The Review School of Accountancy Final Pre-Board Examination 17 September 2017 11:45 AM — 2:45 PM i jab Occovnki Odvorrced Financial fing andl Reporting INSTRUCTIONS: 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 answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 2 only. - rae Seta ZF pea 17, 2018, Lee, Inc. purchased from a Thailand firm an inventory costing 10,000 baht. Payment is due on January 15, 2019. Also on October 17, Lee, Inc. entered into a foreign exchange forward to buy 10,000 baht on January 15, 2019. onze Tie 7 P4130 | PLa2 7436 [oe In the profit and loss statement, foreign exchange gain or loss due to forward contract amounted to: 2018 2019 2018 2019 A POL Boo C P70O loss P5300 gain 8. P1,200 loss P200 gain D. 700 gain P300 loss Items 2 and 3 are based on the following information: ‘The Ventures Corporation decided to open a branch store in Manila. Shipments of merchandise to the branch totaled P108,000 which included @ 20% mark-up on cost. All accounting records are to be kept at the home office. The branch submitted the following report summarizing its operations for the period ended December 31, 20x4. 10 | y-Sales on account... 148,000 | Sales on cash basis... shen 44,000 Collections of accounts. See 120,000 Expenses paid..... z 76,000 DS \ 7 Expenses unpaid... ; se 24,000 “Z| Purchase of merchandise for Cash... 52,000 =--niventory on hand, December 31 (80% from home office) 60,000 —* Remittances to home office sevens 110,000 -2." What is the adjusted balance of the allowance for overvaluation of branch inventory account? a. P 8,000 —P12,000 b. P18,000 4. None of the above. 3. The branch operations, in so far as the home office is concerned, resulted in a net income(ioss) of: a. P1600 c —-P8,000 b._2,000 d. None of the above. ‘ABC Company manufactures product X. It adds materials in the beginning of the process in Department A, which is the first of two stages of its production cycle. The following are the information, concerning the materials used in Department At September 2018: Material ecelereesict io attain —Gosts_| Work-in-process, September 1, 2018 P_2,000 Units started du 23,480 Units completed and transferred to DF department B during September | _ 30,000 Using the weighted-average method, the materials cost of the work-in-process in the September 30, 218is: q AP 5, c. P11,000 3 B. 10,780 D. 14,700 5._€énsolidated financial statements are designed to provide: “a. informative information to all shareholders. e the results of operations, cash flow, and the balance sheet in an uridérstandable and Informative manner for creditors.ReSA: The Review School of Accountancy Page 2 of 14 the results of operations, cash flow, and the balance sheet as if the parent and subsidiary entity. 6. nce sheet as of June 30, 2016 for the partnership of Dom, Joe, and Rey show the following ag Total assets (at cost). 360,000 © 2 ¥ Dom, loan, P 20,000 = Dom, capital 83,000 °° Joe, capital... 77,000 ¥ _ Rey, capital. 180,000 j< 49 Total 360,000 It was agreed among partners that Dom retires from the partnership and it was further agreed that the assets-be a to their fair values of °408,000’as of June 30, 2016. The partnership would pay Doni P121,000)cash for Dom's partnership interest and includes the payment of loan to Dom. NO- .dwill :t0 be recorded (ey share profits and losses: 25%, 25%, and 50% respectively. After Dom's retirefent, what is the balance of Rey's, capital account? A. P180,000 .P200/000 B. P204,000—~~ ©. zy Builders, Inc. has incurred the following contract costs in the first year on a two-year fixed price contract for P4.0 million to construct a bridge: ‘+ Material cost = P2 million © Other contract costs (including site labor costs) = P1 million * Cost to complete = P2 million How much profit or loss should Lazy Inc. recognize in the first year lof the three year construction contract? ‘A. Loss of PO.5 million prorated over two years. B. Loss of P1.0 million (expensed immediately). — C._ No profit oF loss in the first year and deferring it to second year. D. Since 60% is the percentage of completion, recognize 60% of loss (i.e., P0.6 million) 8. Consolidated financial statements are appropriate even without a majority ownership of which of the following exists: ‘a,~ the subsidiary has the right to appoint members of the parent company's board of directors. the parent company has the right to appoint a majority of the members of the subsidiary's board of directors through 4 large minorty voting interest. the subsidiary owns a large minorty voting interest inthe parent company. 