bart Review Schoo! of Accountancy ‘Wel. 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 INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer tor 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 been stated in Philippine pesos as follows: ‘Stated = | Gurrent Rates | Historical Rates ‘Recounts receivable, carrent 200,000 P 220, 600 ‘Accounts receivable, long-tein 100, 000 Prepaid insurance | 80,000_ | Goodwill 80, 000 “The subs! is the amount should Rose’s balance sheet include for the preceding items? a. P430,000 bb. P435,.000 ©. P440;000 ‘a. P450, 000 II, The subsidiary’s functional currency is peso. What total amount Rose’s balance sheet include for the preceding items? 430,000 b. P435,900 cc. B440,000 d. P450,000 A, I-e; I~ a er-amle BlI-a;ir-d 3. None of the above 2. A partnership begins its first yea: with the following capital balances: Arthur, capital P 60,000 Baxter, capital 80,000 Cartwright, -capital 100, 000 that profits and losses be assigned in The articles of partnership stipuia| the following mahner: © Each partner is allocated interest equal to 10 percent of the beginning capital balance. © Baxter is allocated compensaticn of 220,000 per year. * Any remaining profits and losses are allocated on a 3:3:4 basis, respectively. © Each partner is allowed to withdraw up to P5,000 cash per year. Assuming that the net income is P50,000 and that each partner. withdraws the maximum amount allowed, what is the balance in Cartwright’s capital account at the end of that year? A. P105,800 cc. P106, 900 B. P106,200 D. 107, 400 3. Which choice correctly describes the following statements? Statement I:If an entity cannot distinguish the research phase fron the development phase, it should treat an expenditure on a project as if it were incurred in the research phase only and recognize an expense accordingly. Statement II:If it is difficult to distinguish between a change in accounting estimate and a change in accounting policy, then the change is treated as a change in estimate and must be accounted for currently and prospectively Statement III:In rere circumstances, when a retirement benefit plan has attributes of both defined benefit plan and defined contribution plan, the plan is deemed as a defined contribution plan. only statement I is false only statement IT is true c. Only statement 111 is true d. Only statement IIT is false 4. The following are information regarding partnership busines: I. A partnership has the following capital balances: ‘Allen, capital 60,000 CORRECTION LKeT OKEEReSA: The Review School of Accountancy Page 2 of 14 5. aurns, capital 30,000 Costelic, capital 80,000 Profits and losses are split a9 foblows: Ailen (20%), Burns (303), and Costello (50%). costello wants, to leave the partnership, and is paid 100,000 from the business based on provisions in the articles of parthership. If the partnership uses the bonus method, what is the balance of Burns's capital account after Costello withdraws? 7 a. p24,000 b. 227,090 ce. P33,000 di. 236,000 | At year-end, the Cisco partnersnip nas the following capital balences: Montana, capital P13, 006 Rice, capital 120, 000 craig, capital 80,000, Taylor, capital 70,000 Profits and losses are split on a 3:2:2:2 basis, respectively. Craig decides to leave the partrerszip and is paid P90,000 from the business based on the origina! contractual agreement. If the goodwill method is to be applied, what is the balance of Montana’s capital account after Craig withdraws? 25) 137,500 - P140, 000 d. P145, 000 a. 2133, 000 AJ I-a;Ir-d e.l-biir-a B. I= br It-e D. None of the above ‘The following are information regarding a partnership undergoing liquidation: T. A local’ partrership is liquidating and is currently reporting the following capital balances: Angela, capital ‘59% share cf a1} profits and losses) P 19,000 Woodrow, capital (101) 12,000 cassidy, capital (20%) +12, 900} Cassidy has indicated thac 2 forthcoming contribution will cover the 712,000 deficit. fowever, the two remaining partners have asked to ive the 25,000 in cash that. is presently available. How much of this money should each of the partners be given Angela, 213,000; Woadrox, Pi2,009 Angela, Pit, 500 Woodrow, £12,500 Angela, P12,000; Woodrow, ,€12, 200 Angela, 212,509; Wecdrew, £12,500 pope II. A partnership has. the felloring balance sheet just before the final Liquidation is to beq! cash Inventory Other assets hiabiities P 50,000 Ars, capital (408 14,000 Raymond, capital (208) 25,000 Darby, capital (30%) __26,000 toeal S19, 000 total Liquidation expehses are estimated to be P12,009. The other assets are sold for 240,000. What distriturion can be made ts, the partners? a. P-0- to Art, 1,500 £0 Raymond, P2, 500’ to, Darby. b. 1,333 to Art, Pi,333 to Raymond, 21,304 to Darby. c. P-0- to Art, Pl,200 te Raymond, PZ, 860 to Darby. d. P600 to Art, P1,260 to Raymond, P2,200 te Darby. A, -b; In-b c.I-pI-a B.i-c;Ib-a D. None of the above 6. Which is the correct order of the following steps in the accounting cycle? _ 7. Which of the, following terms Step 1: Freparatien of financial statements Making closing entries in the general journal Posting transact:on entries in the general ledger ng etcries in the general journal ptive of SMEs? Private, entities Listed companies Small and medium-sized entities Non-publicly accountable entities pore Advanced Financial Accounting & Reporting Final Pre-Board Examination (BATCH 33) &ReSA: The Review School of Accountancy Page 3 of 14 @. B chemical company manufactures jot: Zest. Costs are assigned to th products Pep and Vim, and a by-product. nt products by the market value method, which considers further provessing costs in subsequent operations. For allocating joint costs vo the by-product, the market value or reversal cost method is used. The tot: ma ts for 10,000 units were P172,000 etacturing during the quarter. Production and cust data follow: ce A B 2 Vin est units produced 5,000 4,000 1,000 Sales price per unit B50 PADS Further processing cost per unit 10 5 - Selling and agm:nisteative expense per unit 2 Operating profit per unit 1 The value of Zest to be deducted From the joint costs is: a. P5,000 b. P5000. 22,000 a. Zero Compute the gréss profit for rep: aMivEeeG b. 970,006 =. P 40,009 4. 2100, 000 T-e;1r-a cli-e 1-4 l-am-a D. None of the above 2. The foliowing are information regarding parent and subsidiary: TI. Par Company owns €vt AL B. 10. wt Equipment). ac: ». a T. Clark Company had + Digitally stored databa ne following transactions with affiliatéd parties during 2698 © Sales of P60,000 to Dean, with £20,000 gress profit.. Dean had P15, 000 of this inventory on hand at year-end. Clark owns a 15¢ interest in Dean and does not exert significant’ influence. * Purchases of raw materiale totaling P240,000 from Kent Corporation, a wholly-owned, subsidiary. Kent's gross profit on the sale was P4@,000. Clark had 60,000 ct this inventory remaining on December 31, 2008. Before eliminating entries, Clark had consolidated current assets of P320,000. What amount should Clark report in its December 31, 2008, consolidated balance sheet: for current assets? a. P320,009 —b. 317,309 c. F308, 000 4. 