iS CRC-ACE The Professional CPA Review Schoo! ain 3 vtaroman id, 879 P Campa St ce apa Sample, Man 1B (02) 738 6901 / 735 9031 0922 064 0191 ‘eri a er ace@yahoo com Baul Rude! Big, V, Lower Mabir cor Diego lang, Baguio Cy “/F CCAM Bldg, Monteverde St. Davag Cy ‘2 (074) aaz-1440 / 0322-8499196 ‘at (082) 289-9605 / 0925-7272223 ADVANCED FINANCIAL ACCOUNTING & REPORTING MAY 2017 BATCH FINAL PRE-BOARD EXAMINATIONS gap ge——g- ag APRIL 28, 2017; 320-630PM INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer for each item by Shadinig, the corresponding letter of your choice on the answer sheet provided. STRICTLY NO ERASURES ALLOWED: Use Pencl No. 2 only. 1. The matters generally dealt with in a joint arrangement contract include the 1 ow OW > activity, duration and reporting obligations“ Yes Yes Yes Yes capita, contribution of the venturers Yes Yes Yes No > sharing of the output, expenses orresults. No Yes Yes Yes > voting rights of the venturers No No Yes. No A. oh ct Bo DOV Which of the following statement enue TA The intercompany profit in invertory trensfer between affiliates is computed by multiplying the inventory held by the buying affiliate whic was acquired from the selling affiliate by the gross. profit rate based on sales of the buying afiliate. B. The income and expenses of a subsidiary are included in the consolidated: financial statements from the acquisition date D. withholding tax Hs Accounts payable 000, Due to BIR. 400,000, Cash = Collecting officer 3,600,000 PAGE 3 40,000,000 5 8 Te sToNeRich.constuston Company ws the lowest bidder on an ofc buling constuction contac. The contrac bid was.P Tamil, wih a estnated costo complete the project of P40 millon. The contact period was 34 mons sartng Jansary 2015 The company vses the comtocast memos of stating Eamings,Becaure of changes quests bythe customer th contact pie nes acjstes Sownwars 1 P&S milion on January, 2014 A record of construction activities for the years 2013-2016 follows. (in millions) 2013 2014 2015 2016 ‘Actual cost-current year P25 P3300 Pat : Progress billings 24 31 13 - Cash receipts 18 30 40 PT Estimated costs to complete 35 4 - > Compute the gross profit (loss) realized in 2014, ‘A P(1.360) milion 8. P 2.806 million C. P 3.317 million D. P 4.167 million Items 10 & 11 are based on the following information: Lakewood Pharmaceutical Comany manufactures a tablet for allergy sufferers. All ingreaients are ‘added at the beginning of the Blending Operation. Conversion costs flow uniformly throughout the process. Tabulating and Coating are operations downstream (rom Blending, Information on the Blending Operation for October is as follows Workin Process - Blending Operations October 1, balance (100,000 units, Completed and transferred 40% complete for conversion costs) 151,780 to Tabulating Direct materials added (1,000,000 units) 1 310,000 "Units =? Direct labor cost 2 Costs-? Factory overtiead (applied at 180% (of direct labor cost) ‘October 31, balance (200,000 unit 70% complete for conversion costs)? ‘The October 1 balance consists ofthe following cost elements: Direct materials P 128,000, Direct labor 8.800 Factory overhead 14.960 Total costs 751.260 SETB{CRC-ACE/AFAR: FINAL PRE-BORRD EXAMS (MAY 2017 BATCH) Pace 4 AY 10. Using nw ero ated iota ne so of wR aaa tanetondan “Tabulating operation. A 1,728,690 P2OTT.760 of EASTWEST's identifiable assets and liabilties was P700,000 and elected to measure the non- Controling interest at its share of the identiiable net assets. Annual impairment reviews ot goodwill A have not resulted in any impairment losses being recognised EASTWEST's current statement of financial position shows share captal of P100,(000, a revaluation reserve of P300,000 and retained earnings of P',400,000. Under JFRS3 Business combinations, what figure in respect of goodwill should now be carried in AIG's consolidated statement of financial position? ‘A. P 1,470,000 c B. P_ 460,000 -€. P 1,260,000 D. P 700,000 © 19. Mango inc. acquired on January 1, 2017 all the isstied and outstanciing common shares of Celine’ Inc. for P310,000 and Celine Inc. is dissolved. On this day, the assets and labilties of Celine In. show: N Cash P 30,000 % ‘Merchandise inventory 90,000. 