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Baauio ude Blog. V, Lower Matin cor Diego Stang, Baguio Cy ‘w (074) 442-1440 / 0922-2499196 ADVANCED FINANCIAL ACCOUNTING & REPORTING FINAL PRE-BOARD EXAMINATION INSTRUCTIONS: Select the corréct The Professional CPA Review School ‘Main: 3FC. Vilaroman 8149. 873 P. Campa St. cx Espana, Sampsie, Manta 'B (02) 735 6501 / 735 9031 / 0922 #1 0181 ‘email ad: crc. S/F GCAM big. Monteverde St. Davao Cty ‘@ (082) 265-8805 / 0925-7272223 MAY 2018 BATCH AE EB PRL 29, 2018; 2:30PM - 5:30PM answer for each of the following questions. Mark only one answer for each item by writing a SHADING corresponding to the letter of your choice on the answer sheet Items 1 and 2 are based on the following information: “ihe contvolle for DIKATIBAYAN Mig, Co. has established the following activity cost pools and cost drivers Budgeted Budgeted Overhead Level for Cost Activity Cost Poot Cost Cost Driver er Pool Rate Machine setups 100,000 Number of setups 100 Pr,000Vsetup Material handling 150,000 Weight of raw material 0,000 pounds PY/pound Hazardous waste control 25,000 Weight of hazardous 10,000 pounds _P2.S/pqund chemical used Quaity eontrot 37,500" Number ofinopections. 1,000 _PS7.Slinspection + Olver overheaa costs 100.000 Machine hours 20,000 PBImachine he. Total Baxasoo ‘An order for 2,000 boxes of fim development chemicals ha the following production requirements Machine setups 4 setups Raw materials 10,000 pounds: . Hazardous materials 2,000 pounds : inspections 10 inspections ‘Machiné hours 500 machine hours 1. Under the activity based cost system, how much is the overhead cost per box of chemicals? A P 10.9375 chemicals. AP 10.9375 B. P21.875 B. P21875 C. P7.B125 D. 3.90625 Using a single predetermined overhead rate based on machine hours, compute the rate per box of ©. P7.8125 D. P.3.90625 tems 3 and 4 are based on the following information: Kupasin Textles Company manufactures a variety of natural fabrics for the clothing industry. The following data pertain to the Weaving Department for the month of September. Weighted average FIFO Equivalent units of direct materials 120,000 80,000 Equivalent units of conversion 104,000 88,000 Units completed and transferred out during September 100,000 100,000, The cost data for September is as follows: Work in process, September 1 40,000 units Direct material P 488,000 Conversion 88,600 Cost incurred during September Direct material 328,000, Conversion 545,600 3. Under the average method, how A. P1,040,000 4, Under the FIFO method, what is ‘A. 110,400 B. P 1,030,000 B. P 106,800 much is the cost of units transferred out during September. C. P 1,043,600. P- 894,800 the cost of work in process ending inventory during September. c. P 120,400 D. P 255,600 B CRC-ACE/AFAR: FINAL PRE-BOARD EXAMS (MAY 2018 BATCH) PAGE 3 8 10, n 2 ‘The partnership of Ryko, Dannie, Maddie, and Sacchie is being liquidated over the first few ‘months of 2018. The trial balance at January 1, 2018 is as follows: Debits Credits Cash 400,000 ‘Accounts receivable 112,000 Inventory 284,000 Equipment —net 600,000, Land 300,000 Loan to Ryko 40,000 ‘Accounts payable P 800,000 Ryko, capital - 20% 340,000 Dannie, capital ~ 10% : 160,000 Maddie, capital — 50% 280,000 Sacchie, capital ~ 20% 186.000 P7736000 Pp 7736.00 ‘Additonal information: 1. The partners agree to retain P 40,000 cash on hand for contingencies and distribute the fest ofthe avaliable cash at the end of each month 2. In January, half of the receivables were colleced. Inventory that cost P 150,000 was liquidated for ‘P-90,000. The land was sold for P 500,000 3. The accounts payable was liquidated. How much will each partner receive for the month of January 2018? A Ryko, P 136,000; Dannie, P 78,000; Maddie, P.O; Sacchie, PO Ryko, 162,000, Dannie, 91,000; Maddie PO; Sacchie, P 18,000 ©. Ryko, P 130,866; Dannie, P 75,334; Maddie PO: Sacchie, PO D. Ryko, P 208,000, Dannie, P.O”; Maddie PO: Sacchie, PO 9 through 11 are based on the following: : W. X and ¥ have capital balances of P224,000, P260,000 and P'116,000, respectively, and share profits in the ratio 3:2:1. Z invests cash in the partnership for a one-fourth interest. ‘Assure Z receives a one-fourth interest in the assets of the partnership, which includes credit for ‘50,000 of goodwill that is recognized upon admission. How much cash Z invest? ‘A. P200,000 8. 