ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

Name: Score:

Permit #: Date:

GENERAL DIRECTIONS
READ THIS PAGE BEFORE STARTING THE ASSESSMENT

This is an eleven (11) paged test and is composed of 1 section and has a total score of seventy (70) points.
You have eighty (80) Minutes to finish this examination. The
breakdown of the exam is as follows: LEARNING OBJECTIVE:

(1) Multiple-choice Section. The questions in this section is This assessment measures the
with four answer choices. The test is composed of 70 competence of the student in terms of
questions and is rated as 1 point each. his/her application of knowledge and
skills in the following topics:
All things unnecessary for the test must be put in front of the 1. Noncurrent assets held for
testing area. Use pencil only in shading. Write all your answers sale and discontinued
on the designated answer sheet. Further, erasures are strictly Operations
NOT allowed and will invalidate your answers. 2. Statement of Changes in
Equity
You may NOT use smart phones or reference materials 3. Statement of cash flows
during the testing session. Only the allowed calculators should 4. Accounting policies, changes
be used. in estimates, and errors
5. Events after reporting period
Try to answer all questions. In general, if you have some 6. Related parties
knowledge about a question, it is better to try to answer it. You 7. Operating segments
will not be penalized for guessing. 8. Events after the reporting
period
Be sure to allocate your time carefully so you can complete
the entire test within the exam session. You may go back and
review your answers at any time during the exam session.

Those who are caught cheating or doing acts not allowed during the exam shall be instructed to surrender
their test papers and shall leave the testing room immediately. Subsequently, their papers shall be rated as
ZERO.

This concludes the instruction page.

You may now begin answering.

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

1. According to PFRS 5, gain on impairment reversal on an asset held for sale is

a. recognized for the fair value change during the period.
b. recognized in other comprehensive income.
c. recognized only to the extent of cumulative impairment losses previously recognized.
d. not recognized.

2. If the fair value less cost of disposal cannot be determined

a. The asset is not impaired.
b. The recoverable amount is the value in use.
c. The net realizable value is used.
d. The carrying amount of the asset remains the same.

3. The estimates in calculating value in use include all of the following, except
a. Cash inflows from continuing use of the asset.
b. Cash outflows incurred to generate the cash inflows from continuing use of the asset.
c. Net cash flows from the disposal of the asset at end of useful life.
d. Income tax payments.

4. The required disclosures for the impairment of long-lived assets include all of the following, except
a. The business segment affected, if applicable
b. The amount of the impairment loss and how fair value was determined
c. The recommendation of the auditor, signed and dated as of the date of discovery
d. The facts and circumstances leading to the impairment

5. The results of a discontinued operations are presented in the statement of profit or loss
a. before the profit or loss from continuing operations but after the profit for the year.
b. after the profit or loss from continuing operations but before the profit for the year.
c. separately from the profit or loss from continuing operations and it does not affect the profit for the year.
d. as an adjustment to the beginning balance of the retained earnings.

6. Which of the following asset disposals would qualify as discontinued operations?

a. Sale of assets due to technological improvements
b. Sale of manufacturer of children’s wear of all assets in Hongkong due to discontinuance of all operations in that
city. The Hongkong’s operations are subsumed in the Singapore’s operations both operationally and for financial
reporting purposes.
c. Sale by a meat packing entity its furniture business. After the sale, all activities related to furniture will be
eliminated.
d. Disposal of assets due to the phasing out of a product line. The product line will be continued after the asset
disposal but with limited production.
7. The order in which sections of the income statement appear is
a. Continuing operations, effect of accounting changes, discontinued operations, EPS
b. Continuing operations, discontinued operations, effect of accounting changes, EPS
c. Continuing operations, discontinued operations, for the year, other comprehensive income, total comprehensive
income, EPS
d. Continuing operations, discontinued operations, profit for the year, EPS
8. A noncurrent asset which has been classified as held-for-sale should
a. Be valued at depreciated historical cost
b. Be depreciated over its remaining useful life
c. Not be depreciated
d. Be tested monthly for impairment

Use the following information for the next four questions

An entity purchased an equipment for P5,000,000 on January 1, 20x1. The equipment had a useful life of 5 years with no
residual value. On December 31, 20x1, the entity classified the asset as held for sale. On such date, the fair value less
cost of disposal of the equipment was P3,500,000.

On December 31, 20x2, the entity believed that the criteria for classification as held for sale can no longer be met.
Accordingly, the entity decided not to sell the asset but to continue to use it. On December 31, 20x2, the fair value less
cost of disposal of the equipment was P2,700,000.

