ReSA 2 PRACTICAL ACCOUNTING PROBLEMS 1% selutions to Final Pre-Hoard-27th Batch » 1. toy if Product | Onis] —Uiimate | Terai | Adalifonal | NV Hipp. | BotIC To | Joint Gost 8 Produced | MVperunit | Mork, Vol od. MV. Palo Bau | P3800 — | —F ato P2700 Tass | 1200 moe | aes Ww | bzono0 | Ease | 2, {A} ~ traditional / conventional method: - z 50,000 / (200 DLK + 200 DL) = P125 per Put x 200 DUI 4 = P25, 000/25 units of Wall Minror = P1,000 per unit (B) = ABC corcing: P50,000 / (5 + 15 naterials, move) = 22,£00 pez nave: move x 5 materials move of wall wisrors = 12,500 / units produced = 259% unie 4. (A)The foreign currency is the tusction ‘closing rate me(iod is appropriate. All asse exchange rats of P430,000+ 5. (C)Because the peso is the functional currency, a remeasurenent (temporal method) is required. All receivables aze reneasured at current rates. Assets carried at historical cost, such as prepaid insurauce and gtodwill, are reneasured at historical rates. currency, 20 4 tramnlation matbed ox fc are translated at ne 6. (©), Ban [Helen [Unadjusted capital 959, €25 | $32,500] ‘Add (deduct); adjustments Doubt ful accounts (38 of 7A] TSF Understatement of depreciat_on [Rajastes capital, _—_ Bao ol . ed 2 oid 303, 000 | 308, 000-7 70e New 310,020 | 132, 000 L — Ag 8200 [149.900 = 1008 a aaa SAS [Resets = 350,900] amet Tao 90 ‘a1 feont eo | * old: P220,000 + P108,CU0 = F369, 000 New: 240,000 + P5C,600 + @20,000, intangibles = r1i0,000 8. (A) Inventory, 1/1 at billed price e165, 00 Add: Shipnents at billed price “210/008 Gost. of goods available for sale at billed price F275, 900 ese: CGS at BP: sales, P169, 000 Leust Salés returns and allowances 3,750, ‘les price of merchandise w acquired from outeidexs : (27,300 / 1208) 9,000 ‘ Net Sales of merchandise acquired from : home office P56, 250 xs Intexcompany cost ratio + 100/125 __125,4 . tnventory, 8/1/2008 at billed price TBsesii00 ‘i x: Cost ratios Nerchandise inventory at cost destxoyed by firePage 2 of 10 RgSA: The Review School of Accountancy S e ve oe 2 vases B 48,600 Direct materials inventory, June 1, 2012.-.+ wee sie Add: Purchases. s-csesceeessseeseseeees ae Roe Direct mutiriels available for wee...- ess! Disect materiale inventory, dune 30, 2012.+- Direct materiale ned....scsescecscerseeeee Diet Iatdr (9,900 hours x 85/hour} «+. Applied fabtory Sverhead (9,900 hous x P2.5/hoUr] Manafacturing costs.eseseecs Adds Work-in-process, dune 1,20 Total work placed in process.-.c. sss eas: Work-in-process, dune 30, 2012. Cont of goods manufactured 51, 000 B 57,600 49,500 ___ 24,750. P 131,850 19,730 “P 142, 560 24,210 20. Average capitals: X: B100,009 x 6 = P600,000 P160,000x 6 = 960,000 P1,560,0C0 / 12 = 130,000 (same with beginning capital) 150,000, 225,090 x 9 = P2,025,000 P155,00¢ x 3 = "465,00, F2,490,000 / 12 = 207,500 467,500 198 xr Interpsts rate, sate on average capitals, 6,500 [ 48, 505] “water tote To 13,000,| 15,900. 