1 ACC417/ACP

1ST SEM/2 021 - 2022

UL Col lege of Accou nta ncy U N IVE RSITY OF LUZO N ACC417/ACP: CASE STUDY no. 1 COLLE GE OF ACCOU NT
Dagupan City
INSTRUCTIO NS: THIS IS A GROUP WORK. SUBMIT YOUR OUTPUT NO
LATER THAN 12:00 PM SEPTEM BER 11, 2021. PREPARE YOUR OUTPUT IN GOO
2 STUDY no. 1
PROBLEM 1: STATEMENT OF FINANCIAL
POSITION
UL Col lege of Accou nta ncy ACC417/ACP: CASE
Your client, Lance Livestrong, is preparing for a meeting with investors. He would like to
provide appropriate information about his company's financial position. Lance has provided the following accou nts and balanc
Debit Credit
Cash P50,000
Accou nts receivable (net) 38,500 Inventories 65,300
Equ ipment (net) 104,000 Patents 2 0,000
Notes and accounts payable P52,000 Non-current liabilities 100,000 Equity 125.800 P2 77.800 P2 77.800
Except for the following items, all adjustments have been recorded in the accou nts.
1. Cash includes P200 petty cash and P20,000 in a fund designated for pla nt expansion in
2 022.
2. The net accou nts receivable is comprised of (a) accounts receivable P52,000 and (b) allowance for doubtful account
3. Equipment had a cost of P132,000 and accumulated depreciation of P28,000. 4. Notes and Accou nts Payable is comprised o
5. Non-cur rent liabilities are 10-year bonds paying interest at 9%, and maturing J une 30, 2 027.
6. Equity is comprised of Share Capital - Ordinary (Pl par) P50,000; Share Capital - Premium
P55,000; and Retai ned Earnings P2 0,800.
Requirements:
1. Prepare a corrected classified statement of financial position for Lance Livestrong
Company at December 31, 2019.
2. Livestrong is proud of his reporting and disclosure practices. He provides the three
primary financial statements along with a president's letter describing the company's accomplishments for the past year. He is w
UL Col lege of Accou nta ncy
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ACC417/ACP: CASE STUDY no. 1
PROBLEM 2: STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
ACC CO. Group (parent and its 75 per cent owned subsidiary) presents the consolidated
statement of profit or loss and other comprehensive income following the single-statement approach.
ACC CO. Group
Statement of comprehensive income at 31 December 2019
###
Revenue 20,000 (a) Cost of sales (7,000) (b) Distribution costs (1,000) (c) Administrative expenses (4,000) (d) Other
Income tax expense (1,600) (h) Dividend declared and paid (400) (i) COMPREHENSIVE INCOME FOR THE YEAR 2,00
Notes that do not form part of the statement of comprehensive income prepared by the group's
management
Parent
 Continui ng Discontinu ed Subsidiary Total
Opera ti on Operation

(a) Increase in fair value of investment 3,000

property

Sale of good s 10,000 1,500 5,000

Gain on disposal of discontinued 500

operation

Revenue 13,500 1,500 5,000 20,000

(b) Cost of sales 4,000 1,000 2,000 7,000

(c) Distribution costs 100 500 400 1,000

(d) Administrative expenses 2,000 1,000 1,000 4,000

(e) Advertising costs 1,000

Actuarial losses on defined benefit plans 700 800

Other expenses 1,700 800 2,500

(f) Impairment of a sales office equipment 500 500

(g) Finance costs 500 500 1,000

(h) All items of income and expense are subject to

tax (deferred and current) at

UL College of Accountancy
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ACC417/ACP: CASE STUDY no. 1
40 per cent of the amount of the income or
expense.

