1 

pts

On February 1, 2016, Baby Corporation purchased a parcel of land as a factory site for P320,000.  An old
building on the property was demolished and construction begun on a new warehouse that was
completed April 15, 2017.  Costs incurred on the construction project are listed below.

      

Demolition of old building P 21,000

Architect's fees 31,700

Legal fees - title investigation 4,100

Construction costs 950,000

Imputed interest based on stock financing 14,000

Landfill for building site 19,300

Clearing of trees from building site 9,600

Temporary buildings used for construction activities 29,000

Land survey 4,000

Excavation for basement 13,200

Additional information:

Salvage materials from demolition sold for P1,800

Timber sold for P3,300

Determine the cost of the land.

P372,900

P353,600

P347,300

P366,600

1 pts

San Antonio Company is engaged in the operation of public highways and skyways in the Philippines.  On
November 2, 2016, a catastrophe devastated the some of the company's operated highways and
skyways.  The company suffered P5.6 billion loss due to catastrophe.  On January 1, 2017, the Philippine
government decided to compensate the company for the incurred loss.  The government loaned P5
billion at 5% per annum with maturity period of 5 years.  The current market rate for similar type of loan
after considering credit risks attached was 10%.  The conditions stipulated on the loan agreement
provide that the proceeds will be used for reconstruction of the skyways and highways.
On January 1, 2017, how much should the company recognize as government grant (round off to nearest
million)?

Nil

P4,052 million

P302 million

P  948 million

1 pts

The Decca Company purchased a machine for P360,000 on 1 January 2016 and received a government
grant of P50,000 towards the capital cost.  Company policy is to treat the grant as a reduction in the cost
of the asset.  The machine was to be depreciated on a straight-line basis over 8 years and was estimated
to have a residual value of P5,000 at the end of this period.
Under PAS20 Government grants and government assistance, what should be the carrying amount of
the machine at 31 December 2016?

P315,625

P266,875

P271,875

P271,250

1 pts

On January 1, 2016, LAL Corp. began construction of homes for those families that were hit by the
tsunami disaster and were homeless.  The construction is expected to take 3.5 years.  It is being financed
by issuance of bonds for P7 million at 12% per annum.  The bonds were issued at the beginning of the
construction.  The bonds carry a 1.5% issuance cost.  The project is also financed by issuance of P3
million share capital with a 14% cost of capital.  The borrowing costs to be capitalized in 2016 is (Use
straight line amortization method)

P840,000

P1,290,000

P870,000

P1,260,000

1 pts
Aries Company started construction on a building on January 1 of this year and completed construction
on December 31 of the same year. Aries had only two interest notes outstanding during the year, and
both of these notes were outstanding for all 12 months of the year.  The following information is
available:

Average accumulated expenditures P250,000

Ending balance in construction in progress before capitalization of interest

360,000

Six percent note incurred specifically for the project 150,000

Nine percent long-term note 500,000

What amount of interest should Aries capitalize for the current year?

P27,900

P15,000

P22,500

P18,000

1 pts

Pantabangan Company takes a full year’s depreciation in the year of an assets acquisition, and no
depreciation in the year of disposition.  Data relating to one depreciable asset acquired in 2015, with
residual value of P900,000 and estimated useful life of 8 years, at December 31, 2016 are:

      Cost P9,900,000

Accumulated depreciation 3,750,000

Using the same depreciation method in 2015 and 2016, how much depreciation should Pantabangan
record in 2017 for this asset?

P1,125,000

P1,650,000

P1,250,000

P1,500,000

1 pts

A machine has a cost of P60,000, has an annual depreciation of P12,000, and has accumulated
depreciation of P30,000 on December 31, 2016.  On April 1, 2017, when the machine has a fair value of
P24,000, it is exchanged for a similar machine with a fair value of P72,000 and the proper amount of
cash is paid.  The loss to be recognized on exchange is _____________.

P6,000

P21,000

P3,000

P0

1 pts

On January 15, 2015, Alaturka Company paid P5,400,000 for property containing natural resource of
2,000,000 tons of ore.  The entity is legally required to restore the site after mining operations.  The
estimated cost of restoring the land after the resource is extracted is P450,000 and the land will have a
value of P650,000 after it is restored for suitable use.  Tunnels, bunk houses and other fixed installations
are constructed at a cost of P8,000,000 and such expenditures are charged to mine improvements.
Operations began on January 1, 2016 and resources removed totaled 600,000 tons.  During 2011, a
discovery was made indicating that available resource after 2017 will total 1,875,000 tons.  At the
beginning of 2017, additional bunk houses were constructed in the amount of P770,000.  In 2017, only
400,000 tons were mined because of a strike.
Alaturka Company should report depletion for 2017 at ________________.

