BA 118.1 (D. Chua Bun Pho/D. Dy/K.

Dela Cruz)
IFRS for SMEs (Set 5)

1. Khalid, Inc., an SME, sold goods with list price of P

=1,000,000 to a customer on normal credit terms of 30
days interest-free credit. Ten days after the sale, the customer paid the entity = P690,000 in full as final
settlement of a debt that arose from the sale of the goods. The amount received from the customer
included =P50,000 VAT. The settlement amount is net of the following discounts: P =200,000 trade discount,
=100,000 volume rebate and P
P =10,000 prompt settlement discount. How is much the revenue from the
sale?

2. Mayer Corp., an SME, had the following borrowings during 2011. The borrowings were made for
general purposes but the proceeds were used to finance the construction of a new building.
PRINCIPAL INTEREST
12% bank loan P =3,000,000 P =360,000
14% bank loan 5,000,000 700,000

The construction began on January 1, 2011 and was completed on December 31, 2011. Expenditures on
the building were made as follows:
January 1 =2,000,000
P
June 30 2,000,000
December 31 1,000,000

Required: Compute the cost of the building.

3. Chance Co. compensates its employees for certain absences. Employees can receive one day vacation
plus one day sick leave for each month worked during the year. Unused vacation days may be carried
forward, but unused sick leave expires at the end of each year. Employees are compensated according to
their current pay rate. The following data were taken from the records for the year 2008.
Employee Start Date Earned SL Carryforward VL Taken in Current Pay
Taken in 1/1/08 2008 per Day
2008
D. Caesar 1/6/06 5 0 7 =70
P
F. Ocean 6/2/07 10 6 3 60
L. Sanchez 11/4/08 2 0 0 48
B. Urie 7/28/08 5 0 1 79

Required: Compute the amount that should be reported as a liability for compensated absences on
December 31, 2008.

4. The following data relate to the defined benefit pension plan of West Co. for the years 2007-2009:
Year Net Periodic Pension Employer Benefits Paid to Actual Return on Plan
Cost Contributions Retirees Assets
2007 =255,000
P =300,000
P =105,000
P =120,000
P
2008 300,000 300,000 114,000 150,000
2009 315,000 300,000 120,000 156,000

At December 31, 2006, the books of West Co. reflected accrued pension cost of =
P30,000. The fair value of
pension fund assets at that date was P
=1,380,000. The pension fund is administered by an independent
trustee.

Required:
1. Prepare the summary journal entries relating to the pension plan that would be required in the
books of West Co. for 2007, 2008 and 2009.
2. Determine the balance of the prepaid/accrued pension cost account at December 31, 2009.
Compute the fair value of pension fund assets as of December 31, 2009.