ReSA B45 FAR Final PB Exam Questions, Answers Solutions

Problem 1: MAGIGINGCPAAKO Company provided you the Statement of Financial Position on December 31, 2023:
MAGIGINGCPAAKO COMPANY
STATEMENT OF FINANCIAL
POSITION DECEMBER 31, 2023
Cash and Cash Equivalents 95,000 Trade and Other Payables 82,000
Trade and Other Receivables, net 100,700 Long-term Payables 98,000
Inventories 60,000
Property, Plant and Equipment, net 56,000 Shareholders’ Equity 187,200
Other Long-term Assets 48,500
Intangible Assets 7,000
TOTAL ASSETS 367,200 TOTAL LIABILITIES AND SHE 367,200
The following information is provided below:

 Cash and Cash Equivalents include the following: Plant expansion fund of P15,500; Fund for the acquisition of
machineries of P20,000 expected to be delivered in 7 months after the balance sheet date. Cash set aside to pay
interest due of P7,000; Cash in bank of P30,000 and Six-month time deposit of P6,500.
 The net trade and other receivables balance include:
Accounts receivable- debit balances P76,000
Notes receivable-trade 18,300
Advances to shareholders 14,400
Allowance for doubtful accounts (8,000)
Trade and Other Receivables P100,700
 Inventories include the following: Goods held on consignment costing P10,000; Goods purchased on account under
FOB Buyer received on December 28, 2023 costing P20,000. The related purchases were recorded on January 5,
2024.
 Property, Plant and Equipment include Land held for undetermined use costing P20,000.
 Other Long-term Assets balance include:
FVPL- PUSOANGLABANAN Company shares of stock P11,000
FVOCI-UTAKANGPUHUNAN Company shares of stock 13,000
Payroll fund 9,500
Bond sinking fund 15,000
 Trade and other payables include deferred tax liability of P5,000 of which P2,500 will reverse in 2024.
1. How much is the correct current assets on December 31, 2023?
a. P224,200 b. P209,800 c. P198,800 d. P216,300
2. How much is the correct current liabilities on December 31, 2023?
a. P77,000 b. P99,500 c. P97,000 d. P102,000
Problem 2: HULAANKOBA Corporation’s checkbook balance on December 31, 2023 was P2,000,000.
Country had the following items related to different checks received from customers:
Check payable to HULAANKOBA, dated January 15, 2024, in payment of a sales transaction made in
December 2023, and this was included on the P500,000
December 31 checkbook balance
Check from customer A, deposited on December but returned by the bank also on December marked
NSF. This was redeposited immediately. An entry 400,000
was made on the books for the redeposit but none on the return
Check from customer B, deposited on December but returned by the bank also on December marked
NSF. This was redeposited immediately. An 300,000
entry was made on the books for the return but none on the redeposit
Check from customer C, deposited on December but returned by the bank also on December marked
NSF. This was redeposited immediately. Examination revealed that the company recorded both the 200,000
return and
redeposit
Check from customer D, deposited on December but returned by the bank also on December marked
NSF. This was redeposited immediately.
Examination revealed that the return and redeposit were no longer 100,000
recorded in the books
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FINANCIAL ACCOUNTING & REPORTING
ReSA Batch 45 – May 2023 CPALE Batch 23
April 2023 ⚫ 11:45 AM to 02:45 PM FAR Final Pre-Board Exam
3. How much is the adjusted cash balance on December 31, 2023?
a. P1,400,000 b. P1,200,000 c. P1,100,000 d. P1,300,000
Problem 3: On May 1, 2023, BABANGONMULI Company purchased a factory machinery having an installment price of
P4,000,000. The company made a P1,000,000 down payment and issued a 6- year, non-interest-bearing note for the balance payable in
equal amounts annually every May
1 starting next year. There is no cash equivalent price for the factory machinery. The prevailing interest rate for similar note is at 6%.
The present value factor of P1 at 6% for 6 periods is at 0.7050
The present value factor of P1 at 6% ordinary annuity for 6 periods is at 4.9173
4. Assuming an estimated useful life of 9 years with a 10% salvage value, how much is the book value of the factory machinery on
December 31, 2023 under the SYD method?
a. P2,016,093 b. P2,163,612 c. P3,043,612 d. P2,863,093
Problem 4: HINDIKATALUNAN Corporation’s December 31, 2023 balance sheet reports the
following shareholders’ equity:
10% Cumulative Preference share capital, P100 par value per share, P3,000,000
30,000 shares issued and outstanding, liquidation value of P105
Ordinary share capital, P100 par value, 60,000 shares issued 6,000,000
Share premium 500,000
Treasury Stock, (ordinary) 5,000 shares at cost 600,000
Retained Earnings 4,000,000
Subscribed ordinary share, net of P400,000 subscription receivable 1,000,000
Revaluation surplus 700,000
Preference dividends have not been paid since last year up to the end of 2023.
5. How much is the book value per share on ordinary share?

a. P173.08 b. P163.04 c. P166.92 d. P157.25
Problem 5: WAGISALABAN Company granted share options to employees with a fair value of P3,000,000. The options vest in three
years. The Monte Carlo model was used to value the options. On January 1, 2022, which is the date of grant, the estimate of
employees leaving the entity during the vesting period is 5%. On December 31, 2023, the estimate of employees leaving before
vesting date is revised to 6%.
On December 31, 2024, only 5% of the employees actually left the entity and on such date a total of 50,000 shares were issued as a
result of the exercise of share options. The shares have a P100 par value and option price of P130.
6. How much is the compensation expense for the year 2024?

a. P500,000 b. P950,000 c. P930,000 d. P970,000
Problem 6: In 2022, BAHAYKUBO Company acquired the following portfolio of equity instruments and reported the following
information.
Security Purchase Price Broker’s fee Market Value 12/31/22 Market Value 12/31/23
SINGKAMAS P300,000 P5,000 P350,000 P345,000
TALONG 450,000 10,000 410,000 400,000
SIGARILYAS 540,000 12,500 640,000 350,000
MANI 610,000 15,000 650,000 700,000
On October 1, 2023, BAHAYKUBO Company sold half of the SIGARILYAS security for P325,000.
Assuming BAHAYKUBO Company classified the securities as Fair Value Through Profit or Loss, determine the following:
7. Unrealized gain or loss to be presented in profit or loss the year ended December 31, 2023.
a. P60,000 b. P65,000 c. P165,000 d. P255,000
Assuming BAHAYKUBO Company classified the securities as Fair value Through Other Comprehensive Income, determine the
following:
8. Amount transferred to retained earnings as a result of the sale of SIGARILYAS security.

a. P43,750 b. P48,750 c. P55,000 d. P48,750

Problem 7: The Statement of Financial Position of ANGHABA Company at the end of 2022 and 2023 follow:
2022 2023
Cash P 300,000 P 700,000
Accounts Receivable, net 600,000 900,000
Merchandise Inventory 700,000 500,000
Prepaid Expense 100,000 250,000
Long-Term Investment 200,000 0
Machinery and Equipment 900,000 1,200,000
Accumulated Depreciation 150,000 250,000
Land 0 700,000
Accounts Payable 650,000 400,000
Accrued Expenses 120,000 200,000
Cash Dividends Payable 10,000 20,000
Note Payable-Long-Term - 400,000
Ordinary Share, P10 par 1,000,000 1,500,000
Share Premium-Ordinary 50,000 350,000
Retained Earnings 820,000 1,250,000
Treasury Shares, At Cost 0 120,000
Additional information for the year 2023:

Land was acquired in exchange for 40,000 ordinary shares. Ordinary shares were also issued for cash at par value. All machinery and
equipment were purchased for cash except for Machinery costing P400,000 that was acquired through issuance of long-term note.
Long-term investment was sold for P140,000. There were no other transactions affecting long-term investments. Equipment costing P
350,000 was sold for P390,000 with book value of P280,000. There were no other transactions affecting retained earnings other than
net income of P600,000 and cash dividends declared. Treasury shares were acquired for cash.
9. How much is the net cash provided by or used in financing activities?

a. P60,000 c. P190,000
b. P180,000 d. P280,000
10. How much is the net cash provided by or used in investing activities?
a. P120,000 c. P680,000
b. P140,000 d. P280,000
11. How much is the net cash provided by or used in operating activities?
a. P350,000 c. P240,000
b. P300,000 d. P180,000
Problem 8: In January, 2018, ANGIKLI Corporation purchased a patent for a new consumer product for P840,000. At the time of
purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to
have a useful life of only ten years. During 2023, the product was permanently removed from the market under governmental order
because of a potential health hazard present in the product.
12. How much is the total amount charged against income during 2023, assuming amortization is recorded at the end of each year?
a. P560,000 c. P84,000
b. P420,000 d. P56,000
Problem 9: On September 30, 2023, a fire at KUMAPITKA Company’s only warehouse caused severe damage to its entire inventory.
Based on recent history, KUMAPITKA has a gross profit of 25% based on cost. The following information is available from
KUMAPITKA’s records for the nine months ended September 30, 2023.
Inventory, January 1, 2023 - P300,000; Net Purchases - P4,200,000; Sales - P3,580,000. Sales returns and allowances – P40,000. A
physical inventory disclosed usable damaged goods costing P35,000 which KUMAPITKA estimates can be sold for P26,000. Also,
included in the inventories were goods out on consignment still unsold as of the date of fire which were marked to sell at P30,000 and
goods in transit purchased under FOB shipping point invoiced at P10,000.
13. How much is the estimated cost of inventory loss as a result of fire?
a. P1,618,000 b. P1,608,000 c. P1,602,000 d. P1,610,000

Problem 10: The adjusted trial balance of WAGKANGSUSUKO Company includes the following accounts at December 31, 2023:
Sales revenue P 5,000,000

Commission income 28,000
Interest expense 180,000
Inventory, 12/31/23 520,000
Purchase, net of returns 2,800,000
Sales commission 500,000
Administrative salaries 720,000
Office supplies expense 110,000
Dividends declared 800,000
Dividend income 16,000
Gain on sale of equipment 100,000
Rent expense 400,000
Unrealized gain on investment at FVPL 55,000
Unrealized gain on investment at FVOCI 88,000
Depreciation expense – store equipment 70,000
Depreciation expense – office equipment 50,000
Freight-in 80,000
Freight-out 120,000
Additional information:
 Merchandise inventory, January 1, 2023, P450,000
 Income tax rate, 30%
 Rent expense is allocated 60% selling, 40% administrative.
14. How much is the total comprehensive income for the year 2023?
a. P167,300 c. P225,300
b. P228,900 d. P327,300
Problem 11: HOYGISING Company reported the following shareholders’ equity on Jan. 1, 2022:
Share capital, P100 par 6,000,000
Retained earnings 1,800,000
Transactions during the year and other information relating to shareholders’ equity account
were as follows:
 On January 26, the entity reacquired for cash 5,000 shares for P110/share.
 On April 4, the entity sold for cash 3,000 shares of treasury for P140/share.
 On June 1, the entity declared a cash dividend of P20 per share, payable July 5, to shareholders of record on July 1.
 On November 1, the entity declared a 2 for 1 split and changed the par value from P100 to P50. On November 20,
shares were issued for the share split.
 On December 5, 4,000 shares were issued in exchange for a second hand equipment. The equipment originally cost
P400,000, was carried by the previous owner at a carrying amount of P200,000 and was fairly valued at P260,000.
 Net income for the current year was P1,730,000.
 Appropriated retained earnings equal to the cost of treasury shares.
15. What amount should be reported as total shareholders’ equity on December 31, 2022?
a. P9,220,000 b. P8,900,000 c. P9,120,000 d. P9,000,000
Problem 12: The following information is made available in relation to the defined benefit plan of MAYPAGASA Company for the year
2023:
Fair value of plan assets, 12/31/23 P4,000,000

Current service cost 200,000
Asset ceiling, 1/1/23 200,000
Fair value of plant assets,1/1/23 2,000,000
Contribution to the plan 700,000
Discount rate 12%
Defined Benefit obligation, 12/31/23 3,440,000
Asset ceiling, 12/31/23 340,000
Benefits paid to retirees 400,000
Defined benefit obligation, 1/1/23 1,700,000

16. How much is the balance of prepaid pension (asset) or accrued pension (liability) that should be presented in the statement of
financial position on December 31, 2023?
a.P340,000 accrued b. P340,000 prepaid c. P560,000 accrued d. P560,000 prepaid
17. How much is the total defined benefit cost for the year 2023?
a. P208,000 b. P560,000 c. P176,000 d. P384,000
Problem 13: PARASAPANGARAP Corporation computed pretax financial income of P 3,000,000 for its first year of operations
ended December 31, 2023. In preparing income tax return for the year, the tax accountant determined the following differences
between 2023 financial income and taxable income:
a. Nondeductible expenses P400,000
b. Nontaxable revenues 100,000
c. Installment sales reported in
financial income but not in taxable income 600,000
The temporary difference is expected to reverse based on the percentage of collection for the next three years:
2024- 50% 2025- 30% 2026- 20%

The enacted rates for this year and the next three years are as follow: 2023- 35% 2025- 33%
2024- 34% 2026- 32%
18. How much is the total liabilities that should be reported on December 31, 2025, assuming the company reported a pretax
financial income of P2,000,000 for the year 2025?
a. P757,800 b. P38,400 c. P719,400 d. P600,600
Problem 14: KAYAK Company invested 50,000 ordinary shares of the total 200,000 outstanding ordinary shares of OTO
Corporation on January 1, 2022. The shares were acquired at P140.
The following are relevant information of OTO Corporation for the years 2022 and 2023:
2022 2023
Net income for the year P4,000,000 P5,000,000
OTO’s shares outstanding at December 31, 2022 follow:

Ordinary share P4,000,000
10% cumulative preference share 1,000,000
During 2023, OTO declared and distributed preference dividends to its preference shareholders. KAYAK received cash dividend of
P10 per ordinary share. OTO did not declare any dividends during 2022. The share capital of OTO did not change during 2023.
19. How much is the share in net income for the year 2023?
a. 1,225,000 b. 1,000,000 c. 1,250,000 d. 975,000
Problem 15: BEYSICDIBA Company uses the net method of accounting for cash discounts. In one of its transactions on December
20, 2023, BEYSICDIBA Company sold merchandise with a list price of P4,000,000 to a customer who was given a trade discount of
10% and 20%. Credit terms given were 5/10, 3/15, n/45. The goods were shipped FOB shipping point, freight prepaid. Total freight
charge paid was P100,000. On January 2, 2024, the customer paid his account.
20. How much is the adjusted accounts receivable to be reported on December 31, 2023?
a. P2,693,600 b. P2,736,000 c. P2,793,600 d. P2,893,600
Problem 16: NAKNANG Company leased equipment from POOCH Inc. on January 1, 2022, for an 8- year period. Equal payments
under the lease are P1,000,000 and are due on July 1 of each year. The first payment was made on January 1, 2022. The interest rate
contemplated by NAKNANG and POOCH is 10%. The cost of the equipment on POOCH’s accounting records is P2,500,000.
Residual value of P100,000 at the end of lease term is unguaranteed by NAKNANG. The lease is appropriately recorded as a dealer’s
lease.
Present value of an annuity of 1 in advance for 8 periods at 10% 5.87
Present value of an ordinary annuity of 1 for 8 periods at 10% 5.33
Present value of 1 for 8 periods at 10% 0.47

