(CPA REVIEW SCHOOL OF THE PHILIPPINES MANILA ADVANCED FINANCIAL ACCOUNTING AND REPORTING Sunday, April 14,2019 Final Preboard Examination 3:30 pam (06:30 pam, [Numbers 1 and 2 ‘On December 31, 2018, Abra, Barbara and Carol organized ABaCa partnership wherein. Abra contributed P4,000,000 for 20% interest in the partnership. Barbara contributed P12,000,000 for acapital ‘credit of P10,000,000. After closing the accounting book, Barbara and Carol withdrew the following ‘amounts respectively: P1,000,000 and P1,200,000. Profit or Los arrangement are agreed as follows ‘Annual salary of PS0,000, P40,000 and P30,000 respectively ‘The remainder will be divided inthe ratio of 23:5 (On December 31, 2019 the capital balance of Abra is P4,030,000. 1. Whats the net income / (net loss) of the partnership forthe year ended December 31, 20192 (199,880) b. 20,000 1,420,000 4. 1,240,000 2, What isthe capital balance of Carol on December 31, 20197 2 4,030,000 . 8,940,000 © 21020,000 4. 4,780,000 ‘Numbers 3, 4 and 5 (On December 31, 2020, the Statement of Financial Position of Triple E with profit or loss rato of 4:1:5, is presented below: Cash 3,000,000 8,000,000 Noncash asset 16,000,000, 7,000,000 3,000,000 1,000,000 On January 1, 2021, Triple E partnership has been subjected to installment liquidation. As of January 31, 2021, the following data concerning liquidation ar provided: ‘© Noncash asset with book value of P12,000,000 has been sold ata loss of P4,000,000. Liquidation expense amounting to P8(0,000 has been incurred forthe month of January. 1,200,000 cash has been withheld for future liquidation expense, 'P6,000,000 liability has been paid. What is Eia’s share in the maximum possible loss on January 31, 20217 a. 2,600,000 b. 2,400,000 ©. 3,000,000 4. 1,500,000 A. Whats the amount received by Blah on January 31, 20217 1,200,000 . . 1,000,000, €. 2,200,000 4. 400,000 5. Whats the cash balance on Jamuary 31, 2021? 1,200,000 1,000,000 2,200,000 31200,000Page 2 Number 6 Ifa rering partner receives more than hs adjusted capital balance before retirement, what isthe logical ‘eason if the capital balances of the remaining pariner decrease after the said retiement? a. Bonus is given by remaining partners to retiring partner >. Bonus is given by retiring partner to remaining partners ©. Goodwill arising from retirement of a partner is recognized, 4. Impairment loss of an existing asset is recognized at the ti Numbers 7 and 8 Nissan Corporation is undergoing liquidation, On January 1, 2020 its Statement of Financial Position showed the following accounts: ASSETS LIABILITIES AND EQUITY Cash P 150000 Salaries Payable 85,000 ‘Accounts Restvablesnet 290,600 ‘Accounts Payable 120,700 Inventory 50,000 Mortgages Payable 28,000 Prepaid Expenses 10.400 Loan Payable 130,000 Building 380000 Notes Payable #300 Good —#0,900 Ondinary Shares 170,000 Deficit -(57,000) TOTAL 96.009 TOTAL Ragioge ‘The mortgage payable is secured by the Building having 2 realizable value of P400,000. Accounts Payable amounting to P75,000 is secured by receivables amounting to P90,600 (P9,900 of which is tuncolleible) The balance of receivables which has & realizable value of P187,500 is used to secure the loan payable. Inventory has a realizable value of P41,200, In addition to recorded liabilities are: accrued interest on morgage payable amounting to Pd,280, liquidation expenses amounting P11,300 and taxes, ‘mounting o P5,600, Prepaid expenses and goodwill have no realizable values. (NOTE: Use 2 decimal places for estimated recovery percentage ex. 8 %), 7. What are the net fee assets? a. 152,500 . 237,500, ©. 254/400, 4. 163,800, 8, What is the estimated payment to partially secured creditors? 390,334 430,360 430,334 420,334 Number 9 ‘Which ofthe following eredits shall be setled first by the corporate liquidator in the winding up of the Atfairs ofa dissolved corporation? ‘Book value per share forthe common stockholders ofthe dissolved corporation es >. Liquidation value per share for the preferred stockholders of the dissolved corporation © Redemption value of the stocks for the redeemable prefered stockholders of the dissolved orion 3. lain of the creditors of the dissolved comporationPage 3 ‘Nambers 10 and 11 LT Ine. is engaged inthe business of selling laptops at installment price. It isthe policy of LT Ine. to recognize gross profit on is installment sales using installment method (Round DGP rate 2 decimal places, ex. 12345 = 12.38%), The company manufactures 10 laptops with the following production costs Direct materials 100,000, Direct lnbor 720,000 Factory overhead 80,000 On January 1, 2020, LT Ine. sold to different students all the laptops at an installment price of PS0,000, cach payable as follows: ‘+ P20,000 down payment on January 1,2020. ‘+ The balance payable i thee equal annual installments every December 31 * The eustomer issued a non-interest bearing promissory note forthe balance. The prevailing market rate forthe similar note is 10%, (PV Factor = 2.48685) LT Inc, has reported the Following operating expenses: 2020 oak 2022 Total marketing expeases PIi,S00 11,200 22,400 Total administative expenses 6 500-8800. 