CPA REVIEW SCHOOL OF THE PHILIPPINES, Manila FINANCIAL ACCOUNTING AND REPORTING —-VALIX IY VALIX ESCALA. SANTOS 1 STATEMENT OF COMPREHENSIVE INCOME An ety reported the following data forthe current year: Lega and aut fees 1,700,000 Rent for office space 2,400,000, Advertising 500,000 Ingerest on inventory loan 2,100,000 Loss on abandoned data processing equipment 350,000 Freight in 1,750,000 Freight out 1,600,000 Officers’ salaries 1,500,000 Insurance $50,000 Sales representative salaries 2,150,000 Research and development expense F000,000, Theoice space is wsed equally by the sles and eccounting departments 1, Wha aunt shoul be clasified as genera and admisatv expenses? (@) 5,250,000 bege ” '. 6,480,000 be 5,600,000 oe 4. 6250,000 how 2. Wn amount shoul be reported as sling expenses? a 5,430,000 6 4280,000 s © 6,300,000 Wregys a8) 4 6,450,000 niet Sol 21% Am entity provided the Following informetion for the cure Increase in raw eoaerals inventory * Decrease in goods in process inventory Decrease ie inished Raw materials cur * Direct labor pay! Factory verivead Freight out see Freie in ‘What isthe cost of goods sold forthe curren: year? ‘a. 9,950,000 '. 91350,000 ©. 91250,000 4. 91150,000 ‘An entity reported operating expenses other dna interest encense fo the year at 40% of cost of goods sold but ony 20 of sales. Interest expense is 5% of sales. The amount of purchases is 120%6 of cost of goods sold. Ending inveztory is twice as much asthe beginning inventory The et neome oie years P2100, The nea a ais 1, Whatisthe amount of sles forthe yeas? y 10,000,000 7 y ». 15,000,000 A 18,000,000, {) 12,000,000 2, What isthe amount of purchases? a. 6,000,000 " 7,200,000 * fe. 3,000,000 4. 3,600,000 6588Page 2 4. Anny proved the fllowing information forthe current year Income fom continuing operations 400.000 Income fom discontinued operation sa00 realized gain on financil asset - FVPLL ¢ Neral soca 1,000,000 ‘Unrealized loss on equity investment - FVOCI ‘Unrealized gain on debt investment - FVOCL-S ‘Unrealized gain on futures contract designated as a cashflow hedgo} ‘Translation loss on foreign operation ‘Net “remeasurement” gain on defined benefit plan during the year! * Loss on ereit risk of a financial lability designated at FVPL Revaluation surplus during the yea. |. What net amount shouldbe reported as other comprehensive income for the curent year? & $,000,000 k 4 , 3,300,000 ©, 3200,000 7,000,000 2, What amount should be reported as comprehensive ineone fr the curent year? a 5,200,000 ’, 77700,000 = 8'300,000 & 7,200,000 ‘5. During 2019, an entity decided to change from the FIFO method of inventory valuation tothe ‘weighted average method. Inventory balances under each method were: Fro Weighted Average Decemier 31, 2016 4,500,000 5,400,000 December 31, 2017 7,800,000 7,100,000 December 31, 2018 83300,000 7/800,000 “The income tax rate 3096. What amount should be reported as the effet of this accounting change inthe statement of retained earings for 20199 charge im ou8y MNCS mk op 380,000 decrease 2 350,000 increase 490,000 decrease 490,000 increase xh 6. On January 1, 2016, an entity purchased a machine for PS.280,000 and depreciated it by the straight line method using an estimated usefil life of eight years with no residual value. On January 1,.2019, the entity determined thatthe mackie ad's useful life of six yeas-fom the Gate of acquisition witha residual value of 480,000. What isthe accumulated depresietion on December 31,2019? ‘a, 2,920,000 Y '. 3,080,000 1 Z ©. 3200000 é ‘ 4. 3:520,000 ; as 7. On January 1, 2017, an entity purchased for P4,800,000 a machine with useful life often years and residual value of P200,000, The machine was depreciated by the double declining balance ‘method. The entity changed to the straight line method on January 1, 2019 and the residual value didnot change. What isthe accumulated depreciation on December 31, 20192Page 3 8. An entity reported net income of P7, 400,000 for the current year. The auditor raised questions shout the following amounts that had been included in net income Equity in eamings of an associate ~ 25% interest 1,500,000 Dividend recived from the associate “0,000 Unrealized loss on equity investment at FVOCT (330,000) Gain on early retirement of bonds payable 2,200,000 Adjustment of profit of prioe sexe for emo in deprecation, net of tax effect (750,000) Loss from fre (4,800,000), Gain fom change in fair value atuibutable 10 the credit risk of financial libity designated ac FVPL 00,000 ‘What amount should be reported as adjusted net income? a $300,000 : 7,300,000 © 91500,000 1.7, €. 300,000 9, An tity had the folowing events and trafsictions during 2019: Depreciation for 2018 was understated by P500,000 frig tree 8 M4 A litigation settlement resulted ina loss of 2,000,000 . ‘The inventory on December 31, 2017 was overstated by P00, 000 The entity disposed ofa recreational division ata loss P1,500,000. The income tax rate is 30% ‘What total amount of loss should be included in income from continuing operations for 2019? a. 2,000,000 1: ‘ , 1,400,000 2 e. 3,500,000 4. 2/450,000 10, An investment entity provided the following data for the current year Dividend income fom investments , 10,000,000 Distribution income from trusts in 500,000 Interest income on deposits 700,000 Income from bank treasury bills 100,000 Income from dealing in securities held for trading 600,000 ‘Weitedown on securities held for trading 150,000 Other income 20,000 Finance cost 300,000 Administrative staff costs 3,800,000 Sundry administrative costs 1,400,000 Income tax expense 2,000,000 1, Whatis the total income before tax? « ‘a. 12,000,000 t b. 12,150,000 ‘11,750,000 2 11,350,000 * 2. What isthe total amount of expenses befe tax? a 7,500,000 b. 5,650,000 ‘ 5,500,000 4. 7,650,000 3. What isthe net income forthe year? a. 6,300,000 'b 4'500,000 «4,650,000 4 450,000