CFAS – FINALS 1ST QUIZ
It is an action by a government designed to provide an
(PAS 20, PAS 24, PAS 28 & PAS 40)
INSTRUCTION: CHOOSE THE BEST ANSWER
1. All of the following are related party transactions, except
a. Took a huge bank loan.
b. Sold an asset to an associate.
c. Sold an entity car to the wife of the managing director.
d. All of the above are consider as related party transaction.
2. Related party transactions include all, except
a. Sold goods to another entity owned by the daughter of the
entity’s managing director.
b. A venturer sold goods to the joint venture.
c. Sold an equipment to the uncle of the entity’s finance director.
d. All of the above are consider as related party transaction.
3. Which of the following is not a required minimum disclosure
about related party transactions?
a. Doubtful debt related to the outstanding balance.
b. The amount of the outstanding balance.
c. The amount of related party transaction.
d. None of the above.
4. Which of the following is not a mandated related party
disclosure transaction?
a. If neither of the entity’s parent nor the ultimate controlling
entity produces financial statements available for public use, then
the name of the next most senior parent that does so.
b. Names of all the associates that an entity has dealt with during
the year.
c. Relationship between parent and subsidiaries.
d. Name of the entity’s parent and, if different, the ultimate
controlling party.
5. Which is not included in key management personnel
compensation?
a. Reimbursement of out-of-pocket cost.
b. Short-term benefit.
c. Share-based payment.
d. Termination benefit
6. Which disclosure is not required about government grant?
a. The nature and extent of government grant.
b. The name of the government agency that gave the grant.
c. Unfulfilled condition.
d. None of the above.
7. Government assistance includes all of the following except
a. Provision of guarantee.
b. Government procurement policy.
c. Free technical advice.
d. All of the above are consider as government grant.
SET C
8.
economic benefit specific to an entity and for which the
government cannot reasonably place a value
a. Government assistance.
b. Government grant.
c. Government benefit.
d. None of the above.
9. A government grant that becomes receivable as compensation
for expenses or losses already incurred should be recognized as
income.
a. When received.
b. Of the period in which it becomes receivable.
c. Of the period in which it becomes payable.
d. None of the above.
10. Government grant related to non-depreciable asset that
requires fulfillment of certain conditions.
a. Should not be recognized as income.
b. Should be recognized as income immediately.
c. Should be recognized as income over the periods which bear
the cost of meeting the conditions.
d. None of the above.
11-12. When an entity uses the cost model, transfer between
investment property, owner-occupied property and inventory
shall be made at
a. Fair value. c. Cost.
b. Carrying amount. D. Assessed value.
13-14. When an investment property under construction is
completed and carried at fair value, the difference between the
carrying amount and the fair value shall be
a. Accounted for as revaluation of property.
b. Included in retained earnings.
c. Included in other comprehensive income.
d. Included in profit or loss.
15-16. If an Inventory is transferred to investment property to be
carried at fair value, the remeasurement to fair value is
a. Accounted for as revaluation of property.
b. Included in income statement.
c. Included in other comprehensive income.
d. Included in retained earnings.
17-18. If the owner-occupied is transferred to investment
property that is to be carried at fair value, the difference between
the carrying amount and the fair value shall be
a. Accounted for as revaluation of property.
b. Included in retained earnings.
c. Included in other comprehensive income.
d. Included in profit or loss.
19-20. Gain or loss from disposal of investment property shall be
determined as the difference between the
a. Fair value and the carrying amount of the asset.
b. Gross disposal proceeds and fair value of the asset.
c. Net disposal proceeds and carrying amount.
d. Gross disposal proceeds and carrying amount.
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Muymoy inc. acquired a building on January 1, 2019 for 33-35. How much should be disclosed as compensation to key
P9,000,000. At that date, the building had a useful life of 30 years. management personnel.
