PRACTICAL ACCOUNTING 1 © UBERITALC. ESPENILLAZG, MACARIOLA STATEMENT OF COMPREHENSIVE INCOME atements: 1. Amincome statement displaying the components of profit or loss 2. A statement of comprehensive income beginning with profit oF loss and displaying components of ‘other comprehensive income b. Single statement of comprehensive income — this is actually a combined profit oF loss statement and statement of other comprehensive income. Comprehensive income includes the components of profit or loss and the components af comprehensive income during. a period Other comprehensive income - includes items of income and expenses that are not recognized in profit or loss but are recognized directly as required or permitted by accounting slamlards. The following are examples of father comprehen Unre: ins and losses on equity investments Gains and losses arising {rom translating the financial statements of a foreign operation revaluation surplus (using the full application of the standards) Unrealized gains and losses on heduing (cash flow hedge the effective portion), D 2 3 4 ‘onal preparation of income statement in eon! 1g net income oF net loss by compariny the total reventies with the GAAP. This approach of determin against the total amount of expenses incurred. Forms of Income st |. Functional presentation — also known as cost of sales method, this form classifies expenses according to their function as part of cost of sales, selling activities, administrative activities and other activities. Function of expense or cost of sales’ method: (single statement of comprehensive income) Pax Revenue Cost of sales ow Gross protit xx Other meome ~ Distribution costs ow Administrative costs « tw Other expenses cx Profit (loss) PAstand Income tas (12% savings) Cann Net income(loss) ater tax Pow Other comprehensive income, net of tax Unrealized pains Pe Unreatized losses Cay vw Comprehensive net income(loss) Paaay 2. Natural presentation ~ also known as nature of expense method. this form, expenses are aggregated according {© their nature and not allocated among various functions within the emity. (for example, depreciation, purchase of materials, transport costs, employee benefits, and advertising costs), and are not reallocated among various functions within the entity ‘Nature of expense method: (single statement of ensive incor Revenue Pann Other income xan ‘Changes in inventory of finished goods and work in process Raw materials and consumables used Employee benefits costs Depreciation and amortization expense Other expenses x Ow Protitioss) Poe) Income tax: (nxReSA «PRACTICAL ACCOUNTING Page 24 ‘Net incometioss) aller tax PRG) Other comprehensive income, net of tax Unrealized gains Pox Unrealized losses (os) agar P xx mprchensive net income(toss) ion to be reported an the face of the profit oF loss statement a. Revenue b. Fimimce cOsts JYaterert. tepens 5 ¢. Share af profit or oss of associates and joint ventures accounted for using the equity method d Posttas ga ized on the disposal of assets oF settlement of tiabilities attributable 10, discontiny Vax expense Profit or loss. 2, The following ems shall be disclosed on the face of the income statement as allocations of profit or Joss for the period a profit or loss attributable fo minority interest; and b. profit or toss atributable to equity holders of the parent ne items, headings and subiotals shall be presented on the face of the income statement when 3. Additional cial performance such presentation js relevant to an understanding of the entity's 4. Anentity shatl not prysent any items of income and expense as extraordinary items, neither on the face of the income statement nor in the notes. 3. When items of income and expense are material, their nature and amount shall be disclosed separately. we include ecoverable 6c ¢¢s that would give rise to the separate disclosure of items of income and exper inventories 10 net realizable value or of property, plant and equipment to downs of amount, as well as reversals of such wrt Restructurme of the activities of an entity and reversals of any provisions for the costy of restructor Disposals of items of property, plant and equipment. Disposals of investments, Discontinuing operations, Litigation settlements, Other reversals of provisions. Entities classifying expenses by funetion shal! di expenses, including depreciation and amortization experise and employee benefits expense. c nature Revenue Measurement und Recognition Revenue — is the gross inflow of economic benefits during the period arising, in the course of the ordinary activities