QUIZ CHAPTER 8

SEPARATE FINANCIAL STATEMENTS

MULTIPLE CHOICE (5PTS)

1. PAS 27 is applied when an entity chooses or is requires by law to present _________
statement that comply with PFRS’s.
a. Financial
b. Consolidated financial
c. Separate financial
2. What method(s) will recognize the dividend from the investment in profit or loss when
the entity’s right to receive the dividends is established?
a. Cost method
b. Fair value method
c. A and B
3. What method(s) use by the entity to recognize any share from the profit of the investee
a. Cost method and Fair value method
b. Cost method and Equity method
c. None of the above
4. These are a single set of financial statements of two or more entities under common
control
a. Consolidated financial statements
b. Separate financial statements
c. Combined financial statements
5. In the separate financial statements of a parent entity, investments in subsidiaries that are
not classified as held for sale be accounted for
a. At cost
b. Accordance with PFRS 9
c. A and B

TRUE OR FALSE –T OR F (5PTS)

1. The PFRS for SMEs does require combined financial statements to be prepared. F
2. PAS 27 prescribes the accounting and disclosure requirement for investment in
subsidiaries, investment in associates and joint ventures when preparing separate
financial statements. T
3. The PFRS for SMEs requires a parent to present consolidated financial statements but
does not require a parent to present separate financial statement. T
4. In equity method, dividends from the investment are recognized in profit or loss when the
entity’s right to receive the dividends is established. F
5. In fair value method, the investment is initially measured at the transaction price plus, in
the case of FVPL, transaction costs directly related to the acquisition. Transaction costs
incurred on investments classified as FVOCI are expensed immediately. F
 FILL IN THE BLANK (5PTS)
1. Entities exempted from preparing ____________ statement present ___________
statements as their only financial statements.
2. If an entity elects, in accordance with PAS 28 to measure its _______________ or
____________at fair value through FVPL in accordance with PFRS 9, it shall also
account for those investments in the same way in its separate financial statements.
3. Investment classified as are accounted for accordance with PRFS 5.

PROBLEM SOLVING (5PTS)

Apple Co. had the following investment transactions during 20x1.

 Acquired 70% interest in Banana, Inc. for P1 250 000 on January 20x1. Apple reported
profit of P15M and declared dividends of P500 000 during 20x1. The fair value of the
investment on December 31,20x1 is P1.8M.

 Acquired 30% interest in Carrot Co. for P120 000 on July 1, 20x1. Transaction cost
incurred amounted to P35000. Apple reported profit of P3M for the six months ended
December 31,20x1 and declared year-end dividend of P300 000. The fair value of the
investment on December 31,20x1 is P150 000.
Apple Co. policy is to measure investments in subsidiaries at cost and investment in associates at
Fair Value through profit or loss in the separate financial statements.
Compute for the following:
1. Carrying amount of the investment in subsidiary in the 20x1 consolidated financial
statements.
a. P1 250 000 c. Zero
b. P1 500 000 d. P1 800 000
c.
2. Net investments income recognized in the separate financial statements.
a. P470 000 c. P440 000
b. P405 000 d. P435 000

3. Carrying amounts of investments in subsidiary and associate in 20x1 separate financial

statements.
a. P150 000 & P120 000
b. P1 250 000 & P150 000
c. P1 250 000 & P120 000
d. P1 800 000 & P150 000
On January 1, 2017, entities X and Y each acquired 30% of the ordinary shares of entity A for P
750 000. Entities X and y agreed to share control over entity A. For the year ended December 31,
2017, entity A reported a profit of P2 000 000. On December 30, 2017, entity A declared and
paid a dividend of P400 000 for the year 2017. At December 31, 2017, the fair value of each
venturer’s investment in entity A was P1 500 000. There’s no published price quotation.
4. Compute for the total investment in Entity A?
a. P 1 350 000 c. P1 230 000
b. P950 000 d. P2 630 000

On January 1, 2017, entities X and Y each acquired 30% of ordinary voting shares of entity A fro
P450 000. Entities X and Y immediately agreed to share control over entity A. Entity A incurred
a loss of P 120,000 for the year ended December 31, 2017 and it did not declare a dividend.
Furthermore, at December 31, 2017 the recoverable amount of each venturer’s investment in
entity A is P240,000 (P300 000 fair value less P 60,000 estimated cost to sell).
5. Compute for the carrying amount of investment in entity A.
a. P240 000 c. P510 000
b. P170 000 d. P110 000