On December 31, 2019, the fair value of the building was a. P3,500,000 c. P5,800,000
P9,600,000 and on December 31, 2020, the fair value is b. P6,550,000 d. P6,800,000
P9,800,000. The building was classified as an investment property
and accounted for under cost model’ Psiwit enterprise invest to Mingming inc. worth P250,000 to
acquire 25% of ownership. Mingming’s fair value of assets and
21-22. What amount should be carried in the statement of liabilities are as follows: Cash P100,000; A/R P 350,000; Inventory
financial position on December 31, 2020? P200,000; Equipment P500,000; Land P1,000,000; Accounts
a. P9,000,000 c. P8,450,000 payable P300,000; Bonds Payable P850,000.
b. P8,400,000 d. P8,700,000
36-37. How much is the implied good will at the acquisition date?
23-25. What amount should be carried in the income statement a. P350,000 c. P100,000
on December 31, 2020? b. P50,000 d. Neither a,b nor c
a. P300,000 expense c. No gain/loss.
b. P200,000 gain d. Neither a,b, nor c Cat Woman corporation purchased 35% of Batman company on
January 1, 2019 for P11,200,000 when Batman’s carrying amount
Mimeow Company purchased a factory machine for P3,500,000 was P32,400,000. On that day, the market value of the net assets
on January 1, 2019. The entity received a government grant of of Batman company equaled there carrying amount with the
P600,000 in respect of this asset. It also has an estimated salvage following exceptions:
value of P200,000. Carrying amount FMV
Equipment P7,000,000 P5,600,000
The accounting policy is to depreciate the asset over 6 years on a Building P1,600,000 P2,600,000
straight-line basis and to treat the grant as deferred income. The equipment has remaining useful life of 5 years, and the
building has a remaining useful life of 10 years. Batman reported
26-27. What is the carrying amount of the asset on December 31, net income of P3,200,000 and declared cash dividend of
2020? P1,000,000 for 2019.
a. P2,333,333 c. P2,533,333
b. P2,300,000 d. P2,400,000 38-40. What is the investment income that will be reported by Cat
Woman corporation for 2019?
28-30. How much will be reported on 2019 Income Statement as a. P987,000 c. P1,260,000
grant income if the approach to be use is deduction from asset b. P1,120,000 d. P1,183,000
approach?
a. P100,000 c. P66,667 41. An entity that entered into a related party transaction would
b. P550,000 d. P0 be required to disclose all of the following information, except
a. Nature of the relationship between the parties.
Daddy company acquired 70% of Son inc. last year. During the b. Peso amount of the transaction.
current year, both entities included in their financial statements c. Amount due from or to related parties at the end of the
the following: reporting period.
Mommy Sissy d. All of the above are required to be disclose.
Officer’s expenses P500,000 P350,000
Loans to officers 400,000 250,000 42. Which of the following enumeration describe the proper
Key officer’s salaries 650,000 300,000 inclusion in key management personnel compensation?
a. Social security contributions, postemployment benefits and
31-32. How much should be reported to Daddy’s consolidated dividends to shareholders.
financial statement related party disclosure in the notes for the b. Social security contribution and dividends to shareholders.
current year? c. Post-employment benefits and dividends to shareholders.
a. P3,000,000 c. P1,450,000 d. None of the above.
b. P2,450,000 d. P1,600,000
43. All of the following are related parties, except
Mingming company reported the following remuneration and a. A postemployment benefit plan for the employees.
other payments made to the entity’s chief executive officer during b. Shareholder owning twenty eight percent.
the year: c. Joint venture in which the entity is a venture.
Termination benefits P3,000,000 d. None of the above.
Share dividends 250,000
Other long-term benefits 1,300,000 44. Which of the following is not a related party of an entity?
Retirement pension 1,500,000 a. Shareholder owning twenty percent.
Short term employee benefits 750,000 b. Associate of an entity.
c. Key management personnel of the entity.
d. None of the above.
SET C
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45. Which is not required as a related party disclosure?
a. An entity that has a common director with another entity
b. The son of the chief executive officer of the entity
c. Associate of an entity.
d. An entity that has a twenty percent investment in common
stock at the company.
46. When an entity holds 20% or more but less than 50% of the
voting power of an investee, which statement is true?
a. The investor should use fair value method unless it can be
clearly demonstrated that the investor has significant influence
over the investee.
b. The investor must use the equity method.
c. The investor must use fair value method.
d. None of the above.
