FAR 1st Preboard Questionaires

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
ICARE BATCH 6 JOSHUA 1st preboard FAR
Directions: Select the best answer from the given choices.
For Numbers 1 to 3
On January 1, 2023, Blue Company sold goods to Green Company in which Green issued
a noninterest-bearing note requiring annual payment of P500,000 for 5 years. The first
payment was made on January 1, 2023. The prevailing interest rate for this similar note
is 10%. The present value factor of an ordinary annuity for 5 periods at 10% is 3.79 while
the factor for an annuity due for 5 periods at 10% is 4.17.
1. How much is the sales for the year ended December 31, 2023?
a. 1,895,000
b. 2,500,000
c. 1,585,000
d. 2,085,000
2. How much is the interest income for the year ended December 31, 2023?
a. 250,000
b. 189,500
c. 158,500
d. 208,500
3. Accounting for interest in a noninterest bearing note receivable is an example of what

aspect of accounting theory?
a. Matching
b. Verifiability
c. Substance over form
d. Accounting entity
For Numbers 4 to 6
Moira Company purchased 1,000 units of sheep on January 1, 2023, for 1,480,000.
These sheep will be sheared semiannually for sale. The sheep had a fair value less cost
of disposal on January 1, 2023 of P1,500,000. During 2023 the change in fair value due
to growth and price changes is P94,000, the wool harvested had a fair value less cost to
sell of P200,000 at the point of harvest. On December 31, 2023, the wool had not yet
been sold and the net realizable value is P180,000. The change in fair value due to
harvest of the sheep is (P11,500).
4. What is the carrying amount of the sheep on Moira’s statement of financial position on
December 31, 2023?
a. 1,562,500
b. 1,480,000
c. 1,468,500
d. 1,582,500
5. What is the net amount of fair value gains for the biological assets?
a. 94,000
b. 102,500
c. 282,500
d. 62,500
1|P a g e T SIY /AT ANG /JSaripada/JBugatan

No. 125 Brgy. San Sebastian
Mobile : 0927 283 8234
Telephone : (043) 723 8412
6. A gain or loss arising on the initial recognition of biological asset and from a change
in fair value less cost of disposal of a biological asset shall be included in
a. The profit or loss for the period.
b. Other comprehensive income.
c. A separate revaluation reserve
d. A general reserve
For Numbers 7 to 10
Augusta Company acquired 30% of the outstanding ordinary shares of Triumph Company
for P8,000,000 on January 1, 2023. The book value of Triumph’s net assets was
P22,000,000. Triumph Company’s assets had fair values that equaled their carrying
amounts except for land, building and inventory.
The fair value of the land, building and inventory exceeded their carrying amounts by
1,000,000, 2,000,000 and 500,000 respectively. The unallocated difference from the
acquisition cost of the shares shall be attributed to an unidentifiable intangible asset.
During 2023, the land was sold to an unrelated party at a gain of P500,000, the building
was depreciated using the straight-line method with a remaining life of 10 years and half
of the inventory on January 1, 2023 was sold to unrelated parties during the year.
Triumph reported net income of P6,000,000 and declared dividends of P2,000,000 in

2023
In 2024, Triumph reported net income of 7,000,000 and declared dividends of 2,500,000
while the remaining inventories from January 1, 2023, were sold in 2024.
On December 31, 2024, Augusta Company sold half of the investment for P5,200,000.
The fair value of the retained investment on the same date was 5,350,000.
7. What is the 2023 investment income?

a. 1,590,000
b. 1,800,000
c. 1,365,000
d. 1,290,000
8. How much is the gain on sale on December 31, 2024?

a. 210,000
b. 230,000
c. 350,000
d. 420,000
9. How much is the gain on reclassification on December 31, 2024?

a. 380,000
b. 570,000
c. 360,000
d. 500,000
10. The purchase price exceeds the fair value of the investee’s net assets where the
acquisition gives the investor the power to exercise significant influence over the
investee. This difference shall

