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NOTRE DAME EDUCATIONAL ASSOCIATION

Purok San Jose, Brgy. New Isabela, Tacurong City

MOCK BOARD EXAMINATION
Advanced Financial Accounting and Reporting
S.Y. 2016-2017

INSTRUCTIONS: This examination is good for three (3) hours. Select the best answer for each
item. Mark only ONE answer for each item by shading the letter of your choice on the ANSWER
SHEET. STRICTLY NO ERASURES. Use Mongol Pencil No. 2 Only.

1. Merry is a single proprietor of a dressmaking business and agrees to make a partnership
business with Jessa who is to contribute cash to give her a 1/3 interest in the business. On
November 30, 2015, right before the partnership formation, Merry has a total business assets
of P41,000 and a liability of P8,000. The two agreed that in order to establish Merry’s interest
in her business, an allowance for doubtful accounts of P426 and an increase in the inventory
value of P3,000, be considered.

How much cash should Jessa invest in the partnership business?
A. P 14,787 C. P 17,787
B. P 15,213 D. P 18,213

2. A partner assigned his partnership interest to a third party. Which statement BEST describes
the legal ramifications to the assignee?
A. The assignment of the partnership interest does not entitle the assignee to partnership
assets upon a liquidation.
B. The assignment dissolves the partnership.
C. The assignee has the right to share in the management of the partnership.
D. The assignee does not become a partner but has the right to share in future partnership
profits and to receive the proper share of partnership assets upon liquidation

Use this Situation to answer items 3-4: Fred and Gary share profits and losses in a ratio of 2:3,
respectively, after salary allowances, interest allowances and bonus allocations. Fred and Gary
receive salary allowances of P30,000 and P60,000, respectively, and both partners receive 10%
interest based upon the balance in their capital accounts on January 1. Partners' drawings are not
used in determining the average capital balances. Total net income for 2015 is P180,000. If net
income after deducting the interest and salary allocations is more than P60,000, Gary receives a
bonus of 5% of the original amount of net income.
Fred Gary
January 1 capital balances P 600,000 P 900,000
Yearly drawings (P3,000 a month) 36,000 36,000

3. What is the total amount for the allocation of interest, salary, and bonus, and how much over-
allocation is present?
A. P180,000 and P0
B. P240,000 and P60,000
C. P249,000 and P0
D. P249,000 and P69,000

4. If the partnership experiences a net loss of P60,000 for the year, what will be the final net
amount of profit or (loss) closed to each partner's capital account?
A. (P90,000) to Fred and P30,000 to Gary
B. (P30,000) to Fred and (P30,000) to Gary
C. (P24,000) to Fred and (P36,000) to Gary
D. (P30,000 to Fred and (P90,000) to Gary

Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 1

000 Building-net 500. capital 200.500 as his total share? A.000 and the fair market value of inventory is P75.000 Mon. The assets are to be revalued prior to the admission of Owen.000 per year.000. Capital: P143. Ana. 2016.5.000 C. The remainder was to be assigned on a 5:2:3 basis. Capital: P104. Manu.000 with net income of P52. A summary Statement of Financial Position for the Mon. Further. P 84. Manu. capital 400. Carl P250. 860 7. and Nobe partnership appears below. 4:6:10:5 8.667 D. P340. Their contributions were as follows: Ana P500. respectively. if the partner with a negative capital balance is personally insolvent? A. On January 2.000 per year. P 105. respectively.000 securities Inventory 125.000 Total assets P1.000 E.000. Assume that the net loss for the first year of operations was P26. What will the profit and loss sharing ratios be after Owen's investment? A. 380 C. Which of the following procedures is acceptable when accounting for a deficit balance in a partner's capital account during partnership liquidation.000 in the second year. Mon. Assume further that each partner withdrew the maximum amount from the business each year. The partner with a negative capital balance must contribute personal assets to the partnership that are sufficient to bring the capital account to zero. P360. 1:2:4:2 C. Bud P250.000.000. P 132.000 6. Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year.000. Partners Ana and Bud will receive salaries of P50. What was the balance in T’s Capital account at the end of the second year? A. Capital: P143. The negative capital balance may be absorbed by those partners having a positive capital balance according to the residual profit and loss sharing ratios that apply to all the partners C. P330. 2:3:5:2 D.000 salary assigned to T. The partners agreed that each partner will receive a 5% interest on capital contribution.000 with P13.760 D.000 and P50.025. they agreed that partners Carl and Dan shall receive a minimum of P25. 3:4:6:2 B.000 Nobe.000 Manu. and Nobe share profits and losses in a ratio of 2:3:5. The remaining profits will be distributed on the ratio 3:3:2:2. respectively. capital P 425.000 The partners agree to admit Owen for a one-fifth interest. P320. Bud. B. Which partnership net income will be favorable to Bud if he wants to receive at least P102.000 Marketable 200.000 Land 100.000 and Dan P200.000.000 Total equities P1. The Articles of Partnership stipulated that profits and losses be assigned in the following manner: Y was to be awarded an annual salary of P26. inclusive of interest and share in the remaining profits.000 T.025. Assets Equities Cash P 100.000 and P30. Carl and Dan formed ABCD partnership. The negative capital balance may be absorbed by those partners having a positive capital Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 2 . A partnership began its first year of operations with the following capital balances: Y. Each partner was allowed to withdraw up to P13.167 B. P 133. The fair market value of partnership land is appraised at P230.690 B.