P1,560,000

P640,000

P1,040,000

P776,000

1 pts

Dingalan Corporation’s investment properties included the following items:

Land held as potential plant site, P5,000,000.

A vacant building to be leased out under an operating lease, P20,000,000.
Property held for sale in the ordinary course of its business, P30,000,000.
Property held for administrative purposes, P10,000,000.
A hotel owned and managed, P50,000,000.
A building being leased out to a subsidiary, P8,000,000.
A building, which cannot be sold or leased out separately, used in the production of goods and
around 2% of the area being leased out to canteen operators, P2,000,000.

How much will be reported as investment properties in Dingalan Corporation’s separate financial
statements?
P20,000,000

P25,000,000

P28,000,000

P33,000,000

1 pts

During 2016, Broca Co, had the following transactions:

On January 2, Broca purchased the net assets of Amp Co. for P360,000.  The fair value of Amp's
identifiable net assets was P172,000, Broca believes that, due to the popularity of Amp’s consumer
products, the life of the resulting goodwill is unlimited.

On February 1, Broca purchased a franchise to operate a ferry service from the state
government for

P60,000 and an annual fee of 1% of ferry revenues.  The franchise expires after five years. Broca
received P20,000 of ferry revenues in 2016.

On April 5, Broca was granted a patent that had been applied for by Amp.  During 2016, Broca

incurred legal costs of P51,000 to register the patent and an additional P85,000 to successfully
prosecute a patent infringement suit against a competitor.  Broca estimates the patent's economic life
to be ten years.

Broca has determined that it is appropriate to amortize these intangibles on the straight-line basis over
the maximum period permitted by generally accepted accounting principles, taking a full year's
amortization in the year of acquisition.
Calculate the total expense to be recognized in 2016 income statement resulting from the foregoing
intangible assets.

P102,300

P25,600

P111,700

P35,200

1 pts

The company's accounting records show that changes in ledger account balances occurred during 2016
as follows:

  Increase Decrease
Cash P800,000  

Accounts receivable (net)   P40,000

Inventories 300,000  

Equipment (net) 360,000  

Building (net) 600,000  

Loans payable 1,000,000  

Accounts payable   300,000

Share capital, P10 par 600,000  

Share premium 200,000  

Retained earnings   ?

Assuming that there were no transactions affecting retained earnings other than the P250,000 cash
dividends, compute the net income for 2016.

P270,000

P2,170,000

P520,000

P770,000

1 pts

Pious sells goods supplied by Devout.  The goods are classed as A grade (perfect quality) or B grade,
having slight faults.  Pious sells the A grade goods acting as an agent for Devout at a fixed price
calculated to yield a gross profit margin of 50%.  Pious receives a commission of 12.5% of the sales it
achieves for these goods.  The arrangement for B grade goods is that they are sold by Devout to Pious
and Pious sells them at a gross profit margin of 25%.  The following information has been obtained from
Pious' financial records:

  GRADE A GRADE B

Inventory held on premises, 1/1/17 P 2,400,000 P1,000,000

Goods from Devout year to 12/31/17 18,000,000 8,800,000

Inventory held on premises, 12/31/17 2,000,000 1,250,000

How much should be reported as sales revenue in Pious’ income statement for the year ended
December 31, 2017?

P11,400,000
P36,800,000

P26,950,000

P48,200,000

1 pts

On 1 July 2017, Zen Company handed over to a client a new computer system.  The contract price for
the supply of the system and after-sales support for 12 months was P800,000.  Zen estimates the cost of
the after-sales support at P120,000 and it normally marks up such costs by 50% when tendering for
support contracts.  The revenue Zen should recognize in its financial year ended 31 December 2017 is
________________.

P620,000

P800,000

P710,000

Nil

1 pts

The Tiger Corporation included the following in its unadjusted trial balance as of December 31, 2017:

Inventory, 12/31/16 P  19,450,000

Purchases 127,850,000

Additional information:

The inventory at December 31, 2017 was counted at a cost of P8.5 million.  This includes
P500,000

of slow moving inventory that is expected to be sold for a net amount of P300,000.

Sales include P8 million for goods sold in December 2017 for cash to Beer Finance Company. 
The

cost of these goods was P6 million.  Beer Finance Company has the option to require Tiger to repurchase
these goods within one month of year-end at their original selling price plus a facilitating fee of
P250,000.
The cost of sales for the year ended December 31, 2017 is  ________________.

