Bachelor in Management

2021/2022

UC: Financial Accounting II 2h 30m June 3, 2022

SITTING EXAM (60%) EXAM (100%)

(Part: I, III e IV) (Part: II, III e V)

NO.__________ NAME: __________________________________________________________

Class (Mark with “X”):

GiB1 GiB2

FINAL GRADE: ______ (LECTURER RESPONSIBLE FOR THE GRADE: ______________)

AACSB GRADE: (SLG4.3./SLG5.3. – CR1) (SLG4.3./SLG5.3. – CR2)

INSTRUCTIONS
1. The duration of the exam is 150 minutes;
2. A cotação de cada grupo/questão é identificada ao longo da prova;
3. IFRS framework and standards and the chart of accounts are allowed references for
consultation purposes during the exam;
4. Students should identify underlying assumptions considered necessary to solve the assessment.
However, validity is always confirmed by lecturers;
5. Students are not allowed to modify the content of the assessment;
6. Students should comply with rules of Código de Conduta Académica do Iscte, under penalty of
assessment cancellation.

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 PART I - SLG4.3./SLG5.3. – CR1
SITTING EXAM (6,0 POINTS)
This part has 10 (ten) questions of multiple choice. For each one, students should mark the
correct answer with an “X”. Each correct question worth 0,60 points. Wrong questions are
penalized with 0,15 points.

1. In general, according with the international standards, revenue from a long-term contract
should be recognized under the:

___ Equity method.

_X_ Percentage-of-completion method.

___ Depreciation Cost Reposition Method.

___ Any one of the above methods presented.

2. Mark the correct answer:

___ Unrealized gains are reflected in statement of financial position.

_X_ Accrued expenses are reflected in SFP as assets.

___ If there is no document that supports an expense, in N, but that expense must be
recognized we are looking at a prepaid expense.

___ None of the answers are correct.

3. Which of the following businesses does not report sales costs on the income statement?

___ A car sale.

___ A restaurant.

___ A vacuum factory.

_X_ A lawyers’ office.

4. In the income statement, inventory production variance (Finished products; By-products;

Work in Progress):

___ Matches to the difference between initial inventories and final inventories of
finished products, by-products, and work in progress.

_X_ Matches to the difference between final inventories and initial inventories of
finished products, by-products, and work in progress.

___ Matches to the difference between final inventories and initial inventories of
merchandise, finished products, by-products, and work in progress.

___ None of the answers are correct.

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 5. FALÉSIA DO MAR, S.A. dispose of 1.000 treasury shares for the price of 17,47 euros per
share, that were acquired for the price of 10,00 euros per share. The difference
resulting from the dispose of, should be recognized as:

___ An increase in other reserve – restricted reserves for 17.470 euros.

___ An increase in other reserves – restricted reserves for 7.470 euros.

_X_ An increase in shareholders equity, presented in other equity variance for 7.470
euros.

___ Increase in net income of the period for 7.470 euros.

6. Company NUVEM ZZ, S.A. acquired in N-3 an ownership interest of 30% of MEGA TT, LDA.
and adopted the equity method to measure this financial investment. At year N, MEGA
TT, LDA., revaluated its property, plant, and equipment, generating a revaluation surplus
of 120.000 euros. What is the impact, if any, in the financial statements of NUVEM ZZ,
S.A., on year N?

___ Increase on equity investments and investment income for the amount of 36.000
euros.

___ Increase in equity investments and retained earnings for the amount of 36.000
euros.

_X_ Increase in equity investments and equity investments adjustment (shareholders’

equity) for the amount of 36.000 euros.

___ None of the answers is correct because revaluation of property, plant and
equipment occurred in Mega TT, Lda. and not on Nuvem ZZ, S.A.

7. Company X sells equipment’s for Biomass industry and sold one of those equipments
for the price of 300.000 euros. The equipment will be paid by the client in 6 postponed
quarterly rents of 50.000 euros each. The first rent will be paid in the end of the first
quarter, after delivery of the equipment, that occurred in December 31, N. Present
value of the payments at delivery date is 275.000 euros. What amount should be
presented in SFP of company X, at the end of year N:

___ An amount at accounts receivable – clients of 300.00 euros.

___ An amount at accounts receivable – clients of 300.000 euros and unearned

revenue of 25.000 euros.

_X_ An amount at accounts receivable – clients of 275.000 euros.

___ An amount of unearned revenue of 300.000 euros.

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 8. According with IAS 8, an error should be recognized:

___ Prospectively in the period of change.

_X_ Retrospectively until except to the extent that it is impracticable.