000 Total assets P 470. The partner with a negative capital balance must contribute personal assets to the partnership that are sufficient to bring the capital account to the same level of the other partners' capital accounts. C. The year-end balance sheet and residual profit and loss sharing percentages for the Glenn. 120. Harry in the amount of P50.000)…… 48. Harry and Ian partnership. a balance sheet reflects book values. B. D.000 Glenn. capital (25%) 80.000 If the partners then distribute the available cash using a safe payments schedule.65 D. P 74.000 Free assets (fair value.000 The total estimated deficiency to unsecured creditors and the expected recovery per peso of unsecured claims is A.000 D. The following data were taken from the statement of affairs for Got7 Corporation: Assets pledged for fully secured liabilities (fair value. are as follows: Cash P 60. C. capital (20%) 175. Sy will receive A. capital (25%) 70. capital (40%) 98.68 13. while statement of affairs emphasizes realization values. 12. 60.000 Fully secured liabilities………………………………………………………………………. P 27.000 Inventory 100. discloses the following:  A mortgage payable of P118. Ian in the amount of P40. P 248.000 Assets pledged for partially secured liabilities (fair value. and Sy are in the process of liquidating their partnership. Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 3 . P 90.000 and P 0.000 Sy./equity P 628. P180.000 cash C. the cash available will initially go to A. P 51.000 cash D. liabilities are arranged in a different sequence. 14. D. Harry in the amount of P70. P150.000 and P 0. A cash distribution plan is developed with vulnerability rankings for the Glenn.000 Accounts payable P 180./equity P 470.000 Total assets P 628. 140.000 The partners agree to liquidate the business and distribute cash when it becomes available.69 C. P 76. 2015.000 Unsecured liabilities without priority ………………………………………………….000 Harry.000 Total liab. and Ian partnership on December 31.000)………………………………………………………….000 Pe. A review of the assets and liabilities of G Company in bankruptcy on June 30.000 Total liab. is secured by building valued at P39.000 cash 11.000 and P 0. capital 120. 2015.000 and P 0.000.000 10. as part of her settlement. P104. P 41.000 cash B.000. Sy has agreed to accept the inventory.000 Accounts payable P 150. owner’s equity is not considered in the statement of affairs.000 Plant assets 280. After outside creditors are paid.000.000 Loan from Harry 50. assets are arranged in a different sequence. P 90. Oh.000 Ian. Glenn in the amount of P20. which has a fair value of P60. balance according to the residual profit and loss sharing ratios that apply to those partners having positive balances.000 Loan to Glenn 50. 9. Harry.000.000 B.000 Partially secured liabilities …………………………………………………………………. P80. The primary difference between a balance sheet and an accounting statement of affairs is that A.000 less than its book value of P172.63 B. Pe. A balance sheet and the residual profit and loss sharing percentages are as follows: Cash P 248.000 Oh. capital (40%) 175.000)………….000 Other assets 360.

000 C. respectively. 2015. P 420.000 16. which Mic and Jelly agreed to assume were P4. C.340 C.000 C. the holder of the lien. On December 30. Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 4 .500 18.000.  Assets other than those referred to have an estimated value of P44. They agreed to divide their profits equally and each shall record his purchases.000 D. B.769 14. 2015? A. P 45.000 each in order to purchase canned goods which are sold by lots at a “closing-out” sale. P 49. shown as part of long-term liabilities of the venture. 15. • Cost of unsold canned goods.000 by Mic and P19. P 52.000 that is 3/5 realizable. 2015. P 236.000 C. entity X recognized a profit of P400. How much was paid to the partially secured creditors? A. At December 30. if the proceeds on the realization of an asset exceed the lien against that asset. sales and expenses in his own books.000. the ventures must report their investment in entity X at A. 2015. other lien holders whose assets will not realize a sufficient amount to cover their lien. However. which included claims with priority of P23. 2015.500 D. P 202. In a liquidation proceeding.380 B. How much dividend income each venture should recognize on December 31. and Jelly was P105. entity X also declared a dividend of P100. in a joint venture. Mic and Jelly.000 B. P 300.500 by Jelly. P 48. P 15.260 D. B.000 D.000. After selling almost all of the canned goods.000 B. P 345. • Expenses paid from the joint venture was cash P15.000. Entities A and B immediately agreed to share control over entity X. Entities A and B uses the cost model to account for its investment in jointly controlled entities.000 for the year ended 2015. C. P 30.000.000 17. What was the joint venture gain or loss? A. the excess is assigned to A. Use the following information in answering items 15 and 16: On January 1. the fair value of each venturer’s investment in entity X is P400. At December 31. an amount that is 75% of its book value  Liabilities other than those referred to total P91. Assuming in January 2. P 213. meet the claims of the unsecured creditors. shown as deduction from the net assets. P 50. they wind up their venture.000. the minority interest in the venture is A.000 for the year 2015 and at December 31. P 75. entity X declared and paid a dividend of P150.  Notes payable of P57.500 and P7. contributed P150. 2015.000.000 B.000. the stockholders of the corporation.000. P 224. the fair value of each venturer’s investment in entity X is P425. The following data relate to the venture transactions: • Joint venture credit balance of Mic was P120. D. 2015.000 is secured by furniture and equipment with a book value of P76. Under proportionate consolidation.000. P 255. there is no published price quotation for entity X. entities A and B each acquired 30% of the ordinary shares that carry voting rights at a general meeting of shareholders of entity X for P300. For the year ended December 31. shown in the equity of the venture. 2015.

