TOMAS CLAUDIO COLLEGES

COLLEGE OF BUSINESS AND ACCOUNTANCY

FINAL EXAMS IN BA 13 (DEPARTMENTAL)

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question. WRITE YOUR ANSWERS
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____ 1. In 2021, Sta. Ines Hospital, Inc. received an unrestricted bequest of common stock with a fair value of P
1,000,000 on the date of receipt of the stock. The testator had paid P200,,, for this stock in 2020. Sta.
Ines should record this bequest as
a. a memo entry
b. non-operating revenue of P 200,000
c. non-operatting revenue of P800,000.
d. non-operating revenue of P 1,000,,000.
____ 2. Clear Hospital has an equity security that is appropriately included in noncurrent assets in unrestricted
funds. The portfolio has an agggregate cost of P300,000. It had an aggregate fair market value of
P250,000 at the end of 2018 and P290,000 at the end of 2017. If the portfolio was properly reported in
the balance sheet at the end of 2017, the change in the valuation allowance at the end of 2018 should be
a. an increase of P 40,000 c. an increase of P50,000
b. a decrease of P 40,000 d. a decrease of P 50,000
____ 3. Margarito Duavit Hospital accounting records disclosed the following information:
Net resources invested in plant assets ..................P 20,000,000
Board-designated funds....................................... 4,000,000
What amount should be included as part of unrestricted funds?
a. None c. 20,000,000.
b. 4,000,000 d. 24,000,000
____ 4. Rizal Provincial Hospital fiscal year ends May 3,1, 2017. In March 2017, a P300,000 unrestricted
bequest and a P500,000 pure endownment grant were received. In April, 2017, a bank notified Rizal
Provincial Hospita, that the bank received P 10,000 to be held in permanent trust by the bank. The
hospital should record the P300,000 unrestricted beqauest as
a. a credit to the fund balance c. other operating revenue
b. a credit to operating expenses d. non-operating revenue
____ 5. On October 1, 2017, Mark Inc., obtained a noncancelable sales order from a Thailand firm for a cusotm
made statue of her beloved Ngina. The contract price was 100,000 baht. On October 12, 2017, Mark
entered into a foreign exchange forward to sell 100,000 baht in 100 days at the forward rate of P3.15.
The statue was delivered on December 11, 2017 and collection on Januayr 20, 2018.
10/12/17 12/11/17 12/31/17 1/20/18
Spot rate (baht) P 3.20 P 3,00 ) 3.09 P 2.97
Forward rate (baht) 2.15 2.98 3.08 2,97
What was the net impact on Mark’s December 11, 2017 income as a result of this fair value hedge?
a. 20,000 decrease c. 17,000 decrease.
b. no impact d. 17,000 increase
____ 6. What are the reportable sales in the income statement in 2017 assuming that the firm commitment
account be closed to sales account.
a. P317,000 c. P 308,000
b. P 300,000 d. P 309,000
____ 7. On December 31,2017, the foreign exchange gain or loss on the hedgign instrument (forward contract)
amounted to
a. P 11,000 loss c. P 7,000 loss
b. P 7,000 gaim d. P 9,000 gain
____ 8. What was the net impact on January 31, 2018 income as a result of this fair value hedge?
a. P2,000 net gain c. P 1,000 net gain
b. P 1,000 net loss d. none
____ 9. Ace Corp starts a subsidiary in a foreign country; the subsidiary’s functional currency is the LCU. On
Janyary 1, Ace buys all of the subsidiary’s common stock for 20,ooo foreign currencies (FC). On April 1,
the subsdiary purchases inventory for 20,000 FCs with payment made on May 1 and sells this inventory
on August 1 for 30,000 FCs, which it collects on October 1. Currency exchange rates for 1 foreign
currency are as follows:
January 1 ..........................P .15 = 1 FC
April 1 ............................... .17 = 1
May 1 ............................... .18 = 1
August 1 ........................... .19 = 1
October 1............................ .20 = 1
December 31........................ ..21 = 1
In preparing consolidated financial statements, how much is the umadkusted amount of net assets ending?
a. 6,300 c. 1,400
b. 4,900 d. 3,000
____ 10. Related to Ace Corp; in preparing the consolidated financial statements, what translation adjustment will
ace report at the end of the current year?
a. P1,400 positive (credit( c. 400 positive (credit)
b. P 1,400 negative (debit) d. 400 negative (debit)
____ 11. Using the information of Ace Corporation, in the translated financial statements, what translation
adjustment will Ace report at the end of the current year?
a. temporal method c. hisstorical cost
b. monetary/non monetary method d. fair value
____ 12. AA, BB and CC sign an agreement to collectively purchase a yacht and to hire a company to manage and
operate the yacht on their behalf. The costs involved in running and operating the yacht business and the
revenue earned from the pipeline are shared by the three parties based on their ownership percentage.
All major operating and financing decisions related tothe yacht business must be agreed to b the three
companies. The cost of purchasing the yacht was P56,000,000. The yacht has an estimated 20-year
useful life with no residual value. The management fee for operating the yacht business for 2015 was P
11,200,000. Revenue earned from the yacht business in 2015 was P18,480,000. AA invested P
20,000,000 for a 40% interest.
Compute the share of BB ub=n the revenue of the joint operation for 2015..
a. 1,344,000 c. 8,000,000
b. 5,544,000 d. 16,800,000
____ 13. Compute the share of AA in the expenses of joint operations for 2015?
a. 5,600,000 c. 4,200,000
b. 3,360,000 d. 5,544,000
____ 14. Compute the share of AA in the gross profit/net income of the joint operation for 2015?
a. 1,344,000 c. 2,400,000
b. 5,544,000 d. 16,800,000
____ 15. Compute the ending investment / capital of AA for 2015?
a. 18,144,000 c. 1,344,000
b. 16,800,000 d. 22,400,000
____ 16. The Snipes Company owns 70% of the Genie Company. On the last day of the accounting period Genie
sold to Snipes a non-current asset for P 200,000. The asset cost P500,000 and at the end of the reporting
period its carrying amount in Genie’s books was P160,000. The group’s consolidated statemjent of
financial position has been drafted without any adjust s in relation to this non-current asset. What
adjustments should be made to the consolidated statement of financial position figures for non-current
assets and retained earnings
Non-current assets Retained earnings,
a. increase by P300,000 increase by P 195,000
b. reduce by P 40,000 reduce by P 26,000
c. reduce by P40,000 reduce by P 40,000
d. reduce by P 40,000 reduce by P 28,000
____ 17. On December 31, 2016 Poe Corp. sold machine for P900,000 to Saxe Corp., its wholly owned subsidiary.
Poe paid P1,100,000 for this machine, which had accumulated depreciation of P250,000. Poe estimated a
P 100,000 salvage value and depreciated the machine on the straight line method over 20 years, a policy
which SAxe continued. In Poe’s December 31, 2016 consolidated balance sheet, this machine should be
included in cost and accumulated depreciation as
COST ACCUM. DEPRECIATION
a. 1,100,000 300,000
b. 1,100,000 250,000
c. 900,000 40,000
d. 850,000 42500
____ 18. Mcquire Company acquired 90 percent of Hogan Company on January 1, 2016 for P234,000 cash.
Jogan’s stockholders’ equity consisted of common stock of P 160,000 and retained earnings of P80,000.
An analysis of Hogan’s net assets revealed: any excess consideration transferred over fair value is
attributable to an unamortized patent with a useful life of 5 years.
Book Value Fair value
Building ( 10 year life) P 10,000 P 14,000
Equipment (4 year life) 14,000 22,000
Land 20,000 25,000

