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Use the following information for question 1
CPA Corporation purchased a 10% interest in Sticky Company on January 1, 2010 as an

available-for-sale investment for a price of P120,000.
On January 1, 2015, CPA Corporation purchases 7,000 additional shares of Sticky

Company from existing stockholders for P945,000. This purchase increased CPA interest
to 70%. Sticky Company had the following statement financial position just prior to CPA
second purchases:
___________________________________________________________________________
Assets Liabilities and Equity
___________________________________________________________________________
Current assets 495,000 Liabilities 195,000
Building (net) 420,000 Common stock, P30 par
300,000
Equipment (net) 300,000 Retained earnings 720,000
_______ ________
Total assets 1,215,000 Total liabilities and equity 1,215,000
On the date of the second purchase, CPA determines that the equipment of Sticky was
understated by P150,000 and had a 5-year remaining life. All other book values
approximate fair values. Any remaining excess is attributed to goodwill.
1. On January 1, 2015 consolidated statement of financial positon, what is

the amount of goodwill to be reported?
A. P180,000
B. P45,000
C. P75,000
D. P120,000
Use of the following information for questions 2 and 3
Penny Company owns an 80% controlling interest in the Money Company. Money
regularly sells merchandise to Penny, which then sold to outside parties. The gross point
on all such sales is 40%. On January 1, 2014, Penny sold land and a building to Money.
The value of the parcel is 20% to land, and 80% to structures. The pertinent data are the
following:
Penny Money
Internally generated net income, P 1,560,000 P 750,000
2014
Internally generated net income, 1,020,000 705,000
2015
Intercompany merchandise sales, 300,000
2014
Intercompany merchandise sales, 360,000
2015
Intercompany inventory, December 45,000
31, 2014
Intercompany inventory, December 60,000
31, 2015
Cost of real estate sold on January 1, 1,800,000
2014
Sales price of real estate on January 2,400,000
1, 2014
Depreciable life of building 20 years
2. For 2014, what is the consolidated comprehensive income attributable to

controlling interest?
A. P 1,569,600
B. P 1,575,000
C. P 1,875,000
D. P 1,597,500
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3. Use the data in number 2, for 2015, what is consolidated comprehensive
income attributable to controlling interest?
A. P 1,603,200
B. P 1,629,000
C. P 1,360,000
D. P 1,630,200

Selected information from the separate and consolidated income statements of People
Corporation and its subsidiary, Society Company for the year ended December 31, 2015
are as follow:
People Corp. Society Co.

Consolidated
Sales P 600,000 P 420,000 P 924,000
Cost of Goods Sold 450,000 330,000 693,000
Gross Profit P 150,000 P 90,000 P 231,000
During 2015, People Corporation sold goods to Society Company at the same mark-up on
cost that People uses for all sales. At December 31, 2015, Society had not paid all of
these goods and still held 37.5% of them in inventory.
4. What is the original cost of goods in Society’s inventory acquired from

People Corp.?
A. P 36,000
B. P 27,000
C. P 9,000
D. P 18,000
Use of the following information from question 5
Selected data for two subsidiaries of Rock Corp. taken from December 31, 2015 pre-
closing trial balances are as follows:
S1 Co. S2 Co.
Debit Credit
Shipments to S1 450,000
Shipments to S2 600,000
Intercompany inventory profit on total shipments 150,000
Additional Data relating to the December 31, 2015 inventory are
the follows
Inventory acquired from outside parties 525,000 750,000
Inventory acquired from S2 180,000
5. At December 31, 2015 the inventory reported on the combined

statement of financial position of the two subsidiaries should be:
A. P1,275,000
B. P1,305,000
C. P1,410,000
D. P1,455,000

On July 1, 2015, Baliwag Company purchased 80% of the outstanding shares of Bicol
Company at a cost of P4,000,000. On that date, Bicol had P2,500,000 of capital stock
and P3,500,000 of retained earnings. For 2015, Bicol reported income of P325,000 and
paid dividends at P150,000. All assets and liabilities of Bicol have book values equal to
their respective fair market values. Assume income was earned evenly throughout the
year except for the intercompany transaction on October 1. On October 1, 2015, Baliwag
purchased a machinery from Bicol for P500,000. The book value of the machinery on that
date was P600,000. The loss of P100,000 is reflected in the income of Bicol indicated
above. The machinery is expected to have a useful life of 5 years from the date of sale.
6. In the December 31, 2015 consolidated balance sheet, how much is the
consolidation net income attributable to the parent company?
A. 1,606,000
B. 2,326,000
C. 2,366,000
D. 2,406,000
Use the following information for questions 7 and 8

