,000,000. What is the depreciation of the equipment for 2017?
a. 1,800,000
b. 2,100,000
c. 1,125,000
d. 3,600,000
13. Odessa Company constructed a building costing P15,000,000 on a mine property. The building has an esti-
mated useful life of six years with no residual value. After all the resources are removed expectedly over five
years, the building will be of no use. The estimated recoverable output from the mine is 1,000,000 tons. During
the first year, Odessa produced 200,000 tons but there was a shutdown and no output in the second year. In
the third year, Odessa resumed operations and produced 300,000 tons. What is the depreciation in the third
year on the building for Odessa Company?
a. 3,000,000
b. 2,500,000
c. 3,600,000
d. 4,500,000
14. The following account balances are recorded in the books of Lavelle Company at the end of 2017:
Retained earnings 5,000,000
Capital liquidated 2,000,000
Accumulated depletion 8,000,000
Current year depletion on 200,000 units extracted at a rate of 20 per unit 4,000,000
Ending inventory of finished goods (30,000 units) 2,400,000
What is the maximum dividends that Lavelle Company can declare for 2017?
a. 5,000,000
b. 13,000,000
c. 12,400,000
d. 10,400,000

15. In 2014, Bourne Mining Company purchased property with natural resources for P62,000,000. The property
was relatively close to a large city and had an expected residual value of P9,000,000. The following infor-
mation relates to the use of the property:
(a) In 2014, Bourne spent P4,000,000 in development costs and in 2015, P3,000,000 in buildings on the
property. Bourne does not anticipate that the buildings will have any utility after the natural resources are
depleted.
(b) In 2015 and 2017, P3,000,000 and P7,900,000, respectively were spent for additional development on the
mine.
© The tonnage mined and estimated remaining tons for the years 2014 to 2018 are as follows:
Year Tons Extracted Estimated Tons Remaining
2014 0 5,000,000
2015 1,500,000 3,500,000
2016 1,800,000 2,200,000
2017 1,700,000 1,400,000
2018 1,400,000 0
1. How much is the depletion in 2017?
a. 18,000,000 c. 14,000,000
b. 17,000,000 d. 18,900,000
2. How much is the depreciation expense on the building in 2017
a. 633,400 c. 945,000
b. 900,000 d. 600,000

ANSWERS: D, C, B, A, D, D, C, C, A, A, B, A, A, C, D, B, A
 PAGE 12

VI. REVALUATION AND IMPAIRMENT

a) Revalued amount is the fair value or the depreciated replacement cost.
b) Replacement cost equals the percentage of accumulated depreciation based on the original depreciable
amount multiplied by the depreciable amount of the replacement cost.
c) Revalued amount less book value equals revaluation surplus (OCI) at gross or pretax.
d) Pretax revaluation surplus amount less the 30% deferred tax liability equals post tax revaluation surplus.
e) Either pretax revaluation surplus or post-tax revaluation surplus divided by remaining useful life of revalued
asset equals amount to be transferred to retained earnings.
f) If the asset is sold, the entire revaluation surplus is transferred to RE.
g) Impairment loss equals recoverable amount less book value or carrying amount.
h) Recoverable amount is the higher amount between value in use and FV less cost of disposal.
i) PPE and IA with definite life are tested for impairment when there are indicators.
j) IA with indefinite life and CGU with GW are tested annually.
k) If a CGU is impaired, the impairment loss is first charged to goodwill the excess is allocated to other assets
based on book values unless the recoverable amount of specific asset is determinable. In such case, the
impairment loss will only equal to the difference of the carrying amount and the recoverable amount.
l) Changes specifically increases in the recoverable amount at a later date will require the reversal of the
impairment. However, the gain shall amount to the increase in carrying amount that will not cause the
asset’s new carrying amount to exceed the supposed carrying amount if the impairment loss was not
recognized.
m) If a revalued asset is impaired, the impairment is first charged to the remaining balance of revaluation
surplus and the excess is the only amount charged to impairment loss.

