STATEMENT OF FINANCIAL POSITION

The following trial balance of an entity on December 31, 2020 has been adjusted except for income tax
expense.

Cash 6,000,000

Accounts receivable 14,000,000

Inventory 10,000,000

Property, plant and equipment 25,000,000

Accounts payable 9,000,000

Income tax payable 6,000,000

Preference share capital 3,000,000

Ordinary share capital 15,000,000

Share premium 4,000,000

Retained earnings – January 1 9,000,000

Net sales and other revenue 80,000,000

Cost of goods sold 48,000,000

Expenses 12,000,000

Income tax expense 11,000,000 __________

126,000,000 126,000,000

During the year, estimated tax payments of P5,000,000 were charged to income tax expense. The tax rate
is 30% on all types of revenue. Inventory and accounts payable included goods purchased in transit, FOB
destination, costing P500,000, and unsold goods held on consignment at year-end, costing P300,000. The
perpetual system is used. The preference share capital is redeemable mandatorily on December 31, 2021.

Write your solutions:

1. What amount should be reported as current assets on December 31, 2020?

ASSETS
Current Assets
Cash P 6,000,000
Accounts Receivable 14,000,000.00
Inventory 9,200,000.00
Total Current Assets P 29,200,000
Non-current Assets
Property, Plant & Equipment 25,000,000.00
TOTAL ASSETS P 54,200,000
2. What amount should be reported as current liabilities on December 31, 2020?
LIABILITIES AND EQUITY
Accounts Payable P 8,200,000
Income Tax Payable 1,000,000.00
Redeemable Preference Share Capital 3,000,000.00
TOTAL LIABILITIES P 12,200,000

3. What is the net income for 2020?

NET INCOME*
Net Sales & other Revenue P 80,000,000
Cost of Goods Sold -48,000,000.00
Expenses -12,000,000.00
Income Before Tax 20,000,000.00
Tax Expense -6,000,000.00
NET INCOME P 14,000,000

4. What amount should be reported as total shareholders’ equity on December 31, 2020?
Shareholder’s Equity
Ordinary Share Capital P 15,000,000
Share Premium 4,000,000.00
Retained Earnings 23,000,000.00
TOTAL SHAREHOLDER’S EQUITY P 42,000,000
TOTAL LIABILITIES AND EQUITY P 54,200,000
 STATEMENT OF COMPREHENSIVE INCOME

An entity reported the following data for the current year:

Net sales 9,500,000

Cost of goods sold 4,000,000

Selling expenses 1,000,000

Administrative expenses 1,200,000

Interest expense 700,000

Gain from expropriation of land 500,000

Income tax 800,000

Income from discontinued operations 600,000

Unrealized gain on equity investment at FVOCI 900,000

Unrealized loss on futures contract designated as a cash flow hedge 400,000

Increase in projected benefit obligation due to actuarial assumptions 300,000

Foreign translation adjustment – debit 100,000

Revaluation surplus 2,500,000

Write your solutions:

1. What amount should be reported as income from continuing operations?

Net Sales P 9,500,000
Cost of Goods Sold -4,000,000.00
Gross Income 5,500,000.00
Gain from Expropriation of Land 500,000.00
Selling Expense -1,000,000.00
Administrative Expense -1,200,000.00
Interest Expense -800,000.00
Profit Before Tax 3,000,000.00
Income Tax Expense -700,000.00
Income for the year for Continuing Operations 2,300,000.00
Income from Discontinued Operations 600,000.00
PROFIT FOR THE YEAR P 2,900,000
2. What net amount should recognized in other comprehensive income for the year?
Items that may be reclassified subsequently to P/L
Foreign Translation Adjustment – loss -100,000.00
Unrealized Loss – Cash Flow Hedge -400,000.00
-500,000.00
OTHER COMPREHENSIVE INCOME FOR THE YEAR P 2,600,000

TOTAL COMPREHENSIVE INCOME FOR THE YEAR P 5,500,000

3. What net amount in OCI should be presented as “may not be recycled to profit or loss?
Other Comprehensive Income, after tax:
Items that will not be reclassified subsequently to P/L
Revaluation Surplus P 2,500,000
Unrealized gain on equity investment at FVOCI 900,000.00
Actuarial Loss – Increase in PBO -300,000.00
P 3,100,000

4. What amount should be reported as net income?

Net Sales P 9,500,000
Cost of Goods Sold -4,000,000.00
Gross Income 5,500,000.00
Gain from Expropriation of Land 500,000.00
Selling Expense -1,000,000.00
Administrative Expense -1,200,000.00
Interest Expense -800,000.00
Profit Before Tax 3,000,000.00
Income Tax Expense -700,000.00
Income for the year for Continuing Operations 2,300,000.00
Income from Discontinued Operations 600,000.00
PROFIT FOR THE YEAR P 2,900,000

5. What amount should be reported as comprehensive income?

OTHER COMPREHENSIVE INCOME FOR THE YEAR P 2,600,000
NET INCOME (PROFIT FOR THE YEAR) P 2,900,000
TOTAL COMPREHENSIVE INCOME FOR THE YEAR P 5,500,000