Name Date

ACC 113 2nd Periodical Examination

This multiple-choice test has a total of 50 points composed of 50 items (theory and problem solving). You have 2
hours to finish this examination. Read each question and answer choice carefully and choose the best answer. Be
sure to allocate your time carefully so you can complete the entire test within the given time. God bless future
CPA! "We learned about honesty and integrity – that the truth matters… that you don’t take shortcuts or play by
your own set of rules… and success doesn’t count unless you earn it fair and square." -Michelle Obama A true
CPA is honest at all times even if no one is looking.

1. On the date of acquisition, consolidated shareholder equity is equal to points: 1

The sum of the parent and subsidiary’s shareholder
equities.
The sum of the parent’s shareholder equity plus its pro rata share of the subsidiary’s shareholder equity on
the date of acquisition.
The parent’s shareholder
equity.
The subsidiary’s shareholder
equity.

2. On the date of acquisition, the parent’s investment (in subsidiary account) is points: 1
Revalued to fair
value
Replaced with 100% of the assets and liabilities of the subsidiary at fair market
value.
Replaced with 100% of the assets and liabilities of the subsidiary at book
value.
Replaced with the parent’s pro rata share of the assets and liabilities of the subsidiary at fair market
value.

3. Any negative goodwill arising on the date of acquisition points: 1

Is recognized as a gain on the date of
acquisition.
Is prorated among the parent company’s identifiable net
assets.
Should be amortized over a predetermined
period.
Is recognized as a loss on the date of
acquisition.

4. ABC Enterprises Inc, purchases 80% of the outstanding voting shares of XYZ Inc on January 1,
2020. On that date, points: 1
ABC’s Non-Controlling Interest account will include 20% of the fair value of XYZ’s net
assets.
ABC’s Non-Controlling Interest account will include 20% of the book value of XYZ’s net
assets.
ABC’s Non-Controlling Interest account will include 20% of the acquisition differential on the Date of
Acquisition.
ABC’s Non-Controlling Interest account will include 20% of any unallocated portion of the acquisition
differential on the Date of Acquisition.

1
5. One weakness associated with the entity Theory is that points: 1
It is inconsistent with the Historical Cost
Principle
Non-Controlling Interest is computed using the fair market values of the subsidiary’s net
assets.
Non-Controlling Interest is computed using the book values of the subsidiary’s net
assets.
The presumed acquisition cost may be unrealistic when the parent purchases significantly less than 100%
of the subsidiary’s voting shares, or voting control is achieved incrementally.

6. Contingent consideration should be valued at points: 1

The fair value of the consideration on the date of
acquisition.
The book value of the consideration at the date of
acquisition.
The acquirer’s pro-rata share of the subsidiary’s net assets at book value at the date of
acquisition.
The acquirer’s pro-rata share of the subsidiary’s net assets at fair value at the date of
acquisition.

7. If a subsidiary’s goodwill is reasonably measurable on the date of acquisition, which consolidation

theory should the parent company apply after January 1, 2009? points: 1
Proprietary Theory
Parent Company Theory
Parent Company Extension
Entity Theory

8. Under the Cost Method, points: 1

The parent’s investment in the subsidiary is recorded at cost, and never changed
thereafter
The parent records its pro-rata share of the subsidiary’s post-acquisition income as an increase to the
investment account and reduces the investment account with its share of the dividends declared by the
subsidiary.
The parent records its pro-rata share of the subsidiary’s cumulative earnings as an increase to the
investment account and reduces the investment account with its share of the dividends declared by the
subsidiary.
The parent’s investment in the Subsidiary is recorded at Cost and reduced by an excess dividends received
from the subsidiary.

9. Under the Equity Method, points: 1

The parent’s investment in the subsidiary is recorded at cost, and never changed
thereafter.
The parent records its pro-rata share of the subsidiary’s post-acquisition income as an increase to the
investment account and reduces the investment account with its share of the dividends declared by the
subsidiary.
The parent records its pro-rata share of the subsidiary’s cumulative earnings as an increase to the
investment account and reduces the investment account with its share of the dividends declared by the
subsidiary.
The parent’s investment in the Subsidiary is recorded at Cost and reduced by any excess dividends
received from the subsidiary.

