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# Using the information given below, classify the elements, identify the measurement basis, and compute

## the following using the measurement principles of the conceptual framework:

Measurement - Measurement -
Account Title Amount Classification A B
Cash P120,000
Accounts receivable- gross 80,000
Notes receivable 90,000
Inventories 50,000
Non-current asset held for sale 32,000
Equipment (10 years life) 100,000
Machinery (10 years life) 130,000
Accumulated depreciation- equipment 30,000
Accumulated depreciation- machinery 39,000
Bonds payable 50,000
Notes payable 60,000
Accounts payable 45,000

Assumption A:
1. The notes receivable is due after three years with nominal interest of 5%. The note was received
on January 1, 2018 to yield 3%. Interest is to be collected annually.
2. Inventories are expected to be sold at P61,000 with cost to be incurred to sell of P12,000.
3. The non-current asset held for sale original carrying value was P40,000. At the end of 2018, the
fair value was at P36,000 with a cost to sell of P20,000.
4. The bonds payable is held primarily for trading purposes.

Assumption B:
1. The notes receivable is to be collected in three equal installment with nominal interest of 5%. The
note was received on January 1, 2018 to yield 3%.
2. Inventories are expected to be sold at P60,000 with cost to be incurred to sell P7,000.
3. The non-current asset held for sale original carrying value was P40,000. At the end of 2018, the
fair value was at P46,000 with cost to sell of P4,000.
4. The equipment and machinery are revalued at its replacement cost of P150,000 and P180,000,
respectively.
5. The bonds payable is held for collection until maturity.

## Using assumption A and B, answer the following questions:

1. How much is the total resources owned and controlled by the business?
2. How much is the total obligations of the business?
3. How much is the equity of the owners?
4. How much is the total amount reported at historical cost?
5. How much is the total amount reported at fair value?
6. How much is the total amount reported at current cost?
7. How much is the total amount reported at present value?