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Quiz No. 2 - Finals

On April 30, 2014, MANACSA Corporation for P30 per share all 200,000 of
LIWANAG Company’s outstanding ordinary share. On this date, Liwanag’s
balance sheet showed net assets of P5,000,000. Additionally, the fair
value of Liwanag’s net assets on the same date was P600,000 in excess
of their carrying amount.

1. What amount should SIOSA report as goodwill in its April 30, 2014
consolidated balance sheet?

A. P-0- B. P400,000 C. P600,000 D. P1,000,000

GARCIA Company has a broadcasting license that expires in 5 years. As

of January 1, 2011, the license has a carrying amount of P1,800,000. The
license is renewable and has already been renewed twice in the past.
During the current year 2011, the broadcasting authority has decided
that in the future it will auction the licenses when they came up for
renewal. As a result of this development the company’s renewal option
is no longer assured. The license has a remaining life of three years
as of January 1, 2011.

2. In the December 31, 2011 statement of financial position, how much

should be reported as the carrying value of the broadcast license?

A. P-0- B. P1,200,000 C. P1,600,000 D. P2,000,000

AGUILAR Inc., incurred P600,000 capitalizable costs to develop a

computer software during 2014. The software will earn total revenues
over its 5-year life as follows: 2014 – P500,000; 2015 – P600,000;
2016 – P600,000; 2017 – P200,000; and 2018 – P100,000.

3. What amount of computer software costs should be expensed in 2014?

A. P120,000 B. P135,000 C. P150,000 D. P600,000

SANTOS Inc., incurred P600,000 of capitalizable costs to develop

computer software during 2014. The software will be used internally
over its 5-year useful life.

4. What amount of computer software costs should be expensed in 2014?

A. P120,000 B. P135,000 C. P200,000 D. P600,000

GEREMILLO Products Company bought Special Product Division in 2010 and

approiately recorded P500,000 of goodwill related to the purchase. On
December 31, 2014, the fair value of Special Products Division is
P4,000,000 ans it is carried on Geramillo’s books for a total of
P3,400,000, including the goodwill. An analysis of Special Product
Division’s assets indicates that goodwill of P400,000 exists on
December 31, 2014.

What goodwill impairment should be recognized by Geremillo in 2014?

A. P-0- B. P50,000 C. P200,000 D. P300,000