Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

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Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

Final Test-Odd Semester 2010/2011

FINANCIAL ACCOUNTING 1
Thursday 16 Desember 2010
150 minutes-Closed Book
Problem 1(25%)
Logical Co. Record the transaction for the month of December 2010 as follows:
Purchase Sales
Date Units Price/unit Date Units Price/Unit
1(beg balance) 200 $ 9.0 10 400 $ 12.0
5 300 $ 9.5 18 400 $ 13.0
15 400 $ 9.2 27 200 $ 14.0
20 200 $ 9.3

Required :

1. Assume that the company keeps the FIFO periodic inventory method: (5%)
a. Compute the inventory at December 31, 2010, show your calculation.
b. Prepare the journal entry needed on December 20 and 27, 2010.
2. Assume that the company keeps the average perpetual inventory method: (15%)
a. Compute the inventory at December 31, 2010 show your calculation.
b. Prepare the journal entry needed on December 20 and 27, 2010.
c. Prepare the journal needed if the physical inventory count indicates that total
inventory on hand is 90 units (the company uses the latest cost per unit to value
inventory on hand)
d. After performing physical count, the company gathered information that the total
selling price of company’s inventory as of December 31,2010 is $950.00 and total
estimated cost to sell is $50.00 Prepare the journal needed if Logical Co. Applies
Lowe-of-Cost-or-Net-Realizable-Value (LCNRV) for its inventory with Cost of Goods
Sold method and the use of an allowance.
e. Show the inventory section of Logival Co’s statement of Financial position as of
December 31,2010

Problem 2(25%)

Icarus Corporation has been expanding its production capacity in order to pursue a low-cost
strategy. The year 2010 is marked by completion of production complex and acquisition of several
assets. The following information pertains to transactions of Icarus Corporation during 2010 :

a. Construction of a production complexwhich qualifies for interest capitalization has been

started since January 1, 2010 and is scheduled to be completed on December 31,2010.
Expenditures on project are as follows :
February 28,2010 $ 450.000
August 31,2010 $ 750.000
December 31, 2010 $ 800.000
$ 2.000.000
Icarus Corporation did not borrow any loan specifically for the construction. However, there are
other borrowings however and all are outstanding as of December 31,2010 :

 10% 5 year note payable of $1 million, issued on 1 November 2009, interest payable
annually on 1 November;
 12% 10 year bond issue of $1,500,000 sold at par June 30,2003, with interest payable
annually on January 31.

Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

The Construction of the production complex qualifies for interest capitalization.

b. On February 1, 2010 purchased a parcel of land located adjacent to the production

complex for use as warehouse site for $500,000. It demolisher one of the two (2) old
buildings on the property, and began construction on a newbuilding (which is a
warehouse) that was completed on October 2,2010.
Demolition of Old Building $ 40.000
Architect's Fees $ 200.000
Legal Fees for title investigation
and purchase contract $ 20.000
Warehouse Construction Cost $ 5.000.000
Icarus Sold salvaged materials resulting from the demolition for 30,000.
For the other old building (which is an office), Icarus Corporation did the following works:
Painting of Ceilings $ 10.000 (estimated useful life in one year)
Electrical re-wiring works $ 35.000 (estimated useful life in ten years)
Construction of Extension room $ 80.000 (estimated useful life in twenty years)