4d. the parent company has an ability to assume the role of general partner in a limited partnership \ _the approval of the subsidiary's board of directors. Controlling interest in. a company implies that the parent company ipsidiary's stock. ansferred common stock for a majority of the subsidiary’s outstanding bonds and debentu 10, Befffant tres, constructing a skyscraper In the heart of the Recto, Manila had has signed a fixed ~~ price two-year contract for P21.0 milion with the local authorities, Tt Has incurred the following cost relating to the contract by the end.of first. year: + Material cost = P5 mil ie a5 + Labor cost = P2 million \ : + Construction overhead = P2 million 7 + Marketing costs = PO.Svryion We q 9 + Depreciation of lale piaptand equipment = PO;salion._ LIdle plantar ore a e Atte end of fst year, thas estimated cost to comply the citrat = PS ition. | hat aross prof o los fromthe contract should Bilan Inc, recognize atthe end ofthe fst yer? A PLS milion (9/18 x 3.0)" = zu 8. PLO millon (9/18 x 2.0)_, _— €._P1.05 milton (10/19 x 20) DS ies D. P1.28 million (9.5/18.5) x 2.5) Items 11 and 12 are based on the following information: ‘The following selected data were taken from the books of the Bixby Box Company. The company uses Job costing to account for manufacturing costs. The data relate to June operations. ADVANCED FINANCIAL ACCOUNTING & REPORTING Final Pre-board ExaminationReSA: The Review Schoo! of Accountancy Page 3 of 14 (A)Materials and supplies were requisironed trom the stores clerk as follows: Job 405, material X, *7,000. Job 406, material X, P3000; materia! ¥, P6,000. Job 407, material X, 7,000; materal Y, P3,200. és For general factory use: materials A, B, and C, P2,300. Y (B) Time tickets for the month were chargeable as follows: Requisition No. | 1 Amount | : 24005 = P8000. eet (©) Other information: f "Factory paychecks for P35,200 were issued during the mgnth. Various factory overhead charges of 19,400 were. incufréd on account. Depreciation of factory equipment for the month was P5,400. Factory overhead was applied to jobs at the vate of P3.50 per direct labor hour. Job ordérs completed during the month: Joi 4015.and Job 406. Selfing and administrative costs were 2,100. / TIF Job 406 were sold on account for P41,500 how much aross profit would be recognized? A. P 3,800, ©. P18,500 3 B. P 5,900 ~ ©, P35,600 12. rhe halance in the factory overhead account would represent the fact that overhead was ‘A. P1,050 underapplied . P3,150 overapplied 8. P1,250 underapplied D. P4,350 overapplied 13),San Miguel Corporation acquired 100% of a foreign subsidiary, Sing Sing Ltd on 1 July 20x7. The balance sheet of Sing Sing on that date was as follows: Balance sheet at 1 July 20x7 Machinery at cost Share capital Investment property General Reserve 100,000 Receivables 50,000 Retained earnings 300,000 Cash _____70,000 S 609,000 The balance sheet of Sing Sing as at Is as follows: Balance Sheet as at 30 June 20x8 £C (Foreign FC (Foreign Currency) __ Currency) Machinery- carrying value 150,000 Share capital 200,000 Investment property 200,000 General Reserve 100,000, Receivables 250,900 Retained earnings 500,000 Cash 300,00 Accounts payable 85,000 Income tax payable 435,000 + Relevant exchange rates are a3 follows: 1 July 20x7 00 = 1.25 30 June 20x8 1.00 3 1.28 Average 20x7-x8 1.00 = 1.18 (1) If the local currency of the foreign subsidiary is the foreign currency and the functional currency is Philippine peso, the total assets of FC900,000 would translate into Philippines pesos as (translate a set of financial statements from local currency into the functional currency); (2) If the functional currency Of the foreign subsidiary is the foreign currency and the presentation currency és Philippine pesos, the total assets of FC900,000 would tansiate into Philippine pesos as (Translate financial statements into the presentation currency) A. (1) P_ 709,688; (2) P 703,125 ADVANCED FINANCIAL ACCOUNTING & REPORTING Final Pre-board ExaminationReSA: The Review School of Accountancy Page 4 of 14 B. (1) P_ 703,125; (2) P_ 709,688 C. (1) P1,141,500; (2) P1,152,000 D. (1) P1,152,000; (2) P1,141,500 4, Parolarl Corporation sold equipment with a remaining three-year useful life and a book value of P14,500 to Its 80%-owned subsidiary, Sarafin Corporation, for P16,000 on January 2, 2018. A consolidated working paper entry on December 31, 2018 to eliminate the unrealized profits from the intercompany sale of equipment will inctude: } A. A debit to gain on sale of equipment of P1,000. <. 