The Professional CPA Review Schoo! me CN a) Reel evn TomeLe ‘email add: crc_ace@yahoo.com _ Baaulo Paves Rudel Bidg. V, Lower Mabini cor Diego Silang, Baguio City: 3/F GCAM Bidg. Monteverde St. Davao City ‘WF (074) 442-1440 / 0922-8499196 ‘© (082) 285-8905 / 0925-72723 ADVANCED FINANCIAL ACCOUNTING & REPORTING MAY 2018 BATCH JAN 30, 2018; 2:00PM — 4:30PM FIRST PRE-BOARD EXAMINATIONS. SET ”A INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer for each item by writing a SHADING corresponding to the letter of your choice on the answer sheet. 4. The following selected accounts appeared in the trial balance of Melrose Sales as of December 31, 2018. Debit Credit Installment Accounts Receivable ~ 2017 Pp 15,000 Installment Accounts Receivable - 2018 200,000 Inventory, December 31, 2017 70,000 Purchases 555,000 Repossessions 31000 58 000 Installment Sales ; Sales . 385,000 Unrealized Gross Profit - 2017 54,000 Additional information: as of December 31, 2017 Installment Accounts Receivable - 2016 as of December 31, 2017 P 135,000 Inventory of new and repossessed merchandise as of December 31,2018, 96,000 Gross profit percentage on regular sales during the year Repossession was made during the year. It was a 2017 sale, and the corresponding uncollected ‘account at the time of repossession was 7,800. . The total realized gross profit in 2018, net of loss on repossession is ‘A. P 130,380 B. P 201,000 Cc. P 244,200 D. 245,880 2. The following balance sheet was prepared for the X, Y and Z Partnership on March 31, 2048: Assets . siabiliti anit Cash P 25,000 Liabilities P 52,000 Other Assets 180,000 _ X, capital (40%) 40,000 Y,, capital (40%) 65,000 . ___ Z, capital (20%) 48,000 Total Assets 205,000 Total liabiities and capital F205,000 ‘The partnership is being liquidated by the ‘sale of assets in instaliments. The first sale of non-cash assets having @ book value of P 90,000 realizes P 50,000. Assume that each partner properly received some cash after the second sale of assets. The cash to be distributed amount to P 14,000 from the third sale of assets, and unsold assets with a P 6,000 book value remain. How should the P 14,000 be distributed to X, Y and Z respectively, A. P5600; P 6,500; P2,800 C. PO; P11,200; P 2,800 B. P5,000; P 5,000; P4,000 D. P5600; P 5,600; P 2,800 3. Partners Joy and Rachel have a profit and loss agreement with the following provisions: Salaries of P 30,000 and P 45,000 for Joy and Rachel respectively; a bonus to Joy of 10% of net income after Salaries and bonus; and interest of 10% on average capital balances of P 20,000 and P 35,000 for rea =a Rachel respectively. One-third of any remaining profits are allocated to Joy and the balance ‘achel 0 {if the partnership had net income of P 102,500, how much should be allocated A. P 44,250 B. P 47,500 Cc. P41,000 DP ar aadCRC-ACE/AFAR:: First Pre-board Exams - May 20! 4 Joseph. Bemard Company's creot rating Present value at December 31, 2017 of the three an for a loan of this type) is P 23,220. 18 batch ‘On December 31, 2017. Bemard Company should record unearned franchise fees of: ©. P 23,220 A. P50,000 8. P-30,000 5. CRC-ACE Corporation transfers merchandise above cost. The average gross margin on the C. P43,220 inventory from its home office to its branch at an amount transfers is 40 percent. At the beginning of the year, the branch held merchandise purchased from the home office in the amount of P 36,000. During the year, the home office made three shipments of in 64,000. and P 50,000. At the end of the yea home office at an amount of P 40,000. ventory to the branch at transfer prices of P 30,000, P 9, the branch had on hand inventory purchased from the What entry should the home office make to record Intracompany profit realized during the year? A. Unrealized intracompany profit Branch Income Summary 8. Unrealized intracompany Profit Branch Income Summary C. Branch income Summary Unrealized Intracompany Profit D. Investment in Branch Branch Income Summary ‘41,600 41,600 55,600 55,800 55,600 55,600 5,600 55,600 \tems 6 and 7 are based on the following information: Partial list of accounts from the trial balances of the ALIBABA Corporation, Branch A and Branch B at 6 7. 8. December 31, 2018 are as follows: Inventory, Jan 2018 Branch A Branch B Purchases Expenses Shipments from home office Home office Sales Shipments to Branch A ‘Shipments to Branch B Loadings in Branch Inventory - Jan 1 Additional information: Home Office BranchA - Branch B 34,000 8,800 100,000 - 81,000 - - 600,000 - - 420,000 35,000 38,000 - 68,200 41,800 94,000 75,000 500,000 150,000 120,000 73,700 46,200 1,300 Shipments to the branches are made at billed prices. Inventory on hand on December 31, 2018 — Home office - P 31,000; Branch A ~ P 7,260; Branch B - P 8,250. Combined cost of goods sold A. P601,900 B. P 503,000 C.. P.482,000 D. P 383,100 \dise inventory on the combined balance sheet as of December 31, 2018. tae " B. P 65,000 C. P 46,500 D. P 45,100 A. P68,400 On December 1, Philip Company opened was shipped. During t he month, adationl shipmer yhandise that was fh returned rere its inventory at P 18,500, which is from the fa branch in Cebu to which merchandise billed at P 30,000 shipments were made at billed prices of P 12,000. During defective and received credits of P 750 on the bu branct December f the month, the branch record returns. At the end of following sources: ‘Merchandi Merchandise a Total inventory ise acquired from home office at billed price quired from outsiders P 16,500 2,000 P- 48,500Page 3 A branch loss for December is calculated at P2,600. The home office has followed biting the branch at 20% above mercharehee cook coraseresct (ZCRO-ACH/AFAR: First Pre-board Exams - May 2018 batch Compute: 1) the balance of the allowance for overvaluation of branch inventory at December 31, Pefofe adjustments, and 2) the net income (oss) of the branch in so far as the home cfice is concerned; A. (1) P 4,126; (2) P(2,600) , ©. (1) P 7,000; (2) P1,525 B. (1) P 6.875; . (2) 1,525 - D. (1).P 6,875; (2) (P2,600) 8. . On March 1, 2016, Cameron Constniction Company was contracted to construct a townhouse for Wit ‘Company for a total contract price of P 8,400,000. The building was completed by October 31, 2018, The annual contract costs incurred, estimated costs to complete the contract, and billings for 2016, 2017 and 2018 are giving below: . 0 ‘ 2018 2017 2018 Contract cost incurred during the year 3,200,000 2,600,000 4,450,000 Estimated cost at completion 6,400,000 7,250,000 7,250,000 Billings during the year 3,200,000 3,600,000 1,700,000 The entry to record the recognized profit in 2018 includes a credit to: A. Construction revenue P 1,680,000 8. Construction in progress 230,000 C. Construetion revenue 1,700,000 D. Construction in Progress 1,450,000 10. Hilda, Irma, and Julie were partners with capital balances on January 2, 2018 of P 560,000, P 672,000, and P 496,000, respectively. Their profit and loss ratio is 3:5:2. On August 1, 2018, Hilda fetires from the partnership, On the date of retirement, the partnership net loss from January 2 is P 384,000; and the partners agreed to revalue inventories to P 296,000 (from the carrying amount of « P2720). The payment to Hilda in settlement of her interest is to be 5 P 454,800. Upon the retirement of Hitda, which of the following will result? A. Bonus to Irma of P 2,000 B. Bonus to Julie of P 800 C. Goodwill to Julie of P 2,800 D. _Inma’s capital is P 66,800 more than Julie's. 11. On September 2, 2018, Nino, Olan, and Pete formed a partnership investing cash of P 945,000, P 850.500, and P 264,600., respectively. The partners share profits and losses in the ratio of 3:2:2 and ‘on October 31, 2018 the firm has cash of P 63,000, other assets of P 2,992,500, and liabilities of P 1,612,800. On this date they decided to go out of business and sell all the assets for P 1,890,000. Pete has personal assets of P 94,500 that may, if necessary, be used to meet partnership obligations. Loss from operations was P 617,400. 3 How much should be distributed to Olan upon liquidation of the partnership? A. P 128,520 Cc. PO B. P 306,180 D. P 268,380 12. _E,J, and N agree to liquidate their consuiting practice as soon as possible after the close of business on July 31, 2018, The trial balance on that date shows the following account balances. Cash P 130,000 Accounts payable P 60,000 Accounts receivable 120,000. Loanto E 40,000 Furniture and fiures 350,000" E, capttal 200,000 . 3, capt 150,000 |, capital . = 150,000 5 800.000 600.000 ‘The partners share profits and losses 50%, 20%, and 30% to E, J, and N, respectively, after N is allowed a monthly salary of P 40,000. August transactions and events are as follows: 4. The accounts payable are paid. 2. Accounts receivable of P 80,000 are collected in full, N accepts accounts receivable with a face yalue and fait value of P 30,000 in partial satisfaction of his capital balance. The remaining ‘accounts receivable are written off as uncollectibie.Page 4 CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch 3. Furniture with a book value of P 250,000 is sold for P 160,000. 1 cage taken by J in 4, Fumiture with a book value of P 40,000 and an agreed upon fair v )- paitial settlement of his capital balance. The remaining furniture an¢ d fixtures are donated to Goodwill Industries. 5. Liquidation expenses of P 30,000 are paid. 6. Available cash is distributed to partners on August 31. partnership liquidation? fs from the How much of u's equity was recovered from rani Bec a eS A P 25,000 B. 51,000 sul, Hence, the partners have sadly concluded that 13. The N, R, and W Parthorship has not bean successful Hence, Ne DICT Nav Sees are. shared as operations must be terminated and their partners! untant placed in charge of this follows: N, 45 percent; R, 35 percent; and W, 20 percent. As the acco ae partnership, you have responsibility for the liquidation and distribution of assets. When you ass your responsibilities, the partnership balance sheet is as follows: e Cash P 180,000 Liabilities P 120,000 Other assets 540,000 Loan from N 180,000 . N, capital 60,000 R, capit 300,000. W, capital 60,000 Ez20.000 720,000 During the first two months of your duties, the following events occur: 1. Assets having a book value of P 400,000 are sold for P 120,000 cash. 2. Previously unrecorded liabilities of P 10,000 are recognized. 3. Before distributing available cash balances to creditors and partnérs, you conclude that a cash reserve of P 10,000 should be set aside for future potential expenses. 