c.On August 1,2010 Icarus Corporation purchase a new packaging machine on a deferred
payment basis. It made a down payment of $10,000 and issued a note promising four
monthly installments of $25,000 each beginning on September 1,2010. The cash
equivalent price of the machine was $95,000. Icarus Corporation had the packaging
machine installed in the warehouse and paid installation cost amounting to $3,000.
d. Icarus Corporation is negotiating the purchase of a new excavator at a price of $7,000
plus trade-in, f.o.b shipping point. Icarus plans to pay $7,000 in cash and trade in a used
evcavator. The used excavator originally cost $62,000. It has book value of $42,000 and a
second-hand market value of $45,800, as indicated by recent transactions involving similar
equipment. This exchange is considered to have commercial substance. Freight for the new
excavator will require a cash payment of $1,100.
e. The annual reporting period of Icarus Corporation in 1 January to 31 December.
Required:
1. In relation to the construction of the production complex: (a)Compute the WAAE of the
construction during capitalization period, (b) Compute the avoidable interest cost
capitalized for 2010.
2. In relation to the purchase of land and construction of warehouse: (a) compute the cost of
the land, (b) compute the cost of the warehouse building. (c) give the journal entries for
the works done on the office building.
3. In Relation to the packaging machine, prepare the journal entry to record the acquisition.
4. In Relation to the exchange of excavator; (a) give the journal entry to record the
transaction, (b) explain how your entry will be different or the same if the transaction has
no commercial substance.
5. In Relation to the above items, list down what information Icarus Corporation should
disclose in the Property Plant and Equipment section of the notes to the Financial
statement for the year ended December 31,2010.

Problem 3 (20%)
PT Suka Damai uses revaluation accounting for a class of equipment it uses in its business. The
equipment was purchased on January 1, 2010 for Rp100.000.000 and has a 10-year useful life
with no residual value. The Company has the following information related to the equipment.
Date Fair Value
January 1,2010 Rp 100,000,000
December 31,2010 Rp 93,600,000
December 31,2011 Rp 76,000,000
December 31,2012 Rp 71,000,000

Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

Required:
1. Prepare all the entries related to the equipment for 2010.
2. Prepare the entry for any revaluation adjustment at December 31, 2011 and 2012 (using
elimination of accumulated depreciation)
3. Determine the amounts to be reported by the company at December 31,2011 and 2012 as
Equipment, Other Comprehensive Income, Depreciation Expense, Impairment Loss, and
Accumulated Other Comprehensive Income.
4. Prepare the entries for the sale of the equipment by the company on January 1,2013 for
Rp 66,000,000.

Problem 4 (20%)
PT AG has the following amounts included in its Statement of Financial Position at December 31,
2009 :
Patent Rp 90.000.000
Less :Accumulated Amortization Rp 9.000.000
Rp 81.000.000
Copyright Rp 54.000.000
Less:Accumulated Depreciation Rp 37.800.000
Rp 16.200.000
Total Rp 97.200.000
PT AG purchased patent on Janyary 2, 2009. AG estimated the remaining useful life of the patent
to be 10 years. AG uses cost method to measure its intangible assets and straight line method to
amortize them. The following transactions influence the intangible assets balance during 2010 :
January 2 Alicese is purchased from PT ABC, distributor of a popular consumer product
, for 150.000.000. It is expected that this product will generate cash flows
for an indefinite period of time. The license has an initial term of 5 years but
by paying a nominal fee, PT AG can renew the license indefinitely for succesi-
ve 5 year terms
Jan-June PT AG incurres research and decelopment costs since January 20 of Rp 315,000,000.
Management estimate that about 40% of the costs are allocated to research the new
formula. The remaining is a decelopment cost. The patent of new formula is obtained
on July 1,2010 and has a useful life of 6 years.
September 1 PT AG pays for Rp 60,000,000 to advertize its product.
December 31 PT AG is doing impairment test for its intangible assets. PT AG has received the following
information related to its intangible assets :
Recoverable Amount-Patent Rp 70,000,000
Recoverable Amount-Copyright Rp 8,000,000
Recoverable Amount-License Rp 165,000,000
Recoverable Amount-Patent New Formula Rp 175,000,000
Required:
1. Prepare the journal entry to record the transactions including the amortization The
company uses accumulated amortization accounts (15%)
2. Compute the carrying amount of each intangible assets on its December 31,2010,
statements of financial position. (5%)

Problem 5(15%)
Each separate transaction of the following is related to current liabilities, provision, and
contingencies. Show the calculation of your answer.
1. Belimbing shop manufactures high-end whole home electronic systems.The company
provides a one year warranty for all products sold. The company estimates that the
warranty cost is $200 per unit sold and reported a liability for estimated warranty costs
$6.5 million at the beginning of 2010. During 2010, the company sold 50,000 units for a

Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

total of $243 millon and paid warranty claims of $7,500,000 on current and prior year
sales. What amount a liability would the company report on its statement of financial
position as of December 31,2010? (2%)
2. Depokmart made cash sales during the month of October of Rp 100,000,000. That sales
amount included Value added tax(Pajak Pertambahan Nilai-PPN) of 10%. What is the
required journal entry to record this transaction?(2%)
Use the following information for Questions 3-4.
Madcow Exploration is involved with innovative approaches to finding energy reserves. Recycle
recently built a facility to extract natural as at a cost 0of $15 million on July 1, 2010. However,
Madcow is also legally responsible to remove thatfacility at the end of its useful life for four years.
This cost is estimated to be $21 million (the present value of which is Rp.15.435. 627 usin 8%
discount rate).
3. What is the journal entry required to record the environmental liability on July, 1, 2010?
(2%)
4. What is the journal entry required to record the interest expenses related to environmental
liability on December 31, 2010? (3%)
Use the following information for Question 5-6
Candy shop includes one coupon in each bag of chocolate it sells. In return for eight coupons,
customers receive a free box of candy. The candy cost Candy Shop $2.00 each. Candy Shop
estimates that 40 precent of the coupons will be redeemed. Data for2010 and 2011 are as follows:
2010 2011
Bags of Chocolate sold 500,000 600,000
Bags of Candy purchased 18,000 22,000
Coupons redeemed 120,000 150,000
5. What is the journal entry to record the estimated premium liability at December 31, 2010?
(3%)
6. What is the premium expense for 2011? (3%)
======================Good Luck======================
Answers
Problem 1

1a Ending Inventory
Unit Total
Date Units
Cost Cost

20-Dec 100 units (200+300+400+200-400-400-200) 9,3 930

Ending Inventory =$930

b Journal *assume purchase and sales are on account

Date Account Description Debit Credit
Dec 20 Purchase $ 1,860
Account Payable $ 1,860
Dec 27 Account Receivable $ 2,800
Sales $ 2,800

Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

2a
Purchased Sold Balance
Date
1 200*$90
5 300*$95 500*$9.3
10 400*$9.3 100*$9.3
15 400*$9.2 500*$9.22
18 400*$9.22 100*$9.22
20 200*$9.3 300*$9.27
27 200*$9.27 100*$9.27
Ending Inventory =100*$9,27 =$927

b Journal
Date Account Description Debit Credit
Dec 20 Merchandise Inventory $ 1,860
Account Payable $ 1,860
Dec 27 Account Receivable $ 2,800
Sales $ 2,800
Cost of Goods Sold $ 1,854
Merchandise Inventory $ 1,854
c Journal
Date Account Description Debit Credit
Dec Inventory over and short $ 92.7
Inventory $ 92.7
d
NRV = Selling price of inventory – estimated cost to sell = $950 - $50 = $900
The ending balance of inventory of the company after performing physical count =
$927 - $92.7 = $834.3
Because the cost of inventory is lower than the NRV, using LCNRV method, the company did not
prepare any journal because the inventory should be valued at its cost.
e
Statement of Financial Position
Logical Co
December 21, 2010
Current Assets
Inventory $834,3

Problem 2
1)
Information Given:

28-Feb 31-Aug 31-Dec Total

$ 450,000 $ 750,000 $ 800,000 $ 2,000,000
No Spesific Debt
Other Debt
1. 10% 5 year Notes Payable 1 November 09 $ 1,000,000
2.12% 10 year bond 30 Juni 03 $ 1,500,000

Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

a. Calculating Weighted Average Accumulated Expenditure

Current Year
Weighted Average
Expenditures Capitalization
Accumulated Expenditures
Period
Date
28-Feb $ 450,000 10/12 $ 375,000
31-Aug $ 750,000 4/12 $ 250,000
31-Dec $ 800,000 0/12 $ -
Total $ 2,000,000 $ 625,000
b. Calculating Avoidable Interest Cost
Because there is no specific debt, we only use Capitalization Rate (Total interest cost of
other debts/Total Principle of other debts)
Principal Interest
10% 5 year note $ 1,000,000 $ 100,000
12% 10 year bonds $ 1,500,000 $ 180,000
$ 2,500,000 $ 280,000

