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Material 6 Inventories Other Investments.. Lucky Version Part 1
Material 6 Inventories Other Investments.. Lucky Version Part 1
18. If P900,000 is put in a savings account today, what amount 27. On December 31, 2014, Dolphin’s investment in real
will be available six years from now? property has a carrying value of 3,600,000 under the fair
a. P900,000 x 0.6302 c.P900,000 x 0.6302 x 0.9259 value model, before considering market value adjustment.
b. P900,000 x 1.08 x 1.4693 d. P900,000 x (1.08 + 1.4693) If the fair market value at December 31, 2014 is
3,000,000,how much shouldbe the gain or loss on transfer
19. What amount will be in a bank account three years from if Dolphin company would shift to the cost model?
now if P500,000 is invested each year for four years with a. Gain of 600,000 reported as other comprehensive
the first investment to be made today? income
a. P1,656,050 c. 1,788,534 b. Loss of 600,000 reported as other loss in the income
b. P2,433,300 d. 2,253,050 statement
c. Loss of 600,000 reported in equity as decrease in
20. What amount should an individual have in a bank account revaluation surplus
today before withdrawal if P200,000 is needed each year d. Zero
for four years with the first withdrawal to be made today
and each subsequent withdrawal at one-year intervals? Use the following information for next two numbers- On
(The balance in the bank account should be zero after the January 2, 2014, Mighty Company converted its occupied
fourth withdrawal.) property to investment property that is to be carried at fair
a. P613,140 c. P662,420 value. The carrying value of the property in the company’s book
b. P715,400 d. P901,220 is P4, 000,000.
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Deposit made with vendor and charged to spoilage or wastage occurred. Each unit of finished goods
purchases in October. The goods contains one unit of raw materials.
were shipped in January 2013 8,000 d. Inventories are stated at cost are as follows:
Deposit made with vendor and charged to Raw materials- according to the FIFO method
Purchases in November 29 and were Direct Labor- At an average rate determined by
included in the physical inventory as correlating total direct labor cost with effective
goods in transit 22,000 production during the period.
Shipments received in November and included Manufacturing overhead – at an applied rate of 150%
in the physical count at November 30 but of direct labor cost.
recorded as December purchases 30,000 43. The raw materials inventory as of December 31, 2007
Due to carelessness of the receiving a. 1,976,000 c. 936,000
department, a December shipment was b. 1,352,000 d. 897,800
damaged by rain. These goods were later
sold at cost in December 40,000 44. The work in process inventory as of December 31,2007 is
Based on the preceding information, determine the following: a. 1,780,000 c. 1,885,565
38. Adjusted net purchases b. 1,751,294 d. 1,776,000
a. up to November 30: 2,666,000; up to December 31,
3,190,000 45. The finished goods inventory as of December 31,2007 is
b. Up to November 30: 2,700,000; up to December 31, a. 3,352,000 c. 3,553,130
3,164,000 b. 3,334,000 d. 3,284,588
c. up to November 30: 2,696,000; up to December 31,
3,186,000 46. The cost of goods sold for the year ended December
d. Up to November 30: 2,704,000; up to December 31, 31,2007 is
3,184,000 a. 16,897,000 c. 15,857,000
39. Cost of Goods sold for 11 months ended November 30, b. 16,568,304 d. 16,875,000
2012
a. 2,688,000 c. 2,666,000 47. In a manufacturing company, which of the following audit
b. 2,670,000 d. 2,692,000 procedures would give the least assurance of the valuation
40. Gross profit ratio for 11 months ended November 30, 2012 of inventory at the audit date?
a. 21.58% c. 20.94% a. Testing the computation of standard overhead rates.
b. 21.47% d. 20.82% b. Examining paid vendors’ invoices.
41. Gross profit for the month of December 2012 c. Reviewing direct labor rates
a. 92,136 c. 91,236 d. Obtaining information of inventories pledged under
b. 83,760 d. 88,000 loan agreements
42. Estimated inventory at December 31, 2012
a. 491,760 c. 456,000 Problem- Kubica uses the perpetual inventory system,
b. 490,000 d. 455,120 Kubica’s inventory transactions for August 2011 were as
follows: (note: n/a means not applicable)
Problem 3- During your audit of records of the ADB Month Explanation Units Unit price Amount
Corporation for the year ended December 31, 2007,the Aug 1 Beg. Invty 20 4.00 80.00
following facts were disclosed: Aug 7 Purchases 10 4.20 42.00
Raw Materials inventory, 1/1/2007 P 720,200 Aug 10 Purchases 20 4.30 86.00
Raw Material purchases 5,232,800 Aug 12 Sales 15 ? ?
Direct Labor 6,300,000 Aug 16 Purchases 20 4.60 92.00
Manufacturing overhead applied (150% of Aug 20 Sales 40 ? ?
direct labor) 9,450,000 Aug 28 Sales Returns 3 ? ?
Finished goods inventory, 1/1/2007 1,240,000
Selling Expenses 8,112,800 48. Using this information, assume that Kubica uses the FIFO
Administrative expenses 7,377,200 cost flow method and that the sales returns relate to the
Your Examination disclosed the following additional August 20 sales. The sales returns should be costed back
information: into inventory at what unit cost?
a. Purchases of Raw materials a. 4.00 c. 4.20
Month Units Unit price Amount b. 4.30 d. 4.60
1/1-2/28 55,000 17.76 976,800 49. Assuming that, Kubica uses the weighted average cost flow
3/1-4/30 45,000 20.00 900,000 method, the August 12 sales should be costed at what unit
5/1-6/30 25,000 19.60 490,000 cost?