7000 each) 3,000 [— s-000| 5,900] 15,000 Receivable, December 31, 2010 B7190, 000 GP Rate {iW-240) 7400 | | | Sle! PEiidi Bia IT EE RR EET HEI ET 13. aa, 400, 000 210, 000 Gelteeionstin 2011 150,000, 300, 000 Tnst Accounts Receivable, Decamber Si, S013 = |-—F 200, 000 Maltipliea by? GP, Rate “ae: 1500-] 240)7400| 35097500 Deferred Gross profit, becenber 3, 2011 E_i6.000] £60,000 Deferred Gross Profit, December 31, 2011 for 20Y0 Sabet 2011 Sale: P 5,000 rece: Untecovered cost? Unpaid balance ~ 2010. evnB 8,000 Less: Deferred gross profit ~ 2010 : ‘(B80 x 160/400). w_3,200 4,800 Gain on repvssession...— PRACTICAL ACCOUNTING 2 - FINAL PRE-EOARD SOLUTIONS (BATCH 27)ReSA: The Review Schoo! of Accountancy 1s. atertals: £300,000 / Lapors 194,000" /'$2/a907 0° =? 3-08 Overhead: P100,800 /"e4,c00 = i. Cost per equivalent unit xr Unlte funsterted. Total costs teansterseeon F1Fo/averag. = cutting Depactnest Quantity Scheduie | Kaeet i Page 3 of iC Te, beg = [[osrF Tito; 505 | Fecounted For: aD Ea ci = == 5, Fendt 35,000 [Toe | “¥5, 000 Taos] 0, ooo] TNT] BO, 000 | send 20,000" Tors |" 20,0001 603] 12,000] 1%] 4,000 7 {E000 22090 song [aa.080] 16. (A) ~ refer te No. 15 for further computation Work-in-process, ending: 7 Maverials:” 29,000 23.00 = P60, 000 Labor: 12,000'x 22.00 = 24,000 Overliend: 4,000 x €1.20 = 4.900 i 17. @) Unit cost trom preceding deparcnent: P496, 000/80, 000. P 6.20 Cost per equivalent unit in the current department: Materials: 218,500 / 79,000. Labor: P293,580"/ 75, 400. Overhead: 075, 020 F 68,200, 30 cost per equivalent unit. TF ans xr Unite ecanvietsedn 0,500 Total costs transferred to finished good e90,,900 FIFO/Average — snoothing Depatment } ‘Quantity schedure | AStual [iP beg <0; i Reccived/feamin | 0,000 6:21 456,000 20,000 “Tr “Aecounted For Retoai | #> [ee wD WD] EP-0n Te, beg, fF =o =o =o R, F and T 0, 000 | 1008 ‘60, 000 |" 1908 | 60, 000 | “1008 | 60,000 TP, end 18, 000 [1098 16,000 |” 808 | 14,400{~ 408] 7,200 * Abnormal 7 2,000 | 1066 1,900 { 1003] 1,000; 1008] 1,000 l oe 20,901 1 1e.c00 | 175.400) 200 18. (a)- refer to No. 17 for farther computation Factory overhead / Expense: + ‘Cost from preceding departhent: P6.20 x 2,000. 22,400 Cost this depsrtment: Materials: 1,000 x 71.50... Labor! 1,000 % P2.7Gmmmn~—. overhead: 1,090 x PI.10, 1. ww Factory Overhead / Expense: Cost from preceding department: P6.20 x 13, 000..nm Cost thie department: Materials: 19,000 x P1.50.. Labor: 14,400 x 22.70. overhead: 7,209 x PL 10... 20. {c) = P500,000 ~ (P400,000 ~ P4,000) = P104,000 21. (6) ~ 2,090 x (B3-00 - P1.00) = F4,000 ‘ PRACTICAL ACCOUNTING 2 - FINAL PKE-BOARD SOLUTIONS (BATCH 27) &| Ne SEE OF PCy ee. 22. (w) 4 é 23, (a) Kumber of ynits = P33,600/26.00 = 2,100 fan ~ (2,20 x 2)1 = P2.60 = P2,080 U AM = 5,000 ass thy ~ t2s.00 x na) ~ (2,100 x £4.00) = 1590 © Aaa 288s 25. R) Books of Mi . "owt 750_| 1,650 of i 26. (c) — 121,009 Less: Bock value of Don's interests. 415,000 Bonus to Dom... BO 8209 Dom: P 43,000 + [(P49,000 - 360,900) x 258] = P9S,000 + P15,000 = P115, 000 P77, 000 + (P48,000 ¥ 25%) = P89,000 + F184,000 + (P48, 00C x S08) = F204,000 therefor, the ‘capital balances of the remaining partners are as follows: Joe! P89,000 ~ (P6,000 x 25/75). P 87,000 Rey: P204,000 ~ (F6,000 x 50/75). 200, 000 27. () Worh-in-protess, ending: (P25, 0C0'+ P50, 000 + P40,000 +,F40,000 - P1z5,450) P 19,559 Applied factory overheaa: ‘Jab 456: P3,000 x 758. 