21. How much is the interest income for the year ended December 31, 2022?
a. P491,700 b. P591,700 c. P587,000 d. P487,000
22. How much is the sales that POOCH should recognize for the year 2022?
a. P5,917,000 b. P5,870,000 c. P2,500,000 d. P2,453,000
Problem 17: MURALESSFORDAPLUS Corporation computed pretax financial income of P2,000,000 for its first year of operations
ended December 31, 2023. In preparing income tax return for the year, the tax accountant determined the following differences
between 2023 financial income and taxable income:
Unearned rent income P500,000

Interest income on time deposit 100,000
Prepaid advertising expense 300,000
Installment sale which will be taxable upon collection 800,000
Accrued salaries expense 400,000
Bad debts expense using a method under accrual basis 100,000
Accrued miscellaneous income 50,000
Impairment loss on Building 150,000
Excess book depreciation over tax depreciation 350,000
Provision for litigation 250,000
Premiums paid on life insurance where the company is the beneficiary 450,000
Impairment loss on goodwill 80,000
Unrealized gain on FVPL 120,000
Excess warranty expense over warranty paid 90,000
Fines, Penalties and Surcharges 30,000
Income tax rate is constant at 30% for all years
23. How much is the taxable income for the year 2023?
a. P1,430,000 b. P2,130,000 c. P2,330,000 d. P3,030,000
24. How much is the deferred tax liability on December 31, 2023?
a. P381,000 b. P411,000 c. P552,000 d. P720,000
Problem 18: FOCUSLANG Corporation had the following amounts under retail inventory method:
Beginning inventory-cost 3,600 Purchases-cost 120,000
Purchase returns-cost 6,000 Net markups 18,000
Abnormal shortage-cost 4,000 Net markdowns 2,800
Sales 72,000 Sales returns 1,800
Sales discounts 3,000 Abnormal shortage-retail 5,500
Purchase returns-retail 7,500 Purchases-retail 200,000
Purchase allowance 1,000 Beginning inventory-retail 5,000
25. How much is the estimated cost of inventory under FIFO?

a. P74,446 c. P75,474
b. P73,857 d. P137,000
Problem 19: A truck owned and operated by KONTINGTIIS Company was involved in an accident with an auto driven by Juan on
December 12, 2022. KONTINGTIIS Company received notice on December 24, 2022 of a lawsuit for P350,000 damages for a
personal injury suffered by Juan. KONTINGTIIS’s counsel believes that it is probable that Juan will be successful against the
company for an estimated amount in the range between P100,000 and P 400,000. Each point within that range of amounts is
considered as likely as any other point.
On December 25, 2022, an employee filed a P3,000,000 lawsuits against KONTINGTIIS Company for damages suffered when one of
its equipment malfunctioned in August of 2022. The legal counsel of the company believes that it is probable that KOTNINGTIIS will
pay the damages ranging between P500,000 to 1,000,000 but P820,000 is considered to be the best estimate of the obligation. On
March 1, 2023, the employee has offered to settle the lawsuit out of court for P925,000 and the company accepted the offer. The
financial statements were authorized to be issued on April 1, 2023.
26. How much is the correct provision that should be reported on December 31, 2022?
a. P3,175,000 b. P3,070,000 c. P1,175,000 d. P1,070,000

Problem 20: The inventory records of SANAOL Corporation show the following purchases during its first quarter operations:
Units Total Cost
January 15,000 units P 187,500
February 20,000 units 240,000
March 13,000 units 167,700
The cost of inventories on March 31 using the average periodic method is P279,000.
27. How much is the cost of inventory on March 31 if the company is using the FIFO method? a.P279,000 b. P316,200
c. P281,700 d. P281,250
Problem 21: The following information pertains to KAYAPABA Corporation defined benefit plan for the year 2022:
Defined benefit obligation, January 1, 2022 P 2,500,000
Fair value of plan assets, January 1, 2022 2,000,000
Actual return on plan assets 300,000
Fair value of plan assets, December 31, 2022 2,100,000
Present value of additional DBO settled 175,000
Defined benefit obligation, December 31, 2022 2,400,000
Current service cost 500,000
Discount rate 10%
Benefits paid to retirees at scheduled retirement date 620,000
Contribution made during the year 600,000
28. What amount of defined benefit cost should be reported in profit or loss?
a. P550,000 b. P555,000 c. P545,000 d. P450,000
Problem 22: TEH Company leased a new machine from KOYA Company. On January 1, 2022, under a lease with the following
information:
Annual rental payable at beginning of each lease year P400,000
Lease term 10 years
Useful life of machine 12 years
Implicit interest rate 14%
Present value of an annuity of 1 in advance for 10 periods at 14% 5.95
Present value of an ordinary annuity of 1 for 10 periods 5.22
Present value of 1 for 10 periods at 14% 0.27
Teh has the option to purchase the machine on January 1, 2032, by paying P200,000, which is less than the expected fair value of the
machine on the option exercise date. The option is reasonably will exercise by Teh at inception of the lease.
29. In its December 31, 2022 balance sheet, the right-of-use asset should have a book value of?
a. P2,181,667 c. P2,190,600
b. P2,231,167 d. P2,434,000
Problem 23: On January 1, 2022, PAGOD Company purchased P 1,000,000 12% bonds of KAH Company for P1,063,394, a price
that yields 10%. Interests on these bonds are payable every December
31. The bonds mature on December 31, 2025. These bonds were classified as Investment at Amortized Cost. On April 1, 2022,
PAGOD Company also purchased a P2,000,000 face value 9% debt instrument of NABA Company for P1,860,000 including accrued
interest. PAGOD Company also paid a transaction cost amounting to P20,000. The investment was classified as Investment at fair
value through profit or loss (FVPL) . The debt instrument pays interest semi-annually on January 1 and July 1.
The investments from NABA Company were all sold on December 1, 2023. Total cash received from the sale was P2,000,000. On
December 31, 2023, PAGOD Company sold P600,000 face value of KAH bonds at market value existing at the end of that year.
PAGOD company intended to reclassify the remaining bonds to investment at fair value through profit or loss since the business
model to collect contractual cash flows is no longer appropriate.
Market values of the bonds on different dates are as follows:
KAH NABA
December 31, 2022 108 97
December 31, 2023 106 95
30. How much is the correct carrying value of investments to be reported on December 31, 2023?
a. P424,000 b. P413,882 c. P380,000 d. P0