000 60. 20. P 1.000 C. P 400.000 - Change order No. not included in the financial statement of the venture. During the construction period. 23% D. A warehouse being constructed for the enterprise's own use C. D. 20.000 21. revenues and costs are recognized proportionately to the cash received from the sale of the product.000 Gross Profit Rate 30% 40% The instalment A/R balance on December 31.250 D. The following schedule summarized these changes in 2015. 10. gross profit is not recognized until the amount of cash received exceeds the cost of the item sold. revenue. A bridge constructed for a third party under a specifically negotiated contract D. A. 2015 is A.100. The following data are available 12/31/14 12/31/15 Balance of Deferred Gross Profit 2014 300. An item of plant and machinery being constructed to be sold as inventory Use the following information to answer questions 21 and 22: On January 3. P 1.000.000 B.000 B. Cost Incurred Estimated Cost Contract 2015) to Complete Price Original Contract P1.000 120. P 1. According to IAS 11 . Under the instalment sales method. B. 21% 22.000 Change order No.400.000 Change order No.000 2015 440. which of the following projects undertaken by an enterprise should be accounted for as a construction contract? A.000 C.'Construction Contracts'. 4 25.000.600. What is the percentage of completion for this project in 2015? A.000 . 2015 appropriately uses the instalment sales method of accounting. MC Corp began business on January 1.462.450. 3 60.000 D.890. costs and gross profit are recognized proportionately to the cash that is received from the sale of the product. P 3.500 23. but gross profit is deferred until all cash is received. gross profit is deferred proportionately to cash uncollected from sale of the product. 2015. enters into a contract to construct a dam for P8. the original contract was modified that eventually changed the provision of the contract. 2 . P 3. P 1.000 P8.050. but total revenue and costs are recognized at the point of sale. C.000 Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 5 .500. 1 10.005.000 P5. P 1.000 10. Kuraptors Inc.000 Negotiable (at least cost) Change order No. What is the amount of estimated gross profit that will be recognized in 2015? A. 19.000 25. Kuraptors uses the cost-to-cost method to determine the percentage completed. 25% C. 30% B. D. An office block being constructed as an investment property B.000.

000 will be paid in advance and the balance in 5 equal annual instalments.000. 34.000 D. On November 1.59 PV of an annuity of P1 14% for 4 periods 2. Etlas Construction Co. The first payment was due on December 31. Hart Corp.085. 1.000 P (200.800 C. for P180.000 cash on December 31. On July 1. 2015.000 D.600. Hart can borrow at 14% for a loan of this type. P 73.24. what is the amount of franchise revenue should Max Turkey recognize for the year ended December 31. P 51.000 26. sold construction equipment to Draw Inc. The cash selling price would have been P473.600. Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 6 .000. Draw paid P30.200. What amount of interest income should be included in Wetson’s income statement (the second year of the contract)? A. 2015.850. 18. 2016.000 and agreed to pay the balance in four equal instalments of P20.000 How much cost was incurred in 2014? A. P 98.000. Present and future value factors are as follows: PV of P1 at 14% for 4 periods 0.000 25. 2015. 2015? A. has used the cost-to-cost percentage method of recognizing revenue.000 to sell Max Turkey’s products for a period of 20 years.890 PV of an annuity of P1 for 5 periods (in advance) 4. 2015.91 Future amount of P1 f14% for 4 periods 1. 12. sold some machinery to the Finney Co. and Max Turkey will be responsible in making the feasibility study of the project and six months training of the franchisee’s staff and employees. On December 31. 2013 2014 2015 Contract Price P20.500 C. 4.000 Gross Profit(loss) 400.001.800.624 D. a franchisee bought from Max Turkey for a sales price of P5.400.240 Assuming collection of the note is reasonably assured. evidenced by a 9% promissory note.600.000 ? 8. 2015.400. 0 C.800 D.885 27.000 B.316. 39. On the same date. Hart paid P40. The present value factors for the 9% rate follow: PV of P1 for 5 periods 0.000 28. The following incomplete records were provided for a recently completed building project. Wetson Co.000 C.000.000) Cost incurred 3. 25. Mole Co.69 At what amount should Hart record the franchise at the date of acquisition? A. Finney entered into an instalment sales contract which required annual payments of P125. 6.200 B. P 120. on January 2.000 P1. Their agreement provides that P500. 4.000 B.000. signed an agreement to operate as a franchisee of Ace Printers for an initial franchise fee of P120. 1. beginning July 1. 11.000.000 B.000. including interest at 10% over five years. The down payment is not refundable and no future services are required of the franchisor. The equipment had a carrying amount of P120.650 PV of an annuity of P1 for 5 periods 3.