4. Remaining cash balances are distributed to creditors and partners. How much cash N should receive? A P.42,000 B. P 26,250 Cc. P31,875 D. * P 180,000 14, Edward-and Ferdinand are partners sharing profits at 60% and 40%, respectively. On January 1, Edward’ and Ferdinand «decided to admit Gerald as a new partner upon the investment of 8,000. On this date, their interests in the firm are as follows: Edward, P 11,500 and F, P 9,300. Assuming the new partner is given a 1/3 interest in the firm with bonus allowed to the new partner the New capital balances of Edward, Ferdinand and Gerald would be: Edward P11;500 P 12,480 P 41,520, P 10,540 pom> Ferdinand Gerald P9,300 P 8,000 P8320 8,000 P 7.680 9.600 P 8,660 P-9,600 Items 15 and 16 are based on the following: . Marcus and Wellington are partners with capital balances of P32,000 and P68,000, respectively July 1, 2018. Marcus has a 30% interest in profits and tosses. All assets of the partnenne eiak toe market value except as follows: Book value Market value Book value Market value Equipment P150,000 142,000 Building —-P274,000 P250,000 Inventory 43,000 50,000 Land 60,000 105,000 The partnership has decided to admit Kelly and Springer as new partners. Kelly contributes cash of P56,000 for a 20% interest in capital and a 30% interest in profits and losses. Springer contributes cash of P10,000 ‘and equipment with a fair market value of P50,000 for a 25% interest in capital and a 35% interest in profits and losses. Springer is also bringing special expertise and client contacts to the new partnership. 18. The capital balance of Marcus after Kelly and Springer's admission under the bonus method is: A. P40,775 8, P34,775 C. P38,000 D. P70,500Tan First Pre-board Exams - May 2018 batch 16. 7. 18. 19. Items Page 5 The method (bonus or goodwill) advantageous to Kelly and Springer and the total amount of advantage is: A. Bonus method for an advantage of P 2,055 B. Bonus method for an advantage of P 5,044 C. Bonus method for an advantage of P 12,750 D. Bonus method for an advantage of P 4,111. Congestions have always been a way of life most specially in Metro Manila. One way to decongest traffic and minimize use of gasoline is to phase out the internationally known jeepneys as well as ie use of dilapidated, smoke-belching and fully depreciated buses. To partially solve the problem as pea ‘as to motivate car owners to use public transportation, an underground monorail system simitar poe ‘of Hongkong was the solution. The system covered the stretch of the famous Edsa, Srp Ros a Boulevard to Bonifacio Monument and would go as far as the area of Malabon as weil as tevcias, & thickly populated fishermen’s village. The project covers several stages and was awarded Ne Sits contractors here and abroad. Competitive bids were held for stage one of the project. The bids Northem City Construction P§80 billion Hongkong Systems 392 billion , JJ Ram Construction Company 400 billion i bidder. However, the A project that undergoes competitive bid is normally awarded to the lowest Government reserves he right To eject any and al bits after caretul review ofthe track record ofthe bidders. Even though JJ Ram Construction Company had the second lowest bid. See eA project was awarded to them. The contract price was 400 billion pesos which was covered by 6 two year construction contract. The following data were available from the records for the years 2018: 2017 2018 (in billion of pesos) Costs incurred P 120 P216 Progress billings 400 300 Cash collections on bilings 98 304 Estimated costs to complete, 216 How much is the income from construction in 2018, using the cost to cost percentage of completion method? A. P41.143 billion —B._ P64 billion c. P22.857 ion D. P161.143 billion On July 1, 2017, BMW Motors sold a new car to WIR Enterprises for P 850,000. The car costs BMW P 650,625. WIR paid 25% cash down payment and received an P 60,000 trade-in allowance on an old car. The price balance will be paid in equal monthly installments. The monthly amortization amounts to P 30,000 inclusive of 12% interest on the unpaid amount of the obligation. The car traded in has a wholesale value of P 120,000 after reconditioning and repainting cost of P 22,500. After paying three (3) installments, the buyer was unable to continue paying so the car was subsequently repossessed. When reacquired, the car was appraised to have a fair value of P 300,000. How much is the realized gross profit on instaliment sales during the year? A. P-96,003 B. P91,623 C. P 20180,000 D. P 71,627 On January 1, 2018, Tom Bravo sells 20-acres of farmland for P8,000,000 taking in exchange a 10% interest-beating note. Tom Bravo purchased the farmland in 1984 at a cost of P5,000,000 ‘The note wil be paid in three instalments of P2,412,690 each December 31, 2018, 2012, and 2013. How much must be the deferred gross profit at the end of 2018 under the instalment method of revenue recognition? - . A. 1,000,000 B. P697,885 C. P637,462 0. 597,885, 20 and 21 are based on the following: A construction contractor has a fixed price contract for 10,000,000 to construct a building project. The contractors initial estimate of total contract costs i ‘the building. At the end of he first A , incl re estimate of total contract costs has stayed tw bare ee elem ce erent ‘The contractor determines the , Proportion that costs incurred for wax Coxe cton of the construction contract by reference to the ‘work performed to date bear to the estimated total costs.23. 24, 25. CRC-ACEVAFAR: First Pre-board Exams - May 2018 batch Page6 20. Determine the revenue, expenses and profit for the year 2018. Revenue " Expenses Profit Revenue Expenses Profit ‘A. 3,000,000 , P1,800,000 P1,200,000 C. 3,133,333 1,800,000 P1,333,333 B._ 3,200,000 ' P2000,000 P1,200,000 0D. 3,333,333 P2,000.000 P1,333,333 reference to 21. If the contractor-determines the stage of completion of the construction contract by independent surveys of work performed. At the end of 2018 the project was certified to be 28% complete Determine the revenue, expenses and profit for the year 2018. Sf Revenue” expences Proft Revenue Expenses Prof A. 2,800,000 1,600,000 P1,000,000 ¢. P2,900,000 1,800,000 PI, 120,000 B. P 2,800,000 2,000,000. P 800,000 D. 3,120,000 2,000,000 Pt,120,000 timated total 22. Building Corporation was contracted by Mr. E to construct 36 condominium units. The esti coat of construction was Pa9 miton’” Bulking bil cient at 120% of Total costs estimated "0 ete a project. Detals regarding the contract are given below coi Prot oe fc Estimated cost at completion Units Finished Costs incurred to date 2015 10 14,721,875 58,887,500 2016 18 36,286,250 58,825,000 2017 7 55,125,000 ? What is the realized gross profit during 2016 using the output measures? A. 2,975,000 C. 2,467,500 B. 2,380,000 D. 1,933,750 ster. The sale agreement signed on January 2, 2017 called 1g note of P20,000 payable in two annual payments representing the value of initiai franchise services rendered by Tweety. in addition, the agreement required the franchisee to pay 5% of its gross revenues to the franchisor; this was deemed sufficient to cover the cost and provide a reasonable profit margin on.continuing franchise services to be performed by franchisee. The restaurant opened early in 2017, and its sales for the year amounted to P500,000. The management of Sivester has estimated that they can borrow a loan of this type at the rate of 10%. The present value factor of an ordinary annuity at 10% for 2 periods is 1.7335, . Tweety should recognize total revenue from the franchise amounting to: ‘A. 77,000 C. 75,000 B. 74,069 » DL 72/338 Nancy, Franchisor entered into a franchise agreement with Kyle, Franchisee on July 1, 2018. The total franchise fee agreed upon if P550,000, of which P50,000 is payable upon signing and the balance is covered by a non-interest bearing note payable in four equal annual installments. It was agreed that the down payment is not refundable, notwithstanding lack of substantial performance by the franchisor. The direct franchise cost incurred was P325,000. Indirect franchise expense of P31,250 was also incurred. The management of Kyle has estimated that they can borrow a loan of this type at the rate of 12%. The franchise commenced operations on July 31, 2018. ‘Tweety sold a restaurant franchise to Silves for @ P30,000 down payment plus an interest bearing How much is the net income/(oss) to be reported? (use a PV factor of 3.04) A. 73,750 C. 119,750 B. 77,550 D. (15,240) On January 2, 2018, Mama signed an agreement to operate as a franchise of Papa for an initial franchise fee of 2,600,000 for 5 years. Of this amount, P500,000 was paid when the agreement was signed and the balance payable in four equat annual payments beginning on December 30,-2018, Mama signed an interest bearing note for the balance. Mama's rating indicated that it can borrow money at 24% for a loan of this type. Present value of an anfuity of 1 for 4 periods is 2.4, Assume that substantial services amounting to P255,000 had already been. rendered by Papa and that additional indirect franchise cost of P68,000 was also incurred If the collection of the note is not reasonably assured, what is the realized gross profit for the year 1, 2018? qa C. 2,245,000" B. 605,200 D. 1,448,0007 ORC-ACE/AFAR: First Pre-board Exams = Page 7 May 2018 batch 78 in folowing are the unadjusted tna! batances of Chip Corp end its branch on December 31, 2019 Home Office Branch Shipment to Branch 120,000 * ranch inventory allowan 39,960 Shipment from home oft 156,000 Purchases 56,580 Inventory Jan 1 21,840 Hei Dec 31 aie ey ales : 20,400 Expenses | The branch ending inventory acquired from the home office is P15,600 at biled price. The branch billed for merchandise shipments at 30% above cost. Calculate the overstatement or (understatement) of the branch's cost of sales. A. 36,360 C4740 B. 37,100 D. (21,840) 27. The following balances were taken from the partnership books of Des, Gra and Sya immediately before liquidation: Cash 20,000 Liabilities 25,000 Non-cash assets 90,000 Des, Capital (30%) 25,000 Gra, Capital (30%) 30,000 ‘Sya, Capital (40%) 30,000 Total 110,000_ Total 110,000 _ p Included in the amount of non-cash assets is an advance to Des worth P4,000 and also included in the amount of liabilties is an advance from Gra worth P3,000. f Gra receives P 15,000 in the first distribution, how much will Des receive? ‘A. 3,000 C.. 10,000 B. 5,000 oO 28. STONES Corporation was contracted to construct @ warehouse for a price of 13,600,000, Information below were provided by STONES: 2017 2018 2019 Cost incurred to date $,850,000 10,275,000 13,500,000 Estimated cost at completion 13,000,000 13,700,000 - How much is the realized gross profitioss during 20187 A. (370,000) C: 400,000 B. (100,000) D. 370,000 29. Presented below are the information taken from the books of IRON Corporation: 2019 2020 Installment sales . 