Advanced Financial Accounting and Reporting Total Assets P32,000 Total liab//equity P32,000

1. On September 3, Pistachio Inc. Consigned to Minimart, 10 ladies handbags costing P30

each, paying freight charge of P30. At the end of month, Minimart reported sales of 6 In Janaury, other assets with book value of P16,000 were sold for P10,000 in cash. Using
handbags at P60 each and expenses incurred of P25 and remitted the net proceeds due a safe payments schedule, how much will each partner receive as cash distribution after
to Pistachio Inc. After deducting 20% commission. the liabilities had been paid?
What is the total cost of the inventory of unsold bags? A. Addy – P1,200; Bess – P1,800; Clara – P3,000
a. P142 B. Ady – P0; Bess – P2,500; Calara – P3,500
b. P150 C. Addy – P1,800; Bess – P1,800 ; Clara – P2,400
c. P132 D. Addy – P0; Bess – P2,000 ; Clara – P4,000
d. P120
2. Butuan Company is bankrupt and has undergone corporate liquidation. Presented below 4. A parent company uses the equity method to account for its wholly owned subsidiary but
is its statement of financial position before the start of liquidation. has applied it incorrectly. In each of the past four full years, the company `adjusted the
Cash 300,000 Accounts Payable 100,000 Investment account when it received dividends from the subsidiary but did nột adjust the
Machinery 500,000 Salaries Payable 200,000 account for any of the subsidiary's profits. The subsidiary had four years of profits and
Building 1,200,000 Income Tax Payable 300,000 paid yearly dividends in amounts that were less than reported net incomes. Which one of
Loan Payable 400,000 the following statement correct if the parent company discovered its mistake at the end of
Mortgage Payable 500,000 the fourth year, and is now preparing consolidation working papers?
Contributed Capital 800,000
Deficit 300,000 A. The parent company's Subsidiary Income account will be increased by the cumulative
total four years of subsidiary profits.
 Liquidation expenses amounting to P600,000 were paid. B. The parent company's Retained Earnings will be increased by the cumulative total of
 The loan payable is secured by the machinery with fair value of P300,000. the first three years of subsidiary profit, and the Subsidiary Income account will be
 The mortgage payable is secured by the building . increased by the profit for the current year.
C. The parent company's Retained Earnings will be increased by the cumulative total of
 At the end of liquidation, the holder of loan payable received P340,000.
four years of subsidiary profits.
What is the amount to be received by the holder of accounts payable at the end of
D. A prior period adjustment must be recorded for the cumulative effect of four years of
liquidation?
accounting errors.
a. P60,000
b. 85,000
5. What is the proper disposition of a partnership loan that was made from a partner who has
c. P40,000
a debit balance in the capital account?
d. P15,000
3. The balance sheet of the Addy, Bess, and Clara partnership on January 1, 2019 ( date of
A. The loan is offset against thee debit balance in the capital account.
partnership dissolution) was as follow:
B. The loan is charged off to the capital accounts of all the partners in their profit and loss
sharing ratios.
Cash P4,000 Liabilities P8,000 C. The loan is ignored in liquidation.
Other asset 26,000 Loan from Addy 1,000 D. The loan is held for payment after all other capital accounts are covered.
Loan to Clara 2,000 Addy, Capital (20%) 2,000
Bess, Capital (40%) 9,000 6. In a "Build-operate-transfer", the contractual obligations to maintain or restore
Clara, Capital (40%) 12,000 infrastructure, except for any upgrade element, shall be recognized and measured at the
 best estimate of the expenditure that would be required to settle the present obligation at 9. If an entity uses hedge accounting for a hedge of variable interest rate risk, foreign exchange
the end of the reporting period. This is done in accordance with what standard? risk, or commodity price risk in a firm commitment or highly probable forecast transaction it is
required to disclose certain matters. required to be disclosed?
A. PFRS 9 B. PAS 23 C. PFRS 15 D. PAS 37 A. The amount that was reclassified from hedging reserve to profit or loss for the period.