. Unrealized profit from internal transfers between the home office and a branch must be eliminated in the preparation of the enterprise’s financial statements that are presented in accordance with GAAP...620.00 Sales orders filled by home office in 2015…………... C.500..... P 47. B.000.. 25..00 and the Home Office Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 7 .380.000.000.000 note bearing interest at 10% payable in five annual instalments of P30....000.00 D. The following is a summary of the transactions of the agency: Sales orders sent to home office……………………………………………… P 66.000 interest.00 Selling expense paid from the agency working fund………………… 3.00 Inventory. 130.. 5% of gross sales Sample shipped to agency: Cost ………………………………………………… ………………………………. P 39...00 B...380.384...994.000.00 Administrative expenses charged to agency…………………………….. Inc.000.. Thereafter. 1.. the following data were gathered: January 1 inventory... D.……...………………………. P 3.. 2016... 12...00. On June 30.320.. Which of the following statements about this arrangement is FALSE? A..994. On December 31....00 Not sales to October 31……………………………………… 225..00 P 7. a fire gutted the branch warehouse and destroyed 60% of the merchandise stock therein. The JJ Company. the estimated cost of the merchandise destroyed by the fire was A... 15.000.00 P 5. The home office and branch office accounts are reciprocal accounts that must be eliminated in the preparation of the enterprise’s financial statements that are presented in accordance with GAAP. The branch office account on the books of the home office represents the equity interest of the branch office in the assets of the home office.000 C. 2015.668.... P 14... what total amount of revenue should Mole recognize from the construction equipment sale and financing? A.. Mole appropriately accounts for the sale under instalment method.00 C. 47. P 27.00 D...00 C..00 31.000 B.. December 31. at billed price …………………… P 50.600.……………………… 1. net of 2% discount…………………….. P 40. 30.00 Shipments from home office to Oct.. 2015...00 Freight on shipment to agency…………………..520.... 31………………... 2015 and signed a P150. 2015………...000.000 29... P 21.. P 24.000.000 D. At the close of business on October 31.. Lobster Trading bills its Iloilo City branch for shipments of goods at 25% above cost.00 32. The home office account on the books of a branch office represents the equity interest of the home office in the net assets of the branch.00 P 7.000.. 55.. 2015. opened an agency in Makati in 2015.628..000 principal and P15. P 40.…. Swift Corporation operates a number of branches in Metro Manila..320.320. Lorenzo branch showed a Home Office Account balance of P27.. its Sn. 10. An enterprise uses a branch accounting system in which it establishes separate formal accounting systems for its home office operations and its branch office operations....00 B...350.00 P 5. For the year ended December 31.. Draw paid P30.00 If undamaged merchandise recovered are marked to sell for P30...00 Collections.00 The company maintains its gross margin on agency gross sales at 30% excluding the freight cost on shipments to agency The agency’s cost of sales including freight and agency’s net income would amount to Cost of Sales Net Income A.