303,000 of Sub Corp.'s cdtstanding capital stock. on May 1, 2008, Par advanced Sub PIG,09G in casr, which was still outstanding at December 21, 208. whet portion of this advance should be eliminated in the preparation of the fecenber 31, 2098 consolidated balance sheet? a. 70,000. 742,000 e. 28,900 dP 9 I-ci-a cr-eu-d I-d:tr-4 D. Rene Of the above h of the following shall Le treated ay part of PPE (Property, Flan ording to PAS 26 on intangials assets? ing system Oper: Application software outsourced cnline program LL. At the inception of the lease contract, the lease term is determined to be equivalent to 55% of the economic life of the leased property If the lease contract contains a bargain purchase mr, the lessee should record the lease as a. Neither asset nor lisbiiity b. Asset but not liability c. Asset and liability d. Expense 12. For equity-settled snare-bared payment transac the goods or services received aad the correspon 13. Hartwell. Company distrib producing departments and ions, the entity shall measure ing increase in equity: Stacement I: Directly at fair value of the goods cr service received Statement II: Indirectly, by reference 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 I is true b. Only statement iI is true €. Both statements I and it are true G. Neither of the statennts is true vice department overhead costs to mation for the month of January is presented as follous 5 Maintenance Utilities Overhead costs incurred P18, 700 P 9,090 ‘Advanced Financial Accounting & Reporting~ Final Pre-Board Examination (BATCH 33) ia). ne & 5ReSA: The Review School of Accountancy Page 4 of 14 Services provided to: Maintenance department soe Utilities department 208 Producing department A 403, 308 Producing department & 408 608 Hartwell Company distributes service ‘cepartment overhead costs based on the reciprocal methed, what be the formla to determine the total maintenance costs? A. M= P18, 700 + .369 e B. M = P 9,000 + .200 Be. 14. Which of the following is che proper way to report a contingent asset when its realization is virtually cercaini @. AS an asset b. Disclose. only c. As unearned tevenue 4. Research and deve f1a,700 + .20U +.40a + .40B 1700 + |40R + 408 ing company engaged in the production of a single special product known 4s “Marvel”. Production costs are accumulated With the use of a job-order-cost system, 15. Pistahan Corporation is a manufac ‘The following informa Work-in process. Direct materials inventory. aon is available as of June 2, 2012 seeeeeP 10,710 48,600 In analyzing the job-order cost sheets, the records disclosed that the compositions of the work-in-precess inventory on June 1, 2012 were as follows: Direct materials used...0.....cseeeeeeeeeeeeeeeeeeseeeeP 3 Direct labér (990 hours} ee Factory overhead applied..... sbosbsousascoode 2 ‘The following manufecturing activity occurred dering the month of June 2008: Purchased direct materials costing 2 60,000 Direct labor worked 9,900 hours at P per hos Factory overhead of P 250 per direct labor hour was applied to production. At the end of June 2012, che following information was gathered in connection with the inventories: Inventory ‘of work-inzprocess Oirect materials vs Direct labor {7,509 ee ee Inventory of direct materials = Compute the cost of gooas manufactured: A. P 142,560 cc. B 121,850 B. P 118,350 TB. B 108,690 +% ¥, and 2, a_partnershii initial investment: ed on January 1, 2012 had the fellcwing Keven - P 100,000 ———— 39,000, 2 225, 060 that che profits and lesses are tc be shared a is made for the following: xX, P48,000 for ¥, and P36,900 ‘The’ partnership agreement svat equally by the partners 2fter considera®: > Salaries allowed to partners: P60,009 fi for 2. - Average partners’ capital balances during the year shall be allowed 10%. ional information = On June 30, 2012, X invested an addit = 22 withdrew P72,000 from the pa: = Share the rema:niag partnership sonal P60, 000 lp on September 30, 2012. fat was F5,000 for each partner. 2 before salaries, interests and Partnership net profit at partners’ share on A, P199,750 B. 207,750 17. What item appears first on the statement of cash flows prepared using the direct method? a. Net income ‘Advanced Financial Accounting & Reporting Final Pre-Board Examination (BATCH 33) @ga)\ReSA: The Review School of Accouintancy Page 5 of 14 18 19. 20. 23. 24 b. Depreciation Retained earnings d. Cash receipts from customers Kanlaon Corporation started spevaticne on January 1, 2010 selling home appliances and furniture sets both ter cash and on installment basis. Data on the installment sales operaticns of the company gathered for the years ending December 31, 201 [a0 Dame “2017 Tavalinens wales F408, 050 f P09, 508 Gort of inseatinent 240,000] 350,000 Gash coltected oo installment sales: 2010 inscalinene sates 210,000] 150,000 [Ee Botner eee 300,000 | Additional information: On vanuary 5, 2012, an installment sales on 2910 was defaulted and the merchandise with an appreisec value cf P5,000 was repossessed. Related installment receivable balarce on January 3, 2012 was P8,000. The balance of the veferred Gross Profit controlling account at, December 31, 2011 was: A. P 76,000 c. F260,020 B. P130,000 D. P390,000 Which of the following is ret listed under the “faithful representation” characteristic of financial information based on the Conceptual Framework of Financial Reportin a. Prudence b. Neutrality c. Completeness 4. Freedom from error Determine the true statem a. The term “IAS” generally c b. The. term “IFRS” generally covers “IAS c. The term generally covers “IERIC" d. The term “IFRIC” generally covers “IFRS” regarding IFRS when referred collectively. vers “IERS Dividends in the form of noncash assets are measured at a. Fair value of the assets dictributed b. Carrying amount of the assets distributed c. Either the carrying amount c2 fair valué of the assets distributed d. Neither the carrying amount sor fair value of the assers distributed riod would he lowest if the bonds is The investor’s interest income for a purchased at a. In hetwoen interest payment dates b. At the face value of the bd ce. A discount, a. A premium Other than financial liabilities measured at fair value through profit loss, how are financial liabilities subsequently measured under PFRS? a. Fair value if acceptable to che envity. b. Amortized cost using the eftective interest