9. What is the carrying amount of the equipment on December 31, 20x1 before classification as held for sale?
a. 5,000,000

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

b. 4,000,000
c. 3,500,000
d. 4,500,000
10. What amount of impairment loss should be recognized in 20x1?
a. 1,500,000
b. 1,000,000
c. 500,000
d. 0
11. What amount should be included in profit or loss in 20x2 as a result of the reclassification of the equipment to property,
plant and equipment?
a. 800,000 gain
b. 800,000 loss
c. 300,000 gain
d. 300,000 loss
12. What is the carrying amount of the equipment on December 31, 20x3?
a. 2,700,000
b. 1,800,000
c. 2,000,000
d. 3,000,000

13. Tangerine Company operates two restaurants, one in Boracay and one in Palawan. The operations and cash flows of
each of the two restaurants are clearly distinguishable. During 2017, Tangerine Company decided to close the restaurants
in Palawan and sell the property. It is probable that the disposal will be completed early next year. The revenues and
expenses of Tangerine Company for 2017 and for the preceding two years are as follows (in millions):
2017 2016 2015
Sales-Boracay 60,000 48,000 40,000
Cost of goods sold-Boracay 26,000 22,000 18,000
Other expenses-Boracay 14,000 13,000 12,000
Sales-Palawan 23,000 30,000 52,000
Cost of goods sold 14,000 19,000 20,000
Other expense-Palawan 17,000 16,000 15,000

The other expenses do not include income tax expense. During the later part of 2017, Tangerine Company sold much
of the kitchen equipment of the Palawan restaurant and recognized a pretax gain of P15,000 on the disposal. The income tax
rate is 30%. Tangerine Company should report income or loss from discontinued operations for 2017 at what amount?
a. 8,000 loss
b. 7,000 gain
c. 5,600 loss
d. 4,900 gain

14. Dividends are disclosed in the

a. Statement of changes in equity
b. Notes
c. Statement of financial position
d. A or b

15. Which of the following statements is correct in relation to the provision of PAS 1 Presentation of Financial Statements?
a. Owner changes in equity are presented in the statement of profit or loss and other comprehensive income.
b. Non-owner changes in equity are presented in the statement of changes in equity
c. A and b
d. None of these

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

16. Accounts receivable arising from trade transactions amounted to P45,000 and P52,000 at the beginning and end of the
year, respectively. Net income reported on the income statement for the year was P105,000. Exclusive of the effect of
other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the
indirect method is
a. P105,000
b. P112,000
c. P98,000
d. P140,000

17. The following information is available from the current period financial statements:
Net income P140,000
Depreciation expense 28,000
Increase in accounts receivable 16,000
Decrease in accounts payable 21,000

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

The net cash flow from operating activities using the indirect method is
a. P131,000
b. P163,000
c. P107,000
d. P205,000

18. If a gain of P9,000 is incurred in selling (for cash) office equipment having a book value of P55,000, the total amount
reported in the cash flows from investing activities section of the statement of cash flows is
a. P46,000
b. P9,000
c. P55,000
d. P64,000

19. The current period statement of cash flows includes the flowing:
Cash balance at the beginning of the period P410,000
Cash provided by operating activities 185,000
Cash used in investing activities 43,000
Cash used in financing activities 97,000

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

The cash balance at the end of the period is

a. P45,000
b. P735,000
c. P455,000
d. P85,000

20. Loster Company reported a net loss of P13,000 for the year ended December 31, 2008. During the year, accounts
receivable decreased P5,000, merchandise inventory increased P8,000, accounts payable increased by P10,000, and
depreciation expense of P5,000 was recorded. During 2008, operating activities
a. provided net cash of P8,000.
b. provided net cash of P1,000.
c. used net cash of P8,000.
d. used net cash of P1,000.

