1.

HULK Corporation declared on December 1, 2021 its 10 brand new

fleet of cars costing ₱500,000 each as property dividends to be
distributed on February 1, 2022 to its ten shareholders. The following
fair value less cost to distribute of the cars was determined to be:
December 1, 2021 - ₱4,800,000; December 31, 2021 - ₱4,500,000; TOTAL CARS
February 1, 2022 -₱4,000,000. What is the carrying amount of the MULTIPLIED BY: COST PER
asset held for distribution on December 31, 2021? * CARRYING AMOUNT 12/31/2
₱ 5,000,000
₱ 4,500,000
₱ 4,800,000
₱ 4,000,000
FAIR VALUE, DEC 31, 2021
2. What is the loss on distribution of property dividend to be recognized TOTAL FLEET OF CARS
on February 1, 2022? * MULTIPLIED BY: COST
₱ 800,000 LOSS ON DISTRIBUTION
₱ 500,000
₱0
₱ 200,000
TOTAL CARS 10
MULTIPLIED BY: COST PER 500,000
CARRYING AMOUNT 12/31/2 5,000,000

FAIR VALUE, DEC 31, 2021 4,500,000

TOTAL FLEET OF CARS 10
MULTIPLIED BY: COST 500,000 5,000,000
LOSS ON DISTRIBUTION (500,000)
 ISSUED ORDINA
TREASURY SHAR
REISSUED TS
DONATED OS
ISSUANCE DOS
OUTSTANDING S

OS
PS
TOTAL DIVIDEND

PS
OS
3. How many ordinary shares are issued and outstanding respectively as of December SP - P
31, 2021?  SP - O
250,000 and 215,000 RE
285,000 and 250,000 PROFIT
250,000 and 285,000 TS
215,000 and 250,000 SP TS
SP DS
4. What is the total amount of dividends on preference and ordinary shares?  SHE
₱ 687,000
₱ 322,500
₱ 634,500
₱ 312,000

5. How much is the total shareholders’ equity at December 31, 2021? 

₱ 14,500,000
₱ 14,435,500
₱ 14,250,000
₱ 14,453,500
ISSUED ORDINARY SHARES, BEG 250,000
TREASURY SHARES (30,000)
REISSUED TS 5,000
DONATED OS (20,000)
ISSUANCE DOS 10,000
OUTSTANDING SHARES 215,000

OS 322,500
312,000
TOTAL DIVIDENDS 634,500

2,600,000
OS 7,500,000
SP - P 740,000
SP - O 750,000
2,100,000
PROFIT 1,215,500
(875,000)
SP TS 15,000
SP DS 390,000
SHE 14,435,500
6. GAMORA Corporation’s shareholders’ equity is composed of
10,000, ₱10 par ordinary shares, ₱40,000 share premium, and
accumulated profits of ₱600,000. If a 40% bonus issue is declared
when the shares are selling for ₱50 per share, what amount should
be transferred from the accumulated profits account to the share
premium account? *
₱ 40,000
₱ 160,000
₱ -0-
₱ 200,000
7. On January 1, 2021, WASP Company granted 10,000 share SHARE OPTION
options to each of its 5 managers. The options vest on January 1, MANAGERS
2025. During this date, the fair value of each share option is ₱50 TOTAL
and it is anticipated that all of the share options will vest on January FAIR VALUE
1, 2025. How much will be credited to share options outstanding for TOTAL
the year ended December 31, 2021? * VESTING PERIOD
₱ 2,500,000 ANNUAL COMPENSATI
₱ 125,000
₱ 833,333
₱ 625,000
SHARE OPTION 10,000
MANAGERS 5
TOTAL 50,000
FAIR VALUE 50
TOTAL 2,500,000
VESTING PERIOD 4
ANNUAL COMPENSATI 625,000
8. The shareholders’ equity section of THANOS Company revealed PREFERENCE SHARE
the following information on December 31, 2021: Preference share, SP PS
₱100 par,₱2,300,000; share premium-preference, ₱805,000; OS
ordinary share,₱15 par, ₱5,250,000; share premium-ordinary, SP OS
₱2,750,000; subscribed ordinary share,₱50,000; Accumulated S OS
profits and losses,₱1,900,000; and stock dividends payable- AP/L
ordinary, ₱450,000. How much is legal capital? * SDP - OS
₱ 5,750,000
₱ 8,000,000
₱ 7,600,000 PREFERENCE SHARE
₱ 8,050,000 ORDINARY SHARE
SUBSCRIBED OS
LEGAL CAPITAL
PREFERENCE SHARE 2,300,000
SP PS 805,000
5,250,000
SP OS 2,750,000
S OS 50,000
AP/L 1,900,000
SDP - OS 450,000