In consoidated at January 1, 2016, what adjustment is necessary for Hogan’s building account?
a. 4,000 decrease c. 2,000 increase
b. 4,000 increase d. 2,000 decrease
____ 19. In consolidation at December 31, 2016, what adjustment is necessary for Hogan’s building account?
a. 4,000 decrease c. 4,400 decrease.
b. 4,000 increase d. 4,400 increase
____ 20. In consoldation at January 1, 2016, what adjustment is necessary for Hogan.s land account?
a. 7,000 increase c. 5,000 increase
b. 7,000 cecrease d. 5,000 decrease
____ 21. In consolidation at Decmber 31, 2017, what adjustment is necessary for Hogan’s land account
a. 5,500 increase c. 5,000 increase
b. 5,500 decrease d. nil
____ 22. On April 1, 2016, ZZ Corp paid cash of P 820,000 for all the net assets of AA Company appropriately
accouted for as a merger. The recordd asets and liabilities of AA CDorp on April 5, 2016 follow:
Cash P 60,000
Inventory 180,000
PPE ( net of accum. depreciation of 220,000) 320,000
Goodwill ( net of P50,000 amortization) 100,000
Liabilities ( 120,000)
Net Assets 540,000
 On April 1, 2016, AA’s inventory had a fair value of P150,000, and the PPE (net) had a fair value of
P380,000. The amount of total assets recordddddded in the books of zz as a result of the business
combination should be:
a. 590,000 c. 690,000
b. 570,000 d. 470,000