21. The cost of merchandise sold during the year was P50,000. Merchandise inventories were P12,500 and P10,500 at the
beginning and end of the year, respectively. Accounts payable were P6,000 and P5,000 at the beginning and end of the
year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for
merchandise total
a. P49,000
b. P47,000
c. P51,000
d. P53,000

22. Sales for the year were P600,000. Accounts receivable were P100,000 and P80,000 at the beginning and end of the year.
Cash received from customers to be reported on the cash flow statement using the direct method is
a. P700,000
b. P600,000
c. P580,000
d. P620,000

23. Operating expenses other than depreciation for the year were P400,000. Prepaid expenses increased by P17,000 and
accrued expenses decreased by P30,000 during the year. Cash payments for operating expenses to be reported on the
cash flow statement using the direct method would be
a. P353,000
b. P413,000
c. P447,000
d. P383,000

24. Income tax was P400,000 for the year. Income tax payable was P30,000 and P40,000 at the beginning and end of the
year. Cash payments for income tax reported on the cash flow statement using the direct method is
a. P400,000
b. P390,000
c. P430,000
d. P440,000

The following selected account balances appeared on the financial statements of the Franklin Company:

Accounts Receivable, Jan. 1 P13,000

Accounts Receivable, Dec. 31 9,000
Accounts Payable, Jan 1 4,000
Accounts payable Dec. 31 7,000
Merchandise Inventory, Jan 1 10,000
Merchandise Inventory, Dec 31 15,000
Sales 56,000
Cost of Merchandise Sold 31,000

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

The Franklin Company uses the direct method to calculate net cash flow from operating activities.
25. Cash collections from customers are
a. P56,000
b. P52,000
c. P60,000
d. P45,000

26. Cash paid to suppliers is

a. P39,000
b. P33,000
c. P29,000
d. P23,000

27. The net income reported on the income statement for the current year was P275,000. Depreciation recorded on fixed
assets and amortization of patents for the year were P40,000 and P9,000, respectively. Balances of current asset and
current liability accounts at the end and at the beginning of the year are as follows:
End Beginning
Cash P 50,000 P 60,000
Accounts receivable 112,000 108,000
Inventories 105,000 93,000
Prepaid expenses 4,500 6,500
Accounts payable (merchandise creditors) 75,000 89,000
What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the
indirect method?
a. P198,000
b. P324,000
c. P352,000
d. P296,000

28. The income statement of Matt Co. shows an adjusted net income of P175,000 for the year ended December 31, 2010.
Adjustments were made for the following errors:
December 31, 2009, inventory overstated by P22,500.
December 31, 2010, inventory understated by P37,500.
A P10,000 customer’s deposit received in December 2010, was credited to sales in 2010. The goods were actually
shipped in January 2011. What is the unadjusted net income of Matt Co. for the year ended December 31, 2010?
A. P234,000 C. P170,000
B. P125,000 D. P200,000

29. During 2010, Paul Company discovered that the ending inventories reported on its financial statements were incorrect by
the following amounts:
2008 P60,000 understated
2009 75,000 overstated
Paul uses the periodic inventory system to ascertain year-end quantities that are converted to peso amounts using the FIFO
cost method. Prior to any adjustments for these errors and ignoring income taxes, Paul’s retained earnings at January 1, 2010,
would be
a. Correct.
b. 15,000 overstated.
c. 75,000 overstated.
d. 135,000 overstated.

30. Tack, Inc. reported a retained earnings balance of 150,000 at December 31, 2009. In June 2010, Tack discovered that
merchandise costing 40,000 had not been included in inventory in its 2009 financial statements. Tack has a 30% tax rate.
What amount should Tack report as adjusted beginning retained earnings in its statement of retained earnings at
December 31, 2010?
a. 190,000
b. 178,000
c. 150,000
d. 122,000

31. Conn Co. reported a retained earnings balance of 400,000 at December 31, 2009. In August 2010, Conn determined that
insurance premiums of 60,000 for the three-year period beginning January 1, 2009, had been paid and fully expensed in

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

2009. Conn has a 30% income tax rate. What amount should Conn report as adjusted beginning retained earnings in its
2010 statement of retained earnings?
a. 420,000
b. 428,000
c. 440,000
d. 442,000

32. Bren Co.’s beginning inventory at January 1, 2010, was understated by 26,000, and its ending inventory was overstated
by 52,000. As a result, Bren’s cost of goods sold for 2010 was
a. Understated by 26,000.
b. Overstated by 26,000.
c. Understated by 78,000.
d. Overstated by 78,000.

33. Events after the end of the reporting period are events, favorable or unfavorable, that
a. Occur between the end of the reporting period and the date of the next annual financial statements.
b. Occur between the end of the reporting period and the date of the next interim or annual financial statements.
c. Occur between the end of the reporting period and the date when the financial statements are authorized for issue.
d. Occur between the end of reporting period and the date of the next interim statements.

34. Adjusting events are those that

a. Provide evidence of conditions that existed at the end of the reporting period.
b. Are indicative of conditions that arose before the end of the reporting period.
c. Are indicative of conditions that arose after the end of the reporting period.
d. Provide for conditions that existed after the date the financial statements were issued.