47. An investor shall discontinue the equity method when
a. The associate operates under severe long-term restrictions.
b. The business activities of the investor and associate are
dissimilar.
c. The investor ceases to have control over the associate.
d. None of the above.
48. Which of the following statement/s is/are correct concerning
the equity method?
1st. The investment in associate is increased or decreased by the
investor’s share of the profit or loss of the associate after the date
of acquisition.
2nd. The investor’s share of the profit or loss of the associate is
recognized in the investee’s profit and loss.
3rd. The investment is initially recorded at cost.
4th. Dividends received from the investee are accounted as a
return of investment.
a. 1st, 2nd & 4th c. 1st, 2nd & 3rd
b. 2nd, 3rd & 4th d. 1st, 3rd & 4th
49. If the investee has outstanding cumulative preference shares,
the investor computes share of profit or loss
a. Without regard for preference dividends.
b. After adjusting for preference dividends which were actually
paid during the year.
c. Will be reduced by the dividends if there will be a declaration.
d. None of the above shows the correct approach.
50. Goodwill arising from an investment in associate is
a. Included in the carrying amount of the investment and be
subjected to impairment annually.
b. Included in the carrying amount of the investment and not
amortized.
c. Both a and b are correct.
d. Neither a nor b is correct.
51. The equity method is not applicable under all of the following
circumstances, except
a. The ultimate parent of the investor produces consolidated
financial statements.
b. The investee is a wholly-owned subsidiary.
c. The investor’s debt and equity instruments are not traded.
d. The investor is in the process of filing financial statements with
SEC for the purpose of issuing debt and equity
SET C
52. When an investment ceases to be an associate, the fair value
of the investment at the date when it ceases to be an associate
a. Is regarded as its cost on initial recognition as a financial asset.
b. Is regarded as its fair value on initial recognition as a financial
asset.
c. Is regarded as its fair value on initial recognition as financial
liability.
d. Is regarded as its amortized cost on initial recognition as an
investment.
53. Which statement best describes significant influence?
a. A mutual sharing in the risks and benefits of a combined entity.
b. The power to participate in the financial and operating policy
decisions of an entity.
c. The holding of a significant proportion of the share capital in
another entity.
d. The contractually agreed sharing of control over an economic
entity.
54. When an investor uses the equity method to account for
investment in ordinary shares, cash dividend received by the
investor from the investee are recorded as
a. Deduction from investment income.
b. Deduction from shareholders equity.
c. Dividend income.
d. None of the above.
55. Under the equity method of accounting for investments, an
investor recognizes its share of the earnings in the period in which
the
a. Investee declares an asset dividend.
b. Investor sells the investment in associates.
c. Investee reported a profit.
d. Investee pays dividends.
56. Which is included in government assistance?
a. Improvement to the general transport and communication
network.
b. The provision of infrastructure in developing areas.
c. The imposition of trading constraints on competitors.
d. None of the above.
57. If the cost of the asset is recorded net of the grant
a. Asset is understated.
b. Equity is overstated.
c. Liability is overstated.
d. Net income is understated.
58. The deferred grant income is classified as
a. Current liability.
b. Noncurrent liability.
c. Partly current liability and partly noncurrent liability.
d. Separate component of shareholder’s equity
59. In the case of grant related to income, which of the following
accounting treatment is prescribe?
a. Credit the grant to sales revenue.
b. Credit the grant to retained earnings.
c. Credit the grant to equity.
d. None of the above.
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60. In the case of grant related to asset, which of the following
accounting treatment is prescribe?
a. As an extra ordinary gain.
b. Set up the grant as deferred income or add it in arriving at the
carrying amount of asset.
c. Set up the grant as deferred income or deduct it in arriving at
the carrying amount of asset.
d. Set up the grant as receivable or deduct it in arriving at the
carrying amount of asset.

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MEMORIZING. IT IS GOOD BUT NOT ENOUGH. PRACTICE YOUR
MIND TO ANALYZE COMPLEX THING AS WELL, THEN YOU WILL
HAVE A COMPLETE SET OF YOUR LEARNING BY TRAINING
YOURSELF – NO ONE CAN DO IT ON YOUR BEHALF.

GOD BLESS STUDS

SET C
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