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Telephone : (043) 723 8412
a. Decrease the investment account

b. Decrease the goodwill account
c. Increases the investment revenue account
d. Does not affect the investment account
For Numbers 11 to 13
Prince Company accepted from a customer a P5,000,000, 9-month, 12% note dated June
1, 2023. On October 1, 2023, Prince discounted the note at the National Bank as a
secured borrowing at a discount rate of 15%.
11. What are the proceeds from discounting?

a. 5,450,000
b. 5,340,625
c. 5,177,500
d. 5,109,375
12. What is the net interest income recognized in 2023?

a. 109,375
b. 200,000
c. 450,000
d. 90,625
13. Notes receivable discounted as a secured borrowing will result in

a. A disclosure of a contingent liability only
b. Recording of an actual liability
c. Reporting a loss on the discounting
d. Exclusion from total receivables without disclosure of a contingent liability
Lovely Company has estimated that it would approximately use 80,000 units of raw
materials in its manufacturing operations to meet the demand for the Christmas season.
On August 1, 2023, Lovely Company purchased a call option from a bank to buy 80,000
units of raw materials on December 1, 2023 at a price of P100 per unit. The company
paid P70,000 for the call option. Lovely Company designated the call option as a cash
flow hedge against price fluctuation for its December purchase. The market price of the
raw material on December 1, 2023, is P90 per unit and P105 on December 31, 2023.
14. What is the cost of the inventory recorded on December 1, 2023?

a. 8,000,000
b. 7,200,000
c. 7,300,000
d. 7,270,000
15. What is the amount of settlement that was made between Lovely and the bank in
2023?
a. 400,000
b. 800,000
c. 300,000
d. 0

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Telephone : (043) 723 8412
16. How much is the loss on the call option for the year ended December 31, 2023?
a. 70,000
b. 870,000
c. 800,000
d. 730,000
17. Which of the following statements best describes the information that should be
disclosed related to derivative contracts?
a. Fair value
b. Notional amount only
c. Both fair value and notional amount
d. Neither fair value nor the notional amount
On January 1, 2021, Roberto Company acquired machinery worth P4,000,000 with a 10-
year useful life and no residual value. On January 1, 2023, Roberto decided to sell the
asset and classified it as held for sale. The fair value less cost to sell on January 1, 2023,
December 31, 2023 and December 31, 2024 are P3,000,000, P2,700,000 and
P2,500,000 respectively. On January 1, 2025, Roberto decided to classify the asset back
into operations and continue to use it. On this date, the fair value less cost to sell is
P2,200,000.
18. How much is the loss to be recognized in 2023?

a. 200,000
b. 500,000
c. 800,000
d. 300,000
19. How much is the gain or loss on reclassification that should be recognized in 2025?
a. 100,000 loss
b. 300,000 loss
c. 100,000 gain
d. 300,000 gain
20. An entity shall recognize any subsequent increase in fair value less cost to sell of a
noncurrent asset or disposal group classified as held for sale as
a. Deferred gain as component of equity
b. Deferred gain as component of liability
c. Gain entirely to be included in profit or loss
d. Gain to be included in profit or loss but not in excess of the cumulative impairment
loss previously recognized.
Margaret Company provided the following information for the month of October:
Cash in bank, per bank statement, October 31 5,600,000

Bank service charge for October 5,000
Interest paid by the bank to Margaret Company for 20,000
October

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Deposits made but not yet recorded by the bank 700,000

Checks written and mailed but not yet recorded by 1,300,000
the bank
Erroneously recorded a check payment for P323,000
that should have been recorded as P233,000 90,000
21. What is the cash balance per ledger on October 31?

a. 6,200,000
b. 4,895,000
c. 6,250,000
d. 5,000,000
22. How much is the cash to be shown in the statement of financial position
a. 5,600,000
b. 5,000,000
c. 6,200,000
d. 5,040,000
23. If the cash balance shown in a company’s accounting records is more than the correct
cash balance and neither the company nor the bank has made any errors, there must
be
a. Deposits credited by the bank but not yet recorded by the company
b. Deposits in transit
c. Outstanding checks
d. Bank charges not yet recorded by the company
24. Rizal Company provided the following information with respect to its cash and cash
equivalents on December 31, 2023.
Checkbook balance 5,000,000