of an enterprise when those inflows result in increases in equity other than increases. relating to tions from equity participants contri Ye Measurement or revenue «at the fai value of she vonsidsuativn receives or receivable. Fair value isthe amount for which an asset could be exchanged, or a liabifiy sctiled, between knowledgeable. willing, parties in an arm’s length transaction, How to apply the fair value measurement? In most cases, it is straightforward to calculate the fair value of the consideration received or receivable because usually the consideration isin the form of eash. ‘The amount of cash to be received is typically specified in an agreement. Sometimes, however, the amount is deferred for period of ime. In other eases, the consideration may not be in the form of cash, but rather may be a swap for ther goods or services. (AS/PAS 18 deals specifically with these cases: Deferred consideration — may take the form of interest-free eredit provided to a buyer oF acceptance of @ note receivable bearing. a below-market interest rate, in such cases, the fair value of the consideration received will bre fees than the nominal amount ofthe receivable. TAS/PAS. 18 specifies that these types of transactions ate to be aceounted for as financing transactions and thatthe fair value of the consideration should be determined by ving all Future receipts using an imputed rate of interest. "he imputed rate of interest is the more clearly Se ora similar instrument of an issuer with similar ered rating oF Seterminable of either (a) the prevailing rate taj a rate of interest that discounts the nominal amount of the instrument 10 a curren cash sales price of the ‘goods or services.a ee eee ee ee ee Recognition of revenue: From sale of goods Revenue is recognize! when all the following conditions are met ‘8, The enterprise has transferred to the buyer the significant risks and rewards of ownership of the BOOKS. HL iu Hoon Far | Plapiic® petime tn bn fe b. The enterprise retains neither continuing managerial involvement to the degree usually associated With ownership nor effective control over the goods sold €. The amount of revenue can be measured reliably 4. It's probable that the economic benefits associated with the transaction will flow to the enterprise €. The cosis incurred or to be incurred in respect of the transaction can be measured reliably. In the absence of any information as to the above criteria, revenue is recognized at the point of sale which is at point of delivery. However, the following are exceptions to the point of sale realization: ‘& Bill and hold sales ~ the bill and hold sales is used to describe a transaction where delivery is delayed at the buyer's request, but the buyer takes title and accepts billing. Revenue is recognized when the buyer takes title, provided. 1. it is probable that delivery will be made 2. the item is on hand, identified and ready for delivery to the buyer at the time the sale is recognized, 3. the buyer specifically acknowledges the deferred delivery instructions. 4. the usual terms apply. b. Goods shipped subject to conditions: 1. Installation and inspection ~ revenue is recognized when the buyer accepts delivery. and instalation and inspection are complete. However. the revenue is recognized immediately upon the buyer's, acceptance of delivery when: 1 the installation process is simple in nature D. the inspection is performed only for purposes of final determination of the contract prices. ‘¢. On approval when the buyer has negotiated a limited right of retum — if there is certainty about the possibilty of return, revenue is recognized when the shipment has been formally accepted by the buyer ‘or the goods have been delivered and the time period for rejection has elapsed d. Cash on delivery sales — revenue is recognized when the delivery is made and cash is received by the setter. €. Layaway sales - applies to transactions where the goods are delivered only when the buyer makes the final payment in a series of installment. Revenue from such sales is recognized when the goods are delivered. However, when experience indicates that most such sales are consummated, revenue may ‘be recognized when a significant deposit is received provided the goods are on hand, identified and ready for delivery to the buyer. f. Sale and repurchase agreement - the term of the agreement must be analyzed to ascertain whether, in substance, the seller has transferred the risks and rewards of ownership to the buyer and hence revenue js recognized. When the seller has retained the risks and rewards of ownership, even though legal tile ‘has been transferred, the transaction isa financing agreement. From rendering of services Revenue is recognized when all the following conditions are met: ‘a. The amount of revenue can be measured reliably b. Its probable that the economic benefits associated with the transaction will flow to the enterprise, The coss incurred oF to be incurred in respect of the transaction can be measured reliably. 