35. Financial statements are said to be authorized for issue when

a. The financial statements are filed with the SEC.
b. The shareholders approve the financial statements at their annual meeting.
c. The management is required to submit the financial statements to a supervisory body made up solely of nonexecutives
and the supervisory body approves the financial statements.
d. The management reviews the financial statements and authorizes them for issue.

36. All of the following events after reporting period should be classified as nonadjusting, except
a. The entity announced the discontinuation of assembly operation
b. The entity entered into an agreement to purchase the leased building.
c. Destruction of a major production plant by fire
d. A mistake in the calculation of allowance for uncollectible accounts receivable

37. A party is related to an entity if the party, directly or indirectly through one or more intermediaries
a. Controls, is controlled by or is under common control with the entity
b. Has an interest in the entity that gives it significant influence over the entity.
c. Has joint control over the entity.
d. All of these

38. Related parties include all of the following, except

a. Parent, subsidiary and fellow subsidiaries
b. Associate
c. Key management personnel and close family members of such individuals
d. Two venturers simply because they share joint control over a joint venture

39. Unrelated parties include all of the following, except

a. Two entities simply because they have a common director
b. Providers of finance simply by virtue of their normal dealing with an entity.
c. Customers with whom an entity transacts a significant volume of business, merely by virtue of the resulting economic
dependence
d. Postemployment benefit plan for the benefit of employees.

40. All of the following fall within the definition of an entity’s related party, except
a. Joint venture in which the entity is a venturer
b. A postemployment benefit plan for the benefit of the employees of the entity
c. An executive director of the entity

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

d. The partner of a key manager is major supplier of the entity

41. Which of the following is not a required minimum disclosure about related party transaction?
a. The amount of related party transaction.
b. The amount of the outstanding balance and the terms and conditions including guarantee.
c. The amount of similar transaction with unrelated parties to establish that comparable related party transaction has been
entered at arm’s length.
d. Provision for doubtful debt related to the outstanding balance

42. All of the following are related party transactions, except

a. Transferred inventory to a shareholder owning forty percent of the entity’s ordinary shares.
b. Sold an entity car to the wife of the managing director.
c. Sold an asset to an associate
d. Took out a huge bank loan.

43. An operating segment is a component of an entity

a. That engages in business activities from which it may earn revenue and incur expenses, including revenue and
expenses relating to transactions with other components of the same entity.
b. Whose results are regularly reviewed by the chief operating decision maker to make decisions about resources to be
allocated to the segment and assess its performance.
c. For which discrete information is available.
d. All of these

44. What is the function of the chief operating decision maker?

a. To allocate resources to the operating segments only.
b. To assess the performance of the operating segments only.
c. To provide information to financial statement users about operating segments.
d. To allocate resources and assess the performance of operating segments.

45. A significant industry segment is one, which meets any of the three criteria relating to revenue, earnings and identifiable
assets. Which of the following is the percentage used to measure each of these criteria.
a. 15 percent c. 5 percent
b. 10 percent d. 1 percent

46. When is an operating segment reportable?

a. The segment external and internal revenue is 10% or more of the combined external and internal revenue of all
operating segments.
b. The segment profit or loss is 10% or more of the greater between the combined profit of all profitable operating
segments and the combined loss of all unprofitable operating segments.
c. The assets of the segment are 10% or more of the total assets of all operating segments.
d. All of these

47. Operating segments that do not meet any of the quantitative thresholds
a. Cannot be considered reportable.
b. May be considered reportable and separately disclosed if management believes that information about the segment
would be useful to the users of the financial statements.
c. May be considered reportable if the information is for internal use only.
d. May be considered reportable and separately disclosed if this is the practice within the economic environment in which
the entity operates.

48. Which is true concerning the 75% overall size test for operating segments?
a. The total external and internal revenue of all reportable segments is 75% or more of the entity’s external revenue.
b. The total external revenue of all reportable segments is 75% or more of the entity’s external and internal revenue.
c. The total external revenue of all reportable segments is 75% or more of the entity’s external revenue.
d. The total internal revenue of all reportable segments is 75% or more of the entity’s internal revenue.

49. Revenue of a segment includes

a. Only sales to unaffiliated customers.
b. Sales to unaffiliated customers and intersegment sales.
c. Sales to unaffiliated customers and interest revenue.
d. Sales to unaffiliated customers and other revenue and gains.

