¢ ) ReSA / i ‘The Review Schoo! of Accountancy ‘BTel. No. 735-9807 & 734-3989 Advanced Financial Accounting & Reporting 09 April 2017 (Sunday) Final Pre-Board Examination 3:00 P.M. — 6:00 P.M. MULTIPLE CHOICE ENSERUCTIONS: Select the correct answer for each of the following , questions. Mark only one answer for each item by shading the box corresponding to the letter of your choice on the sheet provided. + _STRICTLY NO ERASURES ARE ALLOWED. Use pencil no. 2 only. 1. Certain balance sheet accounts of a foreign subsidiary of Rose Company have v been stated in Phi as 5 Stated [Eievent Rates | aiatorical Rates ceivable ® 220, 000 Accounts receivabte, 110,000 [Brepaid insurance 55,000 Goodwill a @5, 000 £470.00 i. The ubsidiary’s : - Tocal currency unit. what amount should Rose's balance sheet jnclude ‘for the preceding itens? a. P430,000—b. 435,000 @) P4490, 000 d. 450,000 II. ‘The subsidiary’s functional currency is peso. What total ancunt Rose's “palance sheet include for the preceding ites? Gi pt30,000°b. P495,000 . P440,009 4. P450,000 Roi-e; m-a Gc r-ar tle so tes gary D. None of the above i B partnership begins its first year with the following capital balances: , > & 9 Bee tee Peon eee ee Baxter, capital 80, 000 = : Cartwright,’ capital 100/000 es 8 arse Mbp & The articles of partnership stipulate that profits and losses be assigned in. the following manner * Each partner is allocated interest equal to,10 percent of the beginning Capital balance. e Baxter is allocated compensation of 220,000 per year. Any remaining profits and losses are allocated on a 3:3:4 basis, respectively. «Bach partner is allowed te withdaw up to PS,000 cash per year. Assuming that the net income is 36,000 and that each partner withdraws the maximum amount allowed, what iz the balance in Cartwright’s capital account at the end of that year? A. Fi0s,e00 €. 2106, 900 B. P106,200 p. R107, 490 3. Which choice correctly describes the following statements? Statement I:If an entity cannot distinguish the research phase from the development phase, it should treat an expenditure on a project as if it were inctrred in the research phase only and recognize an expense accordingly. ~ Statement 11:1f it is difficult to distinguish between a change in accounting estimate and 2 change in accounting policy, then the change is treated a5 a change in estimate and must be accounted for currently and prospectiveiy. ¥ Statement III:in rere circumstances, when a retirement benefit plan has attributes of both defined benefit plan and defined contribution plan, the plan ts deemed as a defined contribution plan. ~ a. Only statement I is false b. Only statement Ir is true c./ Only statement IIT is true d. only statement III is false ff The following are information regarding partnership business: I. A partnership has the following capital balances: Allen, capital 60,000 heY ReSA: The Review School of Accountancy Page 2 of 14 J FPA O06 b II. Rt year-end, the Cieco part Mteairta . Burns, capital 30,000 Costelio, capitol 50,000 Profits and 10 faze split as fo’ en (203), Burns (30%), ‘and Costello (504). Costeilo wants to leave the partnership and is. paid 100,000. from the business based on provisions in the articles ‘of partnership. If the partuersh:} uses the bonus method, what is the balance of Burns's capital account after ello withdraws? P27, 000 233, 000 d. 36,000 ronip has the following capital balances: £130,000: 3 Montana, Rice, 120,000. = Craig, capital €0,000 ” Taylor, capital 70,0007 % <5 Profits and losses are split ona 3:3:2:2 basis, respectively. Craig decides to. leave the partnersiip and is paid P90,000 fron the business Baced cn ubesurigienl Cecteestae: upeeement 1k crergeedvid wether is, tc be applied, what is the balance of Montana’s capital~account after Craig withdrams? com : a. P133,000 b.-P237, 500 P140,.605 P1245, 000 tsb ua None of the shove Ib-e 5. The following are infornaticn regarding a partnershie undergoing liquidation: z qT. 7. Whi A local partrership is liquidating and is currently reporting the following capital balances Angela, capital (592 share of Ali profits ard issses) P 19,000 Woodrow, capital (201) 12,000 Cassidy, capital (20!) (12,000) Cassidy has indicated thac 2 forthcoming contribution will cover the 712,000 deficit. flowever, the two remaining partners have asked to receive the P25,900 in cash that is presently available. How much of this money should each of the partners be given? a. Angela, P13,000; Woodzer, 212,009 b Angela, P11,400: Woodrow, P12,500 Woodrou, 13,000 75007 Weodrox, 12,500 A partnership has the fclloving balance sheet just before the final, Liguidation is to beg Cash #26,000 Liabilisies P 50,009 Taventory 31,900 capital (403) 18,000 Other. assets €2,000 _ ®aymond, capital (30%) 25,000 Darby, capital (30%) 26,000 Total : total, PiL9, 000 Liquidation expenses are estimated to be P12,000. ‘The other assets are sold fer P40,000. What distribution can be made to the partners? a. Pr0- to Art, ®1,500 ymoad, 12,500 to Darby. (Pi 22,293 te act, P1399 to Raymond, 24 ve Darby. %, P-0- to Art, PL,200 te Raymond, P2,800 to Darby. Gd. P600 to Art, P1,200 to Raymond, £2,200 to Derby eb -b G. I> bs tra Mone of the above following steps in the accounting cycle? =e; M-a 38 the correct otder of Step 1: Preparation of financial statements Step 2: Making closing ertries in the general journal Step 3: Posting Fransaction entries in the general ledger Step 4: Making reversing entries in the general journal 2,3/4/4 32.2.4 a : 2/4, 3d BAe ee eeeReSA: The Review