4. The stage of completion of the transaction at the balance sheet date can be measured reliably. Financial service fees & oFigination fees received by the entity relating to the creation or acquisition of @ financial asset othor ‘at that under 1AS 39 is classified asa financial asset at fair value through profit or loss, these Fees are an integral part of generating an involvement with the resulting financial instrument and, together with the related transection costs are deferred and recognized as an adjustment tothe effective interes rate. '. Origination fees on issuing Fnancial liabilities measured at amortized cost, these fee are received are included, with the related transaction costs in the inital carrying ammount of the financial linbility and recognized as an adjustment tothe effective yield a. Fees charged for servicing a loan — these fees are recognized as revenue as the services are provided. 1b. Commitment fees to originate a loan - -when the loan commitment is outside the scope of YAS 39, the ‘commitment fee is recognized as revenve on @ time proportion basis over the commitment peri. ‘Loan commitment fees that are within the scope of IAS 39 are accounted for as derivatives wo measured ot fair valve. c. Investment management fees ~ fees charged for managing investments are recognized as revenue 38 the services are provided. incremental costs that are directly attributable 10 securing an investnientTICAL ACCOUNTING 1 ~ te tn Luxe felt Management contract are recognized as an asset if they can be identified separately and measured reliably and if it is possible that they will be recovered, Fees that are earned on the exce fa significant act: Commission on the allotment of shares to a civent - the commission is recounized as revenue when the shares have been allotted b. Placement fees for arranging loan between a borrower and an investor ~ the fee is recognized as revenue when the Joan has been arranged. Loan syndication fees - such fee is recognized as revenue when the syndication has been completed © Installation fees recognized as revenue by reference to the stage of completion of the installation, unless they are incidental to the sale of a product in which cave they are when the goods are sold. From interest, royalties and dividends — when it is probable that the economic benefits associated with the transaction will flow to the entity and that the amount of revenue can be measured reliably. IAS 18 requites that the revenue arising from the use by thers of entity assets yielding interest, royalties and dividends should be recognized as follows Interest- using the effective interest method as set out in TAS 29 paragraph 9 and AG 5 ~ AG 8. Royalties ~ acerual basis in accordance with the substance of the relevant agreement. Dividends - should be recognized when the sharehoiders” right to receive payment is established, Recording revenue for multiple service elements (bundled offers): JAS 18 refers specifically to situations where the sciling price of a product includes an identifiable amount for subsequent servicing, in which case thal amount is deferred and recognized as revenue over the period during which the service is performed. Sale of assets held for rental - IAS 16 was amended to cequire that where an entity in the course of its ordinary activities, routinely sells items of property. plant and equipment that it has held for rental to others to transfer the assets to inventories at their carrying amount when they ceased to be rented and become held for sale. The proceeds from the sale for such assets are recognized as revenue in accordance with IAS 18, IFRS. 5 does not apply when assets that are held for sale in the ordinary course of business are transferred to inventories. 