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

50. Which of the following statements about major customer disclosure is true?
a. A major customer is defined as one providing revenue which amounts to 10% or more of the combined external
revenue of all operating segments.
b. The identities of major customers need not be disclosed.
c. The entity shall disclose the total amount of revenue from major customers and the identity of the segment reporting the
revenue.
d. All of these statements are true about major customer disclosure

51. Dustin Company has three manufacturing divisions, each of which has been determined to be a reportable segment.
Common costs are appropriately allocated on the basis of each division’s sales in relation to Dustin’s aggregate sales. In
2017, Division 1 had sales of P10,000,000, which was 20% of Dustin’s total sales, and had traceable operating costs of
P6,000,000. In 2017, Dustin incurred operating costs of P1,500,000 that were not directly traceable to any of the divisions.
In addition, Dustin incurred interest expense of P500,000 in 2017. In reporting segment information, what amount should
be shown as operating profit Division 1 for 2017?
a. 4,000,000
b. 3,700,000
c. 3,600,000
d. 2,500,000

52. Celina Company provided the following information for the current year:
Segment Sales Traceable expenses
Aye 5,000,000 3,000,000
Bee 4,000,000 2,500,000
Cee 3,000,000 1,500,000
Additional expenses are P2,000,000 indirect expenses, P1,000,000 general corporate expenses, P500,000 interest
expense and P400,000 income tax expense. The interest expense and income tax expense are regularly reviewed by the
chief operating decision maker as a measure of profit or loss. Appropriate common expenses are allocated to segments
based on the ratio of a segment’s sales to total sales. What is the profit of Segment Cee for the current year?
a. 775,000
b. 525,000
c. 875,000
d. 900,000
53. Kanye Corporation and its divisions are engaged solely in manufacturing. The following data pertain to the industries
in which operations were conducted for the year ended December 31, 2017:
Division A Operating Profit (Loss)
A 30,000,000
B 10,000,000
C (8,000,000)
D (2,000,000)
E 5,000,000
In its 2017 financial statements, Kanye Corporation should disclose an operating segment if operating profit or loss is at least
a. 1,000,000
b. 4,500,000
c. 3,500,000
d. 5,500,000

54. Which of the following types of errors will not self-correct in the next year?
A. Accrued expenses not recognized at year-end
B. Accrued revenues that have not been collected not recognized at
year-end
C. Depreciation expense overstated for the year
D. Prepaid expenses not recognized at year-end

55. Which of the following is a counterbalancing error?

A. Understated depletion expense
B. Bond premium under-amortized
C. Prepaid expense adjusted incorrectly
D. Overstated depreciation expenses

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

56. Which of the following, if discovered by James Company in the accounting period subsequent to the period of occurrence,
requires the company to report the correction of an error?
A. The estimate of the useful life of a depreciable asset should have been revised.
B. A change from declining-balance depreciation method to straight-line method
C. Capitalization of an expense
D. Change in percentage of sales used for determining bad debt expense

57. BJ Company uses a periodic inventory system. If the company’s beginning inventory in the current year is overstated, and
that is the only error in the current year, then the company’s income for the current year will be
A. understated and assets correct.
B. understated and assets overstated.
C. overstated and assets overstated.
D. understated and assets understated.

58. Which of the following is not an example of an accounting error, as distinguished from a change in accounting principle or
change in accounting estimate?
A. Misstatement of assets, liabilities, or owners’ equity
B. Incorrect classification of an expenditure as between expense and
an asset
C. Failure to recognize accruals and deferrals
D. Recognition of a gain on disposal of fully depreciated property

59. Preferred stock issued in exchange for land would be reported in the statement of cash flows in
a. the cash flows from financing activities section
b. the cash flows from investing activities section
c. a separate schedule
d. the cash flows from operating activities section

60. A statement of cash flows would not disclose the effects of which of the following transactions?
a. stock dividends declared
b. bonds payable exchanged for capital stock
c. purchase of treasury stock
d. capital stock issued to acquire fixed assets

61. Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of
cash flows as a use of cash?
a. purchase of noncurrent assets
b. purchase of treasury stock
c. discarding an asset that had been fully depreciated
d. payment of cash dividends

62. Which of the following is a noncash investing and financing activity?

a. payment of a cash dividend
b. payment of a six-month note payable
c. purchase of merchandise inventory on account
d. issuance of common stock to acquire land

63. Which of the following should be shown on a statement of cash flows under the financing activity section?
a. the purchase of a long-term investment in the common stock of another company
b. the payment of cash to retire a long-term note
c. the proceeds from the sale of a building
d. the issuance of a long-term note to acquire land

64. The statement of cash flows may be used by management to

a. assess the liquidity of the business
b. assess the major policy decisions involving investments and financing
c. determine dividend policy
d. do all of the above

65. Entity A’s total shareholders’ equity on January 1, 20x1 was ₱180,000. The following were the transactions during the
year:

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

 Entity A issued additional share capital amounting to ₱360,000.