PREFERENCE SHARE 2,300,000

ORDINARY SHARE 5,250,000
SUBSCRIBED OS 50,000
LEGAL CAPITAL 7,600,000
9. On January 2, 2019, ANTMAN Company grants 50 shares each to 400 employees,
conditional upon the employees’ remaining in the company’s employ during the
vesting period. The shares will vest at the end of 2019 if the company’s earnings
increased by more than 15%; or at the end of 2020, if the earnings increased by an
average of 12% over the two-year period; or at the end of 2021 if the earnings
increased by an average of 10% over the three-year period. The shares have a fair
value of ₱25 on January 2, 2019, which is equal to the share price on the grant date.
At the end of 2019, earnings had increased by 13% and 20 employees have left and
the company expects that earnings will continue to increase at a similar rate in 2020
and expects to vest in 2020. The company also expects that a further 20 employees
will leave during 2020. At the end of 2020, earnings increased by only 9% and
therefore, shares do not vest at the end of 2020. Also, 15 employees have left the
company in 2020 but expects that 10 employees will leave the company in 2021. The
company expects that earnings will continue to increase at a similar rate. At the end of
2021, earnings increased by 9% and 5 employees have left the company in 2021.
What amount of remuneration expense should the company recognize in its
December 31, 2021 income statement? *

₱ 450,000
₱ 70,833
₱ 154,167
₱ 225,000
 2019 2,020 2,021
NUMBER OF EMPLOYEES 400 400 400
EMPLOYEE LEFT (20) (20) (20)
EMPLOYEE LEFT (15) (15)
EMPLOYEE LEFT (5)
EXPECTED (20) (10)
TOTAL EMPLOYEE 360 355 360
SHARE OPTION 50 50 50
18,000 17,750 18,000
FAIR VALUE 25 25 25
450,000 443,750 450,000
VP 2 3 3
225,000 147,917 150,000
LAPSE 1 2 3
225,000 295,833 450,000
CE - 225,000 295,833
COMPENSATION EXPENSE 225,000 70,833 154,167
10. At the beginning of 2021, GROOT Corporation issued 10%
bonds with a face value of ₱1,800,000. These bonds mature in five 2021
years, and interest is paid semi-annually on June 30 and December Jun-21
31. The bonds were sold for ₱1,667,518 to yield 12%. GROOT 31-Dec
uses a calendar year reporting period. Using the effective interest Jun-21
method of amortization, what amount of interest expense should be 31-Dec
reported for 2021? * Jun-21
₱200,705 31-Dec
₱100,051 Jun-21
₱100,654 31-Dec
₱180,000 Jun-21
31-Dec
 IE IP AMORT CARRYING
1,667,518
90,000 100,051 10,051 1,677,569
90,000 100,654 10,654 1,688,223 200,705
90,000 101,293 11,293 1,699,517
90,000 101,971 11,971 1,711,488
90,000 102,689 12,689 1,724,177
90,000 103,451 13,451 1,737,627
90,000 104,258 14,258 1,751,885
90,000 105,113 15,113 1,766,998
90,000 106,020 16,020 1,783,018
90,000 106,981 16,981 1,799,999
11. DRAX Company granted 30,000 share appreciation rights which
entitled key employees to receive cash equal to the difference MARKET PRICE 2021
between ₱50 and the market price of the share on the date each MARKET PRICE
right is exercised. The service period is 2020 through 2022, and the
rights are exercisable in 2023. The market price of the share was SHARE APPRECIATIO
₱55 and ₱60 on December 2020 and 2021, respectively. What
amount should be recorded as compensation expense for 2021? * VP
₱ 150,000
₱ 350,000 LAPSE
₱ 50,000
₱ 200,000 CUMMULATIVE
COMPENSATION EXP
 2020 2021
55 60
50 50
5 10
30,000 30,000
150,000 300,000
3 3
50,000 100,000
1 2
50,000 200,000
- 50,000
50,000 150,000
12. ULTRON Corporation has the following balances: Ordinary share
capital, ₱10 par value, ₱100,000; Paid-in capital in excess of par
value, ₱2,850,000. Based on this information: *
Number of shares issued is 100,000
Legal capital is ₱ 2,950,000
Contributed capital is ₱ 100,000
Issued share capital is ₱100,000
13. The balance in the retained earnings of HAWKEYE Corporation 2020
on December 31, 2020 and 2021 respectively are P720,000 and RE 720,000
P582,000. The net income for 2021 was P500,000. A share dividend NI
was declared and distributed which increased ordinary share capital
by P200,000 and share premium by P110,000. A cash dividend was
declared and paid. What is the amount of cash dividends declared
and paid? *
₱ 638,000
₱ 442,000
₱ 248,000
₱ 328,000
 2021
582,000
500,000
14. On July 1, 2021, VISION Company issued rights to
shareholders to subscribe to additional shares of its ordinary share
capital. One right was issued for each share owned. A shareholder
could purchase one additional share for five rights plus ₱150 cash.
The rights expire on September 30, 2021. On July 1, 2021, the
market price of a share with the right attached was ₱200, while the
market price of the right alone was ₱15. The equity on June 30,
2021 comprised the following: Ordinary share capital, ₱100 par,
50,000 shares issued and outstanding - ₱5,000,000; Share
premium - ₱1,000,000; Retained earnings - ₱2,000,000. What is the
total contributed capital assuming all share rights are exercised by
the shareholders? *