Problems

1. The following account balances relating to property, plant and equipment of Daryl Company appear on the
books on December 31, 2016:
Land 6,000,000
Building 60,000,000
Accumulated depreciation 24,000,000
Plant, property and equipment have been carried at cost since their acquisition. The land was acquired 15
years ago while the building’s construction was completed on January 1, 2007. The straight-line method for
depreciation is used and the building is depreciated over its 25-year useful life with no residual value. On Jan-
uary 1, 2017, the company revalued property, plant, and equipment. On the same date, contracted profession-
al appraisers submitted the following information regarding the replacement cost of the land and the building:

Land 9,000,000
Building 80,000,000

1. What is the revaluation surplus on January 1, 2017?

a. 15,000,000
b. 13,000,000
c. 10,000,000
d. 8,000,000

2. What is the revaluation surplus on December 31, 2017?

a. 14,000,000
b. 13,800,000
c. 14,200,000
d. 11,600,000

3. What is the depreciation on the building for the year ended December 31, 2017?
a. 3,000,000
b. 4,000,000
c. 5,000,000
d. 3,200,000
 PAGE 13
2. Cotton Company acquired a building on January 1, 2013 at a cost of P20,000,000. The building has an esti-
mated life of 10 years and residual value of P4,000,000. The building was revalued on January 1, 2017 and the
revaluation revealed replacement cost of P30,000,000, residual value of P5,000,000 and revised life of 12
years. The entity’s tax rate is 30%

1. What is the revaluation surplus on January 1, 2017?

a. 6,400,000
b. 3,900,000
c. 2,730,000
d. 4,480,000

2. What is the revaluation surplus on December 31, 2017?

a. 3,920,000
b. 5,600,000
c. 3,412,500
d. 2,388,750

3. What is the depreciation on the building for the year ended December 31, 2017?
a. 1,600,000
b. 1,875,000
c. 2,500,000
d. 2,000,000

3. Adelle Company finished construction of its building on January 1, 2013 at a total cost of P25,000,000. The
building was depreciated over its estimated useful life of 20 years using the straight-line method with no resid-
ual value. The building was subsequently revalued on December 31, 2016 and the revaluation report showed
that the asset had a replacement cost of P32,000,000 and was determined to have no change in its useful life.
Adelle’s tax rate is 30%. On January 1, 2018, the building was tested for recoverability and the fair value was
determined to be P18,000,000 on this date, with no change on its remaining useful life.

1. What amount of revaluation surplus will be recognized on December 31, 2016?

a. 5,600,000
b. 3,920,000
c. 3,675,000
d. 5,250,000

2. What is the revaluation surplus on December 31, 2017?

a. 3,675,000
b. 8,400,000
c. 7,875,000
d. 5,250,000

3. What amount of impairment loss shall be recognized in 2018?

a. 750,000
b. 6,000,000
c. 2,325,000
d. 4,000,000

4. What is the depreciation on the building for the year ended December 31, 2017?
a. 1,125,000
b. 1,200,000
c. 1,600,000
d. 2,000,000
 PAGE 14
4. During December 2017, Quintessential Company determined that there had been a significant decrease in
market value of its equipment. At December 31, 2017, Quintessential compiled the following information con-
cerning the equipment:

Original cost 10,000,000

Accumulated depreciation 3,000,000
Expected undiscounted net future cash inflows from the
continued use and eventual disposal 6,000,000
Expected discounted net future cash inflows from the
continued use and eventual disposal 4,800,000
Fair value less cost to sell 4,000,000

What is the impairment loss that should be reported in the 2017 income statement?
a. 1,500,000
b. 3,000,000
c. 1,000,000
d. 2,200,000

5. Everlast Company had purchased equipment for P10,000,000 on January 1, 2016. The equipment had a 10-
year life and a residual value of 500,000. Everlast Company depreciated the equipment using the straight-line
method. On December 31, 2017, Everlast questioned the recoverability of the carrying amount of this equip-
ment. On December 31, 2017, the undiscounted expected net future cash flows related to the continued use
and eventual disposal of the equipment totaled P6,000,000. The equipment’s fair value less cost to sell on De-
cember 31, 2017 is P4,500,000, while the discounted cash flows related to the equipment is P5,000,000. After
the asset was tested for impairment it was determined that the useful life did not change with no residual value.
What is the carrying value of the equipment on December 31, 2018?
a. 4,375,000
b. 3,937,500
c. 7,150,000
d. 5,250,000