B. The period when they are expected to affect profit or loss. C. A description of any forecast
7. The following are the contract revenues and costs transaction of Charlie Builders Corp. as transaction for which hedge accounting had previously been used, but which is no longer expected
of December 31, 2018. The project duration is from July 1, 2018 until June 30, 2019 with a to occur.
total contract cost of P5,000,000. It was agreed further that the initial contract be revised D. The amount of the change in fair value of the hedging instrument recognized in profit or loss.
with an increase by 15%.
Revenue: 10. Which of the following will increase consolidated retained earning?
Initial amount of contract P7,000,00 A. The depreciation of a P10,000 excess in the fair value of equipment over its recorded book
Additional incentives P200,000 value.
Other contract claims P50,000 B. An increase in the value of goodwill associated with a subsidiary subsequent to the parent's date
Incidental income directly related to the P20,000 of acquisition.
project C. The sale of inventory by a subsidiary that had a P10,000 excess in fair value over recorded book
Costs and expenses: value on the parent's date of acquisition
Direct Labor P1,000,000 D. The amortization of a P10,000 excess in the fair value of a note payable over its recorded book
Cost of materials P2,000,000 value.
Depreciation of plant equipment P300,000
Contract Design and technical assitance P150,000 11. Which of the following formulas would calculate the net realizable value of a product?
A. Final sales value minus separable costs
Administrative expenses P100,000
B. Sales value at the split-off point less cost to produce up to the split-off point
Selling expenses P50,000
C. Sales value x constant gross-margin
D. Final sales value minus cost of goods sold
12. The unadjusted balance in the Allowance, for Overvaluation account at year-end represents
Using the stage of completion measured by the proportion that contract costs incurred for
A. the mark-up on the merchandise available for saie by the branch for the year.
work performed to date bear to the estimated total contract costs, compute the amount of
B. the mark-up on the merchandise shipped to the branch during the year.
revenues for the year ended December 31, 2018.
C. the mark-un on merchandise shipped to the branch during the year less the mark-up on the
A. P5,727,000 B. P5,250,000 C. P5,693,800 D. P5,719,182
merchandise returned by the branch during the year.
8. Parent has a 100% direct interest in Subl and Sub2. As a part of a group reorganization, the
D. the mark-up on the cost of goods sold by the branch for the year.
parent transfers its direct interest in Sub2 to Sub) in exchange for consideration of P200M (equal to
13. On consolidated working papers, a subsidiary's, net income is
the fair value of Sub2).
A. only an entry in the parent company's general ledger.
The carrying amount of the investment in Sub2 in the separate financial statements of Parent is
B. deducted from beginning consolidated retained earnings.
P50M. The carrying amount of Sub2’s net asset in he separate financial statements of Sub2 is
C. allocated between the noncontrolling interest share and the parent's share.
P11OM. Sub 1 account for the acquisition of Sub2 using the pooling of interest method in its
D. deducted from ending consolidated retained earnings.
consolidated financial statements.
14. In partnership liquidations, what are safe payments?
What is Subl's cost of the investment in the subsidiary?
A. The amounts of distributions that can be made to the partners during the liquidation based on
A. P200M B. P160M C. P110M D. P50M
the partner's contributed capital return.
B. The amounts of distributions that can be made to the partners, after all creditors have been paid balance sheet?
in full. A.P170,000.
C. The amounts of distributions that çan be made to the partners with assurance that such B.P130,000.
amounts will not have tO be returned to the partnership. C.P120,000
D. The anounts of distributions that can be made to the partners, after all non-cash assets have D. P180,000
been adjusted to fair market value. 20. Under PFRS 15, an asset is transferred to the customer when the it obtains
A. satisfaction
15. Entity S is a wholly owned subsidiary of Entity P. Entity P provides an interest free loan in the B. possession
amount of P100,000 to Entity S. The loan is repayable in full after 3 years. The fair value of the C. control
loan (based on current market rates of 10%) is P75,131. During the periods to repayment D. recognition
(assuming no payment before maturity), the journal entry in the books of Entity P at the end of Year
2 shall be 21. Conglomerate Inc. has two divisions, electronics and music, each of which is a separate
A. Credit to Profit or loss- notional interest in the amount of P7,513 subsidiary. On December 18, 2018, the shareholders approve a non-cash dividend in the form of
B. Debit Loans receivable from subsidiary' in the amount. of P8, 264 the electronics division. The distribution is to be made on January 17, 2019.
