ReSA The Review School of Accountancy BTel. No. 735-9807 & 734-3989 FINANCIAL ACCOUNTING AND REPORTING First Pre-board Examination ___Selution Items 01 and 02 are based on the following information: Helten Company’ has reported an account receivable of P905,000 and merchandise inventory of P1,500,000 in its accounting books as of Decenper t1, 2019; The reported inventory amount does not included goods costing 220,000" sent. to. a consignee, however, Molten Company charged the consignee for the selling price of the goods transferred. The anount Sharer against the. consignee was included in the their = account Feceivable. The gooda are mark to sell at 25% on cost. The “account (report from the consignee) revealed that 60% of the goods were sdy sold. Charges of the consignee are as follows: 8% commission om Sales value of merchandise gold and a 20,000 delivery cost for indise received on consignment. and a P6,000 delivery cost for goods Ot. At what amount should the inventory of Nolten Company be reported in its er 31, 2019 statement of financial position? a. B1,500, 000 c. PL, 588,000 b. P1, 580,000 4. 1,700,000 what amount should the account receivable of Molten Company be reduced respect to the consigned goods? 3. P655, 000 ce P_ 793,000 bL P767,000 d. 2,017,000 ventory PL, 500,000 on consignment (P220,000 * 408) 88,000 Total 1,588, 000 Account receivable PB 905,000 Mase. sent on consignment: (200,000 » 125%) (250, 000) pue from consignee: (2120, 000 1258 * 928 - P26,000) 112, 000 correct account receivable F167, 000 Items 03 and 04 are based on the following information Feenstiowing limited infornation were made available from the cash record or clarence Company and its bank statement for the month of December 31, 2019: Book receipts 4, 462,500 Bank receipts 4,830, 000 November 30 deposit in transit 650,000 Erroneous bank credit for December 25,000 coeeus book credit for November, corrected in Deceaber 50/000 Erroneous book debit 20,000 Erroneous bank debit in November, corrected in December 17,500 Credit meno for December not yet recorded by Clarence 300,000 Credit memo for November, recorded by Clarence in December 375,000 Customer's check received and deposited but posted ‘as disbursement by Clarence 150, 000 03, What is the total anount of deposit in transit as of Decenber 31, 20197 a. 245,000 c. P325,000 b. P275,000 a. P375,000 04. What ig the correct receipt for December? a. Pa, 237,500 e. Pa, 467,500 b. P4,287,500 ds P4, 407,500 Scanned with CamScannerSA: The Review School of Accountancy Page 2_of 11 PA, 162,500 P4,840, 000 1 = Row 640,090) {ein transit — Dee, x tt meno Nav. (375,000) Ai. memo — Dec 300, 000 . { 7o,000) (97,5000 aso,000 Correct receipt a, 467, 50014, 467,500 Book Ye ee 3,B47,500 3,142,500 epoait. in transit 325,000 650,000 Brror 70,000 37, a 4,462,500 Pa, 830,000 Understaterent of receipt _ 150,000 __ Total PH, 612,500 P4, 830,000 PL, 9 980,000 be 20, 000 ordinary share capital P1000, 000 Holding loss on investment (" 30,000) Share dividends payable~ ordinary 150,000 share premiun - ordinary 250,000 550,000 Accumulated profits ‘Total shareholders’ equity 1,920,000 .¢ following information + Ttems 07 and 08 are base_on thi Gn the bank recone The following information was included Roman Co. for July of 2020: iLiation for ee ee ION (Batch 39) PRACTICAL ACCOUNTING T ~ FIRST PRE-BOARD EXAMINATI ey) Scanned with CamScannerReSA: The Review School of Accountancy & charges rec ‘ ee Paes ofl le by bank in duly, Incluiing a July a hargr of P3,000, PHe0,a007 vcervice. chante, mate hy Bank tattae aed rade by bank in June and entry made tn hooks, 116,00! ded by th pany in daly, ly M1, 300,000 Outstanding checks’ for June Insuied In duly for 120,000 recorded by the com any ane mas hank charge dn duly, 20,0002 Erroneous bank cendit in in duly, P40, M00 ant Ere eoeee cies ates rrected in duly, 75,000, Erroneous book disburserent for #1040 he unadjusted disbursement per book on July 31, 20202 a. 2935, 000 cc. P945,000 940,000 d, P963, 000 0 t is the adjusted ancy a. P935,000 b. P9¢0,000 0 the following information lar Company Feceived an PI,800,00 subsidy from the governnent. to purchase anutacturing equipsent on January, 2, 2019. The equiprent has 2 cost of 009,000 a useful life a ten’ years, and no salvage valve. Solar epreciates the equipment on a double declining method. Solar Company hoses) to account for fe grant as deferred revenue. 