rate method. ce. Amortized cost using the stated interest rate of the debt d. The amount uf undiscounted cash that would be required to settle the obligation at the end of the reporting period. Lucille Inc. manufactures 2 product that gives rise to a by-product called “Robon." The only costs associated with Robon are additional. processing costs of P1.00 for each unit. Lucille accounts for "Robon” sales first by deducting its separable costs from ouch gales and then by deducting this net amount from the cost of sales of the major product. the past year 2,000 units of Robon were produced which were roid for ¥5.00 each Sales revenue and cost of ‘goods sold from the main product were P500,000 and P400,000 respectively. Compute the gross margin after considering the by product sales and costs. the If Lucille changes its method of accounting for Rokon sales by show net amount as "Other Income,” the effect on the gross margin would be: AL PO S. #000 . B. P2,000 D. Pe, 090 : ‘Advanced Financial Accounting & Reportin = Final Pre-Board Examination (BATCH 33) &ReSA: The Review School of Accountancy Page 6 of 14 vs ang four-by-eights as joint products Gust can be sold for. P2 per 25. A lumber company produces tworby-fot and sawdust ag a by-producs. The packaged Bound. Packaging costs for the sawdust aze B10 per pound and sales Pommissions are 10% of sales price. The by-product. net revenue serves to Feduce joint processing costs tor joint products. Jount products are assigned joint costs bazed on board feec. Data follows Joint processing costs . . - ee es BP 80,000 Tworby-fours produced (voard feat) 0 0 5 os 200,000 Four-by-eights produced ipeard feet) 2 6. ss ss 199, 000 Sawdust produced (pounds)... 5 560 : 1,000 What is the cost assignes A. P32,000 B. P32, 133 26. The following information summarizes the standard cost for producing one metal tennis, racket frame. if addition, the variances for one month's production are given. Avsune that gil inventery accounts have zero balances at the beginning of th: month: Standard Cost -—«Standard Monthly Por Unit . Costs Materials P 8,400 Dizect labor 2 hes GE2.60 10,920, Factory overhead: Variable 1.90 3,780. Fixed 5.00 10,500, variances: Materials price, P244 Materials quant:ty, 2300.00 unfavorable * uakor rate, 520.96 unfavor, Labor effictency, P2,086.09 unfavorable What were’ the actua! direct laber hours wonked during the month? ‘A. 5,000 c. 4,000 B. 4,809 D. 3400 , 27. Using the same information in No. 76, what were the actual quantities of materials used during the month? A. 2,156 2,225 B. 2,100 7 Dp. 1,975 Ttems 28 and 29 are based on the following information: Presented below is adjusted trial balance of Sterling Products Coxporation at_De: Great) (inventory, 12/31/2 Sea ‘Other assets Accounts payable e000 Unrealized gross 10, 600| Unrealized gross 86,000 Tnrealized gross 500,000 Capital stock 00,000 Retained earnings 30,000, Gain on repossessio: 6-000 | ‘Operating expenses Total i F335, 000 cost of goods sold had been uniform over the years at 60% of sales. ts perpetual inventory procedures. On nstaliment accounts receivable Sterling Products Corporation ad installment sales, the corporation charges and credits inventory gross profit accounts. Repossessions of merchandise have been made during 2010 due to some teetomers’. failure to ‘pay watcring installments. Analyses of these transactions were summarized as follows TAVER COE Vienne ninemsn min suomi 7,509 Unrgalized ge088 PEOLity 2009. monn Boo Unrealized Jros# PEOLIt; 200% -memmmernnnn rn anim 2/400 Installment Accounts Receivable ~ 2002 2,000 Instaliment Accounts Raceivakie ~ 2009. 6,000 Gain on repossensic. : 2,700 Advanced Financial Accounting & Reporting Final Pre-Board Examination (BATCH 33)ReSA: The Review School of Accountancy Page 7 of 14 The repossessed merchandise war unsold at Oscenber 31, 2030. Tt was ascertained that they were booked upon repessessien at original cosis. A f9ir valuation of these ifers would be a sale price of the repossessed merchandise at P10,000 after incurring cons of teconditioning of P5,000 and cost to dispose them in the market at F500 28. Realized ‘gross profit on 2010 sai A. P44, 000 1008 B. P56, 000 D. F136, 008 29. Gain/loss on repossession wast A. 2209 loss P309 Loss B. P200 gain P300 gain 30. The joint venture accounts in the books of che venturers (participants) M,N and ©, .show the balances below, upon termination of the joint venture and distribution of the pro Final settlement of the joint venture will require payments as follows; A. M pays P900 to O and N pays F750 to © B. © pays P900 te Mf and P750 ro © C.N pays P1,650 to M and O pays P900 to N D. M pays P909 to N and N pays BYE te 0 31, For small and medium entities, “SIRE” may under certain conditions replace which two (2) financial statenents? a. Balance Sheet and Income Statemens b. Balance Sheet and Statement of Comprehensive Inceme ©. Income Statement and Statement of Changes in Equity d. Statement of Comprenens: me and Statement of Changes in equity 32. The work-in-process account. of the Malinta Company which uses a job order cost system fcliow: Work-in-process April 1 balance 2,000 | Finished goods — P125,450 Direct materials 50,950 | Darect Labor 40,000 Overhead applied — 3¢,000 Overhead is applied to production st a prenetermined rate based on direct labor’ cost. The work-in-process on April 39 represents the cost of Job No. 436, which has-been charged with direct labor cost of 23,000 and Job No. 789 whitch has been charged with applied overhead of P2, 400. The cost of direct materials charged to Job Nos. 456 and 749 amounted to: ‘R. Pa, 200 €. 27,500 B. Pa, 500 5. Pe, 709 33, The Natural Company acquired $02 of ‘The Loco Company for a consideration transferred of P100 million. The consideration was estinated to include a control premium of P24 million. toco's net assets were PES million at the acquisition date. Are the following -stetenents true or false, according to PFRS3 Business. combinations? (2) Goodwill should be messed at P32 million if the non-controlling interest is measured at its shaze of hocal's net assets. (2) Goodwill should be weasured at P34 million i the ‘non-controlling interest is measured at fair value Statement (1) Statement (2) Faiss ic tree b Statement (2) False True AL 34. The Moon Company acquired a 79% insezes| when the fair value of swan tench P1,200,000. Moen acquired a 05! interes: in The Homer Company for, F300, 000 when the fair value of Zomer‘s (dentif:able assets and liabilities was 640,000. Moon measures noh-controlling interests at the relevant share of the identifiable net assets at che acquisition date. Neither Swan nor Homer had any contungent Liabilities 2t the acquisition date and the above fair values were the same as the carrying amounts .in their financial statements. The Swan Company for Pi, 420,000 ble assets and liabilities ‘was ‘Advanced Financial Accounting & Reporting ‘inal Pre-Board Examination (BATCH 33) &ReSA: The Review Schoo! of Accountancy Page 8 of 14 Annual impairment reviews have uot resulted in any impairment 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. Goodwill: PS80,0C9; Gains on the bargain purchases: P116,000 B. Goodwill: Nil Or zero; Gains on the bargain purchases: P116, 000 ©. Goodwill: Nil or zero; Gaine on the bargain purchases: Nil ox zero D. Goodwill: P§80,900; Gains cn che bargain purchases: Nil or zero A, B, and © are pertners in an accounting firm. Their capital account 38. balances at year-end were A, £90,000; B, 110,000 and c, P50,000. profits and losses on a 4:4:2, after the following special terms 2. Partner Cis to receive a bonus of 10% of net income after the bonus. They share 2. Interest’ of i0% shall be paid on that portion of a partners capital in exceas of P100, 000. 