Bank statement balance 4,000,000
Check drawn on the entity’s account, payable to a supplier
that has been written and recorded on December 26,
2023 1,000,000
and delivered to the supplier but date January 5, 2024.
Sinking fund cash 400,000
Treasury bills, purchased in December 31, 2023 and
maturing on February 28, 2024 2,000,000
Treasury notes 300,000
Undeposited check dated December 1, 2023
200,000
Time Deposits 500,000
What amount would be reported as unrestricted cash and cash equivalents on the
statement of financial position?
a. 8,700,000
b. 9,100,000
c. 7,700,000
d. 8,200,000

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Telephone : (043) 723 8412
On January 1, 2023, Landers Company had accounts receivable and allowance for
doubtful accounts balances of P950,000 and P47,500 respectively. During 2023, cash
and credit sales totaled P5,900,000. Collections from customers were as follows: from
credit customers who took advantage of the 4/10, n/30, P3,024,000, from credit
customers who did not take advantage of the credit terms (which includes recovery of
accounts previously written off of P25,000), P450,000, from cash customers, P2,100,000.
Also, P50,000 of accounts were written off during the year and sales returns and
allowances were as follows: credit memorandum issued to credit customers, P250,000
and cash refund to cash customers, P20,000. For 2023, Landers used the same
uncollectible percentage on the accounts receivable at the end of last year.
25. How much is the doubtful accounts expense?

a. 21,250
b. 22,500
c. 25,750
d. 26,150
26. If a company employs the gross method of recording accounts receivable from
customers, the sales discount taken should be reported as
a. Deduction from sales in the income statement
b. Other expense in the income statement
c. Deduction from accounts receivable in determining the net realizable value of
accounts receivable
d. Sales discount forfeited in the cost of goods sold section of the income statement
27. Steiner Company sold an item on credit for P5,000,000 less multiple trade
discounts of 20% and 5%. The correct entry to record this sale is
a. Debit Accounts receivable for P5,600,000 and Trade Discount for P1,200,000 and
credit Sales for P5,000,000, Output Tax for P600,000 and Allowance for Sales
Discount for P1,200,000.
b. Debit Accounts Receivable for P4,180,000 and credit Sales for P3,800,000 and
Output Tax for P380,000.
c. Debit Accounts Receivable for P4,180,000 and Sales Discount for P1,200,000 and
credit Sales for P5,000,000 and Output Tax for P600,000.
d. Debit Accounts Receivable for P4,256,000 and credit Sales for P3,800,000 and
Output tax for P456,000.
On January 1, 2025, Creston Company purchased bonds with face value of P4,000,000
for P3,500,000 plus transaction costs of P211,618 with the business model of collecting
contractual cash flows that are solely payments of principal and interest and to sell
financial assets. Creston Valley does not elect the fair value option in measuring
financial assets.
The bonds mature on December 31, 2030, and pay interest of 10% annually every
December 31 with a 12% effective yield.

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Telephone : (043) 723 8412
The fair value of the financial asset and effective rate at the end of 2025 and 2026 are:
Date Fair Value Effective

Rate
December 31, 2025 3,875,902 11%
December 31, 2026 4,101,252 9%
28. What amount of unrealized gain on the financial asset should be reported
on the 2025 statement of comprehensive income?
a. 118,890
b. 355,902
c. 164,284
d. 375,902
29. What amount of unrealized gain on the financial asset should be reported on the
2026 statement of comprehensive income?
a. 293,399
b. 174,509
c. 225,350
d. 202,950
30. What amount of unrealized gain on the financial asset should be reported on the
2026 statement of changes in equity?
a. 174,509
b. 225,350
c. 202,950
d. 293,399
31. The fair value option for debt instrument financial assets allows an entity to
a. Record income when the fair value of investment increases.
b. Measure debt investments at fair value in some years but not other years.
c. Report most financial instruments at fair value by recording gains and losses as a
separate component of shareholders’ equity.
d. All of these are true of the fair value option.
32. An entity may make an irrevocable election to present in other comprehensive