6. Customer loyalty programmes — under IF RIC 13, an entity must apply par. 13 of AS 18 and account for award credits as a separately identifiable component of the sales (ransaction(s) in which they are granted (the initial sale). The fair value of the consideration received or receivable in respect of the initial sale must be allocated between the award credits and the other components of the sale If the entity supplies the awards itself, it should recoznize the consideration allocated to award credits as revenue when award credits are redeemed and it fulllls its ebligarions to supply awards, The amount of revenue recognizes should be based on thc nuinber of avard credits that diave been redeemed in exchange for awards, relative (9 the (otal number expected to be redeemed, Expense Measurement and Recognition: Expenses ~ are outflows of (or decreases in) assets of 8 company or incurrence of liabilities (or combination of both) during a period from delivering or producing goods, rendering services or carrying out other activities that are the company’s ongoing major or central operations Recognition of Expenses: Expenses are recognized in the income statement when decrease in future economic benvfits related to a decrease in an asset oF an increase of a lability has arisen that can be measured reliably... Expenses ane recoynized in the income statement on the basis of @ direct aysneiation between the costs incurred and the ‘earning of specific items of income. When economic benefits are expected to arise over several accounting periods and the association with income ean only be broadly or indirectly determined, expenses are recognized in the income statement on the basis of systematic and rational allocation procedures. Expenses are recognized immediately in the income statement when expenditure produces no future economic benefits oF when, and to the extent that; future economic benefits do not quslfy, oF cease to qualify. for recognition in the balance sheet as an asset éNeen rece ec ee nc ee ee ACCOUNTING CHANGES: Comaze: Ip Accousting Policies ‘An entity shall change wn accounting policy only if the change: 4. Is required by an Standard or an Interpretation; oF b. Results in the financial statements providing reliable and more relevant information about the effects ‘of transactions, other events or conditions on the entity’s financial performance or cash flows. 2. The following are not changes in secounting policies: 4. Toe application of an sccounting policy for transactions, other events or conditions that differ in subsiance from those previously occurring; and 4. The application of a new accounting policy transactions, other events or conditions that did not occur preveously or were immaterial. 3. Application of changes in accounting policy: Retrospective application - when it is practicable to determine the period-specific effects of changing an accounting policy, the entity shall adjust the opening balance of each affected component of equity for the “earivest prior period presented and the other comparative amounts disclosed for each prior period presented as if the wew accounting policy had always been applied. Prospective application - when it is impracticable to determine the period-specific effects, the entity shall appiy tbe new accounting policy to the carrying amounts of assets and liabilities as at the beginning of the ‘earivest period for which retrospective application is practicable, which may be the current period, and shali make corresponding adjustment to the opening balance of each component of equity for that period. Changes in Accounting Estimates: Hae ee ea eatin besinasscviies, many toms fe financial sstoments cmnot be aeasured with precision but can only be estimated. Estimation involves judgments based on the latest ‘avasiabie, relnable information. For example, estimates may be required of, Bad debis b. inventory obsolescence ¢. Faur value of financial assets or financial liabilities d. Useful hives of, or expected pattern of consumption of the future economic benefits embodied in, depreciable assets, and e. Warranty obligations. 2. Application of changes in accounting estimates: ‘a. An the period of change, if the change affects that period only; or . In the period of change and future periods, ifthe change affects both. INLERIM FINANCIAL REPORT: ‘Minunum components of interim financial report. 2 Condensed balance sheet 4». Condensed income statement ©. Condensed statement showing cither (1) all changes in equity or (2) changes in equity other than those ‘arising {som capital transactions with owners and distributions to owners 4. Condense cash flow statement; and 2. Selected explanatory notes. 