3. Salaries of 710,006 and 12,000 shall be paid to partners A & C, respectively. Assuming a net income of 44,90 for the year, the total profit. share of partner © was: A. P 7,800 fc. Pid,409 B. P16, 800 P19, 800 Items 36 and 37 are bared on the following information: The income statement subsitted by the Sampanga Branch to the Home Office for the month of December, 20iU 2+ shown below. adjustments the true net income of the Branch After effecting the necessary ascertained to be 156,000. Sales P 600,000 Cost of sale: Inventory, December i oo B 80,000 Shipments’ from Hone Of fice. 350,000 Local purchases. 7 ~ 1 230,000 Total available for sale. 460, 000 Inventory, jaieeeneemeees: «: eiiqo¥co0) December GrOSS MALGIE vwnnnennns Operating expenses Net income The branch inventories were. 12/01/2010 12/31/2010 Merchandise from home offi - F 10,000 ~ P 84,006 Local purchases. ee 16,000 TOCAL semninm ss nn £80..5 100,060 36. The billing price based on cout imposed by the home office to the branch, and AL 1408 cs. 408, B. 1008 B. 298 27. The balance of allowance for cvervaluation of branch December 31, 2008 after adjustment. . P10,000 . P46, 900 B. P24,000 B. Nona of the above 38. The partners of the MAN Partne:ship started liquidating their business on July I, 2030, at which time the parcners were sharing profits and losses .40% to Mand 608 to N. The balance sheet of the partnership appeared as follows: Assets Liabilities & Capital cash Accounts payable P 32,400 Receivable M, capital 31,000 Inventory M, drawing 5,400 25,600 Equipment PES, 200 N, capital P33, 200 Accumulated MN, drawing 033,000 Depreciation 30,890 n, loan Total Total During the month of Joly, no loss, The partners also sold curing which they realized a toral of P32,400. che How much of the cash was pa‘ to M/s capital on July 31, 2 A. P25, 600 B. P 5,400 2320 PO the partoers collected P600 cf the receivables with month the entire inventory on jal Accounting & Reportinig- Final Pre-Board Examination (BATCH 33)ReSA: The Review School of Accountancy Page 9 of 14 39. Following data pertain to u: Siisin Company which sells appliances on an 4 oo | Pa80, 000 ‘so 788,000} Tnstallment eccounts receivable balances F320, 000 Repossessions on defaulted accounts were made during 2010, as follows [aeeount balance Net resale value repossessed ne The total realized gross profit in 2010 on the collections of 2008, 2009, and 2010 sales wast ‘A. P 9,360 2S. F 96,600 B. P62,009 D. PLe7, 960 40. The net gain {loss} on repossession on defaulted sales of 2009 and 2010 was: A. P 500 c. PB 800 B. (800) 2. (2,300) 41, Pasig Garment Company operates a branch in Cabanatuan City. At the end of the year, the Branch account in the books cf the hone offide at Manila shows a balance of P150,000. The foilewing information are ascertained: 1. The hone office has billed the branch, the amount of P37,500 for the merchandise, which was in tranzit on becember 21 A home office accounts roceivabls for ¥10,500 was collected by the branch. Sad collection was not reported to the home office by the branch Supplies of P4,500 was returned by the branch to the home office but the home office has not yet reflected in ite records the receipt of the supplies The branch made. profit of Pic, office erroneously recorded it aa #11, 19C. The branch has not received = sh in the amount of P25,000 sent by home office on Decenker 21. this. was charged te General Expense account. of Uecember but the home All transactions are presumed ca have been properly recorded. What is the balance of the Home Office account on the books of the branch as of December 31, before adjus=nents? - PL2L, 920 B. 123,000 117,420 P06, 92 42. What is the adjusted balan A. P 96,420 B. P106,920 Halley Company. The following figures are statements 43. The Carly Company owns from their separate financial Carly: Trade receivables ?1,040,000, including P30,000 due from Halley. Halley: Trade receivables 221,000, including P40,009 due from Carly. and separate financial statements, what Carly's consolidated statement Recording to PAS 27. Cons! figure should appeer. for-tradu receivables of financial position? A. P1,215,000 B. Pl, 225,000 44. The White Company acquired interest in The Pulley Company when Pulley's equity comprised share capital of 100,000 and retained earnings of 500,000. Pulley's current atatement of financial position shows share capital of P100,000, a revaluation reserve of 400,000 and retained earnings of 1,400,000. Under PAS 27 Consolidated and separate financial statements, what figure in respect of Pulley's retained earnings should be included in the consolidated statement of financial position? B. PB 720,000 €. ¥1, 040,000 B. P1, 440, 000 3. PL, 520,600 ‘Advanced Financial Accounting & Reporting- Final Pre-Board Examination (BATCH 33)ReSA: The Review School of Accountancy Page 10 of 14 45, The Snipes Company owns 657 of The Company. On the last day of the accounting pericd Genic seid te Snipes a non-current asset for #200,000.. The asset originally cost P5600, and at the end of the reporting period its Carrying amount in Genie'r. socks “was 160,00. The group's consolidated Statement of financial posirion bas been drafted without any adjustments in relation te this nen-cucrent asset. under PAS2? Consolidated and’ zeparate financial statements, what adjustments should be made to the conaelidared statement of financial position figures for non-current assets and retained earnings? Retained earnings increase by P(35,000 A. Increase by P300,000 B. Reduce by P40,000 Reduce by P26, 009 1 Reduce by P40, 000 Reduce by P40, 000 . Increase by P2092, 000 Inczease by 2400, 000 46. Bonifacio contractors had a year construction contract in 2012) for 300,000. The company uses the percentage-of-completion method for financial statement purposes. Income to be tecognized each year is based on the ratio Of cost incurred to total estimated cost to complete the contract. Data on this contract follows: Accounts receivable ~ constructzon contract billings PF 30,000 Construction in progress. ee snmB 93,750 Less: Amounts billed. : —— 10% retention nn. 7 a ‘i 9,375 Net income recognized is 2017 {before tax) a 15,000 Bonifacio Contractors maintains = separate bank account for each construction contract. Bank deposits to this contract amounted to PS0,000. What wae the estinated tetel inci A. P45,000 B. P94,000 7 47, The Lakers Company owns 75% of the last day of the accounting period, ¥ for P200,000. the assec's origina: © its carrying amount in Yiking’= b Statement of financial position A relation to this non-current asset. betere tax on this contract? 