Schoot of Accountancy Page 3 of 14 sj. Coats are assigned to the taint products by che markee yalMOPReERed, allocating joint costs fo the by-product, the market vaiue or reversal cost nethod is used. The tota! manufacturing costs for €Q,00) units were £172,000 during the quarter. Production and cost daua follo — fep | Vin” zest onite produced 5.000 4,000 1,000 Sales price per unit P59 P40 PS Further processing cost rer unit u Bie Selling ane adninteteative expcuee’eek awe > 46 2 oy Operating progit per uni 7 Ms 1. the. value ot(fes) deducted Fron the joint costs is: 25,000 a ©. P 60,000 7199,.000 Ay cits erin a B Be None of the avove 9. The following are information regarding parent and subsidiary: % I. Clark Company had the following” transactions with affiliated parties during 2003: Sates + ‘Sales of P60,00U to Dean, with 20,009 gross profit. Dean had P15,900 of this inventory on hand at yedP=@ma. Clark onns a GD interest in Dean and does now exer® significane snéluence. + Purchases of raw zaterials totaling P240,000 from Kent Corporation, a wholiy-cmned subsidiary. Kent's gross profit on the wale wes P49, 000. Clark haa 260,000 of this inventory renairing on December “31, 2008. Before eliminating entries, Clark had consolidated current sssets of 320,008. What amount shold Clark report in its December 31, 2008, consoladated batance shee* for current assets? a. 320,009 b. F917, 200 €. 308,000 4. P302, 090 71. Pax company. sunK603) of_sulcospts outstanding capital stock. on May 1, 7 Pag advanced “Sub P7C, 009 in cagk, which wes still outstanding 2c Decenber 31, 2008-WREE portion.of this advance should be eliminated “in the preparation ef the Fecenber 31, 2098 consol ideted balance sheet? ne 0.000. b. p42, 009 Gap O BOO uae 0. Ser eeemneneee ~Tiesea i - a i-d < ie apq1-4 D. None of the above 10. Which of the following shall be treated ax part of PRE (Property, Plant « Equipment) according to PAS intangipts assets? 3. Operating eystem b, Application softwa: c. Digitally stored database d. Outsourced online program 11. At the Inception of thd! le equivalent to 58% of the contra\ lease as a, Neither asset nor Liabiis: bl Asset put not liability ©. Asset and lisbility d, Expense Fe For equity-settled snare-based payment transactions, the entity shall measure the goods or services received and tne corresponding increase in equity: Stacenent I: Directly at fair value of the goods or service received Statement IZ: Indirectly, by teference to the fair value of the equity instruments granted, if the fair value of the goods or services received cannot be estimated reliably a. Only statement 1 is true b. Only statement IT is true Both statements I an are true 7 G. Neither of the staternts ts true ¢ contract, the lease term iz determined to be nomic life bf the leased property If the lease contains a bargain purchase option, the lessee should record the 13: Hartwell Company distribuiss the service ‘department overhead costs to producing departments and the following information for the month of January is presented as follous Maintenance Utilities Overhead costs incurred P18,700 P9,090 ‘Advanced Financial Accounting & Repoiting- Final Pre-Board Examination (BATCH 33) & nzbehelibe rk waned ReSAi the Revlon echiolat accents) Page 4 of 14 Services provided to: « ee a Maintenance «: 9 ae ewe ent eT : Utilities department “4 208 - —— aw Producing department A 303 30% Producing department B 408 60% Hartwell Company distribaces service department overhead costs based on the <€eClprocal metbes, what would be the formula to determine the total | maintenance costs? : A. Ws Pig,700 + 109 Ls M= p18, 700 4.300 4.40 4.408 BM =P 9,000 + <200 BM = £27,700 + /40R + 408 14. Which of the following ix its realization is v. a. As an asset be Disclose only © ks unearned revenue d. Research and development proper way to report a contingent ally certain? J. Pistahan Corporation (sa manutece fa single special product knows a3 B With che use of a Job-ordet coon systems ompany engaged in the production of “. Production costs are accumulated jg om 18D The following information is availanie as of June 1 : Work-in process. ee : P 10,720 Direct materials inventory... 48,600 In analyzing the job-order cost sheets, the records disclosed that the compositions of the worf-in-precess inventory on June i, 2012 were as follows: Direct materiais used. “PR 4,960 Direct labor (900 hours). re 4,500 Factory overhead applied. pice resi bio, 720 the following manvfacturing a Purchased direct materials centing 960,000, Direct labor worked 9,900 hours at P'S Ber hour ~ J : Factory overhead of © 2.50 per direct labor nour was applied to production. commmpnnppnmonepihguandacfaduse 2012, the follovng infersation nas gathered -n. conieg sei. ceome with the inventories: Inventory of work-in-precess se? : Direct matertals used. -P 12,960 LOwo Dizect labor i, 500 hours 7,500 (sis Factory overhead applied. .cyeteecrcre+ 31950 310 Paz 4 ne $1,000 = Na “Bye m7 visy occurred during the month of June 2008 A. P 142,560 1350 BP 118,380 $00 % ye X,Y, and Z, ‘a partnersh. January 1, had the following initial investnen a 2 i : ia --P 200, 00, ¥ x : 150, 000 45¢) goa EI i 225to0n The partnership agreement staves that the profits and losses are te be shared equally by the partners sfcer consideration is mada for the following: > Salaries allowed to partners: 60,009 for %, P48,000 for Y, and P36,00 for z. OA cig bactnaa! eagh tal cians raring Poet pein A sideweel @O addiecene! infocnat son: = 22 withdrew P7¢,004, fram the