XU eLearn

AEC 32 ACA - INTERMEDIATE ACCOUNTING 2

Question 1 ABC Corp., under 30% tax rate on year ended December 31, 2020,
Answer saved showed the following information for income tax accounting:
Marked out of Pre-tax income 1,000,000
3.00
Excess of depreciation over allowable deduction 80,000
Flag
question Excess of instalment sales over taxable income 120,000
Interest income 36,000
Advance income taxes paid for the year 250,000

1. What is the amount of deferred tax liability for the year?

2. What is the amount of income tax payable for the year end December
31, 2020?
3. What is the amount of total income tax expense for the year?
Answers:
(1) 36000

(2) 352200

(3) 289200

Question 2 ABC Corp. showed the actuarial valuation report on its defined benefit
Answer saved plan:
Marked out of Fair value of plan asset, January 1, 2020 1,500,000
2.00
Present value of defined benefit obligation, January 1, 2020 1,900,000
Flag
question Past service cost 800,000
Current service cost 1,400,000
Benefits paid to retirees during the year 1,000,000
Gain on settlement of plan during the year 200,000
Actuarial loss during the period 150,000
Return on plan asset 200,000
Discount rate 10%

1. What is the balance of the net defined benefit obligation for the year
ended December 31, 2020?
2. What is the amount of defined benefit expense under profit or loss
during the year?
Answers:
(1) (2740000)

(2) 2040000

Question 3 ABC Corp. released the following amounts to its employees during the
Answer saved year 2020:
Marked out of Dec. 20 Signing bonus released for employees hired and to start working
2.00
in 2021 500,000
Remove flag
Dec. 28 Maternity benefit refundable by SSS in 2021 80,000
Dec. 30 Salaries for employees working from Dec. 11 to Dec. 20, 2020
120,000
Jan. 5 Salaries for employees working from Dec. 21 to Dec. 30, 2020
36,000
Jan. 15 Salaries for employees working from Dec, 31, 2020 to January 10,
2021 250,000

Salaries are earned evenly throughout the period.

1. What is the amount of salaries expense for the period December 31,
2020?
2. What is the amount of salaries payable as of December 31, 2020?
Answers:
(1) 281000

(2) 281000

Question 4 ABC Corp. showed the following transactions on its shareholders’ equity
Answer saved
Jan 20 Received P600,000 cash for subscription of 80,000 shares from
Marked out of several subscribers at P30 per share.
3.00
Mar 10 Issued 10,000 shares for a shareholder in exchange for land with
Flag
question fair value of P170,000.
Jun 20 Received cash from some subscribers in Jan 20 and issued
shares for their 50,000 shares subscribed.
Sep 15 Reacquired 1,000 shares for a total of P20,000
Dec 31 Total profit for the year is P500,000

ABC Corp. has a total authorized capital of 100,000 shares at P10 par
value per share.

1. What is the total balance of Share capital account as of December 31,

2020?
2. What is the total number of shares outstanding as of December 31,
2020?
3. If ABC Corp. will declare P1.00 per share, what is the total dividends
payable as of December 31, 2020?
Answers:
(1) 2400000

(2) 60000

(3) 60000

Question 5
Information on Entity ABC’s defined benefit plan is as follows:
Answer saved
PV of DBO – Jan. 1, 2021   2,000,000
Marked out of
3.00 FVPA – Jan.1, 2021   1,800,000
Flag
PV of DBO – Dec. 31, 2021   2,900,000
question
FVPA, end. – Dec. 31, 2021   2,600,000

Current service cost 400,000

Actuarial loss 200,000

Return on plan assets 120,000

Discount rate 10%

1.  How much is the net defined benefit liability (asset) to be presented in
Entity ABC’s December 31, 2021 statement of financial position?
2. How much is the component of the 2021 defined benefit cost to be
recognized in profit or loss?
3. How much is the component of the 2021 defined benefit cost to be
recognized in other comprehensive income – (income)/ loss?
Answers:
(1) (300000)

(2) 420000

(3) 260000

Question 6
An entity reports a profit before bonus and taxes of P1,800,000 during the
Answer saved
year. The entity has an established policy of paying its top management a
Marked out of 13% bonus on annual profit. The entity is subject to a 31% income tax
3.00
rate.
Flag
question
Compute the amount of bonus under each of the following schemes:
1.  Bonus is based on profit after deducting bonus but before deducting
income tax.
2. Bonus is based on profit after deducting bonus and income tax.
3. Bonus is based on profit before deducting bonus but after deducting
income tax.
Answers:
(1) 207080

(2) 148169

(3) 168240

Question 7
ABC Corporation's income statement for the year ended December 31,
Answer saved
2023, shows pretax income of ₱1,000,000. The following items are
Marked out of treated differently on the tax return and in the accounting records:
2.00
  Tax Return Accounting Records
Flag
question Rent income ₱ 70,000 ₱120,000
Depreciation expense 280,000 220,000
Premiums on officers' life - 90,000
insurance

ABC's tax rate for 2023 is 30 percent. 

