CPA REVIEWSCHOOL OF THE PHLPPNES Man it a AUDITENG PROBLEMS FENA PRE-BOARD

EXAMINATION
PROBLEM2 - EVERLASTING COMPANY
7. B Subsidiary edger
Per books P4,023,527 AE 18,750 AjE 5 Write-offs (187,608) Sale, FOB shipping point 61,250 Per a Edit
P3,915,919.
PROBLEM 3 - BANAWE COMPANY
11, CI PATENTS
Balance per books, DeC. 31 2015 UnarinOrtized balance of P225,000 erroneously charged to account
in January 2012 (P225,000 x 7/10) Corrected balance before 2015 amortization 2015 am Ortization:

Patent with 2 years remaining life (P630,000 x 7/14 = P315,000/2 years)

Remaining patent (P1492,500 - P315,000 = P1,177,500/7 years) Carrying value, December
31, 2015
FRANCHSE AGREEMENT Baiance per books, December 31, 2015 Annual payment charged to
account Corrected balance before 2015 amortization 2015 amortization (P150,000/5 years)
Carrying value, December 31, 2015
2. A
PROBLEM5 - SENDONG COMPANY/LOTLOT, INC.
April 19, 2015
General edger
P3,934,014 18,750
(36,845)
P3,915,919
P1650,000
(157,500) 1492,500
(157,500) (18824) P1.166,786
P285,000 (135,000) i50,000 30,000
P20,000
Retained Earnings
Net income over (under)
December 31, 2015
2014 2015 Qver (under) 1. P(46,500) P46,500 2. (65,000)
(65,000)
6,500 6,500 -- 13,000 13,000 3. 120,000 120,000

(30,000) (30,000) (60,000) 4. (84,000) (84,000) 5. 72,000

(36,000) 36,000 6. 14,500) 14,600 r.
PLED2) P 8,100 P33322)
2014 2015 Net income, as reported P530,000 P999,000 1. (120,000) 120,000 2. (3,000) 7,800 3. (10,800)
4,400 COrrected met inCOme P396.200 P1,141,200
PROBLEM 6 - PPTT COMPANY
26. B Carrying amount of assets P5,700,000
Vaiue in USe (5,350,000) Impairment loss P350,000 Alio-Cated to GOOdwi (150,000) Remaining
impairment iOSS P200,000
Page 1 of 4 Pages
CPA REVIEW SCHOOL OF THE PHILIPPINES (CPAR) - MANI AUDIENG PROBLEMS
FINA PREBOARD EXAMINATION
BuildingS Machinery Allocated loss:

Buildings (24/42x P200,000) P114,286 Machinery (1842 x P200,000) P 85,714 Reallocated loss
(64,286) 64,286 P50.000 P150.000 27. A Buildings P4200,000
Accumulated depreciation (P1,800,000 + P50,000) (1,850,000) Carrying value P2.350,000
28. C Pre-in Dairmen kwa
Buildings P4200,000 AfD (P1,800,000 + P600,000) (2400,000) P1800,000 Factory machinery P2,200,000
A/D (P400,000 + P450,000) (850,000) 1350,000 P3,150,000
Actual book walue: Buildings P4,200,000 AfD (P1,800,000 + P50,000 + P650,000) (2,500,000)
P1,700,000
Factory machinery P2200,000 A/D (P400,000 + P150,000 + P500,000) (1050,000) 1,150,000 2,850,000
Reversal of impairment loss P300,000
29. D
Carrying Alocation Net AmQu mt PrQpOrtiQrh of excess Carrying Amount Buildings P1,700,000
1,700/2,850 P119,298 Pi,819,298 Machinery 1.150,000 1,150f2,850 80.702 1,230,702 P2,850,000
P200,000 P3,050,000
30. Reversal of impairment loss P200,000
Amount allocated to Buildings (P1,800,000 - P1,700,000) (100,000) Amount allocated to Factory
machinery P100.000
Factory machinery P2,200,000 Accumulated depreciation and impairment losses (P1,050,000-
P100,000) (950,000) Net carrying amount P1,250,000
PROBLEM 8- HVR Company
36. D Present value of principal (P3,600,000 x 0.7514) P2,705,040 Present value of interest
(P3,600,000 x 5% x 2.4860) 447,480 Consultation service fee revenue P3,152,520
3A. ) Interest Principal Total PWF Present Walue
12/31/15 (P7.2M x 4%) P288,000 P2,400,000 P2,688,000 0.8772 P2,357,914 12/31/16 (P4.8M x 4%)
192,000 2,400,000 2,592,000 0.7695 1994,544 12/31/17 (P2.4M x 4%) 96,000 2,400,000 2,496,000
0.6750 1684.800 Present value of note P6,037,258 Carrying amount of equipment 4800,000 Gain on sale
of equipment P1.237,258
Note receivable from Sale of land:
Date Interest COrse Carrying Armount 1/1/15 P2,181960* 12/31/15 P218,196 2,400,156 12/31/16
239.844** 2,640,000 * P2,640,000 principal x 0.8265 PWF at 10% for 2 periods, ** P2,640,000 -
P2,400,156
Note receivable from ConSLitation:
Effective Nomina! DSCOUnit Carrying Date terest Interest AmOrtization Arnout 1/1/15 Orr P3,152,520
12/31/15 P315,252 P180,000 P135,252 3,287,772
CPA REVIEWSCHOOL OF THE PHILIPPINES (CPAR) - MANILA
AUDITING PROBLEMS FINALPREBOARDEXAMINATION
12/31/16 328,777 180,000 148,777 3,436,549 12/31 fi7 343,451** 180,000 163451* 3,600,000
* P3,600,000 - P3,436,549 = P163,451 ** P163,451 + Pl&0,000 at P343,451
Note receivable from Safe of equipt ment
Effekty Nominal Principal Carrying Date Enterest Interest AmOrtization Collection AsOut 1/1/15 r
P6,037,258 12/31/15 P845,216 P288,000 P557,216 P2,400,000 4,194,474 12/31|16 587,226 192,000
395,226 2,400,000 2,189,700 12/31/17 306,300* 96,000 210,300 2,400,000
* P2,400,000-P2,189,700 = P210,300 + P96,000 - P306,300
PROBLEM 10 - ARAN CO.
46.
48.
49,