2. Periods for which Interim Financial Statement Are Required to be Presented: inierian reports should include interim financial statements (condensed or complete) for periods as follows: A. Balance sheet as of the ead of the current interim period and comparative balance sheet as of the end of the immediately preceding financial year. b. Income statements for the current interim period and cumulatively for the current financial year to ‘date, with comparative income statements for comparable interim periods (current and year to date) of minediately preceding financial year. ¢. Staloment showing changes in equity cumulatively for the current financial year to date, with a ‘somnparative statement for the comparable year-to-date period of the immediately preceding financial year 4. Cash flow statement cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year.Res Z PRACTICAL ACCOUNTING 12. ~~. Pane 2 of, The enterprise should apply the seine aocoumting policies Ta liz Werk Fanci suissocni Wot ee pri yphicd in its annual financial statements, except for accounting policy changes made after the date of the mies recent annual statement that are to be reflected in the next annual financial statcrnents However, the frequency of an emterprise’s reporting (annual, half-yearly or quarterly) should sot affect the measurcien of its annual results, To achieve that objective, measurements for interim reporting, purpuses shuld be made on a year to year basis. Revenues that are received seasonally, cyclically. or occasionally within a financial year should not be anticipated or deferred as of an interim date if anticipation or deferral would nol be appropriate at the end of the enterprise's financial year Examples. dividend, royalties and government grants. Additionally some enterprises consistently earn more revenue in certain interim periods of a financial year than in +Aher interim period: Such revenues are recognized when they occur. Cost incurred unevenly during the financial year should be anticipated or deferred for interim reporting purposes if, and only if, it is also appropriate to anticipate or defer that type of cost at the end of the financial year. Employer payroll taxes and insurance contributions — if assessed on an annual basis, the reluted expense is Fecognized in interim periods using an estimated average annual effective payroll tax or contribution rate Major planned periodic maintenance or overhaul that 1s expected to occur Hate in the yeur is not anticipated for interim reporting purposes unless an event has caused the enterprise to have a legal or constructive obligation. The mere intention or necessity to incur expenditure related to the future 15 nol sufficient give rise to an obligation Provision is recognized when an enterprise has no realistic alternative but to make transfer of economic benefits as a result of an event that has created a legal or constructive obligation. The amount of the obligation is adjusted upward or downward, with a corresponding foss or gain recognized im the income statement, ifthe enterprise's hest estimate of the amount of the obligation changes, Year end bonuses ~ the nature of year-end bonuses varies widely, some are cared simply by continued employment during a time period, some bonuses are camed based on a momihiy, quarterly, oF annual measure of operating result. They may be purely discretionary, contractual, or based on years of historical precedent. Pension cost for an interim period is calculated on a year to date basis by using the actuarially determined pension cost rate at the end of the prior financial year adjusted for significant market fluctuations sinve that time and for significant curtailments, settlements or other significant one-time events yeome tax expense is accrued using the (ex raie that would be spplicabic to expected wtal Interim period is the estimated average annual effective income tax applied to the pre-tax income of the ‘earnings. that interim period. Depreciation and amortization for an interim period is based only on assets owned during thet saterim period. It does not take into account asset acquisitions or dispositions planned for fater sm the financiat yea . Inventories are measured for interim financial reporting by the same principles as at financial year-end Impairment loss is recognized when the carrying value of item of PPE and any other asset iv higner than fis recoverable amount.A SACTICAL ACCOUNTING t co a7. Pepenitla/ CG, Macariola “ ne v , Comprehensive Income, Accta, Changes & Interim Reporting — Morse Cavnpany Marston fo Mogan Calapan) stock an tale th at gust OF P80 000 for an anvoie mount of PE OOG,060 tn eeturn, Marvse Campany received trom Moran €o0np, ‘3 onto PAO. 050 aul ean fe sak ala eta pee of PP, LOD.000, A put trom the exchange of sacks, Maro Comp Jonny to Morgan Company. What amount of revenue should Morase Company