1. How much is the income tax expense for 2023?
2. How much is the current tax expense for 2023?

Answers:
(1) 327000

(2) 294000

Question 8
ABC Co. issued 100,000 shares of common stock. Of these, 5,000 were
Answer saved
held as treasury stock at December 31, 2021. During 2022, transactions
Marked out of involving ABC's common stock were as follows:
2.00
May 3 - 1,000 shares of treasury stock were sold.
Flag
question August 6 - 10,000 shares of the previously unissued stock were sold.
November 18 - a 3-for-2 stock split took effect.

On December 31, 2022, how many shares of Nest's common stock were
(1) issued and (2) outstanding?

Answers:
(1) 73333

(2) 70667

Question 9 Which of the following statement is correct about long term employee
Answer saved benefits?
Marked out of
1.00 a. All of the other choices are correct.
Flag b. Long term defined benefit obligation requires the employer to set
question
up a separate fund to fulfil the obligation.
c. Long term defined benefit obligation requires the employer to
recognize periodic expense towards the fulfilment of the
obligation.
d. Plan asset should exceed the defined benefit obligation every end
of the year.
Clear my choice

Question 10 Which of the following is correct about defined benefit costs?

Answer saved

Marked out of a. Actual return on plan asset is deducted from the interest cost of
1.00 defined benefit obligation to compute for the net interest cost.
Flag b. All of the other choices are correct.
question
c. Actuarial gains or losses are part of the estimates made on the
defined benefit obligation and does not include the estimates on
the plan asset.
d. Interest cost on defined benefit obligation is based on the
beginning net defined benefit liability multiplied by the prevailing
rate.
Clear my choice

Question 11 Which of the following is correct about accounting for income tax?
Answer saved

Marked out of a. A rent income under taxation during the year and unearned
1.00 income under accounting rules give rise to deferred tax liability.
Flag b. Revaluation surplus results a deferred tax liability.
question
c. A right off of bad debts as expense under taxation this year which
was previously recorded as estimated expense under accounting
rules last year give rise to deferred tax liability this year.
d. All of the other choices are correct.

Clear my choice

Question 12 Which of the following is true about deferred tax?

Answer saved

Marked out of a. Deferred tax asset and deferred tax liability on the financial
1.00 position relates to temporary differences arising from the current
Flag year only.
question b. Current tax expense equals income tax due plus deferred tax
expenses.
c. Deferred tax asset and deferred tax liability during the year
results deferred tax expense.
d. All of the other choices are correct.

Clear my choice

Question 13 Which of the following is true about dividends?

Answer saved

Marked out of a. Large share dividends are accounted using the par value of the
1.00 shares declared.
Flag b. Declaration of dividends does not affect the total shareholders
question equity until the date of payment.
c. All shares issued will receive dividends at the date of declaration.
d. Small shares dividends are accounted using the fair value of the
shares at the date of payment.
Clear my choice

Question 14 The employer retains the obligation for the payment of the retirement
Answer saved benefits without the establishment of a separate fund.
Marked out of
1.00 a. Noncontributory plan
Flag
b. Eternal plan
question

c. Funded plan 

d. Unfunded plan

Clear my choice

Question 15 The vested benefits of an employee in a pension plan represent benefits

Answer saved

Marked out of a. that are not contingent on the employee's continuing in the
1.00 service of the employer.
Flag
b. to be paid to the retired employee in subsequent years.
question

c. to be paid from funds currently in the hands of an independent

trustee.

d. to be paid to the retired employee in the current year.

Clear my choice

Question 16 If the current tax expense is less than the income tax expense during the
Answer saved period, there must be a
Marked out of
1.00 a. deferred tax benefit
Remove flag
b. income tax payable

c. deferred tax expense

d. prepaid income tax

Clear my choice

Question 17 Legal capital is the portion of contributed capital that cannot be distributed
Answer saved to the owners during the lifetime of the corporation unless the corporation
Marked out of is dissolved and all of its liabilities are settled first. For no-par value
1.00 shares, legal capital is 
Flag
question a. the aggregate market value of shares issued and subscribed.

b. the aggregate stated value of shares issued and subscribed.

c. the aggregate par value of shares issued and subscribed.

d. the total consideration received or receivable from shares issued

or subscribed.

Clear my choice

Question 18 The use of equity reserves under PFRSs

Answer saved

Marked out of a. is strictly voluntary on the part of the management of a company.

1.00
b. results in the elimination of the retained earnings category from
Flag
the total equity of a company.
question

c. is based on whether a reserve is part of distributable or non-

distributable equity.

d. is primarily for the benefit of shareholders rather than creditors.

Clear my choice

Finish attempt ...

Quiz navigation

1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18

Finish attempt ...

Time left 0:24:06