P138,800,000

P133,000,000

P132,800,000
P139,000,000

1 pts

Maximilian uses the perpetual inventory system.  Maximilian's inventory transactions for the moth of
August were as follows:

Date Particulars Qty Unit Cost Total Cost

01 Aug. Beginning inventory 20 P4.00 P80.00

07 Aug. Purchases 10 4.20 42.00

10 Aug. Purchases 20 4.30 86.00

12 Aug. Sales 15 ? ?

16 Aug. Purchases 20 4.60 92

20 Aug. Sales 40 ? ?

28 Aug. Sales returns 3 ? ?

Using the information, assume that the Maximilian uses the FIFO cost flow method and that the sales
returns relate to the 20 August sales.  The sales return should be costed back into inventory at what unit
cost?

P4.00

P4.07

P4.60

P4.30

1 pts

Maximilian uses the perpetual inventory system.  Maximilian's inventory transactions for the month of
August were as follows:

Date Particulars Qty Unit Cost Total Cost

01 Aug. Beginning inventory 20 P4.00 P80.00

07 Aug. Purchases 10 4.20 42.00

10 Aug. Purchases 20 4.30 86.00

12 Aug. Sales 15 ? ?

16 Aug. Purchases 20 4.60 92

20 Aug. Sales 40 ? ?

28 Aug. Sales returns 3 ? ?

Assuming that Maximilian uses the weighted average cost flow method, the 12 August sales should be
costed at what unit cost?

P4.07

P4.16

P4.30

P4.60

1 pts

On January 1, 2016, Horse Corp. signed a three-year noncancelable purchase contract, which allows
Horse to purchase up to 500,000 units of a computer part annually from Dark Supply Co. at P10 per unit
and guarantees a minimum annual purchase of 100,000 units.  During 2016, the part unexpectedly
became obsolete.  Horse had 250,000 units of this inventory at December 31, 2016, and believes these
parts can be sold as scrap for P2 per unit.  What amount of probable loss from the purchase
commitment should Horse report in its 2016 profit or loss?

P2,400,000

P2,000,000

P1,600,000

P   800,000

1 pts

On August 15, 2016, a typhoon damaged a warehouse of Parlophone Merchandise Company.  The entire
inventory and many accounting records stored in the warehouse were completely destroyed.  Although
the inventory was not insured, a portion could be sold for scrap.  Through the use of the remaining
records, the following data are assembled:

Inventory, January 1 P  375,000

Purchases, January 1-August 15 1,385,000

Cash sales, January 1-August 15 225,000

Collection of accounts, Jan. 1-Aug. 15 2,115,000

Accounts Receivable, January 1 175,000

Accounts Receivable, August 15 265,000

Salvage value of inventory 5,000

Gross profit percentage on sales 32%

Compute the inventory loss as a result of the typhoon.

P102,600

P107,600

P104,200

P255,600

1 pts

A public limited company, Gatas Pure, produces milk on its farms.  It produces 30% of the country’s milk
that it consumed.  Gatas owns several farms and has a stock of 210,000 cows and 105,000 heifers.  
Additional information:

At December 31, 2016 the herds are:

a) 210,000 cows (3 years old), all purchased on or before December 31, 2015
b) 75,000 heifers, average age 1.5 years, purchased on July 1, 2016
c) 30,000 heifers, average age 2 years, purchased on December 31, 2015

No animals were born or sold in the year.

The unit fair values less estimated costs to sell were:

1 - year old animal at Dec. 31, 2016 P32

2 - year old animal at Dec. 31, 2016 45

1.5 - year old animal at Dec. 31,2016 36

3 - year old animal at Dec. 31, 2016 50

1-year old animal at Dec. 31, 2011 

and July 1, 2011 40

The increase in fair value of biological assets in 2016 due to physical change is __________.

P1,500,000

P1,260,000

P1,740,000
P1,470,000

1 pts

The following is information related to the development of a particular software package in the first year
of product life:

Development costs prior to reaching technological feasibility P   4,000

Development costs after reaching technological feasibility 6,000

Costs of duplicating salable product 9,000*

Estimated revenues over 3 year total product life 300,000

Revenue in the first year of product life 150,000

*This represents the entire inventory expected to be sold over the 3-year period.

What is the total expense related to this software package to be recognized in its first-year?

P16,000

P11,500

P12,000

P  7,000

1 pts

Sacramento has just acquired the net assets of Kings for P100,000.  In acquiring Kings, the owners
of Sacramento felt that Kings had unrecorded goodwill.  They decided to capitalize the estimated annual
superior earnings of Kings at 20% to determine the amount of goodwill.  The computation resulted in an
estimated goodwill of P10,000.  A rate of 10% on net assets before recognition of goodwill was used to
determine normal annual earnings of Kings, because it is the rate that is earned on net assets in the
industry in which Kings operates.  All other assets of Kings were properly recorded.  The estimated
annual earnings of Kings is __________.