150,000 C, P250,000 . P100,000 ‘Assume Z receives a one-fourth interest in the. assets of the’ partnership and Z is credited with 40,000 of the bonus from the old partners that is recognized upon Z's admission. How much ‘cash Z invest? A. P160,000 B. 200,000 c. P186,666 ©. P146,666 ‘Assume Z receives a one-fourth interest in the assets of the partnership and X is credited with [30,000 of the bonus from Z, how much cagh Z invest? “&. P230,000 8. 320,000 c. P210,000 D. P240,000 \Nathaniel and James are partners who share profits and losses in a 2:3 ratio. The partnership will bbe liquidated in instalments. Some noncash assets have been sold, but other assets with a book value of P&30,000 remain. Liabilities are now P80,000, and liquidation expenses are expected to ‘be P36,000. The capital balances are P460,000 for Nathaniel and P'340,000 for James, ‘Assuming the available cash Is distributed, how much is the share of Nathaniel? ‘A. 214,000 B. P134,000 C. P160,000 - —D. P40,000 5 CRC-ACE/AFAR: FINAL PRE-BOARD EXAMS (MAY 2018 BATCH) PAGES 18, Fisher Construction Company, Inc. contracted to build an office building for Norman Diaz Corp. on 19. 20. 21. 22 July 1, 2017, for a total contract price of P4,000,000. On July 1, Fisher estimated that it would take between 2 and 3 years to complete the building. On December 31, 2019, the building was deemed ‘substantially completed. Following are contract costs incurred, estimated costs to complete the contract, and accumulated bilings to Norman Diaz Corp. for 2017, 2018, and 2018. ALIININT ALtzrsz018 ALzies2019 Contract costs incurred during the year P-300,000 2,100,000 P 2,100,000 Estimated costs to complete the contract, 2,700,000 1,600,000 -0- Bilings to Norman Diaz ‘600,000 2,240,000 3.700.000 Using the percentage of completion method, the income or loss from construction to be recognized by Fisher in 2018 would be: A. P190,000 B. P60,000 ©. P100,000 D.- P10,000 Which of the following is correct? ‘A. Alljoint arrangements are not structured through a separate vehicle are classified as joint ventures B. Fora joint venture, the rights pertain to the rights and obligations associated with individual assets and liabiities, whereas with a joint operation, the rights and obligations pertain to the net assets c. Im considering the legal form of the separate vehicle if the legal form establishes rights to individual assets and obligations, the arrangement is a joint operation. if the legal form establishes rights to the net assets of the arrangement, then the arrangement is a joint venture 1D. Where the joint operators have designed the joint arrangement so that its activities primarily aim to provide the parties with an output it will be classified as a jointcontrol? Which of the following statements is not correct? ‘A. Joint arrangements may be entered into to manage risks involved in a project B. Joint arrangements may be entered into to provide the parties with access to new technology or new markets C.__Joint arrangements require investors to have equal interests in the joint arrangement ©. The key feature of a joint arrangement is thatthe parties involved have joint control over ‘the decision making in relation to the joint arrangement, ‘The matters generally dealt with in a joint arrangement contract include the row ‘Activity, duration and reporting obligations Yes Yes Yes — Ye Capital contribution of the venturers Yes Yes Yes No Sharing of the output, expenses or results No Yes Yes Yes. Voting rights of the venturers No No Yes No Ad BI ctl DW ‘ACE Company acquired the net assets of CRC Corporation on January 1, 2017. Since the parties ‘cannot agree on the definite value of the company in terms of potential future eamings, they agreed to include in the purchase agreement a provision for contingent consideration. Whereby the acquirer wil pay an additional cash payments on January 1, 2019 equal to twice the amount by which average earings of CRC exceed P 250,000 per year, prior to January 1, 2019. Net income was P £500,000 in 2047 and P 600,000 in 2018. Assume that the liabilties recorded on January 1, 2017, include an estimated contingent liability amounting to P 400,000, What was the eniry made by ACE in January 1, 20197 ‘A. Liability from contingent consideration 400,000 Cash 400,000 B. Goodwill 200,000 Liability from contingent consideration 400,000 Cash 600,000 . Liability from contingent consideration 490,000 ‘Loss on contingent consideration 200,000 Cash 600,000 D. Goodwill 600,000 Cash 600,000