09. What is the combined impact of deferred grant revenue recognition and lepreciation expense recorded for the year ended 2021 iss a. a decrease in the net incone by P230,400 | decrease in the net incone by P409, 600 @ decrease in the net income by P640, 000 decrease in the net income by P870, 400 Depreciation 5,000,000 x .80 x .80 x .20 (2640, 000) Realized income 1,800,00 x .80 x .80 x .20 230, 400 Decrease in the not incone 9,600) on Jonvary 2, 2022, the government asked for the repayment of the Ghe ‘co, che ‘noncompliance with attached condition of the grant. Sanvary 3, 2022 Solar Company repaid the government in the amount 21eyGor000 ae full settlement. What anount of gain or loss should Solar Company recognized as a result of the repayment? a. pone e. P362,720 b. P178,400 d. P510,176 Anount paid P1,100, 000 Garrying value of deferred Income 1/1/22: (2,800,000 x 80% x GOs x ADS) _921, 600 ose’ on repayment F178, 400 11, Assume that grant received on January 2, 2019 was treated as a reduction ASHE gross carrying anount of the manufacturing equipment, what is the adetying value of the equipaent after the repayment mas made on January 3, 20227 a. Pi, 638,400 e. P2,560,000 b. P2,500, 000 a. P3,645,000 5,000,000 x 80% x BOL x BOL = P2,560,000 decline in its Docenber 31, 2019 5 P1,850,000 and its 12, Simon Company has recognized a Rerchandise inventory. The cost of the inventory wa fl Ret realizable value was P1,425,000. The company has & Policy Teciude ail declines in the other expense and reversals in the octet renee a isos the allowance method. During 2020 market conditions Pare incon cling and simon’a inventory decreases to an NRV of 1,200,000, eee een oe che business year of 2020, Simon Company decided £0 shards a ae ccaeaciagitor doclines andi roversaie. | 7herney POs! PRACTICAL ACCOUNTING 1 ~ FIRST PREBOARD EXAMINATION (Batch 39) es) Scanned with CamscannerReSA: The Review School of Accountancy ai ——_______ Page 4 of 11 requires that all declines and rever should now be included in u, roguises tat ie ineladed tote nich of the following wit) Simon Company record in 20202 a. A debit to cont of alos and eradit mllomnen Cor daetina P125,000, be Adeb§t to cont of salen and credit allowmnen for dello hen eee c: Raebit to tons on Dectine Mes, 000, 4 A debét Lo Lon om beeline M880, 00D, Bo + 3s 2018, Foster corporation sold for 1,500,000 an oid Pekine davina an ortginat cost of 3,000,000 and a’ hook, value “we 9.000. The tern of the nate wore au fol lows 7300,000 down. payment "00,000 payable on December 31 each of the next four years agreement of sale made no mention of Interests however, 10% would be» z_gete for this type of transaction. hot ia the amcunt, of incone should be reportod in the statement Of comprehensive. incone year onde Doceabor 3, 20207 vane bass a. P27,273, ‘74,606 yo yo Me Fe b. P82, 066 95,096 jana Boe ou, Tafa fw 90d, — tized cost as of December 31, 2019: rely mae S oP Wi Factor of 101 annuity Talyfae #9009 | for 3 periods s Annual cash Qlews 300,000 x 2.406082 746,056 Prevailing rato at initial recogiitien ft Interest income for year 2020 016 are based on the following informatics jartian Fealized his lifelong dream of becoming 3 vin able to purchase the Hillside Vineyard at an estate auction 2018 for ‘P2, 000,000. is P800,000. purchase was risky because the growing season was Grapes must be harvested in the next several