P10,000

P2,000

P9,000

P11,000

1 pts
On January 1, 2012, the Twine Corporation purchased machinery for P650,000 which it installed in a
rented factory.  It is depreciating the machinery over 12 years by the straight-line method to a residual
value of P50,000.  Late in 2016, because of increasing competition in the industry, the company believes
that its asset may be impaired and will have a remaining useful life of 5 years, over which it estimates
the asset will produce total cash inflows of P1,000,000 and will incur total cash outflows of P825,000. 
The cash flows are independent of the company's other activities and will occur evenly each year.  The
company is not able to determine the fair value based on a current selling price of the machinery.  The
company's discount rate is 10%.  The impairment loss to be recognized in 2016 profit or loss is
______________.

P267,322

P246,490

P317,322

P0

1 pts

On January 1, 2014 Klatten Corporation acquired all the assets and liabilities of New Corporation.

New Corporation has a number of operating divisions, including one whose major industry is the
manufacture of toy train, particularly those having historical significance.  The toy trains division is
regarded as a cash-generating unit.  In paying P20 million for the net assets of New Corporation, Klatten
calculated that it had acquired goodwill of P2,400,000.  The goodwill was allocated to each of the
divisions, and the assets and liabilities acquired are measured at fair value at acquisition date.

      At December 31, 2016, the carrying amounts of the assets of the toy train division were:

Factory P2,500,000

Inventory 1,500,000

Brand – “Choochoo” 500,000

Goodwill 500,000

TOTAL P5,000,000

There is a declining interest in toy trains because of the aggressive marketing of computer-based toys,
so the management of Klatten measured the value in use of the toy train division at December 31, 2016,
determining it to be P4,230,000.
The journal entry to record the impairment loss includes a credit to ______________.

Goodwill of P770,000.

Brand-“Choochoo” of P270,000.

Accumulated depreciation-Factory P150,000.

Inventory of P81,000.

1 pts

The 10% bonds payable of Nixon Company had a net carrying amount of P570,000 on December 31,
2010. The bonds, which had a face value of $600,000, were issued at a discount to yield 12%. The
amortization of the bond discount was recorded under the effective-interest method. Interest was paid
on January 1 and July 1 of each year. On July 2, 2011, several years before their maturity, Nixon retired
the bonds at 102. The interest payment on July 1, 2011 was made as scheduled. What is the loss that
Nixon should record on the early retirement of the bonds on July 2, 2011? Ignore taxes.

P12,000.

P37,800.

P33,600.

P42,000.

1 pts

The following pertains to Megatron, Inc. on December 31 of the current year: Checking account balance
P925,000; an overdraft in special checking account at same bank as normal checking account of P17,000;
certificate of deposit P400,000; cash held in a bond sinking fund P200,000; postdated check from
customer P11,000; certified check from customer P9,800; NSF check received from customer P15,000;
cash advance to subsidiary of P300,000; postage stamps on hand P620; utility deposit paid to electric
company P8,000; currency and coins in a petty cash fund (the company has not replenished the fund to
the imprest amount of P5,000) P800.  The correct amount that should be reported as cash is
______________.

P908,800

P1,318,600

P918,600

P1,322,800

1 pts

On January 1, 2007, Hanoi Company sold a machine with a carrying amount of P300,000 and accepted in
exchange a promissory note with a face value of P500,000, a due date of December 31, 2016, and a
stated rate of 4%, with interest receivable at the end of each year.  The fair value of the machine is not
readily determinable and the note is not readily marketable.  Under the circumstances, the note is
considered to have an appropriate imputed rate of interest of 8%. 
The amortized cost of the note receivable as of December 31, 2011 is  ________________.
P500,000

P407,547

P365,802

P420,154

1 pts

On November 30, 2016, accounts receivable in the amount of P900,000 were assigned to Kaban Finance
Co. by Kalan as security for a loan of P750,000.  Kaban charged a 3% commission on the accounts; the
interest rate on the note is 12%.  During the December 2016, Kalan collected P350,000 on assigned
accounts after deducting P560 of discounts.  Kalan wrote off a P530 assigned account.  On December 31,
2016, Kalan remitted to Kaban the amount collected plus one month's interest on the note.
How much is Kalan’s equity in the assigned accounts receivable as of December 31, 2016?

P149,470

P141,410

P141,970

P148,910

1 pts

On January 1, 2016, YOU TOO Corporation purchased P1,000,000 10% bonds designated as held-to-
maturity.  The bonds were purchased to yield 12%.  Interest is payable annually every December 31. 
The bonds mature on December 31, 2020.  On December 31, 2016 the bonds were selling at 99.  On
December 31, 2017, YOU TOO sold P500,000 face value bonds at 101.  The bonds were selling at 103 on
December 31, 2018. 
How much is the realized gain on sale of the investment in bonds in 2017?

