FINAL QUIZ

INSTRUCTION: Select the best answer and write in LOWER CASE ONLY
in your google answer sheet, please do not include any other character.
Thanks! 😊

PROBLEM 1

An entity purchases plant from a foreign supplier for 3 million yen on January 2, 2030,
when the exchange rate was 2 Yen = P1. At the entity’s year end, December 31, 2030,
the amount has not been paid. The closing rate was Yen 1.50 = P1. The entity’s functional
currency is the peso.

Instructor’s note: Use a continuous computation for conversion of quotation in computing

the difference in exchange rate and multiply it to the foreign currency. Example: ((1/x –
1/y)) (FC)

1. Which of the following statement is correct?

a. Cost of the plant is P2 million, exchange loss P0.50 million, trade payable P2
million.
b. Cost of the plant is P1.5 million, exchange loss P0.50 million, trade payable P2
million.
c. Cost of the plant is P2 million, exchange loss P0.50 million, trade payable P1.5
million.
d. Cost of the plant is P1.5 million, exchange loss P0.60 million, trade payable P2
million.

PROBLEM 2
On January 1, 2010 an entity purchased a tract of vacant land that is situated overseas
for 90,000 Baht. The entity classified the land as an investment property. The fair value
of the land at December 31, 2010 is 100,000 Baht.
The entity’s functional currency is the Php (Peso)
Spot currency exchange rates:
January 1, 2010: 1 Baht = P2
Weighted average exchange rate in 20X0: 1 Baht = P2.04
December 31, 2010: 1 Baht = P2.1

2. What is the carrying amount of the investment property at December 31, 2010 and
what amount/s would be presented in profit or loss for the year ended December 31,
2010?
a. Carrying amount of investment property = P210,000. Profit for the year includes
P30,000 increase in the fair value of investment property.
b. Carrying amount of investment property = P210,000. Profit for the year includes
P20,400 increase in the fair value of investment property and P9,600 foreign
exchange gain.
c. Carrying amount of investment property = P180,000. Profit for the year includes
no amount in respect of the investment property.
d. Carrying amount of investment property = P189,000. Profit for the year includes
P9,000 foreign exchange gain.

3. Assuming the entity cannot, without undue cost or effort, determine the fair value of
its investment property reliably on an ongoing basis. What is the carrying amount of
the investment property at December 31, 2010 and what amount/s be presented in
profit or loss for the year ended December 31, 2010?
a. Carrying amount of investment property = P210,000. Profit for the year includes
P30,000 increase in the fair value of investment property.
b. Carrying amount of investment property = P210,000. Profit for the year includes
P20,400 increase in the fair value of investment property and P9,600 foreign
exchange gain.
c. Carrying amount of investment property = P180,000. Profit for the year includes
no amount in respect of the investment property.
d. Carrying amount of investment property = P189,000. Profit for the year includes
P9,000 foreign exchange gain.

PROBLEM 3
On September 1, 2030, Baby Co. acquired a computer for $100,000 when the exchange
rate is P1 = $20. Baby reported foreign exchange loss of P15,000 in its 2030 financial
statement and P10,000 foreign exchange gain in its 2031 financial statements.
4. What is the exchange rate on December 31, 2030?
a. P1 = 19.85 c. $1 = P0.20
b. $1 = P20.15 d. None of the choices
5. What is the amount of computer on December 31, 2030 statement of financial
position?
 a. P2,000,000 c. P5,000
b. P2,015,000 d. P20,000
6. The exchange rate on settlement date
a. P1 = $0.10 c. $1 = P20.15
b. P1 = $20.05 d. P1 = $10
7. How much is the cost of computer on December 31, 2031 statement of financial
position?
a. P10,000 c. P5,000
b. P20,000 d. P2,000,000
8. How much is the total accounts payable on December 31, 2030 statement of financial
position?
a. P20,000 c. P2,000,000
b. P2,015,000 d. P5,000

PROBLEM 4
On November 19, 2022, Sipieyoyat Company, a Philippine Company ordered
merchandise from Wales Company for 31,800 pounds. The merchandise was
delivered on December 18, 2022. The invoice was dates December 2, 2022, the
shipping date (FOB shipping point). Sipieyoyat Company paid the invoice on January
28, 2023.