₱ 7,500,000
₱ 8,000,000
₱ 6,000,000
₱ 9,500,000
ORDINARY SHARE 50,000 5,000,000
SP 1,000,000

OS 50,000
RATIO 5
OS PURCHASE 10,000
PAR 100
OS RIGHTS 1,000,000
OS 5,000,000
TOTAL OS 6,000,000
SP 1,000,000
SP RIGHT 1,000,000
CONTRIBUTED CAP 8,000,000
 ISSUED SHARE
15. During 2021, FALCON Company issued 50,000 shares of ₱100
par value convertible preference share capital for ₱120 per share. SHARE SPLIT
One preference share can be converted into three ordinary shares
with ₱10 par value at the option of the preference share PAR VALUE
shareholder. On December 31, 2021, when the market value of the ORDINARY SHARES
ordinary share was ₱50 per share, all of the preference share capital
was converted. What amount should FALCON credit to ordinary ISSUED SHARE
share capital and share premium as a result of the conversion? * CONVERSION
₱ 1,500,000 and 6,000,000
₱ 1,500,000 and 3,500,000 LESS: PAR
₱ 1,500,000 and 4,500,000 SP
₱ 1,500,000 and 0
 50,000
3
150,000
10
1,500,000

50,000
120
6,000,000
1,500,000
4,500,000
1. What amount of retained earnings should be appropriated as a result of
the given transactions? 
TREASURY SHARE ACQUIRED 1,000,000
APPROPRIATION OF NEW PLAN 3,000,000
APPROPRIATED RETAINED EA 4,000,000
2. HAWKEYE Corporation has the following shareholders' equity accounts
as of December 31, 2021: 6% Preference shares, ₱10 par - ₱200,000;
Ordinary shares, ₱10 par - ₱300,000; Accumulated profits - ₱80,000.
Dividends have not been declared for the years 2019 to 2021. The whole
amount of the accumulated profits of ₱80,000 was declared as dividend on
December 31, 2021. How much dividend per share shall an ordinary
shareholder have if the preference share is cumulative and participating up
to 21%? ( Present your answer for this problem in 2 decimal places,
example X.XX) 
 PREFERENCE ORDINARY
PREFERENCE: 6% x P10 x 20000 x 3 36,000
ORDINARY: 6% x P10 x 30000 18,000
BALANCE: 80000-36000-18000 = 26000 26,000
PREFERENCE: (21%-6%) x P10 x 20000 26,000
ORDINARY -
TOTAL DIVIDENDS 62,000 18,000
DIVIDED BY: ISSUED AND OUTSTANDI 20,000 30,000
DIVIDEND PER SHARE 3.10 0.60
 SHARE CAPITAL

SHARE PREMIUM

3. What is the total shareholders' equity at year-end?  RETAINED EARNI

TREASURY SHAR
SHAREHOLDER'S
SHARE CAPITAL
SHARE CAPITAL, BEG 1,000,000
10-Jan 400,000
15-Dec 100,000 1,500,000
SHARE PREMIUM
SHARE PREMIUM BEG 400,000
10-Jan 200,000
31-Oct 1,100,000
15-Dec 100,000 1,800,000
RETAINED EARNINGS
RE BEG 360,000
12/31 NI 550,000 910,000
TREASURY SHARES (60,000)
SHAREHOLDER'S EQUITY 4,150,000
4. After the quasi-reorganization, the total shareholders' equity should be? 
SHARES 50,000
MULTIPLIED BY: NEW PAR VALUE 50
SHARE CAPITAL, ADJUSTED 2,500,000
ADD: TOTAL SHARE PREMIUM
RETAINED EARNINGS, BEG (2,000,000)
INVENTORY, ADJUSTMENT (500,000)
PLANT ASSET, ADJUSTMENT (1,000,000)
ACCOUNTS PAYABLE (300,000)
ADDITIONAL CONTRIBUTION 1,500,000
DECRESE IN PAR VALUE 2,500,000
TOTAL 200,000
ADD: SHARE PREMIUM, BEG 500,000 700,000
SHAREHOLDER'S EQUITY 3,200,000
5. During 2021, CAPTAIN AMERICA Company had two classes of shares
NET INCOME
issued and outstanding for the entire year. Additional information are as
follows: Ordinary share capital, par ₱10 - ₱1,000,000; 7% Preference LESS: PREFERENCE DIVIDE
share capital, ₱100 par, cumulative - ₱500,000. The net income for the
year amounts to ₱500,000. What is the basic earnings per share?
(PRESENT YOUR ANSWER IN TWO (2) DECIMAL PLACES, example: TOTAL
xx.xx)  DIVIDED BY: AVERAGE ORD