7,600, ‘On December 31, 2020, LT Inc. was ble to eolest all the installments due, On December 31,2021, LT collected all te installments due exeept for those of the buyers of two lapiops who defaulted on the insalment de. As areal, LT Ine. epossessedthe two laptops. At December 31,202, the repossessed laptop hs an estimated selling price per unit of P7,500 afer reconditioning cost inthe amount ofP000. ‘The normal profit foreach repossessed lapiop is estimated at 20%, On July 1, 2022, LT Ine. was able to sel the two repossessed laptops at cash pice ofP10,000 each after reconditioning them, On December 31,2022, LT Ine, was able to collect all the remaining insalments due. 10. What is the net income tobe reported by LT Inc, forthe year ended December 31, 2021? 28,532 b 159374 i 34.004 \ é 28,160 | 1 What is the net income to be reported by LT Inc. fo the year ended December 31, 20227 a 17,589 b. 25/586 «. 16316 4. 40316 Number 12 ‘What i the accounting treatment tothe excess ofthe net installment receivable (installment receivable ‘minus deferred gross profit) over the fair value of the repossessed inventory at the date of the repossession of inventory duc tothe defeul o the installment balsnce? Deferred gain on repossession classified as liability '. Loss on repossession as part of profit or loss Deferred loss on repossession as part of other comprehensive income 4. Gain on repossession as part of other comprehensive incomePage 4 Number 13, ‘On January 1.2020, Megaworld Inc. accepted a long-term construction contract to build 2 condominium with total contract price of P30,600,000. For the two years ended December 31, 2020 and 2021, the following dat were provided by Megaworld Inc. 1232020 1231/2021 Genel sdinisaton cost which s not eimbursable under the contract p> 669,009 3,000,000 forthe year Site labor costs including site supervision for the year 3,500,000 5,000,000 Selling cats forthe year 000,000 1,000,000 Cost of direct materials used in construction forthe year 2,500,000 3,400,000 Estimated cost to complete the condominium at year end 4,000,000 3,600,000 ‘Megaworld Inc. billed its client 30% during 2020 and 40% during 2021. The outcome of the construction contract can be estimated reliably ‘What isthe balance ofthe Construction in Progress in excess of Progress Billings / (Progress Billings in excess of Construction in Progress) to be presented in the Megaworld’s December 31, 2021 Statement ‘of Financial Position? & 9,000,000 asset . 5,400,000 asset 3,000,000 asset 4. 6,600,000 liability Numbers 14 and 15 (On January 1, 2020, Engr Ine. entered into a contract to build a large office building for CPA Ine. fora {otal contact pres of P10,000.000. CPA Ine. will make annual payments 19 Engr ne. but the amount of ‘these payments cannot exceed the direst coats ineured by Engr ine ‘The construction contract provided CPA Inc. witha final inspection right to ensure compliance withthe ‘contract tems ror to accepting the completed projet. 1 had been the accounting poisey of Engr Inc. to use percentage of completion method to compute ‘construction even sn 088 profit. On Jancary 1, 2022, Engr Inc. implemented an sccounting change ‘rom percentage of completion method to zero prof oF cost recovery method. The following data were jrovided by Engr. Ine. forthe yeers ended December 31, 2020, 2021 and 2022: NOTE: (Round percentages of completion 2 decimal places, ex. 12345 = 12.38%) 2020 202 2022 Costs incurred each year 2,902,900 5,200,000 1,200,000 Estimated cost to vomplete at year-end 6:300,000 ‘800.000 = Progress billings exch year 800.000 4,000,000 5,200,000 Progress payment received each year 550,000 4,200,000 5.250,000 The costs incurred for each veur are administrative costs which are usive ofthe following actual marketing expense and general reimbursabie under tie constrsetion contracts: 2020 zon 2022 Marketing expense 140,000 400,000 240,000 General administrative costs 0,000 300,000 160,000 14, What i the net income to be reported by Engr Inc. forthe year euded December 31, 2021? a 1,500,000 800,000 748.950 448.950 1S, What isthe excess construcion in progress or (excess billings) as of December 31, 20217 4,200,000 b. 31300.000 6. 