Reprieve Co. issued 20,000 additional shares of its common stock for P4,800,000.
Reprieve Co.’s owners’ equity section immediately before and immediately after this
issuance of stock transaction are presented below:
Before After
3,000,000
3,600,000
Capital Stock, P30 value
Additional paid in capital 7,500,000 11,700,00
Retained Earnings 11,700,000 11,700,000
22,200,000
27,000,000
Total Owners’ Equity
7. Assume that Reprieve Co. issued this stock to the general public, by what
amount should Respite Corp. the owner of 80,000 of the outstanding
shares of Reprieve Co. adjust its investment in subsidiary account
because of the issuance of stock by Reprieve Co.?
A. 240,000 credit
B. 240,000 debit
C. 3,840,000 credit
D. 3,840,000 debit
8. Assume that Reprieve Co. issued stock to Respite Corp., whose ownership
interest thereby increased from 80,000 shares to 100,000. If the carrying
value of the identifiable assets of Reprieve is equal to their fair value at
the time the additional shares are issued, the goodwill indicated in the
purchase of the additional shares equals
A. 80,000
B. 60,000
C. 960,000
D. 961,000

On January 1, 2015, P Company purchase 32,000 shares of the 40,000 outstanding
shares of S Company at a price of P1,200,000, with an excess of P30,000 over the book
value of S Company’s net assets. P13,000 of the excess is attributed to an undervalued
equipment with a remaining useful life of eight years from the date of acquisition and the
rest of the amount is attributed to goodwill. For the year 2015, P Company reported a net
income of P750,000 and paid dividends of P180,000. While S Company reported a net
income of P240,000 and paid dividends to P Company amounting to P39,000. Goodwill
was not impaired in 2015. The retained earnings of P Company at the end of 2015 per
books is P1,025,000. P Company uses the cost method to account for its investment in S
Company. Non-controlling interest is measured at fair market value.
9. Compute for the non-controlling interest in net assets.

A. P339,875
B. P334,525
C. P336,475
D. P337,925
Use the following information for question for 10

On June 15, 2015, Psalm Company purchased merchandise worth 100,000 Swiss francs
from its Swiss supplier payable within 30 days under an open account agreement. Psalm
issued a 30-day 6% note payable in Swiss francs. On July 15, 2015, Psalm paid the note
in Full. The following spot rates (P/SF) are provide:
Buying Selling
June 15, 2015 P24.03 P24.15
July 15, 2015 24.15 24.22
10. How much is the loss on the payment to the Swiss supplier did
Psalm recognize?
A. 7,000
B. 7,035
C. 12,000
D. 12,060
Use of the following information for question for 11

On June 18, Trisha Corporation entered into a firm commitment to purchase specialized
equipment from the Shaza Trading Company for Y80,000,000 on August 20. The
exchange rate on June 18 is Y100 = P1. To reduce the exchange rate risk that could
increase the cost of the equipment in pesos, Trisha pays P12,000 for a call option
contract. This contract gives Trisha the option to purchase Y80,000,000 at an exchange
rate of Y100 = P1 on August 20. On August 20, the exchange rate if Y93 = P 1.
11. How much did Trisha save by purchasing the call option?
A. P12,000
B. 48,215
C. 60,215
D. Trisha would have been better off not to have purchase the call option