2
10. Consolidated Net Income is equal to points: 1
The sum of the net income of both the parent and its
subsidiaries.
The sum of the net income of both the parent and its subsidiaries less any inter-company
dividends.
The parent’s net income excluding any income arising from its investment in the
Subsidiary,
The parent’s net income excluding any income arising from its investment in subsidiary less the
amortization of the acquisition differential.

11. 8. On January 1, 20x1, ABC Co. acquired 75% interest in XYZ, Inc. for ₱2,500,000 cash. ABC Co.
incurred transaction costs of ₱250,000 for legal, accounting and consultancy fees in negotiating the
business combination. ABC Co. elected to measure NCI at the NCI’s proportionate share in XYZ,
Inc.’s identifiable net assets. The carrying amounts and fair values of XYZ’s assets and liabilities at
the acquisition date were as follows (see attached file) How much is the goodwill (gain on a bargain
purchase)? points: 1

140,000
287,500
278,500
264,500

12. 12. On January 1, 20x1, HISTRIONAL Co. acquired all of the identifiable assets and assumed all of
the liabilities of THEATRICAL, Inc. by paying cash of ₱4,000,000. On this date, the identifiable assets
acquired and liabilities assumed have fair values of ₱6,400,000 and ₱3,600,000, respectively. As of
January 1, 20x1, HISTRIONAL holds a building and a patent which are being rented out to
THEATRICAL, Inc. under operating leases. HISTRIONAL has determined that the terms of the
operating lease on the patent compared with market terms are unfavorable. The fair value of the
differential is estimated at ₱80,000. How much is the goodwill (gain on bargain purchase)? points: 1
1,080,000
1,280,000
1,120,000
1,200,000

3
13. On January 1, 20x1, CONJUNCTION Co., and UNION, Inc. entered into a business combination
effected through exchange of equity instruments. The combination resulted to CONJUNCTION
obtaining 100% interest in UNION. Both of the combining entities are publicly listed. As of this date,
CONJUNCTION’s shares have a quoted price of ₱400 per share. CONJUNCTION Co. recognized
goodwill of ₱300,000 on the business combination. No acquisition-related costs were incurred.
Additional selected information at acquisition date is shown below (see attached file) How many
shares were issued by CONJUNCTION Co. in the business combination? points: 1

40,000
20,000
12,000
10,000

14. On January 1, 20x1, CONJUNCTION Co., and UNION, Inc. entered into a business combination
effected through exchange of equity instruments. The combination resulted to CONJUNCTION
obtaining 100% interest in UNION. Both of the combining entities are publicly listed. As of this date,
CONJUNCTION’s shares have a quoted price of ₱400 per share. CONJUNCTION Co. recognized
goodwill of ₱300,000 on the business combination. No acquisition-related costs were incurred.
Additional selected information at acquisition date is shown below (see attached file) What is the
par value per share of the shares issued? points: 1

10
40
12
32

15. On January 1, 20x1, CONJUNCTION Co., and UNION, Inc. entered into a business combination
effected through exchange of equity instruments. The combination resulted to CONJUNCTION
obtaining 100% interest in UNION. Both of the combining entities are publicly listed. As of this date,
CONJUNCTION’s shares have a quoted price of ₱400 per share. CONJUNCTION Co. recognized
goodwill of ₱300,000 on the business combination. No acquisition-related costs were incurred.
Additional selected information at acquisition date is shown below (see attached file) What is the
acquisition-date fair value of the net identifiable assets of UNION? points: 1

3,700,000
3,200,000
2,800,000
2,400,000

4
16. On January 1, 20x1, FORTITUDE Co. acquired 15% ownership interest in ENDURANCE, Inc. for
₱400,000. The investment was accounted for under PFRS 9. From 20x1 to the end of 20x3,
FORTITUDE recognized net fair value gains of ₱200,000. On January 1, 20x4, FORTITUDE acquired
additional 60% ownership interest in ENDURANCE, Inc. for ₱3,200,000. As of this date, FORTITUDE
has identified the following: a. The previously held 15% interest has a fair value of ₱720,000. b.
ENDURANCE’s net identifiable assets have a fair value of ₱4,000,000. c. FORTITUDE elected to
measure non-controlling interests at the non-controlling interest’s proportionate share of
ENDURANCE’s identifiable net assets. The previously held interest was initially classified as FVOCI.
How much is the goodwill (gain on bargain purchase)? points: 1
200,000
420,000
920,000
540,000