The spot rates for a pound on the respective dates were:

November 19, 2022 P76.90
December 2, 2022 P76.15
December 18, 2022 P75.75
December 31, 2022 P72.35
January 28, 2023 P73.15

9. What amount will affect profit or loss in 2022?

a. P120,840 gain c. P25,440 loss
b. P108,120 gain d. P144,690 gain

PROBLEM 5
Memayaaaaahhhh Trading buys goods from Kowloon Inc. of Hong Kong payable in Hong
Kong dollars at a credit term of 60 days. On June 30, 2030, the statement of Financial
Position Memayaaaaahhhh Trading reflects a payable to Kowloon Inc. representing
purchase of goods worth HK$ 250,000 when Hong Kong dollars was going at
HK$1/PhP1.
Instructor’s note: If conversion will be required, round off up to the 5th decimal place.

10. What will be Memayaaaaahhhh Trading’s foreign exchange gain or loss on June 30,
2030, if the prevailing exchange rate is HK$ 0.975/PhP1?
a. P6,250 loss c. P6,410 loss
b. P6,250 gain d. P6,410 gain

PROBLEM 6
Mandaluyong Company buys goods from Tokyo Company of Japan, worth 2,500,000
yen. The prevailing exchange rate is P0.130214/Yen. Mandaluyong Company settles the
account 60 days later when the exchange rate is going at P0.118376/Yen.
11. What is the forex gain or loss of Mandaluyong?
a. P29,595 gain c. P1,920,000 loss
b. P29,595 loss d. P1,920,000 gain

12. What is the forex gain or loss of Tokyo?

a. P29,594 gain c. P 0
b. P29,594 loss d. Yen 2,500,000

PROBLEM 7
Irvin Corp sold handicrafts goods to a US firm for $100,000 in 2029. Pertinent information
on exchange rate follows:
Buying Selling
Sept. 4 Receipt order 45.80 46.00
Oct.15 Date of Shipment 47.00 48.00
Dec 31 Balance Sheet Date 47.20 48.50
Jan 6, 2030 Date of Settlement 46.00 47.00

13. The sale would appropriately recorded at

a. P4,700,000 c. P4,580,000
b. P4,600,000 d. P4,800,000
PROBLEM 8
Emperador, Ltd. Is a British subsidiary of a Philippine Company. Emperador’s functional
currency is the pound sterling. The following exchange rates were in effect during 2030:
Instructor’s note: Use a continuous conversion and round off to the nearest peso
January 1 P1 = £.625
June 30 P1 = £.610
December 31 P1 = £.620
Weighted average rate for the year P1 = £.630

Emperador reported sales of £ 2,625,000 during 2030.

14. What amount (rounded) would have been included for this subsidiary in calculating
consolidated sales?
a. P1,653,750 c. P4,233,871
b. P4,166,667 d. P1,627,500

15. On December 31, Emperador had accounts receivable of £ 490,000. What amount
(rounded) would have been included for this subsidiary in calculating consolidated
accounts receivable?
a. P303,800 c. P784,000
b. P306,250 d. 790,323

PROBLEM 9
Honda Phil. is a subsidiary of Honda Japan. The functional currency of Honda Phil. is
peso while the presentation currency of its parent, Honda Japan is yen. For the year
ended December 31, 2031, Honda Phil. has the following foreign currency denominated
assets: Accounts Receivable of FC 1,000 and prepaid asset are FC 100. The historical
rates of accounts receivable and prepaid asset are FC1 = P30 and FC1 = P20 and P1 =
2Yen and P1 = 4Yen, respectively. The exchange rate on December 31, 2031 id FC1 =
P40 and P1 = 3Yen. In the separate statement of financial position of Honda Phil. on
December 31, 2031.
16. What is the book value of accounts receivable and prepaid assets, respectively?
a. P30,000 and P2,000
b. P40,000 and P4,000
c. P40,000 and P2,000
d. P30,000 and P4,000