6. Caliber Company reported an impairment loss of P4,000,000 in its income statement for the year ended 2016.
This loss was related to an item of property, plant and equipment which was acquired on January 1, 2015 with
cost of P25,000,000, useful life of 10 years and no residual value. On the December 31, 2016 statement of fi-
nancial position, Caliber reported this asset at P16,000,000 which is the fair value on such date. On December
31, 2017, Caliber determined that the fair value of its impaired asset had increased to P19,000,000. The
straight-line method is used in recording depreciation of this asset. What amount of gain on impairment recov-
ery should Caliber report in its 2017 income statement?
a. 5,000,000
b. 3,500,000
c. 1,500,000
d. 0

7. On December 31, 2017, Ella Company’s only cash generating unit was tested for impairment. Information to
the assets of the cash generating unit is presented below:
Building 2,500,000
Equipment 1,500,000
Machinery 1,000,000
Goodwill 500,000
It was determined that the cash generating unit has a recoverable amount of P3,500,000 and the building’s fair
value is P2,000,000.

1. What is the impairment loss to be recognized on the building?

a. 750,000
b. 800,000
c. 500,000
d. 700,000
 PAGE 15

2. What is the impairment loss to be recognized on the equipment?

a. 900,000
b. 450,000
c. 400,000
d. 600,000

3. What is the impairment loss to be recognized on the machinery?

a. 400,000
b. 900,000
c. 600,000
d. 300,000

ANSWERS: A, C, D, D, A, B, B, A, A, B, D, A, B, C, D, A

VII. INTANGIBLE ASSETS

Patents
• An exclusive right granted by the government to an inventor to control the manufacture, use or sale of an
invention
• Cost – Licensing and registration fees only for APPLIED AND REGISTERED patents and purchase price
and any directly attributable expenditure necessary in preparing the asset for its intended use for PUR-
CHASED PATENTS.
• Principles on amortization:
▪ Amortization is based on the useful life or legal life (20 years), whichever is shorter.
▪ If a competing patent is acquired to protect an original patent. The cost of the new patent and the
carrying amount of the original patent is amortized over the remaining life of the original patent.
▪ If a related patent is acquired to extend the life of an existing patent. The cost of the new patent and
the carrying amount of the original patent is amortized over the extended period, unless if the remain-
ing life of the new patent is shorter than the extended period.

1. Susan Company acquired three patents in January of 2017. The patents have different lives as indicated in the
following schedule:
Cost Remaining useful life Remaining legal life
Patent A 2,000,000 8 5
Patent B 3,000,000 10 15
Patent C 5,000,000 Indefinite 8
Patent C is believed to be uniquely useful as long as the company retains the right to use it. In June 2017, the
company successfully defended its right to Patent C. Legal fees of P1,000,000 were incurred in this action.
The company’s policy is to amortize intangible assets by the straight-line method to the nearest half-year. The
company reports on a calendar-year basis. What is the total amount of amortization that should be recognized
for 2017?
a. 1,325,000
b. 1,550,000
c. 1,625,000
d. 1,000,000

