DIFFICULT 3 - AFAR Time: 60 Second: Joaquin Co. ee ee in Chichay Co. on January 1, 2016 for P1,225,000. On this date, the outstanding ordinary.srare capital and accumulated profits of Joaquin Co. and Chichay Co. are as, follows: Joaquin Chichay Ordinary share capital P 3.150000 R 875,000 Accumulated profits (losses) 1,400,000 175,000 | The assets and liabilities of Chichay were stated at their fair values when Joaquin acquired 80% interest | and the proportionate share in net identifiable assets was used to initially measure the NGV Joaquin | uses the cost method to account for its investment in Chichay under PAS 27 - Separate Financial Statements. Net income and dividends for 2016 for the affiliated companies follows: cure i Joaquin Ghichay (49,2) Net income R 525,000 RB 187,500 | Dividends declared 345,000 87,500 vere" | Dividends payable, 12/31/2016 157,500 43,750 sient | sy Based on PAS 36 — Impairment of Assets, year-end evaluation indicates P12,000 impairment in | goodwill, Determine the net income attributable to parent. t a QE TES ' DIFFICULT 7— AFAR Time: 60 Seconds ‘A, B, and C are partners in an accounting firm. Their capital account balances at year-end were A, 90,000; B, 110,000 and C, 50,000. Their agreement includes the following: age] 22, rau I> pw Partner C is to receive a bonus of 4,000. RL Interest of 20% shall be paid on that portion of a partner's capital in excess of 100,000. Salaries of 10,000 and 12,000 shall be paid to partners A & C respectively. oon Any remainder is to be divided equally among the partners. Profit 20,000 ae How much is C’s share in the profit if profit is distributed in the following order of priority: Interest on capital, then bonus, then salaries and then according to profit or loss percentage? Peeters a | | ye6pnq Suyesedo jenuue | 84101 pueBeu ym s10joaup jo pieod auy UI o1@A 0} 1UGU SiR SEY PUE “PI LHO JO %ZF SEU "PIT O85 II “qWeUOW Aue 38 pesiouexe oq, Uueo }! pue Aevow 24} UI si uoAdo je9 91) Jo eoud asiorexe eu “Sou O1NOQ Jo sisele}UI ANE euy 40 %bz UeY) GJ0W YM BuIpiOY SI} esee20UI 0} uoRdo Ue pausiqerse 1} AqeioyM jusaeiBe Ue OyU | Palaque “pr Ogg ‘JeeK 614) 40 BulUUIBeq emp ay SeUINy O3NOG Jo %Z Ul JSB1BIU! JA.IP Sey ‘PIT OBA ‘Il | ueuyedep seounosa uewny pue suoIsioep BuRelew eu) Jo) ejqisuodsas | S1O@a el1um "Pr Gey J0 suoHesedo je!o1eWoD pue UoRONpoLd BU) 105 Biqisuodse, st g Aqareym ‘g Jepioyeveys ey) yum queweelBe Ue peuBIs pue “PIT GAY Ul %zg Jo ISelayUI Ue Sey ‘PI OG] ‘1 25330 seu eLepisuco jou ies] senue Bumolo} OU JO YOU |An entity, a construction company, enters inio a contract to construct a commercial bullding for a customer on | | customer-owned land for promised consideration of P1 million and a bonus of P200,000 if the building is | completed within 24 months. The entity accounts for the promised bundle of goods and services as a single | performance obligation satisfied over time in accordance with paragraph 35(b) of PERS 15 because the customer | controls the building during construction. At the inception of the contract, the entity expects the following: Details Amount. Transaction price P 1,000,000 | —~ Expected costs 700,000 | ~~ [Expected profit 300,000) ~~ At contract inception, the entity excludes the P200,000 bonus from the transaction price because it cannot | conclude that itis highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Completion of the building is highly susceptible to factors outside the entity's influence, including | weather and regulatory approvals. In addition, the entity has limited experience with similar types of contracts. | The entity determines that the input measure, on the basis of costs incurred, provides an appropriate measure | of progress towards complete satisfaction of the performance obligation. By the end of the first year, the entity | has satisfied 60% of its performance obligation on the basis of costs incurred to date (P420,000) relative to total | | expected costs (P700,000). The entity reassesses the variable consideration and concludes that the amount is | still constrained in accordance with paragraphs 56-58 of PFRS 15. | tn the first quarter of the second year, the parties to the contract agree to modify the contract by changing the floor plan of trie building. As a result, the fixed corisideration and expected costs increase by P150,000 and 120,000, respectively. in addition, the allowable time for achieving the P200,000 bonus is extended by 6 months to 30 months from the original contract inception date. At the date of the modification, on the basis of its | experience and the remaining work to be performed, which is primarily inside the building and not subject to weather conditions, the entity concludes that it is highly probable that including the bonus in the transaction price | will not result in a significant reversal in the amount of cumulative revenue recognized in accordance with paragraph 56 of PFRS 15 and includes the P200,000 in the transaction price. in assessing the contract | modification, the entity evaluates paragraph 27(b) of PFRS 15 and concludes (on the basis of the factors in | paragraph 29 of PFRS 15) that the remaining goods and services to be provided using the modified contract are | not distinct from the goods and services transferred on or before the date of contract modification; that is, the contract remains a single performance obligation. Consequently, the entity accounts for the contract modification as if it were part of the original contract. The entity updates its measure of progress and estimates that it has satisfied 51.20% of its performance obligation (CU420,000 actual costs incurred + CU820,000 total expected costs). At the date of the m the entity recognizes additional revenue as a cumulative catch-up adjustment amounting to A. P91,200 B, P93,200 C. P91,000 D. P90,000 XS1 