17. What is the book value of accounts receivable and prepaid asset, respectively, in the
consolidated statement of financial position of Honda Japan?
a. Y 120,000 and Y 6,000
b. Y 90,000 and Y 4,000
c. Y 120,000 and Y 8,000
d. Y 90,000 and Y 24,000

PROBLEM 10
A subsidiary of Darwin Inc.., a Philippine company, was located in a foreign country. The
functional currency of this subsidiary was the euro. The subsidiary acquired inventory on
credit on November 1, 2030, for 438,000 euro that was sold on January 17, 2031 for
569,400 euro. The subsidiary paid for the inventory on January 31, 2031. Currency
exchange rates between the dollar and the euro were as follows:

November 1, 2030 P0.19 = 1 euro

December 31, 2030 P0.20 = 1 euro
January 17, 2031 P0.22 = 1 euro
January 31, 2031 P0.23 = 1 euro
Average for 2031 P0.24 = 1 euro
18. What figure would have been reported for cost of goods sold on Peter’s consolidated
income statement at December 31, 2031?
a. P2,190,000 c. P2,305,263
b. P87,600 d. P83,220

19. What figure would have been reported for cost of goods sold on Porter’s consolidated
income statement at December 31, 2031?
a. P87,600 c. P1,825,000
b. P105,120 d. P96,360
Problem 11
Ivonne Inc., a Philippine Corporation, purchased an inventory items from the supplier in
Japan on November 5, 2030, for 100,000 yen when the spot rate was P0.4295. At
Ivonne’s December 31, 2030, the spot rate was P0.4245. On January 15, 2031, Ivonne
bought 100,000 yen at the spot rate of P0.4345 and paid the invoice.
20. How much should Ivonne report as part of net income for 2030 and 2031 as foreign
exchange transaction gain or loss?
Year 2030 Year 2031
a. 500 (1,000)
b. - (500)
c. (500) -
d. (1,000) 500

INSTRUCTION: In your google answer sheet write true if the statement is

correct and false if it is wrong, write in LOWER CASE ONLY. Thanks! 😊
1. The best definition for the direct quotes would be, “direct quotes measure is
how much domestic currency must be exchange to receive 1 foreign
currency”
2. The date of transaction is the date of recording the transaction in the books of
the company.
3. A bank dealing in a foreign currency tells you that the foreign currency will
buy you P0.75, the bank has given you a direct quote.
4. A Philippine entity purchases equipment from US company, the US Company
requires payment in US dollar. In this transaction, the dollar would be referred
as the purchasing currency.
5. The Company should record the foreign currency transaction initially at Spot
rate at the date of invoice.
6. Non- Monetary assets carried at historical cost would not result in an
exchange gain/loss after conversion.
7. If the exchange rates fluctuate significantly, the use of average rate for a
period is inappropriate on initial recognition.
8. According to PAS 21, a foreign operation is A foreign representative where
the activities are not an integral art of the parent.
9. Paz Corp, a Philippine company buys merchandise from a foreign company
denominated in Philippine peso, no foreign exchange gain or loss will result.
10. Jimms Corp., a Philippine company buys merchandise from a foreign
company denominated in foreign currency. If the foreign currency
depreciates, a foreign exchange loss will result.
11. When a Philippine Company purchases parts from a foreign company the
foreign currency appreciated in value relative to the Philippine peso.
12. The foreign currency transaction and non-monetary item measured at fair
value in a foreign currency shall be translated using the closing rate.
13. The foreign currency transaction non-monetary item measured in terms of
historical cost in a foreign currency shall be translated using the exchange
rate when the fair value was determined.
14. The opening net investment of the period needs to be restated at the
historical exchange rate.
15. A business purchases goods from a foreign supplier. In this transaction the
accounts payable is a non-monetary item and the inventory is a monetary
item.