weeks, experience in carrying off a grape harvest. ieyard owner when he was in October 1, The fair value of the land being the contributory asset Martian retained the Hillside name for his new busines The coning to an end, the and Martian has Linited ©f operations, Martian is feelin: A the end of the first quarter first harvest was a success; value of P1,200,000, 19 Pretty good about his early results. The 300 bushels of grapes were harvested with a harvest). current commodity prices at (based on the tine of the net Fealizable value of Martian’ the end of the first quarter. And given the strong yield from area vineyards during the season, vineyard has increased to P2,500,000 at 200,000. The contributory asset has After storing the grapes for a short period of tine increased by Martian was able to sell the entire harvest for P1,400,000 on Decenber 26, 2018. estimated remaining life of The the grape vines on October 1, 2018 is 10 years 14, At what amount should the bearer plant be reported in the statement of financial position of Martian at the end of the first quarter? a. P1,170,000 ©. 1,500,000 b. P1, 200,000 dL P2,500,000 Bearer Plants Contributory Asset = Vineyard FY, beg Pl, 200,000, 800,000, = P2,000,000 Increased by "300,000 200, 000 500, 000 Fv, end 1,500,000 P1, 000,000 = P2,500,000 Cost (bearer plants) 1,200,000 10 years Depreciation 3 months (1,200,000/10 x 3/12) (""30/000) Carrying value 12/31 1,170,000 1s. to the vineyard and the harvests? PRACTICAL ACCOUNTING I — FIRST PREBOARD EXAMINATION (Batch 39) What is the net effect in the profit or logs statenent of Martian related Scanned with CamScannerCC OOSS'”-SC_o WO SA: ReSA: The Review School of Accountancy Page 5 of 11 a. P 200,000 increase ni 100 increase BL 1,200,000 increase &Mfr00;000 Increase Gain on initial recognition ~ harvest 1, 400,000 Depreciation — bearer plants «_"_30,099) Net effect on the profit or 16 Pi, 310.000 18. 19. What is the total not effect in the December 31, Income of Martian Company in relation to the bearer plants, 2018 comprehensive contesbutocy Par ery es 1,370,000 ffoct on the Profit or loss (reduce and bearer plants) 1270000 Effect on the ‘contributory asset, i7s70-000 taloori lessee ibatary neoee) ts Total effect on the Comprehensive income as oi of 20,000 every December 31 of the year. The his interest rate is 102. As of December 31, difficulty and indicates it will be unable to make fo the contractual terms. Bolow shows the a note receivable from gn annual interest torical effective ‘in financial ©f December 31, 2020, Miracle Company has ‘ahan Company, with face amount of P200,000 that pays Graham Company is G11 payments according ‘ash flow schedule involving the receivable from Grahan” What amount of impairment Decenber | Contractual cash Expected cash | boss cash Flows lows lows 202 20,000, 16, 000, 4,000, 2022 20,000, 16, 000 4,000, 2023 720,000, Te6, 000, 34, 000 joss should Miracle Company recognized on the bbove receivable as of December 31, 2020? a. 246,830 ce. P66, 830 b. Pa7,513 @. 67,513 Assume that e prevailing market rate of interest at the tine the syed J should Sedeived was 8%, what amount of impairment loss receivable was insacle Company recognized on Decenber 31, 2020? a. P42, 867 ‘e. P46,830 b. P46,296 a. P50,000 Happy Company held Limited Company. a 32 holding of the shares of Polo Company, a public the investaeat was classified as an investment in nd at June 30, 2019 had a carrying amount of equity. instruments ye forward {rom the previous period). Happy Company 10,000,000 (broug} had’ made an irrevo Mable election to recognize all changes in fair value income. The cumulative unrealized gain to dune in other comprehensive he investment was P800,000. On June 30, 2019, the 30, 2018 relating to t whole of the share copst ppeublie Limited company and, Of Roxy Company Galue of the shares ri Of shares, ‘ol of Carry Company was acquired by Roxy Company, ‘as a result Hlappy Company received shares in exchange for ite shares in Pole Company. The fair ceive ig P11,000,000. As a result of the exchange Cae umount of unrealized gain or loss should be transferred fo retained earnings? a. none e. P1,000, 000 b. 800,000 4. 