Interim Financial Reporting 485 с. the best estimate of the weighted average annual income tax rate expected for the full financial year. a the best estimate of the weighted average annual income tax rate expected for the interim period. 10. If an entity changes an accounting estimate during an interim period, the change shall be applied as at the beginning of that interim period where the change occurred. b. as at the beginning of the current year. as at the end of the interim period where the change a. C. occurred. d. as at the end of the current year. PROBLEM 5: MULTIPLE CHOICE - COMPUTATIONAL 1. Farr Corp. had the following transactions during the quarter ended March 31, 20X7: Loss from rare earthquake Payment of fire insurance premium for calendar year 20X7 100,000 P 70,000 What amount should be included in Farr's income statement for the quarter ended March 31, 20X7? Casualty loss 70,000 Insurance expense a. 100,000 b. 70,000 25,000 С. 17,500 25,000 d. 100,000 (AICPA) 2. Vilo Corp. has estimated that total depreciation expense for the year ending December 31, 20X6, will amount to P60,000, and that 20X6 year-end bonuses to employees will total P120,000. In Vilo's interim income statement for the six months ended June 30, 20X6, what is the total amount of expense relating to these two items that should be reported? amount of these expenses should be included in Rex's quarterly income statement for the three months ended June b. 30,000 с. 90,000 d. 180,000 a. 0 (AICPA) 3. On March 15, 20X4, Rex Company paid property taxes of P180,000 on its factory building for calendar year 20X4 o April 1, 20X4, Rex incurred costs of P300,000 that are to benefit the remainder of the calendar year. What total expected 30, 20X4? b. 145,000 c. 195,000 d. 345,000 a. 75,000 (AICPA) 4. Wilson Corp. experienced a P50,000 decline in the value of its inventory in the first quarter of its fiscal year. Wilson had expected this decline to reverse in the third quarter, and in fact, the third quarter recovery exceeded the previous decline by P10,000. Wilson's inventory did not experience any other declines in value during the fiscal year. What amounts of loss and/or gain should Wilson report in its interim financial statements for the first and third quarters? First quarter Third quarter a. 10,000 gain 50,000 gain 60,000 gain b. С. 50,000 loss d. 50,000 loss (AICPA) 5. On February 2, Flint Corp's Board of Directors committed to plan to sell its frozen food component and to sell the component's assets on the open market as soon as possible. As a result, the component's operations and cash flows will be eliminated from the entity's operations and the entity will have no significant continuing post-disposal involvement in the component's operations. The division reported net operating losses of P20,000 in January and P30,000 in February. On February 26, sale of the division's assets resulted in a gain of P90,000. What amount of gain from disposal of a