UNIVERSIDAD DE MANILA

Name : __________________________

Course:________________________

Year & Sec. _____________________

Quiz no. 2 ( Show solution – 35 points)

1.JM com. Reported the following renumeration and other payments made to the entity’s chief
executive officer during the current year:

2,000,00
Annual salary 0
1,000,00
Share option 0
retirement benefit plan 500,000
1,200,00
reimbursement of travel expenses for business trip 0
What total amount should be disclosed as “ compensation” to key management personnel

2. DC acquired 100% of MC company in the prior years. During the current year, the individual entities
included in their financial statements the following:

  DC MC
Key officer's 500,00
salaries 750,000 0
100,00
Office expenses 200,000 0
1,250,00 500,00
loans to officers 0 0
Intercompany 1,500,00
sales 0  
What total amount should be reported as related party disclosures in the notes to DC consolidated FS?

3. EC prepare draft financial statements that showed the profit before tax for the year ended December
31, 2021 at P9,000,000. The board of director authorized the financial statements for issue on March 20,
2022.

A fire occurred at one of EC sites on January 15, 2022 with resulting damage amounting to P7,000,000
only P4,000,000 of which is covered by insurance. The repairs will take place and be paid for in April
2022.

The P4,000,000 claim from the insurance entity will however be received on February 14, 2022.
What amount should be reported as profit before tax in the financial statement?

4. During 2020, MC was sued by a competitor for P5,000,000 for infringement of a patent. Based on the
advice of the legal counsel, The entity accrued the sum of P3,000,000 as a provision in the financial
statements for the year ended December 31, 2020.

Subsequently, On march 15, 2021 the supreme court decided in favor of the party alleging infringement
of the patent and ordered the defendant to pay the aggrieved party a sum of P3,500,000.

The financial statements were prepared by the entity’s management of February 15, 2021 and approved
by the board of directors on March 31, 2021.

What amount should be recognized as current liability on December 31, 2020.?

5.DC accounts for non-current assets using the cost model. On October 1, 2020. The entity classified a
non-current assets as held for sale. At the date, the assets carrying amount was P3,200,000. The fair
value was estimated at P2,200,000 and the cost of disposal at P200,000. On Dec. 15, 2020 the assets
was sold for net proceeds of P1,850,000.

What amount should be recognized as an impairment loss in 2020?

6. AC accounts for non-current assets using the cost model. On October 30, 2020. The entity classified a
non-current assets as held for sale. At the date, the assets carrying amount was P1,500,000. The fair
value was estimated at P1,100,000 and the cost of disposal at P150,000. On Nov. 20, 2020 the assets
was sold for net proceeds of P800,000.

What amount should be included as loss on disposal in 2020?

7. CC accounts for non-current assets using the cost model. On July 31, 2020. The entity classified a non-
current assets as held for sale. At the date, the assets carrying amount was P1,450,000. The fair value
was estimated at P2,150,000 and the cost of disposal at P150,000. On Jan 31, 2021 the assets was sold
for P2,120,000.

What amount should the assets be measured on Dec. 31, 2020