8. A debit to gain on sale of equipment for P1,500. C. A credit to depreciation expense for P1,500 D. A debit to machinery for P1,500. 5. Hartwell Company distributes the service department overhead costs to producing departments and ‘the following information for the month of January is presented as follows: __| Maintenance | _ Utilities P_9,000 = io% | Producing department A pode Producing department B The company distributes service department costs based on the reciprocal method, what would be the formula to determine the total maintenance costs? AG Ra 18,700 + .10U C. M = P18,700 + .30U + .40A + .40B 9,000 + .20U D. M = P27,700 + .40A + 40 16, The best definition for direct quotes would be direct quotes measure a. Exchange rates at a future point in time b. Current or spot rates, c. How much domestic currency must be exchanged to receive 1 foreign currency d. how much foreign currency must be exchanged to receive 1 domestic currency 17. Which of the following is NOT considered when directly computing the transiation adjustment for foreign financial statements? a. Beginning amount of net assets held by the domestic investor b. Increase or decrease in net assets for the period excluding capital transactions c. Increase or decrease in net asset as a result of capital transactions d. Allare considered when directly computing the translation adjustment 18. Which of the following suggests that the foreign entity’s functional currency is the parent's currency? a. _Intercompany transaction volume is low. 'b. Debt is serviced through local operations. There is an active and primarily local market. 4d. Sale prices are influenced by international factors. 19. On October 2, 2018, Tamayao, Inc. ordered a custom-built-passenger van from a Japanese firm, The purchase order is noncancelabie. The purchase price is’1,000,000 ens with delivery and payment to be on March 31, 2019. On October 2/ 2018, Tamayao, Inc. entered into a forward contract to buy 1,000,000 yens on March 31, 2019 for P.57,. On March 31, 2019. the custorn-built passenger van was delivered. ~soayie aaaiae P | Spot rate (rupee) _ é Forward rate (rupee) I 53 58 | 57 ‘The December 31, 2018 profit and loss statement, foreign exchange gain or loss (on hedged item / commitment) amounted to: Fair Value Cash Flow Fair Value Cash Flow Hedge Hedge Hedge Hedge ‘A P60,000 loss P50, 000 loss C. P50,000 loss PO BP 0 50,000 loss D.P50,000 gain P 0 using the same information in No. 19. compute the December 31, 2018, foreign exchange gain on forward contract amounted to (income statement or equity): Fair Value Cash Flow Fair Value Cash Flow Hedge Hedge Hedge Hedge ‘A. P50,000 1/S P50,000 equity C. P50,000 1/S Not applicable B. P50,000 equity 50,000 1/5 D. Not applicable P50,000 equity ADVANCED FINANCIAL ACCOUNTING & REPORTING Final Pre-board ExaminationReSA: The Review School of Accountancy Page 5 of 14 The Diamond Company uses 3 job order cost accounting system. Overhead applied to production is at a predetermined rave of 80% vscied un direct laber costs. The following postings appear in the ledger accounts of the company for the month of Sepcerber 2018: Debit Work-in-process, September 1 P 30,000 Direct materials, 60,000 4 Direct labor. 50,000, Factory overhead. we 45,000 FBT use red from the work-in:process costing P160,000. Job ember and has been charged 4,600 for factory On September 30, 2018, finishad gooas csinpl 327 was the only job not completed in Sep overhead. Oect materi charged 0 ho. 327 ws A. P10,350, re ©. P20,000 2 ce ae eae 27 per annur and D a minimutn ofP6,0D0 which is indusive of amounts representing interest’ and-ttélr respective: shares in partnership’ profits. The balance of the profits shall be distributed among A, 8, © and !) in the ratio of 3:3:2:2. What amount must be earned by the partnership i) 2018, before any charges for interest and partners’ salanes in order that A may recone a aggregate of P1500 including interest, salary and share of profits? koe t A P30,007 pgher Be is 8. 32,334 30,000 Z ia 34)1n 2018, PJD Construction Corporation tegan construction ‘work under a\ 3-year contract. The contract price was PB00,000. PID uses the percentage-of completion method for financial accounting purposes. The income-to be recognized each year is based on the proportion oF costs incurred to {otal estimated costs for completing the contract. The financial statement presentation relating to this contract at December 31, 2018 weie as ‘oliows: Balance Sheet ‘Accounts. Receivable ~ construction contract uilinas, 17,200 Construction-in-progress, 52,000 Less: Contract Billings, 19,200 Costs of uncompleted contract in excess of billings, 2,800 Income Statement Gross profit (before tax) recognized in 2018. P 14,560 ‘What was the initial estimated gross before tax on this contract ? A. P 52,000 © P576,000 8. 