C. Credit to `Loans payable to parent' in the amount of P7, 513
D. Debit Profit or loss - notional interest P8,264 In Conglomerate Inc.'s separate financial statements at December 18 and 31, 2018, the investment
16. An agency received a Notice of Cash Allocation (NCA)in the amount of P1,226,618 It paid a in Electronics Inc., which holds the electronics division, is caried at Pl100M- The division has
total of P1,094,422. The accounting entry to recognize reversion of unused NCA shall have a consolidated net assets of P210M. The fair value of the electronics division at December 18 and
A. credit to `Subsidy from National Government' in the amount of P1,226,618. 31, 2018, is P375M of Conglomerate Inc. shall have
B. debit to `Subsidy from National Government' in the amount of P132,196. A. A credit to `Equity' of P375M in its consolidated financial statement S The entry in the books
C. debit to Subsidy from National Government' in the amount of P1,226,618. B. A credit to Liability' of P375M in its separate financial statements
D. credit to "Subsidy from National Government' in the amount of P132,196. C. A credit to Liability' of P210M in its consolidated financial statements
D. A debit to Equity of P210M in its separate financial statements
17. Entity S provides a below market rate loan in the amount of P100,000 to Entity P. The loan 22. Which of the following reconciling transactions will require credit to home office current account
bears interest at 4 and is repyable in full after 3 years. The fair value of the loan, based dn currint in Branch A's Book for the adjustment?
market rates of 10 is P84,147. The journal during the periods to repayment, in the books of the A. Collection by Branch A of Branch B's account receivable
Entity S (Subsidiary Company) at the end of Year 1, includes a B. Credit memo received by Branch A from, Home Office
A. Credit to Profit or loss - notional interest in the amount C. Payment by Branch A of Home Office 's accounts payable
of P8,415 D. Reshipment of goods received by Branch A to Branch B .
B. Debit to Profit or loss - notional interest in the amount 23. Austin contributes his computer equipment to the landscaping partnership he starts with
of P8,415 Bentley. At what amount should the computer equipment b credited to Austin's partnership capital?
C. Credit to Loan receivable from parent in the amount of A. At the amount that Bentley contributes, with the assumption that they both contribute equally to
P9,256 the partnership
D. Debit to Loan receivable from parent in the amount of P9,256 B.Austin's original cost
C. The tax basis
18. On June 1, 2019, Puell Company acquired 100& of the stock of Sorrell Thc. On this date, Puell D. The fair value at the date of contribution C.
had Retained Earnings of P100,000 and Sorrell had Retained Earnings of P50,000. On December 24. When a secured claim is not fully settled by the selling of the underlying collateral, the
31, 2019, Puell had Retained Earnings of P120,000 and Sorrell had Retained Earnings of P60,000. remaining portion
What is the amount of Retained Earnngs that would appear in the December 31, 2019 consolidated A. of the claim cannot be collected by the creditor.
B. is classified as an unsecured with priority claim.  Entity X owns the shopping center. does not specify that the parties have rights to the
C. remains as a secured claim. shopping The contractual agreement center;
D. is classified as an unsecured without priority claim.  The parties are not liable in respect of the debts, The liabilities or obligations of Entity X. If
25. Which of the following statements is TRUE of joint costing? Entity X is' unable to pay any of its debts or other liabilities or to discharge its obligations
A. The costs of a production process that yields multiple products simultaneously are called joint to third parties, the liability of each party to any third party will be 1imited to the unpaid
costs. amount of that party's capital contribution;
B. Joint costing is less useful for companies which manufacture multiple products simultaneously  The parties have the right to sell or pledge their interests in Entity X;
from the same production process.  The party receives a share of the income from operating the shopping center, in
C. Distribution costs incurred beyond the split-off point that are assignable to each of the specific accordance with its interest in Entity X.
products identified at the split-off point are considered as joint costs.
D. The primary purpose of joint costing is to allocate the separable costs to the individual products Which of the following statements is TRUE about the arrangement described above?
that are eventually sold. A. The joint arrangement is not a joint venture.