2. Heir Company purchased a patent on January 1, 2014, for P6,000,000. The patent’s remaining legal life was 15
years expiring on December 31, 2028, however it was determined that due to the competitive nature of the
product that the patent will only be valid for 10 years. During 2017 Heir determined that the economic benefits
of the patent would not last longer than eight years from the date of acquisition. What amount should be re-
ported in the statement of financial position as patent, net of accumulated amortization, at December 31, 2017?
a. 4,400,000
b. 3,360,000
c. 3,675,000
d. 3,600,000
 PAGE 16
3. On January 2, 2014, Carmine Company purchased a patent for a new consumer product for P5,000,000. At the
time of purchase, the patent was valid for 15 years. However, the patent’s useful life was estimated to be only
10 years due to the competitive nature of the product. On December 31, 2017, the product was permanently
withdrawn from sale under governmental order because of a potential health hazard in the product. What is the
total amount that Carmine should charge against income during 2017, assuming amortization is recorded at the
end of such year?
a. 3,000,000
b. 2,000,000
c. 3,500,000
d. 500,000
4. On January 1, 2014, Trina Company after incurring P5,000,000 worth of extensive research and development
for their new product line, registered Patent A at a cost of P800,000. Due to the competitive nature of Trina’s
industry, it was assessed that the useful life of the patent was only eight years. Since that time, Trina’s competi-
tors had taken strides in developing product lines that would equal Trina’s breakthrough. It was only on De-
cember 31, 2016 that Trina took action to protect itself and purchased Patent B, the most immediate threat to
Patent A’s survival at a cost of P2,000,000. The value of Patent B was evident because Trina’s product engi-
neers estimated that the remaining useful life of Patent B was ten years from the date of acquisition. What is
the total amortization expense recorded by Trina in 2017?
a. 500,000
b. 300,000
c. 250,000
d. 1,125,000
Goodwill
• An unidentifiable intangible asset that allows an enterprise to earn above normal income.
• It is only purchased goodwill that is recognized as an asset which is the cost in excess of the fair value of
the net assets acquired in a business combination. This the premium paid in acquiring another business or
ordinary shares when control is achieved.
• Internally generated goodwill shall not be recognized as an asset.
• Methods of estimating goodwill
a. Capitalization of “average excess earnings”
b. Capitalization of “average earnings”
c. Purchase or multiples of “average excess earnings”
d. Present value of “average excess earnings”
EXAMPLE: Let’s assume that a buyer is planning to buy the business of a competitor. The cumulative net
earnings for the past 5 years were P18,000,000. The current value of net assets of the seller was 10,000,000
only. Meaning if the buyer is able to acquire the assets and assume the liabilities at fair value, the purchase
price would only be 10,000,000. But let us say that buyer will account for the past performance of the seller and
determine it as a contributor to additional income in the future from the purchase of the seller’s business.
Goodwill is determined by the following assuming a 20 percent rate of return and a 25% capitalization rate?
Average earnings (18M / 5) 3,600,000
Less: Normal earnings (10M x 20%) 2,000,000
Excess earnings or earnings from goodwill 1,600,000
Capitalized at 25% or divided by 25%
Goodwill 6,400,000
➢ The purchase price will then be 16,400,000 which is the price at fair value plus the
goodwill added to the fair value.
➢ A multiplier of let’s say 3 years if the “multiples of excess earnings” is used or a PV
factor of 3.17 if the discount rate is 10% and 4 periods shall be used to compute for
goodwill if for example the “PV of excess earnings” will be used.
Average earnings (18M / 5) 3,600,000
Capitalized at 25% or divided by 25%
Purchase price 14,400,000
➢ Remember from above that 2M came from the net assets and 1.6M came from
goodwill. That’s why if you add the two together the 3.6M comes from the net assets
with the goodwill or simply the purchase price.
 PAGE 17

5. Sherrie Company purchased Houston Company for P7,500,000 cash. A schedule of the market value of Hou-
ston’s assets and liabilities as of the purchase date follows.
Cash 50,000
Accounts receivable 800,000
Inventory 1,350,000
Property, plant and equipment 4,300,000 6,500,000