1,500,000 1,875,000 Cost of instaliment sales 1,080,000 4,500,000 Installment accounts receivable at year end 2019 sales 960,000 440,000 2020 sales 680,000 What is the total deferred gross profit to be presented in the statement of financial position on year 2020 using cost recovery method? ‘A. 375,000 C. 385,000 B. 815,000 D. 10,000 The branch collected a home known to the home office,€RC-ACE/AFAI 31 32. 33. : Page 8 : First Pre-board Exams - May 2018 batch una Branch ©. The home office recorded the net income of Laguna Branch at 119,000. Lag See ise to home 0. Ara llevsaleriesteteneion P83,000 by the branch due to retumed merchandise office on December 28 which was in transitas of December 31. ing allocated E. On December 22, OMG Corporation sent a debit memo for PS. aC ea ait ‘expense to Laguna Branch, The branch journalized the said transaction o inadvertently recorded another entry two days before year-en of December 31, Determine the adjusted balance if the branch account in the home office books as 7A 06,500 ©. 116,500 B 111,100 D. 171,900 : The LAM. KO and TO share profits and losses aa follows: LAM. 20%, KO 30%, and KO 50%. hip’s Staternent of Financial Position is presente a LKT COMPANY. ‘Statement of Financial Position ‘As of December 31, 2018 ASSETS Liabilities and Equity Cash P_ 410,400 Liabilities Noncash Assets 2,028,600 Loan from'KO Lam, Capital Ko, Capital To, Capital Total Total The partners decided to liquidate on January 2, 2019. All partners are personally solvent except for Lam. If To received P236,250 for her interest how much were the noncash assets sold for? A. 476,100 ©. 1,512,000 : B. 516,600 D. 1,952,500 Because of their differences, Jessica, Matt and Danny November 40, 2018 Jessica, Matt and Danny have a pr y decided to liquidate :their partnership on partnership on December 31, 2017 reported P25,000; rofit ratio of 4:3:3. The'balance sheet of the P30,000 and P10,000 capital balances of the Hapiites, Debt ratio as of December 31, 2017 amounted to 20%. During the eleven months ended, fevenues reported amounted to P44,000; expenses incurred totaled P22,00%, snet cash flows amounted to 15,126 and liabilities increased by P28,750. a If Jessica wants to receive P27,600, wh: lat should be the selling price of the non-cash assets of the company on November 30, 20177 ¥ A. 91,875 + C 127,500 B. 94,225 D. 96,500 ‘The balance sheet of partners DES, PA and SITO are shown below: . OPS Partnership Balance Sheet December 31, 2018 Cash P 50,000 Liabitties P Non-cash assets 250,000 Des, Capital (60%) 100,000 Pa, Capital (25%) 75,000 Sito, Capital (25%) 45,000 TOTAL , P 300,000 TOTAL P 300,000 ‘On January 2019, certain non-cash assets were sold for a certain amount. Li uidation e) habiities of P4,000 and P25,000 were paid. Future liquidation expenses of PDO mn ontcpeted Be received P42,750 from the first distribution of available cash, How much is the cash received from the realization? A. 120,000 . C. 130,000 B, 140,000 D. 75,000oO q CRC-ACE/AFAR:_ First Pre-board Exams - May 2018 batch. Page 9 34. Assuming that on February 2019, the remaining non-cash assets were sold for P75,000 and liquidation expenses of P5,000 are paid, how much is the total cash received by Des from the two distributions of cash? . . A. 37,500 ©. 75,000 B. 73,000 D. 74,000 35. ANNA and BELL formed a partnership on. January 2, 2018. ANNA and BELL contributed capital of 350,000 and P50,000 respectively, They agreed to share profits and losses 80% and 20%, respectively. BELL is given a monthly salary of P5,000 and.a 15% bonus based on income before salaries, interest and bonus. Both partners are given an interest of 5% of beginning capital. The income statement for the year ended prepared by the company's bookkeeper is shown below: Net Sales 1,750,000 Cost of Sales 00,0008 Gross Profit‘ . P 350,000 Expenses (including salary, interest and bonus) ___286,000_ Net Income =P 64,000- ‘What is the amount of bonus to Bell in 20187 A. 25,412 c. 2,087 B. 18,783 D. -o- 36. A,B and C formed a partnership on January 1, 2018 and had the following initial investment: A P170,000 B 255,000 c 382,500 ‘The partnership agreement states that the profits and losses are to be shared equally by the partners after consideration is made for the following: * - Salaries allowed to partners: P102,000 for A, P81,600 for B and P61,200 for C. - Average partner's capital balances during the year shall be allowed 10%. Additional information: - On June 30, 2018, A invested an additional P102,000. - C withdrew P119,000 from the partnership on September 30, 2018. - Share in the remaining partnership profit was P8,500 for each partner. What is the total partnership capital on December 31, 20187 ‘A. 688,500 ©. 4,141,550 B. 816,000 D. 1,143,675 37. _ Following is the balance sheet of the WXYZ Partnership at March 34, 2018, whe be liquidated: |, when the partnership is to Cash 6,000 Liabilities 12,400 Other assets 126,000 W, loan 12.000 X, loan 14,400 Z, loan 9.600 W, Capital (25%) 46.200 X, Capital (25%) 12,000 Y, Capitat (25%) 37700 Z, Capital (25%) 17.700 During the month of April 2018, assets having book Liquidation expanses of Pa00 ore nara ving book value of P18,000 are sold at a loss of P2,400. ll as 7,200 of the liabilities. i '40 represents salary payable to Z and P160 represents salary eae " On April " mr 30, 2018, now much cash \yil be distributed to the partners? 0-8 8,000 B. 1,950 1950 1.950 1,950 Coe. 0- 1,850, 0 0 0 9,000 6.ne Page 10 (CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch 39. 40. 41. roentage of completion Com izes construction revenue and expenses using the per lat eet 8 wate Danny 2007, 'a single long-term project was started which continued in 2018. Inf the project was as follows: enon ce Bigg fhe A Receivable from ion contract =e 200,500 00.009 Construction expense 210,000 354.000 ‘Construction in Progress 244,000 eae Partial bilings on contract : ‘The profit to be recognized from the long-term construction coreract should amount to: 2017 2018 A. “44,000 ‘456,000 cc. 34,000 = 8. 44,000 200,000 D. 34,000 100, Items 39 and 40 are based on the following information: f December The income statement submitted by the Baguio Branch to the Home Office for the month oF 31, 2018 follows: Rg . | P-600,000 Cost of sales : . Inventory, December 1 P 80,000 ‘Shipments from Home Office 360,000 Loca! Purchases — 30.000 Total P 460,000 Inventory, December 31 100,000 ___._ 360,000_ Gross Margin P 240,000 Operating Expense 480,000 Net income for the month P_60,000) The branch inventories consisted of: 12/1/2018 42/34/2018 Merchandise from Home Office P 70,000 P 64,000 Local Purchases : 10,000 46,000 Total * P_ 80,000 P_ 100,000 After effecting the necessary adjustments, the Home Office ascertained the true net income of the branch to be 156,000. ‘ At what percentage of cost did the Home Office Bill the Branch for Merchandise sHipped to it? ~ A. 100% C. 140% s B. 120% . D. 150% ; What is balance of the Allowance for Overvaluation in the Branch inventory at December 31, 2018? A. 10,000 C. 24,000 B. 16,000 D. 34,000 Following is the income statement of DCU Branch in Davao City Company, for the six months periods ending June 30, 2018: Sales P 620,000 Cost of Sales at Shipments from Home Office P 550,000" Purchases 50,000 Total P 600,000 Inventory, June 30, 2018 ’ From Home Office P 75,000 From Purchases ——10,000_ 85,000 _515,000_ Gross Margin P 105,000 Expense ; ____85,000_ Net Income P_20,000 The Home Office ships merchandise to, and bills the Branch Office at 125% of cost. The rent of the Branch office for six months at a monthly rate of P1,000 was paid by the home. The Home Office net profit from its Branch Office in Davao City for the six (6) months ending June 30, 2018 is: ‘ A ‘ 14,000 . C. 126,000 B. 109000 D. 139,000/ CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch Eset 42, 43 44, 45, ROEL, JEK, and MIKE, a partnership formed on January 1, 2018 had the following initial investment: ROEL P 170,000 JEK 255,000 MIKE ‘ 382,000 ‘The partnership agreement states that the profits and losses are to be shared equally by the partne after consideration is made for the following: MIKE + Salaries allowed to partners: P102,000 for ROEL, P81,600 for JEK, and P61,200 for - Average partners’ capital balances during the year shall be allowed 10% Additional information: ~ On June 30, 2018, ROEL invested an additional P102,000 ~ MIKE withdrew P119,000 from the partnership on September 30,2018 + Share the remaining partnership- profit was P8,500 for each partner The total partnership capital on December 31, 2018 was: AL PP 688,500, cP 816,000 BP 1,141,550 0. =P 1,143,675 is to Following is the balance sheet of the ABCD Partnership at March 31, 2018, when the partnership beh “Cosh P 6,000 Liabilities 12,400 Other Assets 126,000. A, Loan 12,000 B. Loan 14,400 D, Loan 9,600 A, Capital - 25% 16,200 B, Capital - 25% 12,000 C, Capital - 25% 37,700 D, Capital - 25% 17,700 P2,400. During the month of April 2018, assets having @ book value of p18,000 are sold at a loss of P2, Liquidation senses sf PEDO are paid as well as P7,200 of the labiities, Of the liabilities shown in the balance sheet, P240 represents salary payable to D and P160 represents salary payable to D and 160 represents salary payable to C. On April 30, 2018 cash to be distributed to A, B,C, and D as follows: A B g DB A Pp -0- Pp -0- Pp -0- P 9,000 8 P 1,950 P 1,950 P 1,950 P 1,950 6. Pp -0- Pp -0- Pp -0- P 1,950 D. P'-0- Pp -0- P 9,000 Pp -0- OCTAGON Enterprise entered into construction agreement in 2017 that called for a contract price of P 9,600,000. At the beginning of 2018, a change order increase the initial contract price by P 480,000. In relation to the project, the following data were obtained: 2017 2018 Cost incurred to date P 4,920,000 P 8,640,000 . Estimated cost to complete 4,920,000 2,160,000 Billing made to date 5,280,000 870,000 Collections made to date 4,920,000 8,700,000 Compute the amount of construction in progress (net) ~ due from customers or progress billings (net) — due to customers for the year 2018: Percentage — of- Cost Recovery Method of completion Method Construction Accountin, P780,000 ~tiability P780,000 = fiability 780,000 ~ asset 780,000 asset 60,000 ~ liability 60,000 — jiability 636,000 ~ liability 636,000 ~ liability ich of the following statements is false? The preparation of combined statements necessitates the elimination of reciprocal accounts The recording of reported branch net income on the home office book: C$ rey eee presents a home office C. The procedures in reconciling the home office and br esser ranch income accounts ar i Same as that of the bank reconciliation statement DS ®>S com>CRC-ACE/AFAR:. First Pre-board Exams - May 2018 batch Page 12 D. While the branch financial statements may be prepared for internal reporting purposes, external accounting reports reflect the activities and practices of the company as a whole Items 46 and 47are based on the following information: his MCI Builders, inc. employs the cost-to-cost method in determining the percentage-of-completion fo revenue recognition. The company's records show the following information on a recently complet project for a contract price of PS,000,000. 