17. On January 1, 1990, Poe Corp. sold a machine for ₱900,000 to Saxe Corp., its wholly-owned
subsidiary. Poe paid ₱1,100,000 for this machine, which had accumulated depreciation of ₱250,000.
Poe estimated a ₱100,000 salvage value and depreciated the machine on the straight-line method
over 20 years, a policy which Saxe continued. In Poe's December 31, 1990, consolidated balance
sheet, this machine should be included in cost and accumulated depreciation as: points: 1
1,100,000; 300,000
1,100,000; 290,000
900,000; 40,000
850,000; 42,500

18. Zest Co. owns 100% of Cinn, Inc. On January 2, 1999, Zest sold equipment with an original cost
of ₱80,000 and a carrying amount of ₱48,000 to Cinn for ₱72,000. Zest had been depreciating the
equipment over a five-year period using straight-line depreciation with no residual value. Cinn is
using straight-line depreciation over three years with no residual value. In Zest's December 31,
1999, consolidating worksheet, by what amount should depreciation expense be decreased? points:
1
0
8,000
16,000
24,000

5
19. Owl Co. paid ₱150,000 for its 75% interest in Owlet Co. Owl elected to value NCI at fair value.
Owlet’s net identifiable assets approximated their fair values at acquisition date. The acquisition
resulted in a goodwill attributable to NCI of ₱10,000. Since the acquisition date, Owlet has made
accumulated profits of ₱200,000. There have been no changes in Owlet’s share capital since
acquisition date. The group determined that goodwill has been impaired by ₱8,000. A summary of
the individual statements of financial positions of the entities as at the end of reporting period is
shown below (see attached file) How much is the fair value assigned to NCI at date of acquisition?
points: 1

112,000
98,000
76,000
55,000

20. Owl Co. paid ₱150,000 for its 75% interest in Owlet Co. Owl elected to value NCI at fair value.
Owlet’s net identifiable assets approximated their fair values at acquisition date. The acquisition
resulted in a goodwill attributable to NCI of ₱10,000. Since the acquisition date, Owlet has made
accumulated profits of ₱200,000. There have been no changes in Owlet’s share capital since
acquisition date. The group determined that goodwill has been impaired by ₱8,000. A summary of
the individual statements of financial positions of the entities as at the end of reporting period is
shown below (see attached file) How much is the goodwill at the end of reporting period? points: 1

17,000
15,000
13,000
9,000

6
21. Owl Co. paid ₱150,000 for its 75% interest in Owlet Co. Owl elected to value NCI at fair value.
Owlet’s net identifiable assets approximated their fair values at acquisition date. The acquisition
resulted in a goodwill attributable to NCI of ₱10,000. Since the acquisition date, Owlet has made
accumulated profits of ₱200,000. There have been no changes in Owlet’s share capital since
acquisition date. The group determined that goodwill has been impaired by ₱8,000. A summary of
the individual statements of financial positions of the entities as at the end of reporting period is
shown below (see attached file) How much is the NCI in net assets? points: 1

95,000
89,000
103,000
112,00

22. Owl Co. paid ₱150,000 for its 75% interest in Owlet Co. Owl elected to value NCI at fair value.
Owlet’s net identifiable assets approximated their fair values at acquisition date. The acquisition
resulted in a goodwill attributable to NCI of ₱10,000. Since the acquisition date, Owlet has made
accumulated profits of ₱200,000. There have been no changes in Owlet’s share capital since
acquisition date. The group determined that goodwill has been impaired by ₱8,000. A summary of
the individual statements of financial positions of the entities as at the end of reporting period is
shown below (see attached file) How much is the consolidated retained earnings? points: 1