26. Percy Inc. acquired 80% of the outstanding stock of Sillson Company i business combination. B. The agreement established that the parties have rights to the net assets of Entity X. I
The book values of Sillson's net assets are equal to the fair values except for the building, whose C. The joint arrangement is a not joint operation.
net book value and fair value are P500,000 and P800,000, respectively. At what amount is the D. The agreement established both joint operation and joint venture.
building reported on the consolidated balance sheet? 30. The following assets of Poole Corporation's Romanian subsidiary have been converted into
A. P400,000 U.S. dollars, at the following exchange rates:
B. P800,000
C. P640,000 Current Rates Historical Rates
D. P500,000 Accounts receivable $850,000 $875,000
Trademark 600,000 575,000
27. Neither the Palmer Branch nor the home office of Rupert Company had completed any PPE 1,200,000 900,000
intracompany transactions during the last half of May, the credit balance of the branch'ş Home
Totals $2,650,000 $2,350,000
Office ledger account on May was larger than the debit balance of the home office's Investment in
Palmer Branch account. The most likely reason for this discrepancy is:
Assume the functional currency of the subsidiary is the U.S. dollar and the books are kept in a
A. The home office reported a net loss for the month of May.
different currency: The assets should be reported in the consolidated financial statements of Poole
B. The branch reported a net income for the month of May.
Corporation and Subsidiary in the total amount of
C. The branch reported a net loss for the month of May.
A. $2,350,000. B. $2,375,000. C. $2,325,000. D. $2,650,000.
D. The branch returned merchandise to the home office.

29. Two real estate companies (the parties) set up a separate vehicle (entity X) for the purpose of
acquiring and operating a shopping center. The contractual agreement between the parties
31. On October 4, 2018, Sooty Corporation, a US firm, borrowed 250,000 British pounds from a
establishes joint conti of the activities that are conducted in Entity X. The main feature of Entity X's
London bank, evidenced by an interest-bearing not payable due in one year. The note was
legal form is that the entity, not the parties, has rights the assets, and obligations for the liabilities,
payable in pounds. Exchange rates for pounds were: October 4, 2018 December 31, 2018
relating to the arrangement. These activities include the rental of the retail units managing the car
October 4, 2019 $1.59 $1.55 $1.61
park, maintaining the center and its equipment, such lifts, and building the reputation and customer
October 4, 2018 $1.59
base as a whole.
The terms of the contractual arrangement are such that: December 31, 2018 $1.55
October 4, 2019 $1.61
 What exchange gain or loss appeared on Sooty's 2018 income statement?
A. a gain of $15,000
B. a loss of $10,000
C. a loss of $15,000
D. a gain of $10", 000
32. On January 1, 2019, Star Company established a branch in a nearby city At the close of the
calendar year ended December 31, 2019, the investment in branch account on the books of the
home office had a balance of P66,000. The branch books reflected another amount thus the
difference in the reciprocal accounts is due to the following data:
 Cash of P10,000 forwarded to the home office by the branch is in transit and has not
been recorded on the home office books.
 Merchandise costing the home office P8,000 was transferred to the branch at a billing
price of P9,000. The merchandise is in transit and has not been recorded on the branch
books.
 Notification sent by the home office to the branch, informing the branch of P5,000 of
operating expenses that the home office paid on behalf of the branch, has not been
received by the branch and thus has not been recorded by the branch. the home office
books.
 Cash of P2 ,000 received by the brar.ch from the home office was erroneously recorded
by the branch as P20,000.
 The branch purchased, for cash P15,000 of equipment for its use; fixed asset accounts
of the branch are maintained at the home office. Notification sent to the home office by
the branch, informing the home office of the branch's action has not been received, by
the home office and thus has not been recorded by the home office.
How much is the unadjusted balance of home office account on branch's books?