yy Similar stock in trade ny pati cash ot Feeouttizcd al the tine ot exchange” hone 6) PH.000.000 900.000, oh) PH100,000 On Jannary 1, 2012 Conint Company, a property developer. sells @ completed property 10 cust Consideration af B80,000,000, The price is bnbed on the cuTeRE market value oF the property. The developer imovhatel enters into an asreement to bushack the property on December 31, 201 fora price of PS8.320,000 {eaiewlated at PSO.00.000 compounded at X¥s por anount for two year). What ameunt of revenue sould Covahal Company recognize on January 12012? finanel4g Mransacton bone 190,000,000 >) PS,320,000 1) PS8320,000 er fora Changi Company. sells one of ity praduets for PSO per unit on credit, To encourage company awards its customers 4 10% carly settlement discount provided that the customer settles within 30 days oF buying the woods Normal credit ferms are 60 days. Custonier A pays P40,S00, within 30 days of the date of purchase, 1 seite the amount owing far 90 unity bought from the entity Customer B pays P4S,000, 60 days alter the date OF punehaye. to settle the ammwunt ow ings Jor 90 ants bought to the entity, What is the ammount ‘oF net revenue should Changi Company report related to the ahove sale? a) P0800 ©) PSI.O00. by PAS.a00 PB P8500 Company R sells furniture and offers an interestfice Customer B qualifies for the interest-free period and purchases furnitu satles price nue is PDO. Crstomer Bill pay PAD,00 Company R determines that annum, What amount of reven ax} of M6 months to certain qualifying customers, ‘on June 30, 2010. “The current cash hom June ¥0, 2011, 2012 and 2013. hate for imputing interest Wo the transaction is 4% per R recognized on June 30, 20107 the fin 1 appropriate disco we should Compan a) one PHIL 004 by PTSaas 4) 120,000 Company N swaps a container of its mith for 4 container af milk of Company M in order to be able to deliver to, ‘customer located closer fo Company N°s distribution center. The value of the container of milk is P10,000, Which is the same for both companies The following week, Company N swaps a container of mith (with a Value oF P1O,000) with Company. 1 in exchange fo m, ‘The value of Company 1s container ‘aFeream is P12,000, Company N also pad P1200 to Company 1. What amount of re recognized related to the 9a a) PIO 000 ©) P12,000 28 PIO.S00 4) i320 ReeetD = Action Company. a grocery retailer, ants 100,000 points for customers who purchase goods i Pro.nto.000 uur) 2012. THe tragemen enimalos tt such polnt-eah be redeemed ef PI2Saxuivalon groceriee, Mawcver. Action Compuny expects that only 84,000 points be redeemed. Fram the proceeds of 110.000 000 rma the gran of pwinks hal aniounl should Astion Cormpany, lene a) none 9.900.000 = By Po.s00.000 A) 10,000,000 911 we the mo For a quarter ended March 31, 2012, Ress Hotel. grants customers who have stayed in the hotel a total of 5.000.000 points which can be used to redeem “free slay", fee food and beverage andor fee spa treatment The terms of the redemption are as follows [eof pony fr reception © Noumnal yelling price {Fre i 2000 raf HY Bs) xp4o00 #2 #4 [Free food and beverage i oe EHO Zee de poy PLO aM [easeoee aimee oo a LK aera e.0¢ based on the operator's past experience, there is a 40% probability that customers will opt for the free one ight stay and a 30% probability for eae oF the other two awards, HC further estinvates that 20% oF theReSA / Practical Accounting I: Gumprehensive Income, Accounting Changes & Jateria Reporting aistomers will no redeem theit award credits, What amount of deferred revenve shuld Resa Tel ce tor the quamer ended March 31, 2012? 8) None FF PSB40.000 by P1t60,000 €) P7.300.000 operates @ customer loyally programnie {1 eants programme members (0 Jayalty points Sor every P1000 amount of groceries. Programme members can redeem the points for further groceries. The points have no expiry period Crystal has eranted 20,000 points and management expects Sly of these ports tw be redeemed. Crystal estimates the ftir valuy of each loyalty point 10 be 5 und the amount of deterred revenue initially is P100,000. At the end of the current year December 31, 2012 8400 points have been redeemed in exchange fe of revenue fiom the loyalty programme should be recounized on December 31, 2012? a) none ©) 40.000 by P3000 P8500 [Ape xim 204] 9, On January 1. 