135, 0¢0 144,000 Skin Company. On December 31, 2012, the a d to Lakers a noncurrent asset + was P500,C00 and on December 31, .2012 nas P160,000. The group's consolidated en drafted without any adjustments in under PAS 27 Consolidated snd separate financial statements, what adjustments should be made to atement of financial: position figures for retained ear Retained earnings Increase by P225,000 Increase by P300,000 C. Reduce by 230,000 DL Reduce by P40, 000 nop by P10, 000 ange 48. The Virgil Company owns 632 of The Migu Company. Un December 31, 2012, the last day of the sccounting period, Virgil sold to Migu a noncurrent asset for P1,000. The ascet's criginal cost was P2,500 ahd on December’ 31, 2012 its carrying amount in ¥. s books was P800. The group's consolidated Statement of financial position ras been drafted without any adjustments in relation to this non-current asset under BAS27 Consolidated and separa'e financial statements, what adjustments Should be made to the consolidated statement of financial position figures for non-current assete and non-contzeilang interest? Non-current: assets Nen-controlling interest A. Tnerease by PI, 500 Tnrease by 2525 B. Reduce by P200 No change ©. Reduce by P209 Reduce by P70 D. Inerease by P2,500 No change . 49, The Roel Company acquired og en January 1, 2009 at a cost of ® ysers with a nil residual value, on January 1, 2012 The Muldon Company acquired 100% of Roel and estimated the fair value of the equipment at F460,000, with = remaining life of 5 years. This fair Qalue was not incorporated inte Roel's boos and the: deprecidtion expense continued to be calculated by reference to original cost. 800,000, depreciating it ove. "Advanced Financial Accounting & Reporting~ Final Pre-Board Examination (BATCH 33)’ ReSA: The Review School of Accountancy Page 11 of 14 Under PAS 27 Consolidated and sepazate financial statements, what adjustments should be made te the depreciation expense for the year and the statement of financial position cerrying amount in preparing the consolidated financial statements for the year ended Decenber 3}, 20137 Depreciation. A. Increase by B. Increase by P8,000 Decrease by P24, 006 C. Decrease by P8,000 Increase by P24, 000 D. Decrease by P8, 000 Decrease by P24,000 50. Which of the following is kely to be included in the cost of inventory? a. Freight In b. Cost to store goods c. Purchase cost of goods d. Excise tax on gcods purchased Items 51 and 52 are based on the following information: Apo Supply Company is engayed in merchandising both at Home Office in Makati, Metro Manila and a branch in Davac. Selected accounts in the trial balances of the Home Office and the brancn at Oscemser 21, 2010 follow: Purchases 105,000 Freight-in from hone of: 5,500 sundry expenses 52,000 28,000 credits . Home office P 53,300 Sales 000 140, 000, Sales to Branch 4 210,009 Allowance for . Branch inventory, January 1, 2010 1,000 Additional information 1. Davao branch receives all its merchandise from the home office. The Home Office bills the goods at cost pius 10% mark-up. At December 31, 2010, a shipnent with a billing value of P5,000 was in transit to the branch. Freight on this shipment was PZ50 which is to be treated as part of inventory. 2. December 31, 2010 inventories excluding the shipment in transit , are: Home office, at cost... eoorinnee® 30, 000 Davao branch, at billed value (excluding freight of P5209)... 10,400 51. Net income of the Home Office was: ‘A. B10,000 B26, 000 B. P15,000 D. P25, 000 52. Net income of Davao branch was: A. P10, 470 c. Pi2,470 B. P12, 470 D. 13,470 ° 53. A hospital has the following account balances: Revenue from newsstand P 50,000 Amount charged to patients 800, 000 Interest income 30,000 Salary expense ~ nurses 100, 000 Bad debes 10,000 Undesignated gifte 80,000 Contractual adjustments 120,000, What is the hospital's ret gatient service revenue? A. 880,000 cL P63, 000 B. P800,000 D. F620, 900 54. 0n January }, 2013, two real estate companies (the parties - Packet Company and Sacket Company) set up a separate vehicle (Harrison Company) for the purpose of acquiring and operating a shopping centre. The contractual Grrangement between the parties vstablishes jeint control of the ‘activities that are conducted in Harrison Company. The main feature ef Harrison’s legal form ia that the entity, not. the parties, has rights to the assets, and obligations for the liabilities, relating tc. the arrangement. These Sotivities include the rental of the serail units, managing the car park, ‘Advanced Financial Accounting & Reporting Final Pre-Board Examination (BATCH 33) gSReSA: The Review School of Accountancy Page 12 of 14 Maintaining the centre and its cquipment, such as lifts, and building the Teputation and customer base fer the centre as a #hole. As a result, Packet Company paid F1.6 million for 50,000 shares of Harrsson’ ¢ voting common stock, which represents a 49% investment. No allocation to Goodwill or other specific account was made. The joint control over Harrison Oe chieved by this scquisition and so Packet applies the equity method. Harrison distributed a dividend, of P2 per share curing the yeat and reported het, incole of £560,000. What 'ic the balance in che Investment. in Harrison account found Jn Packet's fm records as of December 31, 2013? a. Bi, 724,00 c. F1,B44, 000 b. P1, 784,000 a. 1,884,000 55. Connie Corp. had a i 4 foreign exchange loss of P15,000. for the year ejcd December 31, 2011 and wust also determine whether the following items will require year-end adjust * Connie had an 6,00: accounts ef its wholly 5 December 31, 2011. « Comie hud an account payablé to an unrelated foreign supplier payable the muppiias's Local currency. The Philippine peso Cguivelent of the eaysble was 764,000 on the October 31, 2011 {avoise date, and it was P0,000 on December 31, 2011. The invoice is payable on January 30, 2012. tn Connie's 2011 consolidated ‘income statement, what amount should be cluded as foreign exchange loss? A. P 12,000 c. P 19,000 a. PB 15,000 b. p 23,000 joes ‘resulting from the translation of the 4 foreign subsidiary for the year ended 56. Noting that there was a P5,760,000 translation adjustent gain, Dore Ine. leche parent company! Secured 4 foreign bank loan denominated in the funetipnal currency when the spot cate was 1 Taiwan Nt dollar = Pl,022. The bank loan fas a principal amount ofr 200,000,000 Nt dollars. Interest calculations are ignored. The bank loan is designated as a hedge of net, Snwestment and is considered to have satisfied ail necessary criteria Selected exchange vates between the functional curency (Nt dollar) and the peso are as follows Pate sae = oT Rate | anaary 1, Sil P 0.58 Qetober 1, 2012. 