A. P87,000 B. P41,000 C.. P62,000 -D: P45,000
33 The Green Company processes unprocessed goat milk up to the split-off point where two
products, condensed goat milk and skim goat milk result. The following information was collected
for the month of October:
Direct materials processed: 102,000 gallons ( after shrinkage)
Production:
Condensed goat milk 42,500 gallons
Skim goat milk 59,500 gallon
Sales:
Condensed goat milk P3.25 per gallon
Skim goat milk P2.75 per gallon
The costs of unprocessed goat milk and processing purchasing it up to the split-off point to yield ä
tötal of 102,000 gallons of saleable product was P188,480. There were no inventory balances of
either product. Condensed goat milk may be processed further to yield 42,000 gallons (the
remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of P4
per usable gallon. Xyla can be sold for P20 per gallon.
Skim goat milk can be processed further to yield 58, 200 gallons of skim goat ice cream, for an
additional processing cost per usable gallon of P4. The product can be sold for P12 per gallon and
ending inventory balances. There are no beginning
What is the estimated net realizable value of the skim goat ice cream the split-off point?
A. P680,000 B. P465,600 C. P672,000 D. P476,000
34. If a sale on account by a U.S. company is made with a foreign company, and the U.S. company
has no foreign currency risk, then
A. the foreig: company has measured the transaction in their own currency.
B. the U.S. company has measured the transaction in U.S. dollars.
C. the foreign company has denominated the transaction in their own currency.
D. the U.S. company has denominated the transaction in U.S. dollars.
35. Gains and losses incurred at liquidation are distributed to the partner using the residual profit
and loss sharing ratios because
A. using ownership percentages would permit solvent partners to not share profits with insolvent
partners.
B. using the established profit and loss sharing ratios is not permitted.
C. the residual profit and loss ratios represent the ownership percentages.
D. these amounts represent profits and losses from prior periods hat would have been shared
using the residual profit and loss ratios.
36. In which of the following ways can debt be restructured?
I. Assets can be transferred to the creditor,
II. An equity interest can be granted to the creditor. III. The terms of the debt can be,
modified.
A. I and III only
B. II and III only I. II. III.
c. 1 and II only
D. I, II, and III
37. Which of the following factors would guide you in classifying a product as a main product or
byproduct?
A. Weight or volume of outputs per period
B. Number of units per processing period
C. Joint costs incurred up to the split-off point
D. Percentage of total sales value C. The agreement is not a joint arrangement.
D. There is joint control established by the agreement.
38. Identify the following statements whether these are true or false. 44. When the stand-alone selling price is not directly observable, an estimate of the stand-alone
Statement 1: A contract must create enforceable rights and obligations to fall within the scope of selling price is made through maximizing the use of observable inputs. Which of the following is
PFRS 15. NOT a possible estimation approach?
Statement 2: The contract referred to in Statement 1 must be in writing for it to fall under the scope A. Residual approach B. Adjustment market assessment approach C. Net realizable value
of PFRS 15. approach D. Expected cost plus a margin approach
A. Statement 1 is true; Statement 2 is false.
B. Statements 1 and 2 are all false. 45. Entity G acquires Entity H and as part of the arrangement, Entity G agrees to pay an additional
C. Statement 1 is false; Statement 2 is true. amount of consideration to the seller in the future, as follows:
D. Statements 1 and 2 are all true.  If the 12–month earnings in two years' time (also referred to as trailing 12 months) are Pl
40. What is the authorization issued by the DBM to NGAS to incur obligation for specified amounts million or less, nothing will be paid
contained in a legislative appropriation in the form of budget release documents?  If the trailing 12 months earnings in two years' time are between million and F2 million,
A. Appropriations B. Approved Budget C. Allotment D. Automatic then 2 times 12-month earnings will be paid
41. Appropriations Identify the following statements if these are TRUE or FALSE.  If the trailing 12 months earnings in two years' time are greater than P2 million, then 3
Statement 1: If a joint venturer loses joint control but retains an interest in an associate, it would times 12-month earnings will be paid
continue to apply the equity method
Statement 2: An entity has to remeasure its retained interest in an associate when it loses joint At the date of acquisition, the possible twelve-month earnings of Entity H in two years'
control over a joint venture. time are determines to be as follows :