28. (D) (PNCI meastred otis share of net assets (Pariol Good) Folr vale of Subsidiony: Consiceration ronstorred.. Low For voiye of iCentioble asses and filles of Loco (80% x P8S mion) _48 mon E32 mation (Q)NICI is meox-red at Its for valve (Ful Goodwl) For value of Subsidiary: ‘Consideation transfered... . .P 100 milion Far valve of NCI [1P100 milion ~ P24 milion = P76 milion / 80% = P95 milion) PBS milion « 20%. _—12.-miion Foir vakue of Subsictory. =P 19 milion Leer For volue of Kianiiicile csvalt 32. BE milion Goodwit (fu). x on BBk iin t— 23. 30. au. 32. 33. ~ SNOOFOF Accoumancy + Page > Under PFRS 3 par? 32, goodwill is measured af the consideration trans! sed EoTroling interest however measured) less net assets ocquired. The non-caniccitn be measures tits share of net assets ar ils far value, per PFR $3 par. 19. Note: Fair valve is assumeci to be the some with the canying/book aie. | >) i : Foir valve of Subsidiary - Swan Ee ‘Considerotion transferred... Less: Fair valve of identifiable assets Gnd tabittias of Swan [70% xP Goodwill (partial). neg (Goodwill s cared as an asset in the consolidated statement of financial position. Foir value of Subsidiary - Homer : Consideratior. transferred. Less: Fair vaive of identiiabie: Gain on bargain purchases... ‘nd ibis of Homer (63% x P640 000) wnn_416.000 Buecoo) Notes: ' 1. Moon mecsures non-controting interests at the relevent share of the idlenifiiabie net cs0!s the acquisition date; therefore partic goodwill isin effect. 2. Fair value is essumed fo be the some with the canying/book value. tr Bonus™ Interestr’> Salaries 10-000 Balance (aaTZ]— 5,800] 6, 800, *B = 108 (wi-2) +#In excess of P100,000 ‘ = 108 (44,000 - B) (F110,000 = P200,009) x 108 = P4400 ~".10B 2.208 Pa, 400 g B= P4000 . aw zt ‘rue Branch Net income ‘Less: Branich Net income as rep Overvaluation of Cost of gooas sold Less: Cost of goods sold from home office at billed price’ Inventory, December 1 " ‘Shipments from home office ... » 350,000 Cost of goods from home office available for saie.. P420,00 Less: Inventory, December 31... 84,000 Cost of goods sold from hums office, at cost owl Billed Price: (2336,000/P240,000) P 70,000 (3) Allowance for overvaluation after adjustment: 84,009 x 40/140 e L w @ Total Total interests 25,600 | 47, 000 72 600 Reduction in interest (25,200) | “137, $20) [—1$3, 500) Payment fo partners 3 cio0| * cash beginning.. Add: Pzoceeds fron receivable PRACTICAL ACCOUNTING 2 = FINAL PRE-BOARD SOLUTIONS (BATCH 37) ©ReSA: The Review, School of Accountancy Pagecofst \ : M. (or av i 360 2008: 24,009 - 90 = 24,000 collections x 33¢ Po 2009: £300,090 - P60,000 - #10,000 detauits ‘= 230,000 xei28 26,800 2010: F480, 000 ~ 320,000 - PS, 000 defnuite = 7455.00 x 40¥ — 62.000 Realized gross profit’ on installment sales 21 2010. Fite 4 0 not 2008 and 2008 35. (a)~ Conzection: jhe requizenant should be 2009 and 20% 2998 Net resale value of repossessed merchandise P 4,500 2 2,500 P10,600 ® $,000 4,209 Less: Unrecovered cost Unpeia balance. aloes es tet # 0GP - 2009: Pi0,000 x 428.. es OGP = 2010: P 5/000 x 49mm 2.000 Unrecovered CORE annie Esro00 Gain (2058) a i390) E308 Met 208 Some perenne pLgoo 36. (C)~ use Touccounts if possible. as lone Office Sooke Branch Books i (branch Currant- | (Home Office Current Dp. balance) = cr. balance: | Gnaayusted batance P10, 500 Pi1, 420 adjustment [on transit 7 tT Tar 50 HO-A/R collected by Bra 16, $00 7 ‘turned = 14,500) Error in recoreing Br. Wi 2807 ‘Cash Seni to branch Lo General Expense by HO 25,000 25, 000 [Rajustes balance Eii9-320 37. (D) = refer t6 No. 36 for computation. 