July-August 35,000 20.00 700,000 a. 4.16 c. 4.07
Sept–Oct 45,000 20.40 918,000 b. 4.06 d. 4.00
Nov-Dec 60,000 20.80 1,248,000
b. Data with respect to quantities are as follows: Biological Assets Section-
Units 50. Green Thumb Company had a plantation that is likely to be
Explanation 1/1/2007 12/31/2007 harvested and sold in 30 years. The income should be
Raw Materials 35,000 ? accounted for in the following way:
Work in Process a. No income should be reported until first harvest and
(80% completed) 0 25,000 sale in 30 years.
Finished Goods 15,000 40,000 b. Income should be measured annually and reported
Sales 205,000 units using a fair value approach that recognizes and
c. Raw materials are issued at the beginning of the measures biological growth.
manufacturing process. During the year, no returns,
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c. The eventual sale proceeds should be estimated and July 1, 2010
matched to the profit and loss account over the 30 1 year old 3,000
year period. January 1, 2010:
d. The plantation forest should be valued every five years 1 year old 3,000
and the increase in value should be shown in the 2-year old 4,000
statement of gains and losses. The entity has had problems during the year. Contaminated
milk was sold to customers. As a result, milk consumption has
51. When agricultural produce is harvested, the harvest should gone down. The entity’s business is spread over different parts
be accounted for by using PAS 2- Inventories or another of the country. The only region affected by the contamination
applicable Philippine accounting standard. For PAS 41, cost and were healthy. The entity feels that it cannot measure the
at the date of harvest is deemed to be fair value of the cows in the region because of the problems
a. Its fair value less estimated point of sale costs at point created by the contamination. There are 600 cows and 200
of harvest heifers in the Batangas farm and all these animals had been
b. The historical cost of the harvest purchased on January 1, 2010.
c. The historical cost less accumulated depreciation 54. What is the fair value of biological assets on January 1,
d. Market value 2010?
a. 9,300,000 c. 9,600,000
52. All of the following are classified as agricultural produce, b. 8,400,000 d. 7,200,000
except? 55. What is the fair value of the biological Assets purchased on
a. Sugar c. Wool July 1, 2010?
b. Cotton d. Milk a. 2,250,000 c. 3,000,000
e. all of these b. 3,750,000 d. 3,375,000
56. What is the fair value of biological assets on December 31,
53. Which of the following information should be disclosed 2010?
under PAS 41? a. 14,550,000 c. 15,750,000
a. Separate disclosure of the gain or loss relating to b. 15,225,000 d. 11,850,000
biological assets and agricultural produce. 57. What is the increase in fair value of biological Assets on
b. The aggregate gain or loss arising on the initial December 31, 2010?
recognition of biological assets and agricultural a. 3,000,000 c. 5,250,000
produce and the change in fair value less cost to sell of b. 4,950,000 d. 6,150,000
biological assets. 58. What is the increase in fair value of biological assets due to
c. The total gain or loss from biological assets, physical change?
agricultural produce and from changes in fair value less a. 1,260,000 c. 1,740,000
cost to sell of biological assets. b. 3,000,000 d. 1,440,000
d. There is no requirement in the Standard to disclose
separately any gains or losses. 59. Elisha Company is a producer of coffee. On December 31,
2012, the entity has harvested coffee beans costing P3,
Problem 1- Farmland Company produces milk on its 000, 000 and with fair value less cost to sell of P3, 500, 000
farms. The entity produces 20% of the community’s milk that is at the point of harvest. Because of long aging and
consumed. Farmland Company owns 5 farms and had a stock of maturation process after harvest, the harvested coffee
2,100 cows and 1,050 heifers. The farms produce 800,000 beans were still on hand on December 31, 2013. On such
kilograms of milk a year and the average inventory held is date, the fair value less cost to sell is P3,900,000 and the
15,000 kilograms of milk. However, on December 31, 2010, the net realizable value is P3,200,000. What is the
entity is currently holding 50,000 kilograms of milk in powder. measurement of the coffee beans inventory on December
On December 31, 2010, the herds are: 31, 2013?
Purchased on or Before January 1, 2010 a. 3,000,000 c. 3,500,000
3 years old 2,100 cows b. 3,200,000 d. 3,900,000
Purchased on January 1, 2010 60. The following pertains to Smile Company’s biological
2 years old 300 heifers assets:
Purchased on July 1, 2010 Price of the asset in the market 5,000
1.5 years old 750 heifers Estimated commissions to brokers
No animals were born or sold during the current year. The unit and dealers 500
fair value less cost to sell is as follows: Estimated transport and other costs necessary
to get asset to the market 300
December 31, 2010: Selling price in a binding contract to sell 5,200
1 Year old 3,200 The entity’s biological assets should be valued at
2 Year old 4,500 a. 4,700 b. 4,500 c. 4,400 d. 4,200
1.5 year old 3,600
3 year old 5,000
Answer key:
1 7 13 19 25 31 37 43 49 55
2 8 14 20 26 32 38 44 50 56
3 9 15 21 27 33 39 45 51 57
4 10 16 22 28 34 40 46 52 58
5 11 17 23 29 35 41 47 53 59
6 12 18 24 30 36 42 48 54 60
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