644,000
702,000
556,000
628,000

7
23. Owl Co. paid ₱150,000 for its 75% interest in Owlet Co. Owl elected to value NCI at fair value.
Owlet’s net identifiable assets approximated their fair values at acquisition date. The acquisition
resulted in a goodwill attributable to NCI of ₱10,000. Since the acquisition date, Owlet has made
accumulated profits of ₱200,000. There have been no changes in Owlet’s share capital since
acquisition date. The group determined that goodwill has been impaired by ₱8,000. A summary of
the individual statements of financial positions of the entities as at the end of reporting period is
shown below (see attached file) How much is the consolidated total assets? points: 1

1,298,000
1,367,000
1,387,000
1,402,000

24. Owl Co. paid ₱150,000 for its 75% interest in Owlet Co. Owl elected to value NCI at fair value.
Owlet’s net identifiable assets approximated their fair values at acquisition date. The acquisition
resulted in a goodwill attributable to NCI of ₱10,000. Since the acquisition date, Owlet has made
accumulated profits of ₱200,000. There have been no changes in Owlet’s share capital since
acquisition date. The group determined that goodwill has been impaired by ₱8,000. A summary of
the individual statements of financial positions of the entities as at the end of reporting period is
shown below (see attached file) How much is the consolidated total equity? points: 1

872,000
998,000
1,036,000
1,047,000

8
25. On June 30, 20x1, Cockroach Co. acquired 75,000 of Nymph Co.'s 100,000 outstanding shares
with par value per share of ₱1 for ₱4 per share. At this time, Nymph’s shares have a quoted price of
₱3.50 per share and Nymph’s retained earnings is ₱80,000. Additional information: • Nymph’s total
assets include land classified as investment property at a cost of ₱180,000. The land’s fair values
are ₱200,000 on acquisition date and ₱320,000 on June 30, 20x3. Nymph uses the cost model for its
investment properties. However, the group uses the fair value model. • On acquisition date,
Nymph's building classified as property, plant, and equipment had a fair value of ₱30,000 in excess
of its carrying amount. The building's remaining useful life is 5 years. The group uses the straight-
line method of depreciation. • The current accounts on June 30, 20x3 include intercompany
receivables and payables of ₱10,000. • An impairment test on June 30, 20x3 concluded that goodwill
is impaired by ₱20,000. • NCI is measured at fair value. • There are no subsequent changes in
Nymph’s outstanding shares. The June 30, 20x3 individual financial statements of the entities show
the following information (see attached file) How much is the goodwill in the June 30, 20x3
consolidated financial statements? points: 1

153,700
169,300
145,300
137,500

26. On June 30, 20x1, Cockroach Co. acquired 75,000 of Nymph Co.'s 100,000 outstanding shares
with par value per share of ₱1 for ₱4 per share. At this time, Nymph’s shares have a quoted price of
₱3.50 per share and Nymph’s retained earnings is ₱80,000. Additional information: • Nymph’s total
assets include land classified as investment property at a cost of ₱180,000. The land’s fair values
are ₱200,000 on acquisition date and ₱320,000 on June 30, 20x3. Nymph uses the cost model for its
investment properties. However, the group uses the fair value model. • On acquisition date,
Nymph's building classified as property, plant, and equipment had a fair value of ₱30,000 in excess
of its carrying amount. The building's remaining useful life is 5 years. The group uses the straight-
line method of depreciation. • The current accounts on June 30, 20x3 include intercompany
receivables and payables of ₱10,000. • An impairment test on June 30, 20x3 concluded that goodwill
is impaired by ₱20,000. • NCI is measured at fair value. • There are no subsequent changes in
Nymph’s outstanding shares. The June 30, 20x3 individual financial statements of the entities show
the following information (see attached file) How much is the NCI in net assets? points: 1

