Answer Key ACCTG 202- Semi Final Exam

1. ₱ 1,243,100
2. ₱ 2,283,251.44
3. ₱ 1,000,000
4. ₱ 342,487.72
5. Cash ₱ 10,000,000
Right use of asset 3,027, 600
Equipment ₱ 8,000,000
Lease Liability 3,784,500
Gain on right transferred 1,243,100

Solutions:

Present Value of ordinary annuity of 1 at 15% for 6 periods = 3.7845

Sales Price ₱ 10,000,000

Carrying Amount 8,000,000
Total Gain ₱ 2,000,000

Cost of right use of asset ₱ 3,027,600

Annual depreciation = = = ₱ 504,600
Lease term 6 years

PV of Lease Liability
Cost of right use of asset= X carrying amount of the asset
Sales price at FV

3,784,500 workback
= X 8,000,000 = ₱ 3,027,600
10,000,000

Fair Value ₱10,000,000

Less: lease liability (3,784,500)
Right transferred to buyer-lessor ₱ 6,251,500

workback

Total gain to be recognized = (6,215,500/10,000,000) x2,000,000 = ₱ 1,243,100

PV of lease liability = Annual rental X PV of annuity = 1,000,000 X 3.7895 = ₱ 3,784,500

Date Annual Payment Interest 15% Principal PV

Jan 1, 2021 ₱ 3,784,500
Dec 31, 2021 ₱ 1,000,000 ₱ 567,675 ₱ 432,325 3,352,175
Dec 31, 2022 1,000,000 502,826.25 497,173.75 2,855,001.25
Dec 31, 2023 1,000,000 428,250.19 571,749.81 2,283,251.44
Dec 31, 2024 1,000,000 342,487.72 657,512.28 1,625,739.16
PROBLEM 2
PV of 1 for 4 periods at 12% = 0.6355
PV of annuity of 1 in advance at 12% for 4 periods = 3.4018

Annual rental = (1,000,000/2) collected evenly

= ₱ 500,000

Cost of Machinery (workback) ₱ 1,764,450

PV of residual Value (100Kx0.6355) = (63,550) .
Net investment to be recorded from rental ₱ 1,700,900
Divide; PV of annuity 3.4018
Annual rental ₱500,000

Gross rental (500,000 x 4) ₱ 2,000,000

Residual Value – Guaranteed 100,000
Gross Investment – ₱ 2,100,000
Net investment – cost of machinery (1,764,450)
Unearned Interest Income ₱ 335,550

Date Payment Interest Principal PV

Jan 1, 2021 ₱ 1,764,450
Jan 1, 2021 ₱ 500,000 - ₱ 500,000 1,264,450
Jan 1, 2022 500,000 ₱ 151,734 348,266 916,184
Jan 1, 2023 500,000 109,942.08 390,057.92 526,126.08
Jan 1, 2024 500,000 63,135.1296 436,864.87 89,261.218
Jan 1, 2025 500,000 10,711.34152 89,288.6548 -

6. ₱ 335,550
7. ₱ 390,057.92
8. ₱ 526,126.08
9. No entry
PROBLEM 3
PV of 1 at 10% for 4 periods = 0. 6830
PV of ordinary annuity of 1 at 10% for 4 periods = 3.1699

Gross rental (1,000,000 x 4) ₱ 4,000,000

Purchase option 400,000
Gross investment – lease receivable ₱ 4,400,000

PV of rentals (1,000,000 x 3.1699) ₱ 3,169,900

PV of purchase option (400,000 x 0.6835) 273,200
Net investment ₱ 3,443,000

Gross Investment – Lease receivable ₱ 4,400,000

Net investment (3,443,000)
Unearned interest Income ₱ 956,500

Journal Entry
Lease receivable ₱ 4,400,000
Cost of Goods Sold 2,200,000
Sales ₱ 3,443,100
Unearned interest Income 956,900
Inventory 2,000,000
Cash 200,000

Multiple Choice
1. D
2. A
3. B
4. A
5. B