2016 2017 2018 Cost incurred to date P 900,000 P 2,550,000 ep? Gross profit (oss) 100,000 ‘350,000 (60,000) 46. The estimated costs to complete the project at December 31, 2017: A. P 850,000 c.* P. 2,300,000 8 P _ 1,700,000 DB. P_ 2,550,000 47, The actual costs incurred during the year 2018 A P 2,550,000 ©. P 2,200,000 B. P. 2/300,000 D. P_ 2,050,000 48. The afterrclosing trial balances of the Brenda, Peter, and Timothy partnership at December 31, 2018 included the following accounts and balances: Fi Assets Cash: P 120,000 Accounts receivable ~ net 2 140,000 Loan to Timothy 20,000 Inventory - 200,000 Plant assets — net 200,000 Trademarks + 20,000 » Total debits . .700,000 Equities : ‘Accounts payable : P 150,000 Notes payable 100,000 © > Loan from Peter 10,000 Brenda capital (50%) 170,000 Peter capital (30%) 170,000 ‘ Timothy capital (20%) 100,009 Total credits P.z00.000 ‘The partnership is to be liquidated as soon as possible, and all available cash except for a P 10,000 contingency balance is to be distributed at the end of each month prior to the time that all assets are converted into cash. . During January 2018, P 100,000 was collected from accounts receivable, inventory items with a book «value of P80,000 were sold for P100,000, and available cash was distributed During February 2018, Brenda received piant assets with a book value of P60,000 and a fair value of 50,000 in partial settiement of her equity in the partnership. Also during February, the remaining inventory items were sold for P60,000, liquidation expenses of P2,000 were paid, and a liability of 8,000 was discovered. Cash was distributed on February 28. During March 2018, Brenda received plant assets were sold for P110,000 the remaining noncash assets were written off, final liquidation expenses of P5,000 were paid, and cash was distributed, The dissolution of the partnership was completed on March 31, 2018. The amount of cash to be received by Timber for the month of March: A Pp -0- Cc. P 29,000 B. P 23,000 DP. 60,000CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch Page 13 49, 50. REH Textile Company has a singlé branch in Zambales. On March 1, 2018 the home office accounting records included an Allowance for Overvaluation on Inventories - Zambales Branch Ledger account with @ credit balance of 32,000, During March, merchandise, costing P36,000 was shipped to the Zambales Branch and billed at a price representing a 40% mark up on the billed price: On March 31, 2018, the branch prepared an income statement indicating a net loss of P11,500 for March and ending inventories at billed prices of P25,000. What is the amount of adjustment for Allowance for Overvaluation on Inventories to reflect the true branch net income? A P39, 267 debit Cc, .P 39,333 debit B P 46,000 credit D. =P 46,000 debit DAVID and EMERALD entered into @ partnership as of March 1, 2018 by investing P125, 000 and P75, 000, respectively. They agreed EMERALD that DAVID, as the managing partner, was to receive a Salary of P30,000 per year and a bonus computed at 10% of the net profit after adjustment for the salary: the balance of the profit was to be distributed in the ratio of their original capital balances. On December 31, 2018, account balances were as follows: Cash P 70,000 Account payable P 60,000 Account receivable 67,000 DAVID, capital 125,000 Fur and fixtures 45,000 EMERALD, capital 75,000 Sales returns §,000 DAVID, drawing (20,000) Purchases 196,000 EMERALD, drawing (30,000) Operating expense 60,000, Sales 233,000 Inventories on December 31, 2018 were as follows: supplies, 2,500; merchandise P73,000, Prepaid insurance was P950 while occurred expenses were P1,550. Depreciation rate was 20% per year. The partner's capital balances on December 31, 2018, after closing the net profit and, drawing accounts, were: DAVID EMERALD DAVID EMERALD A. P135, 940 P47, 960 C. P139,680 P48,680 B, P139, 540 Pag, 860 D. 142,350 47,6703) = fe Se Le Oe The Professional CPA Review Schoo! ‘Main: 3F C. Vitaroman Bidg. 873 P. Campa St. cor Espana, Sampeloc, Manila ‘ (02) 735 8901 / 735 9031 / 0922 861 0191 ‘eral add: x pce@yehoo.com city Rudel Bldg. V, Lower Mabini cor Diego Sita yulo 3/F GCAM Bidg. Monteverde St. Davao (Or) ani | BeOS ‘@ (082) 285-8805 / 0925-7272223 . MAY 2018 BATCH TAXATION FIRST PRE-BOARD EXAMINATIONS SET A INSTRUCTIONS: Select the correct answer for eacl Mark only one answer for each item by writing a SHADING, corresP’ letter of your choice on the answer sheet. JAN 29, 2018; 2:00AM-4:30PM h of the following questions. jonding to the Which of the following statements is correct? a. Taxes can only be imposed to raise revenues. b. The State can not have the power of taxation Constitution expressly grants it so. c. The State can not actually tax anything a exercise of its taxing power. a. The provisions of taxatéon in tl not grants of power but rather limitations on the exerci unless the any time in the he Philippine Constitution are se of the taxing ‘powers, One of the characteristics of our internal revenue laws is that they are: , a. Penal in nature. b. Criminal in nature. c. Political in nature d., Generally prospective in application although the tax law may nevertheless operate retroactively provided it is clearly the legislative intent. . 3. The following are similarities of the inherent powers of police power, eminent domain, and taxation. Which one is not? a. Inherent in.the State. b. Exist independently of the Constitution. c. Interfere with private rights and property. -d. Inferior to- the non-impairment of obligations clduse of the Constitution. 4. The distinction of a tax from a permit or license fee is that in tax: a. Failure to pay makes the act or business illegal. b. Imposition may not only be on the right to exercise a privilege but also on persons’ and property. ¢, The amount imposed depends on whether the activity is useful or non-useful. d. The permit or license fee is a charge imposed under the taxing Power of the State for the purpose of regulations. : 5. The following are examples of an excise tax. a. Income taxes. b. Estate and.Donor’s taxes. ¢. VAT and other percentage taxes. Which one is not?PAGE 2 CRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2016 BATCH) 10., d. Real property taxes. personal exemption in income i the Congress enacted a law increasing oryiduals regardless of taxation to a uniform P50,000 for all i Status (whether single, head of a family, or married)and aaditions® exemption for each qualified dependent child (not exceeding a to P25,000. The law took effect on July 6, 2008. The Secretary Fe Finance shall allow the increased personal and additiona exemptions: a. & the effectivity of the, law; thus, the income tax was correspondingly reduced only for the second half of 2008 ae for the first half), rather than a full year tax relief to the taxpayers b. ne of the beginning of the year in which the law was passed by Congress as income taxes are computed on an annual, not semiannual, basis; thus, prorated application of the tax exemptions was void. Besides, there’ is a clear legislative intent of the law to grant full tax relief to the taxpayers. ©. As of the beginning of the succeeding calendar year. d. Only when Congress passes a law clearly stating the effectivity of the increases. Which of the following political subdivisions of the government, has no power of taxation? - a. Barrios. 5 - . Barangays, Municipalities, Provinces and Cities. ¢. Autonomous Region in Muslim Mindanao (ARMM). d. Cordilleras Autonomous Region (CAR). Which one of the following statements is correct? A tax. reform (like the TRAIN under the Duterte administration) at any given time underscores the fact that: a. Taxation is essentially a legislative function. b., Taxation is an inherent power of the State. ©. The State shall evolve a progressive system of taxation. d. Taxation is a power that is very broad. Which of the following statements is wrong? ‘a. Customs duty is a tax. b..Non-payment of a tax does not make the activity being taxed unlawful. c. A tax is a demand of sovereignty while a toll is a demand of property ownership. ‘ d. A grant of police power to a unit of local government ‘carries with it a grant ‘of the power'to tax. Statement 1. Inherent limitations on the power of “taxation | must give way to the constitutional limitations. Statement 2. Because the power of, taxation is inherent in the state the inherent limitations on the power of taxation always apply. a. Both statements are true. b. Both: statements are false,Ss. 4 CRC-ACE/TAXATION: “FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) . PAGES) s ¢. Statement 1 is true while statement 2 is false. d. Statement 1 is false while statement 2 is true. Gs ane A 11. Statement 1. pirect double taxation is allowed by the Philippine Constitution. spp Statement 2. Indirect double taxation is allowed by the Philippine Constitution. a. Both statements are correct. b. Both statements are incorrect. 