P41,060

P35,387

P29,010            ‘

P10,000

1 pts

Edwards Company began business in February of 2016.  During the year, Edwards purchased the three
trading securities listed below.  On its December 31, 2016, balance sheet, Edwards appropriately
reported a P4,000 credit balance in its Market Adjustment--Trading Securities account.  There was no
change during 2017 in the composition of Edward's portfolio of trading securities. Pertinent data are as
follows:

            

Security Cost Fair Value 12/31/17

A P120,000 P126,000

B 90,000 80,000

C 160,000 157,000

What amount of loss on these securities should be included in Edward's income statement for the year
ended December 31, 2017?

P11,000

P3,000

P7,000

P0

1 pts

On July 1, 2012, Cleopatra Corporation acquired 25% of the shares of Marcus, Inc. for P1,000,000.  At
that date, the equity of Marcus was P4,000,000, with all the identifiable assets and liabilities being
measured at amounts equal to fair value.  The table below shows the profits and losses made by Marcus
during 2012 to 2016:

Year Profit (Loss)

2012 P200,000

2013 (2,000,000)

2014 (2,500,000)

2015 160,000

2017 300,000

What is the carrying amount of the investment in Marcus, Inc. as of December 31, 2012?

P40,000

P75,000

P15,000
P0

1 pts

On January 1, 2013, Jumbo Corporation issued a P3 million 6% convertible bonds at par.  The bonds are
redeemable at a premium of 10% on December 31, 2016 or it may be converted into ordinary shares on
the basis of 50 shares for each P1,000 bond at the option of the holder.  The interest rate for an
equivalent bond without the conversion rights would have been 10%.
The issuance of convertible bonds on January 1, 2013 increased the entity’s equity by ________.

P175,518      
b. P380,418

P  73,068            
d. P      0

1 pts

On January 1, 2013, Jumbo Corporation issued a P3 million 6% convertible bonds at par.  The bonds are
redeemable at a premium of 10% on December 31, 2016 or it may be converted into ordinary shares on
the basis of 50 shares for each P1,000 bond at the option of the holder.  The interest rate for an
equivalent bond without the conversion rights would have been 10%.

The carrying amount of the bonds payable as of December 31, 2013 is

P3,000,000

P3,039,625

P2,701,540

P2,926,930

1 pts

Presented below is pension information related to Enrique, Inc. for the year 2016:

Service cost P96,000

Interest on projected benefit obligation 72,000

Interest on vested benefits 32,000

Amortization of prior service cost due to increase in benefits 16,000

Expected return on plan assets 24,000

Actual return on plan assets 30,000

Contributions to the plan 100,000

Benefits paid 120,000

The amount of pension expense to be reported for 2016 is ___________.

P144,000

P192,000

P160,000

P216,000

1 pts

On January 2, 2016, Arjam Co. established a noncontributory defined benefit plan covering all
employees and contributed P450,000 to the plan.  At December 31, 2016, Arjam determined that the
2016 service and interest costs on the plan were P620,000.  The expected and the actual rate of return
on plan assets for 2016 was 10%.  There are no other components of Arjam's pension expense.  What
amount should Arjam report in its December 31, 2016 statement of financial position as accrued
pension expense?

P575,000

P125,000

P170,000

P  80,000

1 pts

Dunn Co.’s 2016 income statement reported P90,000 income before provision for income taxes.  To
compute the provision for current income tax, the following 2016 data are provided:

Rent received in advance P16,000

Income from exempt municipal bonds 20,000

Depreciation deducted for income tax purposes in excess of depreciation

reported for financial statement purposes
10,000

Enacted corporate income tax rate 30%

What amount of current income tax liability should be reported in Dunn’s December 31, 2016, balance
sheet?
P18,000

P25,800

P22,800

P28,800

1 pts

West Corporation leased a building and received the P36,000 annual rental payment on June 15, 2016. 
The beginning of the lease was July 1, 2016.  Rental income is taxable when received.  West’s tax rates
are 30% for 2016 and 40% thereafter.  West had no other permanent or temporary differences.  West
determined that no valuation allowance was needed.  What amount of deferred tax asset should West
report in its December 31, 2016 statement of financial position?

P5,400

P10,800

P7,200

P14,400

1 pts

The December 31, 2016 balance sheet of Camille Corp. showed shareholders’ equity of P448,700.
Transactions during 2016 which affected the shareholders’ equity were:  (1) an adjustment to Retained
Earnings for an overstatement of depreciation in 2015 P10,000; (2) gain on the sale of treasury shares,
P9,000; (3) declared dividends of P60,000 of which P40,000 were paid during the year; and (4) net
income after tax of P75,500.  The share capital balance of P300,000 remain unchanged during the year.
The retained earnings balance on January 1, 2016 was _____________.