224,000 D. 800,000 35, If a partnership has only non-cash assets, all abilities have been property disbursed, and no additional liquidation expenses are expected, the maximum potential joss to the partnership in the liquidator process is: a. the fair market value of the non-cash assets b. the book value of the non-cash assets the estimated proceeds from the sale of the assets less the book value of the non-cash assets d. none of the above 46. Under the bonus method, when a new partner is sdmitied to the partnership, the total capital of the ne partnership is equal to: 4. the Ook value of the pravious uartners’ ‘existing partnership by the incoming pare? isthe thir market value of the consideration paid to the ADVANCED FINANCIAL ACCOUNTING & REPOFTING Final Pre-board ExaminationReSA: The Review School of Accountancy Page 8 of 14 . the ook value of the previous partnership pius any necessary asset write ups from book value to market value pus the fair market Value ofthe consideration paid to the existing partnership by the incoming partner ©. the book value-f the previous partnership minus any asset write downs from book to market value ‘lus the fai market vale ofthe consideration paid tothe existing partnership by the incoming partnes- 1, the fair market value of the new partnership as implies by the value ofthe incoming partners _c6nsideration in exchange far an ownership percentage in the new partnership 3 Saint Paul Hospital, a nonprofit hospital affiliated with Saint Paul University, received the following cash contributions from donors during the year ended December 31, 2018: Contributions restricted by donors for research... P-80;000" Contributions restricted by donors for capital acquisitions... sents 250,000 ‘Nelther of the contributions was spent during 2018, however, during 2019, the hospital spent the entire P50,000 contribution on research and the entire P250,000 contribution on a capital asset ‘which was placed into service during the year. On the hospital's statement of operations for the year ended December 31, 2019, what total amount should be reported for “net assets released from restrictions?” APO C. P250,000 6. 50,000 ©. 300,000 8, The balance in SM Corp.'s foreign exchange loss account was P15,000 on December 31, 20x2, before any necessary year-end adjustment relating to the following: (1) SM had a P20,000 debit resulting from the restatement/remeasured in pesos of the accounts of its wholly owned foreign subsidiary for the year ended December 31, 20x2. (2) SM had an account payable to an unrelated foreign supplier, payable in the supplier's local currency on January 27, 20x3. The Philippine peso equivalent of the payable was P100,000 on the November 28, 20x2, invoice date, and P 106,000 on December 31, 20x2. In SM's 20x2 consolidated income statement, what amount should be included as foreign exchange loss in computing net income? Functional = Functional Currency is Peso a 21,000 41,000 b. 1,000 21,000 c 41,000 21,000 a. 41,000 41,000 9¢1f a bonus is traceable to the previous partners rather than an incoming partner, it is allocated among the partners according to the. 2. profit-sharing pescentages of the previous partnership bi. proftst centages of the new partnership. < capil ‘tages of the previous partners. d._eapitat percentages of the new partnership. “S6Affime Industries acquired an 80 percent interest in Sands Company by purchasing 24,000 of its 30,000 outstanding shares of common stock at boOk value of P105,000 on January 1, 20x4. Sands reported net income in 20x4-of P45,000 and in 20x5 of P60,000 earned evenly throughout the respective years. Prime received P12,000 dividends from Sands in 204 and 18,000 in 20x5. Prime Uses the equity method to record its investment. ete cee ia Waa eae ose ac el a 000 <. P159,000 b.¥138,600. d. —P165,000 Ss R " ee 321n a construction contract, the term “variation” means =F (te) a. the initial amount of revenue agreed in the contract, b. an additional amount paid to the contractor if specified performance standards are met or / 57 ‘exceeded. can instruction by the customer for a change in the scope of work to be performed under the construction contract. d, an amount that the contractor seeks to collect from the customer as reimbursement for cost not included in the construction contract. 