1.00 a6 1.05 : _j___1.03 geacunt balance obtained to hedge the net December 32 2 2012 average. The December 31, 2012 Loans pay investment amounted to A. P196,060,000 P26, 609, 000 B. 200,000, 000 DL 219,900, 000 57. Kuchen Manufacturing uses backflush costing. te account for an electronic wter it makes, During August 2611, the firm produced 16,000 meters of which tt sold 15,800. The standard cost for each meter 1st Direct material Total Assume Uhat the company had ro inves took place in Augus Purchased P320,000 ct direct naterial: 2. Incurred P708,000 of conversion costs. 3, Applied 704,000 of conversicn costs te Raw and In Process Inventory. 4. Finished 16,000 meters. 5. Sold 15,800 meters for P2100 ach. ntory on ‘August 1. The following event Compute thé Finished Gcods, ending ana the amount of Cost of Goods Sold after the adjustment of over-snder appiied conversion cost of Si copy Use the following information for questions 58 to 59: Gn January 1, Jd acquired @0 percen. of the outstanding voting stock of SZ for $560,000 sash consideration. The yenaining 20 percent of SZ had an acquisition sete fair value of P65,000. Ca Janvary 2, Sh possessed equipment (S-year 1) fe) eee Mas undervalued on ite books by £25,000. 8% also had developed several Advanced Financial Accounting & Reporting- Final Pre-Board Examination (BATCH 33) &ReSA: The Review School of Accountancy age 13 of 14 secret formilas chat JY assessed ‘at P50,000, These formulas, “although net recorded on S2"s financial recocds, were estinated te have « 20-year future Life Ag of December 31, tho financial sts appeared az. fellows = Rovenuers tee 5 ¥ (300.000) P1200,000) Cos of goods sold o 140,000 180,000 PRPENSOS kee cere 20,000 10,000 Nel income 2 a (140,000) {110,080} Retained eamings. 1/1. ee 300,000) __P(150,000} Nel income... . (140,000) (110,000) Dividends paid... eee 0. 0. Retained camings, 12/3) . ep P{440.000) (260,000) ‘Cash and receivables ee Pz10,000 90,000 Inventory . ss : 150,000 110.000 Investment in Ji oo 260,000 0 Equipment (net) . 440,000 300,000 Total assets.......... : 1,060,000 500,000 Labitties * Pf420,000) _P (140,000) Common stock... : oy (200,000) (100,000) Retained earings, 12/31 ‘i {440,000} (260,000) Total fobilties cna equities _P{1,060,000) __P{500,000) During the year, 33 bought inventory for P80,090 and sold it to SZ for P100,000. 22 hed paid for only balf of this purchase by the end of the year. Of these goods, $2 still owns69 percent on December 31 8. What is the total of consviidated vevenues? a. 500,009 c. P426, 000 b. P4690, 000 3. Paco, 900 59. What is the-total consolidated cost. of, goods sold? a. P140,000 ¢, 130,900 b. P152,000 4. P132,090 60. The component of defined benefit cost include all of the following, EXCEPT: a. Service cost b. Net interest c. Remeasurenents d. Plan contributions 61. Earnings per share eiscio: a. Public entities b. Private entities c. Entities with complex capitel structure a. Entities that change the period wees axe required oly for capital structure during the reporting 62. The failure te record an accrued expense at year-end will result in overstatement errors of Net_income Working capital as No. Ne Yes be No yes Re c. Yes Ne No 4 ves yes . Use the following information for questions 63 to 65: on 1/3/x6, Pylax sold ‘equiprent costing P100,000 to its 100%-owned subsidiary, sylux, tox 80,000. At the rime of the sale, the equipment had been 50% depreciated (using the straight-1i thod and an assigned life of 10 years sylux continued depreciating the equipment by using the straight-line method over a remaining life of 5 years. 63. What are the cost and ace wlated deprecsation, respectively, of this equipment in the 12/31/x6 consclidated balance sheet? a: PBO,CO0 and P16,000 4. PL00, 000 and P16, 000 b. 80,006 and P56, 090. e. P105, 000 and P60, 000. cc. P80, 000 and P60, 000. 64. What is the amount of rcompany profit or loss that must be deferred at 12/31/x6? a. 26,000 2. P24, 006 bl 214,000 e. 20,000 c. P16, 000 65. What is the amount of the aajustment to Depreciation Expense in prepating th consolidation worksheet a= 12/3 /%6? a. P5,000 Advanced Financial Accounting & Reporting~ Final Pre-Board Examination (BATCH 33) SReSA: The Review School of Accountancy Page 14 of 14 b. P3,000 =. P6,000 1 Pa, 006 : Use the following information for questions 66 und 67. Ce Congoration subsidiary buys marrerable equity securities and inventory on Gers t goxt, for 100,000 foreign curvencies each. It pays for bork items on Jone 1, 2044, and they axe stiii on “hand at year end. Inventory is carried at TEte Uhaee “the ower ef-cost-or-arket rule. Currency. exchange raves for 1 peso foliow Teo, Ts=1 Fe | 20d ‘ 0. 16= | cose ae oat | December 31,_20%4 JI 66. Assume that the FC (foreign is the subsidiary’s functional currency. What balances consolidated balance sheet report as of Desember 31, 20x Marketable equity securities ~ 216,000 and Inventory =.P16,000 Marketable equity securities ~ P17,900 and inventory = P17,000. Marketable equity securities £15,009 and Inventory = P16, 000. Marketable equity securities 219,000 and Tnventory P19, 000. the rabsidiary!s functional What balances balance sheet iepoxt as of December 31, 20x47 Marketable equity securities > 616,000 and Inventory ~ P16, 000. Marketable equity » 17,009 and Inventory = 97,000. Marketable equity securities P19,000 and Inventory = P16, 090. Marketable equity securities 219,000 and Inventory P19, 000. 