Problem 24: SANAKAYAKOPATALAGA Company operates a customer loyalty program. The entity grants loyalty points for
goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. During 2022, the entity sold
goods for a total consideration of P2,000,000 for which 2,000 points were granted. The fair value of each loyalty point is P50. The
company expects that 60% of the award credits shall be redeemed. During 2022, 720 of the award credits were redeemed.
31. How much is the total amount of revenue that should be recognized for the year 2022?
a. P1,900,000 b. P60,000 c. P1,960,000 d. P2,000,000
Problem 25: On December 31, 2023, AAHONSALUGI Company presented the following information:
Ordinary share capital, P50 par P6,000,000
Retained Earnings (1,200,000)
AAHONSALUGI decided to undergo quasi reorganization. As a result, the company’s property, plant and equipment with cost of
P8,000,000 and book value of P4,000,000 has recoverable amount of P3,000,000. Also, inventory would be written down by
P300,000.
AAHONSALUGI will redeem its P50 par value ordinary shares and will issue equal number of ordinary shares with P30 par value.
32. How much is the balance of share premium after the quasi reorganization?
a. P 0 b. P200,000 c. P300,000 d. (P2,200,000)
Problem 26: On January 1, 2023, JOSKONAMAN Company issued P2,000,000 face value, 5-year bonds at 102. Each P1,000 bond
has one detachable share warrant that allows the holder to purchase ten shares of P50 par value stock at P70 per share. The bonds
would have been sold at 99 without the warrants. The stated rate on the bonds is 11% payable annually every December 31, starting
December 31, 2023.
33. Assuming that all the warrants were exercised at a time when the market value of the stock is P100 on December 31, 2025, how
much is the total net effect on equity upon exercise of the warrants?
a. P1,400,000 b. P1,460,000 c. P460,000 d. P0
Problem 27: During 2022, PARANGMANANALO Company filed suit against another entity seeking damages for patent
infringement. On December 31, 2022, the legal counsel believed that it was probable that the entity would be successful against the
other entity for an estimated amount of P1,500,000. On April 15, 2023, the entity was awarded P1,000,000 and received full payment
thereof. The 2022 financial statements were issued on March 31, 2023.
34. How should this award be reported in the 2022 financial statements?
a. As receivable and revenue of P1,000,000
b. As receivable and revenue of P1,500,000
c. As disclosure of contingent asset of P1,000,000
d. As disclosure of contingent asset of P1,500,000
Problem 28: PWEDENA Company provided the following data for the purpose of reconciling the cash balance per book:
Balance per Book P220,000
Outstanding checks (including certified check of P20,000) 50,000
Deposit in transit 90,000
December NSF checks (of which P10,000 had been re-deposited
and cleared on December 27) 30,000
Erroneous credit to PWEDENA’s account, representing proceeds
of loan granted to another company 60,000
Proceeds of note collected by bank for PWEDENA, net of
service charge of P4,000 150,000
Erroneous bank charge 3,000
A check of P5,000 in payment of account was recorded
by the company as 50,000
35. How much is the total net adjustments to Cash in Bank?

a. P175,000 debit c. P85,000 debit
b. P175,000 credit d. P85,000 credit

Problem 29: ISHORTKATMOYAN Company is considering to give bonus for its new company CEO. The plan states that the bonus
rate would be equal to 15%. Profit before income tax and bonus for 2023 is P10,000,000. Income tax rate is 30%.
36. How much is the amount of bonus if the bonus is based on net income after bonus and after tax?
a. P1,304,348 b. P1,099,476 c. P950,226 d. P1,004,785
Problem 30: On December 31, 2022, ALANGBEARING Company experienced a decline in the value of inventory from P5,000,000
cost to NRV of P4,650,000. ALANGBEARING’s inventory on January 1, 2022 was P3,000,000 and purchases of P2,600,000 were
made during the year 2022. During the year 2023, ALANGBEARING made purchases of P2,500,000 and market conditions had
improved. At the end of the year 2023, the inventory had a cost of P5,400,000 while the net realizable value is P5,200,000.
37. How much should be reported as ending inventory on December 31, 2023, assuming the company is using allowance
method and includes reversal in the cost of goods sold?
a. P5,400,000 c. P5,000,000
b. P5,200,000 d. P4,650,000
Problem 31: DISERVICETO Company started selling IPAD23 with a four-year warranty against factory defects in 2019. The
warranty provides the customer an assurance that the product will function as intended because it complies with agreed-upon
specifications. The company does not normally sell warranty services on its products and the customer has no option to purchase the
warranty service separately. Estimated warranty costs related to pesos sales are as follows: 1% of sales in the year of sale, 2% of sales
in the year after sale, 4% of sales two years after sale and 7% of sales three years after sale. Information relating to sales and actual
warranty expenditures for the years 2019 through 2022 is as follows:
Sales Actual warranty expenditures
2019 P3,280,200 P 110,600
2020 4,320,500 200,480
2021 4,585,800 310,690
2021 5,320,300 400,480
38. How much is the estimated liability for warranty at December 31, 2022?
a. P344,362 b. P744,842 c. P1,428,702 d. P146,873
Problem 32: MANGGAGAMIT Company started operations in 2021 with 250,000 P10 par value ordinary shares and 20,000, 9%
P100 par value preference shares. This capitalization did not change until 2023.
MANGGAGAMIT paid dividends amounting to P150,000, P260,000 and P540,000 at the end of 2021, 2022 and 2023, respectively.
39. How much is the dividend per preference share on 2023 if the preference shares were cumulative and fully participating?
a. P10.50
b. P12.00
c. P9.00
d. P17.00
Problem 33: HAYSALAMAT Company and its divisions are engaged solely in manufacturing. The data pertain to the industries in
which operations were conducted for the year ended December 31, 2023:
Intersegment External
Operating Segment Sales Revenues
A P1,000,000 P5,000,000
B 1,500,000 3,000,000
C 4,000,000 8,000,000
D 500,000 1,300,000
E 2,000,000 2,800,000
F 200,000 900,000
Total P9,200,000 P21,000,000
40. How much is the total minimum revenues of the reportable segments of HAYSALAMAT Company?
a. P15,750,000 b. P2,100,000 c. P6,900,000 d. P22,650,000

Problem 34: On September 30, 2023, WALEY Company declared its non-current asset as a dividend with a carrying value of
P2,000,000 and has a current fair value of P 1,800,000. On December 31, 2023, the non-current asset has a fair value of P1,700,000.
The non-current asset was distributed on March 1, 2024 when its fair value was P1,600,000.
41. What amount shall be taken to profit or loss as a result of remeasurement of liability on December 31, 2023?
a. P0 b. P100,000 c. P200,000 d. P300,000
Problem 35: On December 31, 2023, THEENDISNEAR Company has P2,000,000 of short-term notes payable due on February 14,
2024. On January 10, 2024, THEENDISNEAR arranged a line of credit with MYWAY Bank which allows THEENDISNEAR to
borrow up to P1,500,000 at one percent above the prime rate for three years. On February 2, 2024, THEENDISNEAR borrowed
P1,200,000 from MYWAY Bank and used P500,000 additional cash to liquidate P1,700,000 of the short-term notes payable.
THEENDISNEAR Company obtained the right to refinance the obligation on December 31, 2023.
42. What amount of the short-term notes payable should be reported as current liabilities on the December 31, 2023?
a. P0 c. P500,000
b. P300,000 d. P800,000
Problem 36: An inventory loss from market decline of P1,600,000 occurred in May 2023, after its March 31, 2023 quarterly report
was issued. None of this loss was recovered by the end of the year.
43. How should this loss be reflected in the company's quarterly income statements?
Three Months Ended
3/31/23 6/30/23 9/30/23 12/31/23
a. -0- -0- -0- P1,600,000
b. -0- P533,333 P533,333 P533,333
c. -0- P1,600,000 -0- -0-
d. P400,000 P400,000 P400,000 P400,000
Problem 37: YUNGMADALILANG Company had the following ordinary share activity in 2023: January 1- 500,000 ordinary shares
outstanding
March 1- Issued new 60,000 ordinary shares June 1- Ordinary share
was split 2 for 1
November 1- Reacquired 48,000 ordinary shares
YUNGMADALILANG Company had 100,000 shares of P 20 par, 10%, cumulative and convertible preference share outstanding
throughout 2023. Each preference share is convertible into one ordinary share. During the year 2023, the company reported net
income of P2,950,000. Dividends are in arrears for 2 years at the beginning of 2023.
44. What is the basic earnings per share?

a. P2.52 b. P2.15 c. P2.70 d. P2.28
Problem 38: YUNGMASMAHIRAP Company reported the following data at December 31, 2023:
Net income for the year 2023 P3,700,000