$ 280,000
Capitalization Rate
$ 2,500,000
= 11.2%
So the avoidable interest cost is
WAAE Interest Rate Avoidable Interest
$ 625,000 11.2% $ 70,000

2)
a) Cost Of Land
=Cost for Purchase + Cost for removal old building + Legal fees - Salvage Material
=$500,000+$40,000+$20,000-$30,000
=$530,000
b) Cost of Warehouse Building
=Architect Fees + Warehouse Construction Cost
=$200,000 + $5,000,000
=$5,200,000
c)

Date Account Description Debit Credit

Feb 1 Equipment $ 115,000a
Cash $ 115,000
a
115,000 = 35,000+80,000 (Painting of ceilings did not adding/serving future economic benefit for
the company, so the cost incurred should be expensed)
3)

Date Account Description Debit Credit

August 1 Machine $ 113,000
Notes Payable $ 100,000
Cash $ 13,000

Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

4)a
The exchange has commercial substance, so we should record the gain from the exchange

Date Account Description Debit Credit

Excavator(New) $ 53,900
Accumulated Depreciation $ 20,000
Excavator(Old) $ 62,000
Cash $ 8,100
Gain on Exchange $ 3,800
b.The transaction has not commercial substance, so the journal is

Date Account Description Debit Credit

Excavator(New) $ 50,100
Accumulated Depreciation $ 20,000
Excavator(Old) $ 62,000
Cash $ 8,100

5)
A company should disclose:

 Accounting Policies for PPE

o Depreciation method
o Estimated useful life and Residual Value of each PPT
 Any changes of PPE (disposal, capital expenditure, currency retranslation,etc)
 Any commitment and liability related to these assets

Problem 3

a
January 2,2010
Equipment Rp 100,000,000
Cash Rp 100,000,000
December 31,2010
Depreciation Expense Rp 10,000,000
Accumulated Depreciation-Eq Rp 10,000,000
Accumulated Depreciation-Eq Rp 10,000,000
Equipment Rp 6,400,000
Unrealized Gain Rp 3,600,000
b
December 31,2011
Depreciation Expense Rp 10,400,000
Accumulated Depreciation-Eq Rp 10,400,000
Accumulated OCI Rp 400,000
Retained Earnings Rp 400,000
Accumulated Depreciation-Eq Rp 10,400,000
Unrealized Gain Rp 3,200,000
Loss on Impairment Rp 4,000,000
Equipment Rp 17,600,000

Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

December 31,2012
Depreciation Expense Rp 9,500,000
Accumulated Depreciation-Eq Rp 9,500,000
Retained Earnings Rp 500,000
Accumulated OCI Rp 500,000
Accumulated Depreciation-Eq Rp 9,500,000
Recovery on Impairment Rp 4,000,000
Unrealized Gain Rp 500,000
Equipment Rp 5,000,000
c December 31,2011 December 31,2012
Equipment Rp 76,000,000 Rp 71,000,000
OCI Rp - Rp 500,000
Depreciation Expense Rp 10,400,000 Rp 9,500,000
Impairment Loss Rp 4,000,000 Rp (4,000,000)
Accumulated OCI Rp - Rp 1,000,000
d
Cash Rp 66,000,000
Loss on Disposal of Equipment Rp 5,000,000
Equipment Rp 71,000,000
Accumulated OCI Rp 1,000,000
Retained Earnings Rp 1,000,000