67. Assume that the peso does a consolidated noun 68. The following are based on PAS 12 (Income Taxes): Statement I: & deferred tax asset shall be recognized for the carry forward Sf unused tax losses and unused tax credits to the extent that it is probable Chat future taxable profit will be avaiable against which the unused tax losses and unused tax crecits can be ‘Statement II: Current tax abilities jassets} for the current and prior periods shall be measured at the amount expected to be paid (recovered trom) Phe taxation authorities, usicg the tax cates (and tax laws). that have been enacted or substantively enacted by the end of tke reporting period ‘Statement III: Deferred tax assets and liabilities shall be measured at the fax retes that are expected to apply to the period waen the asset is realized or the liability is seztied, besed on tex rates {an laws) that have been enacted ox substantively ena: the end of the reporting peri: ‘a. Only statement T is fa: b. Only statement IT is f. only statement I! is raise @. None of the statements is ¢ 69. Under PAS 7, interest paywente can be classified es part of either a. Investing or f) ay * operating or investing activit g or financing avtivitses b ce. Opera’ a lancing activities operating, investing o: 70. any loss incurred from the saie of treasury shares shali-be charged to a. share premium from original issuance, share premium from treasury shares and then b. Loss on sale of treasury shares ©. Retained earnings and then share premium from treasury shares 4. Share premium from treasury shares and then retained earnings. tained earnings. be reported as er expense -end of examination ~ The most difficult secret of a man to keep is the opinion he has of himseff. Nothing great was ever achieved without determination. Don't be discouraged; everyone who got where he is, started where he was. Impossibilities vanish when @ man and his GOD confront a mountain. Advanced Financial Accounting & Reporting- Final Pre-Board Examination (BATCH 33)‘RESA.095 BAL PREROARD ifr 20171 ADVANCED PMANCIAL ACCOUNTING & REPOWTREG IAAI 3. Under PAS 29, one of the following is an indicator of hyperinflation. People prefer to keep their wealth in monetary assets People prefer to keep their wealth in relatively stable foreign currency Interest rates, wages and prices are not linked te a price index The cumulative inflation race over three (3) years axceeds or is approaching 508 pove Under 8FRS 11, joint arrangements that are joint ventures {which were ‘jointly controlled entities’ under the FAS 31) are accounted for under ‘a. Cost method in accordance with 2AS 29 b, Bquity method in accordance with PAS 28 ¢. Fair value method in accordance with PFRS 9 4.” Proportionate consolidation method in accordance with PAS 31 Under PFRS 10, when a parent loses vontrol of a subsidiary, it must recognize any investment retained in the former subsidiary at ‘@. Carrying amount b. Fair value, with any gain or toss recognized in profit or loss c. Fair value, with any gain or loss recognized in other comprehensive income d. original acquisition cost, sdjusted for any dividend received from the subsidiary 10. \the modified accrual basis in accounting for government transactions means ‘a. Income’ is recognized when received while expenses are recognized when incurred b. Income is recognized when earned while expenses aie recognized when paid ©. Income iy recoguized when received while expenses are recognized when paid, except for transactions that are required by law to be accounted for under another basis 4. “Income is recognized when earned while expenses are recognized when incurred, except for transactions that are required by law to be accounted for under, cash or another basis 11, To be highly effective, the actual results of the hedge must be within a range of ‘a. 1008 ~ 1508, . b. 100 - 1258 ce. 80 - 109% a. Boe + 1258 12. Under PFRS 4, it refers to « party that has a right to receive comp insurance contract if an insured event occurs. a. Cedant bl Insurer e. Reinsurer 4. Policyholder 14. Financial statement of not-for-profit orgentzation focuses on a. Basic information for the organization as a whole b. Standardization of funds aomenciature cc. Inherent differences of uot-for-profit organization that impact reporting presentations d. Distinctions between current fund and noncurrent fund 17. The following statenents are based on PERS 3 (Business Combinations): Statement I: An entity shall account for each business combination by applying the acquisition method. Statement I2:The acquirer shail measure the identifiable assets acquired and the Liabilities assumed at theix acquirition date fair values. Statement III:For each business combination, the acquirer shall measure any non- controlling interest in the acquisee either at fair value or at the non-controiling interest’s proportionate share of the ecquirer’s identifiable net assets. ‘a. All of the statements are tie b. only statement I iz trne €. only statement 11 se a. only statenent 11 is faise 19. A Philippine importer that purchases mevchundices from a foreign firm's foreign current unit (FCO) would be exposed te a net exchange gain on the unpaid balance if the ‘a. Peso weakened relative to the FCU and the FCU was the denominated currency bl Peso weakened relative ta the FCO and the peso was the denominated currency ©. Peso strengthened xelstive to the FCO and the FCU was ‘the denominated currency . Peso. strengthened relative to currency re FCU and the peso was the denominated 20. Abnormal spoilage in a manufacturing process should be charged to ‘a. Profit or loss b. Accumulated profit or lose 5 €. Manufacturing overhead applicd ad. Manufacturing overhead control 21. What ts the correct accounting for Juint Arrangements? a. ALl joint arrangeuents are accounted for under PAS 28. B. Joint arrangenents classified ae Joint ventures are accounted for under PERS a.cs Joint arrangements classified a2 joint ventures are accounted for under PAS 26. @. Joint arrangements classified ax joint operations are accounted for under PAS 2a. 22. Gains or losses that arise as 2 result of translating foreign currency denominated operations inte the reporting cuxrsnay exe recognized in income: only if they are materiel ites b. only when they are settled jn cosh ¢. in the reporting period in whica they arise @. only when the interest in the foreign operation iu sold 23. Under PAS 11, when it is probable that total contract costs on a fixed price construction contract will exces rota? contract xevenue, the expected loss should be ‘Set off against profit of other construction contract where available Recognized a2 an expense immediately, unless revenue to date exceeds. casts to date Apportioned to the years of the contract according to the percentage of completion method d. Recognized as an expense inmediately 31, The cost per equivalent unit under the weighted average method of process costing considers Current cost only Current cost plus cost of ending work in process Inventory Current cost plus cost of beginning work in process inventory Current cost less cost of beginning work in process inventory 50. Goodwill should be xecorded in the accounting records only when “a. It is internally generated bl Te can be established that a definite benefit or advantage has resulted to a firm from some item such ar good name, capable staff, or reputation c. It ds acquired through the acquisition of another busine: 4. A firm reporta above normal earnings for five or more consecutive years 60. For which type of hedge are changes in fair value deferred and amortized as an equity adjustment? + Cash Flow hedge b. Operating hedge fi ¢. Pair value hedge 4. Notional value heage 61, Which models are aliowed to be used by the private operator for build-operate- transfer (BOT): schemes under IFRIC 127 I~ Financial Asset sede) EX ~ intangible As: IIT ~ Property, Plast + Equipment: model model a.) Tana tt b. [and TIT e. YT and Ir d.