2011, Clippers Service Company sells sume equipment. the cash price of the equipment is £400,000 but it was sold for PS60,000 with a commitinent fo serview the equipment for # period of tw sears With no further charge What fotal anwunt of revenue should Chippers Service Company disclose in as December 31, 2011 statement af comprehensive income? e > None prvimnann — St ee by 400,000 d) PSN, igh ote 10, Mix Company. a toy retailer sells toy for #100. A. voucher entiting the. beater to a discount of PSW%in a subsequent purchase of the same type of toy 1s issued with each sale. the retailer hay a historical EXPE: that for every two vouchers issuicd, one iy redeemed. Mix Company hay Sold 110 toys and has issued 1.000 souchers ap uf December 1, 2011, site the residual method of allocating the proceeds, what amour of revenue frm sale of toys shoul! Mis Company report in its December 31-2011 proforma? de 3) P8000 a if ® 5000 Fae ted Toca MPP by P5000 pty ‘d) P100,000. (ore) (279_ Lips TEP 11. On Janunry 22012 Company A provides a undled service offering to Customer B._tt charges ELAM: 130.000 for upitont advice and to ongoing services. call advice and access to Compan. A°s daca bases ‘over & 2 year period. Company A determines tha, iit were to charge « separate fee foreach service Hf soid Separately the fee would be: upfront P2004: neal P26,000: Access to databases, P.O. What amour of revenue should Company A repor in is Duveinber 31,2017 sistent af comprehensive income? a) Pl.067 PRPS >) 76,667 2) 30.000 12. Diesel fuel held as inventory at 1 November 2011 was P123,000 and there were invoices awaited for P17, 000, During the year to 31 October 2012, diesel fie! invoices ot PS,000 were paid, and a delivers orth PY 3.000) had yet to be invoiced At 31 October 2012. diesel fiel inventory was valued at POK.OUO, The diese! fuel to be ‘charged as an expense in the profit or loss of the year to 31 October 2012 is , a) PRS1,000 1) PBRS.0U d) P9100 yn was taken from the accounting records of Freeman Company for the year ended ember 31,2012: bi aint! HE Raw materials purchased, 1.000.000; Increase in raw materials inventory, P400.000; Dive iS ces 5,000,000; Factory overhead, P6,000,000: Decrease in work in process inventory. P300, 000" and increase m finished goods inventory, P400,000, Cost of woods sok! 2012 should b= Poverse ZB PA300.000 6) PIO 500,000) (ive b) P18,300.000 <4) P20.300,000 eevee 14, The following information pertains to Surety Company's 2012 cost of sales: Inventory, January 1 P 4.000.000 2 Inventory, December 31 3,000,000 Purchases 10,000,000 Purchase returns 100,000 Purchase discounts 180.000 20,000 inventory 00,000 Ifthe company's policy is 19 clude deeling/wrte-off in the value of inventory 10 other expense, what atnount should the company report as cost of sales? af rin2s0.00 «) Pi1.200.000 911 b) 10,740,000 4d) PI2,800,000Resa. 1S, Presental helo ares Practical Accounting I: ar-end balanees of the assets and liabilities po Comprehensive Income, Accounting Changes & lorceim Reporting ing to Glacier Merchandisn: 2012 2014 Cash m0 Pizoaen Equity nestment a far val to pri or los 2001000) 2.000 3on.90 women Invemtories, 70.000 o3sn00 Prepaid expenses e900 TRAE Accounts payable 82.000 Beno Other current tiabiliies: 141.000 125500 Bonds payable 200.000 20000 Additional investment mae bythe owner daring 2012 wa P'130.000 but «260.000 personal Tabs as paid ‘out of company's Funds. Wh a) P 30,000 AT P140.000 is the company’s profit of loss far the year ended December 31, 2012? €) P190.000 sf om «d) P200,000 ‘ 6. Monarch Company s account balances during 2012 showed the following changes: Current assets Non-current assets Current liabilities Non-current hiahilits ‘Share Capital Share premium capital There were no changes in retained ear result of operations, How much is Mona a) PS00,000 PF e.000 17. Presented below are year-end balances of the assets and li 2011 and 2012 Current assets Non-cutrent assets Current habilites Non-current liabilities During 2012, Tudor Corp. issued additional shares for a total proceeds af P2.000.000 of which P800.000 was used to pay dividends accruing 10 last y dividend. It was also noted that a piece of land was received as donation from one ofits shareholders with market value of P2,000,000, What amount of net profi(ioss) the comy a) 200,000 net loss PP _1.900.000 net toss 18, The following information perta P 3,000,000 merease 2,500,000 decreuse 1,600,000 decrease 1.000.000 increase 20 1.200.000 increase £800,000 increase Zi ) for 2012 other than a 1,500,000 dividend payment and year-end Js" net income for 2012? ) P700,000 1d) P800,000 to Tudor Corporation for the years row 2012 ; P3.0.000 5.500.000, : 7.900.000 we 5,500,000 *' pa sn Sonn 220000 7S" 2,000,000 > 4 : that has been declared previously and a P1,000.000 current year * ny earmed( incurred) in 2012? ©) P1,200,000 net toss <4) P2,000,000 net loss isto Wendy Company during 2012: January 1, 2012 inventory, PASU.006E December 31, 2012 inventory, P480.000: Purchases during the year, 1,800,000; Purchase returns and allowances, 105,000: Purckase discounts. P25,000: transportation in, 10.000: Sales during the year. P3,850,000: Sales discounts granted. P70,000; Sales returns. P120,000: Selling ‘expenses, P990,000: Administrative expenses, P82.000; Rental revenue eared. P65,000: Dividend received. 