Beth had the following foreign currency transactions during 2015:
 Purchased merchandises from a foreign supplier on January 20, 2015 for the
Philippines peso equivalent of P60,000 and paid the invoice on April 20, 2015 at
the Philippine peso equivalent of P68,000.
 On September 1, 2015 borrowed the Philippine peso equivalent of P300,000
evidenced by a note that is payable in the lender’s local currency on September 1,
2016 on December 31, 2015, the Philippine peso equivalent of the principal
amount was P320,000.
12. In Beth’s 2015 income statement, what amount should be included

as a foreign exchange loss?
A. P4,000
B. P20,000
C. P22,000
D. P28,000

On December 1, 2015, Glenda Company whose functional currency is the Philippine peso
purchased equipment from a German Company invoiced at Euro 100,000 to be settled
on February 28, 2016. The Euro/peso exchange rates on December 1, 2015, December
31, 2015 and February 28, 2016 were P14.28, P14.31 and P14.41 respectively. Assume
Glenda hedge the equipment purchase by a forward contract on December 1, 2015 for
the delivery of Euro 100,000 on February 28, 2016 at a forward rate of P14.32. Assume
further that the forward rates for a 60-day forward at December 31, 2015 is P14.36 and
P14.40, respectively, and that the forward contract is a derivative financial instrumental
that is net cash-settled upon expiry.
13. Determine the (1) balance sheet presentation of the forward

contract at December 31, 2015 and (2) the net cash settlement between
the counterparties at February 28, 2016.
A. (1) P4,000 liability (2) P9,000 paid by Glenda

B. (1) P4,000 asset (2) P9,000 received by Glenda
C. (1) P0 (2) P0 received or paid by Glenda
D. (1) 5,000 asset (2) P5,000 received by Glenda

On June1, The company forecasted the purchase of 5,000 units of inventory from foreign
vendor. The purchase would probably occur on September 30 and require payment of
100,000 foreign currency. It is anticipated that the inventory could be further processed
and delivered to customers by early October.
On June 1, the company purchased a call option to buy 100,000 FC at a strike price of 1
FC = P0.55 during September. An option premium of P900 was paid. Change in the time
value of the option will be excluded from the assessment of hedge effectiveness.
June01, 2015 June 30 (B/S date) September

30, 2015
Spot Rate (market price) 0.53 0.552 0.56
Strike price (exercise price) 0.55 0.55 0.55
Fair value of call option P900 P1,300 P1,000
14. What is the foreign exchange gain or loss on option contract

(hedging instrument) on Sept 30?
Equity Earnings Equity Earnings

A. 1,000 (1,100) C. 1,100 (1,000)
B. 800 (1,100) D. 1,100 800

On December 1, 2015, Machupapii, Inc. entered into a 120-day forward contract to
purchase 250,000 US dollars for speculative purposes. Machupapii, Inc. fiscal year ends
on December 31. The exchange rates are as follows:
Date Spot rate Forward rate (3/31/10)