P134,200

P123,200

P132,300

P114,200

1 pts

At December 31, 2015, Rama Corp. had 20,000 shares of P1 par value treasury shares that had been
acquired in 2010 at P12 per share.  In May 2016, Rama issued 15,000 of these treasury shares at P10 per
share.  At December 31, 2016, what amount should Rama show in notes to financial statements as a
restriction of retained earnings as a result of its treasury shares transactions?
P  5,000

P  90,000

P60,000

P240,000

1 pts

Mekeni Corp. has the following classes of shares outstanding at December 31, 2016:

      

Ordinary share capital, P100 par P360,000

6% Preference share capital, P100 par, cumulative and fully

participating 120,000

Dividends on preference shares are in arrears for 2014 and 2015.

If P57,600 are to be distributed as dividends, the total dividends to be given on preference shareholders
would be _________.

P32,400

P25,200

P30,000

P26,400

1 pts

The shareholders’ equity account balances for the Unforgiven, Inc. on December 31, 2016 follows:

12% Preference share capital, P100 par, 20,000 shares P2,000,000

Ordinary share capital, P25 par, 145,000 shares 3,625,000

Subscribed share capital, net of P500,000 subscriptions receivable 1,000,000

Share premium 500,000

Retained earnings 695,000

Treasury shares, 5,000 shares, at cost 400,000

Preference shares have a liquidation value of P110; shares are cumulative, with dividends in arrears for
3 years including the current year and fully payable in the event of liquidation.  The book value of an
ordinary share is _____________.
P25.00

P27.78

P22.50

P29.00

1 pts

Ket Company’s capital structure was as follows:

Outstanding Shares 2015 2016

Ordinary 1,000,000 1,000,000

Convertible Preference 100,000 100,000

10% bonds payable 30,000,000 30,000,000

During 2016, Ket paid dividends of P15 per share on its preference shares.  The preference shares are
convertible into 150,000 ordinary shares and the 10% bonds are convertible into 300,000 ordinary
shares.  Profit for 2016 was P10,000,000.  The income tax rate is 35%.  The diluted earnings per share for
2016 should be __________.

P8.50

P8.04

P8.24

P7.50

1 pts

The Alcala Company counted its ending inventory on December 31.  None of the following
items were included when the total amount of the company’s ending inventory was computed:

P150,000 in goods located in Alcala’s warehouse that are on consignment from another
company.
P200,000 in goods that were sold by Alcala and shipped on December 30 and were in transit on
December 31; the goods were received by the customer on January 2.  Terms were FOB Destination.
P300,000 in goods were purchased by Alcala and shipped on December 30 and were in transit
on December 31; the goods were received by Alcala on January 2.  Terms were FOB shipping point.
P400,000 in goods were sold by Alcala and shipped on December 30 and were in transit on
December 31; the goods were received by the customer on January 2.  Terms were FOB shipping point.

The company’s reported inventory (before any corrections) was P2,000,000.  What is the correct
amount of the company’s inventory on December 31?
P2,550,000

P2,500,000

P1,950,000

P2,700,000

1 pts

The Mary I Mfg. Co. in its balance sheet as of December 31, 2017 has an inventory the amount of
P176,000 which consists of:
      

Direct materials P55,000

Direct materials purchases in transit, FOB destination

12,000

Direct materials purchases in transit, FOB shipping point

9,000

Prepaid insurance on inventory 2,000

Work-in-process 38,000

Finished goods 45,000

Goods shipped on consignment, at selling price with 20% profit on

sales 15,000

What is the cost of inventory to be shown in the statement of financial position of Mary I Mfg. Co. as of
December 31, 2017?

P162,500

P159,000

P150,000

P159,500

1 pts

Skyfall Co. records purchases at net amounts.  On May 5 Skyfall purchased merchandise on account,
P32,000, terms 2/10, n/30.  Skyfall returned P2,000 of the May 5 purchase and received credit on
account.  At May 31 the balance had not been paid.  
By how much should the account payable be adjusted on May 31?

P600
P680

P640

P0

1 pts

Compute for the cost of inventory lost in fire using the data below:

Inventory, July 1, 2016 P51,600

Purchases, July 1, 2016 to Jan. 19, 2017 368,000

Sales, July 1, 2016 to Jan. 19, 2017 583,000

Purchase returns 11,200

Purchase discounts taken 5,800

Freight in 3,800

Sales returns 8,600

A fire destroyed the entire inventory except for purchases in transit, FOB shipping point, of P2,000 and
goods having selling price of P4,900 that were salvaged from the fire.  The average gross profit rate on
net sales is 40%.