partnership on September 30, 2012. - Share the remaining partnership profat was P5,000 for each partner. bey oa nership net profit at December 32, 2012 before salaries, interests partners’ sare on the renainder@s>: ip ad ‘ROPE Ts wo Li Be 207, 750, B 17. What item appears first on Use statement of cash flows prepared using the direct. method? ee da Nee Ancome & «Advanced Financial Accounting & Reporting= Finai Pre-Board Examination (BATCH 33) &cv ~ ReSA: The Review Schoo! of Accountancy Page 5 of 14 b. Depreciation ¢. Retained earnings d. Cash receipts from customers December 31, 2010 and 201 Follor 20: P400, 000 | F500, 000 240,000K 350, 000 [wb instalinen: sales ey e ee Additional information: On Yanuary 5, 2012, an installment sales on 2010 was defaulted and th: Merchandise with an appraiscc value cf P5,000 was repossessed. Related installment receivable balance on January 5, 2012 was P8, 000. The balance of the beferred Gross Profit control’ing account at December 31, ne eee 76,000 G. #460, 090 B. P130,000 D. Pi90,000 > ¥9. Which of the following is ret listed under the “faithful representation” characteristic of financial information based on the Conceptual Framework of Financial Reporting? . a. Prudence ~ b. Neutrality ©. Completeness d. Freedom from error 20. Determine the true statement regarding IFRS when referred collectively. a. The term “1AS" generaily covers “IFRS” b. The term “IERS" generally cevers “1 c. The term YIAS" generally covers: “TERIC” d. The term “EFRIC” generally covers “IFRS” 21. Dividends in the form of none: asp Fairevalue of the assets assets are measured at tributed ‘ b.” Carrying amount of the aasets distributed &- Either the carrying ancunt or fair value of the assets distributed d. “Neither the carrying amount uor fair value of the assets distributed 22. The investor's interest income for @ pericd would be lowest if the bonds is purchased at a. In between interest payment dates b. At the face value of the bonds €. “A discount, d. A premium 23, Other than financial liabilities measured at fair value through profit or joss, how are financial liabilities stesequen a. Fair value if acceptable co “he entity “b. “Amortized east using the effective interest rate method. e, Bmortized cost using the stated interes: rate of the debt. d. The amount of undiscounted cash that would be required to settle the obligation at the end of the reporting period. measured undes DFRS? Lucille Inc. manufactures a product that gives rise to a by-product called iduen ine Seal cares wand ee ees Ce es of aac each unit, iucilie accounts for “ghon" sales first by deducting ee ee et ie re ee ae Sona oe ee oe. ELE ret lg gages acon cr am Gate ere BABE i Nera ere is eof Gear le akan A ae a0, O00 uspAceIVENe Saupstrel tag tere Set = dear ce eres (2d en “product sales and costs. 000 units of If Lucille changes its mechod of accounting for Rohon sales by showing the et amount as "other Income,” the’ gtfect on the gross margin would be: : be. 000 on eo A. PO FR P2000 Pe,09 Advanced Financial Accounting & Reporting Final Pre-Board Examination (BATCH 33) Kanlaon Corporation started opecaticne on January 7, 2010 selling home appliances and furniture sets both for cash and on instalinent basis. Data on the installment sales operaticns ot the company gathered far the years ending 150,000 b 30, gonad = ye aw Hee 76ReSA: The Review School of Accountancy Page 6 of 14 25. A lumber company produces two-by fuse and fomeiy-esghts as joint products and saws as a by-oroat The packaged sawdus} can be sold for per pound. Packaging costs tor che sawdust are Pet pound and sales commissions axe @) of sales price. The by-product net revenue serves to Xeduce joint proc&ssing costs for joint products. Joint products are assigned jeint cests based.on board fewt. Data follows: U Joint processing costs . ee P -50,0004207 Two-by-fours produced roard feet)... é 200, 000 Foar-by-eights produced ipcard feet)... . ‘ 199,000 * Sawdust produced (pounds). , 6 +1 + 1s se 1, 000%2.9 215 HA = 209 What is the G5pt assigned fours? 0 2m: 2x Get A. P32, 000 BS. P32,133 De P33, 333 26. The following information summarizes the standard cest for producing one metal. tennis racket. frame. In addizion, the variances for one month* production are given. Assume tnat ali inventery accounts have zero balances at the beginning of the mnths Standard Cost Standard Monthly Ber Unit ___ Costs Materials ¥ 4.00 F_§, 400 : Direct labor 2 hrs 5.26 26,920 Factory overhead yy Variable 1.99 3,780 Fixed 5100 10, 500 Variances: Mate 1.75 unfavorable 0.00 unfavorable labor tate, “DG unfavorable Labor efficiency, P2,080.00 unfavorable What were the actual direct laber hours worked during the month? A. 5,000 4,000 4,800 2,400 27. Using the same informecicn in' Nc. 26, what were the actual quantities of uy materials used during tle month? Son 2n5by 2. aeen 2, 100 d. 1,97: Items 28 and 29 are based ou the following information: Presented belox ia the unadjusted trial balance of Sterling Products Corporation. ie Desenber 31, 2010 [Gash Inventory, 12/ ‘Other assets Recounts payable #50, 000 Daeeatisee gcoee 10,000 inigatived grees peorit 36000 Unrealized yross peotit == "99. 