 Total income earned amounted to ₱1,000,000.
 Total expenses incurred amounted to ₱560,000.
 Entity A declared dividends of ₱140,000.

How much is the total shareholders’ equity on December 31, 20x1?

a. 840,000
b. 700,000
c. 640,000
d. 540,000

A 180K + 360K + 1M – 560K – 140K = 840K

66. During 20x1, ALBEIT ALTHOUGH Company decided to change from the Average cost formula for inventory valuation to
the FIFO cost formula. Inventory balances under each method were as follows:
Average FIFO
January 1 4,000,000 4,800,000
December 31 8,000,000 8,400,000

Income tax rate is 30%. What is the net cumulative effect of the accounting change in ALBEIT’s opening retained earnings
balance?
a. 400,000 increase c. 280,000 increase
b. 560,000 decrease d. 560,000 increase

D (4,800,000 – 4,000,000) x 70% = 560,000 increase

67. On January 1, 20x1, PRISTINE UNCORRUPTED Co. acquired an equipment for ₱4,000,000. The equipment will be
depreciated using the straight-line method over 20 years. The estimated residual value is ₱400,000.
In 20x6, following a reassessment of the realization of the expected economic benefits from the equipment, PRISTINE Co.
changed its depreciation method to sum-of-the-years digits (SYD). The remaining useful life of the asset is estimated to be 4
years and the residual value is changed to ₱200,000. How much is the depreciation expense in 20x6?
a. 1,160,000 b. 1,140,000 c. 1,233,560 d. 1,110,669

A [(4M – 400K) x 15/20 + 400K] – 200K x 4/10 = 1,160,000

68. TRIBULATION GREAT DISTRESS Co.’s current reporting period ends on December 31, 20x1. The following transactions
occurred after the end of reporting period:
 On January 5, 20x2, TRIBULATION declared ₱8,000,000 dividends.
 On January 15, 20x2, TRIBULATION issued 1,000 shares with par value per share of ₱400 for ₱2,400 per share.
 On January 20, 20x2, TRIBULATION installed an oil rig. Current legislation requires that the oil rig be uninstalled at the
end of its useful life and the site where it was installed be restored. TRIBULATION estimates the present value of the
decommissioning and restoration cost at ₱4,000,000.
 On February 1, 20x2, a building with a carrying amount as of December 31, 20x1 of ₱2,000,000 was totally razed by fire.
 On February 10, 20x2, TRIBULATION received notice of a litigation in relation to an accident that happened on December
31, 20x1. TRIBULATION estimates a probable loss of ₱800,000.
 On March 5, 20x2, TRIBULATION purchased a subsidiary for ₱40,000,000 in a business combination accounted for using
the acquisition method. Goodwill of ₱10,000,000 was recognized on the business combination.

The financial statements were authorized for issue on March 1, 20x2.

What is the total amount of the adjusting events?

a. 6,800,000
b. 800,000
c. 4,800,000
d. 30,000,000

B 800,000 probable loss on litigation

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ACC 109: INTERMEDIATE ACCOUTNING, PART 4 2nd GRADING EXAMINATION

Use the following information for the next two questions:

The following relates to the transactions of GRIMACE FROWN Co. during 20x1:
Directors' and officers' remuneration 8,000,000
Post-employment benefits of officers 800,000
Fringe benefits in the form of housing assistance to
directors and officers 20,000,000
Share options granted to officers 1,200,000
Officers' expenses on travels, representation and
entertainment subject to liquidation and
reimbursement 400,000
Loans to directors and officers 12,000,000
Sales to related entities 40,000,000

69. How much is the amount of related party disclosures on GRIMACE’s separate financial statements?
a. 30,000,000
b. 52,000,000
c. 82,000,000
d. 42,000,000
C Key management personnel compensation (8M + 800K + 20M + 1.2M) + Related party transactions (12M + 40M) = 82M

70. How much is the amount of related party disclosures on GRIMACE’s consolidated financial statements?
a. 12,000,000
b. 30,000,000
c. 82,000,000
d. 42,000,000

D Key management personnel compensation (8M + 800K + 20M + 1.2M) + Related party transactions (12M) = 42M

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