income changes in fair value of
a. An investment in equity instrument that is held for trading.
b. An investment in equity instrument that is not held for trading
c. A financial asset measured at amortized cost
d. A financial asset measured at fair value through profit or loss.
The following information is provided for the current year:
Revenue 1,200,000
Income from continuing operations 150,000
Net income 135,000
Selling and administrative expenses 700,000
Income before income tax 220,000

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Revaluation surplus before tax 30,000

Tax rate 20%
33. What is the amount of discontinued operations?

a. ( 30,000)
b. 120,000
c. ( 18,750)
d. ( 15,000)
34. What is the comprehensive income?

a. 165,000
b. 180,000
c. 144,000
d. 174,000
35. Other comprehensive income shall include all of the following, except
a. Net unrealized loss on financial assets at FVOCI
b. Foreign currency translation adjustments
c. Revaluation surplus
d. Unrealized gain on FV option debt instruments
Judge Company owns a building on January 1, 2022, with a historical cost of
P40,000,000. The building has a useful life of 40 years with no residual value. Judge uses
the revaluation model and has so far revalued the asset twice at fair value on the following
dates: January 1, 2023 – P46,800,000 and January 1, 2025 – P55,500,000.
36. What is the revaluation surplus to be reported in the 2023 statement of comprehensive
income?
a. 7,800,000
b. 7,600,000
c. 6,800,000
d. 4,200,000
37. What is the revaluation surplus to be reported in the 2025 statement of comprehensive
income?
a. 9,900,000
b. 8,700,000
c. 11,100,000
d. 15,500,000
38. What is total revaluation surplus on December 31, 2025?

a. 18,000,000
b. 18,900,000
c. 18,600,000
d. 18,400,000
39. PAS 16 require that revaluation surplus resulting from initial revaluation of property,
plant and equipment should be treated in which of the following ways?
a. Credited to retained earnings as this is unrealized gain.

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b. Released to the income statement at the amount equal to the difference between
the depreciation calculated on historical cost vis-à-vis revalued amount.
c. Deducted from current assets and added to the property, plant and equipment.
d. Debited to the class of property, plant and equipment that is being revalued and
credited to “revaluation surplus”, which is presented under “equity”.
On January 1, 2023, Carmina Company received P5,385,000 for a P5,000,000 face
amount, 12% bond, a price that yields 10%. The bond pays interest semiannually. The
entity elected the fair value option for valuing financial liabilities. On December 31, 2023,
the fair value of the bond is determined to be P5,125,000.
40. What is the gain or loss that should be recognized in 2023 to report this bond at fair
value?
a. 260,000 gain
b. 260,000 loss
c. 600,000 loss
d. 340,000 loss
41. What is the 2023 interest expense?

a. 600,000
b. 538,500
c. 512,500
d. 646,200
42. Which of the following statements concerning discount on bonds payable is false?
a. Discount on bonds under the fair value method is not amortized
b. The discount on bonds payable is a contra liability account, which is shown as a
deduction from bonds payable.
c. The discount on bonds payable represents additional interest charges applicable
to future periods.
d. Amortizing the discount causes the carrying value of the bonds to gradually
decrease over the life of the bonds.
Charlie Company purchased 10,000 shares representing 2% ownership of Carson
Company on February 11, 2023, at a price of P2,500,000. Charlie received a 25% stock
dividend on March 31, 2023, when the market value per share was P400. Carson paid a
cash dividend of P20 per share on September 15, 2023. On December 31, 2023, Charlie
sold 7,000 shares of this investment for P1,500,000.
43. What amount should Charlie report as gain on sale on this investment in the income
statement?
a. 250,000
b. 100,000
c. 180,000
d. 150,000
44. What is the total amount of income that shall be recognized in profit or loss?
a. 1,100,000
b. 350,000