42. A partnership agreement calls for allocation of profits and losses by salary allocations, a bonus allocation, interest on capital, with any remainder to be allocated by preset ratios. If 4 partnership has a loss to allocate, generally which of the following procedures would be applied? 3. Any loss would be allocated equally to all partners. ADVANCED FINANCIAL ACCOUNTING & REPORTING Final Pre-board ExaminationReSA: The Review School of Accountancy Any salary allocation criteria would not ne "sed, The bonus criteria would not be used. The loss would be allocated using the profit and joss ratios, only. Page 9 of 14 a, 43, The underlying amount of a derivative insirument 1s 9. related to the number of units specified in the derivative and the price that relates to the asset or liability underiying the derivative, the change in the price or rate ‘hat relates to the asset or lability underlying the derivative. the price or rate that relates (0 the asset or fabilty unkeiiying the derivative. the number of units that is specified in tho derivative instrument. ie - tox Corporation purchas (2) percent of Bown Company’ stock In January 1, 20x5 for P6O0,000. At the acquisition date, Dow: has equipment wath a market value £250,000 greater than book value. On that date, Fox Corporation gives fhe abilty £ ave joint contro! with another entity over Down Company's. The equipment tis an estimated remaining life of 10 years. In 20x5, Down has net income of P320,000 and pays 180,960 of divitends. What is the balance in the investment account ‘on Fox's financial records at the end of 20,5 600,000 660,000 983,750 673,750 Items 45 and 46 are based on the following ‘i\fermation: dn January 1, 20x4, Park Corporation and Stren Corporation and their condensed follows: balance sheet are as Park Corp, Strand Corp._| Current Assets. P 70,000 “P 20,0077 QO) | Non-current Asiets 90,000 40,000 | | Total Assets *i60,000 P6000 | )2 Current Liapaites P 30,000 10,000 | Long-term Debt 50,000 Stockholders’ Eouity 20.000 000 Total Liallties and Equitles 5 160,000. 60,900 Jainary 2, 20x4, Park Corporarion borrow! 60,000 ane! used the proceeds to obtain #0% oF the ‘outstanding common “shares of Stand°Corporation, The P60,000 debt 1» payable In 10 equal annual principal payments, plus interest, Deginaing Deceinber 31 ‘over the undertying book value of the acijuired net assets (40%), 20x4. The excess fair value of the investment > allocated to inventory (60%) and to gooxtwill On a consolidated balance sheet as of January 2, 20x4, what should be the amount for each of the Following? oO Bee 45, Current assets should be: a a. P105,000 400,000 b. P102,000 a 90, eon s 46. Stockholders’ equity using fli fair vstue (full/gross-up. goodwill) proportionate basis of determine: non-controlling interest should be a. P80,000 & P_95,000 b. P90,000 dP 130,000 +7. The entry to set-up payable to officers and employees «ipon approval of payroll Salaries and Wages 510,000 PERA 35,000 Gross Compensation 365.000 witlinolding Tax 51,900 sis 5,300 PAGIEIG 1,200 Phuleattn 510 Total Deductions Net > $82,590 a, Salaries and Wages. Regular $10,000 Personne! Economic Relief Allowance (PEMA) ‘000 Due to aIF 51,000 Due to GSIS) 15,300 Due to PagtBIG ‘0,200 Due to Philkieaith 510 Due to Officers & Ematoys 487,990 . Salaries and Wages Regular Personnel Econiomic Reliet Allowance (PERA) ADVANCED FINANCIAL ACCOUNTING & REPORTING 510,000, 55,000 Final Pre-board ExaminationReSA: The Review School of Accountancy Page 10 of 14 Due to BIR 51,000 Due to GSIS 15,300 Due to PagIBIG 10,200 Due to PhilHeaith ‘sto Cash ~ MDS, Regular 487,990, ©. Salaries and Wages Regular 510,000 Personnel Economic Relief Alowance (PERA) 55,000 Due to Officers & Employees 565,000 Advances for Payroll 565,000 Due torOfficers & Employees 565,000 48. On Bécember 20, 2018, United Appeal, a-voluntary health and welfare organization, received a ___-donation of computer equipment valued at’P25,000 from a local computer retailer. The equipment is expected to have a useful life of 3 years. The donor placed no restrictions how long the computer equipment was to be used and United has an accounting policy which does not imply 2 time restriction on gifts of long-lived assets. On United's statement of activities prepared for the year ended December 31, 2018, the donation of computer equipments should be reported: ‘A. As an increase in temporary restricted net assets 8. Only in the notes to the financial statements CC. As an increase in unrestricted net assets D. sae increase in temporary restricted net assets or as an increase in unrestricted net ass 49.