4301,110 5 301.110Number 16 Por 5 When wil the balance of constrtion in progress computed under eo scthod be higher than ihe balance of construction ir mar oonges reas als es in progress computed under percentage of completion method? & lnthe year when the esimated contact pe ower ha the etna ol cnstcton com '. Inthe year when the entity reported realized gross profit under cost recovery method. G. In the year when entity reported realized gros loss under percentage of completion method. 4. Such scenario wil never happen throughout the lifetime ofthe project. Number 17 ‘WY lnc, granted a franchise to XX Inc. to operate its registered business of barbershop. The contract was signed on January 1, 2020 with initial franchise fee of P500,000 payable in P200,000 cash and the balance in five equal semi-annual installments every June 30 and December 31, The non-interest bearing. promissory note (reasonably assured) has implicit rate of 10% (PV Factor = 4.32948). The contact Provides that XX Inc, shall pay a contingent franchise fee equal to 5% ofthe revenve from the barber shop. XX Ine. reported a revenue in the amount of P100,000 during 2020. VV Inc. has sybstantially performed all the services required under the franchise contract, ‘What isthe total income to be recognized by VV Ine. for the year ended December 31, 2020? a 508.000 b. 455,120 432.447 488.395 | Number 18 ‘Under PFRS 15, when shall entity recognize revenue from contract with customers? ‘4. When itis probable that future economic benefits will flow to the entity and the fair value of the revenue can be measured reliably. When the entity has already collected the consideration from revenue from contract with customers, When oras the entity satisfies a performance obligation, 4. When the entity becomes a party to contract Number 19 ‘Under PFRS 15, what is measurement basis of revenue from edntract with customers? ‘Historical cost of the consideration received or receivable: Book value of the consideration received or receivable | ©. Fair value ofthe consideration received or receivable 4. Revoverable amount of the consideration received or receivable ‘Numbers 20,24 and 22 i ‘The income statement submitted by the KC. branch to the Home Office for the month of December 31, 2019 follows: Sales 600,000 Inventory fan. 1 2019 80,000 Shipments from Home office 350,000 Purchases 30,000! Inventory, Dec. 31, 2019 100,000 Operating expenses 180,000 ‘The branch inventories consisted of Jan. Dee. 31 Merchandise from home office 70,000. 84,000 Local purchases 10,90 16,000 Total 80,000 700,000 ‘After the necessury adjustment, the home office ascertained the trve net income of the branch to be 156,000. 20, What percentage above cos di the home office il the bea for mechani sipped tt?Page 6 21, Whet is the ending inventory of the branch inthe combined statements? a. 100,000 b. 84,000 © 76,000 4. 60,000 22. Whats the December 31, 2018 unrealized profit branch inventory? 2 24,000 20,000 «120,000 a 96,000 Number 23 The fotlowing information forthe month of Jenuary i provided for Marie Company and its only branch: Home Office ControlCurrent Jan 1, 2019 Balance 60,000 Jan, 3, Cash remitted tothe home office 80,000 Jan. 5, Shipments from the home office 120,000 Jan, 28, Expenses from the home office 45,200 Jan, 28, Cash remitted tothe home office 30,000 Jan. 28, Merchandise returned from the home office 12,000 Branch Control/Current Jan, 1, 2019 Balance 60,000 Jan. 3, Cash received from branch 80,000 dan. 4, Shipments wo branch, 120,000 Jan, 28, Expense allocation 52,400 Jan, 28, Shipments to branch 24,000 Jan, 8, Collection from branch customer 18,000 Jan. 28, Supplies purchased for branch and shipped directly to branch 8,000 Except forthe errr hy the branch in recording its share of allocated expenses, all differences are timing differences, ‘What isthe adjusted balance of reciprocal accounts? © 103,200 b. 166,400 & 124400 4. 117,200 Number 24 CPDB Corporation, operates a numberof branches in Metro Manila, On June 30, 2019, its Tenaybeanch showed a Heme Office Account talanse of P27.380 and the Home Office books showed a Tanaybranch account balances of #25550. The folowing information my help in revoneiling both accounts: 4) APL2,000 shipment, charged by Home Office to Tanay branch, was actually set to and retained by Baras branch ') A P15,000 shipment, intended and charged 10 Morong branch was shipped to Tanay branch and retained by the later ©) AP2,000 emergency cath transfer from Barss branch was vot taken wp in the Home Office books 4) Home office coeets # Tenay braich accounts receivable of F3,600 and fils to notify the branch ©) Home Office war charged for P1,200 for merchandise returned by Taray branch on June 28, The ‘merchandise is ir rans 1) Home office erroneously recorded Tanay's net income for May, 2019 at P16,275, The branch reported anet income of P12,675, ‘What isthe reconciled amount ofthe Home Office and Tenay branch reciprocel accounts? 