___ Prospectively in the period of change and future periods.

___ None of the answers are correct.

9. On year N, EMPRESA ABC was notified that was being sued for 10.000 m.u. by one of its
clients, that claims for merchandise delivered with delay. According with the IAS 37,
which statement is not correct?

___ The probability of an unfavourable decision to company ABC is relevant to record a

provision

_X_ It should only be disclosed on notes a contingent liability because company ABC
intends to negotiate a lower reparation and a improve its delivery process.

___ If a provision is recognized, it can be reversed or used in the following accounting

periods.

___ Estimation to value provisions does not arm its reliability.

10. On March of year N EMITEBEM, S.A., decided to increase its share capital to 150.000
m.u. by issuing new shares at 25 m.u. per share. Knowing that, before capital
increase, shareholders’ equity was 250.000 m.u., being share capital 100.000 m.u.
represented by 12.500 shares, which statement is the correct one:

___ Increase on share capital was 50.000 m.u.

___ Increase on share capital was 150.000 m.u.

_X_ Share premium record increased share capital on 106.250 m.u.

___ None of the options are correct.

_____________________________________________________________________________

No. of correct answers: : No. of wrong answers: Unsanwared questions:

QUOTATION OF PART I: ___________

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 PART II - SLG4.3./SLG5.3. – CR1
EXAM (6,0 POINTS)
This part has 10 (ten) questions of multiple choice. For each one, students should mark the
correct answer with an “X”. Each correct question worth 0,60 points. Wrong questions are
penalized with 0,15 points.

1. MICROPC, acquired on August of year N an equipment with the following conditions:

Purchase price: 100.000 euros; importing duties: 5.000 euros; sales discount: 20.000
euros; installation costs: 8.000 euros; trade discount: 20.000 euros. Ignore tax effects. At
acquisition date this equipment should be recognized on property, plant, and equipment
for the amount of:

___ 73.000 euros.

_X_ 93.000 euros.

___ 100.000 euros.

___ 113.000 euros.

2. AUTO-PHILIP LDA., acquired in January of N a building for rental, by the amount of

5.000.000 euros, that was recognized as Investment Property. Useful life was settled in
50 years. On December of N+10, fair value was 9.000.000 euros, and company adopted,
at that date, fair value model. What is the depreciation amount to recognize on year
N+11?

_X_ 0 euros.

___ 100.000 euros.

___ 180.000 euros.

___ 225.000 euros.

3. Company X is totally owed by Company Y. Company Y is quoted on a regulated exchange

market. When Company Y presents its consolidated financial statements is:

_X_ Obliged to present financial statements according to the International Standards of

IASB (IFRS)

___ Obliged to present financial statements according to GAAP (SNC).

___ Forbidden to present financial statements according to the International Standards

of IASB (IFRS).

___ None of the answers are correct.

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 4. On March of year N EMITEBEM, S.A., decided to increase its share capital to 150.000
m.u. by issuing new shares at 25 m.u. per share. Knowing that, before capital increase,
shareholders’ equity was 250.000 m.u., being share capital 100.000 m.u. represented
by 12.500 shares, which statement is the correct one:

___ Increase on share capital was 50.000 m.u

___ Increase on share capital was 150.000 m.u.

_X_ Share premium record increased share capital on 106.250 m.u.

___ None of the options are correct.

5. Empresa X acquired a building for rental on 01/01/N for the amount of 5.000.000 euros,
useful life of 40 years and no residual value. Empresa X adopted the cost model as
measurement after recognition. Building evaluation on 31/12/N, made by an
independent expert, determined that its value was 4.900.000 euros. For this building, on
the Income Statement of Empresa X it will be presented:

___ A line with depreciation of 125.000 euros and another line with unrealized fair value
gain of de 25.000 euros.

___ A line for unrealized fair value loss of 100.000 euros

_X_ A line with depreciation of 125.000 euros.

___ Nothing will be presented on the Income Statement, for this building.

6. Which of the following businesses does not report sales costs on the income statement?

___ A car sale.

___ A restaurant.

___ A vacuum industry.

_X_ A lawyers’ office.

7. In the income statement, inventory production variance (Finished products; By-

products; Work in Progress):

___ Matches to the difference between initial inventories and final inventories of
finished products, by-products, and work in progress.

_X_ Matches to the difference between final inventories and initial inventories of
finished products, by-products, and work in progress.

___ Matches to the difference between final inventories and initial inventories of
merchandise, finished products, by-products, and work in progress.