2 is incorrect. Statement 1 is correct while statement c. ; Statement 2 is correct while statement 1 is incorrect. a. 12. Statement 1. A revenue regulation must not’ be contrary to the ts. provisions of the tax law that it implemen’ | Statement 2. A revenue regulation cannot expand the provisions of the law that’it implements by imposing a penalty when the tax itself that authorizes the revenue regulation does not impose 4 penalty. . a. Both.statements are correct. b. Both statements are incorrect. Statement i is correct while statement 2 is incorrect. c Statement 2 is correct while statement 1 is incorrect. a. 13.. A non-payment of a tax has a civil liability (payment of the tax) and a criminal liability (fine and/or imprisonment). Statement 1. A civil case has to be filed in court apart from a criminal case to be filed in'court. Statement 2. A case filed in the Court of Appeals covers both the - civil and criminal aspects of the tax case. a. Both statements are true. b. Both statements are false. c. Statement 1 is true but statement 2 is false. d. Statement 1 is false but. statement 2 is true. 14, One Chief Justice said that the power to tax involves the power to destroy while another Chief Justice maintains that the power to tax is not the power to destroy. Which among the following statements “does not reconcile the two seemingly inconsistent opinions? a. The power to tax could not be subject of compensation and set- off. b. An illegal tax could be judicially declared invalid and should not work to prejudice a taxpayer’s property. ¢. The first Chief Justice’s view refers to. a valid tax while the second Chief Justice’s view refers to an invalid tax. 7 d. The imposition of a valid tax could not be judicially restrained merely because it would prejudice a taxpayer's property. 15. This is an inherent limitation on the power of taxation: a."The rule of taxation shall be uniform and equitable. b. me law impairing the obligations of contracts shall be enacted c fe tax laws cannot appl. to tl 5 preenes a y he property of foreignCRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) 16. 17. 18. 19 20. a. PAGE 4 Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, and non-profit cemeteries, and all kinds of lands, buildings and improvements actually, directly and exclusively used for religious or charitable purposes shall be exempt from taxation. This is a constitutional limitation on the power of taxation: a. b. As b. The power of taxation cannot be delegated. hn No person shall be imprisoned for debt or non-payment of a po: tax. ; ; ‘ The power of taxation is limited to the territorial jurisdiction of the taxing State. te 4 Exemption from taxation of government instrumentalities an agencies through which the government exercises sovereign powers. regards a revenue bill, which of the following is incorrect? The President may recommend a revenue bill to Congress. The Senate may propose amendments if the bill originates from the House of Representatives. The House 6f Representatives may propose amendments if the bill originates from the Senate. A Senate version and a House of ‘Representatives version approved separately and then consolidated with both houses approving the consolidated version. . Which one of the following is not an intangible. personal property situated in the Philippines? . : Shares, obligations or bonds issued by a foreign corporation. Shares, obligations or bonds issued by a domestic corporation. Shares, obligations or bonds issued by.a foreign corporation 85% of the business of which is located in the Philippines. Shares, obligations or bonds issued by a foreign corporation if such shares, obligations or bonds have acquired business situs in the Philippines, Properties acquired by gratuitous title before the marriage and ‘brought into the marriage are classified as: I I a. b. a d. + Separate properties under conjugal partnership of gains. I. Separate properties under absolute community of properties. Only I is correct. Only II is correct Both I and II are correct Both I and IT are incorrect. One of the statements that follow is correct. Which is it? A deed of donation was executed by a Donor residing in Makati, in favor of a Donee residing jn Manila. The Donee executed a deed of acceptance in the city of Manila. .The donor’s tax return shall-be filed with ‘the Bureau of Internal Revenue Office: fal b. At the residence of the Donor. At the residence of the Donee.a leer 21. NNN SAAS (MAY 2018 BATCH) PAGES c. At the residence of peel of the Donor or the Donee, whichever the Donor d. Neither at the residence of th the Donee. ‘ @ Donor nor at the residence of With the consent of her husband and on account of their daughter's forthcoming marriage, Inday donated a conjugal real property to the daughter. The. zonal value of the property ig P1,500,000 but its market value per the tax declaration is P1,000,000. Unpaid mortgage on the. property is P300,000 and.the unpaid realty tax is P100,000 which were assumed by the donee-daughter. The taxable net gift of Inday is: a. P550,000 b. P540,000 P306,000 = d._P290,000 Numbers 22 to 24 are based on the following information: Dina Cabangon, a resident citizen, single, died leaving the following’ properties with their fair market value, charges and deduct ions: Property inherited 5% years ago with a . - P 1,400,000 fair market value of P1,000,000 when inherited Property: acquired through own labor 3,600, 000 Actual funeral expenses 240,000 Judicial expenses _ 200,000 Claims against the estate: Evidenced by a notarized loan agreement i 40,000 Evidenced by a promissory note (not notarized) 20,000 22, The Vanishing deduction is: 23 24. 25, a. None b. P181,600 c. P182,400 d. P364,800 . The taxable net estate is: a. P3,358,400 b. P3,377,600 c. P3,540,000 d. P3,560,000 Ignoring the éstate tax, the distributable net estate i ‘a. P3,536,000 b. P3,717,600 c. P4,500,000 d. P4,682,400 Statement 1. The property belongs to the heirs at the moment of death of the ancestor as completely as if the latter had executed and delivered to the former a deed'for the same before he died. Statement 2. The obligation to pay the estate tax arises as of the time of the decedent’s death. a. Both statements are correct. b. Both statements are incorrect. c. Statement 1 is correct but not statement 2. d. Statement 2 is correct but not statement 1. 26. A married decedent left the following: Exclusive property P 3,000,000 |Community property 5,000,000 xclusive deduc' 850,000 Community deductions 450,000 Among those included in the exclusive property were the following: a. A toyota avanza car which was received as gift 18 months before the death.of the present decedent. FMV date of donation, P500,000; FMV date of death, P400,000." CRCACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) PAGE6 b.A piece of residential lot inherited from the decedent’s father who predeceased, him 3% years ago. FMV at the time of inheritance was P800,000 (no mortgage indebtedness); FMV at the time of death of the present decedent is P900,000. The lot was mortgaged during the marriage for the benefit of the family for 300,000 which was paid by the decedent before he died. The vanishing deduction is: a. P435, 500 b. P469,000 c. P536,000 P636, 500 27. Which among the following reduces the gross estate (not the net estate) of a citizen of the Philippines’ decedent for estate taxation purposes? a. Property previously taxed. b. Transfer for public purpose. ©. Standard deduction of P1 million qd. Paraphernal property of the surviving spouse. 28. The following real properties were owned by a decedent head of family who was a Filipino citizen at the time of his death: Vacation house, USA P 2,000.000] | Beach house, La Union 1,500, 000 House and lot (family home), Bulacan 1,200,000 House and lot (dwelling place when in Metro Manila), Makati City 2,500,000 How much should be included in and deducted “from the gross estate? Amount as Gross Estate Amount _as Deduction a. P 5,200,000 . P 1,200,000 io b. 7,200,000 2,000, 000 e. 5,000,000 2,000,000 a. 7,200,000 1,000, 000 29. The decedent was a married man with following data: Exclusive properties a surviving spouse and the P 2,500,000 Conjugal real properties 5,000,000 Conjugal family home 1,500,000 Conjugal ordinary deductions: Funeral expenses P 200,000 Other deductions 1,200,000 Medical expenses 400,000 Additional information: a. 20% of the funeral expenses ‘were borne by the estate. . b. Other deductions include P200,000 judicial expenses incurred to settle the conflicting claims of the heirs. The taxable net estate is: a. P 2,650,000 b. P2,980,000 c. P3,180,000 d. P4, 080,000‘CRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) “PAGE7 30. : Under what case the estate tax return-shall be accompanied by a ‘atement duly certified to by an independent Certified Public Accountant (Cpa) 2 : a. In case where it shows a gross estate value of more than’ P2,000,000, : : P. IA case where it shows a goons peoencewaluelctir2/000).000\and) above, : ©: In case where it shows a gross estate value of P2,000,000 and below. . G. None of the choices. 31. Under what case is an estate tax return required to be filed? a. In all cases of transfers subject to the tax. b.In all cases regardless of the gross value of the estate where the estate consists of registered or tegistrable property. ¢-In all cases where although exempt from tax the gross value of the estate exceeds two hundred thousand pesos (P200,000). a. All of the choices. 32. When is the time for filing of the estate tax return? 33 34. 35. Continuing” No. 34, the amoun a. Two (2) years from the decedent’s death: b. Six (6) inonths from the decedent’s death. ¢. Two {2) months from the decedent’s death. a. Thirty (30) days from the decedent’s death. + Statement 1. The donor’s tax shall apply whether, the gift is direct or indirect, and whether the property is real or personal, tangible or intangible, even if the transfer is merely in trust. Statement 2. Renunciation by an heir including the surviving spouse of his/her share in the hereditary estate left by the decedent is exempt from donor’s tax even if done in favor of identified heir to. the: exclusion or, disadvantage of other co-heirs in the hereditary estate. a. Both statement are true b. Both statement are false c. Statement 1 is true but not statement 2 d. Statement 2 is true but not statement 1 Naty Gok, Filipina, has one year more to reach the compulsory retirement age of 65 years old as an employee of a private firm. Gnfortuhately, she met a fatal vehicular accident that caused her instantaneous death. She is survived by her husband and received P500,000 from Naty Gok’s employer as benefit under R.A 4917. The amount that must be included as part of Naty Gok’s gross estate is. a. None, exempt. b. P200,000 P250,000 4. P500;000 tt that must be claimed as a special deduction from Naty Gok's gross estate for the benefit received under R.A 4971 is: * a. None b. P200,000 P250,000 d.P500, 000CRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) PAGES 36. a7 38. Numbers 39 to 41 are based on the following information 39. 