-Of January 1, 2018, the Jonas Company sold equipment to its wholly owned subsidiary, Neptune Company for P1,800,000. The equipment cost Jonas P2,000,000; accumulated depreciation at the time of sale was:P500,000. Jonas was depreciating the equipment on the straight-line method over twenty years with no salvage value, a procedure that Neptune continued. On the consolidated balance sheet at December 34-2018; the cost and accumulated depreciation, respectively should be: ‘A. P1,500,000-dnd P600,000 C. P1,800,000 and P500,000 B "00/800 ‘and 100,000 . 2,000,000 and P600,000 50, ,0f March 1, 2018, Evan and Helen decide to combine thelr business and form 2 partnership. The balance sheets of Evan and Helen on March 1, 201 ‘adjustments show the following: race sheets of Evan and Helen 01 pments show me. ‘Helen _| 3,750 | 13,500} 3 9% Bes 19,500 | = 30,000 | 9,000.09 eemmameen: | 3:900 | “) Bos a7 TP 51500 | ‘They agreed to provide 3% for doubiful accounts of their accounts receivables and found Helen furniture and fixtures to be under-depreciated by P900. If each partner's share’in equity is to be equal’to the net assets invested, the capital accounts of Evan and Helen would be: A, P58,170 and-P33,095, respectively C. P_ 59,070 and P32,195, respectively 8, P58,320-and P32,495, respectively —_~#-P 104,820 and P50,195, respectively 51))PafGon Corporation owns an 80% interest in Shely Corpgsation acquired several years 2go. Shelly Corporation regularly sells merchandise to its parent at 125' f Shelly’s Cost. Gross profit data of Poron an ely fo yer 208 ae 2 los KS ee 8 [Gross profit : uring 2018, Parcon purchased inventory items from Shelly at a transfer price of P400,000. Parcon’s December 31, 2017 and 2018 inventories included goods acquired from Shelly of P100,000 and 125,000, respectively ter Consolidated cost of goods sold of Parcon Corporation and Subsidiary for 2018 was: 4 ADVANCED FINANCIAL ACCOUNTING & REPORTING Final Pre-board ExaminationReSA: The Review School of Accountancy Page 1) of 14 A. P1,024,000 © P1,052,800 8. 1,045,000 D. 1,056,000 items 52 and 53 are based on the following information: 2, Jiminez Limited acquired 80% of the share copital and reserves of Mustang Limited for P180,000. Share capital was P100,000 and reserves amounted to-P50,000. All assets and liabilities were corded at fair value except buildings which was recosded at P10,000 below fair Value, The fait value of the NCT at the date of Jiminez’s acquisition was 35,000. If the company tax rate was 30%, the ‘990dwill recorded in relation to this business combination amounts to: Partial =~ Ful Partial Full i Goodwiit ‘Soodwil) Goodwill A 5: P55, 00 C. P54,400° —P68,000 B 4,400 58,000 D. P52,000 —_P58,000 °°. Using the same information s the previous number, the NCI share of equity at the date of acquisition Partial -. Full Partial Fut ill =~ Gooavuil soodwill Goodwill A P33, 35,600 C. P3140 P35,600 8. #51400 35,000 D. 32,000 35,000 De Components of the Decemier 17, 2018, statement of affairs of Liquo Company, which was ‘undergoing liquidation, included the following: Assets pledged t0 fully secured creaitors, at current fair value rr71soone Assets pledged to partiaty secured creditors, at current fale value......./~. 104,000 Free assets, at current fair value. svn 80,008> — tO Fully secured tiabilties 60,000 Partially secured liabilties, 420,000 Unsecured liabilities with priority 14,000 Unsecured liabilities without priority fossa 226,000 Determine the estimated payment to partially secured abilities? of A. P 78,000 CPL (¢ 8. P114,400 BPLs.1 re Po Ise 5, Wilson Company produces product x in a production cyck: which begins in the Grinding Department Conversion costs for this department were 80% complete as to the beginning work-in-process atid 50% complete as to the ending wark-in-process. Data as to conversion costs in the Grinding nber 2018 are as follows, Costs _Department in January _ 90,000 | _ | Conversion 1 | i 600 | 114400.) Using the FIFO method, what was the conversion costs of the: workin‘ proves in thé Grinding Department at December 31, 20187 A. 36,000 c, Pa0,480. Z0 ee 8. 31,200 ‘ D. 26,400 Tey 1 Items 56 and 57 are based on the following information: x The standard-cost per unit of component part K-45 45 (9) During the montn 6,000 units of K-48 aurchased-at a total cost of P25,200. In addition, 7,100 units of K-45 were used during the month, however, the standard quantity aliomed for acta! production is 5,900 units 58: The gece variance, materials ae record at sandra cost (once: A. P1,200 unfavorable ©. P1,200 favorable 42. 