___ None of the answers are correct.

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 8. FALÉSIA DO MAR, S.A. dispose of 1.000 treasury shares for the price of 17,47 euros
per share, that were acquired for the price of 10,00 euros per share. The difference
resulting from the dispose of, should be recognized as:

___ An increase in other reserve – restricted reserves for 17.470 euros.

___ An increase in other reserves – restricted reserves for 7.470 euros.

_X_ An increase in shareholders equity, presented in other equity variance for 7.470
euros.

___ Increase in net income of the period for 7.470 euros.

9. Company X sells equipment’s for Biomass industry and sold one of those equipments
for the price of 300.000 euros. The equipment will be paid by the client in 6 postponed
quarterly rents of 50.000 euros each. The first rent will be paid in the end of the first
quarter, after delivery of the equipment, that occurred in December 31, N. Present
value of the payments at delivery date is 275.000 euros. What amount should be
presented in SFP of company X, at the end of year N:

___ An amount at accounts receivable – clients of 300.00 euros.

___ An amount at accounts receivable – clients of 300.000 euros and unearned

revenue of 25.000 euros.

_X_ An amount at accounts receivable – clients of 275.000 euros

___ An amount of unearned revenue of 300.000 euros.

10. On year N, EMPRESA ABC was notified that was being sued for 10.000 m.u. by one of
its clients, that claims for merchandise delivered with delay. According with the IAS 37,
which statement is not correct?

___ the probability of an unfavourable decision to company ABC is relevant to record a

provision.

_X_ It should only be disclosed on notes a contingent liability because company ABC
intends to negotiate a lower reparation and a improve its delivery process.

___ If a provision is recognized, it can be reversed or used in the following accounting

periods.

___ Estimation to value provisions does not arm its reliability.

_____________________________________________________________________________

No. of correct answers: No. of wrong answers: Unanswered questions:

QUOTATION OF PART II: ___________

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 PART III - SLG4.3./SLG5.3. – CR2
SITTING EXAM/EXAM (5,0 POINTS)
Company BCSA – BEM CONSTRÓI SOBRE ÁGUA, S.A. signed a contract with ACQUA AZUL, LDA., for the
construction of an aquatic park in Douro River, with performance time of 3 years. Construction
started on January of N-2.

This project will use 3D and 4D technology to create a futuristic sensorial experience, and fun
educational elements.

According with the signed contract, price was settled on 7.500.000 euros and estimated total
cost was 6.000.000 euros.

Total billing was divided in 3 moments, being the first bill issued on N-2 for 20% of settled
price. On year N-1 and year N, bills for 30% and 50% of settled price were also issued. Payment
was made at billing date, through bank transfer.

It was considered that estimated values were reliable, and the following information of the
construction performance was obtained:
Estimated costs to finish
Accumulated incurred costs
construction
Until 31-12 of year N-2 600.000 5 400 000

Until 31-12 of year N-1 900.000 5 100 000

Until 31-12 of year N 6.000 000 -

IT IS INTENDED THAT:
1. [1,5 POINTS] Present on December 31 of N-2, N-1 and N, the percentage of completion and
gross profit to be presented by BCSA – BEM CONSTRÓI SOBRE ÁGUA, S.A. for each year,
knowing that it is the only project of the company during that period.

Description N-2 N-1 N

1. Cost incurred on the period 600.000 300.000 5.100.000

2. Accumulated costs incurred 600.000 900.000 6.000.000

3. Total estimated costs (accumulated) 6.000.000 6.000.000 6.000.000

4. % OF COMPLETION (ACCUMULATED) 10% 15% 100%

5. Contract price 7.500.000 7.500.000 7.500.000

6. Revenue of the period 750.000 375.000 6.375.000

7. Billings to date 1.500.000 2.250.000 3.750.000

8. GROSS PROFIT 150.000 75.000 1.275.000

6 x 0,25 = 1,5 points

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 2. [3,5 POINTS] Prepare the journal entries for years N+2, N-1 and N.

Debit Credit
Expenses (materials, payables, etc) 600.000

Accounts payable – Suppliers / Cash 600.000 0,125

(To record expenses with construction on N-2)

Construction in process 750.000

Revenue from long-term contracts 750.000 0,25

(To record revenue on N-2)

Accounts receivable – Clients 1.500.000

Billings on construction in process 1.500.000 0,50

(To record billing on N-2)

Cash 1.500.000

Accounts receivable – Clients 1.500.000 0,125

(To record client’s payment on N-2)

Expenses (materials, payables, etc) 300.000

Accounts payable – Suppliers / Cash 300.000 0,125

(To record expenses with construction on N-1)