21,780 23,750 27,350 20,150Page 7 Numbers 25 and 26 ‘On Devember 31, the Investment in Branch account in the Home Office books shows a balance of 'P50,000. The following facts are ascertained: 8). Merchandise billed at P12,500 is in transit on December 31 from the home office tothe branch 'b) The branch collected a home office accounts receivable for P3,500. The branch did not notify the home office of such collection {©} On December 30, the home office vent cash of P7,500 to the branch, bu this was charged to General ‘expense; the branch has not received the cash as of December 31 4) Branch profit for December was recorded by the home office at P2400 instead of P2,040 ‘) The branch reuried supplies of P,500 to the home offce but the home office has not yet recorded the receipt of the supplies 64,140 381140, ©. 14000 | 4. 13,000 26. Whats the adjusted balance of the reciprocal accounts on December 31 2 40,860 b. 59,860 fe 51,640 2g ettanieaate | Number 27 ‘office shipped to the branch merchandise which had cost of P120,000. Three-fourths of these ‘merchandise was sold by the branch for P141,000. Operating expenses of the branch amounted to 27,000. ‘What net income will the branch report if merchandise is billed by the home offce tothe branch at 25% above cost? 4 800 4,200 1,00 8,000 i peer | ‘The Aey Corp. established its Taytay branch in Marek 2019. During the first year of operations, the home | Number 28 ‘Which of the following transactions will result to credit 1 home office account in the book ofthe branch? ‘Collection by the branch ofits ow receivable Net loss reported by the branch Payment by the home office ofthe payable ofthe branch 4d. Retum by the branch of merchandise coming from the home office [Numbers 29 and 30 Department A is the frs stage in the Speed Manufacturing Company's production cycle. Beginning WIP laventory was 10% incomplete as t9 conversion while Ending WIP is 90% done as to conversion. Inspection point is made when the units reached 80% stage of completion. The company normally incurs 122 loss onthe units started. Information as to conversion in Department A follows: Units Conversion Costs Beg, WIP 50,000 P 88,280 Units Stared 200,000 483000 Completed and Transferred 175,000 Ending WIP 72,000Page 8 29, Compute the total conversion costof the units transfered-ou sing the method which presents more accurately the physical flow of units a. 413,280 b. ai4836 «417232 @. 470/204 30. Compute the total conversion cost of the units in-process at the end using the method which ‘commingles the units in the production a 157076 , 160,048 fe, 159232 4. 158,153 [Numbers 31 and 32 XYZ Company manufactures picture frames of all sizes and shapes and uses job order costing system, ‘There is always some spoilage in each production run. The following costs relate to the current production run, + Estimated overhead (exclusive of allowance for spoilage) 250,000, ‘+ Spoilage allowance (estimated) P 37,500 ‘© Direct Labor hours 120,000 A single unit of frame requires direct material and direct labor in the amount of 5.00 and P6.00 ‘respectively, and 1.5 direct labor hours. 31. Assuming spoilage is atributabe to all jobs, what is the unit cost of each frame? 1460 13.40 1475 B30 pegs 32. Assuming spoilage is attributable to the specific job, what i the unit cost ofeach frame? 14.18 b. 1460, © 13.2 a. 14.12 ‘Numbers 33 and 34 Oregon Manufacturing Company manufbetures products X, Y and Z from a joint process. Additional {information ae as follows in deciding when to sel! the joi products: Product X Product Y_—Produet Z Total Units produced 12,000 ? 4,000 24,000 Joint costs P 48,000, 2 2 120,000 Sales value at splint Pp? BD 50,000 200,000 Additional processing cost P 18,000 Pi4,000 10,000 © P 42,000 Final selling price P110.000 —PSU,c00—— 60,000 —P 260,000 Units sold 1600 7,200 ? 2,100 Joint costs were allocated using the selative cules value at split-off spproach. 33. Compute the amount of joint cost allocated to Product ¥ and Z. 30,000 and P42,000, 42,000 and P30,000, 'P80,000 and 70,000 5,500 and P5600Page 9 34. Compute the value ofthe ending inventories of Product X and Y ‘& 5,00 and PS,600 ’. P$,000 and Pa,200 fe. P4,000 and PS,600 4. 