A. Statements 1 and 2 are all true. PO.8 million - 40%
B. Statemeint 1 is false; Statement 2 is true. P1.5 million - 40%
C. Statement 1 is true; Statement 2 is false. P2.5 million - 20$
D. Statements 1 and 2 are all false. The probability-weighted payout is
A. P2.7 million B. P2.3 million C. P2.0 million D. P2.5 million
42. What is the primary goal behind consolidating financial statements of controlled subsidiary?
A. Representing the company's underlying economic condition. B. Assuring that the subsidiary 46. A business merger differs from a business consolidation because
financial statements are the same under the temporal method or the current rate method. A. a consolidation is created when two entities join, but a merger is created when more than two
C. Representing the conversion of statements at, the historical exchange rate. entities join.
D. Assuring that the individual nature of the subsidiary entity is not lost in the consolidation. B. a consoiidation dissolyes all but one of the prior entities, but a merger dissolves all of the prior
43. Five parties jointly bought an aircraft. By contractual agreement, each party has the right to use entities.
the aircraft for a certain number of days each year and shares proportionately in the maintenance C. a merger dissolves all but one of the prior entities, but a consolidation dissolves all of "the prior
cost. They share decision-making regarding the maintenance and disposal of the aircraft, which are entities and forms a new corporation.
the relevant activities for the aircraft. These decisions require the unanimous agreement of all of D. a merger is created when two entities join, but a consolidation is created when more than two
the parties. The contractual agreement covers the expected life of the aircraft and can be changed entities join.
only by agreement of parties holding 75% of the voting rights. Which of the following statements is 47. The gift shop of a nonprofit, private, hospital has cash revenue of P24,000. What account will
TRUE about this arrangement? the hospital credit?
A. The agreement is a joint arrangement. A. Temporarily restricted revenue
B. The multiple combinations of how the 75% can be achieved They These The created joint B. Other operating revenue - unrestricted
control. C. Unrestricted revenue
D. Unrestricted support respective capital interests. The partnership records goodwill. After recording the admission of Cal,
48. On October 4, 2018, Sooty Corporation, a US firm, borrowed 250,000 British pounds from a how much will be the respective capital balances of Anna and Bess?
London bank, evidenced by an interest-bearing note payable due in one year. The note was A. P120,000; P80,000
payable in pounds. Exchange rates for pounds were': B. P210,000; P190,000:
October 4, 2018 $1.59 C. P190,000; P210,000
December 31, 2018 $1.55 D. P80,000; P120,000
October 4, 2019 $1.61
What is the final amount of the loan payable that Sooty repaid? A. $287,500 B. $402,500 C. 53. Which of the following is not a general objective of bankruptcy procedures?
$397,500 D. $250,000 A. Assurance of an equitable distribution of the debtor's property among creditors
B. Assurance that all obligations of the debtor will be satisfied completely
49. A, B and C enter into a joint arrangement to conduct an activity in Entity z. The contractual C. Protect the interest of the company.
agreement between A and B states that they must agree to direct all the activities of 2. The 5. Attempt to give the debtor a fresh start
agreement of C is no required, except that C has the right to veto the issuance of debt or equity 54. Voluntary health and welfare organizations must report expenses classified by
instruments by z. In this situation, what exists between A, B and Z? A. restriction and natural classification.