____ 23. The amount of goodwill recorded in the books of ZZ as a result of the business combination is
a. 350,000 c. 150,00
b. 250,000 d. 120,000
____ 24. The Boy George Company acquired the net assets of the Girl Company on January 1, 2015 and made the
following entry to record the purchase:
Current assets..................................100,000
Equipment........................................150,000
Land ............................................... 50,000
Buildings...........................................300,000
Goodwill............................................100,000
Liabilities....................................................... 80,000
Common stock, P 1 par..................................100,000
Paid-in capital, in excess of par.......................520,000
The amount of consideration paid by Boy George Company on the acquisition was
a. 700,000 c. 520,000
b. 620,000 d. 100,000
____ 25. Related to no. 24, assuming that additional shares on January 1, 2017 would be issued on that date to
compensate for any fall in the value of Boy George common stock below P 16 per share. The settlement
would be to cure the deficiency by issuing added shares based on their fairvalue on January 1, 2017. The
fair price of the shares on January 1, 2017 was P 8.
What is the additional number of shares issued on January 1, 2017 to compensate for any fall in the value
of the stock/
a. 60.000 c. 100,000
b. 80,000 d. 10,000
____ 26. What is the amount of paid-in capital in excess of par on January 1, 2017 immediately after tha additional
shares were issued?
a. 520,000 c. 420,000
b. 460,000 d. not affected
____ 27. Pangasinan Branch of Malate Company at the end of its first quarter of operatiosn, submitted the
following income statement:
Sales 300,000
Cost of sales:
Shipments from home office 280,000
Local purchases 30,000
Inventory at end (50,000) 260,000
Gross profit 40,000
Expenses 35,000
Net income 5,000
vvvvvvv