40. a. P3,000,000 b. P4,000,000 c. 41. Going back to No. 34 but assuming this time that Naty Gok was Single when she died, the amount that must be claimed as a special deduction from the gross estate arising from the benefit received under R.A. 4971 is a. None b. P200,000 c. P250,000 4. P500, 000 Referring again to No, 34, the taxable net estate arising from the retirement benefit received under R.A 4971 regardless of whether or not Naty Gok died as single or married is: . a. None b. 200,000 c. P250,000 — d. P500, 000 Statenen 1. In determining the situs of taxation, the subject matter of the tax is not to be considered at all. ‘ Statement 2. In gratuitous transfer of property, situs of taxation could be the taxpayer’s residence, citizenship or location of the Property. b. c. da. Both statements are correct. Both statements are incorrect. Statement 1 is correct but statement 2 is not. Statement 2 is correct but statement 1 is not. Donation of properties (with market values) follows: Land in Hongkong B 2,000,000 Land and building in the Philippines 3,000, 000 Shares of stock of a domestic corporation 1,000, 000 Shares of stock of a foreign corporation 800,000 Receivable from a friend (residing in the same country as that of the donor) 100, 000 Transfer inter vivos of property. in the country of the transferor: Consideration received, P180,000; fair market value of property at the time of transfer 400,000 Cancellation of indebtedness of a resident of the country where the transferor resides, * purely as an act of liberalit: aaa u 40,000 The gross gifts if the donor is a citizen or resident of the Philippines: a. P4,160,000 b. P5,160,000 P7,160,000 d. P7,340,000 The gross gifts if-the-donor is a non- resident, ‘not citizen of. the Philippine: . P5,800,000 d. P7,160,000 The gross gifts if the donor is a non-resident, ‘not citizen of the Philippines, and the reciprocity clause of the applies: a. P3,000,000 b.. P4,000,000 c. P5,800,000 estate tax law d. P7,160,000 \ SET A.‘CRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) PAGES Numbers 42 and 43 are based on the following information: Donations were made as follows: Cash in the Philippines to: Legitimate daughter, on account of marriage P. 300,000 Illegitimate son, on account of marriage 500,000 Legally adopted daughter, on account of marriage 9,500 Friend, on account of marriage 5 5,000 Catholic’ church, Philippines 50,000 Cash in the United States of America (USA). to: Recognized natural child 100,000 City of Baguio, on Philippine pesos 60,000 42. 43. 4a, 45. Land in Canada to: Legitimate son, on account of marriage, but son * to assume a mortgage on the land of P200,000 800,000 Deductions from the gross gifts if the donor is a citizen or resident of the Philippines: . ° a. P339,500 b. P349,500 c. P359,500.* d. P344,500 Deductions from the gross gift s if the donor is not a citizen and not a resident of the Philippines: a. P50,000 - b. P60,000 c. P110,000 d. P250,;000 Spouses Chito and Angie wanted to donate a parcel of land to their son Popoy who i's getting married in January 2013. The parcel of land has a zonal valuation of P420,000. What is the most efficient mode of donating the property? . a. Spread the donation over a period of 5 years with the spouses donating. P100,000 each year from 2013 to 2016 and P20,000 in 2017. . b. The spouses should each donate a P110,000 portion of the value of the property in 2013 then each should donate P100,000 in 2014. = c. The spouses should first donate in 2013 a portion of the property, valued at’ P20,000 then spread the P400,000 equally for 2014, 2015,2016 and-2017, d. The spouses should each donate a P100,000 portion of the value of the property in 2013, and another P100,000 each in 2019. Then in 2015, Angie should donate the remaining P20,000. Batman is a sole proprietor engaged in the distribution of various vanity products. During the year he sold a parcel land valued at P2,500,000 to his long time buddy, Robin, for. only. P1,500,000. The property was purchased by Batman two years ago at a cost of P1,200,000. The correct taxes due are: Donor’s Tax Capital gains tax Dst VAT a... P 0 P 150,000 P 37,500 P 0 b. 360, 000 90,000” 22,000 1,440,000 c. 450,000 72,000 18,000 180,000 a. 750,000 0 0 300,000CRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) 46. a. 48. 49, PAGE 10 Using the sane date in No. 45, only that Batman this time is a real estate dealer and the parcel of land sold is held for sale in the ordinary course of trade or business. The correct taxes due are: Donor’s tax Capital gains tax pst vat a ° P 150,000 P o- P ° b. 300,000 ° 37,500 300,000 c. 360,000 90,000 220,000 144,000 a. 450,000 72,000 18,000 180,000 The gross sales and/or receipts of someone who will be in the course of trade or business are expected to be coming from the ronth period: following sources in a 12 Day goods store P 1,500,000 Sale of gold to the BSP 419, 500 Passenger jeepneys for. hire 500,000 Which of the following statements is correct? a. The taxpayer is required to register for VAT because the basis for compulsory registration is the total gross sales and/or receipts of P2,419,500. b. The taxpayer may elect to register for VAT because the annual gross, sales and/or receipts as basis for optional registration amount to only P1,500,000. ©. The taxpayer may elect to register for VAT because the annual gross sales and/or receipts as basis for optional registration amount to only P1,919,500. a. The taxpayer is not required to register for VAT because the amount of annual gross sales and/or receipts has,no bearing in the optional or compulsory registration as VAT taxpayer. Statement 1. Excise tax is imposed on selected goods and articles of local manufacturers or importers, regardless of whether only a casual importer or one in the business of importation. Statement 2. Where an importation is subject to excise tax, the importer shall pay both the excise tax and the value-added tax (VAT) prior to the removal of the goods from customs custody. a. Both statements are true. b. Both statements are false. ‘c. Only statement 1 is true but not statement 2. d. Only statement 2 is true but not statement 1. The following data pertain to a value-added taxpayer for December, 2017: Sales, total invoice price Pi, 344, 000 Local, purchases from a VAT-registered supplier, tax not included 360,000 Importation of goods for sale with landed_cost_of 300,000 The value-added tax.payable for December is: a. P64,800 b. -P85,080 c. P100,080 d. P11s,080cre. I 7 4 11 CRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) PAGE 12 50. Sh. 52. 53. A ee seengred Cooperative with the CDA is requesting the BIR to conmoditice fn Payment of the VAT on its purchases of prime that it ig m VAT=registered domestic suppliers for the reason can enjoying exemption from all taxes under the Cooperative le of the Philippines. Statenent 1. The Cooperative is not subject to VAT because the tax s imposed by law on the seller and not on the buyer. Statement 2. the var component of any domestic purchase is not a tax on the Cooperative but a part of its purchase cost, hence, there is no tax to complain about. a. Both statements are correct. b. Both statements are incorrect. ¢- Statement 1 is correct while statement 2 is incorrect. d. Statement 2 is cofrect while statement 1 is incorrect. Who of the following is not considered in the course of trade or business and, therefore, not subject to the business taxes? a. Isolated service in the Philippines by a non-resident foreign person. b, Isolated sale of property for a gross selling price of P2,000,000. - economic ¢. Regular conduct or pursuit of a- commercial or an activity by a non-stock, non-profit private organization: a. Regular conduct or pursuit. of a commercial or an economic activity by a stock, for profit private organization. Statement 1. Every taxpayer not subject to VAT but subject to the excise tax or OPT shall register with the BIR as a non-VAT taxpayer and pay an annual registration fee of P500 for every. separate and distinct establishment where the business is conducted. Statement 2. Every taxpayer subject to the VAT shall register with the BIR as a VAT taxpayer and pay an annual registration fee of P1,000 for every separate and distinct establishment where the business is conducted. ; a. Both statements are true. b, Both statements are false. c. Only statement 1 is true but not statement 2. d. Only statement 2 is true but not statement 1. Consider the following: Bed spaces at a monthly rental ranging from P10,000 to P12,800 per bed space Sale of “inihaw na Bangus” at Dagupefia’s restaurant. Sale of fresh meat, fruit, fish and vegetables ‘in the public market. Sale of an inheritéd parcel of land to defray burial expenses of “somebody who died in the family. Statement 1. All of the above are subject to VAT. Statement 2. None of the above is subject to VAT. a. Both statements are correct. b, Both statements are incorrect. ¢. Only statement 1 is correct but not statement 2.CRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) 54. 55. 56. 57. PAGE 12 d. Only statement 2 is correct but not statement 1. Statement 1. A taxpayer who is in trade or business shall have his/her/its invoices or receipts registered with the BIR. If the taxpayer is a VAT or non-VAT taxpayer, such invoices or receipts shall clearly show that he/she it is a VAT or non-VAT taxpayer. Statement 2. The registration of any person as a VAT or non-VAT taxpayer. maybe cancelled if that person has ceased to carry an his/her/its trade or business and does not expect to recommence any trade or business within the next 12 months. a. Both statements are true. b. Both statements are false. ©, Statement 1 is true while statement 2 is false. d. Statement 2 is true while statement 1 is false. The following are data, VAT exclusive, of Magic. Appliance Center for the last quarter of 2017: Sales up to December 15 Purchases up to December 15 Importation of appliances for sale, with dutiable value ‘plus customs duties and other: legitimate charges while within the customs custody 150,000 Additional information: On December 16, 2017, Magic Appliance Center retired from .its business and the inventory (all from VAT-regigtered suppliers) valued at P190,000 was taken and transferred to New Era Appliance Center. There is a deferred input taxes from the third quarter of 2,500. . . P 300,000 200,000 How much is the VAT payable by Magic Appliance Center in its last quarter operations and its retirement from business? a.P 12,000 b. P12,300 cc. P10, 500 d. P14,300 A VAT-registered taxpayer had, the following sales (tax inclusive) ‘in the month: Cash sales ¢ P 224,000 Open account sales 392,000 Installment sales 168, 000 + Consignment sales: 0-30 days old (Consignee remittance, P112,000) 560, 000 31-60 days old 784,000 61 days old and above 896, 000 How much is the value-added tax on the sales for the month? a. © P180,000 b: P192,000. c. P201,600 — d._: 215,040 A VAT-registered practicing lawyer received P291,000 from a retainer medium-sized establishment client for services rendered. The. lawyer’s expected annual gross income has consistently been more than P720,000 (for creditable withholding tax purposes). The output tax included ‘in the Official Receipt issued is: a. P31,179 b. P34,235 co. P34,920 a. P36, 0004B CRC-ACE/TAXATION: F1 z RST PRE-BOARO EXAMS (MAY 2018 BATCH) . PAGE 13, 58. Statement ony verocraten get certain goods and services to senior citizens sales, ” = the transactions spe es, hence, the value-added tax on at , aa ement 2. Sales of certain goods and services to senior citizens exempt from value-added tax, hence, the value-added tax on the transactions is zero. 27 Both statements are wrong. + Both statements are correct. c. Statement 1 is correct while statement 2 is wrong. Gd. Statement 2 is correct while statement 1 is wrong. 