Current liabilities 800,000

Note payable – bank (long-term) 1,200,000 2,000,000
Net asset market value 4,500,000
What amount of goodwill shall recognize goodwill from the acquisition?
a. 1,000,000 c. 950,000
b. 3,000,000 d. 0
6. Simone Company engaged your services to compute the goodwill in the purchase of Barker Company January
1, 2017, which provided the following:
Net income Net assets
2013 1,400,000 6,000,000
2014 1,600,000 8,000,000
2015 2,000,000 8,800,000
2016 2,200,000 9,200,000
It is agreed that goodwill is measured by capitalizing excess earnings at 25% with normal return on average net
assets at 15%. How much is the purchase price for Barker Company?
a. 11,600,000 c. 11,200,000
b. 10,400,000 d. 11,000,000
7. The owners of Jello Company are planning to sell the business to new interests. The cumulative net earnings
for the past 3 years was P7,000,000 including casualty loss of P500,000. The current value of net assets of
Jello Company was P22,000,000. Goodwill is determined by capitalizing average earnings at 10%. What is the
amount of goodwill?
a. 1,333,333 c. 3,000,000
b. 1,800,000 d. 1,250,000
Trademark
• An exclusive right granted by the government that permits the use of distinctive symbols, labels, and de-
signs associated with the product or the organization.
• Cost – Licensing and registration fees only for developed trademarks Cost of research, survey, design and
development cost is expensed.
• The legal life of a trademark is 10 years however it may be renewed for an additional 10 year period for an
unlimited number of times. Therefore the legal life of a trademark is indefinite and is not subject to amorti-
zation but instead tested for impairment.
8. On January 1, 2017, Kris Company acquired the following intangible assets:
* A trademark for P2,000,000. The trademark has 8 years remaining in its legal life. It is anticipated
that the trademark will be renewed in the future indefinitely, without a problem.
* A patent for P4,000,000. Because of market conditions, it is expected that the patent will have an
economic life for just 5 years, although the remaining legal life is ten years.
Because of a decline in the economy, the trademark us now expected to generate cash flows of just P120,000
per year. The useful life of the trademark still extends beyond the foreseeable horizon. The cash flows ex-
pected to be generated by the patent are P500,000 annually for each of the next 4 years. The appropriate dis-
count rate for all intangible assets is 8%. The present value 1 at 8% for four periods is .74 and the present val-
ue of an ordinary annuity of 1 at 8% for four periods is 3.31. What is the total impairment loss for the intangible
assets?
a. 2,045,000 c. 2,845,000
b. 1,545,000 d. 1,980,000
 PAGE 18
Computer Software
• If the software is an integral part of the hardware for example the operating system of the PC, the
cost of the software shall be included in hardware cost
• Internally developed (whether for use or sale) charge to expense until technological feasibility is
achieved
• Cost to develop the software shall be capitalized once technological feasibility is reached either from
the creation of a “working model or a detailed program design”. Probable future benefits, intent and
ability to use or sell the software, resources to complete the software, and ability to measure cost are
also requirements for capitalization.
• Development activities have concluded and commercial production shall commence once the final or
“beta” version of the software has been produced. In accounting specially in US GAAP, the final ver-
sion is known as the “product master”
• The amortization method for computer software should reflect the pattern in which the asset’s future
economic benefits are expected to be consumed by the entity. If such pattern cannot be determined
reliably, the straight-line method is used.

9. During 2017, Sarah Company incurred costs to develop and produce a routine low-risk computer software
product as follows:
Completion of detailed program design or working model 1,500,000
Cost incurred for coding and testing to establish technological feasibility 500,000
Other coding costs after establishment of technological feasibility 2,500,000
Other testing costs after establishment of technological feasibility 2,000,000
Costs of producing product master for training materials 3,000,000
Duplication of computer software and training materials from product master 4,000,000
Packaging of product 1,000,000
1. In the December 31, 2017 statement of financial position, what amount should be capitalized as software
cost subject to amortization?
a. 7,500,000 c. 9,500,000
b. 4,500,000 d. 8,000,000
2. In the December 31, 2017 statement of financial position, what amount should be reported as inventory?
a. 5,000,000 c. 4,000,000
b. 7,000,000 d. 6,500,000
Leasehold Improvements
• Permanent upgrading on leased property under an operating lease.
• This is a tangible asset by nature, however classified as an intangible asset because it’s an asset where
the ownership is not with the lessee who constructed or added the cost to the leased property but owner-
ship is with the lessor since the improvements cannot be detached or taken by the lessee at the expiration
of the leaseterm. This will be subject to amortization.
• If the lease contract is nonrenewable, the LHI is simply amortized using the shorter period between the re-
maining leaseterm and the useful life of the LHI.
• If the lease is renewable, the additional period shall be added to the remaining leaseterm if the extention
option has already been exercise or the intention to renew is certain. This total period will be the one
compared to the life of the LHI.
10. On January 1, 2013, Sugar Corporation signed a ten-year lease for an office space. Sugar has the option to
renew the lease for an additional five-year period on or before December 31, 2017. Sugar finished the con-
struction of general improvements to the leased premises at costing of P2,100,000 on January 1, 2016 with a
useful life of 10 years and opted to depreciate these leasehold improvements using the straight-line method.
At December 31, 2016, Sugar’s intention as to exercise the renewal option is uncertain. Sugar took a full
year’s depreciation in 2016. In 2017, it was decided by management to exercise the renewal option stated in
the contract. What is the depreciation expense on the leasehold improvement in 2017?
a. 300,000 c. 150,000
b. 200,000 d. 210,000
 PAGE 19
Research and Development Expense
• Cost incurred during product development and charged as expensed as incurred.
• Product development only relates to new products and services being created by the entity. This does not
include the routine improvements and modification to existing products.
• Due to the uncertainty of such experimental activities all cost shall be charged to expense unless PPE or IA
are acquired with an alternative future use. In such case the cost shall be capitalized and only the
depreciation or amortization is charged to R and D expense.
• Once technological feasibility is achieved, cost is now capitalized as intangible asset such as “formula”,
“model” or “prototypes”.
• Also, contractually reimbursable research and development cost is treated as a receivable.