1,800,000 . of the investment in Polo Company is P10, 000,000 needs ‘the carrying amoun i ‘ir value in the amount of P11,000,000. A fair value gain of ist lappy Company ° soe ered shares of Polo and 50 the investment in Polo Company should be derecognized a should be recognized. the ee PRACTICAL ACCOUNTING 1 — FIRST PRE-BOARD EXAMINATION (Batch 39) updating to fai 990.000 to be reported in the other comprehensive income. \o longer retains any risks and rewards of ownership in the nd instead a financial asset for the investment in Roxy No gain or loss on derecognition will arise. Both Narealized gain at the date of derecognition and the cumulative gain Scanned with CamScannerReSA: The Review School of Accountan Page 6_of U1 of ji ri of 7800,000 previously recognized In the other Gompronensive i ransferred to retained earnings as a reserves movenent « 20. Vivian Tne had not sales in 2020 of P700,000. AE DecenPer, ai, 20200 cee ee ead meeatclee, ‘the. balance in selecthd, 2 rT ccounts Fee a ee Ga0 debit and atiowance £2F UOWPNT Orove te San een ee pat DE of Tes net ane ee abl be uncollectable. What the cash realizable value ‘of the receivables What ia the cash realizapl®, “December 31, 20207 tof financial position at reported on the statenon 109,800 . p12, 200 bl 111,000 a. 322,500 Account receivable 125,000 Required allowance: Beginning balance p 1,200 Bad debts 700,000 x 2% 14,000 15,200 a B09, 800 Net realizable value th without ee 38. The finance receivable for ess) on the ins accounts receivables Wi for a finance charge 0 108 of the accounts vrded as a gait 21. Sun Inc. factors P2,000,000 of guarantee ( without recourse) Company retains an amount equal ty possible adjustments. What would be rece) Eransfer of receivables? a. PO fe. P60,000 gain B. Lees of P60,000 6. 260,000 Loss 1s 72,000,000 of its accounts receivables 3° collateral 0 of fein, gun Inc. also pays a, finance 20 22. Sun Inc assigns Sa be eecorded as a gain for a PL million 8 lean w EF i on the transaction upfront. What wou) F receivables? (less) on the transfer o! a. PO ©. 260,000 loss 4. 180,000 1053 b. Loss of P160,000 fons 23 and 24 @ receivables with a carrying ‘soes a finance charge of Relative to this ‘ale fo be reported use the following information for questi 2020, Hlenaon Company factores on eeer uP N500,000 to Agee Company. Ageo Conpany 295%: anount of Pioteivables and retains 31 of the recesvalres 38 oF tian, you are to determine the amount Of toss on transact Toone stacenent of Henson Company for February on February 1 23, Assune that Henson factors the receivables on a without guarantee 722we eae) basis. The loss to be reported i= fe. PYS,000 PO 4. P24, 000 fenson factors the oceivables on a with guarantee 24, Asoume that ‘The amount of cash received is (recourse) basis a. P265,000 ie. P291, 000 b. 276,000 d. 300, 000 a5, isera Tne. reported totsl assets of 1,600,000 and nat incose of Risers "7S; tne current year. Risers determined that inventory was sQ00 ae the beginning of the year and P10,000 at the underatated by P2: uaderatatet her iihat is the corrected anount for total assets and net Gneone for the year? 'P1, 610,000 and P95, 000 e. P1,610,000 and P72,000 d. PI, 600,000 and P85, 000 D_ P1,590,000 and P98, 000 uae the following infornation for questions 26 and 27 the following information was available from the inventory records of Rich Conpany for January: PRACTICAL ACCOUNTING I — FIRST PREBOARD EXAMINATION (Batch 39) & Scanned with CamScannerSA: TI ReSA: The Review School of Accountan Page 7 of 11 Balance at January 1 Units Unit Cost Total Cost Purchase: 3,000 19. 