Question

Multiple Choice

1. At the reporting date, the carrying value of the cash-generating unit has been reduced by CU800. The unit includes the following assets: CU 4000 land; CU 3000 factory building; Goodwill CU 1000. The carrying amount of goodwill after the allocated impairment value is:

a. CU 200

b. CU 0

c. CU 1000

d. CU 900

2. As of December 31, 2018, PT Sensi chartered a vessel from PT Kapalindo for the eight-year period ending December 30, 2026. The same annual payment of CU500,000 is due on December 31 each year, starting with December 31, 2018. Charter is classified appropriately as the payment lease in PT Sensi's book. The present value as of December 31, 2018, of the eight lease payments over the lease term at a discount of 10% is CU2,934,213. Assuming all payments are made on time, the amount that must be reported by PT Sensi as the total liability for the finance lease in the statement of financial position on December 31, 2019, is:

a. CU3,000,000

b. CU 2,727,635

c. CU 2,500,397

d. CU2,177,634

3. PT Sensi leased equipment from PT Menara for the same four years amounting to CU344,152. with the first payment due at the beginning of the lease. The lease does not transfer ownership, nor is there a purchase price option. The equipment has a useful life of 4 years and there is no residual value. PT Sensi's incremental loan interest rate is 10% and the implicit interest rate for renters (which is known to PT Sensi) is 8%. PT Sensi uses the straight-line method for depreciation of similar assets. How much depreciation expense was recorded by PT Sensi in the first year of the asset's life? (Advance annuity PV for 8% 4 periods = 3.57710 and for 10% 4 periods = 3.48685)

a. CU284,968

b. CU300,000

c. CU307,767

d. CU 0 because the assets are depreciated by PT Sensi

4. The characteristics that distinguish goodwill from other intangible assets are:

a. Can be identified

b. Its nature as a monetary asset

c. Has a physical embodiment

d. Can be separated from the entity and sold individually

5. Which of the following is true?

a. The periodic inventory method of accounting will always result in a lower ending balance than the perpetual method.

b. The periodic method of accounting for inventory (periodic method) will always result in a higher ending balance than the perpetual method.

c. The relationship between ending inventory balances using the periodic method (periodic method) and the perpetual method (perpetual method) will depend on whether the FIFO method or weighted average method is used to value inventories.

d. The closing inventory is always the same according to the periodic method (periodic method) and the perpetual (perpetual method)

6. Which of the following is required to calculate depreciation: I. Estimated residual value, II. Estimated useful life; III. Revaluation cost or value; and IV. Depreciation method.

a. I, II, III and IV

b. I and III only

c. I, II and IV only

d. II and III only

7. The weighted average inventory cost method is particularly suitable for inventories where:

1. Homogeneous products are mixed together.
2. Goods have a different date of use and the goods that were produced for the first time must be sold at the earliest;
3. Different products are stored in separate locations;
4. The entity carries stock of raw materials, work in progress and finished goods;

Answer 1

1.b) CU 0

Explanation:The impairment value of CU 800 will first be fully allocated to goodwill then will be allocated in a pro rata basis to remaining assets.The goodwill was CU1000 so CU800 is fully alocated to goodwill and goodwill will reduce to CU 0

2.b) CU 2,727,635

Calculation: Balance on 1st jan 2019 = CU 2,934,213

  Add: Finance Cost @10% = CU 2,934,22

Less: Annual Payment = CU 500,000

Lease Liability on 31 Dec 2019 = CU 2,727,635

3.c) CU307,767

Calculation: (CU 344,152* Annuity Factor of 8% for 4 years.)/4 years

= ( CU 344,152 *3.57710 ) / 4 years = CU 1,231,066/4 = CU 307,767

4.d. Can be separated from the entity and sold individually

5.a. The periodic inventory method of accounting will always result in a lower ending balance than the perpetual method.

6.a) I, II, III and IV

7.a) Homogeneous products are mixed together.