5,300 and P3,200, Numbers 35 and 36 JKL Souvenir Factory manufactured a varity of party souvenirs. The owner had recently decided to implementa ITT Costing System. Transactions during February were as follows: ‘Raw materials totaling P 450,000 were purchased and requisitioned for production. Direct labor costs of P500,000 were incurred. Indirect Inbor costs amounted to P640,000. Uslites costs tousled P210,000, Other actual factory overhead costs amounted to P270,000. Applied conversion costs totaled P1,S00,000. ‘All units were completed and picked-up by the customer. erperee ‘35. Compute the amount of over-applied or under-applied conversion cost forthe month 50,000 over-applied ’. P 120,000 under-applied € P50,000 under-applied &. P120,000 over-applied 136. Entry made to record the applied conversion cost 1a. Factory Ovethead Applied 1,000,000 Conversion Costs 1,000,000 1. Material & In Process Inventory 1,000,000 ‘Conversion Costs 1,000,000 ‘&. Conversion Costs 1,800,000 Various Accounts 1,500,000 4. Material & In Process Inventory 1,500,000 Conversion Costs 1,500,000 Number 37 ‘When will he equivalent unit of production computed for direst materials under FIFO Process be always the same withthe equivalent unit of production computed for direct materials under Average Process in ‘ease Work in Process Inventory Beginning is present? 1 When all direct materials are added atthe start ofthe production process When direct materials are added evenly throughout the production process When all direct materials ae added atthe middle ofthe production process <4. When all direct materials are added atthe end of the production process ‘Number 38 Which ofthe following will increase the cost of geods sold during the year? Inerease in the salaries of inventory accountant during the year Decrease in finished goods inventory during the year Tcrease in work in process inventory durin the year Decrease in purchases of direct materials during the year b. &Page 10 Number 39 ‘The entity reported a net unfavorable direst labor variance. Ifthe standard direct labor hours to be rendered are higher than the dizect labor hours actually rendered, which is correct? ‘a The actual direct labor cost is lower than the standard direct labor cost 1. The standard direct labor rate is lower than the actual disest labor rate ‘&. The emount debited to work in process is higher to the amounted credited to salaries payable, 4. The entity debited labor efficiency variance and credited labor rate variance. Number 40 On January 1, 2020 Entity A acquired the net assets of Entity B by issuing common stocks with fair ‘value of P150,000 and par value of P100,000. Aside fom that, Entity A is required to pay P132,000 cash to the overs of Entity B on December 31, 2020. The applicable effective interest rate ofthis contingent ‘consideration is (0%, Oa January 1, 2026, the net assets of Entity B is reported at a book value of ‘250,000. On the acquisition date, all assets and liabilities of Emty B are property valued except for the “ventory that is undervalued by P20,000 and the note payable that is overvalued by P30,000, Asa result ‘of acquisition, Entity A incurred and paid the following costs: (1) acquisition related cost of 20,00 @) indirect cost of aquisition of P10,000; and (3) stock issuance costs of P30,000. ‘What is the goodwill or gnin on bargain purchase arising from business combination to be recognized bby Entity A on January 1, 20207 ‘4. 30,000 gain on bargain purchase 10,000 gain on bargain purchase b ©, 18,000 gain on bargain purchase 4. 20,000 goodwill, Numbers 43 and 42 On Januery 1,2020, Entity A aoquired 80% of the outstanding common stocks of Entity B ata gain on bargain purchase of P100,000. Ar the date of acquisition, all the assets of Entity B are propery valued except fora building that is overvalued of P$0,000 and an inventory that is undervalued by P30,000. The said overvalued building has a raining useful life of S years on January 1, 2020 while 1/3 ofthe said ‘undervalued inventory remained unsold as of December 31, 2020. The following intercompany transactions occurred during the year: ‘© On4July 1, 2020, Entity B leased a machinery to Entity A at an annual renal of P120,000. ‘© On October 1, 2020, Entity A rendered management services to Entity B at a consideration of 40,000. Entity A accounted its Investment in Entity B using cost method in its separate financial statements. For the year ended December 31, 2020, Entity A reported net income of P1,000,000 and declared dividends of P200,000 in its separate financial statements while Entity B reported P500,000 and seclared dividends of P100,000in ts separate financial stalemenis. 41, What isthe consolidated net income attributable to Entity A's shareholders to be reported by Entity Ain its Consolidated Income Statement forthe year ended December 31,2020? a. 1,354,000 b. 11852,000 © 1,616,000 4. 1282,000 . 