000. Under IFRS 3. intended and charged to Sn Jose branch was shipped to Sn Lorenzo branch and retained by the latter. P 21. D. C. The following information may help in reconciling both accounts: 1. B. Home Office was charged for P1. A P15. all of the items stated except the cost of registering and issuing the securities are expensed.00.000 Cost of closing duplicate facilities 11.00 emergency cash transfer from Sto. reassess the recognition and measurement of the net assets acquired and the consideration transferred. 2. reassess the recognition and measurement of the net assets acquired and the consideration transferred. Business Combination.00 33. 5.00. books showed a Sn.750. A P 12.000 shares of newly issued P1 par value common stock with a fair market value of P25 per share for all of the outstanding P5 par value common stock of Gardner Inc and Gardner is then dissolved. In a business combination.200. Lorenzo branch on June 28. In the business combination of Manet and Gardner.00.00 D. D. and then recognize any excess immediately in other comprehensive income. only the costs of closing duplicate facilities. C. P 20. C. the costs of registering and issuing the securities are included as part of the purchase price for Gardner.00 B. B.000. the acquirer should A. A P2. Tomas branch was not taken up in the Home Office books. the salaries of Manet's employees assigned to the merger are treated as expenses. all of the costs except those of registering and issuing the securities are included in the purchase price of Gardner. In the business combination of Manet and Gardner A. all of the items listed are treated as expenses. Lorenzo branch accounts receivable of P3.000 Accounting and legal fees 9. B. recognize the excess immediately in other comprehensive income. an acquirer’s interest in the fair value of the net assets acquired exceeds the consideration transferred in the combination.150.00 shipment. Lorenzo branch account balance of P25. the salaries of Manet's employees assigned to the merger. Home office collects a Sn. the costs of registering and issuing the securities are deducted from the fair market value of the common stock used to acquire Gardner.00 shipment. D. The branch reported a net income of P12. 2015 at P16.000.550.275. then recognize any excess immediately in profit or loss. Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 8 . charged by Home Office to Sn. P 23. Home Office erroneously recorded Sn. Lorenzo’s net income for May.750.00 for merchandise returned by Sn. What is the reconciled amount of the Home Office and Sn.000 Registering and issuing securities 14. only the accounting and legal fees are included in the purchase price of Gardner.600. 35.675. was actually sent to and retained by the latter. recognize the excess immediately in profit of loss.350.000 Salaries of Manet’s employees assigned to the implementation of the merger 15. 3.00 and fails to notify the branch.00 C. 4. The merchandise is in transit. P 27.000 34. Lorenzo branch reciprocal accounts? A. (list refers to those in the main item of #34 & 35) A. Lorenzo branch. Use the following information in answering items 34 and 35: Manet Corporation exchanges 150. and the costs of the shareholders' meeting would be treated as expenses. Manet paid the following costs and expenses related to the business combination: Costs of special shareholders’ meeting to vote on the merger P 13.

000 and P105. 38. On January 1. Nest’s stockholder’s equity immediately before the investment by Robin consisted of P3. D. Assume that the equity method is being used.000 on December 31. Which of the following observations is consistent with the equity method of accounting? A. P 17.250 D.600. It is used when the investor lacks the ability to exercise significant influence over the investee. the accountant has understated the investment account and understated the net earnings. P 18. additional shares will be issued on January 1. 37.000. 2015.760 D. On January 1. P 7.000 and paid dividends of P30. the accountant has overstated the investment account and overstated the net earnings. Polk issues common stock to acquire all the assets of the Sam Company on January 1.36.000.000 and paid dividends of P10.000 for the year. Based on the preceding information. Kestral Inc. but to reassign the amounts assigned to equity accounts. respectively? A.000 B.000 39. The fair value of shares held by Yang was P110. 2014.800. have no effect on asset values. Spiel Company reported net income of P75. By using the equity method.000. reduce retained earnings. the accountant has overstated the investment account and understated the net earnings. B. which states that if the income of the Sam Division exceeds a certain level during 2015 and 2016.000.000. if it used the equity method of accounting? A.000 and paid dividends of P8.750 B. D. Dividends declared by the investee are treated as income by the investor.680. increase the price assigned to fixed assets. Kestral’s accountant mistakenly assumed considerable influence and used the equity method instead of the cost method. By using the equity method.500 C. P 22. Gulfstream Corporation acquired 40 percent of the voting shares of Hunter Company for P65. P 23. There is a contingent share agreement. Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 9 .000 in 2015.000 cash. P 18. what would Gulfstream report as income tax expense for the year? A. Mouse had net earnings of P60. P 1. 2014 and 2015 respectively. Robin Corporation purchased 150. Based on the preceding information. P 2. Gulfstream reported operating income of P50. C. P 11. What is the book value of Robin’s investment in Nest? A.540 41. C.500 C. P 1. By using the equity method. Hunter reported net income of P45. B. P 3.000 for both 2014 and 2015. Yang Corporation acquired 25 percent of the outstanding shares of Spiel Corporation for P100.800 B.000 in retained earnings. the accountant has understated the investment account and overstated the net earnings. what amount will be reported by Yang as income from its investment in Spiel for 2015.000 of capital stock and P2. 2017. The impact of issuing the additional shares is to A.000 D. P 26.500.000 previously unissued shares of Nest Company’s P10 par value common stock directly from Nest for P3. By using the equity method. owns 10% of Mouse Company. B. In the most recent year. record additional goodwill.250 40.400. What is the impact on the investment account and net earnings. 2015. There is 80 percent exemption of intercompany dividends and the effective tax rate is 35 percent.000 C.