8. P1,420 unfavorable D. P1,A20 favorable 7 coo [4 The price variance, if materials are recorded at actual cost (price) ‘A P1,200 unfavorable C. P1,200 favorable 8, P1,420 unfavorable 0. P1,420 favorable 58. Wright Corp. has several subsidiaries that are included in its consolidated financial statements. December 31, 2005 trial balance, Wright had the following intercompany balances oefore mination ADVANCED FINANCIAL ACCOUNTING & REPORTING Final Pre-board Examination In itsReSA: The Review School of Accountancy Page 12 of 14 In its December 31, 2005 consolidated balance sheet, what amount should \ & Wright report as intercompany receivables? A, P152,000 CP 36,000 B. 146,000 Dis o ‘. A company has identified the following overhead costs and cost divers for the com ‘Number of Inspections | _ 130,000 _ | umber of i “Number of material moves pea ies | Engineering hours. i [ie 10 | Pe eS Budgeted direct labor cost was PL00,000 and budgeted direct material cost was P280,000. Compute the cost of each unit of Job 102 sing Actity-Based Costing: A. F340, C.P440 B. 392, D. 520 »0. Cherry, Inc. charges an initial franchise fee of P115,000, with P25,000 paid when the agreement was signed and the balance in ive annual payments. The present value of the future payments, discounted at 10% 1s P68,234. The franchisee has the option to purchase P15,000 of equipment for- 12,000. Cherry has substantially provided all initial services required and collectibility of the > payments is reasonably assured. The amount of revenue from franchise fees is; ‘AP 25,000 CP 93,234 8. 99,234 D. 115,000 D1, Mt. Carmel Hospital, a not profit hospital affiliated with a religious group, reported the following ‘information for the year ended December 31, 2018: Gross patient service revénue at the hospitals full established rates... 980,000- Bad debts expenses. ‘i 10,000. 9XO Contractual adjustments with third-party payors. san = 000002 Allowance for discounts to hospital employees. 2 15,0007 On the hospital's statement of operations for the year ended December 31, 2018, what amount should be reported as net patient service revenue? A. P 865, . P855,000-—~ a] 8. 880} D. 955,000__— ° 62. On November 1, 2018, Creamline Dairy Corp. concluded that the Thailand baht would weaken during the next six moths because of the coup that transpired recently. In hopes of reporting a gain, Greamine entered into a foreign exchange forward for speculation on November 1, 2018, to seb 1,000,000 baht on April 30, 2019 at the forward te. ae noi" Waive | a3 | Spot rate (baht) “oie TPt.180 | 'P1.210 | Forward rate (baht) [aga ey. 210 Cars tn the profit and loss statement, foreign exchange gain oP 6s on forwartr Contract amounted to: 2018 2019 2018 2019 8. P12,000 loss 23,000 gain C. P10,000 loss P30,000 gain is) 812,000 gain 23,000 loss Os Oi ae aot ! ADVANCED FINANCIAL ACCOUNTING & REPORTING. Final Pre-board ExaminationRe@SA: The Review School of Accountancy Page 13 of 14 3 Some units of output failed to pass final inspection at the end of the manufacturing process. The production and inspection supervisors determiried that the incremental revenue from reworking the Lunits exceeded the cast of rework. The rework of the defective units was authorized, and the Following costs were Incurred w reworking the units: Materials requisitioned froin stores Direct materials Miscellaneous suppiles, Direct labor. 14,000 —~ 2j The menufacturing overhead bucget inciudes an allowance for rework. “The predetermined mnanufacturng overhead rate Is 33% of direct labor cost. The account(s) to be charged and the appropriate charges forthe resvrk cost mould Be a. Worketn-process Inventory cant for P19,Un0 8. Work-in-process inventory Control for 5,009 and factory overhead control for P35,300. ._ Factory overhead contro! for 19,300, a. T fos Manufacturing Company fas @ cycle uf 3 days, uses a raw and in process (RIP) account, Charges all Conversion costs (0 Costs oi Good Sold. At the end. month, all inventories are wunted, thelr conversion cast components are estimated and inventory account balances are adjusted. Raw material cast is back flushes from RIP to Finished Goods. The following information is for June: Beginning batance of RIP account, including P2, 000 of conversion cost.....P 15, 000 Beginning balance of finished qoods account, including P3, 000 of Conversion cost. 23,000 Raw materials credit on credit. 