Ordinary share, P 100 par 2,500,000
10% bonds payable (issued prior to 2023) 1,000,000
The bonds are convertible into ordinary shares in the ratio of 5 ordinary shares for each P1,000 bond. The income tax rate is 35%.
45. What is the diluted earnings per share?

a. P148.00 b. P125.50 c. P126.67 d. P150.60
Problem 39: ETOPARINYUN Company had 560,000 shares ordinary issued and outstanding at December 31, 2022. On July 1, 2023,
an additional 40,000 shares of ordinary were issued for cash. ETOPARINYUN also had unexercised stock options to purchase 32,000
shares of ordinary at P12 per share which were issued on October 1, 2023. The average market price of ETOPARINYUN's ordinary
share was P20 during 2023.
46. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31,
2023?
a. 592,800 b. 588,000 c. 580,000 d. 583,200

Problem 40: On January 1, 2022, LABANLANG Company sold an old building for P1,000,000 to PUSO Company. PUSO Company
paid P100,000 down and signed a non-interest-bearing note for the balance which is payable in 3 equal annual installments every
December 31 of each year. The carrying value of the old building on the date of sale was P600,000.
On May 31, 2022, LABANLANG Company also sold a piece of land to TIWALA Company. TIWALA Company signed a 12%,
interest-bearing note of P500,000 due on May 31, 2025. The carrying value of the land on the date of sale was 200,000.
The prevailing rate of interest for the above type of notes was 12%. The present value of P1 at 12% for three periods is 0.71. The
present value of an ordinary annuity of 1 for three periods is 2.40.
47. How much is the carrying value of the notes receivable on December 31, 2023?
a. P267,168 b. P767,168 c. P622,168 d. P800,000
Problem 41: On January 1, 2020, KELANMATATAPOS Corporation issued a P3,000,000, 6% convertible bonds at face value. The
bonds mature in five years and interests are payable every December 31. The bonds may be converted into ordinary shares on the
basis of 50 shares for each P1,000 bond. The par value of each share is P15. The interest rate for an equivalent bond without the
conversion rights would have been 10%.
48. How much is the total credit to equity account upon conversion assuming the bonds were converted on December 31,2023?
a. P2,890,909 b. P3,345,774 c. P1,095,865 d. P640,909
Problem 42: On January 1, 2022, DIBAKINAYAMO Inc. issued 2,000 of its 5-year, 11%, P1,000 face value bonds dated January 1
with an effective annual interest rate of 9%. Interest is payable annually every December 31. DIBAKINAYAMO Inc. uses the
effective interest method of amortization. On December 31, 2023, the bonds were retired by DIBAKINAYAMO Inc. for P1,980,000.
The PV Factors are: PV of 1 at 9% for 5 period – 0.6499; PV of ordinary annuity of 1 at 9% for 5 periods – 3.8897.
49. What is the gain or loss on retirement of bonds?
a. P121,190 gain taken to profit or loss
b. P121,190 loss taken to profit or loss
c. P121,190 gain taken to OCI
d. P121,190 loss taken to OCI
Problem 43: NATAPOSDIN Company has an overdue note payable to SAWAKAS Bank of P 9,000,000 and recorded accrued
interest of P 810,000. On December 31, 2023, SAWAKAS Bank agreed to the following restructuring agreement:
 Reduce the principal obligation by P1,000,000
 Waive the P810,000 accrued interest
 Extend the maturity date to December 31, 2026.
 Annual interest of 9% of the new principal is to be paid on December 31, 2024, December 31, 2025 and
December 31, 2026.
 The prevailing market interest rate for similar debt instrument on the date of restructuring is 10%.
50. How much is the gain on debt restructuring on December 31, 2023? (Use 4 decimal places for the PV factors)
a. P2,009,032 b. P1,809,864 c. P1,199,032 d. P0
51. Bonds with a par value of P 5.0 million carrying a stated interest rate of 12% payable semiannually on March 1 and September 1
were issued on July 1. The total proceeds from the issue amounted to P 5,200,000. The best explanation for the excess amount
received over the face value is
a. The bonds were sold at a premium
b. The bonds were sold at a higher effective interest rate
c. The bonds were issued at face value plus accrued interest
d. No explanation is possible without knowing the maturity date of the bond issue
52. Machinery was acquired at the beginning of the year. Depreciation recorded during the life of the machinery could result in
Future Future
Taxable Amounts Deductible Amounts
a. Yes Yes
b. Yes No
c. No Yes
d. No No

53. A taxable temporary difference arises when a revenue item is reported for tax purposes in a period
After it is reported Before it is reported
in financial income in financial income
a. Yes Yes
b. Yes No
c. No Yes
d. No No
54. The proceeds from the issuance of nonconvertible bond should be accounted for
a. Entirely as bonds payable
b. Entirely as equity
c. Partially as unearned revenue and partially as bonds payable
d. Partially as equity and partially as bonds payable
55. Which of the following statements is true concerning contingent liabilities?

a. Such liabilities should include obligations of known existence but of unknown of timing & amount
b. If the definite amount is involved, it is not a contingent liability
c. Such liabilities are generally reported and totaled with other liabilities to make up the liability section of most balance
sheets.
d. Such liabilities should include obligations known in amount but unknown in existence
56. The following statements are based on PAS 38 (Intangible Assets):

Statement I: Internally generated goodwill shall not be recognized as an asset. Statement II: No intangible asset arising from
research or research phase of an internal project shall be recognized.
Statement III: Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance shall be
recognized as intangible assets.
a. All of the statements are true
b. Only statement I is true
c. Only statement II is false
d. Only statement III is false
57. Which of the following is/are not subject to depreciation?

I. Land held to be used as a future plant site
II. Machinery classified as held for sale
III. Building classified as investment property under fair value model
a. I only
b. I and III
c. II and III
d. I , II and III
58. A 180-day, 10% interest-bearing note receivable is discounted to a bank at 12% after being held for 30 days. The proceeds
received from the bank upon discounting would be the:
a. Maturity value less the discount at 10%
b. Maturity value less the discount at 12%
c. Maturity value plus the discount at 10%
d. Maturity value plus the discount at 12%
59. A company using a perpetual inventory system neglected to record a purchase of merchandise on account at year end. This
merchandise was omitted from the year-end physical count. How will these errors affect assets, liabilities, and stockholders'
equity at year end and net income for the year?
Assets Liabilities Stockholders' Equity Net Income
a. No effect Understate Overstate Overstate.
b. No effect Overstate Understate Understate.
c. Understate Understate No effect No effect.
d. Understate No effect Understate Understate.
60. When an owner-occupied property is transferred to investment property at fair value, a decrease in the carrying amount of the
property to its fair value at the date of transfer
a. Is recognized in profit and loss, or, for a revalued property, charged
against the revaluation surplus to the extent of its credit balance
b. Is recognized in profit and loss at all times
c. Is absorbed by retained earnings
d. Is carried directly to equity