consolidated net income for 2015 was A.000 C.280 C. Consolidated gross profit D. Consolidated retained earnings C.000) Equipment-net P 550. Thermal sold 100% of its output to Darter during 2014 and 2015 at a markup of 120% of Thermal’s cost.000 44.600 of these items remaining in its January 1. 42. It may be used in place of consolidation. Separate balance sheets for Falcon and Rodent included the following equipment and accumulated depreciation amounts on December 31. 2015.000. compute the consolidated net income for 2014 and 2015. P 372.025. 2015 inventory and no items on December 31.000 Less: Accumulated depreciation ( 200.000) ( 50.000 when its book value was P85. understated by P 1.000 was sold intercompany for P30.000 B. Pedro purchased 100% of the common stock of the Sanburn Company on January 1. for P500. D.000 P 460. which of the following line items is indifferent to the sales being either upstream or downstream? A. Non-controlling interest expense B.000 and it had a 5-year remaining useful life with no expected salvage value.000 B.025. Its primary use is in reporting non-subsidiary investments. unaffected because Darter buys 100% of Thermal’s output 45.400 D. 2015 respectively? A..050. On that date.000 P 300. P 1. In situations where there are routine inventory sales between parent companies and subsidiaries. P 362. 2014 2015 A. P 1. its appraised value at the time of sale.000 P 454. 2015. 2015: Falcon Rodent Equipment P 750. Darter had P9. If Darter neglected to eliminate unrealized profits from all intercompany sales from Thermal. 2014.000 60. overstated by P 1. P 362. Falcon Corporation sold equipment to its 80%-owned subsidiary. Falcon sold the equipment for P110.000 and P 250.000. Consolidated net income 43. On January 1. 2015. Silver Corporation is a 90% owned subsidiary of Proto Corporation acquired several years ago at book value equal to fair value. on January 1. 2014 sale of land. P 1. Darter Industries acquired an 80% interest in Thermal Company to insure a steady supply of Thermal’s inventory that Darter uses in its own manufacturing businesses.000 What were the consolidated amounts for equipment and accumulated depreciation at December 31. C. when preparing the consolidation statements.000 The only intercompany transaction between during 2014 and 2015 was the January 1.050.000 46.000 and P 245.000 Silver’s net income 80. For the years 2014 and 2015.000 D. If the land was sold by Proto to Silver (downstream) and that Silver still owns the land at December 31.000.000 P 250.000 D.000 and P 245.000 and P 250. P 363. Rodent Corp.000 P 400. The land had a book value of P20.000 P 454. Proto and Silver report the following: 2014 2015 Proto’s separate income P 300. the stockholders' equity of Sanburn Company was P380.600 B. overstated by P2.000 P 460.000 C. P 1. On the Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 10 . 2014.

. 10.000.445..000 B.443. Relevant spot rates for Swiss francs on the respective dates are as follows: Buying Selling Spot Rate Spot Rate December 4.000 Dividends paid.. 2016... It requires no net settlement. purchase date. Inc. currently valued at P1. B..000 P90. P 25.. D.000 48. a calendar-year-end firm. some ineffectiveness may result. 000 P 570. It requires no initial net investment or an initial investment that is smaller than would be required for contracts expected to have a similar response to the market.89 On December 31. 2015. 2015 32. On December 31.. weakened relative to the Korean won and the won was the denominated currency B... P 325. 50. It has one or more underlying’s and one or more notational amounts...5M..500 D... P 0 P 570. Armani paid the invoice on January 21. It will be represented as an asset or liability on the financial statements. P 2..463..000 C.. Which of the following is NOT a characteristic of a derivative? A.000 B.45 P32.. 2016 32. P 2.60 December 12..000 10. strengthened relative to the Korean won and the won was the denominated currency D. On October 1... The reported income and dividends paid by Sanburn Company were as follows: 2014 2015 Net income. the fair value of the derivative has increased by P325.000.. the fair value of the hedged assets has decreased by P350..72 32.. balance sheet of Phil Corporation.433. invested in a derivative designed to hedge the risk of changes in fair value of certain assets.. was understated by P20.. 2015 32..000. which of the following amounts are CORRECT? Investment Income Investment Account Balance 2014 December 31. strengthened relative to the Korean won and the dollar was the denominated currency 49.. weakened relative to the Korean won and the dollar was the denominated currency C. 2014 A.. 2015.. The derivative is structured to result in an effective hedge. 2015 P32. P 10. On December 4. 000 P 500. P 0 C...000 C.. P 10..000 Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 11 .58 32. A US importer that purchased merchandise from a South Korean firm would be exposed to a net exchange gain on the unpaid balance if the dollar A.. P 2. ordered FOB Shipping point from a Switzerland Company for 75..84 December 31. which was sold during 2014.000 P 500. 2015.96 January 21. P 350.68 32. Bestos. Bestos should recognize a net effect on 2015 earnings of A.. 2015. C. what will be the balance of the equipment? A. P80.000 D..000 Using the cost method.. Phil Corporation..000 47. The equipment was shipped and invoiced to Armani Company on December 12..750 B.000 D. However. P 2. P 80... 2015. Any remaining excess of cost over book value is attributable to patent with a 20- year life. inventory of Sanburn Company.000 Swiss francs.