50.
2014 Depreciation expense - Vehicles: Beg. Balance (P468,000 - P196,560) x 40% June 22
acquisition (P162,000 x 40% x 6/12)
Ot|

2014 Depreciation expense - Machinery:

Machine 1 (P430,000 - P25,000 - P405,000/5 x 8/12)
2 ((P480,000 - P30,000 - P450,000/6)
3 (P592,000 - P40,000 = P552,000/5)
P239,400
Accumulated depreciation - Office furniture, Dec. 31, 2015:
(P115,000 - P5,400 = P109,600/8 x 14/12)
Total

20.6 Depreciation expense - Machinery:

Machime 2:

Cost (P480,000 +P120,000) AfD, Feb. 2011 - Dec, 3, 2015:

(P480,000 - P30,000/6 x 411/12)
Carrying value, 111 fi Revised residual value Revised remaining life (6 - 4 lifi2 + 1)
Depreciation (P181,250/25 x 12)
Machine 3 (P552,00075)
Tota

2016 Depreciation expense: Buildings (P1,857,200 - P50,000/20) Machinery Velicies;

Old traded in om June 20, 2016:
(P234,000 - P98,280 P135,720 x 60% x 60% = P48,859 x 40% x 6/12) Acquired June 22, 2014,
Scrapped Oct. 4, 2016:
(P162,000 - P162,000 x 40% x 6/12) =
P129,600 x 60% x 40% x 9/12) Acquired through trade in on June 20, 2016:
(P270,000 x 40% x 6/12) Office furniture (P115,000 - P5,400 = P109,60078) Land
improvements (P55,000/10) Total
PROBLEM 11 HARLENGTON COMPANYILABADA CO.
51. A Net income before trading security adjustment
Unrealized loss (P3,465,000 cost - P3,195,000 fair value) Net income, as adjusted
P108,576 32,400 P140976
P 54,000 75,000 110,400
P18.267
P600,000
368.750 231,250 (50,000) 25 months
P 87,000 110,400 P197400
P90,360 197400
P9,772
23,328
54,000 87,100 13,700 5,500 P394.060
P2,700,000
(270,000) P2.430,000
CPA REVIEWSCHOOL OF THE PHILIPPINES (CPAR) - MANILA
AUDING PROBLEMS FENAL PREBOARD EXAMINATION

52. B Net income before trading security adjustment P2,700,000 Unrealized gain (P3,465,000
cost-P3,564,000 fair value) 99000 Net inCOme, as adjusted P2.799.000
LABADA CO.

53. Di ing Vale Fair Vakie

Ganda CO. P1710,000 P1759,500 Waston, Inc. (P135 x 1,800) 243,000 229,500 PL353,600 P.989.000
Unrealized gain (P1989,000-P1,953,000) P36,000
54. C Net proceeds (P93 x 15,000 = P1395,000 - P13,500) P1381,500
Carrying value (1,251,000) Gair or sale P 130,500
55. B Trading securities at fair value P1989,000

PROBLEM 12 DIAS coMPANYI BAIKAL coMPANY

56. A Present value of principal (P4,000,000 x 0.77218) P3,088,720 Present value of interest
payments (P4,000,000 x 6% = P240,000 x 2.5330). 607,512 Liability component of Convertible
debt P3,696.232 Proceeds P4,000,000 Liability Component 3,696,232 Equity component of
convertible debt P. 303,768
SA. :) r
interEst Intefest DiSCOunt Carrying Date Paid Expense AmOrtizatiOm Walle 01/01/14 r-r
P3,696,232 12/31/14 P240,000 P332,661 P 92,661 3,788,893 12/31/15 240,000 341,000 101,000
3,889,893 12/31/16 240,000 350,107* 110,107 4,000,000
* Adjustment due to rounding.
58. C Carrying value of bonds, Dec. 31, 2015 P3,889,893 Share premium - conversion privilege 3O3,768
Total Consideration 4,193,66l. Par value of ordinary shares P2 x (4,000 x 200) 1,600,000 Share premium
- issuance P2.593,661
BAIKAL COMPANY

59. A Cost of equipment (P1,200,000 x 0.68301) P819,612

Accumulated depreciation, Dec. 31, 2016 (P819,612 P150,000 = P669,612x2.5)
267.84 Book value, Dec. 31, 2016 P551,767
60. B Carrying value of note payable at Dec. 31, 2016 P99.730
DiSCOUrt Carrying Date AmOrtization Walue of Note 1231.4 P819,612 12.3.1.15
P81,961 1 901,5732 12.3.1.6 90,157 991,730 12.31.17 99,i,73 1,090,903 12.3.1.18 109,097 1,200,000
, 81.981 - 819,612 10%
2 P901,573 s P819,612 + P81,961 P4 adjustment due to rounding
rn - END ---