December 1, 2015 P45.00
P45.50
December 31, 2015 46.00 46.50
January 30, 2016 45.60 45.30
March 31, 2016 45.10
15. How much is the forex gain or loss to be reported from this forward
contract in 2016?
A. P250,000 B. P350,000 C. P300,000 D. P224,000
E.
F. Use the following information for question for question 16
G. CLETCH Corporation issued a promissory note denominated in foreign currency for
the purchases an Italian supplier. The following were the related transactions: (in
Italy Lire). On December 1, CLETCH Corporation purchased merchandise from the
Italian supplier for 60-day, 18% promissory note for 108,000 Italy Lire, at a selling
rate of 1FC to P74.20 On December 31, the selling spot rate is 1FC to P74.85. On
January 30, the selling spot rate is 1FC to P75.75.
H.
16. On the settlement date, how much is the foreign exchange
gain/loss?
A. P98,658 B. P172,422 C. P100,116 D. P172,422
loss gain loss loss
I.
J.
K. Spot rate forward rate (1/24/10)
L. October 26, 2015 P52.73 P52.77
M. December 31, 2015 52.82 52.89
N. January 24, 2016 52.94
O.
17. What is the net forex gain (loss) from this transaction and hedge
that will be reported on CHARLE’S 2015 statement of income?
A. P15,120 B. (P8,640) C. P6,480 D. (P2,160)
P. Use the following information for question for 18
Q.
R. Catherine Corp sold handicrafts goods to a US firm for $100,000 in 2015. Pertinent
information on exchange rate follows:
S.
T. Buying Selling
U. Sept. 4 Receipts of order 45.80 46.00
V. Oct. 15 Date of shipment 47.00 48.00
W. Dec. 13 Date of balance sheet 47.20 48.50
X. Jan. 6 2016 Date of settlement 46.00 47.00
Y.
18. The sale would appropriately recorded at:
A. 4,700,000
B. 4,580,000
C. 4,600,000
D. 4,800,000
Z.
AA. Use the following for question for 19
AB. The following information was available from St. Rowie Hospital’s financial
records on donor contributions for various hospital expenses. The donations were
received during the year-end December 31, 2015. The hospital is private non-profit
organization.
AC.
AD. Under the authority of NPO’s Board of Trustees:
AE. Expensed P100,000
AF.Not expended 300,000
AG.
AH. Under the authority of NPO’s Board of Trustees
AI. Expended P600,000
AJ. Not expended 75,000
AK.
19. How much total unrestricted revenues were recognized in the
statement of activities of St. Rowie in 2015?
AL.
A. P600,000
B. P775,000
C. P700,000
D. P675,000
AM.
AN. Use the following information for question for 20
AO. Kevin hospital has the following account balances
AP.
AQ. Revenue from newsstand P50,000
AR. Amount charged to patients 800,000
AS. Interest income 30,000
AT.Salary expense- nurse 100.000
AU. Bad debts 10,000
AV.Undesignated gifts 80,000
AW. Contractual adjustments 110,000
AX. Charity Care 10,000
AY.
20. What is the hospital’s net patient service revenue?
A. P880,000
B. P800,000
C. P690,000
D. P680,000
AZ. Use the following information for question for 21
BA. Crisostomo and Rizal, in a joint venture, contributed P300,000 each in order
to purchase canned goods which are sold by lots in a closing-out sale. They agreed
to divide their profits equally and each shall record his purchases, sales and
expenses in his own books. After selling almost of the canned goods, they wind up
their venture. The following data relate to the venture transactions:
BB.
 Joint venture credit balance of Crisostomo was P240,000 and Rizal was P210,000
 Expenses paid from the joint venture cash was P30,000 by Crisostomo and P39,000
by Rizal
 Cost of unsold canned goods, which Crisostomo and Rizal agreed to assume were
P9,000 and P14,000 respectively.
BC.
21. What was the total sales of the joint venture?
A. P1,119,000
B. P1,073,000
C. P1,050,000
D. P669,000
BD.
BE. Use the following information for question for 22
BF.On March 2015 entities SME and SME each acquired 30 percent of the ordinary
shares that carry voting rights at general meeting of shareholders of entity Z for
P300,000. Entities A and B immediately agreed to share control over entity Z. On
31 December 2015 entity Z declared a dividend of P100,000 for the year 2015.
Entity Z reported a profit of P80,000 for the year ended 31 December 2015. At 31
December 2015 the recoverable amount of each venture’s investment in entity Z
is P290,000 (calculation: fair value P293,000 less costs to sell P3,000). Assuming
that entity Z earned its profit evenly through the year, under Cost Method, There is
no published price quotation or entity Z.
BG.
22. How much will be recognized in profit (loss) by each venture as a
result of the investment?
A. 30,000
B. 16,667
C. 20,000
D. 38,333
BH.
23. On January 1, 2015, Engr Inc. entered into a contract to build a large office
building for CPA Inc. for a total contract price of P5,000,000. CPA Inc. will make
annual payments for Engr Inc. but the amount of these payments cannot exceed
the direct costs incurred by Engr Inc. The construction contract provides CPA Inc.
with a final inspection right to ensure compliance with the contract terms prior to
accepting the completed project. It has been the accounting policy of Engr. Inc. to
use percentage-of-completion method to compute its construction revenue and