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c. 250,000
d. 1,500,000
45. At which of the following dates has the shareholder theoretically realized income from
its equity security investments?
a. Date of declaration of dividends.
b. Date of record.
c. Date of payment of dividends.
d. Date of receipt of dividends.
Reese Company invested in shares of Hershey Company acquired as follows:
Number of shares Cost

2021 2,250 180,000
2022 3,750 330,000
In 2023, Reese Company received 6,000 rights to purchase Hershey’s share at P80. Five
rights are required to purchase one share. At issue date, rights had a market value of P4
each and the shares were selling at P96 per share. Stock rights are accounted for
separately by Reese Company. By the end of 2023, Reese Company used the rights to
purchase 900 additional ordinary shares of Hershey and allowed the remaining rights to
expire.
46. What is the investment in stock rights to be recognized by Reese?

a. 24,000
b. 20,400
c. 48,000
d. 0
47. What is the cost of the new investment purchased by Reese through the exercise
of the stock rights?
a. 87,300
b. 108,000
c. 90,000
d. 72,000
48. What is the remaining carrying amount of the prior two investments in ordinary
shares by Reese?
a. 486,000
b. 489,600
c. 492,000
d. 510,000
49. All of the following are alternatives for an investor who receives stock rights except
a. Exercising the rights by purchasing additional stock.
b. Selling the rights.
c. Permitting the rights to expire.
d. Converting the rights into a cash dividend.
10 | P a g e T SIY /AT ANG /JSaripada/JBugatan

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At the beginning of 2023, Bravo Company constructed assets costing P4,215,000. The
weighted average accumulated expenditures on these assets during 2023 was
P3,900,000. Bravo borrowed P2,000,000 at 7.5% on January 1, 2023. Funds not needed
for construction were temporarily invested in short-term securities, and earned P59,000
in interest revenue.
In addition to the construction loan, Bella had two other notes outstanding during the year:
a P1,500,000, 10-year, 10% note payable and a P1,000,000, 8% mortgage payable
partially used in construction.
50. What is the cost of the building at December 31, 2023?

a. 4,543,800
b. 4,512,500
c. 4,165,800
d. 4,480,800
51. What is the interest expense for 2023?

a. 230,000
b. 14,200
c. 55,200
d. 65,800
52. If the qualifying asset is financed by general borrowings, the capitalizable borrowing
cost is equal to
a. Actual borrowing cost incurred.
b. Total expenditures on the asset multiplied by a capitalization rate.
c. Average expenditures on the asset multiplied by a capitalization rate or actual
borrowing cost incurred, whichever is lower.
d. Average expenditures on the asset multiplied by a capitalization rate or actual
borrowing cost incurred, whichever is higher
On November 30, 2023, a fire destroyed the entire uninsured merchandise inventory of
the Tolentino Company. The following data are available:
Inventory, January 1 P
400,000
Purchases, January 1 through November 30 2,200,000
Sales, January 1 through November 30 2,500,000
Sales returns 100,000
Sales discounts 50,000
Markup percentage on cost 25%
53. What is the estimated cost of goods sold?
a. 2,000,000
b. 1,920,000
c. 1,880,000
d. 1,800,000

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54. What is the approximate inventory loss as a result of the fire?

a. 800,000
b. 500,000
c. 680,000
d. 380,000
Bartolo Company started its operations in 2022. Bartolo uses FIFO cost flow to determine
its cost of goods sold and ending inventory. The following data are abstracted from the
company’s production and sales records:
2022 2023 2024

Number of units produced 160,000 155,000 135,000
Ending inventory units 60,000 35,000 25,000
Unit production cost 9.00
7.50 10.00
Sales revenue 1,500,000 1,800,000 2,000,000
55. What is the cost of goods sold in 2023?