Construction in process 375.000

Revenue from long-term contracts 375.000 0,125

(To record revenue on N-1)

Accounts receivable – Clients 2.250.000

Billings on construction in process 2.250.000 0,5

(To record billing on N-1)

Cash 2.250.000

Accounts receivable – Clients 2.250.000 0,125

(To record client’s payment on N-1)

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 Debit Credit
Expenses (materials, payables, etc) 5.100.000

Accounts payable – Suppliers / Cash 5.100.000 0,125

(To record expenses with construction on N)

Construction in process 6.375.000

Revenue from long-term contracts 6.375.000 0,125

(To record revenue on N)

Accounts receivable – Clients 3.750.000

Billings on construction in process 3.750.000 0,5

(To record billing on N)

Cash 3.750.000

Accounts receivable – Clients 3.750.000 0,125

(To record client’s payment on N)

Billings on construction in process 7.500.000

Construction in process 7.500.000 0,75

(To record completion of contract)

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 PART IV - SLG4.3./SLG5.3. – CR2
SITTING EXAM (9,0 POINTS)

4.1. [5,0 POINTS] On December 31 of N-1, shareholders’ equity of company S, S.A. presented the
following composition:

Description Amount (in m.u.)

Share capital 800.000

Treasury shares – par value (50.000)

Treasury shares premium/discount 5.000

Legal reserves 150.000

Free reserves 100.000

Restricted reserves 45.000

Retained earnings (80.000)

Revaluation surplus of PPE and IA 100.000

Net income 120.000

Total shareholders’ equity 1.190.000

Information for year N:

a) MARCH: shareholders’ meeting approved the following:

▪ Transfer of 15% to legal reserves;
▪ From the distributable amount, 50% will be dividend payment to shareholders;
▪ The remaining amount will be transferred to retained earnings;
b) JUNE: decided to dispose of 80% of 25.000 treasury shares detained by the company, at
the price of 2,2 m.u. per share;
c) JULY: dividend payment through bank transfer;

Prepare the journal entries for transactions occurred on year N, according with the
accounting standards.

Debit Credit
January N

Net income 120.000

Retained earnings 120.000 0,75

(To record net income from N-1)

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 Debit Credit
March N

Retained earnings 23.000 0,25

Legal reserves 6.000 0,25

Ordinary share dividend distributable 17.000 0,25

(to record retained earnings attribution)

Cash 44.000 0,25

Treasury shares at par value 40.000 0,50

Share premium and discount – Treasury 4.000 0,50

(To record treasury share dispose of)

Other reserves - Restricted reserves 36.000

0,75
Other reserves – Free reserves 36.000

(To record restriction of reserves reversal)

Share premium and discount – Treasury 8.000

0,75
Other equity variance 8.000

(To record net gain on treasury share dispose of)

Ordinary share dividend distributable 17.000 0,75

Cash 17.000

(To record dividend payment)

AVAILABLE FOR AUXIALIRY CALCULATIONS

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 4.2. [4,0 POINTS] Company INVESTE&ESTUDA, S.A. acquired on 01/01/N, an ownership interest of
30% of company OPERATIVA, S.A., for 2,5 m.u. per share, paid through bank transfer.

Shareholders’ equity of OPERATIVA, S.A. was like expressed below (values in m.u.):

Description 01/01/N 31/12/N

Share capital (*) 100.000 100.000

Share premium 5.000 5.000

Legal reserves 20.000 20.000

Other reserves 2.000 2.000

Retained earnings 95.000 95.000

Other comprehensive income - Grants - 1.000

Net income - 10.000

Total shareholders’ equity 222.000 233.000

(*)
Par value per share = 1 m.u.

On March of N+1, shareholders’ meeting of OPERATIVA, S.A., approved the distribution of

dividends corresponding to 60% of net income of N, and no transfer was made for legal
reserves because its value already represents 20% of share capital.

According with the equity method and assuming that, at the date of acquisition, share capital
of OPERATIVA, S.A., expresses its assets and liabilities and contingent liabilities acquisition date

1. [3,25 POINTS] Prepare the journal entries of company INVESTE&ESTUDA, S.A. for years N and
N+1.

Debit Credit
January N
Equity investment 66.600 0,5
Goodwill 8.400 0,5
Cash 75.000 0,25
(To record interest acquisition)
Equity investment 3.000
0,5
Investment income 3.000
(To record net income from the investee)
December N
Equity investment 300
0,5
Equity investment adjustment 300
(To record other comprehensive income variance)

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 Debit Credit
December N

Dividend receivable 1.800

0,5
Equity investment 1.800

(To record investee dividend distribution)

Year N+1

Retained earnings 1.200

0,5
Unappropriated retained earnings 1.200

(To record net income retained by the investee)

2. [0,75 POINTS] What is the carrying amount of the financial investment on 31/12/N.