159,500
163,500
149,500
195,500

9
27. On June 30, 20x1, Cockroach Co. acquired 75,000 of Nymph Co.'s 100,000 outstanding shares
with par value per share of ₱1 for ₱4 per share. At this time, Nymph’s shares have a quoted price of
₱3.50 per share and Nymph’s retained earnings is ₱80,000. Additional information: • Nymph’s total
assets include land classified as investment property at a cost of ₱180,000. The land’s fair values
are ₱200,000 on acquisition date and ₱320,000 on June 30, 20x3. Nymph uses the cost model for its
investment properties. However, the group uses the fair value model. • On acquisition date,
Nymph's building classified as property, plant, and equipment had a fair value of ₱30,000 in excess
of its carrying amount. The building's remaining useful life is 5 years. The group uses the straight-
line method of depreciation. • The current accounts on June 30, 20x3 include intercompany
receivables and payables of ₱10,000. • An impairment test on June 30, 20x3 concluded that goodwill
is impaired by ₱20,000. • NCI is measured at fair value. • There are no subsequent changes in
Nymph’s outstanding shares. The June 30, 20x3 individual financial statements of the entities show
the following information (see attached file) How much is the consolidated retained earnings?
points: 1

668,000
702,000
716,000
772,000

28. On June 30, 20x1, Cockroach Co. acquired 75,000 of Nymph Co.'s 100,000 outstanding shares
with par value per share of ₱1 for ₱4 per share. At this time, Nymph’s shares have a quoted price of
₱3.50 per share and Nymph’s retained earnings is ₱80,000. Additional information: • Nymph’s total
assets include land classified as investment property at a cost of ₱180,000. The land’s fair values
are ₱200,000 on acquisition date and ₱320,000 on June 30, 20x3. Nymph uses the cost model for its
investment properties. However, the group uses the fair value model. • On acquisition date,
Nymph's building classified as property, plant, and equipment had a fair value of ₱30,000 in excess
of its carrying amount. The building's remaining useful life is 5 years. The group uses the straight-
line method of depreciation. • The current accounts on June 30, 20x3 include intercompany
receivables and payables of ₱10,000. • An impairment test on June 30, 20x3 concluded that goodwill
is impaired by ₱20,000. • NCI is measured at fair value. • There are no subsequent changes in
Nymph’s outstanding shares. The June 30, 20x3 individual financial statements of the entities show
the following information (see attached file) How much is the consolidated total assets? points: 1

1,485,500
1,498,800
1,514,500
1,569,500

10
29. On June 30, 20x1, Cockroach Co. acquired 75,000 of Nymph Co.'s 100,000 outstanding shares
with par value per share of ₱1 for ₱4 per share. At this time, Nymph’s shares have a quoted price of
₱3.50 per share and Nymph’s retained earnings is ₱80,000. Additional information: • Nymph’s total
assets include land classified as investment property at a cost of ₱180,000. The land’s fair values
are ₱200,000 on acquisition date and ₱320,000 on June 30, 20x3. Nymph uses the cost model for its
investment properties. However, the group uses the fair value model. • On acquisition date,
Nymph's building classified as property, plant, and equipment had a fair value of ₱30,000 in excess
of its carrying amount. The building's remaining useful life is 5 years. The group uses the straight-
line method of depreciation. • The current accounts on June 30, 20x3 include intercompany
receivables and payables of ₱10,000. • An impairment test on June 30, 20x3 concluded that goodwill
is impaired by ₱20,000. • NCI is measured at fair value. • There are no subsequent changes in
Nymph’s outstanding shares. The June 30, 20x3 individual financial statements of the entities show
the following information (see attached file) How much is the consolidated total liabilities? points: 1

290,000
310,000
326,000
348,000

30. On June 30, 20x1, Cockroach Co. acquired 75,000 of Nymph Co.'s 100,000 outstanding shares
with par value per share of ₱1 for ₱4 per share. At this time, Nymph’s shares have a quoted price of
₱3.50 per share and Nymph’s retained earnings is ₱80,000. Additional information: • Nymph’s total
assets include land classified as investment property at a cost of ₱180,000. The land’s fair values
are ₱200,000 on acquisition date and ₱320,000 on June 30, 20x3. Nymph uses the cost model for its
investment properties. However, the group uses the fair value model. • On acquisition date,
Nymph's building classified as property, plant, and equipment had a fair value of ₱30,000 in excess
of its carrying amount. The building's remaining useful life is 5 years. The group uses the straight-
line method of depreciation. • The current accounts on June 30, 20x3 include intercompany
receivables and payables of ₱10,000. • An impairment test on June 30, 20x3 concluded that goodwill
is impaired by ₱20,000. • NCI is measured at fair value. • There are no subsequent changes in
Nymph’s outstanding shares. The June 30, 20x3 individual financial statements of the entities show
the following information (see attached file) How much is the consolidated equity? points: 1