a. 1,530,000
b. 1,395,000
c. 1,620,000
d. 1,507,500
56. What is the gross profit in 2024?

a. 270,000
b. 585,000
c. 550,000
d. 685,000
Devin Company and its divisions are engaged both in manufacturing and mining
operations. Devin identified its operating segments for the year ended 2023. The
following data pertain to the industries in which operations were conducted for the year
ended December 31, 2023.
Segments External Intersegment Identifiable

Revenue Revenue Assets
1 14,200,000 4,000,000 30,000,000
2 8,500,000 2,000,000 29,000,000
3 7,200,000 1,500,000 12,000,000
4 3,800,000 1,000,000 8,000,000
5 3,000,000 800,000 5,000,000
6 3,300,000 700,000 6,000,000
40,000,000 10,000,000 90,000,000

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57. Which operating segments should be “reportable segments” in the 2023 financial
statements?
a. Segments 1, 2 and 3.
b. Segments 1, 2, 3 and 5
c. Segments 1, 2, 3, 4 and 5
d. Segments 1, 2, 3 and 4
58. What minimum amount of revenue must be recognized for a customer to be

identified as a “major customer”?
a. 5,000,000
b. 4,000,000
c. 1,000,000
d. 9,000,000
59. On January 1, 2023, Beaufort Company signed a 10-year equipment lease with annual
payments of P2,000,000 beginning January 1, 2023. The equipment is properly
classified as a finance lease. The ten lease payments have a present value of
P12,640,000 on January 1, 2023 based on an implicit rate of 12% and a present value
of P11,900,000 based on Beauford’s incremental borrowing rate of 14%. What amount
should Beaufort report as interest expense for the year ended December 31, 2023?
a. 1,386,000
b. 1,150,000
c. 1,516,800
d. 1,276,800
60. On January 1, 2023, Arthur Company leased equipment from Treks Company. Annual
lease payments are P100,000 due each December 31, beginning December 31, 2023.
The last payment is due on December 31, 2027. Arthur and Treks agreed that the
interest rate is 10% and that a third party related to Treks guarantees a P120,000
residual value when the asset is returned on January 1, 2028. The remaining useful
life of the asset was six years. The PV of 1 at 10% for 5 periods is 0.62, and the PV
of an ordinary annuity of 1 at 10% for 5 periods is 3.79. What is the carrying amount
of lease receivable of the lessor on January 1, 2023?
a. 353,400
b. 379,000
c. 453,400
d. 620,000
61.Under a direct financing lease, the excess of aggregate rentals over the cost of leased
property shall be recognized as interest income of the lessor
a. In increasing amounts during the lease term using interest method
b. In constant amounts during the lease term using straight line method
c. In decreasing amounts during the lease term using interest method
d. After the cost of leased property has been fully recovered through rentals
62. On January 1, 2023, Collins Company acquired the following intangible assets:
* A trademark for P2,000,000. The trademark has 8 years remaining in its legal
life. It is anticipated that the trademark will be renewed in the future
indefinitely, without a problem.

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* A patent for P4,000,000. Because of market conditions, it is expected that

the patent will have an economic life for just 5 years, although the remaining
legal life is ten years.
Because of a decline in the economy, the trademark us now expected to generate

cash flows of just P120,000 per year. The useful life of the trademark still extends
beyond the foreseeable horizon. The cash flows expected to be generated by the
patent are P500,000 annually for each of the next 4 years. The appropriate discount
rate for all intangible assets is 8%. The present value 1 at 8% for four periods is .74
and the present value of an ordinary annuity of 1 at 8% for four periods is 3.31. What
is the total impairment loss for the intangible assets?
a. 2,045,000
b. 1,545,000
c. 2,845,000
d. 1,980,000
63.On December 31, 2023, Marcy Company exchanged 100,000 ordinary shares of P10
par value for the following assets:
* A trademark valued at P1,500,000.