38.) * ‘Cotly's rode'receivabies.... Hatey's trade,receivables. Tote anes Renn Less: iniercorhpany receivabie (ave from Haley Interconpany receivable [dye from Carly. Consolidated trode receivables, 39. IA) n This is the parent company’s share of the post acquisition retained eamnings of the svissciary. This ‘s determined ’by deducting (i) the parent company’s share of the retained eamings of the subsidiary at the date of acquision from (él the perent company’s share of the retuined earni of the subsidiary at the end of the curent reporting period. " reseaycmaend oe conn pparare binds Ce ee a epamepat P 900,000 Controlling; INtELESt Bs... “ = 80% Pulley's reicined earnings included in the consolidated financial position -F 20000 z 40. (B) * 1 Es es Leer ae sti : peers 7009 Gain on intercompany sole incidentally, the eliminating eritry (assuming books are aire . Retained eamings ~ Parent (65% x °40,000) Ser rn bear lois Non-controling terest (25% x P40,000) Noncurent asst PAS 27 pars. 20-21 requie the profit on intragroup assets to. incsiealy ‘hore of he fof f the sUbsisary ore foken Yo group telained eorinen tn the Group PRACTICAL KECSUNFING' ~ FINAL PRE-BOARD SOLUTIONS (BATE ZH) &a. 43. PRACTICAL ACCOUNTING 2 - This is because the subsisiory Dette ne ee substioy S015 Ine set fo tne parent. This goin snot sealed ham @ grouD Srorenoter othe see hone ust Be removed Wh fuk fis non olercled tetw28h ie om-contoling inenee Ko I Ihe form of retcined earings {group shareigh he Go ne my, Contract price Costs incurred each year sD Add: Cost incurred in prior years a Costs incurred to date = 7180, ‘Add: Estinated cost to complete ‘Total_estinated rosts Eatinated Grose Profit (i Multiply by: ¥ OF coupletion (15/000 > 75,750) 7 900,000 Recognized Gross Profit (Losa] to date ; [ess Gross Profit (bees) Recognized Gross Profit —esp Tn pio year Cosa) in Gurtent year i SEI5/ 009 TS ayere 14.00] | Or, alternatively: Contract Price. x: GPt 115, 000/85,150) Estimated Gross Profit. -P 990, 00 (o) Upstroom soles: Selling price of non-curent axe. Less: Boat/cerying valve, date of sai. Gain 01 intercompany scie.... Incidental, ne erinating ety (asuming books cre ahead closed) wou be os flows Retained camings ~ Parent (75% x P40,000).. 30,000 4 Nomceritoing interes (25% x 40.00}. 10,000 Non-curent asset. ’ 40,090 The profit on intragroup assety are to be eliminated in fullitOnly the group share of the profits of the subsidiary are teken to group retained earninga: This ic because the subsidiary sold the asset to the parenc. This gain is not realized from @ group perspective per PERS 10 and muse be removed in full. It is then allocated between the shareholders of the subsidiary, in the form of retained earnings (group share of the vfain) and the non-controlling @ ‘ Downstrean sale: Selling price of non-current a8... Less: Book/corying valve, date of Scie... Gain on intercompany sale. ‘ Incientaty the alminoting ety fosuming Docks are ateady closed woul be os 3 fofows Retained eoming: ~ Parent (100% x P200). eee 2005 NOmcument A886 occnne 2O0r The profit ou intragroup ssets are to be alininated in fu Oniy the group share of the profits of the subsidiary aces taken tc greup retain ned earnings. This is becaise the parent sold the asset to che eubsidian. hot realised from a group perspective por BRAS 10 end) unde he fait. Thia profit wovla) origineiiy Rave ‘boon ‘recognicot by" ihe Company, and 30 thore is no inpuct on the non-centroliing have a stake in che subsidiary This gain 4s bos siitezast, eke enty co) Fair value adjustments under PERS 3 par. 26 not reflected in ‘he books of the parent but it must Be adjusted for purposes of consolidation: {i PRE-BOFRID SOLUTIONS CHATEH 3) & eatenRaSA: The Review School of Accountaricy Annual depreciction expense: Roe''s clepreciation: (P800,000 - PO}/8 year... ‘Muldon’s depreciation: P 460,000 /5. Decrease. Net carlying/so0k valve, 12/31/2013: Roe's book value: [PBO0,000 - {P800,000/8 years x 5 yean}].. ‘Mukdon's book valve (note): (P460,000 - {P460,000/5 x3 years). Decreose.. 7 1 45. (By t 7 parent Subsidzary Consolidated Net Inccme from own cnera: ions: B = (P900,000 - P549,000) P490,.009 3 = (2400, 060 ~ P3606, 309) 50,000 PF 49,000 Pnortizagion of allocated excess*———— £1490) (_5,600) pore Ets. 000 4 serotsang/ No i Parent's 8 * Allocated excess that was undervalued on the date of acquisition two years ago. P predenark: 760,090 / 10 years = © 6,009 Patent: 40,000 / 5 years = _ 8,300 . or, alternatively: Combines revenues |P900,000 + F490,090)--anunuuuP 1,200,000 Less: shmbined expenses’ (?500,000 + P300,000)..—._-B90,000 Comings Net Inccne fs "500° 900 Less: Anortizaticn of allocated excess. Consol lated Net Income 7 46, (C) ~ refectto Now 45 for computation of NCI~CNI. a7. Date of Bi te 1.5 million Balance shest date: 3 miiiion bal 10 million BxCMANG® 19S cen . 48. (0) " Consideration Transferred... Loss: Fair value cf net a Goods: LD en = Divided by: CURRENT RATE on the balarce aneet for purposes of translation on ths date of (acquisition... mn ed Goodwill in’the Consolidated Balaze! Sheet (date of equi SLtLON) enna million million million Million 2.0 baht per peso Bld million Examines may be misled thar since the functional curency is peso, the temporal method [applied only in cose of subsequent to date of acquistion) should then be Oppled wherein ‘goocwill or any fair value adjustments & considered as a non-monetary asset coried ot historical Cost be remeosited (or frersiated) using historical rate (which inthis probiem 's 1-5 bont = ?1). But the problem: do not fall under this category ~ the temporal method, insteac! ils @ classical ‘exomple of « goodwill and fai value adjustments arising from acquisition of subsidiories, Goodwit arising torn the Acquistion of Subsidiaries (Dole of Acquiiton) When @ cermpany acquires @ cor‘roting interest in another company. the excess of the purchase price over the ocqurer's interest in the fak value of the iderhable ne! ossels