A. C is not a party to the joint arrangement. B. function and natural classification.
B. A and B have joint control over C. restriction, function and natural classification.
C. C holds a protective right with respect to Z and therefore holds a joint control over Z. D. restriction.
D. A and B have joint control over z.
50. Accounts representing an allowance for uncollectible accounts are converted into U.S. dollars SITUATIONAL:
at Situational 1: Manila Manufacturing Co. Uses a job order cost system. Its cost sheet for the month
A. current rates regardless of the functional currency. of April 2019 were as follows:
B. current rates only when the U.s. dollar is the functional currency. Job 410 Job 411 Job 412 Job 413 Job 414 Job 415
C. historical rates regardless of the functional currency. Work in
D. historical rates when the U.S. dollar is the functional currency. progress April
51. A U.S. importer that purchased merchandise from a South Korean firm would be exposed to a 1 2019
net exchange gain on the unpaid balance if the Direct 1,200 750
A. dollar weakened relative to the Korean won and the dollar was the denominated currency. Materials
B. dollar strengthened relative to the Korean won and the won was the denominated currency. Direct Labor 1,800 1,440
C. dollar weakened relative to the Korean won and the won was the denominated currency. Applied 1,170 936
D. dollar strengthened relative to the Korean won and the dollar was the denominated currency. factory
52. Anna and Bess share partnership profits and losses at 60% and 40%, respectively. The overhead
partners agree to admit Cal into the partnership for 50% interest in capital and earnings. Capițal Finished
accounts immediately before the admission of Cal are: goods April 1,
Anna (60%) P300,000 2019
Bess (40%) P300,000 Direct 9,000 3,360
Total P600,000 material s
Cal invested r400,000 for the ownership interest, and that this is a fair price for that share of, the Direct Labor 12,000 4,200
partnership to be acquired. Cal paid the money directly to Anna and to Bess for 50 of each of their Applied 7,800 2,730
overhead
 Issued equity, 1,000,000 P5,000
Cost utilized ordianry shares
in April Retained earnings 3,000
Direct 5,460 6,600 18,000 2,400 Total 8,000
material s
Direct Labor 7,200 8,400 21,000 3,600
Applied 4,680 5,460 13,650 During the year ended December 31, 2018, Investee reported a profit of P6,000,000 but does not
overhead pay any dividends. In addition, the fair value of the Investee's land increases by P3,000,000 to
Pl1,000,000. However, the amount recognized by Investee in respect of the land' remain
unchanged at P6,000,000. The following shows Investee's statement of financial position at
December 31, 2018 together with the fair values of identifiable In assets:
The company completed three jobs (Job Nos. 412,413 and 414) during April 2019. The applied
factory overhead rate is 65% of direct labor cost, is the same for each job. Thus, overhead was Investee's Statement of Financial Position
added to the cost sheets of said jobs on the aforementioned rate. Actual factory overhead as at As at December 31, 2018 (000)
April1, 2019 amounted to Php18,000. Actual overhead for the month of April totaled Php 9,000 Carrying Amount Fair value
55. The cost of goods manufactured for the month of April 2019 is A. Php97,746 B. Php97,647 C. Cash and receivables P8,000 P8,000
Php97,476 D. Php97,674 Land 6,000 11,000
56. The cost of goods manufactured for Jobs 412 is Total P14,000 P10,000
A. Php 52,650 B. Php 21,510 C. Php 23,586 D. Php 51,650 Issued equity, 1,000,000 P5,000
57. The cost of goods manufactured for Job 413 is ordianry shares
A. Php 23,566 B. Php 23,586 58. C. Php 21,150 D. Php 21,510. Retained earnings 9,000
58. The cost of goods manufactured for Jobs 414 and 415, respectively, are Total 14,000
A. Php 4,170 and Php 3,126 B. Php 28, 800 and Php 10,290
C. Php 17,340 and Php 20,460 On January 1, 2019, Investor acquires a further 60% ownership interest in Investee for
D. Php 52,650 and Php 8,340 P22,000,000 cash, thereby obtaining control. Throughout the period January 1, 2018 to January 1,
2019, Investor's issued equity was P30,000,000. Investor's only Asset apart from its investment in
Situation 2 - Investor acquires a 20% Ownërship interest in Investee (a ser company) at January 1, Investee is cash.
2013 for P3,500,000 cash, which is the fair value of the investment at that date. The Investor has Investor'e initial 20% investment in Investee is measured at its fair value at the acquisition date of P
concluded that despite of its 20% holding it does not have a significant influence over the Investee. 3,500,000. Investee's 1,000,000 ordinary shares have a quoted market price at December 31,
At that date, the fair value of Investee's identifiable assets is P10,000,000 and the carrying amount 2018 of P30 per share. Therefore the carrying amount of Investor's initial 20% investment is
of those assets is P8,000,000. Investee has no liabilities or contingent liabilities at that date. remeasured in Investor's Einancial statements to P6,000,000 at December 31, 2018, with the
following shows Investee's statement of financial position at January 1, 2018 together with the fair P2,500,000 increase recognized as a component of other comprehensive income. Investor's
values of the identifiable assets: statement of financial position before the acquisition of the additional 608 ownership tnterent is as
The Investee' s Statement of Financial Position follows:
As at January 1, 2018 (000)
Carrying Amount Fair value Cash P26,500
Cash and receivables P2,000 P2,000 Investment in Investee 6,000
Land 6,000 8,000 Total P32,500
Total P8,000 P10,000 Issued equity, P30,000
Gain on remeasurement of the 2,500 A. Debit Asset for right to recover product to be returned P100,000: Credit Revenue P100,000
equity investment designated as B. Debit Accounts receivable P121,000; Credit Revenue P121,000.