D.000 575..250 to its Swedish subsidiary in the current year.000 P 2. This should be recorded as A. a weighted average rate B.XXX B. C. the assets should be reported in the consolidated financial statements of Oriole Corporation and Subsidiary in the total amount of A. P 2. Which of the following suggests that the foreign entity's functional currency is the parent's currency? A. Cash ………………………………………………XXX Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 12 . A US parent makes a 1.…………….350. There is an active and primarily local market. The loan is denominated in US dollars and the functional currency of the subsidiary is the krona. the parent but not the subsidiary.375.000 Property plant and equipment 1.000 54. both B and C are correct.200.000 C. a footnote in the financial statements disclosing the rent-free arrangement. C. both the subsidiary and the parent. a historical rate 52. 56.000. C.000 Totals P 2. as it is eliminated as part of the consolidation procedure. Atlee makes a cash gift to a not-for-profit local ballet company which is designated by the donor to buy costumes for a new ballet staging. Assuming that a foreign entity is deemed to be operating in an environment dominated by the local currency.000 D. 53. This intercompany transaction is a foreign currency transaction of A. rent expense at the fair market value. D. B. XXX C.000 B. a contribution.000 900. B.325. the subsidiary but not the parent. Sale prices are influenced by international factors. A voluntary welfare organization is permitted to use building facilities rent free.000 Trademark 600. P 2. Cash……………………………………………….000 P 875. Cash ………………………………………………XXX Revenue-Temporarily Restricted Contribution….350. the entity's assets are translated using A. 55.51. Which should be accounted for with the following journal entry? A. D. the current rate C.000 krona loan worth P108. neither the subsidiary nor the parent.650. B.000 If the functional currency of the subsidiary is the Philippine Peso.XXX Revenue-Unrestricted Contribution……. The following assets of Oriole Corporation’s Romanian subsidiary have been converted into Philippine Peso at the following exchange rates: Current Historical Rates Rates Accounts receivable P 850. P 2. Debt is serviced through local operations. Intercompany transaction volume is low. a simple average rate D.650. P 2. Cash ………………………………………………XXX Revenue-Endowment Fund……………………………… XXX D.

Revenue-Permanently Restricted ………………………. Other details include WIP beginning (50% for conversion) 19.800. P 8. 4. Catastrophe Accounting C. 4. Subsidy Income. Summarize the flow of physical units. 5. 5 C.000.500. Once a government agency receives Notice of Cash Allocation (NCA).50 P1 P160. it shall debit “ Cash- National Treasury. 4.000 C. Which of the following accounting practices has been outlawed by PFRS No. 5.National Government 58.000 D. 4. 4? A.Local Government C.000 B.Local Government D.20 . 3.500. Compute output in terms of equivalent units.10 . Life insurance D. P 8. 1 63.000 Contingent Assets 300.500 units Units completed and transferred out 116. The CORRECT order for these steps is A.30 . 4.000 Under the direct-method of cost allocation.000 Determine the Government Equity for 2015. Direct costs for each department and the proportion of service costs used by the various departments for the month of July are as follows Proportion of Services Used by: Department Direct Costs S1 S2 P1 P2 S1 P60.XXX 57. Subsidy Income.000 P2 P140.National Government B. P 8. 2 D. Medical Insurance B.000 62. A test for the adequacy of recognized insurance liabilities D. Shadow accounting B.200. Summarize total costs to account for. 5.000 59. Agency X had the following account balances for the year 2015: Current Assets 1. NCA. P 6.700 units Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 13 . P 10. Motor insurance C.000 C. direct materials are added at the beginning of the process and conversions costs are uniformly applied. 3 B. P42. 1. 5. Modified Disbursement System” and credit A. The five steps of the process costing procedure are scrambled below 1. P20. 3. 2. 3.000 . 2. the amount of S1 costs allocated to the S2 would be A. P 0 B.000. Which of the following types of insurance contract would probably NOT be covered by PFRS 4? A. Bee Corporation has two production Departments: P1 and P2 and two service departments: S1 and S2. Compute the cost per equivalent unit.200 units Units started 120. 1.20 S2 P100. 3.000 D.000 Contingent Liabilities 500. A. An impairment test for reinsurance assets 60.000 . NCA. 2. Assign total costs to units completed and to units in ending WIP Inventory. 1.000 Investments and Fixed Assets 9.000 Other Assets 500. At Sunny Corporation.70 .000 Liabilities 1. Pension Plan 61.700. 2.