BASIC EARNINGS PER SHA

NET INCOME 500,000
LESS: PREFERENCE DIVIDEND
PREFERENCE SHARE, CUMULATIVE 500,000
MULTIPLIED BY: PERCENTAGE 7% 35,000
TOTAL 465,000
DIVIDED BY: AVERAGE ORDINARY SHARE OUTSTANDING
ORDINARY SHARE CAPITAL 1,000,000
DIVIDED BY: PAR VALUE 10 100,000
BASIC EARNINGS PER SHARE 4.65
6. SPIDER MAN Bottling Corporation embarked on a promotional program
whereby a can opener costing ₱13 each is given away for 10 bottle crowns
plus ₱5. SPIDER MAN also pays ₱2 per can opener for handling and
shipping cost. SPIDER MAN estimates that only 40% of the bottle crowns
in the hands of consumers will be presented for redemption. The following
information is available: Bottles sold - 1,000,000 units amounting to
₱5,000,000; Can openers bought for giveaways - 15,000 units amounting
to ₱195,000; Can openers distributed to customers - 10,000 units. At the
close of the first year, how much should SPIDER MAN recognize as
estimated liability for promotional items outstanding? 
BOTTLE SOLD 1,000,000
ESTIMATED REDEMPTION 40%
TOTAL BOTTLE CROWNS TO BE REDEEMED 400,000
DIVIDED BY: NO. OF BOTTLE CROWN PER CAN OPENER 10
ESTIMATED CAN OPENERS TO BE REDEEMED 40,000
LESS: CAN OPENER DISTRIBUTED 10,000
TOTAL CAN OPENERS TO BE REDEEMED 30,000
MULTIPLIED BY: PC+DC-CR 10
ESTIMATED LIABILITY 300,000
 MARKET PRICE, 12/31/2021
LESS: PREDETERMINED PR
EXCESS
MULTIPLIED BY: NUMBER O
CUMULATIVE COMPENSAT
7. What amount should BLACK WIDOW charge to compensation expense DIVIDED BY: VESTING PER
for the year December 31, 2023 as a result of the share appreciation ACCRUED COMPENSATION
right?  LESS: ACCRUED COMPEN
COMPENSATION EXPENSE
 2021 2022 2023
MARKET PRICE, 12/31/2021 124 151 151
LESS: PREDETERMINED PRICE 100 100 100
EXCESS 24 51 51
MULTIPLIED BY: NUMBER OF SHARES 50,000 50,000 50,000
CUMULATIVE COMPENSATION 1,200,000 2,550,000 2,550,000
DIVIDED BY: VESTING PERIOD 3 1 1/2 1
ACCRUED COMPENSATION 400,000 1,700,000 2,550,000
LESS: ACCRUED COMPENSATION, PRI 0 400,000 1,700,000
COMPENSATION EXPENSE 400,000 1,300,000 850,000
 RETAINED EARNINGS, BEG
NET INCOME
TOTAL
LESS: OVERSTATEMENT
8. What is the retained earnings balance ending December 31, 2021?  SHARE DIVIDEND

CASH DIVIDEND

RETAINED EARNINGS
RETAINED EARNINGS, BEG 1,500,000
NET INCOME 850,000
2,350,000
LESS: OVERSTATEMENT 50,000
SHARE DIVIDEND
SHARE CAPITAL 5,000,000
DIVIDED BY: PAR VALUE 100
TOTAL SHARES, BEG 50,000
MULTIPLIED BY: PERCE 15%
SHARES ISSUED AND D 7,500
MULTIPLIED BY: SELLIN 120 900,000
CASH DIVIDEND
TOTAL SHARES, BEG 50,000
ADD: SHARE ISSUED AN 7,500
TOTAL SHARES 57,500
MULTIPLIED BY: AMOUN 1.75 100,625
RETAINED EARNINGS 1,299,375