600 capital stock si 600, 000 [Retained earnings ‘in_on Fepossession | Qpexating expenses Total Shicbsoraas 3 sz.000 | —Fsaa, oo Coat of goods sold had been uniform over the years at 60% of sales. Sterling Products Corporati: installment sales, the cozpor and credits inventory gross p: adopts perpetital inventory procedures) On taen stallment accounts receivable Repossessions of merchan’ customers’ failure to’ pay maturing ins transactions were sumsarized a5 follows: ise have been made during 2010 due to some aliments. Analyses of these Inventory. Eb iia 74509 ‘ Onréalized gross profi, 200%,.iwe we 800 Y Unrealized gross profit, 2908.00 2,400 Installment Accounts Receivable - 2008 2,000 Installment. Accounts Receivable ~ 2009... 6,090 % Gain on repossessien = 2,700 "aevanced Financial Accounting & Reporting Final Pre Board Examination (BATCH 33)a ReSA: The Review School of Accountancy Page 7 of 14 ~ The repossessed merchand:. © unsold at Secember 33, 2010. It was ascertained that they were booked upon repossession at original costs, A fair Valuation of these items would be a sale price of ‘the reposseased merchandise at P10/000 after incurring costs $f reconditioning of 25,000 and cost to @ispose them in the market at F500: 3 Realized gross profit on 2010 sates wast A. B44, 0007 ©. ¥iz4,c00 B. P56, 000 . 136,000 29. Gain/loss on repessesaion vas A. 2200 loss <1 P30? logs Be 200 gain P300 gain 30, The joint venture accounts in the books of the’ venturers (participants) M,N and 0, show the balances below, upon rermination of the joint venture and distribution of the : SRD ahi fined ascent of the Seitz veicixe wS1 vamiite papente aa lice {A © pays P900 to M and P750 to ae 31, For | emall and medium entities, “SIRE may urder certain conditions’ replace Which two (2) financial etatenents? yp a. Balance Sheet and Income Statement bs Balance Sheet and Statement ‘of Comprehensive Income Gi Income Statement “and Statement of Changes in Equity d- "Statement of Conprenensive Trcome and S$eatement cf Changes in Equity — Dh The Moor te Beccese actouht ok, Ge Malinch Coepony hich vess ¢ Joo otaee cost system feliows: ors 00a: es April 1 balance 5,000 | Finished goods Pi25,450 4s {a0 me Direct materials 50/960 | aera Direct labor 40,000 | ae Overhead appied 30,000 ta} m0) Meresed ss apgisg so geome UWS: 4 pledeccimined rate. based on dsrect He ethers cote wien edo ee ne oe Lng 456, which has been charged with dizect laor ecst of £3,000 and Sob me which has been charged with applied overhead of E,dig™ To Bn The cost of direct mteriala charged to Job Nos. 456 and 769 amounted to: 2. Pa, 200 con ey F130 789 B. P4,500 Pa, 700 age 33, The Natural ‘Company acquired €o%)or The Loco. Company for a consideration b transferred of millien. The considerstion’ was estimated to include a control prenitm 6f P24 million. ioco’s net assets were P85 million at the acquisition date. Ake the toliowing statements true or false, according te PERS} Business combinations? @) Goedwill should’ be menoured at P32\ million if the nen-contrel!: interest is measured at ite share of facal's net assers (2) Goodwill “shoeld be yeaspred at P3¢\ million. if the interest is meas fair value. 7 cement (2) Statement (1) Stavement (2) Faise es True False 80 tre De true True A mes} Company acuuired st in tho ian Compan) tor Fi420, ovob fair vaine of durtifiable asgeta and liabilittes Was} ) Moon acguiced 0 (650 snares tm The Gagan) Company” for to00, oak” fair value of ‘emet's identifidbie’ assets and liabilities ‘was ass Moon measures non controlling interests at the relevant share of MIs the Identifiable net assets a: tne acquisition date. Neither swan nor Hones \reyye had any centangent isabiit the acquisition date and the above fair values were the sane an the g amounts in their. financial statements hon-controlling Advanced Financial Accounting & Reporting Final Pre-Board Examination (BATCH 33) &ReSA: The Review School of Accountancy Page 8 of 14 Annual Smpairment reviews have not restlted in any impaizment losses being recognized Under PFRS 3 Business combinations, what figures in respect of goodwill and ef gains on bargain purchases should be included in Mcon's consolidated statement of ‘financial position? A. Goodwijl; P580,009; Gains on rhe bargain purchases: P116,000< B. Goodwill: Nil Or zero; Gains on the bargain purchases: P116,000 + Goodwill: Nil or zero Gaing on the burgain purchases: Nil or zero D. Goodwitl: P580,900; Gains on ‘the bargain purchases: Nil or zero Reihsenk Gants aaa pam ta Tntenig Cae” sont ean 2,000 shail be paid to partners A & cy respectively. Ria eae Assuming a net income of Pad,G00 for the year, the total profit sflare of partner C was: G:\0L(44o0-6) es iene: he P 7,800 = aR- wT of vi, 400 Zee » B. P1E, 800 = c. 219,800 s i OS @ 6 Rou 8 oF Ttems 36 and 37 are based on the following information: The income statement submitted by the Pampanga Branch te the Home Office for the month of December, 20iU is shown below. After effecting the necessary adjustments the true net incone of the Branch was ascertained to be PJS6.000. Sales oe P 600,000 Cost of sales: Enventory, DOCEMbEZ Leewnes wn P 80,009 Shipments from Home Of 6168 cm. 350,000 Boe al Purchase emma Total available for salen. won £460,000 Inventory, December 21. 109,000° "360,000 GLOSS MALGLD soonmmnrns vine tte 240,000 ie a operating’ Net income The, branch inventories were: 20, 12/01/2010 12/31/2019 Merchandise from home office. 