FVOIC (without recycling) C. Debit Asset for right to recover product to be returned P80,000; Credit Inventory P80,000
Total P32,500 D. Debit Accounts receivable Pl00,000; Credit Revenue P100,000.

65 During the 3-month right of return eriod, how much interest income shall be recognized?
A. PO B. P1,708 C. P5,125 D. P2,625
66. When the right of return lapses and the product is not returned what amount of revenue shall
59. Assume that Investor, in measuring the non-controlling interest in Investee, the option that be. recognized?
proportionate of the value of the net identifiable assets acquired is adopted, the amount of goodwill A. PO B. P121,000 C. P100,000 D. P80,000
to be recognized in its consolidated financial statements shall be
A. P6,000,000 B. P3,000,000 C. P13,000,000 D. P12,800,000 60. Situation 4 - On June 30, 2019, the Alpha, Bravo, and Charlie partnership h. the following fiscal
60. Investor's consolidated financial statements imumediately after the acquisition of the additional year-end balance sheet:
60% ownership in Investee will show a balance in its `Investmert in Investee' account of
A. P2,500, 000 B. P5,000,000 C. PO. D. P3,800,000
61. Investor's consolidated financial statements immediately after the acquisition of the additional Cash P8,000 Accounts Payable P14,000
60% ownership in Investee will show a balance in its `Retained Earnings' account of Accounts receivable 12,000 Loan from Charlie 10,000
A. P2,500,000 B. P30,000,000 C. P11,000,000 D. P12,800,000 Inventory 28,000 Alpha, Capital ( 20%) 28,000
Plant asset – net 24,000 Bravo, Capital (20%) 20,000
62. Investor's consolidated financial statements immediately after the acquisition of the additional Loan to Able 12,000 Charlie, Capital (60%) 12,000
60 & ownership in Investee will show a balance in its Non-controlling Interest'account of Total Asset P84,000 Total Liab./equity P84,000
A. P3,800,000
B. P0 The percentages shown are the residual profit ,and loss sharing ratios. The partners dissolved the
C. P5,000,000 partnership on July 1, 2019 and began the liquidation process. During July the following events
S. 2,500,000 occurred:

Situation 3 - Alpha sells a product to, a "customer for P121,000 that is payable 24 months after  Receivables of P6,000 were collected.
delivery. The customer obtains control of the product at contract inception. The contract permits the  All inventory was sold for P8,000. :
customer to return the product within 90 days. The product is new, 'and Alphe has no relevant  All available cash was distributed on: July 31, except for P4,000 that was set aside for
historical evidence of product returns or any available market evidence. contingent; expenses.
The cash selling price of the product, is P100,000, which represents the amount that the customer
would pay upon delivery Cor the same product sold under otherwise identical terms and conditions 67. The book value of the partnership equity (i.e., total equity of the partners) on June 30, 2019 is
as at contract inception. The cost of the product is P8O,000.
A. P 84,000
63. What is the amount of revenue that shall; be recognized when control of the product transfers B. P120,000
to the customer? C. P 60,000
A. P100,000 B. P5,042 C. P121,000 D. PO D. P. 58,000
64. When the product is transferred to the customer, what shall be the accounting entry? 68. The cash available for distribution to the partners on July 31, 2019 is
A. P22,000
B. P14,000
C. P 4,000
D. P 8,000

69. How much cash would Bravo receive from the cash that is available for distribution on Kuly 31?
( Assume a safe payments schedule is used).
A. P0
B. P2,400
C. P4,000
D. 800
70. How much cash would Alpha receive from the cash that is available for distribution on July 31?
(Assume a safe payments schedule is used.)
A. P4, 000
B. P0
C. P2,400
D. P800