61. Which of the following items should be excluded from inventories at the balance sheet date?
a. Goods sold under layaway sale where the buyer has not yet fully paid
the account as of the balance sheet date
b. Goods out on approval where the right of return has already expired
as of the balance sheet date
c. Goods in transit as of the balance sheet date purchased under Free
Alongside Ship (FAS) agreement
d. Goods in transit as of the balance sheet date sold under Delivered Ex-
Ship (DES) agreement
62. Which of the following transactions would not result to a transfer of liabilty to revenue account?
a. Redemption of gift certificate
b. Redemption of points in a customer loyalty program
c. Realization of revenue under service-type warranty
d. Return of customer’s deposit on returnable containers
63. Which of the following is true about erroneous book debits?
a. Cash balance per bank is overstated
b. Receipts per book is understated
c. It should be recorded as a debit to cash in bank account
d. It should be deducted from balance per book in the bank reconciliation
64. What effect does the issuance of a 2-for-1 share split have on each of the following?
Par Value per Share Retained Earnings
a. No effect No effect
b. Increase No effect
c. Decrease No effect
d. Decrease Decrease
65. What is the current service cost component of pension expense?
a. These are the best estimates of the variables that will determine the ultimate cost of providing post-employment
benefits
b. These are assets held by an entity that is legally separate from the reporting entity and exists solely to pay or fund
employees benefits
c. It is the increase in the present value of the defined benefits obligation resulting from employees service in the current
period
d. It is the increase in the present value of the defined benefits obligation for service rendered by employees in prior periods
resulting from the introduction of a retirement benefits plan or amendment of an existing plan
66. In the cash flow statement, alternatively interest paid may be classified as cash flow from
a. Operating activities c. Financing activities
b. Investing activities d. Revenue activities
67. In the cash flow statement, proceeds from short-term or long-term bank loan received are classified as cash flow from
a. Operating activities c. Financing activities
b. Investing activities d. Revenue activities
68. The basis of classifying assets as current assets is
a. The accounting cycle or one year, whichever is longer
b. The accounting cycle or one year, whichever is shorter
c. The operating cycle or one year, whichever is longer
d. The operating cycle or one year, whichever is shorter
69. In 2023, the firm changed from straight-line (SL) method of depreciation to double declining balance (DDB). The firm’s 2022
and 2023 comparative financial statements will reflect which method/s?
a. 2022: SL, 2023: SL c. 2022: DDB, 2023: DDB
b. 2022: SL, 2023: DDB d. 2022: SL, 2023: either SL or DDB
70. Which of the following is NOT a qualifying asset under PAS 23 (Borrowing Costs)?
a. Building that will take three years to construct
b. Inventories such as wine and cigars
c. Machinery that is purchased under a three-year installment period
d. Manufacturing plant and power generation facilities
- END of EXAMINATION –

ANSWERS & SOLUTIONS/CLARIFICATIONS

1 D 26 C 51 C
2 C 27 C 52 A
3 A 28 B 53 B
4 C 29 B 54 A
5 B 30 B 55 D
6 D 31 C 56 D
7 B 32 B 57 D
8 B 33 A 58 B
9 B 34 D 59 C
10 D 35 A 60 A
11 B 36 C 61 B
12 B 37 B 62 D
13 B 38 C 63 D
14 B 39 B 64 C
15 D 40 A 65 C
16 B 41 A 66 C
17 B 42 D 67 C
18 A 43 C 68 C
19 A 44 A 69 B
20 D 45 B 70 C
21 A 46 D
22 B 47 B
23 D 48 B
24 A 49 A
25 B 50 A
Problem 1: MAGIGINGCPAAKO Company
1. CURRENT ASSETS, Unadjusted balance (95,000 + 255,700

100,7000 + 60,000)
Plant Expansion Fund (NCA) (15,500)
Fund for the acquisition of Machineries (NCA) (20,000)
Advances to Shareholders (NCA) (14,400)
Goods held on consignment (Not recognized) (10,000)
FVPL – PUSOANGLABANAN Company 11,000
Payroll fund 9,500
CURRENT ASSETS, Adjusted balance 216,300
2. CURRENT LIABILITIES, Unadjusted balance 82,000

Unrecorded purchases on account 20,000
Deferred tax liability (NCL) (5,000)
CURRENT LIABILITIES, Adjusted balance 97,000
Problem 2: HULAANKOBA Corporation
3. CASH BALANCE, Unadjusted balance 2,000,000

Customer’s PDC (500,000)
Customer A (400,000)
Customer B 300,000
Customer C -
Customer D -
CASH BALANCE, Adjusted balance 1,400,000
Problem 3: BABANGONMULI Company

4. Down payment 1,000,000
PV of FCI (500,000 x 4.9173) 2,458,650
Initial cost of the factory machinery 3,458,650
SYD of 9 = (9 x 10) / 2 = 45
Depreciation expense-2023 = 3,458,650 x 90% x 9/45 x 8/12 = 415,038
BOOK VALUE, 12/31/23 = 3,458,650 – 415,038 = 3,043,612

Problem 4: HINDIKATALUNAN Corporation
5. TOTAL SHAREHOLDERS’ EQUITY 15,000,000

(3,000,000 + 6,000,000 + 500,000 – 600,000
+ 4,000,000 + 1,400,000 + 700,000)
Preference share at Liquidation Value (P105 x (3,150,000)
30,000 shares)
Preference dividend (600,000)
(P10 x 30,000 shares x 2 years)
SHE to ORDINARY 11,250,000
Outstanding ordinary shares = 60,000 + 14,000 – 5,000 = 69,000

BOOK VALUE PER ORDINARY SHARE = 11,250,000/69,000 = 163.04
Problem 5: WAGISALABAN Company
6. Cumulative compensation expense – 2022 to 2024 (3,000,000 x 2,850,000

95%) / 3 years x 3 years
Cumulative compensation expense – 2022 to 2023 (3,000,000 x (1,880,000)
94%) / 3 years x 2 years
COMPENSATION EXPENSE - 2024 970,000
Problem 6: BAHAYKUBO Company
7. Fair value, 12/31/23 1,795,000

(345,000 + 400,000 + 350,000 + 700,000)
Carrying value, 12/31/23 (1,730,000)
(350,000 + 410,000 + 320,000 + 650,000)
UNREALIZED GAIN – P/L 65,000
8. Fair value, 10/1/23 325,000

Cost (540,000 + 12,500) x 50% (276,250)
CUMULATIVE UNREALIZED GAIN TO RE 48,750
Problem 7: ANGHABA Company
9. Dividends paid (160,000)

Issuance of ordinary shares for Cash 100,000
Purchase of machinery (120,000)
NET CASH USED IN FINANCING ACTIVITIES (180,000)
Increase in ordinary share capital/Issuance of shares = 1,500,000 – 1,000,000 = 500,000 Ordinary share capital issued for
Land = 40,000 shares x P10 = 400,000
Ordinary share capital issued for Cash = 500,000 – 400,000 = 100,000
10. Sale of long-term investment 140,000

Sale of equipment 390,000
Purchase of machinery and equipment for Cash (650,000 – 400,000) (250,000)
NET CASH PROVIDED BY INVESTING ACTIVITIES 280,000
11. Net income 600,000

Depreciation expense 170,000
Gain on sale of equipment (110,000)
Loss on sale of long-term investment 60,000
Increase in accounts receivable (300,000)
Increase in inventories 200,000
Increase in prepaid expenses (150,000)
Decrease in accounts payable (250,000)
Increase in accrued expenses 80,000
NET CASH PROVIDED BY OPERATING ACTIVITIES 300,000

Problem 8: ANGIKLI Corporation
12. Amortization expense (840,000 / 10) 84,000

Loss due to write-down of Patent (840,000 x 4 /10) 336,000
Total expenses - 2023 420,000
Problem 9: KUMAPITKA Company
13. TGAS (300,000 + 4,200,000) 4,500,000

Estimated COGS (3,580,000 – 40,000) / 1.25 (2,832,000)
Estimated cost of ending inventories 1,668,000
Damaged goods at NRV (26,000)
Cost of goods out on consignment (30,000/1.25) (24,000)
Cost of goods purchased (10,000)
Estimated cost of inventory loss due to fire 1,608,000
Problem 10: WAGKANGSUSUKO Company
14. Net sales 5,000,000

COGS (450,000 + 2,800,000 + 80,000 – 520,000) (2,810,000)
Other income (28,000 + 16,000) 44,000
Operating expenses (500,000+720,000+110,000+400,000+70,000+50,000+120,000) (1,970,000)
Non-operating income (100,000 + 55,000) 155,000