70,900 P 84,000 Local purchase since ie 16,009 26,000 Total .. es £80,000 “ p109, 060 . The billing price based on cost imposed by che home office to the branch, 1403 ce. 408 2008 D., 298 37. The balance of allowance for evervalvation of branch December 21, 2008 after 8 adjustment. A. P10,000 P16, 000 B. P24, 000 * ‘B. Wone of the above The parthers of the Mit Party ip stare ed liguidating their business on. uly 1, 2019, at which time the parcners were sharing profits and losses 40% , to M and 608 to N. The bala: sheet of the partnership appeared as follows: ei Labitietes ¢ | U Beaten) | tank a, $00" Haugounes Pavesi » 32,400 Receivable £91,000 Inventery 1400 25, 600 Equipment P65,200 P33, 200 Accumulated 200 33, 000 Depreciation _ 34,400 14,090 Total 2105, F105, 005 During the month of July, the paxtuers collected Gap of the receivables with no loss. ‘The partners also seid daring Phe month the entize. inventory on tt they realized « tocal of £32,190. Botan Bone mart'oe tI ceee SAE cae ou on vuly 34, 20107 A. P25, 600 2329 B. P 5,400 FO “Advanced Financial Accounting & Reporting- Final Pre-Board Examination (BATCH 33) &~ ReSA: The Review School of Accountancy Page 9 of 14 Fae Potiemne tate installment bepiss ain to. Matiisin c mpany which sells appliances on an [ae B00 “2010 F420, 000 | F460, 000 343, coo] 299-000 2010 F 320,000 Rept ring 2010, as foLiow: repossi The total’ rea: 2010 sales was: AL PB 9,360 co. F 46,600 Be P62, 000 + PL67, 960 40. The net gain (Joss; on repossession on defaulted sales of 2009 and 2010 was: g A. B 500 2: 2 800 A B. B(800) be PA, 400) Pasig Garment Company operates = branch in Cabanatuan City. at the end of the year, the Branch account in the Locks of the hone office at Manila shows a balance of P150,900. The, following information are ascertained: 1. The hone office has billed the branch the amount of 737,500 for the merchandise, which was in transit on Decenber 2 A hone office accounts receivable for 210,500 was collected by the branch. Said collection was nct reported to che home aftice by the branch. 3. Supplies of Pi,500 was returned by the branch to the nome office but the home office has not yei reflected in its records the receipt of the supplies. 4. The branch made profit of 010; 100 for the month~of-December-but™the-home! ffice erroneously recorded it ag £11,190. : The branch has not. received the cash in the amount, of P25,000 sent by home office en Yecenbe= #1, This was chargea to General Expense account. All transactions are presumed +o have been properly recorded. What is the balance of the of December 31, before aa) a. Pl21, 920 1, 420) B. 2123, 009 Pins, D a2. wnat, is the adjusted balance of ghe rec A. P 96,620 AS pir? 26) B. Pave, 920 + PL79, 320 43. The Carly Company owns 754 v from their separate financial ive account on the books of the branch as he following figures are fr Garly: Trade receivables 21,040,000, Halley: Trade receivables 221,009, in ueluding 30,000 due from Hi uding P40,000 due from Carly. According to PAS 27 Consvlidated and Separate financial statements, what figure should appear for trade receivables in Carly's consolidated statement of financial position? A. PI, 215,000 G. Fiy285, 090 A» P1,225, 000 Bi, 265, 000 44, the white company acquires an 6) intesest in the Pulley Company when Pulley's eguley comprised share Sipital of 100,000 and retained eurainay of 7500, 000. Pulley" current. statenent af| financial position shows ehase capital 9f P100,000, 2 revaluation feserve of €400,000 ‘and retainea earmiogs ca of Pi490,000. Under PAS 27 Consolidated and separate financial atatements, what figure in respect of Pulley's retained earnings should be included in the consolidated A. P 720,006 B. Pi, 440,000 ‘Advanced Financial Accounting & Repos ting- Final Pre-Board Examination (BATCH 33) &ReSA: The Review School of Accountancy Page 10 of 14 45. The ‘Shipes Company ow accounting pericd Geni At the Genie Compeny. On the last day of the ‘te Snipes @non-current asset for @200,0002 ‘he asset originally. cost P30G,000Sand at the end of the reporting period its carrying amount in Genie‘ cocks was PI60,000. The group's consolidated statement of financial position has been drafted without any adjustments in relation to this ron-current asset. B Under PAS2? Consolidated and separave financial statements, what adjustments should be made to che consclidated statement of financial position figures for non d @axnings? current assets and x Non-cvrrent assets Retained wa: ancrease by P300, 000 tnerease by P195,009 Reduce by P40; 000 Reduce by P26, 000 ©. Reduce by P40, 000 Reduce by P40, 000 B. Increase by P200,000 Tnerease by P300, 000 Ye Bonifacie contractors had a snyear P900,000. The comeany uses the percentage-of-completion method for financial statement purposes. Incone co be recognized each year is based on the ratio D af cost incurred to total estimated cost to complete the contract. Data on this, Gentine eel ieen contract in 2012. for Accounts receivable - constzuct:en contract billings 49,000 Construction in progress. less: Amounts billed...... 10% retention. 9,375 Net income recognized in 2012 {before tax}... 