000 B. Coop Bags Company uses a single plantwide overhead rate to allocate its P8.800 is associated with the Medium Bag line. P 3. Currently. The standard cost for materials is P1.459. P 3.000 pounds of Product C and 20. Large Bags has been overcosted. The Company sells the bags in cases of 1.000 is associated with the Small Bag line.088. of Pounds Price per pound Further Price after Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 14 .418. Santa Company processes copper ore into two products.500 Costs of materials added P384.000 bags. 66. and Small. Medium. P 685. Large. Medium. The Company uses machine hours as the cost driver for manufacturing overhead costs. Of this amount.000 of direct materials and incurred P30. C and U. Which product line(s) have been overcosted or undercosted by using the plantwide manufacturing overhead rate? A. No Finished Goods Inventory is maintained and product costs are applied directly to Cost of Goods Sold. Assume the company uses the relative-sales- value method of allocating joint costs. finished Goods Inventory for P90. Sweet Temptation produces various types of candies. and P2. H-Connection Company uses a back flush-costing system to account for bicycles. P 3. C. P3. Coop Bags Company manufactures cloth grocery bags to be sold to grocery stores and other retailers. Medium and Small have been undercosted.00 D.100 Costs of conversion added P271. and Small Bags have all been undercosted. Santa Company plans to produce 40. the journal entry has a Debit to A. 15. which are allocated based on pounds produced.21 B. Medium. B. P 2. Medium and Small have been overcosted.000 in conversion costs to produce 40 bicycles. P 0 C. The candies are produced in a joint processing operation with P500. Large Bags has been undercosted. and 11. When production is complete. H-Connection Company purchased P60.000 is associated with the Large Bag line.000 C. WIP ending (60% for conversion) 23. The ore costs P5 per pound and conversion costs are P15 per pound. Product C sells for P30 per pound and Product U sells for P40 per pound.000 Beginning WIP conversion costs P22. The bags come in three sizes: Large. P 480.000 B.125 What is the cost per equivalent unit for direct materials? A.210.75 C.000 pounds of Product U from 60. D.600 in the Small Bag line.500 per bicycle.400 in the Medium Bag line.000 pounds of ore.000 D. Several candies could be sold at the split-off point or processed further and sold in a different form after further processing. Coop Bags Company is currently running a total of 40. Bicycles are scheduled for production only after orders are received and products are shipped to customers immediately upon completion.08 64.000 of joint processing costs monthly.000 machine hours: 13. Information concerning this process for a recent month appears below: Candy Type No. The standard cost for conversion costs is P750 per bicycle. P2. P 400. cost of Goods Sold for P90.000 of annual manufacturing overhead. conversion Costs for P90.000 in the Large Bag line. Large. What amount of joint costs is allocated to Product U? A.714 67. During the current month.000 D.000 units Beginning WIP direct materials P35. no entry is needed 65. and Small Bags have all been overcosted.

should be allocated to products to determine whether they are sold at split-off or processed further B.260 C. you find the following information for May: Materials purchased 20.000 P5.000 P10. which indicate the following Materials price variance P200F Materials efficiency (quantity) variance P600F What was the total standard cost of direct materials allowed during May? A.400 D. a maker of holiday novelties. Labor efficiency variance of P4. The direct material standard is 0. In reviewing the records. P 8. The company's accountant resigned without leaving adequate records or explanations for what she did. Labor rate variance of P437.50 per hour. needs your help immediately.50 The joint processing costs in this operation A. Actual direct labor hours were 275. P 9.50 unfavorable 69. MB Fabrics budgeted to manufacture 1.900 C. Wax reported an unfavorable direct labor rate variance of P1.000 P5 P20. should be ignored in determining whether to sell at split-off or process further C. P 68. P 65.100 D. Wax Industries' actual direct labor cost was P67. What was the standard direct labor cost for actual output during the period? A. as they are misleading to all management decisions 68.000 P10.600 END OF EXAMINATION  Mock Board Examination for Accountancy – Advanced Financial Accounting and Reporting Page 15 .00 Chocolate Delight 100.50 unfavorable C.400 curtain valance for a month.575 curtain valances with total direct materials cost of P3.800 and a favorable direct labor efficiency variance of P2.400 and total direct labor cost of P5. Actual output for March was 1.60/unit. The Holiday Gifts Company.900 B. P 9. Evaluate the correctness of each of the following and determine which is CORRECT A.50 Minty Wonders 25. P 68.000 P8 P75. You know that the materials price variance is recorded at the time of purchase and you find some handwritten notes among the accountant's work papers. The direct labor standard is 20 minutes per curtain at a direct labor rate of P17.800 70. are never included in product cost. P 8.375 unfavorable B. should be ignored in making all product decisions D.000 units You find a copy of the budget which shows that materials were budgeted at P0. at Split off processing processing costs further Sweet Meats 50.250.000 units Materials used 15.812.000 P10 P30.937.50 favorable D.900. Total labor variance of P3. P 69.75 yards of direct materials per curtain valance at a cost of P13 per yard.440 B.000 during the current period. Total labor variance of P4.