TEST BANK- INTERMEDIATE Financial Accounting part 1B | Q&A 2026 update|

2026

, TABLE OF CONTENTS
CHAPTER 12
INVESTMENTS IN ASSOCIATES .............................................................. 1
CHAPTER 12: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION
PURPOSES).............................................................................................. 1
CHAPTER 12: THEORY OF ACCOUNTS REVIEWER........................................ 6
CHAPTER 12 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 23

CHAPTER 13
AGRICULTURE ....................................................................................... 24
CHAPTER 13: MULTIPLE CHOICE – COMPUTATIONAL (FOR CLASSROOM INSTRUCTION PURPOSES) 24
CHAPTER 13: THEORY OF ACCOUNTS REVIEWER...................................... 28
CHAPTER 13 - SUGGESTED ANSWERS TO REVIEW THEORY QUESTIONS ........ 34


CHAPTER 14
PROPERTY, PLANT AND EQUIPMENT (PART 1) ................................ 35
CHAPTER 14: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION
PURPOSES)............................................................................................ 35
CHAPTER 14: THEORY OF ACCOUNTS REVIEWER...................................... 40
CHAPTER 14 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 50


CHAPTER 15
PROPERTY, PLANT AND EQUIPMENT (PART 2) ................................ 52
CHAPTER 15: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION
PURPOSES)............................................................................................ 52
CHAPTER 15: THEORY OF ACCOUNTS REVIEWER...................................... 58
CHAPTER 15 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 79


CHAPTER 16
DEPLETION OF MINERAL RESOURCES ................................................ 80
CHAPTER 16: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION
PURPOSES)............................................................................................ 80
CHAPTER 16: THEORY OF ACCOUNTS REVIEWER...................................... 84
CHAPTER 16 – SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 91


CHAPTER 17
GOVERNMENT GRANTS ........................................................................ 92
CHAPTER 17: MULTIPLE CHOICE – COMPUTATIONAL (FOR CLASSROOM INSTRUCTION PURPOSES) 92
CHAPTER 17: THEORY OF ACCOUNTS REVIEWER...................................... 94
CHAPTER 17 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS102


CHAPTER 18
BORROWING COSTS ............................................................................ 103
CHAPTER 18: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION
PURPOSES).......................................................................................... 103
CHAPTER 18: THEORY OF ACCOUNTS REVIEWER.................................... 105
CHAPTER 18 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS114


CHAPTER 19
INVESTMENT PROPERTY ................................................................... 115
CHAPTER 19: MULTIPLE CHOICE – COMPUTATIONAL (FOR CLASSROOM INSTRUCTION PURPOSES) 115
CHAPTER 19: THEORY OF ACCOUNTS REVIEWER.................................... 120



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, CHAPTER 19 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS127


CHAPTER 20
INTANGIBLE ASSETS ........................................................................... 128
CHAPTER 20: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION
PURPOSES).......................................................................................... 128
CHAPTER 20: THEORY OF ACCOUNTS REVIEWER.................................... 134
CHAPTER 20 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS155


CHAPTER 21
IMPAIRMENT OF ASSETS ................................................................... 156
CHAPTER 21: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION
PURPOSES).......................................................................................... 156
CHAPTER 21: THEORY OF ACCOUNTS REVIEWER.................................... 164
CHAPTER 21 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS170




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, Chapter 12
Investments in Associates

Chapter 12: Multiple choice – Computational (SET B) – (For classroom
instruction purposes)

Equity method – Cost equal to fair value of interest acquired
Use the following information for the next five questions:
On January 1, 20x1, ABASE Co. purchased 20,000 shares of the 100,000 total
outstanding shares of PRAISE, Inc. for ₱4,000,000. PRAISE’s assets and liabilities
approximate their fair values. In 20x1, PRAISE, Inc. reported profit of
₱12,000,000 and declared and paid cash dividends of ₱800,000.

In 20x2, PRAISE reported loss of ₱8,000,000, declared and issued 10% stock
dividends, and reported gain on property revaluation of ₱2,000,000 and loss on
exchange differences on translation of foreign operations of ₱400,000.

1. How much is the share in profit or loss of the associate in 20x1?
a. 2,240,000 b. 2,400,000 c. 160,000 d. 0

2. How much is the carrying amount of the investment as of December 31, 20x1?
a. 4,000,000 b. 6,240,000 c. 6,400,000 d. 6,560,000

3. How much is the investment income (loss on investment) to be recognized in
profit or loss in 20x2?
a. (1,280,000) b. 400,000 c. (1,600,000) d. 320,000

4. How much is the net share in the other comprehensive income of the
associate in 20x2?
a. 320,000 b. (1,280,000) c. (1,280,000) d. 0

5. How much is the carrying amount of the investment as of December 31, 20x2?
a. 4,960,000 b. 4,640,000 c. 4,000,000 d. 0

Equity method – Cost exceeds fair value of interest acquired
Use the following information for the next three questions:
On January 1, 20x1, ABET Co. purchased 25% interest in the ordinary shares of
ENCOURAGE, Inc. for ₱8,000,000. ENCOURAGE’s assets and liabilities
approximate their fair values except for inventories with carrying amount of
₱2,000,000 and fair value of ₱400,000 and depreciable asset with carrying
amount of ₱12,000,000 and fair value of ₱20,000,000. The remaining useful life of
the depreciable asset is 10 years. ENCOURAGE’s net assets has a book value of
₱20,000,000.

On December 31, 20x1, ENCOURAGE reported ₱4,800,000 profit and declared
and paid dividends of ₱2,000,000.

6. How much is the goodwill that will be subsumed in the carrying amount of the
investment?
a. 1,400,000 b. 1,250,000 c. 1,100,000 d. 0

7. How much is the net share in the profit or loss of the associate (investment
income) in 20x1?



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