18,000 Bonifacio Contractors mainaire a separate bank account for each construction contract. Sank deposits to this contract amounted to P59, 000. What was the estimated Ectal-tecons -befere tax bn this contract? A. 243,000. ©, P135,000 B, 294,000 1 plad, 000A The Lakers Company owns 75? of last day of the accou ne Viking Company. On Decesber 31, 2012, the Vikings sol@ to Lgkers a noncurrent asset ja for 200,000. ea crigi®s! code wee 950,000 and on December Ji 2012. itsearrying amount in Viking's Locke sas Pl6t,000. The group's consolidated Statement of financial positicn has een drafted without any adjustments in Felavion ta this ns “current asset. Under PAS 27 Consolidated end separate financial statements, what adjustments should be made to the iigated statement of financial position figures for retained earnings end non-controlling interest? ins Pee aide 494 Ye Vizgst Company nos Ge ct the wig company. om Ovcenber 31,2012) ine Last day of the accounting erica, Virgil sold to Migu a noncurrent asset for The asset's original cost wasP7,50Q and on December 31, 2012 its b Sattying amcunt in Virgil's beoks ‘Sar @PEQD) The group's consolidated Dedvadeues oe einanetar' pastel an eta lbeenl drakrhd ithaue any cetliukendncs' ie relation to this non-current asset. Under PAS2? Consolidated atid separate financial statements, what adjustments should be made to the consclidsted statement of financial position figures for non-current assets and non-cntroilang interest? shsatcrart “aunts wee doneaa ling Batevest pee Re eri asge Te (B. Reduce by P200 No ¢Ghange orate pepe Bee aati Pee re mene ge On eee al UO eee ee poo age Mie ueecirie Ge Pee ee Ger nt reign va cok etary 1, 2012 The Muldon Company acquired 100% of Roel and estimated the fair value of the equipment at P460,000, with » remaining life of 5 years. this fair value was not incorporated into Poel’s boos and the depreciation expense continued to be calcwlated by reference to original cost “Advanced Financial Accounting & Reporting. Final Pre-Baard Examination (BATCH 33)__ ReSA: The Review School of Accountancy Page 11 of 14 ~.* Under PAS 27 Consolidated and separate financial statements, what adjustments should be made to the depreciation expense for the year and the statement of financial position cerrying amount in preparing the consolidated financial statements for the year ended Derenber 21, 20137 spreciation expenge A. Increase by 8,000 B. Increase by P2,000 C. Decrease by P8,900 Increase D. Decrease by P8,000 Secrease by : to be included in the cost of 50. Which of the following is LEAST lixe?; cinventory> —~ = a. Freight tn 2 b. cost to store goods ©. Purchase cost of goods d@ Excise tax on gosds purchased Items 51 and 52 are based on tha following information: Apo Supply Company is encayed in merchandising Eoth at Home Office in Makati, Metro Manila and a branch in Davac. Selested accounts in the trial balances of the Home Office and the brancn at December 21, 2010 follow: Deb fone Office Branch Inventory, January i, 2 ® 23,000 211,550 Davae Branch 58,300 Purchases 190,000 108, 900 Freight-in from tore o: 5,500 Sundry expenses 52,000 28,000 credits Home office P 53,300 Sales Sales te Branch Allowance for branch inven: 3,000 - 40,000 210,009 1,000 Additional information: 1, Davao branch receives all sta mercheng Office BiI1s the goods. ak cost. pius(@0) mark-up. At. December 34,2010, shipment with a billing valde of PB.A0-waa in tranpit to the beanch Freight on this shipment was F250 which is to be treated aa part of snventory. from the home office. The Hone 2. December A 201Dinventerits excluding the shipment in transit , are: Hone office, at cost. P40, 000 ; Davao branch, at bilied value : (excluding freight of P20}. 12, 400-Ra>|0,q—9 © iM, 10 © fl. Net indine of the Hone Office uae: A, P10,000 "#26, 000 fr 52+ Net income of Davao branch was: A. B10, 470 ¢. Pi2,470 8. PL1,470 7 D.. P13, 470 Ga A hospital has the following account bslances: Revenue from newsstand 50,000 Amount charged to patier 800, 000% Interest income 30,000 yt Salary expense ~ 1urses 209,000) Bad debts €, 000% Undesignated gifts £0,000 Contractual adjustments 140, 000 What is the hospital's A. P880,000 3B. 800,000 >. #620, 500 54. On| January 1, 2013, two real estate companies (the parties - packet Company and Sacket Company) set ap a Separate vehicle (iarzisen Company) for the purpose of acquiring and operating a shopping centre. The contractual arrangement between the parvies establishes jeint control of the activities that are conducted in Warrisor Conteny. The main feature of Harrison’a legal form is that the entity, not ‘the parties, | has rights to the assets, and obligations for the liabiliri relating. te the arrangement., ‘These activities include rental of the ze POT ere Oeteber 1, 2012 st % 160 | becerber iu, nba: 195 2012 average: 22 oss: 1.03 The December 31, 2012 Loans payable ac investment amounted to A. P196, 000, 000 BR. P200,000, 000 87. Kuchen Manufacturing uses backflu ¢ sold 15,809 fhe standacd cost Direct material Conversion costs Total Assume that the company had ro took place in August 1. Purchased P320,000 ct direct vateria 2. Incurred P708,000 of conversion cost: 32. Applied P704,000 o£ conversicn cost 4. Finighed 16,000 meters. 5. Sold 18,800 meters for P199 each. Compute the Finished Scods, eriding ang the amount of C the adjustment of over-unde: Finished Goods, erding applied conv! ober Use the following information for questions 5 on January 3, 260,000 cash consideratfon. The reuaining 2 date fair value of £65,000, Cn January 1, that was undervalued on ite peoks by PL, unt balance obt: ory PPu6, 009, 000 219,000, 000 sting to account P20 aa a or August 2, ae meter it makes. During August 201i, the firm produced 16,000 meters of which for each meter is ined to hedge the net an electronic The following event te Raw and In Process Inventory. ersion cost: A to 59: J3 acquired 80 percert cf the outstanding voting stock of Sz for percent doo. of SZ had an atquisition- z possessed equipment 8% aiso had developed several (S-year life) © “Advanced Financia! Accounting & Reporting- Final Pre-Board Examination (BATCH 33) &ReSA: The Review School of Accountancy Page 13 of 14 ~ Sceret | farmilae thet’ Ud), assessed eat 50,000: -these= formide althougn nex fecorded oh S2's financial records, were estimated to have a 20-year future life. As of December 31, £8 appeared as follows: f id & Revenues... é (300,000) —_Pr200,000) Cost of goods soi 140,000 90,0001. Expenses... 