42. what is the net income ettributable to nonicontolling interest to be reported by Entity A in its Consolidated Income Statement for the yeartended December 31, 2020? a 94,000 b. 106,000 c 86,000, 4, 96,000Page 11 Numbers 43,44 and 45 A.Co. acquired 60% of the outstanding ordinary shares of B Co. on January 2, 2020. A Co. acquired it atbook value which is the same as its fir value atthe date of ucquisitc Income statements of A Co. and B Co. for 202! areas follows: A B Net sales 218,750 87,500 Cost of sales 031.250) 452,500) Gross profit 37,500 35,000 OPEX 26.2501 13.128) Operating income 61.250 2S Dividend income 14.000 = | Net income 75,250 21875 B Co, made seles to A Co. of P28,000 in 2020 and P42,000 in 2021. A Co. reported inyentory on December 31, 2020/amounting to 17,500 of which 20% comes from B Co. and inventory on December 31,2021 amounting to P21,000 of which 303% comes from B Co. A Co. uses 30% mark up on cost and B Co, uses 25% mark up on cost for ther selling prices. A Co, and B Co. declared and paid dividends. in2021 amounting 1 P21,000 and P17,500 respectively. On January 1, 2021, B Co. has ordinary shares ‘of P80,000; share premium of P30,000 and retained earnings of 40,000. 43. What isthe consolidate sale forthe year ended December 31, 2021? a 306,250 b. 236250 « 264250 4. 278250 44. What isthe consolidated cost of goods sold forthe year ended December 31, 2021? a 183,750 b. 142310 © 184310 156,450 45. What isthe consolidated gross profit forthe year ended December 31, 2021? a 121,940 '. 122:500 121,800 4. 79940 Numbers 46,47, and 48 (On January 1, 2620, Rapids Company purchased 80% of the outstanding shares of Mock Corporation at book value. The siockholders’ equity of Mock Corporation on this date showed” Oniinary share | 4,560,000 and Retained camings ~P3,920,000. On April 30, 2020, Rapids Company acquired used machinery for P672,000 from Mock Corp, that was being carried inthe latter's books at 80,000. The asset stil has a remaining useful life of $ years. On the other hand, on August 31, 2020, Mock Corp, purchased an equipment that was already 20% deprecated from Rapids Co for 2,760,000. The orginal Cost ofthis equipment was P3,000,000 and had a remaining life of 8 years. Net income of Rapids Co. and Mock Corp for 2020 amounted to P2,880,000 and P1,240,000. Dividends paid totaled to P920,000, and P20,000 for Rapids Co. and Mock Corp, respectively * 46. What is the net income in the consolidated financial statements in 20207 a 3,920,600 ». 3,775,000 | ©. 3,584,600 4. 3307.480Page 12 447, What is the net income attributable to parent's shareholders’ equity inthe consolidated financiat statements in 2020? & 3,336,600 3307480 3.643.480 3,584,600 448. What isthe non-controlling interest in net assets inthe consolidated financial statements in 20207 21,696,000 '. 1,860,000 y . 1/820,120 41,889,120 Numbers 49, $0 and St (On January 1, 2020, Entity A acquired 70% of outstanding ordinary shares of Entity B at 2 price of 1,000,000. Entity A incutred P200,000 cost related to acquisition. At acquisition date, the book value of net assets of Entity B is P2,S00,000 but a machinery with useful life of 10 years is overstated by 'P300,000. For the year ended December 31, 2020, Entity B reported net income of P350,000 and Geclared dividend in the amount of P100,000 to its ordinary shareholders. The fair valve of the Investment in Entity B is mensured at P1,800,000 on December 31, 2020 with cost to sell of 15% while its value in use is discounted at P1,750,000, If Entity A accounted its Investment in Entity B using equity method in its separate financial Satements. what is the book value of Investment in Entity B to be reported by Entity A on December 531, 2020 init separate statement of financial position? & 1,750,000 b. 1,800.000 1.830.000 4. 610,000 ‘50, What isthe net effect in its Investment in Er satement? | Increase in prodit by P670,000 Increase in roti: by P870,060 ‘Increase in prof: by P60G,000 44. Increase in profit by PB00.006 icy A's net profit in its separate income statement assuming it accounted B sing fair value model through profit or loss in its separate income 5 |- What isthe book value of Investasent in Entity B woe reported by Entity A on December 31, 2020 in its separate statement of financial position assuming it counted its Investment in Entity B using cost method” a 1,800,000 b. 1,530.000 200,00 4 1000.600 Number 82 [fhe Parent Corporation accounnsits Investment in Subsidiary using cost method in its sepacate nancial statements, which income iter will appear in its separate statement of comprehensive income? ‘4 Gain on bargain puschase in ease the fair value of net asseis acquire is higher than the fair value of the consideraticn given up forthe acquisition ofthe investment in subsidiary '. Dividend income fiom subsidiry when its right to receive dividend is established through + declasation by he board of directors of its subsidiary . Investment income or share in adjusted net income of its subsidiary Gain on changes in fair value of investment i subsidiaryPage 13 ‘Number 53 Under PFRS 3, what is the aecounting treatment when an acquirer obtains control of a business? & Itshall be accounted for using cost method. 