Interest expense (180,000)
Income before tax 239,000
Income tax (239,000 x 30% ) (71,700)
Profit 167,300
OCI, net of tax (88,000 x .70) 61,600
Total comprehensive income 228,900
Problem 11: HOYGISING Company
15. SHE, 1/1/22 (6,000,000 + 500,000 + 1,800,000) 8,300,000

Purchase of TS (5,000 x 110) (550,000)
Sale of TS (3,000 x 140) 420,000
Payment of cash dividends (58,000 x 20) (1,160,000)
Issuance of shares for second hand equipment 260,000
Net income 1,730,000
SHE, 12/31/22 9,000,000
Problem 12: MAYPAGASA Company
16. FVPA, 12/31/23 4,000,000

DBO, 12/31/23 (3,440,000)
Prepaid pension before EAC/Impairment, 12/31/23 560,000
EAC / Impairment (560,000 – 340,000) (220,000)
Prepaid pension to be reported in the SFP, 12/31/23 (Recoverable 340,000
value / Asset ceiling, 12/31/23)
17. Asset ceiling, 12/31/23 340,000

Asset ceiling, 1/1/23 (200,000)
Increase in asset / Overfunding - 2023 140,000
Contribution to the plan - 2023 (700,000)
Total defined benefit cost - 2023 560,000

Problem 13: PARASAPANGARAP Corporation
18. Pretax financial income-2025 2,000,000

Collection-2025 (30% x 600,000) 180,000
Taxable income - 2025 2,180,000
Tax rate-2025 33%
Income tax payable, 12/31/25 719,400
Deferred tax liability, 12/31/25 (600,000 x 20%)
x 32% 38,400
Total Liabilities, 12/31/25 757,800
Problem 14: KAYAK Company
19. Net income-2023 5,000,000

Preference dividend (1,000,000 x 10%) (100,000)
Net income to Ordinary shareholder 4,900,000
Ownership (50,000 shares/200,000) 25%
Share in net income - 2023 1,225,000
Problem 15: BEYSICDIBA Company
20.
Invoice price = 4,000,000 x 90% x 80% = 2,880,000
Adjusted AR, 12/31/23 = (2,880,000 x .97) + 100,000 = 2,893,600
Problem 16: NAKNANG Company
21. PV of periodic rent (1,000,000 x 5.87) 5,870,000

PV of URV (100,000 x .47) 47,000
PV of MLP / Net Investment 5,917,000
Interest income - 2022 = (5,917,000 – 1,000,000) x 10% = 491,700
22.
Sales = PV of periodic rent only since the residual value is UNGUARANTEED: 1,000,000 x 5.87 = 5,870,000
Problem 17: MURALESSFORDAPLUS Corporation
23. Pretax financial income 2,000,000

Nontaxable revenue (100,000)
Nondeductible expenses (450,000 + 560,000
80,000 + 30,000)
Financial income subject to income tax 2,460,000
Future taxable amounts (1,270,000)
(300,000 + 800,000 + 50,000 + 120,000)
Future deductible amounts 1,840,000
(500,000+400,000+100,000+150,000+350,000+250,000+90,000)
Taxable income - 2023 3,030,000
24. Prepaid advertising expense 300,000

Installment sale 800,000
Accrued miscellaneous income 50,000
Unrealized gain on FVPL 120,000
Total future taxable income 1,270,000
Future tax rate 30%
Deferred tax liability, 12/31/23 381,000

Problem 18: FOCUSLANG Corporation
25. TGAS at RETAIL 207,200

(5,000 + 200,000 – 7,500 – 5,500 + 18,000 – 2,800)
Adjusted net sales (72,000 – (70,200)
1,800)
Estimated ending inventory at RETAIL 137,000
Cost ratio 53.91%
Estimated ending inventory at COST under FIFO 73,857
TGAS at COST = 3,600 + 120,000 – 6,000 – 1,000 - 4,000 = 112,600

Cost ratio under FIFO = (112,600 – 3,600) / (207,200 – 5,000) = 53.91%
Problem 19: KONTINGTIIS Company
26.
CASE 1 (Midpoint) = (100,000 + 400,000) /2 = 250,000
CASE 2 (Amount settled on March 1, 2023 – Adjusting event) = 925,000
Total Provision, 12/31/22 = 250,000 + 925,000 = 1,175,000
Problem 20: SANAOL Corporation
27.
WAUC = (187,500 + 240,000 + 167,700) / (15,000 + 20,000 + 13,000) = 12.40/unit
Ending inventory units, 3/31 = 279,000 / 12.40 = 22,500 units
March purchases (13,000 units) 167,700

February purchases (9,500 units) (9,500 / 20,000) 114,000
x P240,000
Cost of Inventory, 3/31 (22,500 units) 281,700
Problem 21: KAYAPABA Corporation
28. Current service cost 500,000

Interest expense on DBO (2,500,000 x 10%) 250,000
Settlement loss (180,000 – 175,000) 5,000
Interest income on FVPA (2,000,000 x 10%) (200,000)
Defined benefit cost taken to Profit or Loss 555,000
Settlement price of additional DBO settled = 2,000,000 + 300,000 + 600,000 – 620,000

– 2,100,000 = 180,000
Problem 22: TEH Company
29. PV of periodic rent (400,000 x 5.95) 2,380,000

PV of BPO (200,000 x .27) 54,000
Initial cost of the right-of-use machine 2,434,000
BV, 12/31/22 = 2,434,000 x 11/12 = 2,231,167
Problem 23: PAGOD Company

30.
Amortized cost of investment in KAH Company before sale, 12/31/23 = 1,063,394 x 1.10
– 120,000 x 1.10 – 120,000 = 1,034,706
Remaining % of ownership after the sale of investment in KAH Company = 400,000/1,000,000 =
40%
Amortized cost of remaining investment in KAH Company, 12/31/23 = 1,034,706 x 40% = 413,882
Reclassification to FVPL shall be made on January 1, 2024, hence, the investment in KAH Company on 12/31/23
should still be classified as IAC.
NOTE: Investment in NABA Company on 12/31/23 is 0 because all were sold as of December 1, 2023.

Problem 24: SANAKAYAKOPATALAGA Company
31.
Consideration attributable to sale of goods (Outright revenue) = (2M/2.1M) x 2,000,000
= 1,904,762
Consideration attributable to loyalty points (Unearned revenue) = (100,000/2.1M) x 2,000,000 = 95,238
Revenue from redemption of points in 2022 = (720 / 1,200) x 95,238 = 57,143
Total revenues for the year 2022 = 1,904,762 + 57,143 = 1,961,905 Problem 25: AAHONSALUGI
Company
32. Share premium before quasi-reorganization 300,000

Increase in share premium as a result of reduction in par 2,400,000
(50 – 30) x 120,000 shares
Decrease in share premium as a result of absorption of deficit (2,500,000)
Share premium after quasi-reorganization 200,000
Total adjusted deficit = 1,200,000 + (4,000,000 – 3,000,000) + 300,000 = 2,500,000
Problem 26: JOSKONAMAN Company
33.
Total net effect on equity = Cash received upon exercise of the warrants:
2,000 bonds x 1 warrant per bond x 10 shares per warrant x exercise price of P70/share = P1,400,000
Alternative solution = OS of P1,000,000 + SP of P460,000 – SWO of P 60,000 = P1,400,000
Journal entry:
Cash 1,400,000
SWO 60,000
OS 1,000,000
SP 460,000
Problem 27: PARANGMANANALO Company
34.
DISCLOSURE only in the Notes to the Financial Statement because the event was only PROBABLE related
to an ASSET, unless virtually certain.
The P1,000,000 received on April 15, 2023 was AFTER the FS were authorized for issue (outside the scope
of PAS 10)
Problem 28: PWEDENA Company
35. Unadjusted balance per book 220,000