29, 310 January 6 poner 2,000 10.30 204600 2,700 10.71 28,917 sates: anwary 7 Januar enon saiance ne 3a 000) ee at January 31 Stb00 26 Assuming that Rich does ee hat Rich does net maintain perpetual inventory ecorl, Should ‘be "the inventory at damuary. aly, using the weighted average inventory method, rounded to the nearest dotlaz? a. P12, 606 ce P12,312 b. Pi2,26¢ ge Bla 322 + 20,600 + 28/917) 78,827 310 + 20,600 9,827 Total goods available for sale (29, 7000 + 2000 + 2,700) total unite available for aslo (3 70.237 Wwerage unit cost 2 * Units unsold 1 waza Cost of inv ory end - 27. Assuning that Rich maintains pexpetual inventory record, what Shes Beene ucen: sega ciuaeuacry s)fcestagi cali aceOOaeeeees samara method, rounded to the nearest dollar? 2. P12, 606 b. pt2,312 b. P12, 284 ) 12,432 Ae sale = TGAS 29,310 + 20,600 = p49, 910 ‘Tuas 3,000 + 2,000 ~ ‘5,000 Unit cost, 9982 ‘ae gale ~ Inventory beg. after the 1 sale 2,500 x 9.982 ~ 240295 Purchase 2200 28,917 Total goods available for sale 53,872 P Gnits available for sale 5,200 Unit cost 10-36 3,200 x unsold units Cost of fnventory end sell to local end national ice cream oe eevey Rub Daisy Began operations on January ly 2015 by purcas.og Producers we far 1,176,000. The company controller had the following seeorsation available at year end relating to the cows: 26. Dub Dairy produces milk to wilking cous Eartying value, Jenuaryl, 2025 P1, 176, 000 rey ta fair value dve to grosth and price changes 365, 000 ceeegece in fair value duc to harvest (42,000) it not yet sold P54, 000 ilk harvested during 2015 bu ‘on bub Daiy's incone statement for the year ending Decenber 31, 2025, Oe ae GE unrealized gain on harvested milk will be reported? a. No gain cP 54,000 a. P311,000 b. 212,000 yo, Braun pairy produces milk to sell t9 local and national ice croam Bravmagra. Yseoum. Dairy begen operations on January iy 2015 by Gao miik cons for 780,000. The company controller had the purchasing formation available at year end relating to the cows: following ini milking cous Garzying value, January, 2015 700,000 erry ind gait value doe to growth and price changes 242, 000 Seerease in fair value duc to harvest 128,000) Milk harvested during 2015 but not yet sold £56,200 on Braun Dairy's incone statement for the year ending December 31, Sei Mhat amount of unrealized gain on biological assets will be reported? PRACTICAL ACCOUNTING I — FIRST PRE-BOARD EXAMINATION (Batch 39) Scanned with CamScanner5 ReSA: The Review Schoo! of Accountan Page 8 of 11 age Bo 1 ae ! ps6, 00 aa _ : March 15,9 From Jontary e (iventery on hand as of January 1 totaled Fl, 650,000 rea Jamtary 1 through the Ue ot the fiver the company mage purchase PL, 10, 000. les returns of P100,000 and sales discount of 760,000 uming the rate of gross profit ice i ys, what is the Resuming the rato Of gross profit to selling peice ts 30% * inventory that was destroyed? m maesc 5 Bates 18 1, 650,000 Pp 683, 000 Fc 78,000 Estimated cost of inventory end destroyed by fire 1,144,000 31. Dicer uses the FIFO retail method to determine its ending inventory of Cost, Assune the beginning inventory at cost (retail) were PZ60, 000 (2396, 000), purchases during the eureent year at cost (retail) were 21,373,260" {2,200,000}, sales during the current year totaled P2/100,000, and net markups {nackdowns) were P48,000 (P72, 000). What Le the ending inventory value at cost? a. P283, 200 c. P299,201 b. P292, 640 a. 300,832 co 260,000 1B 396,000 Sales — P2, 200,000 e 1,379,280 NP 2,276,000 SIE 472,000 yotal 1,638,280 fotal 2,572,000 Total 2,572,000 Ratio 1,379,280/2,176,000 = 63.39% Inventory end at cost’ 472,000 x 63.398 = 299,201 32. bicer uses the conventionqal retail method to determine its ending (nesntory at cost. Assume the beginning inventory at cost (retail) were 260,000. (#396, 000), purchases during the current year at cost (retail) F260 on, 379,260. (22,200,000), sales during