Professional Documents
Culture Documents
Discussion Problems Hyperinflationary and Current Cost Accounting
Discussion Problems Hyperinflationary and Current Cost Accounting
Discussion Problems Hyperinflationary and Current Cost Accounting
Sunflower Company reported the following liabilities in the statement of financial position:
Accounts payable 1,000,000
Accrued expenses. 500,000
Bonds payable 3,000,000
Finance lease liability 4,000,000.
Unearned revenue 300,000
Advances from customers 1,200,000
Estimated warranty liability 200,000
Deferred tax liability 400,000
What amount should be classified as monetary assets in preparing constant peso financial
statements?
a. 620,000
b. 600,000
c. 20,000
d. 0
Dahlia Company was formed on January 1, 2007. Selected balance from historical cost
statement of financial position on December 31, 2013 were:
Land (purchased on January 1, 2007) 2,400,000
Investment in long-term bonds (purchased on January 1, 2010) 1,200,000
Long term debt (issued on January 1, 2007) 1,600,000
The general price index was 120 on January 1, 2007, 150 on January 1, 2010 and 300 on
December 31, 2013.
What amount should be reported in a hyperinflationary statement of financial position?
Land Investment Long-term debt
a. 2,400,000 1,200,000 1,600,000
b. 6,000,000 2,400,000 4,000,000
c. 6,000,000 2,400,000 1,600,000
d. 6,000,000 1,200,000 1,600,000
The use of comparative data may necessitate the restatement of a base period. Rosal
Company decides to use 2011 as a base period (100) and desires to compare 2011, 2012
and 2013 industry index numbers. The index numbers are 2010 - 100, 2011 - 120, 2012 -
360 and 2013-384. What would be the restated index number of 2013 if 2011 is used as
base year?
a. 320
b. 300
c. 120
d. 100
The index number had moved on December 31 of each year: 2009 100, 2010 - 130, 2011
150, 2012 - 240 and 2013- 300. The property, plant and equipment were purchased on
December 31, 2011. The noncurrent liabilities were loans raised on December 31, 2012.
What is the balance of retained earnings on December 31, 2013 after adjusting for
hyperinflation?
a. 2,350,000
b. 2,750,000
c. 3,550,000
d. 2,625,000
Simple Company purchased land on January 1, 2013 for P500,000 cash. On December
31, 2013, the land has a current replacement cost of P600,000. On December 31, 2014,
the land has a current replacement cost of P750,000. The entity sold the land for
P1,000,000 cash on December 31, 2015. On this date, the current replacement cost of the
land is P800,000.
1. What is the unrealized holding gain to be reported in 2013?
a. 600,000
b. 500,000
c. 100,000
d. 0
2. What is the unrealized holding gain to be reported in 2014?
a. 250,000
b. 150,000
c. 100,000
d. 0
3. What is the realized holding gain to be reported in 2015?
a. 300,000
b. 250,000
c. 50,000
d. 0
4. What is the gain on sale of land to be reported in 2015?
a. 500,000
b. 250,000
c. 200,000
d. 150,000