P59,760

P56,940

P62,660

P56,820

1 pts

On December 31, 2017, Norala Company purchased an equipment from Maasim Company. 
Simultaneous with the sale, Maasim leased back the equipment for 12 years for its use in the new farm
that it is developing.  The sales price of the equipment was P8,000,000 while the carrying amount in the
books of Maasim as of the date of the sale was P6,500,000.  Maasim’s engineers have estimated that
the remaining economic life of the equipment is 15 years.  Maasim Company should report deferred
gain from sale of the equipment on December 31, 2017 at _________.

P1,500,000

P1,400,000

P1,375,000
P0

1 pts

A director of an entity receives a retirement benefit of 10% of his final salary per annum for his
contractual period of three years.  The director does not contribute to the scheme.  His anticipated
salary over the three years is Year 1 P100,000, Year 2 P120,000, and Year 3 P144,000.  Assume a
discount rate of 5%.  The pension liability at the end of the second year is _______.

P29,520

P27,429

P22,500

P26,775

1 pts

Bailey Co. leased equipment to Greco, Inc. on January 1, 2016.  The lease is for an 8-year period.  The
first eight equal annual payments of P600,000 was made on January 1, 2016.  Bailey had purchased the
equipment on December 29, 2015 for P3,600,000.  The lease is appropriately accounted for as a sales-
type lease by Bailey.  Assume that the present value at January 1, 2016 of all rent payments over the
lease term discounted at a 10% interest rate was P3,520,000.  What amount of interest income should
Bailey record in 2017 as a result of the lease?

P261,200

P320,000

P292,000

P327,200

1 pts

On December 31, 2017, Iriga Company sold an equipment to Magarao Company for P8,000,000 and
simultaneously leased it back for 2 years.  The carrying amount of the equipment is P6,000,000 and the
remaining economic life is 10 years.  What should Iriga report as gain in its 2017 income statement?

P2,000,000

P1,000,000

P500,000

P200,000
 

1 pts

Elizabeth, a public limited company, has granted 100 share appreciation rights to each of its 1,000
employees in January 2017.  The management feels that as of December 31, 2017, 90% of the awards
will vest on December 31, 2019.  The fair value of each share appreciation right on December 31, 2017,
is P10.  What is the fair value of the liability to be recorded in the financial statements for the year
ended December 31, 2017?

P10,000,000

P300,000

P100,000

P 90,000

1 pts

In arriving at its profit before tax for the year ended 31 December 2017 The Ryan Company has accrued
royalties receivable of P200,000 and interest payable of P250,000.  Both royalties and interest are dealt
with on a cash basis in tax computations.  What are Ryan's net temporary differences at 31 December
2017, according to PAS12 Income taxes?

Taxable temporary differences of P50,000

Deductible temporary differences of P450,000

Deductible temporary differences of P50,000

axable temporary differences of P450,000

1 pts

The Huang Company has a non-current asset which had a carrying amount in the financial statements of
P18,000 at 31 December 2017.  Its tax written down value (the tax base) at that date was P9,000.  The
tax rate is 30%. In accordance with PAS12 Income taxes, what is the deferred tax balance in respect of
this asset at 31 December 2017?

P9,000 asset

P2,700 asset

P2,700 liability

P9,000 liability

 
1 pts

For the year ended December 31, 2017, Talisay Company reported accounting profit of P9,500,000.  Its
taxable profit was P9,000,000.  The difference is due to accelerated depreciation for income tax
purposes.  The income tax rate is 35% and Talisay made estimated tax payment during 2017 of
P1,000,000.  What should Talisay report as current tax payable as of December 31, 2017?

P3,150,000

P3,325,000

P2,150,000

P2,325,000

1 pts

At December 31, 2017 Mindoro Corporation’s taxable profit is P5,000,000.  The following items are the
temporary differences that caused Mindoro’s income in the income tax return to differ from the amount
reported in the income statement: Future deductible amounts expected to reverse in 2018 of P400,000
and future taxable amounts expected to reverse in 2018 and 2019 of P500,000 and P900,000,
respectively.  Mindoro’s income tax rate is 35%.  The income tax expense reported by Mindoro in its
December 31, 2017 income statement is ___________.

P2,100,000

P1,750,000

P1,400,000

P1,785,000

1 pts

The Coral Company applies the PFRS for SMEs.  On 20 July 2017 Coral wishes to classify a non-current
asset as held for sale.  At that date the asset's carrying amount was P14,500, its fair value was estimated
at P21,500 and the costs to sell at P1,450. 

The asset was sold on 18 October 2017 for P21,200. 

In accordance with PFRS for SMEs, at what amount should the asset be stated in Coral's statement of
financial position at 30 September 2017?