70,000 19,600 Nel income +++... P4090) P110,000) Retained earings. 1/1 (300.000) —_P(150000) Netincome 110,000) (110,000), Dividends paid... 0. 2 Retained camings. 12/3) rae (440.000) —_P(260,000) Gosh and receivables. ve vsvesesevesesy 210.000 'P90,000 Inventory... a 150,000 110.000 Investment in iJ... c..- Aa 260,000 o | Equipment inet) ena 440,000 300,000 etal atteeDenaatcy.. 7 co ees 1,060,000 500,000 tiobities «TTI Pa (420,000) (140,000) Common stockist! liu aes ee as! (200,000). (100,000) Relined eamings, 12/31 00.01... {440,000} (260,000), Total liobiities ena aqui During the year, JI bought inventory for £60,090 and séld it to sz for P100,000. $2 had paid for only halt of! this’ purchase) by the and of the yea?. > OF these goods, 82 still owns60 percent on Deceaber 31. 58. What is the total of consciidated revenues? 500,009 €. 426,000 P4609, 000 a. asc; 000 59. What is the rotal Piao, 000 bi P1S2,000 cE goods sold? 30,000 P2132, 000 60. The component of defined benefit cout. include all of the following, EXCRET: 4. Service cos: b. Net interes: cc. Remeasurenenta d. Plan contributions ol: Barnings "per share aiscio: + @ublic entities Private entities Entities with complex cacitai vtrveture Butities that change their capital structure during the reporting peried i poe 62. The failure te Yeecrd an overstatement errors Net_incox yense at year-end will resui On 1/3/x6, Pylux sold equipment costing FLOOD GOD to its 100%-owned subsidiary, 64. What is the amount of the intercompany profit or loss that must be deferred at 12/31/x6? rere 3 26,000 ay b24,000 b. P14, 000 ©, P20,000 ce. P16,000 What is the amount of the agjusiment 10 Sepreciation Expense in preparing the consclidaticn worksheet ac 12/, Poe P5000 Advanced Financial Accounting & Reporting Final Pre-Board Examination (BATCH 33) cquized only for ra inaanneiemeasReSA: The Review Schooi of Accountancy Page 14 of 14 ; be 3,060 6 ce. P4,000 Use the following information for questions 66 and 67. cc corpora bsidiary buys marketable equity se April 1, 20x4, for 100,000 foreigh curtencies each. dune 1, 20x4), and they are stali cost under the lower-of-cost~cr-marke follow: urities and inventory o1 it pays for both items on hand at year- end. Trventory is carried at rule. Currency exchange rates for 1 peso 66. Assume that the (feresan 2) currency. Whet balances soes a consol. December 31,2044? a. Marketable equity secumiies = ?16,000 and Inventory = P16, b. Marketable equity securities + 217,000 end Inventory = P17, 000. o: Marketable equity securities 19,000 and Inventory = P16,000, a, Marketable equity securities 229,000 and Inventory P19, 000. the subsidiery’S functional balance sheet repo: tas of peso is the subsidiary's functional currency. what bale sheet repert as of December 31, 2024? 6,000 and Inventory = P16, 000. b. Marketable equity securities = F17,009 and Inventory ~ 8L7,000. Marketable equity securities 19,000 and Inventory = 16,090. “a. Marketable equity securities 719,900 and Inventory P19, 000 68. The following Iz (Income Taxesi: Statement I: A deferred vax esset shall be recognized for the carry forward bf unused tax lorses and unused tex credits to the extent that it is probable that future taxable profit fe available against which the unused tax losses and unusea tax creaite can be etilized Statement II; Current tux liabilities (assets) for the current and prior periéds shall be measured at the amount expected to be paid (recovered from) the taxation authorities, usicg the tae cates (and tax laws) that have been @ or substantively enacted hy the end-cf the reporting period. Statement III: Deferred tax asects and diubilities SWalT~ be*measured=wtwethosmseme, tax rates that are expected to apply to the period when the asset is/realized or the liability is sectied, besea on tax rates (and tax laws) that have been enacted or substa! enacted bY the end of the reporting period. a. Only statement T is false b. Only statemen: Ii is false Only statement 111 is. fa: d. None of the statenents 25 tuise c./ Operating or financing activi’ d. Operating, investing or cing activities 20, Any loss incurred gasur) shares shall be..chargedato~ a. Share premium fr T igstence, share Drenium fron treasury hares and then retained earnings. Loss on sale of treasury shares to be reported as other expense Retained earnings and then shar? preazam from treasury shares Sha¥e premium from treasury shares and then retained earnings. “end of examination ~ The most difficult secret of a ran to keep is the opinion he has of himself. Nothing great was ever achieved without determination. Don't be discouraged; everyone who got where he fs, started where he was. i Impossibilities vanish when ¢ man and his GOD confront a mountain. z : Ke "Advanced Financial Accounting & Reperting- Final Pre-Board Examination (BATCH 33) &)‘N,_under ras 29, one of tne following is an indicator of hyperinflation, a, People prefer to keep their wealth in monetary assets: DB ¥ beople preter to, keep their vesith in selatively stable foreign currency Interest rates, wages and prices are not linked ta a price iniex ‘The cwndlative infla 508 CDEP TIS 11) flint arcangeaea> that are dist ventieee union’ were ‘jointly Sontrolled entities’ Under the PAS 21) are accounted Tor under 4 A® Cost method in accordance with ZA5 39 B. Equity method in accordance with Pas 2° Fair value method in accordasce