11. Summer Company incurred research and development costs in 2017 as follows:

Equipment acquired for use for various research and development projects 6,000,000
Depreciation on the above equipment 1,200,000
Materials used 3,000,000
Compensation costs of personnel 4,000,000
Outside consulting fees 1,500,000
Indirect costs appropriately allocated 1,300,000

What is the 2017 total research and development expense?

a. 11,000,000 c. 9,700,000
b. 15,800,000 d. 9,800,000

12. Humble Company incurred the following costs during 2017:

Quality control during commercial production, including routine

testing of products 500,000
Laboratory research aimed at discovery of new knowledge 700,000
Testing for evaluation of new products 300,000
Engineering follow-through in an early phase commercial production 1,000,000
Adaptation of an existing capability to a particular requirement or
customer’s need as part of continuing commercial activity 200,000
Trouble-shooting in connection with breakdowns during
commercial production 800,000
Searching for application of new research findings 450,000

What was Humble Company’s research and development expense for 2017?
a. 2,150,000 c. 1,450,000
b. 700,000 d. 1,150,000

13. In 2017, James Company incurred the following costs that are related with its research and development activi-
ties:

Direct costs of doing contract research and development work for the
government to be reimbursed by the local government unit 5,000,000
Research and development costs not included in the above were:
Depreciation 4,000,000
Salaries 2,000,000
Materials 1,500,000
Utilities 900,000
Indirect cost appropriately allocated 300,000

What was DDD’s total research and development expense in 2017?

a. 8,700,000 c. 9,700,000
b. 13,700,000 d. 12,500,000
 PAGE 20
14. Ronald Company started its research and development project on a new fiber optic cable capable of greater
bandwidth and full duplex voice calls on March 1, 2016. Total cost incurred before reaching technological fea-
sibility amounted to P4,000,000, while development cost amounted to P5,000,000 before year end. Prior to
commercial production, Ronald paid legal and registration fees amounting to P1,000,000 in filing for a patent on
the new product on July 1, 2016. Development activities were completed early in January of 2017 after addi-
tional development cost of P2,000,000. The patent filed in 2016 was also approved during January and is valid
until December 31, 2036. However, Ronald expects technological advancements will render the new product
virtually obsolete by December 31, 2021. However, Ronald plans to develop a new product by that time and
apply for a new patent for the upgraded fiber optic cable by the end of 2021. Total cost related to commercial
production incurred during 2017 amounted to P30,000,000.

1. What is the total amortization to be recorded by Ronald on its intangible assets in 2017?
a. 1,600,000
b. 600,000
c. 1,450,000
d. 200,000

2. What is the carrying amount of the patent on December 31, 2017?

a. 950,000
b. 800,000
c. 700,000
d. 900,000

ANSWERS: A, D, C, A, B, A, C, A, A, A, B, A, C, A, A, B

- - END - -