P20,050

P21,200

P21,500
P14,500

1 pts

Camil Company’s ledger showed a balance in its cash account at December 31, 2016 of  Php1,364,500,
which was determined  to consist of the following:

Petty cash fund      P   7,200

Checking account in Kapamilya bank ( check

of  Php12,000 is still outstanding) 673,500

Notes receivable in the possession of a  collecting agency     

50,000

Undeposited receipts, including a postdated check for Php10,500 and

traveller’s check  for Php10,000 356,000

Bond sinking fund cash 255,000

IOUs signed by employees      9,900

Paid vouchers, not yet recorded      12,900

TOTAL 1,364,500

At what amount should “cash on hand and in bank” be reported on Camil       Company’s statement of
financial position?

P1,003,700

P1,258,700

Php1,014,200

Php1,324,500

1 pts

The December 31, 2016 trial balance of Mari Company includes the following accounts:

Petty cash fund P   700,000

Current account-Kapuso bank      40,000,000

Current account-Kapamilya bank (overdraft) (  2,500,000)

120-day money market placement-K bank 10,000,000

Time deposit-KB bank      20,000,000

Additional information:
The petty cash fund includes unreplenished  December 2016 petty cash expense vouchers for
Php150,000 and an employee check  for Php50,000 dated January 31, 2017.
A check for Php1,000,000  was drawn against Kapuso bank  current account dated and recorded
December 27, 2106 but delivered to payee on January 10, 2017.
The KB bank time deposit  is set aside for land acquisition in early January 2017.
What should be reported  as “cash and cash equivalents” on December 31, 2016?

Php51,300,000

Php41,500,000

Php51,500,000

Php48,800,000

1 pts

Assume the following data of Pau Company of its cash and short-term, highly liquid investments for
December 31, 2017:

                        Cash on hand                                                            P800,000

                        Checking account No. 421, Kapuso bank      2,000,000

                        Checking account No. 724, Kapuso bank    (   300,000)

Securities Date Acquired Maturity Date Amount

120-day certificate of deposit

12/10/17 1/31/18 P6,000,000

BSP-Treasury bills (No.1) 11/30/17 4/30/18 50,000,000

BSP-Treasury bills (No.2) 10/31/17 1/20/18 10,000,000

180 days commercial papers

12/1/17 6/20/18 14,000,000

Money market funds 11/21/17 2/10/18 20,000,000

The correct cash and cash equivalents balance on December 31, 2017 is  _________?

P38,500,000

P52,500,000

P38,800,000
P52,800,000

1 pts

Total cash and cash equivalent of Php63,250,000 reported by Mari Company on December 31, 2017
include the following information:
Two certificates of deposits, each totaling Php5,000,000, having a maturity of 120 days.A check is dated
January 12, 2018 in the amount of Php1,250,000. A commercial  paper of Php21,000,000 which due in
90 days. Currency and coins on hand amounted to Php770,000.

Mari Company has agreed to maintain a cash balance of Php5,000,000 in one of its banks at all times to
ensure future credit availability (this amount is legally restricted as to withdrawal and was included in
the above balance)

How much is the correct amount of cash and cash equivalents that Mari       Company should report  in
its December 31, 2017 statement of financial position?

P57,000,000

P47,000,000

Php31,000,000

Php62,000,000

1 pts

The following   pertains to Pau Company on December 31, 2016:

      

Postage stamps P      5,000

Credit memo from a vendor for a purchase  Return          100,000

Current account Kapamilya bank      (500,000)

Current account at Kapuso bank      10,000,000

Employees postdated check   20,000

Foreign bank account-restricted (in equivalent peso)        5,000,000

IOU from Finance Manager’s brother in law   50,000

Trading securities   75,000

Payroll account 2,500,000

Petty cash fund (Php20,000 in currency and  expenses receipts for
Php30,000)      50,000

Postal money order 150,000

Traveler’s check      250,000

Treasury bills, due 1/31/17 (purchased 1/31/16) 1,500,000

Treasury bills, due 3/31/17 (purchased 12/31/16) 1,000,000

Treasury warrants      1,500,000

Additional information:
Check of Php1,000,000 in payment of accounts  payable was recorded on December 31, 2016 but mailed
to suppliers on January 5, 2017. Check of Php500,000 dated January 15, 2017 in payment of accounts
payable was recorded and mailed on December 31, 2016.Check of Php250,000 dated January 15, 2016
in payment of accounts payable was recorded and mailed on January 15, 2016. As of the reporting
period, the same has not been encashed by the payee and still outstanding.

How much cash and cash equivalents should Pau Company report on the       December 31, 2016
statement of financial position?

Php15,650,000

Php17,170,000

Php17,000,000

Php18,650,000