1,175,500
1,289,500
1,198,500
1,167,500

11
31. Refer to the attachment. Case #1: On acquisition date, ABC Co. elected to measure non-
controlling interest as its proportionate share in XYZ, Inc.’s net identifiable assets. How much is the
consolidated profit for 20x1? points: 1
296,000
280,000
208,000
276,000

32. Refer to the attachment. Case #1: On acquisition date, ABC Co. elected to measure non-
controlling interest as its proportionate share in XYZ, Inc.’s net identifiable assets. How much is the
consolidated total assets as of December 31, 20x1? points: 1
1,900,000
1,907,000
1,903,000
1,904,000

33. Refer to the attachment. Case #1: On acquisition date, ABC Co. elected to measure non-
controlling interest as its proportionate share in XYZ, Inc.’s net identifiable assets. How much is the
consolidated total equity as of December 31, 20x1? points: 1
1,492,000
1,415,000
1,488,000
1,491,000

34. Refer to the attachment. Case #2: On acquisition date, ABC Co. elected to measure non-
controlling interest at fair value. A value of ₱75,000 is assigned to the non-controlling interest. How
much is the consolidated profit for 20x1? points: 1
296,000
280,000
278,000
276,000

35. Refer to the attachment. Case #2: On acquisition date, ABC Co. elected to measure non-
controlling interest at fair value. A value of ₱75,000 is assigned to the non-controlling interest. How
much is the consolidated total assets as of December 31, 20x1? points: 1
1,900,000
1,907,000
1,903,000
1,904,000

36. Refer to the attachment. Case #2: On acquisition date, ABC Co. elected to measure non-
controlling interest at fair value. A value of ₱75,000 is assigned to the non-controlling interest. How
much is the consolidated total equity as of December 31, 20x1? points: 1
1,492,000
1,415,000
1,488,000
1,491,000

12
37. If NCI is measured at “proportionate share,” how much is the gain or loss on the transaction to
be recognized in the consolidated financial statements? points: 1

80,000
(80,000)
(83,000)
0

38. If NCI is measured at “fair value,” how much is the gain or loss on the transaction to be
recognized in the consolidated financial statements? points: 1

(83,000)
83,000
(80,000)
0

39. MIME TO IMMITATE Co. initially tested its goodwill for impairment on September 30, 20x1. When
should MIME perform its second impairment testing on its goodwill? points: 1
on or before September 30,
20x2
on or before December 31,
20x2
at any date not earlier than September 30,
20x2
at any date during
20x2

13
40. When NCI is measured at fair value, points: 1
goodwill is attributed only to the owners of the
parent.
goodwill is attributed to both the owners of the parent and
NCI.
goodwill impairment is allocated to both the owners of the parent and
NCI.
b and
c

41. The journal entries to eliminate unrealized profit in closing inventory at December 31, 2019 were
as follows (see attached file) What are the journal entries to eliminate the unrealized profit in
opening inventory in the following period? points: 1

Dr. Cost of Goods sold 500,000 Cr. Inventory

500,000
Dr. Inventory 500,000 Cr. Cost of Goods sold
500,000
Dr. Retained earnings, beg. 500,000 Cr. Inventory
500,000
Dr. Inventory 500,000 Cr. Retained earnings, beg.
500,000

42. A non-current asset was sold by Siapno Co. to Pares Company during 2019. The carrying amount
of the asset at the time of the sale was P700,00. As part of the consolidation process, the following
journal entry was passed (see attached file) Assuming there is another ten years of useful life
remaining for the asset, what are the journal entries at December 31, 2020 to adjust for
depreciation? points: 1