150,000; Income tax expense. P&3,200: and Retained earnings. January |, 20} 200,000. equity mvestment at fair value to other comprehensive income, net of tax, P20,000; Translation loss, net of tas 10,000 and Dividends paid of P150.000 on redeemable preferences shares accounted as a ligbilit. Question L ifthe company uses the natural presentation, what amount of total net revenue should be disclosed im its profit or loss statement forthe year ended December 31, 2012? a) P5.660.000 'b) 3.725.000 Quest ‘comprehensive income sholl the company report? 4), PI 76.800 AF 186.800 ‘Questa J What is the amount of profit or los assuming the company enterprise? 8) 176,800 by 186.800 ©) 3,850,000 “AT PR ATS 000 2. If-the company prepares two separate statements for its comprehensive income, what amount of 7a, ) P278,800 4) P288,800 196,800 /3) P278,800ReSA,/ Practical Accounting te Comprehensive lacome, Accounting Changes & faterin Reporting 9 20. 21 nn Bes Sree ented Derember tt, 302, Tentin Company repated the elon Ng pratt, P20, 000, Dividends pid of P20,000 on prerence shares and PNO:OWO on-oninary shares, Unrelfg holdin gain on equity inves PRLGDN,Trastton os, PLO G0 What amount of comprehensive meome shoukl Te Income for the year ended December 31, 2012 ay P300.000 ©) 330,000 yh P2000 4) P40.000 Jon Company report an is statement of comprehensive HBO Company purchased an equipment on January 1, 2009 for P3,090,000. On the date of acquisition, the equipment had usetul Ife of 6 ye: mated salvape value of P9000. Phe equipment is being depreciated on a strausht-line basis January 2012, HKO Company determined that the equipment had useful life of 8 years from the dite of acquisition with mo chang in salvage value, What is the carrying value of the equipment on December 31, 2012? a) P1,090,000 © P272,000 fae by PL120,000 PEP 290.000 dened On January 1, 2009, Turtle Company purchased heavy equipment for P12.960,000 and depreciated it by the straight ine mettod using an estinuted usetial fife of ten years with an estimated salvage value of P360.000, On January 1. 2012, Turtle Company determined that the equipment had a useful life of & years from the date of acquisition, with the sane salvage viluc. Also. on the same date, the company decided to change the method of depreciatine the equipment to the sum of years digit, Asa result of the above changes, how much depreciation shoul Turtle Company recognize in 2012? v0 a 9 BAe ae ee of oe to FIFO irom Average for both financial statements and income tay reporting purposes. ‘The change resulted in 2 P900.01N) increase in the beginning insewtory at January 1, 2012 the aecounting change should preferably be reported hy the company in its year 2012 a) Income statement as a P612,000 credit Retained e Statements as a POT2,000 credit adjust ‘) Retained earnings statements as a P612,000 debi: adjustment to the beginni 4d) Income statement 1s @ P612,000 debit ted ston. Company decided to change rom VEC) method of inventory valuation to the w balances under each method were as follows During 2011. P average method. Inve EIKO WEIGHTED AVERAGE Decem 1.500.000 14650,000 December 31 L020) ae SO. December 31, 2009 1 SH0.0083 1.660.000, i December 31-2008 {600,000 1,700,900 4 wnoring income tas, in ils year 2011 statement of retained earnings, what amount should Pistons report ay the effect ofthis accounting change? a) none fp 20.000 by 80,000 8) 20.000 eS Grapes Company °s P190,000 net incomie for the quarter ended September 30, 2012 included the following after tay items hecndet : API20,000 gai \pokal of equipment, realized on April 30, 2012 was allocated equally to the pid: 3° and." quarters. 48,000 , © AP32.000 cumulative effect loss resulting from a change in inventory valuation method was secbenizes on August 4.2012, + 92,060 In addition. Grapes paid P%6.000 on February 1. 2012, for 2012 calendar year pr amount, P24,000 was allocated to the 3" quarter of 2012, NAF For the quarter ended September 30, 2012, how much should Grapes report as net inconte? 182.000 ©) 222,000 b) P206.00 8) P210,000