Professional Documents
Culture Documents
Set A
Set A
December 31,
2007 2008
Reese uses the percentage-of-completion method as the basis for income recognition. For the
years ended December 31, 2007, and 2008, respectively, Reese should report gross profit of
2007
a. 600,000;
b. 7,800,000;
c. 1,800,000;
d. 3,000,000
In 2007, Crane Corporation began construction work under a three-year contract. The contract price is
2,400,000. Crane uses the percentage-of-completion method for financial accounting purposes. The
income to be recognized each year is based on the proportion of costs incurred to total estimated costs
for completing the contract. The financial statement presentations relating to this contract at December
31, 2007, follow:
Balance Sheet
Income Statement
a. 100,000;
b. 140,00;
c. 20,000;
d. 240,000
4. What was the initial estimated total income before tax on this contract?
a. 300,000;
b. 320,000;
c. 400,000;
d. 480,000
5. Eaton Construction Co. uses the percentage-of-completion method. In 2007, Eaton began work
on a contract for 3,300,000 and it was completed in 2008. Data on the costs are:
For the years 2007 and 2008, Eaton should recognize gross profit of
2007 2008
a. 0 1,290,000;
b. 774,000 516,000;
c. 810,000 480,000;
d. 810,000 1,290,000
6. A bankruptcy is a
A. Involuntary reorganization;
B. Liquidation;
C. Voluntary reorganization;
D. Bankruptcy in which all creditors receive payment in full.
7. The Greenminded Bank loaned P50,000 to Legendary Company. The loan is secured by inventory
with a book and fair value of P60,000 and P40,000, respectively. What amount will the bank receive
if unsecured creditors receive 30% of their claims?
A. P10,000;
B. P40,000;
C. P37,000;
D. P50,000
8. Bakakon Company owes P250,000 on a note payable plus P9,000 in interest to its bank. The note
is secured by inventory with a book value of P170,000 and a fair value of P130,000. What amount
will the bank received if unsecured creditors receive 65% of their claims?
A. P213,850;
B. P214,500;
C. P170,000;
D. P130,000
9. Mondragon Company owes P35,000,000 on the mortgage of its building to Rural Bank. The
building has a net book value of P40,000,000 and a fair value of P38,000,000. When Mondragon
Company file for liquidation, it owed interest of P190,000; when the building is sold for
P38,000,000, the interest due on the mortgage is P400,000. What amount will the bank receive if
the unsecured creditors received 75% of their claims?
A. P35,000,000;
B. P35,400,000;
C. P35,300,000;
D. P35,190,000
10. Americano Co. has been forced into bankruptcy and liquidated. Unsecured claims will be paid at
the rate of P0.35 on the peso. Diamond Co. holds a non-interest bearing note receivable from
Filipino Co. in the amount of P70,000, collateralized by machinery with a liquidation value of
P30,000. The total amount to be realized by Gold on this note receivable is:
A. P70,000;
B. P44,000;
C. P40,000;
D. P30,000
11. Land and buildings having a book value of P150,000 and a fair value of P185,000 are
transferred to a creditor in a troubled debt restructuring to fully settle a loan of P200,000
plus accrued interest of P3,000. What is the amount of the gain on restructuring?
a. P35,000;
b. P53,000 ;
c. P15,000;
d. P18,000
12. January 1, 2012, Duke Company negotiated an agreement to modify the terms of a
P500,000 note with P38,000 of accrued interest. Payments of P25,000 cash will be made
each quarter end up to and including June 30, 2016. Which of the following is true about
this troubled debt restructuring?
13. On January 1, 2012, Duke Company negotiated an agreement to modify the terms of a
P500,000 note with P38,000 of accrued interest. Payments of P35,000 including interest
will be made each quarter end up to and including June 30, 2016. Which of the following
is true about this troubled debt restructuring?
14. Under a troubled debt restructuring that results in a modification of terms the debtor will
report interest expense when
15. In a troubled debt restructuring where the debtor elects to transfer an equity interest to a
creditor in exchange for the satisfaction of an outstanding debt:
a. The debtor may recognize a gain on restructure when the market value of the
equity interest is greater than the book value of the debt plus any accrued
interest.;
b. The debtor may recognize a gain on restructure when the market value of
the equity interest is less than the book value of thedebt plus any accrued
interest.;
c. Any difference between market value of equity interest and book value of the
debt plus accrued interest must be recorded inRetained Earnings.;
d. Any difference between market value of equity interest and book value of the
debt plus accrued interest must be recorded in Additional Paid in Capital in
Excess of Par.
a. Multiple stakeholders;
b. Revenue orientation;
c. Multiple objectives;
d. Transparency
19. H&M, the Swedish fashion retailer, has partnered with WaterAid to launch the H&M for
Water collection for the Summer 2013 range, modelled by global superstar, Beyoncé,
with 25% of sales from the H&M for Water collection donated to H&M for
WaterAid. This marketing activity is referred to as:
a. Organization marketing;
b. Person marketing;
c. Cause-related marketing;
d. Place marketing
a. Business enterprise;
b. Public sector;
c. Campaigning organization;
d. Social enterprise