7% \ Plant and equipment 160,000. Me, Goodwill 0,000 iy Liabilities ( 60,000) - Per appraisal, plant and equipment and merchandise inventory were valued at P190,000 and - 75,000, respectively. What is the amount of goodwill resulting from this transaction? ss “A. P'125,000 B. P40,000 e. P75,000 D. P90,000 SETB ef.CRC-ACE/AFAR:, FINAL PRE-BOARD EXAMS {MAY 2017 BATCH) a Ay 20. Corporation used debentures with a par value of P10,000 {0 acquire 100 percent of the net assets of S Company on January 1, 2017 and S Company is dissolved. On that date, the fair value ofthe bonds issued by P Corp. was P564,000, and the following belance sheet data were reported byS Co, Balance Sheet Item Historical cost Fair value Cash and Receivables P 55,000 P $0,000 Inventory. 105,000. 200,000 < Land: 60,000 100,000 Plant and Equipment 400,000 300,000 Less: Accumulated Depreciation _( 180,000) ‘Goodwill 40,000 Total assets ‘480,000 Accounts Payable P5000 —-P-50,000 ‘Common Stock 100,000 Additional Paid-in Capital 60,000 Refained Earnings 270,000 Tetal Liabilities and Equities 480,000 P. Corporation incurred an out of pocket expenses of 20,000. How much goodwill is to be recognized on the books of P as a result of the business combination? Ae PO B. P10,000 ©. P20,000 D. 30,000 B 21, ciydes Bakery owns 60 percent of the stock of Good Shepherd Products acquired several years ago at book value. On January 1, 2017, inventory reported by Clydes Bakery included 20,000 bags of flour purchased from Good Shepherd Products at P90 per bag. By December 31, 2017, all these beginning inventory purchased trom Good Shepherd Products had been baked into products and sold to customers by Clydes Bakery. There were no transactions oetween Clydes Bakery and Good Shepherd Products during 2017, Both Clydes Bakery and Good Shepherd Products price their sales at cost plus 50% mark-up for profit. Clydes Bakery reported income from its baking operations of P3,000,000 and Good ‘Shepherd Products reported net income of P2,500,000 for 2017. Compute the consolidated net income attributable to controlling interest. €. P1,000,000 and P740,000 B. P1,000,000 and P705,000 D. P970,000 and P696,000 C24, Use the same information as in problem except assume thatthe transfer were from Pricewater Company to SGV Company. What are the consolidated sales and cost of goods sold for 20177 ‘A. P 1;000,000 and P720,000 C. P1,000,000 and P696,000 B. P 1,000,000 and P755,000 ®. P 970,000 and P712,000 C 25. Hecht’s, a 90% owner of Robious, sold merchandise at a sales price of P60,000 to Robious during the 2014 fiscal year. This represented @ markup of 10% on the selling price. Robious’ ending inventory contained 30% of the merchandise purchased during the year from Hecht’ SET By! C20 vatsyo Corporation holés 70 percent ownership of Jeremian Enteses_On January 1. 2017 7 CRCAGE/AFAR: FINAL PRE-BOARD CxaMs (MAY 2017 BATCH) aster Preparing the 2014 consolidated for the Retoncen statements the accocntant failed to adjust fo TY Profit in ending inventory. The impact ofthis omission on consolidated statement was ‘A Overstate net income, P1800, > P1,800, and understate ending inventory. P1809. B. _Understate net income, 96,000. and overstate retained earnings, P6,000. NG. Overstate net income, 1,600, and overslate ening voor) 4 800. 