1. Itshall be accounted for using pooling of interest method, c. Itshall be accounted for using equity method 4. Itshall be accounted for using acquisition method. Number 54 Under PFRS3, what the counting resent of the cot related to the acquisunby the sequier of the ecuie sich s finders fee, profession fos consuling fees and general adminiatve coat? | They sal be expened as neured They shall fora part of the cosertion ven pin the business combination, | They all be debited share premium The sal be chugedo goodhal or gin on bargin pushaeaising fom busnessconbiration. | Number 58 (On July 1, 2020, a Filipino entity whose functional currency is Philippine Peso acquired 1,000 common stocks of an American entity ata price of $5 per share. The Filipino ently accounted the investment in ‘common stocks a financial asset at fair value through profit or loss. On October 1, 2020, the American | entity declared and distributed 20% same share dividends to its common stockholders. On December 31, 2026, the common stacks of the American entity are tcaded at $4 per share. The direct foreign currency | ‘exchange rates are $1=PS0 on July 1, 2020 and $1=PS2 on December 31, 2020. Wit he ein came a eats af ns neg a a | recognize Flipinoeny for the yea ended Deco 31,2020? 2. 8,000 gain '. 10,000 gain © 9,600 gain | 4. 8,400 gain ‘Numbers 56 and $7 (On July 1, 2020, «Filipino entity whose functional currency is Philippine Peso purchased on account inventories ta cost of $100 to be paid on June 30, 2021. On October I, 2020, the said inventories were sold on account by the Filipino entity ata selling price of $150 to be collected on September 30, 2021 ‘The following direct foreign exchange rates re given: July 1,2020 October 1,2020 December 31, 2020 | Buying Spot P40 Pa es Selling Spot P50 Pat Ps | 56. What isthe gross profit to be reported by the Filipino entity forthe year ended December 31, 2020? | a 1300 . b 21100 2400 4. 3,200 57, what isthe net foreign currency gain or los forthe year ended December 31, 2020? 150 net gain 250 net gain 1 (G50) net toss (50) net loss peerPage 14 Number 58 Filipino Ent is operating in the USA where the functional cuency isthe USA. The presentation cunency of Fipne Ents Philippine Peso because alt overs ae Filipinos, On January 1, 2020, theFilipno Entity aque an investment propery a sof 1,00 wih wef if of 10 years without residual value. Flpio Enfy lected cast model la the accounting of is investment propery. On December 31,202, the ae value of vesiment propery is determined tobe $1,200. The direst frign cuireacy exchange ‘ates are $1=PS0 on fanuary 12020 and 1-40 on December 31,2020. What is the carrying amount of Investment Property to be presented in the Statement of Financial Position of Filipino Entity? 48,000 b. 45,000 60,000 &. 36,000 Number 59 Which of the following gain or loss on changes in the value of derivates shall be presented in other comprehensive income with reclassification adjustment to profit or loss if already realized? ‘4. Gain or lots on changes of intrinsic value of derivates classified as undesignated hedge . Gain or loss on changes of value of derivates designated as cash flow hedge arising from its ineffective portion ‘© Gain or loss on changes of value of derivatives designated as hedge of net investment in foreign ‘operation arising from is effective portion 4. Gain or loss on changes of time value of derivatives designated as fair value hedge Number 60 Under PAS 21. whet is dhe eccoumting treatment of exchange differences arising from translating financial statement i entity's fsictional cureney into entit’s presentation currency? | Itshall be prescrted nd esogaized in otter comprchersive incosne with reclassification adjustment to profit ois 'b. It shell be presented and recognized in other comprehensive income without reclassification adjustment to profit or lose {tshal be presented and recognized in profit or loss, 1 shall be preseoted and recognized as chenge in accounting policy in statement of changes in auity: ap Number 61 Under PAS 21, when translating foreign curent denominated asset inte entity’ functional currency, what isthe exchange rate to be used for translting investment property accounted for using cost model at each subsequent statement of tinancial position date? ‘a. Exchange rate atthe date of transaction a.k.a historical rate b, Exchange rate et the end of reporting period aka. elosing rice ce. Exchange rate that existed wilt the fai values were determines Average exchenge rte for each yearPoge 15 Number 62 Entity A and Entity B incorporated Entity C. The contractual agreement ofthe incorporating entities ‘Provides that decisions about the relevant activites of Entity requir the unanimous consent of Entity A and Entity B. The contactal agreement provides tht Entity A and Entity B have rights to the assets, and obligations forthe lables, relating to Entity C. How shall Emty A and Entity B account their interests in Entity C? 1 They shall be accounted for as Investment in Associate using Equity Method under PAS 28. 