{i) Dividend declared and paid 400 400

The parent raised 1,000 from the owners of the parent during 2 019 by issuing shares to the
owners of the parent
The group follows an accounting policy of recognizing actuarial gains and losses on its defined
benefit obligations in other comprehensive income.
Requirements:
1. Prepare ACC CO. Group's financial performa nce statements for the year ended 31 December 2019 using the sing
2. Prepare ACC CO. Group's financial performance statements for the year ended 31
December 2 019 using the two-statement approach. Ignore comparative figures.
5 STUDY no.
PROBLEM 3: STATEMENT OF CASH FLOWS
UL Col lege of Accou nta ncy ACC417/ACP: CASE
Selected financial statement information and additional data for Stanislaus Co. is presented
below. December  31 2 018 2 019
Land P 58,800 P 21,000 Equ ipment .............................................................. .
504,000 789,600 I nventory.................................................................. 168,000
2 01,600 Accou nts receivable (net).................................. 84,000 151,2 00 Cash
............................................................................ 42 000               63 000
TOTAL.. ...................................................... P856.800 Pl.226.400
Share capital-ordinary ....................................... P420,000 P 487,200 Retained
earnings................................................. 67,200 205,800 Notes payable - Long- term................................ 168,000 302,400
term............................... 67,2 00 29,400 Accou nts payable
.................................................. 50,400 86,000 Accum ulated
depreciation................................ 84 000                        115 600
TOTAL.. ...................................................... P856.800 Pl.226.400
Additional data for 2019:
1. Net income was P235,200.
2. Depreciation was P31,600.
3. Land was sold at its original cost
4. Dividends of P96,600 were paid.
5. Equipment was purchased for P84,000 cash.
6. A long-term note for P201,600 was used to pay for an equipment purchase. 7.
Share capital-ordinary was issued to pay a P67,200 long-term note payable.
Requirement: Prepare a statement of cash flows for the year ending December 31
6

PROBLEM 4: STATEMENT OF CHANGES IN

EQUITY
U L Col lege of Accou nta ncy ACC417/ACP: CASE
STUDY no. 1
Since the formation of ARE N N CO. many years ago it has been a wholly owned subsidiary of ACC
CO..
I n 2019, after the ACC CO. group's consolidated financial statements for the year ended 31
December 2018 had been approved for issue, management discovered an error in its prior period financial statements. The ef
The equity of ACC CO. (separate entity) and AREN N CO. (separate entity) before correcting the
pnor per1'0 d error 1s summa n'sed as tollows:
2018 2019

ACC CO. AREN N CO. ACC CO. ARENN CO.

Total equity at the beginning of the year:

- share capital 2,500,000 10,000 2,500,000 10,000

- share premium 1,900,000 1,900,000

- retained earnings 2,070,000 80,000 2,415,100 82,000

Profit for the year 500,000 32,000 658,300 40,000

Actuarial gains/(losses) on defined benefit (1,900) (5,000) (3,000) 1,000

pension obligation, net of tax

Exchange gains/(losses) on translation of foreign 67,000 (46,200)

operation, net of tax

Issue of shares 6,000,000

Dividends declared and paid (220,000) (25,000) (320,000) (31,000

)

Total equity at the end of the year 6,815,100 92,000 13,104,200 102,000

I n 2 019, ACC CO. issued 1,000,000 ordinary shares with a par value of Pl each for P6 each.
Requirement: Prepare ACC CO. Group's consolidated statement of changes in equity for the
year ended 31 December 2 019.
LLE GE OF ACCOU NTANCY

OUTPUT IN GOOD FORM USING MS EXCEL AS SOLUTIO N SHEET.

ing accou nts and balances at December 31, 2019, for Lance Livestrong Company.

nce for doubtful accounts P13,500.

Payable is comprised of the following : Accou nts Payable P32,000; Taxes Payable P3,000; and Note Payable Pl 7,000, due Ju ne 30, 2 020

for the past year. He is wondering whether there are specific guidelines for presenting current and non-current assets and liabilities, as well

nses (4,000) (d) Other expenses (2,500) (e) Extraordinary item (500) (f) Fina nce costs (1,000) (g) Profit before tax 4,000
ME FOR THE YEAR 2,000
 Total

20,000

7,000

1,000

4,000

2,500

500

1,000

400

ber 2019 using the single-statement approach. Ignore comparative figu res.

figures.
 1

. 168,000 302,400 Notes payable Short-

31 2019

ncial statements. The effect of the error is P230,000 overstatement of retained earnings at 1 January 2 018. The error related to an error in

ARENN CO.

10,000
82,000

40,000

1,000

31,000

102,000
l 7,000, due Ju ne 30, 2 020.

sets and liabilities, as well as the prescribed order and format for presenting items in the statement of financial position. Advise Livestrong

it before tax 4,000

e error related to an error in the calculation of depreciation of ACC CO.'s sales building.
al position. Advise Livestrong about these issues.