1D. Understate net income, P1800, and overstate ending inventory. P1600 'toms.26 and 27 are based on the fotlowin Belgium Corporation owns 80 percent of the siock of Hilinger Compary AL the ond of 2017, Belgum Corp. and iinger Company reprted ihe folonng part operating rasue and ventory Beiglum Corp. iinger Co- Total sales P'eb3,000 510,000 Sales to Fitieger Company ‘140 000 Sales to Belgium Corporation ‘240,000 Net income 20,000 Operating income (excluding income fom ‘ilinger Company) 70,000 Inventory on hand, December 31, 2017 48,000 purchased from Hilinger Company purchased from Belgium Corporation Belgium Corporation regulerly prices its procucts at cost plus a 40 percent markup for profit. Hil'inger Company prices its sales at cost plus a 20 parcent markup. The total sales reported by Belgium and Hillinger include both intercompany sales and sales to nonaffilates. 42,000 D6. The consohaates ost of sales or 2017 must be “Aw P5428 POI OPS7EA28 ©. PS96,428 A. 27, The controting interest net income for 2017 must ber i, 1 eo mise eee Se ee at aa ee er eer pei Cet de oe Cease ahs Rone nue oa ee ce pane ten Number of units 47,000. 3,000 Direct materials cost per unt 3.23 3.09 Direct labor cost per unt 222 2.10 Direct labor hours 70,000. 2/500 Machine nours 2,400 21800 Inspection hours 30 100 Purchase orders 10 30 Mr. Mutation has learned that overhead costs are assigned to products on the basis of direct labor hours, The overhead costs for this time period consisted ofthe following items: ‘Overhead Cost Item ‘Amount Inspection costs 16,200 Purchasing costs 3.000 Machine costs 49,000 Total 73.200 1) 48. Using the direct lator hours to allocate overhead cost, determine the gross margin per unit for Product X A. P1304 se. P1454 c. P4505 D. P1.926 C49. Using the actvty-based costing, determine the gross margin per unit for Product X ALP 1ass BP 1398 cP 505, D. P1926 D 50. Mijainc., manufactures four products: Brand W, Brand X, Brand Y, and Brand Z. These products, each with significant sales value, are produced simultaneously. The following information 's utilized in order to allocate the joint costs under a process cost system Brands W, X, Y and Z emerge at the end of processing in Department 1. Brand Y is processed further in Department 2 and then sold. ‘The final market values for all the products total P550,000. 2. 3. The costs of the finishes products total P375,000. 4, Additional processing costs in Department 2 total P50,000. 8. Percentage of the final total market value of all the products: Brand W: 35%, Brand X: 15%, Brand Y: 30%, and Brand Z: 20%. 2 + Calculate the joint cost allocated to Brand W using the market (hypothetical) value method. AL P131,250 SB, P113,750 Cc. P144,375 D. P125,125 | C ‘1. ‘Thetrial balance of Conchita, Mercedes, and Eutha, on December 31, 2016, is as follows: Cash P 27,495 ‘Other assets 12,500 Receivable from Conchita 4,250 Merchandise inventory, January 1, 2016 5,250 Purchases 16,750 Expenses 6,755 6% Note payable to Conchita, dated June 1, 2016 P> 3,000 Sales 33,000 Rental payable 550 Conchita, capital 11,610 Mercedes, capital 13,390 \ Editha, capital 8.450 B_70,000 10,000 Merchandise inventory on December 31, 2016, amounts to 4.550; accrued interest on the note are closed and fable to Conchita is to be recognized as of December 31. Nominal accounts pay 15,750 is paid for.Conchita’s net interest in the firm (capital, receivable, and payable balances). A few days later, Mercedes ‘accepts @ personal check for P16,000 from Editha to quit the business nd allow Editha to continue operations as a sole proprietor. The partners share profit and losses equally. Compute the ending capital balance of Editha immediately after Mercedes's withdrawal? A. P 12,690 C. P 28,245 D. P 12,397.50 B, P 12,795 SET B