'b. They hal be accounted fr as joint operation under PFRS 11 ‘& They shall be accounted for as Investment in Joint Venture using Equity Method under PFRS 11 in relation to PAS 28, 44. They shall be accounted for using aoquisition method under PFRS 3 and PFRS 10. Numbers 63 and 64 Banks A and B agreed to combine their corporate, investment banking, asset management and service activities by establishing a separate vehicle (Bank X). Both partes expect the arrangement to benefit ‘them in different ways, ‘The asset and libilites held in Bank: X are the assets and liabilities of Bank X and not the assets and liabilities ofthe parties. Banks A and B each invested PS,000,000 to have a40 perceat ownership interest in Bank X, withthe remaining 20 percent being listed and widely held. The stockholders’ agreement between Bank A and Bank B establishes joint control over the activities of Bark X. ‘Transzctions of Bank X forthe year 2020 and 2021 as follows: 2020 2021 Revenues 10,000,000 12,000,000 Cost and expenses 6,000,000 7,000,000 Dividends declared and paid - 4,000,000 (63, What is the imerest of Bank B inthe joint arrangernent at December 31, 2021? & 7,000,000 10,000,000 & 6,600,000 4. 5,400,000 (64. What isthe dividend income from Bank X reported under Bank A's primary financial statements forthe year ended December 31, 2021? ‘4. 4M using cost or fair value method . 1.6M using costo far value method © Ousing cost method 4. Ousing equity method Number 65 ‘MADOCS Hospital had the following cash receipts and disbursements forthe year ended December 31, 2030: Collections fiom patients 2,500,000 Contribution for an establishment of term endowment 00:00 ‘Tuition from nursing schoot 1,000,000 Interest received from investment in permanent éndowments 175,000, Dividends reesived from investment in term endowments 200,000 Payment of supporting expenses 750,000 Payment of program expenses 1,075,000 ‘The interest received from permanent endowment is restricted by the donor for acquisition of medical equipment,Page 16 ‘What isthe net cash provided by operating activities? a. 1,675,000 b. 1,875,000 «. 2,050,000 4. 2,175,000 Number 66 Resources ofa not-for-profit organization's that have been set aide fora specific purpose by the Board of Trustees of the organization are accounted fr in: ‘a Term endowment fund Unrestricted fund Restricted curent fund Annuity fund ‘Number 67 On January 25, 2020, the Department of Agriculture purchased PI Million worth of rie from farmers forsale to customers. On February 2, the rice were seld for P1,200,000 with a 10% discount to rice ‘dealers. What isthe entry of Department of Agriculture to record the sale of rice on February 2? ‘Debit Merchandise Inventory P1,200,000 and Credit Cost of Goods Sold P1,200,000 'b. Debit Cash-Coltecting Officers’ PI,080,000 and Sales Discounts P120,000 and Credit Sales Revenue PI,200,000. CashMDS, Regular 1,080,000 and Sales Discounts P120,000 and Credit Sales Revenue PI, 200,000. Debit Cash-Treasury/Agency Deposit 1,080,000 and Sales Discounts P120,000 and Credit Sales Revenue P1,200,000. er Number 68 Which ofthe following cash flows shall be classified as part of operating activities in the Statement of Cash Flows ofa nonprofit organization? ‘& Cash payment forthe acquisition of service bus ofthe organization '. Cash receipt from sale of souvenir items ofthe organization ‘¢. Cash payment forthe matured loans payable ofthe organization 4. Cash receipt from donor who restricted the fund for research project ofthe organization Namber 69 ‘This phase in the national government budgetary provess involves the enactment of the General Appropriations Act by the Congress of the Philippines based on the proposed national budget submitted by the President ofthe Republic ofthe Philippines Budget Preparation '. Budget Legislation © Budget Exeeution 4. Budget Accountability ‘Number 70 ‘The Republic ofthe Philippines contracted with a SLEX Incorporated to develop, operate and maintain the grantor’s skyway connecting North Luzon Expressway and South Luzon Expressway. SLEX Incorporated has received the license ot right to tharge users ofthe skyway that it constructs and then ‘must operate and maintain for a period of $0 years How shall SLEX Incorporated account its interest in the ssid skyway? 4 It shall be accounted under PAS 38: Intangible Asset. '. Itshell be accounted under PFRS 9: Financia] Asset classified as debt instrument. cit shall be accounted under PAS 16: Property, Plant and Equipment. 4. It shall be accounted under PAS 40: Investment Property