Shipments to the branch were billed at 140% of cost. The branch inventory of September 30 amounted to
P50,000 of which P6,600 was locally purchased. Markup on local purchases, 20% over cost. branch
expenses incurred by head office amounted to P2,500 not yet recorded by the branch. Compute the
amount of allowance for overvaluation by home office:
 a. 200,000 c. 50,000
b. 80,000 d. 37,600
____ 28. How much was the ending balance of allowance for overvaluation
a. 31,000 c. 43400
b. 12,400 d. 24,000
____ 29. The following information are extracted from th books and records of Rona Company and its branch.
The balances are at December 31, 2016 of the company’s operations.
Home Office Branch
Sales 260,000
Shipments to branch 78,000
Shipments from home office 104,000
Purchases 39,000
Expenses 78,000
Invntory, January 1 26,000
Allowance for overvaluatio of branch inventory 31,200
However, no shipments in transit between the home office and the branch were made. Both shipments
accounts are properly recorded. The ending inventory includes merchandise acquired from the home
office in the amount of P25,ooo and P7,800 from outsiders for a total of P33,800.
What is the allowance for overvaluation of beginning inventory?
a. 7,800 c. 31,200
b. 5,200 d. 26,000
____ 30. How much is the ending inventory at cost?
a. 15,600 c. 31,200
b. 20,800 d. 26,000
____ 31. Espana branch awas billed by the home officefor merchandise at 140% of cost. At the end of its first
month, Espana branch submitted among other things,the following data:
Merchandise from Home Office at billed price 98,000
Merchandise purchased locally by branch 40,000
Inventory, December 31 of which P7,000 are of local purchases 28,000
Net sales for the month 180,000
The amount of total cost of sales without the overvaluation is
a. 110,000 c. 78,000
b. 82,000 d. 70,000
____ 32. On October 1, 2014, NN Company consigned 100 wall clocks to PG Retailers. Each wall clock had a
cost of P150. Freight on the shipment was paid by NN for p 200. On December 31, 2014, PG submitted
an account sales stating that it had sold sixty pieces and it was remitting the remaining cash. The
remittance was net of the following deductioons from the sales price of the wall clock sold. How much
commission commission per wall clock was collected by PG:upon the remittance of P 12,840 which was
netted against the advertising of P 500 and Delivery and installation charges of P 100
a. 20 c. 56
b. 24 d. 30
____ 33. What is the selling price per unit of wall clock?
a. 300 c. 280
b. 200 d. 224
____ 34. Pita Pal sells fast food franchises. Pita Pal received P 75,000 from a new franchisee for provding initial
training, equipment and furnishings that together have a stand alone selling price of P75,000/ Pita Pal
also receives P36,000 per year for use of the Pita Pal name and for ongoing consulting services (starting
on the date the franchise is purchased). Rachel became a Pita Pal franchisee on March 1, 2016 and on the
same date, Rachel had completed training and was open for business. How much revenue in 2016 should
Pita Pal recognize for its arrangement with Rachel?
a. 105,000 c. 99,000
b. 111,000 d. 75,000
____ 35. Jenny Construction has two projects for which it reported as of December 31, 2016, the following
information:
Project A Project B
Contract price 4,800 860
2015 : Cost incurred 3,400
Percent completed 75%
2016 Cost incurred 1,250 140
Percent completed 25% 15%
Using percentage of completion, the gross profit to be recognized would be
a. 2015 :200; 2016 (50) + (11) = (61) c. 2015 200: 2016 (61)
b. 2015 : 1,400; 2016 279 d. 2015 - 1,400; 2016 50
____ 36. The October 1, 2014 Oldies Corp enters a contract to build a sports arena which it estimated would cost
P3,120,000. Oldies bills its clients at cost plus 20% and recognized construction revenue on a percentage
of completion basis. Data on the project for 2013, 2015 and 2016 follow:
Cost Incurred Est’d Cost tp Complete
2014 546,000 2,054,000
2015 998,400 1,315,600
2016 1,575,600 -0-\
How much is the gross profit for 2014?
a. 146.640 c. 237,160
b. 477,360 d. 240,240
____ 37. The following data relate to a construction job started by Jay Company during 2016:
Total contract price 100,000
Actual costs during 2016 20,000
Estimated remaining costs 40,000
Billed to customers during 2016 30,000
Received from customer 20,000
Any costs incurred are expected to be recoverable. Under the percentage of completion method, what
amount should Jay Compay recognize as gross profit for 2016?
a. Zero c. 13,333
b. 4,000 d. 12,000
____ 38. Which of the following is a not a charactristic of a contract for purposes of revenue recognition
a. lacks commercial substance c. identified performance obligation
b. Written d. presence of a selling price
____ 39. A company owes a bank loan of P100,000. It carries an accrued interest payable of P20,000. The loan is
secured b the company’s land which has a book value of P10,000 and an estimated realizable value of P
200,000. On a statement of affairs, the liability to the bank would be classifed as
a. fully secured c. unsecured liabilites with priority
b. partially secured d. unsecured liabilities
____ 40. From the above
a. there is no free assets available c. the lender has to make do with the
estimated deficiency ratio
b. there is free assets available d. the lender should conduct a dacion en
pago legal right

41.Marle Construction enters into a contract with a customer to build a warehouse for €950,000 on March
30, 2018 with a performance bonus of €50,000 if the building is completed by July 31, 2018. The bonus is
reduced by €10,000 each week that completion is delayed. Marle commonly includes these completion
bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by Probability
July 31, 2018 65%
August 7, 2018 25%
August 14, 2018 5%
August 21, 2018 5%

The transaction price for this transaction is

a. €995,000
b. €950,000
c. €652,500
d. €685,000

42. On June 1, 2018, Johnson & Sons sold equipment to James Landscaping Service in exchange for
a zero-interest bearing note with a face value of €110,000, with payment due in 12 months. The
fair value of the equipment on the date of sale was €100,000. The amount of revenue to be
recognized on this transaction in 2018 is
a. €110,000.
b. €10,000
c. €100,000
d. €100,000 sales revenue and $5,833 interest revenue.

43. P & G Auto Parts sells parts to AAA Car Repair during 2018. P&G offers rebates of 2% on
purchases up to £60,000 and 3% on purchases above $60,000 if the customer’s purchases for the year
exceed £200,000. In the past, AAA normally purchases £300,000 in parts during a calendar year. On
March 25, 2018, AAA Car Repair purchased £74,000 of parts. The journal entry to record the purchase
includes a
a. debit to Accounts Receivable for £74,000.
b. debit to Accounts Receivable for £72,800.
c. credit to Sales Revenue for £72,380.
d. credit to Sales Revenue for £72,800.
 44. Roche Pharmaceuticals entered into a licensing agreement with Zenith Lab for a new drug under
development. Roche will receive €8,100,000 if the new drug receives FDA approval. Based on
prior approval, Roche determines that it is 85% likely that the drug will gain approval. The
transaction price of this arrangement should be
a. €8,100,000.
b. €6,885,000.
c. €1,215,000.
d. €0 until approval is received.