of the aequied compony it recognized as goodwill on consoldation. fh the context of @ foreign compony, the issue arises of 10 whether goodwil is an osset of the acquired company or on onset hy the acauver’s books Wits an asset of the ocquired sutsiclory. the goodwil s 0 foreign {asset which should be translated in the some manner as any other osset of the occur subsidiory which may give re lo @ ransaton aerence, However, is herted ox an cee the ocquirer’s books, there is 0 need for translation, Pas 21 por. 47 states that:eS 49. 50. st 53. 54. 56. PRACTICAL ACCOUNTING 2 — FINAL PRECROARD aan inhnn Toe ReSA: The Review School of Accountancy : Page of 1: “APY goodwill arising on the cequistion of o ‘and uny fol vowe Adjustments o the comyng omcunt of aoek cou ebeher cnune on the aequisiton of that Tersign operation snal be healed os assets ond lobilies of the foreian Sperations Thus they shal be expressed the fonelonal eurerey of tne fori perotion Gnd shal be trandted at the clouing rela” ‘ Subscavent to date of acauistion. accordingly goed has to be meorurcd i f utency of ihe foreign operation. I Ihe funcional curency of the sieign obpsrcion urency, the goodwil on ccquiston sto be fronscted at tne closing rte ee i0 080 © Ne. $7). On ie other hand, if the functional curency of ihe foreign opetction & fe GuuTency for the presentation currency]. goodwit on acauélion Is Wecled as @ Hen asset and remeosured at the exchenge fate of Ihe acquisiton of te foreigr porate. a . i Allocated Excess arising from ccnsolidationeneucmee- | 1-2/méLlion baht Divided by. CURRENT RATE on the balance shect for Purposes of translacion the date of ACqUiSLE LOM wenn er 2.0. baht per peso Allocated Excess (over hinder valuation) : Refer to No. 48 for fuither discussion of using closing/eurent rate on'the aci{uisiion of a foreign ‘operation ‘esuiing in fair value adjustments. Again. the same with NO. 48, the functional Currency of pesos somewhat misteading: it does nat refer to the use of femoral method on the date of acquisition, oe) {C) ~ 20 million x 240.4/60.4 = 80 million” (C) ~ Wo fovvard contract, therefore, only the sale transaction: (2.0035 = P.0033 = P.0002 Loce x 10 million foreign currencies. = P2,000 Loss.) Bd Sale Transact ‘\on/Hedge Iten ~ refer to No. 10 above Hedging Inetrument/Forward Contract (¥.003¢ - 7.0032 gain «10 asilion foreign currdnes ='P2,900 gain x .9796) Net decrsave in net income {C) ~ the paso value of the LCU receivable has decreased “zon Pi10,009 at December 31, 2010 to P95,000 e Februzzy 15, 2011. This daczea: shovld be reported ag a Loredgn exchange Lose in 2011. (2) = The merchandise purchace results in a foreign exchange’ loss of 29,200, the differsnce between the Philippine paso equivalent at the date ef purchase and at the date of settlement. The increase in the peso equivalent of the note’s principal results in a foreign exchange loss of P20, 000. : The total ioreign excnange loss Ls 28,009 (78,000 + 720,000). (©) = Amounts charged to patients lass contractual adjustmenti, 1) i ee 4 Tn this problem, full eccrusl method is used to tecogaM¥ed thi Eranchiae fee of P100,000 anclyze aa follow: yoosatt eat ete Revenve Analysis