ui Z ane | PBC Company's Job 004 manufactured 13,750 units that were completed in February at unit costs | | | presented as follows: UWUULL (00 ood \aso Direct materials nn) Direct labor 270 Tso Factory overhead (includes an allowance of P16 Spoiled work) _270 Qo ries VUE Final inspection of Job 004 disclosed 1,250 spoiled units, which were sold as export overrun at an | ‘amount equal to 40% of the production cost. The good units were delivered and billed to the customers. at 20% gross profit. What would be the gross profit on the order if the spollage loss i attributable to exacting specifications of Job 0047 Estimated total contract costs is P180,000,000. It incurs the following costs relating to the contract during the first year: | 26st of materials used 2,000,000.00- | “Sife labor cost 20,000,000.00 {Gost of indirect materials used 8,000,000.005% ‘Half year depreciation of plant and equipment used on the contract 4,285,714.29 =. 4 He ‘Payroll of design and technical department allocated tothe contract 2'500,585.55/ jasurance costs allocable to the contract 11499.414.457 Depreciation of idle equipment that is not used on a particular contract © —50,000.00_| Marketing costs for selling apartments when they are ready -40;000;000:00-— Agreed administrative costs per contract to be reimbursed by the customer ~4:555,500.00.4 (ccs | Berrowing cost incurred during the construction period 11444,500.00 | | Using cost-o-cost method of determining the stage of completion, the percentage of completion of this | contract at year end is: (Round of to 2 decimal %) ‘Company A selis widgets to Company 8. The transaciion is denominated in Japanese yen. Both companies are located in Europe and the euro is their functional currency. Since Japanese yen is not the functional currency of | either company, and the product is not routinely or commonly denominated in yen, Company A identifies an | embedded foreign currency derivative. Company A sells the widgets to, zcampeny B'for sideration of, 850,000, which is equivalent to €50,000 at contract inception. The stand-alone selling price bf the widgets | “and the fair value of the embedded derivative are €48,000 and €4,000, respectively. ‘Company A determines that the embedded foreign currency derivative would be separable and needs to be accounted for in accordance with IAS 39. Determine the arrangement consideration allocation amount attributable to widgets and the embedded foreign currency derivative, respectively (in €) . CO“Company A and its subsidiary (1.e., Company B, Company C and Company D) have the following deferred income tax recognized in their respective FS presented as net DTA(DTL) as required by IAS 12 (local tax laws allow offsetting and only one tax authority): Company A (Parent) | Company® | Company ] Company DTA 700 750 200 30 (OTL) co) (700) (0) i) Net DTA (TL) (ay 30 120 (80) ‘Assuming no other information, for consolidated statement of financial position purposes, the amount that should be pi A B. 165 c. D. resented in accordance with PFRS is as follows: (complete the table) ‘Company A (Parent) Won-Current Assets portion of the Consolidated Statement of Financial Position DTA (net) wy? Non-Current Liabilities portion of the Consolidated Statement of Financial Position DTL (net) (ye a) 170 170 . 165 (2) 120 120 130 130 | Band B states that atthoym ‘must agree to direct all ofthe activities of Z. The agreement of C is not required, except that C has the right to veto the issuance of debt or equity instruments by Z. The ability to veto the issuance of | equity and debt instruments is deemed a protective right because the right is designed to protect C's interest | without giving C the ability to direct the activities that most significantly affect Z's returns. Which of the following statements is/are true? Aand B have joint control over Z,, Cis nota party to the joint arrangement.» il. C does not have joint control, IV, C only holds a protective right with respect to Z. I Nl A B. 1Only Only C. fand Iii Only D. Il and IV Only E.|, Illand IV Only[Tree Corporation is a company involved in manufacturing cars. On January 1, 2017, the board of directors of the | said company has decided to acquire the net assets of Knee Corporation and Dudd Corporation, suppliers of | materials they use in production. The merger is expected to result in producing higher quality cars with lower | total cost. | The following information was gathered from the books of the entities on January 1, 2017 (in 000's): i | enn) | Tree Knee Dudd | Current Assets P1375| P 390| P 260 | Noncurrent Assets 3,125 2,550 4,700 1 Liabilities 325 210 140 } Ordinary Share Capital, P100 par_| 2,748.50| 1,780.2 | 1,186.8 | ‘Share Premium ~ Ordinary Share 176.50 | 169.8[ 113.2 ‘Accumulated Profits (Losses) 1,250 780) 520) Tree wl issue 22,500 of Ks orcnary shares n exchange forthe net assets of Koae.and 11.200 of ts ordinary ' shares in exchange for the net assets of Dudd. The fair value of Tree's shares is{P150«In addition, the folowing | adjustments should be made: (in 000's) | 4PM | Knee |__Dudd | Current Assets ~_P_ 450 | P 230 ae” | Noncurrent Assets 2,150 1,975 | 7 3H oe 1 _ The following are paid out of pocket costs related to the combination: Legal fees for the contract of business combination 000 Audit fee for SEC registration of share issue = M71 6,000 Printing costs of share certificates ~ A? ‘< G,o00 \ | Broker's fee 4,000 Ht Accountant's fee for pre-acquisition audit 10,000 Other direct cost of acquisition 7,000} Internal secretarial, general and allocated expenses 9,000 | Listing fees in issuing new shares — Atl. 3,000 ~Documentary stamp tax on the new shares -A@ ic. 2,000 / Determine the total Accumulated Profts (losses) after the-business combinations. —> ‘A. P1,590,000 C. P1,587,000 % B. P1,580,000 D. P1,594,000 (ue _ al ——