the current year totaled 1e'S00, 000, ‘and net markups (markdowns) were P48,000 (P72,000). What is the ending inventory value at cost? 2. P203,200 fe. P299,202 b. 7292,640 2. P300, 832 1B 260,000 8 396,000 Sales — P2,100, 000 P 1,379,280 NP 2,176,000 ETE 472, 000 Total 1,639,280 Total 2,512/000 Total 2,572,000 Ratio 1,639,280/2, 644,000 = 62% Taventory end at cost = 472,000 x 628 = 292,640 33. Boxer Inc. uses the average retail method to determine its ending [nventory at cost. Assume the beginning inventory at cost (retail) were 600, 000. (P990, 000), purchases during the current year at cost (retail) Were’ P6,025,000 (3,010,000), freight-in on these purchases totaled 265,000, sales during the current year totaled P8,110,000, and net narkups were 600,000. What is the ending inventory value at cost? 3. P1,618,500 PL, 718,100 By. PL,715,610 a. 2,450,000 PRACTICAL ACCOUNTING 1 — FIRST PRE-BOARD EXAMINATION (Batch 39) ze! Scanned with CamScannerND ReSA: The Review $1 hool of Ai 34. White count faite Farm ‘Supply’ an Page 9 of 11 38. 36. 37. 39 38. PRACTICAL ACCOUNTING 1 — FIRST PRE-BOARD EXAMINATION (Batch 39) Purchases o: Fecords for Seed OE the Tien) won or Tea anlatonce ADO" September 5,500 280, 51 October ac000 116-000 Tota meaty to an0 18, 600 6,800 The invento: OEY OF Commodity A at aed the end of october using FIFO is valued at Assuming ¢ suming that none . What value wouten® OF commodity A was sold during August and Septenbers, assuned? © shown at the end of October if average cost was @) P351, 900 ') 353, 300 ©) 9350, 662 &) 9365, 700 jentory end (F140) October ac 363,900 6,900 SexgnRE teaetei tion 2,300 $.i00 votes ember acquisition 93,600 @ 521,800 units Ave Ave unit cost 966, 800/19, 600 = P51.98 ventory end (Average) 6,900 x 51.98 = P658, 662 The following information pertains to the Inventory being produced PY Stamp Company. Cost of vaw materials put inte production, 900,000; Tabor | ang overhead cost incurred during 2020, P300,000, Labor and overhead costs incurred during the Lirst quarter of '2021 being the completion date. 780,000. Selling price, Pl,210,000. Total costs to sell P50, 000, At what amount should the inventory be valued as of December 31, 2017? a. P 900,000 ‘e. P1, 200, 000 b. 1,080,000 4. P1;280, 000 Material cost P 900,000 Labor and overhead 300,000 Total 004 NRV (2,220,000 ~ 80,000 ~ P50, 000) “77080, 000 Lower #1 089,.000 tens 36 to 38 are based on the following information: Gn January 2, 2018, Jolo Company receives a government loan of P3,000,000 paying a coupon interest of 3% per year. The loan is repayable on Beteber 31, 2022. Jolo Company's borrowing cost is 10% per annum. Thi Pelowmarkes interest is provided by the government to enable Jolo Company to bear cost of 3% per annum on the nominal value of the loan. lihat amount of defersed incone should Jolo Company report in the statement Of financial position as of Decenber 31, 20197 a. P64, 463 ‘c. P665, 672 b. 522,239 a. P7196, 065, What is the anount of realized grant should the company report in its December 31, 2018 statement of comprehensive income? a. P130,393 fc. P1S1,776 bl p143,433 4. P173.554 lihat 15 the net effect in the profit or loss of 2018 in relation to the government loan? a. none fe. P130,393 b. (290,000) 4. (F220, 393) Bailey, Tne. purchased 40,000 ordinary shares of Miller Manufacturing as a trading investment for 2,640,000. During the year, Miller Scanned with CamScanner42. 