gross profit. On January 1, 2017, Engr. Inc. implemented an accounting change
from percentage-of-completion method to zero profit or cost recovery method. The
following data were provided by the accountant of Engr. Inc. for the years ended
December 31, 2015, 2016 and 2017?
BI.
BJ. 2015 2016 2017
BK. Cost incurred each year 1,450,000 2,600,000 600,000
BL. Estimated cost to complete at
BM. year end 3,150,000 400,000
BN. Progress billings each year 400,000 2,000,000 2,600,000
BO. Progress payment received
BP.each year 275,000 2,100,000 2,625,000
BQ.
BR. The above costs incurred for each year are inclusive of actual marketing
expense and general administrative costs which are not reimbursable under the
construction contracts and provided by the accountant as follows:
BS.
BT. 2015 2016 2017
BU. Marketing expense 70,000 200,000
120,000
BV. General administrative costs 30,000 150,000
80,000
BW.
BX. The corporate income tax of the years ended is 30%. What is the net
income to be reported by Engr. Inc. for the year ended December 31,
2016?
BY.
A. P150,000
B. P280,000
C. P100,000
D. P250,000
24. On January 1, 2020, Jeszie’s Grill Inc. granted a franchise to Ms. Jessie
Sarmiento to sell Jeszie’s products. The franchise agreement provides the following
terms:
BZ.
 Initial franchise fee in the in the amount of P15,000,000 .payable at P5,000,000
down payment on January 1, 2020 and the balance payable in five equal annual
installments every December 31. Ms. Jessie Sarmiento issued a 5-year non-interest
bearing promissory note. The prevailing market rate of the similar note is 10%.
 Contingent franchise fee equal to 5% of the sales revenue of Ms. Jessie Sarmiento.
CA.
CB. As of December 31, 2020, Jeszie’s Grill Inc. has not yet performed
substantially all material services or conditions required of the franchise contract.
For the year ended December 31, 2020, Ms. Jessie Sarmiento reported sales
revenue in the amount of P1,000,000.
CC.
CD. What is the amount of total income to be reported by Jeszie’s Grill
Inc. for the year ended December 31, 2020?
CE.
A. P0
B. P50,000
C. P12,631,574
D. P808,157
CF.5,000,000
CG.
25. DSWD receive a grant or donation from SM Inc. in the amount of P100,000.
DSWD has no specific authority for the use of the grant. DSWD remitted the
P100,000 cash to the Bureau of Treasury through the bank. Afterwards, the DSWD
prepared and submitted special budget for Street Children Christmas Party to the
DBM. Upon approval of the special budget for DSWD, the DBM released the Special
Allowance Release Oder (SARO) in the amount of P100,000. Afterwards, the DBM
released the Notice of Cash Allocation to the DSWD.
CH.
CI.Which of the following journal entries in the national government book or
regular agency book of DSWD is incorrect?
CJ.
A. To record the receipt of grant from SM in the National Government Book of DSWD
CK. Cash- Collecting Officer 100,000
CL. Income from Donation 100,000
B. To record the remittance to the Bureau of Treasury through the bank in the National
Government Book of DSWD
CM. Income from Donation 100,000
CN. Cash- Collecting Officer 100,000
C. To record the receipt of Special Allowance Release Oder (SARO) from DBM in the
Regular Agency Book of DSWD
CO. Receivable from DBM 100,000
CP. Subsidy income from National Government 100,000
D. To record the receipt of Notice of Cash Allocation from DBM in the Regular Agency
Book of DSWD
CQ. Cash – MDS, Regular 100,000
CR. Subsidy income from National Government 100,000
CS.
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Use the following information for question 1

CPA Corporation purchased a 10% interest in Sticky Company on January 1, 2010 as an

On January 1, 2015, CPA Corporation purchases 7,000 additional shares of Sticky

1. On January 1, 2015 consolidated statement of financial positon, what is

Use of the following information for questions 2 and 3

2. For 2014, what is the consolidated comprehensive income attributable to

Use the following information for question 4

People Corp. Society Co.

4. What is the original cost of goods in Society’s inventory acquired from

Use of the following information from question 5

5. At December 31, 2015 the inventory reported on the combined

Use the following information for question 6

Use the following information for questions 7 and 8

Use the following information for question 9

9. Compute for the non-controlling interest in net assets.

Use the following information for question for 10

Use of the following information for question for 11

Use the following information for question for 12

12. In Beth’s 2015 income statement, what amount should be included

Use the following information for question 13

13. Determine the (1) balance sheet presentation of the forward

A. (1) P4,000 liability (2) P9,000 paid by Glenda

Use the following information for question 14

June01, 2015 June 30 (B/S date) September

14. What is the foreign exchange gain or loss on option contract

Equity Earnings Equity Earnings

Use the following information for question for 15

Date Spot rate Forward rate (3/31/10)

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