Carrying amount = Investment value – Accumulated Impairments

Carrying amount = 66.600 + 3.000 + 300 = 69.900

AVAILABLE FOR AUXIALIRY CALCULATIONS

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 PART V - SLG4.3./SLG5.3. – CR2
EXAM (9,0 POINTS)

5.1. (5,0 POINTS] Company FACIL, S.A. started the construction of an industrial building on year
N-1. Construction is being performed by a construction company and, at the end of that year,
costs were 6.000.000 euros and 10% represented land. The building was concluded on 01-01-
N, and 30% of the building will be rented to other entities.

Company intends to use the building in the next 40 years, and, at sales date, it is estimated
that still be valued by 40% of its initial value. The company uses the straight-line method of
depreciations for property, plant, and equipment.

Company adopts the revaluation model for measurement after recognition of buildings, for
PPE, and fair value model for investment properties. Fair value of the building, at the end of
year N, was 6.500.000 euros. The company uses the revaluated value method for revaluation
adjustment.

Prepare the journal entries for year N (ignore any tax effect).

Debit Credit
January N
Property, plant, and equipment – Land 420.000
0,375
Investments in course – Land 420.000
(To record PPE available to use)
Property, plant, and equipment – Building 3.780.000
0,375
Investments in course – Building 3.780.000
(To record PPE available to use)
Investment properties – Land 180.000
0,375
Investments in course – Land 180.000
(To record IP available to use)
Investment properties – Building 1.620.000
0,375
Investments in course – Building 1.620.000
(To record IP available to use)
December N
Depreciation expenses – Building 56.700
0,375
Accumulated depreciations -Building 56.700
(To record annual depreciation)
Accumulated depreciations -Building 56.700
0,625
Property, plant, and equipment – Building 56.700
(To record revaluation of asset)

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 Debit Credit
Property, plant, and equipment – Land 35.000
0,625
Revaluation surplus – Land 35.000

(To record revaluation of asset)

Property, plant, and equipment – Building 371.700

0,625
Revaluation surplus – Building 371.700

(To record revaluation of asset)

Investment properties – Land 15.000

0,625
Unrealized investment property gain – Land 15.000

(To record fair value adjustment)

Investment properties – Building 135.000

0,625
Unrealized investment property gain – Building 135.000

(To record fair value adjustment)

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5.2. (4,0 POINTS] On December 31 of N-1, shareholders’ equity of company S, S.A. presented
the following composition:

Description Amount (in m.u.)

Share capital 800.000

Treasury shares – par value (50.000)

Treasury shares premium/discount 5.000

Legal reserves 150.000

Free reserves 100.000

Restricted reserves 45.000

Retained earnings (80.000)

Revaluation surplus for PPE and IA 100.000

Net income 120.000

Total shareholders’ capital 1.190.000

Information for year N:

a) MARCH: shareholders’ meeting approved the following:

• Transfer of 15% to legal reserves;
• From the distributable amount, 50% will be dividend payment to shareholders;
• The remaining amount will be transferred to retained earnings;
b) MARCH: Company S, S.A. has an ownership interest of 30% on Delta, S.A., and uses the
equity method. On N-1 Delta, S.A. computed a net income of 90.000 m.u, and on
March of N has decided to not distribute dividends.
c) JUNE: decided to dispose of 80% of 25.000 treasury shares owned by the company, at
the price of 2,2 m.u. per share;

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 Prepare journal entries for transactions of year N, on company S, S.A. accounting.

Debit Credit
January N

Net income 120.000

0,50
Retained earnings 120.000

(To record net income from N-1)

March N

Retained earnings 23.000 0,25

Legal reserves 6.000 0,25

Ordinary share dividend distributable 17.000 0,25

(to record retained earnings attribution)

Retained earnings 27.000

0,50
Unappropriated retained earnings 27.000

(To record net income retained by the investee)

June N

Cash 44.000 0,25

Treasury shares at par value 40.000 0,50

Share premium and discount – Treasury 4.000 0,50

(To record treasury share dispose of)

Other reserves - Restricted reserves 36.000

0,50
Other reserves – Free reserves 36.000

(To record restriction of reserves reversal)

Share premium and discount – Treasury 8.000

0,50
Other equity variance 8.000

(To record net gain on treasury share dispose of)

AVAILABLE FOR AUXILIAR CALCULATIONS

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