43. PRACTI Re vanar tt Schoo! of Accountan "ler tanutactaring Sh divi 10 of 11 Treose MABEacKuring gyal HYldend ot R650 pee ahnro™_me_yonr-wde ansane Qeatenont for aes, Me selt ing tor "Hea por sheer on eRe = oat Lae git, OM etled. Decenbor ny Bhat “ha the total Peo. a0 O88 and livident revenue faported by Balle mast ‘000 ©. P260,000 ividens a pavosoo0 An Unrealized sore 26:50 x 40,000 = p260,00 paueiboe + boite corpor: Ps28 oon Rotation at Corp Peutton purchased 16,000 ordinary shares of Comna Co. for Yearontt i the Years Coma paid a cash dividend of O13 pee share: ration pus’ Slates were selling for P38 por share. | Teire Foetseeiee Berhasod: the” shares “to. moat. on-trading | FOgV1atotY ratyeg aan Mat amount of total incomy will Loire Corporation report a. P-a- me statement for the year? b! P80, 000 08,000 of the outstanding the equity method reported net on, Jonasey 2, 2020 tod company purchased, 254 fo account” for the investments "busing 2020 Jobe T00, ‘cone of 340,000" ant giseribated atvidens of £360,000, 7he, ending Tance “inthe Equity, Sesccenonts acvoue, at peceaber 31» 2020 wad P6t0/000 after’ aptiving the eayley method during 2020. Wat. was he purchase price Pod Company paid for its investment in Jobs, ‘Inc? a. F170, 000 c. P380,000 B! peeo,c00 & Becooo sglex Corporation purchased 25,000 2019. Sherman Corporation Corporation for P80 per share on January 2, had. 100,000 ordinary. shares outstanding during 2020, peid cash 2020, and reported net income of dividends of 600,000 during 52,000,000 for 2020. At Decenber 31, 2020 Sherman's shares are selling at pee per share. By what net amount should the profit o loss of Ziegler Company be affected by their investment in Sherman Company for the year 20202 a. P150,000 fe. P500,000 b. P350,000 a. P550,000 Cost of investment 2,000,000 Ghcome from investment 2,000,000 x 25% ‘500,000 pividand 600,000 x 25% (150,000) Carrying value 12/31/20 2,350,000 Foie value/recoverable amount 25,000 shares x P66 2,200,000 Impairment loss F 150,000 Incoue from investnent 500,000 $350,000 Not effect in the profit or loss 2020, Chronic Company is committed to a plan to sell a auility and has initiated actions to locate a buyer. ‘oes not intend to transfer the facility to a buyer until tions of the facility and eliminates the backlog ‘The facility was constructed for a total period of 30 on January 2, hanvfacturing. f Chronic Company Sifter it ceases all opera Ge uncompleted customer orders. oe enegrnG, 100,000. Tts estimated useful life was for a $e8ks ind with an estimated salvage value of F300, 000. the carrying value of the facility is P4, 300,000 of P4,500,000. As of December 31, 2020, Chronic lete the customers’ orders and the facility has a As of January 2, 2020, anda recoverable value Company has yet to comp! Cecoverable amount of P4, 000,000: on Decenber 31, 2020, Chronic Company should classify the facility as oF Deoperty, plant & equipment valued at P4,000,000 CAL ACCOUNTING 1 — FIRST PRE-BOARD EXAMINATION (Batch 39) fio ee Scanned with CamScannerPage 11 of 11 4, 100,000 assee Rel FOr 8910 and” valued at P4, 500,000 posal and valued at £4,000, 000 a 28 of Janu atom th 3a, cee 4,300,000 38 Of Dace 200 = 300,000 + 20 years) 200,000 28 Of Becenber 31, 2020 4,100,000 P4/000,000 aa, On Januar; coy eee ces (408) of Polo Company's ordinary ‘st following in its income and a 500, Marco Company purchased 200,000 sha: Statement, ot comprenensive income a P4,000/000, net fair v. (000 unrealized loss from its investment in equity 2° aa Value to other comprehensive income. Polo Company paid cash dividends o£ 13,000,000 on Decenber 21, 2019- | on January 21,2020, teres Company sold $0,000’ shares of Polo Company at the current BBEEES TONGS ‘olo’s shares at P32 per share. What amount of gain oF loss from the sale should Harco Company recognise? eelesseeos cc. P425,000 b. P375,000 &L pa7s,000 Cost of investment 4, 500, 000 Share in net income 4,000,000 x 408 1,600,000 Share in unrealized loss $00,000 x 408 «200, 000) Share in the dividends 3,000,000 x 40% 43,200,000) Carrying value a, 700, 000 Selling price $0,000 x P32 1, 600, 000 Carrying value of investment sold (4,100,000 + 200,000 x 50/200 1,225, 000 Gain from sale 375,000 cavesstiseresseecessscsesvees ghd of axan shtsiensensantseagsecseneeeee® PRACTICAL ACCOUNTING 1 — FIRST PREBOARD EXAMINATION (Batch 39) Scanned with CamScanner