NSF (30,000 – 10,000) (20,000)
Net Credit memo 150,000
Overstatement of disbursement (50,000 – 5,000) 45,000
Adjusted balance per book 395,000
Unadjusted balance per book (220,000)
Net adjustments to Cash in Bank (increase / debit) 175,000
Problem 29: ISHORTKATMOYAN Company
36.
15% x (10,000,000 x 70%) / 1 + (15% x 70%) = 950,226

Problem 30: ALANGBEARING Company
37. Cost, 12/31/23 5,400,000

Allowance for inventory write-down, 12/31/23 (5,400,000 – (200,000)
5,200,000)
Ending inventory to be reported in the SFP, 12/31/23 5,200,000
Problem 31: DISERVICETO Company
38. Cumulative warranty liability, 12/31/22 2,450,952

(3,280,200 + 4,320,500 + 4,585,800 + 5,320,300) x 14%
Cumulative actual warranty expenditures (110,600 + 200,480 (1,022,250)
+ 310,690 + 400,480)
Warranty liability, 12/31/22 1,428,702
Problem 32: MANGGAGAMIT Company
39. TOTAL CASH DIVIDENDS - 2023 540,000

Preference dividend (20,000 x P9) (180,000)
Ordinary dividend (225,000)
(9% x P10 x 250,000 shares)
Excess cash dividends to preference and ordinary 135,000
Excess cash dividends allocated to Preference Share = (2,000,000 / 4,500,000) x 135,000

= 60,000
Cash dividend per Preference share = (180,000 + 60,000) / 20,000 shares = P12
Problem 33: HAYSALAMAT Company
40.
Overall size test (75%) = P21,000,000 x 75% = P15,750,000
Problem 34: WALEY Company
41.
The remeasurement of liability (property dividends payable) should be adjusted to RETAINED
EARNINGS and not to P/L
Problem 35: THEENDISNEAR Company
42. Notes payable due on 2/14/24 2,000,000

Refinanced on a long-term basis (3 yrs.) (1,200,000)
Notes payable classified as CURRENT, 12/31/23 800,000
Problem 36:
43.
The write-down or impairment of inventories is an example of immediate recognition basis of expense
recognition principle; hence, it should not be allocated. The loss should be recognized immediately on
May 2023 (i.e., second quarter only).
Problem 37: YUNGMADALILANG Company
44.
WANOSO = (500,000 x 2 x 12/12) + (60,000 x 2 x 10/12) – (48,000 x 2/12) = 1,092,000
BEPS = (2,950,000 – 200,000) / 1,092,000 = 2.52

Problem 38: YUNGMASMAHIRAP Company
45.
DEPS = 3,700,000 + (1,000,000 x 10% x .65) / (25,000 + 5,000) = 125.50
Problem 39: ETOPARINYUN Company
46.
Number of shares assumed issued without consideration:
[(20 – 12) / 20] x 32,000 = 12,800
WANOSO = (560,000 x 12/12) + (40,000 x 6/12) + (12,800 x 3/12) = 583,200
Problem 40: LABANLANG Company
47.
Notes receivable related to the sale of Building, 12/31/23 (300,000 x 2.40) 267,168
x 1.12 – 300,000 x 1.12 – 300,000
Notes receivable related to the sale of Land, 12/31/23 500,000
CV of notes receivable, 12/31/23 767,168
Problem 41: KELANMATATAPOS Corporation
48.
Ordinary share capital, 12/31/23 2,250,000
Share premium – ordinary 1,095,774
Total credit to Equity 3,345,774
Journal entry on the date of conversion:
Bonds payable 3,000,000

SP-BCP 454,958
Discount on BP 109,184
Ordinary share capital 2,250,000
SP-ordinary 1,095,774
Problem 42: DIBAKINAYAMO Inc.
49.
DATE NOMINAL EFFECTIVE AMORTIZATION CV
1/1/22 2,155,534
12/31/22 220,000 193,998 26,002 2,129,532
12/31/23 220,000 191,658 28,342 2,101,190
Retirement price 1,980,000

CV of BP retired (2,101,190)
Gain on retirement -P/L 121,190
Problem 43: NATAPOSDIN Company
50.
PV of restructured future cash outflows = (8,000,000 x .7513) + (720,000 x 2.4869)
= 7,800,968
CV of original liability (9,000,000 + 810,000) 9,810,000

PV of restructured future cash outflows (7,800,968)
Gain on debt restructuring, 12/31/23 2,009,032

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ReSA B45 FAR Final PB Exam Questions, Answers Solutions

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Problem 1: MAGIGINGCPAAKO Company provided you the Statement of Financial Position on December 31, 2023:

The following information is provided below:

Page 1 of 21 0915-2303213  resacpareview@gmail.com

5. How much is the book value per share on ordinary share?

6. How much is the compensation expense for the year 2024?

8. Amount transferred to retained earnings as a result of the sale of SIGARILYAS security.

Page 2 of 21 0915-2303213  resacpareview@gmail.com

Additional information for the year 2023:

9. How much is the net cash provided by or used in financing activities?

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Sales revenue P 5,000,000

Fair value of plan assets, 12/31/23 P4,000,000

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2024- 50% 2025- 30% 2026- 20%

OTO’s shares outstanding at December 31, 2022 follow:

Page 5 of 21 0915-2303213  resacpareview@gmail.com

Unearned rent income P500,000

Income tax rate is constant at 30% for all years

25. How much is the estimated cost of inventory under FIFO?

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35. How much is the total net adjustments to Cash in Bank?

Page 8 of 21 0915-2303213  resacpareview@gmail.com

Page 9 of 21 0915-2303213  resacpareview@gmail.com

44. What is the basic earnings per share?

Net income for the year 2023 P3,700,000

45. What is the diluted earnings per share?

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Page 11 of 21 0915-2303213  resacpareview@gmail.com

55. Which of the following statements is true concerning contingent liabilities?

56. The following statements are based on PAS 38 (Intangible Assets):

57. Which of the following is/are not subject to depreciation?

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ANSWERS & SOLUTIONS/CLARIFICATIONS

Problem 1: MAGIGINGCPAAKO Company

1. CURRENT ASSETS, Unadjusted balance (95,000 + 255,700

2. CURRENT LIABILITIES, Unadjusted balance 82,000

Problem 2: HULAANKOBA Corporation

3. CASH BALANCE, Unadjusted balance 2,000,000

Problem 3: BABANGONMULI Company

Page 14 of 21 0915-2303213  resacpareview@gmail.com

5. TOTAL SHAREHOLDERS’ EQUITY 15,000,000

Outstanding ordinary shares = 60,000 + 14,000 – 5,000 = 69,000

Problem 5: WAGISALABAN Company

6. Cumulative compensation expense – 2022 to 2024 (3,000,000 x 2,850,000

Problem 6: BAHAYKUBO Company

7. Fair value, 12/31/23 1,795,000

8. Fair value, 10/1/23 325,000

Problem 7: ANGHABA Company

9. Dividends paid (160,000)

10. Sale of long-term investment 140,000

NET CASH PROVIDED BY INVESTING ACTIVITIES 280,000

11. Net income 600,000

Page 15 of 21 0915-2303213  resacpareview@gmail.com

Problem 8: ANGIKLI Corporation

12. Amortization expense (840,000 / 10) 84,000

Total expenses - 2023 420,000

Problem 9: KUMAPITKA Company

13. TGAS (300,000 + 4,200,000) 4,500,000

Problem 10: WAGKANGSUSUKO Company

14. Net sales 5,000,000

Non-operating income (100,000 + 55,000) 155,000