for IEF : ‘ cash we [Services 2 Yes Yes Perioc of defund | Yes Yes Collect ioilixs Reasonably assured r 7,000 [seata Revenue Raven Mosvaneiei "pertobeanoe uf) ell sollocciont dactusngeecemmmsetated shatReSA: The Review School of Accountancy Pagetoof nt u Period of refunding the initial Eragchise fee sand coliectibility of the notes is not anymoxe a problem (they depend on the profitability of its first year Of operations) “because he result of operations in the first year ig Brofitable.’ Therefore, the initial franchise fee of 100-000 (P20, 000 + 260,000) is‘ considered as revenue, and a continuing frenchise fee Of 5,000 (38" x P50b,600) should Be also be recognized as revenue - continuing Franchises Therefore, ‘the earned franchise fee amounted to P105,000 (£100,000 initial plus P5, 000, continuing) 57. 1) Baw-andTn Process =; Finished Goods__ _-{ostof Gooas Sold _ 320,000 [320,003 ——-—» 320,000 [1,021,200 _»1011,200 Paes 74,000 Corive:sion Cost 1,024,000 Las229 708,000 [704,000 1 = 006 / 16,000 = Pé4 x (16,000 - 15,800) = P12,800. FP, 024, 58. (B) ~ cefer to No. 57 59. a) 60. (C) ~_1P459600 + (P60,000 - 745,009) x #08) = 957,000 f ae | Carney [Pierce [Menton | foshn Balances 60,00] 27,000} 43, 000] 26,000 Divides by FEE TIS a rr 308 “208 | “tos vaynent_to, partners [55 000 | 30, 000 | 215,000] 200,000] (i THis, 005) [Payment to gartnezs 12" Bighest) I~ 209,000 Therefore, the payment Lo partner Menton should ba, F3,000 (P1Z,000 x 208) on. (a) ‘eters Profuct | nt Produced [Rate | i fe | 28000" | 5/20 |_—_ 60,000 s_]2235,000_— [3/10 35,000, T1000" /10_|- 24,000. T__sc.000. Pizoo0y | . #50,000 x 5/10 * Conversion Costs 7 ‘Product | Unt Produced] Final SPT Total Ur MV EPC R [35000 | P10 S| 15000 [~~ a2 T [agg as ae Total Cost ( Product | Materials Costy FPG | Conv. Costs | 60,600 36,000 _| 24 20,000 I . "*Ugit cost of R: P178.000 / 25,000 = P72 62. (D)- : hanging the treatment of the by-product from Cost off Revanue will result to 2 reduction in the cross Net Income. The amount would be asefollows: Goods Sold to Other Profit bac have no effect on Sake PEED emcee apna Lest: Estimated cost te sell... Not iRoal!zable Value per onivon, Inits Produced (Praduction ~ Sales) Not Realizable Value, PRAETTEAL ACCOUNTING 3 ~ FINAL PRE-GORRD SOLITONS (GATEHT?yReSA: The Review School of Accountancy 63. (a) Mobiization Fee: 5% xPIOM Collection on Bilings: Contract price x Progress billings, nat of 10% onc BR (59% - 10% - 8 Progress bilings = x: Collections net of contrac! retention of 10% Collections in 20x4 64. Ie) Contract Price xz MoDiISzation fee Mobi lizat:on Foe 65. 1c) = NV Of By-product ZOStnnn wenn Lees: Selling ard adniniotrazive evpenve.. Operating profit is Share in Joint Cost per UN bemer mn PALES PLOSUCED eet mom Snare in joint Page 1 of 1 P 50M P 100M ‘4 _32% PaZM + 0% __28.8M Bae M Costs , 66. (D) ~ : fp. Fep: $000 x (e5E-Pi0)~ P 200,000 x 508 = F400,000 Vins 4/000 x (Péd-P 5) = 140,000 750.009 Joint costs — _ Lese: Joint costs allocated te By-productonum Joint cosrs to Joint products... Soles of Pep: (P80 x 5,000). Less: Cost of Sales: JOIN! CORE Seaman P10, 000} Further processing $0; 000, Gross profit... 170,00" 9172, 300 —-P 250/500