59. The following aré the various VAT methods and system application. Which one is a contradiction? a. Tax credit method. b. Cost deduction method. S. Mixture of tax credit and cost deduction methods. d. Neither tax credit method nor cost, deduction method. 60. Which one of the “following is not among the characteristics or nature of VAT? a. An indirect tax. b. A percentage tax. c. A tax on property. d. A tax on consumption. 61. Taxpayer is a VAT-registered processor of fruits and canned sardines, Selling prices, VAT exclusive: . Processed fruits P 400,000 600,000 Processed sardines Purchase costs, VAT exclusive: * Fruits Fish Fruits, purchased from farmers P 60,000 Sardines (fresh "tamban") purchased from. fishermen P 40,000 Tomatoes purchased from farmers : 16,000 Olive oil purchased from processors of olive oil 12,000 Raw cane sugar purchased from millers 24,000 " Bottles 8,000 : Tin can containers 14,000 30,000 Paper labels 10,000 14,000 Cardboard for boxes 16,000 18,000 Hauling services of forwarders 9,000 20,000 The value-added tax payable i: a. P85, 080 + 96,280 c. P99, 800 d. P101,240 62. Taxpayer is a VAT-registered taxpayer. Data for the month of January 2017 (VAT not included) follow P 1,500,000 Sales of goods Sales of property: No. 1, purchased from non-vAT taxpayer 100,000 orr a. PAGE 14 CRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS (MAY 2018 BATCH) 63. 64, 65. 200,000 No. 2, purchased from VAT taxpayer 400,000 Purchases of goods from VAT suppliers Purchases of property from suppliers: No. 3, with useful life of 6 years . 900,000 No. 4, with useful life of 8 years 2,000,000 No. 5, with useful life of 3 years 1,500,000 VAT The value-added tax payable for the month is: c. P147,200 d. 157,200 a. P145,200 b. P147,000 : Analysis of the balances in selected accounts of a taxpayer, with VAT and non-VAT businesses is shown below. There were no inventories at the beginning and end of the taxable period. All amounts shown are VAT exclusive. Purchases, all from VAT suppliers P1, 600, 000 Export sales, VAT business 1,000,000 Export sales, non-VAT business 600,000 Domestic sales, VAT business 2,000,000 Domestic sales, non-VAT business 400,000 The net value-added tax payable (refundable) ‘for the taxable period is: a. (P48,000) b. P48, 000 €. (P96,000) d. P96,000 Sales in any preceding year never exceeded P1,919,500. Data in January, 2017, follow: Sales, any tax not included P 240,000 Purchases from VAT suppliers, VAT inclusive 44,800 . Inventory, all purchased = from VAT supplier. January 1, VAT inclusive 67,200 January 31, VAT exclusive 20,000 The taxpayer opted to be a VAT taxpayer beginning January of 2017. The value-added tax payable for January of 2017 is: a. P16, 224 b. P16,800 - ¢." P22,080 c. P22, 656 The taxpayer has both a VAT and non-VAT businesses with two sets of invoices. Sales, VAT not included of: vaT business, issuing VAT invoice P 500,000 Non-VAT, business, but issuing VAT invoice 100,000 Non-VAT business, issuing non-VA? invoice 200,000 Purchases of goods from VAT suppliers, VAT not included, for: VAT business 120,000 Non-VAT business. 110/000 Purchase of supplies for use of both VAT and non-VAT businesses from VAT suppliers, VAT not ; 5,000 included Other operating expense paid for: VAT business 300,000 50,000 Non-VAT business+ 18 CRC-ACE/TAXATION: FIRST PRE-BOARO EXAMS (MAY 2018 BATCH) PAGE AS The value-added tax payable is: a. 45,225 b. P45, 600 57,150 d. P57,600 , 66. 7 pontinuing Wo. 65 and assuming that there were no inventories a paing and end of the taxable period, the net income is: + P201, 650 b. P201,800 P214,850 d. P215,000 Numbers 67 to 70 are based on the following information: Domestic Export Sales to private entities P $00,000. P 500,000 Sales to the government 500,000 Sales of exempt goods 500,000 Input taxes passed on by VAT- registered suppliers on: Sales to private entities 30, 000 Sales to the government 25,000 20,000 Sales of exempt goods 10,000 Purchase of depreciable capital goods not attributable to any specific activity (monthly authorization for 120,000 60 months) government were subjected to the automatic The sales to the withholding tax (CWT) on its deduction of the 1% creditable Purchases from domestic suppliers. The input taxes attributable to export sales which may be refunded 67. or credited against any other internal revenue tax, including the value-added tax on domestic sales to private entities: a. P20,000 b. P30,000 €. P50,000 d. P60,000 68. What “is the treatment of the difference between the actual and standard input tax on sales to the government? a. Income b. Expense c. Input tax cxedit d. Capitalized cost 69. The journal entry to take up the domestic sales to the government wis: a. Cash or AR 560,000 Sales - 560,000 b. Cash or AR 560,000 Sales 500,000 Output. tax 60,000 c. Cash or AR 7 535,000 Final withholding VAT 25,000 Sales 500, 000 Output tax 60,000 d. Cash or AR 530, 000 Final withholding VAT 25,000 Creditable withholding tax 5,000 Sales "500,000 Output tax 60,000 SETA.CRC-ACE/TAXATION: FIRST PRE-BOARD EXAMS. (MAY 2018 BATCH) PAGE 16 70. The journal entry to recognize the difference between the actual and standard input tax on the sales to the government is:. a. Output tax 60,000 Income summary 20,000 Input tax 55,000 Final withholding vaT : 25,000 b. Output tax . 60,000 Input tax 15,000 Final withholding VAT 25,000 Income surimary 20,000 c. Output tax 60, 000 Input tax 55,000 Income summary 5,000 d. Output tax 60,000 Income summary 20,000 Input tax 55,000 VAT payable 25,000 rdm/reh“OO CRC-ACE The Professional CPA Review School Main: 36. Vilaroman Bidg. 873 P. Campa St. cor Espana, Sampsloc, Mania ‘® (02) 735 6901 / 735 9031 / 0922 661 019% rn Baguio ‘email add: cr_ace@yahoo.com Bldg. V, Lower Mabini cor Paveo Y Drege Siang, CGCAM Bldg. Monteverde St. Davao Cty © (074) 442-1440 one easeie OY (082) 285-8005 /O905-7272I22 REGULATORY FRAMEWORK FOR BUSINESS . TRANSACTIONS Max 2018 BATCH FIRST PRE-BOARD EXAMINATIONS JAN 30, 2018; 7:30AM-10:30AM SET A INSTRUCTIONS: Select the correct answer for each of the following GWestions. Mark only one answer for each item by writing’ a SHADING Corresponding to the letter of your choice on the answer sheet. Bl Waldo obliged himself to deliyer to Allan the following: 1): His HP Pavilion i8 Laptop 2) Ford Ranger car with plate number WAD 364 1 statement - In case Waldo failed to deliver the laptop, the court may compel him to deliver one 2 statement - In case Waldo failed to deliver the car, the court may compel him to deliver another car plus damages. A. True, true c. False, true B. True, false" De False, false 1" statement, - The receipt of a later installment of a debt without reservation as to prior installments, shall give rise to a conclusive Presumption. that such installments have been paid. 2m statement - The receipt of the installment shall give rise to a disputable presumption that the principal loan has been paid. A, True, true c. False, true B. True, false D. False, false Mr. ‘Reyes owes Mr. Cruz, P500,000.00 payable on, Jan. 31, 2018. Which of the following is correct? A. If Mr. Reyes dies before Jan., 31, 2018, Mr. Cruz cannot collect from the heirs of Mr. Reyes. If Mr. Reyes dies before Jan. 31, 2018 Mr. Cruz ‘can collect from the heirs.of Mr. Reyes C. If Mr. Cruz dies his heirs cannot recover from Mr. Reyes. D.° If both Mr. Reyes and Mr. Cruz die, the heirs of Mr. Cruz can collect from the heirs of Mr. Reyes. Kékoy obliged himself to give toBiboy his brand new fossil watch if the latter cannot make a circle that is at the same time a square. A. The obligation is unenforceable bécause the condition is immoral. B.. The obligation is void because of the positive impossible condition. ° C.* The obligation is valid’ because the impossible condition is negative. D. The obligation is void, not enforceable 3. Blex is obliged to deliver his only car to Bob on Jan. 31, 2018. Alex does not deliver, and on February-10, 2018, a typhoon destroys the car: A. Alex is not liabie becauge the obligation is extinguished B. Alex is liable because he is in delay €. Alex and Bob will divide ‘the loss equally D. Alex's obligation is converted into a monetary obligationX ‘CRC-ACE/RFBT: First Pre-board Exams —May 2618 Batch 6. Page 2 of 12 Angel owes Baldo P10,000. Later Angel paid Baldo P7,000 Leaving, 3 balance of P3,000. " Caloy, a suitor of Angel and intending to surprise Angel, paid Baldo the sum of P10,000 thinking that Angee still owed Baldo that amount. Caloy did this without knowledge o Angel. Which,is correct? A. Caloy can recover P10,000 from Angel B. Caloy can recover P10,00 from Baldo ©. Galoy cannot recover anything from Angel D. Caley can recover P3,000 from Angel When the thing improves pending the fulfillment of the suspensive condition with the expense of the ; debtor, the improvement shall inure to the benefit of: ~ A. the party who made the improvement B. partly by the debtor and partly by the creditor C. the debtor + D. the creditor May the suit filed by a passenger who was hurt against the operator of a public utility vehicle still prosper even if the driver was acquitted by the court? A. Yes, provided he can prove the negligence of the driver. B. No, this. will constitute double jeopardy which is violative of the Constitution C. No, the acquittal means that the guilt of the accused was not proven py proof beyond reasonable doubt D. Yes, it is sufficient for him to prove the existence of the contract of carriage and the injuries suffered. Andrew sold his Laptop for P20,000 to Bobby. There was no fixed date for the performance of the obligations of both parties. The obligation of the seller is: ; A. To wait for demand before delivering the laptop B, To deliver the laptop immediately as this. is