500,000 Ending RIP inventory per physica! count, imcuding P2, 500 conversion Cost estimate 22,500 Ending finished good inventory ver physica’ count, including P1, 000 Conversion cost estinai 16,000 Compute the amount of materials to be backflushed trom Finished Goods to Cost of Good Sold: A. P 499,500 ©. 498,00 B 493,000 D. 509,000 65, Aguilar Sweets Factory manufactures a coconut candy, Coco, which is sold for P5.00 a box. The manufacturing process also results in a by-product Soloc. Without further processing, Soloc sells for P1.00 per pack, with Further processing, st sells for P3,00 per pack During the month of April, the total joint manufacturing costs up to the point of separation consisted. of the following charges to work-n-process: Raw materials, 225,000 Direct labor 100,000 Factory overhead, 45,000 During the month, the production for the two produicts was as follows: Coco. 591,000 boxes; Soloc, 45,000 packs. The following additional costs ate necessary for further processing to complete Soloc, In aver to obtain a selling price of P3.90 pier pack, durin "he month oF Apri! Raw materials, 30,000 Direct labor 22,500 Factory overhead 7,500 Assuming that the by-product Solo, is further pracessed and then transferred to the stockroom at et realizable value with a corresponsing reduction of Coco's manufacturing costs, the journa! en would be: A. By-product inventory ~ Soloc 45,000 ‘Work-in-Process ~ Cac 45,000 8. By-product inventory ~ Soloc 135,000 Raw materials. 30,000 Direct labor. 22,500 Factory overhead, 7,500 Work-in-Process ~ Cixo. 75,000 C. Work-in-Process ~ Solot. 6,750 Work-in-Process Coco 6,750 ADVANCED FINANCIAL ACCOUNTING & REPORTING Final Pre-board ExaminationReSA: The Review School of Accountancy Page 14 of 14 . Work-in-Process ~ Soloc. --60,000 Raw materials. 30,000 Direct labor. : 22,500 Factory overhead. 7,500 Items 66 and 67 are based on the following information: Montana Machine Company has developed the following standard factory overhead costs for each FX unit assembled in Department 143, based on a monthly capacity of 80,000 direct labor hours: Variable overhead. 2 hours @ P 6 per hour = P12 Fixed overhead. 2hours @ P 3 per hour = _6 Department 143 factory overhead per unit of FX. Pia ing the month of August, 38,000 units of FX were actually produced. Actual direct labor hours totaled /,500, and actual factory overhead totaled P700,000. i eS yotermine the: : v ©, Kontroliable variance: yO 778, Gabe Mi | ‘A. P4,000 favorable .P 4,000 unfavorable x Hg B. P5,000 favorable “al . P12,000 unfavorable 2 Yolume variance: A. P4,000 unfavorable 5. P 12,000 favorable C. P12,000 unfavorable 2 S .P 7,500 unfavorable 8. On December 30, 2018, Leigh Museum, a not-for-profit organization received a P7,000,000 donation of Day Company shares with donor-stipulated requirements as follows: + Shares valued at P5,000,000 are to be sold, with the proceeds used to erect a public viewing building, ‘+ Shares valued at P2,000,000 are to be retained with the divktends used to support current operations. As a consequence of the receipt of the Day shares, how much should Leigh report as temporarily restricted net assets on its 2018 statement of financial position (balance sheet)? Aces 0 C. P'5,000,000 8. 2,000,000 D. 7,000,000 Items 69 and 70 are based on the followiig data: 7X chemical company manufactures Joint products Pep and Vim, and a by product. Zest. Costs are assigned tothe Joint products by the market value method, whic considers further processing costs subsequent operations. For allocating joint costs to the by-product, the market value or reversal Cost method 1s used The total manufacturing costs for 10,000 units were P172,000 during the quarter. Production and cost data follow: produced — z Sales price per unit — { Further processing cost per unit | Selling and administrative expense per unit _ “Operating profit per 91. The valu€ of Zest to be deducted from the joint costs is: A. 5,000 C. P2,000 ¢ 8 3,000 D. Zero i The gross profit for Pep amounted to: ey A. P100,000 . P70,000 8. 90,000 D. Ze10 Good luck and GOD BLESS!!! ‘ner are ony to things me werd ta worry over the things you cn cnt and the things Yu ca control. Fl the at get {The invarable mark of wisdom 1s se the micutous inthe common. ‘No one knows what he can do until he ties There's no trac jan on the extra ite, Worry i lke 9 racking chair wil give you something to do, but wont get you anpwhere. {you haven tal things you want be grateful forthe things you don" have that you din want ADVANCED FINANCIAL ACCOUNTING & REPORTING Final Pre-board Examination