1.

Publicly traded entities are encouraged to provide interim financial reports

Answer: At least at the end of the half year and within 60 days of the end of the interim period.

2. ABC Company's P950,000 net income for the quarter ended September 30,2021 included
the following after tax items:

*A P600,000 expropriation gain, realized on April 30, 2021, was allocated equally to the
second, third, and fourth quarters of 2021.

*A P160,000 cumulative-effect loss resulting from a change in inventory valuation

method was recognized on August 1, 2021.

In addition, ABC paid P480,000 on February 1, 2021, for 2021 calendar-year property
taxes. Of this amount, P120,000 was allocated to the third quarter of 2021. For the
quarter ended September 30, 2021, what amount should be reported as net income.

Answer: 910,000

3. ABC Company prepares quarterly interim financial reports. The entity sells electrical
goods and normally 5% of customers claim on their warranty. The provision in the first
quarter was calculated at 5% of sales to date which amounted to P10,000,000. However,
in the second quarter, a design fault was found and warranty claims were expected to be
10% for the whole year. Sales for the second quarter amounted to P15,000,000. What
amount of provision should be charged in the second quarter's interim income
statement?

Answer: 2,000,000

4. ABC Company is preparing its interim financial statements for the first quarter ended
March 31, 2021. Expenses in the first quarter totaled P4,000,000 of which 25% was
variable. The fixed expenses included television advertising expense of P1,500,000
representing air time to be incurred evenly during 2021, and depreciation expense of
P600,000 for 2021 for an equipment that was available for use on March 1, 2021. What
amount should be reported as total expenses in the first quarter ended March 31, 2021?

Answer: 2,335,000

5. Which statement about interim reporting is true?

Answer: The same accounting principles used for the annual report should be employed for
interim report.

6. An interim financial report contains

Answer: Either a complete set or condensed set of financial statements.

 7. ABC Company has historically reported bad debt expense of 5% of sales in each quarter.
For the current year, the entity followed the same procedure in the three quarters of the
year. However, in the fourth quarter, the entity, in consultation with its auditor,
determined that bad debt expense for the entire year should be P450,000. Sales in each
quarter of the year were as follows: first quarter, P2,000,000; second quarter, P1,500,000;
third quarter, P2,500,000; fourth quarter, P4,000,000. What amount of bad debt expense
should be recognized for the fourth quarter?

Answer: 150,000

8. Entities should disclose all of the following in interim financial report, except

Answer: Events after the end of the reporting period

9. Which basic financial statements are reported prepared as a minimum for interim
financial reporting?

Answer: Statement of financial position, statement of comprehensive income, statement of

cash flows and statement of changes in equity.

10. ABC Company has estimated that total depreciation expense for the year ended
December 31, 2021 will amount to P600,000 and that 2021 year-end bonuses to
employees will total P1.200.000. In ABC's interim income statement for the six months
ended June 30, 2021, what total amount of expenses relating to these two items should
be reported?

Answer: 900,000

11. There is a presumption that anyone reading interim financial reports shall

Answer: Have access to the most recent annual report

12. An entity is preparing interim financial statements for six months ended June 30, 2027.
In the interim financial statements for six months, a statement of financial position on
June 30, 2027 and a statement of comprehensive income for six months ended June 30,
2027 shall be presented. In, addition, all of the following shall be presented, except

Answer: Statement of financial position on June 30, 2026

13. Which of the following statements is true regarding interim reporting?

Answer: Interim reports are not required.

14. For interim financial reporting , the income tax expense for the second quarter should be
computed by using the

Answer: Statutory tax rate for the year

 15. If the entity does not prepare interim financial reports

Answer: The year-end financial statements' compliance with IFRS is not affected.