a perfected contract. ©. To deliver the.laptop after receiving the payment. D. To rescind the contract 10. Apple promised to sell her house and lot in-Cebu to Bubbles if the 11, latter decides to live in Cebu. This obligation i: A. with casual condition and is therefore valid B. with suspensive potestative condition on the part of the debtor and is therefore void. €. with resolutory potestative condition on the part of the debtor and is therefore valid. ; D. with suspensive potestative condition on the part of the creditor and is therefore valid. Angel promised her dog to Baby on Jan 1, 2018 to be delivered on Feb 1, 2018. The dog gave birth to puppies while in possession of Angel. In this case: 1. Angel is entitled to the puppies as they were born while the dog is in her possession If the puppies were born on Feb. 1, 2018 or after, Baby is entitled to them If the puppies were born before Feb. 1, 2018, Angel is entitled to them , Bi Only, 1 and 2 are correct B, Only 1 and 3 are correct SETA“rspoard Exams ~May 2018 Batch Page 3 of 12 §: Qnly.2 and 3 are “ DP. Only 3 48 conrecp rect 12. Using th es Angel to pany> tS a8 given above, supposing the dog was sold by + Ani oe pe entitled to the puppies as they were born while the dog 2. Possession trfet, entitled to the puppies’ as the buyer is entitled to the AL boc. S#0™ Perfection of the contract of eale BL geet land 2 are true c. only 2 is true + Only 1 is true D. Both 1 and 2 are false 13. The condition that sone event happen at a determinate time shall Thaupithe Obligation as soon as the time expires or if it has become jnoubitable that the event will not take place. A. Extinguish Cc, Give rise to B. Suspend D.. Toll 14. Jane, Jean and Jenny are debtors of Jack, Jaq and Jak, in the amount 2 P900,000. sane’s obligation st 7 A. Pay Jack P300,000 ‘8. Pay Jack P100,000 ©. Pay gack’P 150,000 D. Pay Jack, Jaq and Jak P900,000 1S. Case No. 1. Henry promised to give his son a car if the son will marry Herlyn this year. If by the end of the year, Herlyn is already dead or the son has not married Herlyn, the obligation to give a car is effective and demandable. Case No.2. Henry promised to give his son a-car if the son will not marry Herlyn before the end of 2018. If on January-1, 2011, the son has not yet married Herlyn, or Herlyn has died, the obligation is extinguished. A. Both. statements are false. B. First false, second true. C. Both statements are true. D. First true, second false. 16. Which of the following statements is true? As: A condition always refers to the future, B. The debtor losses the right to the period if he does not give any security to the creditor. : The condition not to do an impossible thing does not render the obligation void. D. In alternative obligations the right to select which of the Prestation shall be delivered belongs to the creditor, unless expressly given to the debtor. 17. "do ut facias" means: : A. I give and you give C. I do and you give +B. I give and you do D. I do and you do 18. X, ¥ and Z solidarily owe A, B, C, D, joint creditors P30,000. . How much can A collect from xX? ' A. P7,500 only. . B, 5,000 only, ¢- P10,000, A in turn has. to give P2,500 each to B, C and D. D. P20,000, A in’ turn has to give PS,000 each to B, C and D,* CRC-ACE/RFBT: First Pre-board Exams ~May 2018 Batch 19. A and Bare jointly liable to deliver a particular car valued at P200,000 to C on Jan'17, 2018. Which is: correct? A. The prestation is indivisible making the liability of A and B solidary B. If on July 17, 2018, A is willing to deliver the car but B is not, C may enforce the obligation against A A is liable for a proportionate part of the obligation and will be liable also for damages if B is not ready to comply with his obligation, even if A is willing to deliver the car The liability of A and B is joint and that damages may be assessed only against the debtor who violated the obligation Page 4 of 12 20. 1* Statement - In delagacion, the insolvency of the new debtor can never revive the original debtor’s obligaticn. 2° Statement- In expromission, the insolvency of the new debtor may at times ‘revive the original debtor’s obligation A. True, true B. True, false Ci. False, true D. False, false 21. In Facultative obligations, if substitution has been made, which of the following is false? A. The obligation is extinguished B. The loss of the original prestation is immaterial C. The obligation is converted into a simple obligation D. The obligation ceases to be facultative 22. It presupposes not only that the obligor is able, ready and willing, but more so, in the act of performing his ‘obligation. ; A. Payment or performance C. Consignation B. Tender of payment D. Application of payment Facultative as distinguished from Alternative obligation 23. A. If it is impossible to give all except one, that last one must still be given. B. The right to choose may be given either to debtor or creditor C. Various things are due, but the giving of one is sufficient. D. If the principal obligation is void, there is no necessity of giving the substitute. 24. When does the buyer of a thing has the, right to the fruits of the thing bought? A.. From the time B. From Cc. From D. From the time the the fruits are delivered the obligation to deliver the thing bought arises the time the sale is perfected thing bought is delivered 25. A condition with, if imposed on an obligation will be disregarded will therefore make the obligation immediately demandable. and ke A. If Juan commits suicide C. If Juan kills Pedro B. If Juan passes the bar examination D. If Juan will not rise from the deadie 26. Aborrower wh. 27 28. rust vre-Doard Exams ~May 2018 Batch eee 0 uses intended, delays i the thing for a purpose different from that lends it to Serres return, receives the thing under appraisal, thing borr, Person, or saves his’ property instead of the because "©? Shall be liable even in case of fortuitous event, A. The a B. the Beer of the obligation requires the assumption of risk. Cl the jan 2eS Rave expressly stipulated such liability. D. SW expressly so provides, Time 18 of the essence. Ramon, Simon and Tonyo bound themselves solidarily to pay Pipoy the Poot. P291000.00. When the obligation became due and demandable. Pipoy Sued Ramon for the payment of the: P10,000.00. Ramon moved to Gismiss on the ground that there was failure to implead Simon and Tonyo who are indispensable parties. Will the motion to dismiss Prosper? why? A. Yes, because Simon and Tonyo should have been. impleaded as their obligation is solidary. B. No, because the creditor may proceed against any one of the Solidary debtors or some or all of them simultaneously. No, because a motion to dismiss is a prohibited pleading. D. Yes, because Simon-and Tonyo should also pay their share of the obligation. Berto, Cardo and Danny are solidarily debtors of Amado. Twelve (12) years after.the obligation became due and demandable. Berto paid Amado and later on asked for reimbursement of Cardo’s and Danny’s shares. Is Berto correct? Why? : A, No, because the obligation has already prescribed. B. Yes, because the obligation is solidary. C. No, because in solidary obligation any one of the solidary debtors can pay the entire debt. D. Yes, because Cardo and Danny will be unduly enriched at the expense of Berto. 29. Which of the following is not considered as quasi-contract? A. Solutio indebiti B, When in fact the manager has been tacitly authorized by the owner C. Negotiorum gestio D, Reimbursement due the person who saved from destruction the property during fire or storm without the knowledge of the owner 30. X-has been missing for some time leaving no one to manage his 31. RETA properties. A and B jointly took charge of the management thereof, However, due to the negligence of A, the properties of X were damaged. The liability therefore to X for damages shall be: A, only A shall be liable B, A and B are not liable C. both shall be jointly liable D. both shall be solidarily liable Statement I: It is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. Statement II: The ‘Civil Code characterize negligence as the omission of that diligence required by the nature of the obligation and corresponds with the circumstances’ of the persons, of the time and of the place.12 CRC-ACE/RFBT: First Pré-board Exams —May 2018 Batch : pee ect 32. 33. 34. 358) 36. 37. 38. - Only I is true + Only II is true + Both are true Both are false pow> ly in Statement I: In payment by cession the debtor is not necessarily i a state of financial difficulty. . an Statement II: In dacion en pago, the debtor is in a state of partis or relative insolvency. A. Only I is true c. Both are true B. Only II 4s true D. Both are false Mr. 2y, @ famous couturier bound himself to deliver to Ms. zhaza he party gown she is supposed to wear on the celebration of her 1 birthday on January 17, 2017. Mr. Zy failed to deliver therefore: A. there was no delay because he was not at fault B. there is delay already because he was in bad fait! C. ‘he has already incurred in delay D. there was no delay because there was no demand ai STATEMENT ~ The delivery to and acceptance by the creditor of a certified cashier's check produces payment of the debtor's obligation ant STATEMENT ~' Solidarity cannot exist if the creditors and the debtors are not bound in the same manner and by the same periods and conditions. A. Both statements are false + B. Both statements are true . C. 1% statement false, 2 statement true D. 1° statement is true, 2" statement false “I will’ begin supporting you from the time your father dies of aids" is an example of an obligation with: A. suspensive period B. resolutory period C. suspensive condition D. resolutory condition This is the accord or coincidence of the desires and intent of the parties to the contract upon the subject matter and the cause. + Reformation C. Performance s B. Consent D. Ratification Culpa contractual is different from cul) + In culpa aquiliana there is a “culpa contractual there is rione B. In culpa contractual the source of obli contract, in culpa aquiliana the source negligence of the defendant C. In culpa contractual the negligence is independent of a contract; in culpa aquiliana, incidental to the performance of ‘an obligation D. There is a negligent act or omission in culpa contractual and none in culpa aquiliana pa aquiliana in that: pre-existing obligation, while in gation is the breach of © of obligation ‘is the substantive and the negligence is Bert obliged himself to deliver to Bong the following: 1) a 2017 model Mitsubishi Pajero car colored metallic’ silver 2) his, mobile phone ‘