Problem 4

January, 2 2010
License Rp 150,000,000
Cash Rp 150,000,000
January, 20 2010
R&D Cost Rp 189,000,000
Cash Rp 189,000,000
July, 1 2010
New Formula Patent Rp 126,000,000
Cash Rp 126,000,000
September 1,2010
Advertisement Expense Rp 60,000,000
Cash Rp 60,000,000
December,31 2010
Patent Amortization Expense (90jt/10) Rp 9,000,000
Accumulated Patent Amortization Rp 9,000,000
Loss on Impairment(90jt-18jt) - 70 jt) Rp 2,000,000
Patent Rp 2,000,000
Copyright Amortization Expense (54jt/10) Rp 5,400,000
AccumulatedCopyright Amortization Rp 5,400,000

Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

Loss on Impairment (54-43.2jt)-8 jt Rp 2,800,000

Copyright Rp 2,800,000
New Formula Patent Amortization Expense Rp 10,500,000
Accumulated New Formula Patent
Amortization (6/12)*(126/6) Rp 10,500,000
License is not amortized because it has indefinite life. Moreover, it is not impaired because the
carrying amount is lower than the recoverable amount.

Statement of Financial Position

Patent Rp 70,000,000
Copyright Rp 8,000,000
New Formula Patent Rp 115,500,000
License Rp 150,000,000
Total Rp 343,500,000

Problem 5

1)
Belimbing shop has recorded warranty liabilities $6.5 million from prior
sales at 2009.
December 31 2009
Warranty Expense $ 6,500,000
Warranty Liability $ 6,500,000
At 2010, the company paid warranty claims of $7.5 million. $6.5 million
from $7.5 million is recorded as deduction of warranty liability from prior
year sales.
Warranty Liability $ 6,500,000
Warranty Expense $ 1,000,000
Cash $ 7,500,000
At 31 December 2010, the company should accrue the warranty cost from
current year sales. Ending year balance is [(50,000 units x $200) -
$1,000,000]
Warranty Expense $ 9,000,000
Warranty Liability $ 9,000,000
So the amount of warranty liability on its financial
position as of December 31 2010 = $9,000,000
2
Cash $ 10,000,000
Sales $ 9,090,909.0909
Value Added Taxes $ 909,090.9091
3 -July 1,2010
Exploration Platform $ 15,000,000
Cash $ 15,000,000
Exploration platform $ 15,435,627
Environment Liability $ 15,435,627

Semester Ganjil 2010/2011

Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Keungan 1

4-December 31,2010
Depreciation Expense $ 1,875,000
Accumulated Depreciation $ 1,875,000
Depreciation Expense $ 1,929,453.375
Accumulated Depreciation $ 1,929,453.375
Interest Expense $ 1,234,850.16
Environment Liability $ 1,234,850.16
5

Journal Entry for purchasing box of candy (18,000 units x $2.00)

Inventory of Premium Box of Candy $ 36,000
Cash $ 36,000
Candy Shop estimates that 40 percent of coupons will be redeemed (500,000 x 40% =
200,000 coupons) and can be exchanged for 25,000 box of candy (200,000/8).
Journal entry to record premium expenses for coupons redeemed at 2010 (120,000
coupons is redeemedfor 15,000 box of candy and assume no premium liability at the
beginning of the year)
Premium Expense $ 30,000
Inventory of Premium Box of Candy $ 30,000
So the estimated premium liability at December 31 2010 (outstanding premium 200,000
– 120,000 = 80,000 coupons or 10,000 box of candy) is
Premium Expense $ 20,000
Premium Liability $ 20,000
6

Premium Expense for 2011 is only calculated from the sales of bags of chocolate at 2011.

 Estimated coupons redeemed:

o 40 percent of 600,000 bags of chocolate sold = 240,000 coupons
 240,000 coupons can be exchanged for 30,000 bags of chocolate
 So the premium expense for 2011
o 30,000 bags of chocolate x $2.00 = $60,000
 Remember, the journal entry to record $60,000 premium expenses is divided into 2
entries:
1. At the redemption of coupon
 Total coupon redeemed at 2011 less estimated outstanding coupon from
prior sales (150,000 – 80,000 = 70,000 coupons)
2. At the end of the year (record an estimated premium liability)
 Estimated coupons redeemed for 2011 less actual coupons redeemed from
current year sales (240,000 – 70,000 = 170,000 coupons)

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