° 1, rr and 121 62..1f shares are istued as part cf the consideretion paid, transactions costs such as brokerage fees’ may be incurrea. According to PFRS 3 Business Combinations the appropriate accounting treatment fcr such costs un the records of the acquirer is a debit to é ‘a. Cash bl Investments ¢. Share capital d. Acquisition expenses 66. Under PFRS 10, which is NOT one of the three (3) elements of control? ‘a. power over the investee b. holding majority voting rights @. exposure, or rights, to variable returns from involvement with the investee @. the ability to use powsr over the investee to affect the amount of the investor's returns 69. The test indicating that-an intra-group business transaction has been realized is: a. the generation of profit from the transaction b, the involvement of an externsi party in the transaction . the presence of only within che group as parties to the transaction @. whether or not an operating profit or Loss occurred as a result of the transaction 70.Under NGAS; it is an authorization issued by the DEM to government agencies to withdraw cash from ‘the Mational ‘Treagury’ through the issuance of Modified Disbursement System checks. ‘a. Allotment bl Obligation . Appropriation d. Notice of Cash AllocationReSA ‘The ReviewSchool of Accountancy ‘WTel. No. 735-9807 & 734-3989 ADVANCED FINANCIAL ACCOUNTING & REPORTING Solutions to Final Pre-Board 33rdBatch to) Irena Zhe foreign currency is the functional currency, so a translation method or Glosing rate method is appropriate, All assets are translated at the mevenn exchange rate of P430,000- Because the peso is the functional currency, a remeasuremant (temporal method) is Feguired. All receivables are remeasured at current rates. Assets carried at pistorical cost, such as prepaid insurance and goodwill, are remeasured at historical rates. 2. (Dp) Allocation of Net Income ARTHORBAXTERCARTWRIGHT TOTAL Interest—108 of beginning capital P 6,000 P 8,000 —P10,000 24,000 Salary 20,000 20,000 Balance/Remainder (3:3:4) 1,800 1,800 2,400 Totals 21.990 "p29, 800 pig 200 “p50 005" STATEMENT. OF CAPITAL ARTHUR BAXTERCARTWRIGH? TOTAL Beginning capital "60,000 80,000, 100,000 240,000 Net income (above) 7,800 29,800 12, 400 50,000 Drawings (given) (5,000) "_(5, 000) (5,000) (15,000) Ending capital B52,800 "P104,800__ p107, 400_p2 75,000 3.8 4a) Ina % P10/000 bonus is paid to Costello (P100,000 is paid rather than the P90,000 capital balance). This bonus is deducted from the two remaining parthers according to their profit and loss ratio (2:3). A reduction of 60 perceat (3/8) is assigned to Burns or a decrease of P6,000 which drops that partner's capital balance from P30,000 to P24, 000. or, MOURE PAL denen —— s-ssense-P100, 000 Less: Book value of interest of Costello (308)... 90,000 Bonus to retiring partners... nen BAO 000 Burns, capital: P30,000 - (P10,000 x 3/5). B 24,000 i-@ Graig receives an additional P10,000. Since Craig is assigned 20 percent of all Profits and losses, this allocation indicates total goodwill of P50, 000. 20% of Goodwill ~ P10,000 -20 G = PLO, 000 S = P10,000/.20 G = P50, 000 Montana is assigned 30¢ of all profits and losses and would, therefore, record F15,000 of this goodwill, an entry that raises this partner's capital balance from P130,000 to P145, 000. or, 5 Se vavenee® 90/000 Less: Book value of interest of Craig (20%) ...60,000 Excess. ee Divided by... . _ = Goodwill - toval s = Montana, capital: P130,000 + (P50,000 % 308) ..P145,000 5. (c) I-bIRSA: The Review School of Accountancy Reported balances Potential loss from Cassidy deficit (split 5/6:3/8) Cash distributions Reported balances Possible loss Possible insolvency (3:3) Payment to Partners 6.8 ne 8! ic) MV of By-product Zest. Less: Selling and admi Share in Joint Cost per x: Unite produced. Share in joint cost. strative expense. Operating profit. Page2et10 Angela Woodrow cassidy P19,000 P18,000 (12,000) { 1,500) __(4, 500) 12,000 PI2, 509, P13, 500 320,000 [1,011,200 1,011,200 704,000 4,000 1,024,000 -1.915,200 * P1,024,000 / 16,000 = P64 x (16,000 ~ 15,800) = P12,800. 58. Add the two book values and remove P100,000 intercompany transfers. 59. Intercompany gross profit (P100,000- P80,000).. 20,000 Inventory remaining at year’s end OR Unrediized intercompany gross profit 12,000 CONSOLIDATED COST OF GOODS SOLD Parent balance 140,000 Subsidiary balance ... 80,000 Remove intercompany transfer . (100,000) Defer unrealized gross profit (above) 12,000 Cost of goods sold sn P.132,000 60.4 61a 62.6 Be Original cost of aa ‘Accumviated depreciation, 1/1/20x (P100,000 x 50%) ‘Add: Adcitional depreciation (P100,000 ~ P50,000) / 5 years Accumulated depreciation, 12/31/20x6 bd Sales price Less: Book vaive Cost Less: Accumulated depreciation (50% x P100,000) 50.000 Unrealized gain on sale Less: Realized gain - depreciation (P30,000 / 5 years) ann $,000_ Net unrealized gain, 12/31/20x6 65.€ Biminating enfiies: 12/31/20x6: subsequent to date of acquisition Advanced Financial Aecounting ¢ Reporting~ Solutions to Final Pre-board 3320 BatchRSA: The Review School of Accountancy Page 10 of 10 Realized Gain - depreciation _ _ a ‘Accumulated depreciation — 000 Depreciation expense a a 6000 {80,000 - (P100,000 - (P100,000 x S0%I}] = P30,0007 5 years or 15,000 P8,000 = P7,000 7 “Should be in CFS” Parent —Pylux “Recorded as” Subsidiary - Sylux Depreciation pens] T ‘Depracifon expense (50,000 15 year). 1.000 (0.00075 13000 (Acs. Boprectaton ae ‘Acc. depreciation TE000. 66. d_ The foreign currency is the functional currency o¢ 68. B 69. B 70. D ‘appropriate. All assets are translated at the current exchange rate of P.19. The peso is the functional currency, Inventory is a nonmonetary asset rate of P.16. Marketable equity s ;ecurtties is a nonmonetar remeasured at the current exchange rate of P.19. '¥, $0 @ translation (or cunent rate method) is 80 a remeasurement (or temporal method) is appropriate. (caried at cost) is remeasured at the historical exchange ry assel (carried at market value) are Advanced Financial Accounting & Reporting- Solutions to Final Pre-board 33RD Batch