with PRS § 4. Proportionate consolidation method in accordance with PAS 31 Under PFRS 10, when a parent loses investment retained in the former subs @. Carrying anount b, Fair value, with any gain or 2 Fair value, with any gain or loss recognized in other compechensi @- Qriginal acquisition cost, adjusted for any dividend received tres "the subsidiary dg nat 1 Pe mettnd fe a sip eal areca eae ee D 1: 76 be highly effective, the ‘a, “100k ~ 1508 1008 - 1258 c. 80 - 1098 a. 808 - 1258 OW. onder nae 4, st raters to a pocty that haa a right to receive canpsnssticn under co cotane a. Somme Tollcyilaer 14 Financial statement of/60t for prolit aryenteation focuses on a 4. Basic antomatdon forthe. azderisation ae a ohote b. Seahtaidisation GF tmar soceciseee cr Miherene,‘ditterences a sot—for-protit organization that impact reporting preleesticae one ae ‘ mn Face over three (3) years exceeds or is approaching ontrol Of a subsidiary, it mist recognize any diary at accounting for government transactions means when received while expenses are recognized when etual resulte of the hedge must be within a range of 27- The following statements are based on ¥2RS 3 (Business Combinations) Stacamant 71 ans enzity shall account: for each Bitinesn combimstion by applying the acquisition merhed. : A Statement 1-the acquirer shail mesaure the identifiable assets acquired and the Liabilities assumed ar these acquisition date fair velues Seatoment TET:For each business conbinstion, the acquirer shall measure any non- ferorenesaa interest in the acquires either at fair value or at the nom-conteoliing interest’s proportionate share of the acquites’s ideatifiable net aveeta, @. All of the statements are tzue b: Only statement 1 is tras . Only statement 1 in false Al Only statement III is false ; A Philippine importer that parchases movchandices from foreign firm's foreign t EREFent unit (FCO) would be exposed tc @ net exchange gain on the unpaid belavce if the = : fo the FCU and the FCU wes the denominated currency D: 2859 woshened relative ts the SC and the peso was the denominated certoncy + Boag Stkanythened relative to the, mo” ad's the 2U nas’ the Geceaiicted currency G Beso strengthened relative to ‘the FOU dnd the peso ‘wae’ ‘the denominated 20. Abnormal spoilage ina minafacturing provess should be charyed to & “Tar Profit or loss Accumulated profit or loss Manufacturing overhead applica Manufacturing overhead sontrol ta freee eee eet ce ae C7 Sit Se corres scons ing for ace pana "_s: Joint arrangements classified a2 joint ventures are accounted for under PAS 28. @. Joint arrangements classified as joint operations are accounted for under PAS 20. 22. Gains or losses that arise as a result of translating foreign currency ‘denominated operations inte the reporting currshiay exe recognized in income: a. only if they are materiel itexs Bony when they are settled in c g- in the reporting period in whica they arise 4. only when the interest in the foreign operation is sold Se eee ee eesti et ee ieee tae ein cuortroceion coHttact Will auteed toval GBEbegEE revenue, tho expected Toor should be apc tpt eraiedl craelh op otha aeeretiog cart tact tency apatcls By tabopuined 4s" all uasion Stesdlst4l6y Galati] ptatoe’ fo dies paspate! Soets Seance : sh Regering Ree ieee Cece eestaiod Be cee nec canars oe elec ote Po eter Go Si ek eet tar eee eters ee eet rete enyl ce veces) cea ciny considers ‘a. Current cost only b. Current cost plus cost of ending work in process inventory Gr Current cost plus cost of soyinsing work in process inventory @. Current cost less cost of beginning work in process inventory 50. Goodwill should be recorded in the accounting records only when a. It is internally generated b. It can be established that a definite benefit or advantage has resulted to a fixm from some item such as good name, capable. staff, or reputation ce. It is acquired through the acquisition of another business 4. A fizm reports above normal earnings for tive or more consecutive years f) (2 FOE which eye of hedge are changes in fair value deferred and anortized as an equity adjustment? a. Cash flow heage 7 (i Operating hedge ©. Fair value hedge 4. Notional value hedge 61. which models are allowed to be ured by the private operator for build-operate- transfer (BOT) schemes under TREC 127 T= Pinancial Asset aodel HI - Intangible Asset model XIT ~ Property, Plast + Uquipsent: model a, Tana tr Wot and rar Wand 12 4d. f, If and tir 62, If shares are issued as pact brokerage fees may be i appropriate accounting treatment = debit tot a. Cash bl Investments ©. Share capital A Acquisition expenses the consideretion paid, transactions costs such as ed. According to PERS 3 ‘Business Combinations the Such sorts in the records of the acquirer is a ® 68 Under BPRS 10, which {s NOF one of the three (2) elements of control? a. power over the izveatee _~ b. holding majority voting tights ~~ 2 exposure, or rights, to variable returns from involvement with the investee d. the ability to use poncr over the investee to affect the anount of the investor’s returns indicating that en intre group business Sransaction has been realized & che genezation of profit fzom che transection - b, the involvement of an externai party in the transaction + €. the presence of only within the group as parties to the transaction d. whether or not an operating profit or loss occurred as a result of the eransaction one a Se ce eee cue ae sare re a Pea ea, Seamed” opt series Hegie pareence, eee Sommcien ci dpe ERE or es areca