Dr. Accumulated depreciation 40,000 Cr. Depreciation 40,000

Dr. Accumulated depreciation 30,000 Cr. Depreciation 30,000
Dr. Accumulated depreciation 60,000 Cr. Depreciation 30,000 Cr. Retained earnings, beg.
30,000
Dr. Accumulated depreciation 40,000 Cr. Depreciation 20,000 Cr. Retained earnings, beg.
20,000

14
43. On Janaury 1, 2020, Plato Co. acquired control of a subsidiary via an 80% shareholding. On
December 31, 2020, the subsidiary declared a dividend of P100,000. Plato Co. accounted for
dividends on an accrual basis. Plato Co. treated the dividend as tax-free. Which of the following pro-
forma entries would be prepared in the consolidation for the year ended December 31, 2020? points:
1
Dr. Deferred tax asset 30,000 Dr. Dividend income 100,000 Dr. Dividends payable 100,000 Cr. Income tax
expense 30,000 Cr. Retained earnings 100,000 Dividends receivable 100,000
Dr. Dividend income 100,000 Dr. Dividends payable 100,000 Cr. Retained earnings 100,000 Dividends
receivable 100,000
Dr. Deferred tax asset 24,000 Dr. Dividend income 80,000 Dr. Dividends payable 80,000 Cr. Income tax
expense 24,000 Cr. Retained earnings 80,000 Dividends receivable 80,000
Dr. Dividend income 80,000 Dr. Dividends payable 80,000 Cr. Retained earnings 80,000 Dividends
receivable 80,000

44. Wrong Corp. has several subsidiaries that are included in its consolidated financial statements.
In its December 31, 2019 trial balance, Wrong had the following intercompany balances before
eliminations (see attached file) In its December 31, 2019 consolidated balance sheet, what amount
should Wrong report as intercompany receivables? points: 1

152,000
146,000
36,000
0

45. Parker Corp. owns 80% of Smith, Inc.'s common stock. During 2020, Parker sold Smith P250,000
of inventory on the same terms as sales made to third parties. Smith sold all of the inventory
purchased from Parker in 2020. The following information pertains to Smith and Parker's sales for
2020 (see attached file_ What amount should Parker report as cost of sales in its 2020 consolidated
income statement? points: 1

750,000
680,000
500,000
430,000

15
46. What is the amount of unrealized profit that needs to be eliminated at the end of the period, in
the following situation, where Moreland Co. is the parent of World Co.? (Ignore the tax effect)
Moreland purchases 500 units of inventory for P20 each. Moreland sells this entire inventory to
World Co. at a mark-up of 25%. World then sells half of the inventory to an external party. Half of
the remaining amount (after the external sale) is old back to Moreland for P2,500. points: 1
2,500
300
625
1,250

47. The Rodman Co. acquired equipment on January 1, 2015 at a cost of P800,000, depreciating it
over 8 years with a nil salvage value. On Janaury 1, 2018, the Mel Co. acquired 100% of Rodman and
estimated the fair value of the equipment at P460,000, with a remaining life of 5 years. This fair
value was not incorporated into Rodman's books and the depreciation expense continued to be
calculated by reference to original cost. Under IFRS 10, Consolidated Financial Statements, what
adjustment should be made to the depreciation expense (DE) for the year and the statement of
financial position carrying amount (CA) in preparing the consolidated financial statements for the
year ended December 31, 2019? points: 1
DE increase by 8000; CA increase by
24000
DE increase by 8000; CA decrease by
24000
DE decrease by 8000; CA increase by
24000
DE decrease by 8000; CA decrease by
24000

48. Refer to the attached file. What is the consolidated sales revenue for the year ended December
31, 2020? points: 1

2,600,000
2,320,000
3,000,000
2,720,000

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49. Refer to the attached file. What is the consolidated gross profit for the year ended December 31,
2020? points: 1

1,,120,000
1,048,000
1,028,000
1,152,000

50. Refer to the attached file. What is the noncontrolling interest net income for the year ended
December 31, 2020? points: 1

88,000
59,200
51,200
100,800

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