45. Meyer & Smith is a full-service technology company. They provide equipment, installation
services as well as training. Customers can purchase any product or service separately or as a
bundled package. Container Corporation purchased computer equipment, installation and training
for a total cost of €144,000 on March 15, 2018. Estimated standalone fair values of the
equipment, installation, and training are €90,000, €60,000, and €30,000 respectively. The
transaction price allocated to equipment, installation and training is
a. €90,000, €60,000, €30,000 respectively
b. €48,000, €48,000, €48,000 respectively
c. €144,000 for the entire bundle.
d. €72,000, €48,000 and €24,000 respectively.

46. Meyer & Smith is a full-service technology company. They provide equipment, installation
services as well as training. Customers can purchase any product or service separately or as a
bundled package. Container Corporation purchased computer equipment, installation and training
for a total cost of €144,000 on March 15, 2018. Estimated standalone fair values of the
equipment, installation and training are €90,000, €60,000 and €30,000 respectively. The journal
entry to record the transaction on March 15, 2018 will include a
a. credit to Sales Revenue for €144,000.
b. debit to Unearned Service Revenue of €30,000.
c. credit to Unearned Service Revenue of €24,000.
d. credit to Service Revenue of €60,000.

47. Bella Pool Company sells prefabricated pools that cost £80,000 to customers for £144,000. The
sales price includes an installation fee, which is valued at £20,000. The fair value of the pool is £128,000.
The installation is considered a separate performance obligation and is expected to take 3 months to
complete. The transaction price allocated to the pool and the installation is
a. £124,541 and £19,459 respectively
b. £144,000 and £20,000 respectively
c. £128,000 and £20,000 respectively
d. £110,702 and £17,298 respectively
48. Botanic Choice sells natural supplements to customers with an unconditional sales return if they
are not satisfied. The sales returns extends 60 days. On February 10, 2018, a customer purchases
€4,000 of products (cost €2,000). Assuming that based on prior experience, estimated returns are
20%. The journal entry to record the expected sales return and cost of goods sold includes a
a. debit to Cash and a credit to Sales Revenue of €4,000.
b. debit to Allowance for Sales Returns of €800 and a credit to Cost of Goods sold of €400.
c. debt to Cost of Goods Sold and credit to Inventory for €2,000.
d. credit to Estimated Inventory Returns of €400

49. Botanic Choice sells natural supplements to customers with an unconditional sales return if they
are not satisfied. The sales returns period extends 60 days. On February 10, 2018, a customer
purchases €4,000 of products (cost €2,000). Assuming that based on prior experience, estimated
returns are 20%. The journal entry to record the actual return of €250 of merchandise includes a
a. credit to Allowance for Sales Returns for €250.
b. credit to Returned Inventory for €125.
c. debit to Returned Inventory for €125.
d. debit to Estimated Inventory Returns for €125.

50. On August 5, 2018, Famous Furniture shipped 40 dining sets on consignment to Furniture Outlet,
Inc. The cost of each dining set was €350 each. The cost of shipping the dining sets amounted to
€3,600 and was paid for by Famous Furniture. On December 30, 2018, the consignee reported the
sale of 30 dining sets at €850 each. The consignee remitted payment for the amount due after
deducting a 6% commission, advertising expense of €600, and installation and setup costs of
€780. The amount cash received by Famous furniture is
a. €25,500
b. €23,970
c. €22,590
d. €23,370

51. On August 5, 2018, Famous Furniture shipped 40 dining sets on consignment to Furniture Outlet,
Inc. The cost of each dining set was €350 each. The cost of shipping the dining sets amounted to €1,800
and was paid for by Famous Furniture. On December 30, 2018, the consignee reported the sale of 30
dining sets at €850 each. The consignee remitted payment for the amount due after deducting a 6%
commission, advertising expense of €600, and installation and setup costs of €780. The total profit on
units sold for the consignor is
a. €22,590
b. €10,290
c. €12,090
d. €19,890