Jullie Carmelle H.

Chatto
Accounting 16: Problems Part III

Problem I: Hizuka Inc.

Requirement 1: ₱ 1,400.00
Fair Value (3-year old animal) – 12/31 (11 x 120) ₱ 1,320.00
Fair value (0.5-year old) – 12/31 (1 x 80) 80
Total Fair Value – 12/31 ₱ 1,400.00

Requirement 2: ₱ 292.00
Fair value of 10 animals – 1/1 (10 x 100) ₱ 1,000.00
Acquisition Cost of 1 animal – 7/1 108.00
Total Carrying Amount of Biological Assets – 12/31 ₱ 1,108.00
Less: Fair Value on December 31 1,400.00
Total Fair Value – 12/31 ₱ 292.00

Requirement 3: ₱ 55.00
Ten (2-year-old animals) ((105 – 100) x 10) ₱ 50.00
One (2.5-year-old animal) ((111 - 108) x 1) 3.00
One new born – 7/1 ((72 - 70) x 1) 2.00
Gain from change in fair value due to price ₱ 55.00

Problem II: Bazooka Company

Requirement 1: ₱ 2,250,000.00
Change in fair value due to growth and price changes ₱ 2,500,000.00
Decrease in fair value due to harvest (250,000.00)
Net gain from biological assets ₱ 2,250,000.00

Requirement 2: ₱ 400,000.00
Inventory 400,000.00
Gain on agricultural produce 400,000.00

Problem III: Finetti Company

Requirement 1: ₱ 3,600,000.00
Total Cost ₱ 3,700,000.00
Unrealized Loss in 2020 (100,000.00)
Market Value – 12/31/20 ₱ 3,600,000.00

Requirement 2: ₱ 300,000.00
Market Value – 12/31/21 ₱ 3,300,000.00
Market Value – 12/31/20 3,600,000.00
Unrealized Loss in 2021 (squeeze) ₱ (300,000.00)
Unrealized Loss in 2020 (100,000.00)
Cumulative Unrealized Loss – 2021 ₱ 400,000.00
Requirement 3: ₱ 400,000.00
Market Value – 12/31/21 ₱ 3,300,000.00
Original Acquisition Cost 3,700,000.00
Cumulative Unrealized Loss (₱ 400,000.00)

Problem IV: Boruto Company

Requirement 1: ₱ 100,000.00
Market Value – 12/31/19 ₱ 4,120,000.00
Carrying Amount (4,250,000 – 230,000) 4,020,000.00
Unrealized gain in 2019 ₱ 100,000.00

Problem V: Alodia Company

Requirement 1: ₱ 500,000.00
Fair Value ₱ 5,500,000.00
Acquisition Cost – Trading 5,000,000.00
Unrealized gain including P/L ₱ 500,000.00

Problem VI: Luffy Company

Requirement 1: ₱ 600,000.00
Original Shares (20,000 + 30,000) ₱ 50,000.00
Share dividend (4,120,000 x 20%) 10,000.00
Total Shares ₱ 60,000.00
x Value Per Share 10
Dividend Income ₱ 600,000.00

Requirement 1: ₱ 1,150,000.00
FIFO Approach June 1 December 31
Original Shares 20,000 30,000
Share dividend (20%) 4,000 6,000
Total Shares 24,000 36,000

Sale Price (30,000 x 125)

Cost of Shares Sold: ₱ 3,750,000.00
From 6/1 ₱ 2,000,000.00
From 12/1 (6,000/36,000 x 3,600,000) 600,000.00 2,600,000.00
Gain on Sale ₱ 1,150,000.00

Requirement 1: ₱ 950,000.00
Sale Price ₱ 3,750,000.00
Cost of Shares Sold (30,000/60,000 x 5,600,000) 2,800,000.00
Gain on Sale ₱ 950,000.00
Problem VII: Eugene Company
Requirement 1: ₱ 600,000.00
Theoretical Value of Right (125 – 100/4 + 1) ₱ 5.00
Initial Cost of Rights (50,000 x 5) 250,000.00
Cash paid for new shares (50,000/4 x 100) 1,250,000.00
Cost of New Investment ₱ 1,500,000

Problem VIII: Rukawa Company

Requirement 1: ₱ 1,400,000.00
Acquisition Cost ₱ 6,400,000.00
Net asset acquired (1,250,000 x 40%) (5,000,000.00)
Excess of Cost ₱ 1,400,000.00

Requirement 2: ₱ 1,750,000.00
Share in Net Income (5,000,000 x 40%) ₱ 2,000,000.00
Amortization of excess:
Equipment (800,000/4) 200,000
Building (600,000/12) 50,000 250,000.00
Investment Income ₱ 1,750,000.00

Requirement 3: ₱ 7,150,000.00
Acquisition Cost ₱ 6,400,000.00
Investment income 1,750,000.00
Cash Dividend received (2,500,000 x 40%) (1,000,000.00)
Carrying amount of investment in associate ₱ 7,150,000.00

Problem IX: Goku Company

Requirement 1: ₱ 692,000.00
Net Income – 2018 ₱ 2,000,000.00
Unrealized Portion of Sale of Equip – 1/1/18 (800,000–500,000) (300,000.00)
Realized Profit on Equipment Sold – 1/1/18 (300,000 x 10%) 30,000.00
Adjusted Net Income ₱ 1,730,000
x 40%
Investment Income for 2018 ₱ 692,000.00

Requirement 2: ₱ 1,870,000.00
Net Income – 2019 ₱ 2,000,000.00
Realized Profit on Equipment Sold – 1/1/18 (300,000 x 10%) 30,000.00
Unrealized Profit (400,000–500,000) (10,000.00)
Unrealized Profit on Ending Inventory (280000-2000000) 800,000.00
Adjusted Net Income ₱ 1,870,000.00

Requirement 3: ₱ 5,720,000.00
Carrying amount - 1/1/19 ₱ 5,372,000.00
Investment Income -2019 748,000.00
Cash Dividend (1,000,000 x40%) (400,000)
 Carrying Amount ₱ 5,720,000.00

Problem 10: Piccolo Inc.

Requirement #1: ₱ 4,618,000.00
Carrying amount – 1/1/18 ₱ 4,562,000.00
Amortization of Discount – 2019
Interest Income (4,562,200 x 10%) ₱ 456,200
Interest Received (5,000,000 x 8%) (400,000) 56,200
₱ 4,618,200
Requirement #2: ₱ 4,680,020
Amortization of Discount – 2019
Interest Income (4,618,200 x 10%) ₱ 461,820
Interest Received (5,000,000 x 8%) (400,000) 61,820
₱ 4,680,000