* A building, including land, valued at P6,500,000 of which 20% is for the land.
* A franchise right. No estimate of the value is available at the time of
exchange.
The ordinary share of the entity is selling at P90 on the date of the exchange. What
amount should be recognized as value of the franchise on the date of exchange?
a. 1,500,000
b. 1,000,000
c. 2,000,000
d. 0
As an inducement to enter a lease, Lucio Company, a lessor, grants Mindi Company, a
lessee, six months of free rent under a five-year operating lease. The lease is effective
on July 1, 2023, and provides for monthly rental of P250,000 to begin January 1, 2024.
64. What is the rental income for the year ended June 30, 2024?
a. 3,000,000
b. 2,700,000
c. 1,200,000
d. 1,500,000
65. What is the rent receivable for the year ended June 30, 2025?
a. 900,000
b. 1,200,000
c. 600,000
d. 300,000
66. The Financial Reporting Standards Council employs a "due process" system which
a. Is an efficient system for collecting dues from members.

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b. Enables interested parties to express their views on issues under consideration.

c. Identifies the accounting issues that are the most important.
d. Requires that all accountants must receive a copy of financial standards.
67. An entity acquired a subsidiary exclusively with a view to selling it. The subsidiary
meets the criteria to be classified as held for sale. At year-end, the subsidiary has not
been sold and six months have passed since acquisition. How will the subsidiary be
measured at the current year-end?
a. At fair value
b. At lower of cost and fair value less cost to sell
c. At cost
d. Carrying amount under equity method
68. What is the objective of financial reporting as indicated in the Conceptual Framework?
a. To provide information that is useful to those making investing and credit decisions.
b. To provide information that is useful to management.
c. To provide information about those investing in the entity.
d. All of the above
69. It is the accounting standard setting body created by the Professional Regulation
Commission upon recommendation of the Board of Accountancy to assist the BOA in
carrying out its powers and functions under R.A.9298, otherwise known as the
Philippine Accountancy Act of 2004.
a. Financial Reporting Standards Council
b. Accounting Standards Council
c. Education Technical Council
d. Auditing and Assurance Standards Council
70. Aliyah Company is an oil and gas company engaging in many exploration projects
around the world to extract petroleum. During 2023 Aliyah had a total of 20 projects
at a total cost of P5,000,000 each. By year’s end, 15 of the projects proved to contain
oil and gas while the rest where so called “dry holes”. Also by December 31, 2023,
30% of the projects have been depleted. Aliyah uses the successful efforts method in
accounting for cost incurred in exploration projects. What is the capitalized cost for
exploration of wasting assets?
a. 50,000,000
b. 75,000,000
c. 100,000,000
d. 70,000,000

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No. 125 Brgy.

ICARE BATCH 6 JOSHUA 1st preboard FAR

Directions: Select the best answer from the given choices.

3. Accounting for interest in a noninterest bearing note receivable is an example of what

1|P a g e T SIY /AT ANG /JSaripada/JBugatan

Triumph reported net income of P6,000,000 and declared dividends of P2,000,000 in

7. What is the 2023 investment income?

8. How much is the gain on sale on December 31, 2024?

9. How much is the gain on reclassification on December 31, 2024?

2|P a g e T SIY /AT ANG /JSaripada/JBugatan

a. Decrease the investment account

11. What are the proceeds from discounting?

12. What is the net interest income recognized in 2023?

13. Notes receivable discounted as a secured borrowing will result in

14. What is the cost of the inventory recorded on December 1, 2023?

3|P a g e T SIY /AT ANG /JSaripada/JBugatan

18. How much is the loss to be recognized in 2023?

Cash in bank, per bank statement, October 31 5,600,000

4|P a g e T SIY /AT ANG /JSaripada/JBugatan

Deposits made but not yet recorded by the bank 700,000

21. What is the cash balance per ledger on October 31?

Checkbook balance 5,000,000

5|P a g e T SIY /AT ANG /JSaripada/JBugatan

25. How much is the doubtful accounts expense?

6|P a g e T SIY /AT ANG /JSaripada/JBugatan

Date Fair Value Effective

32. An entity may make an irrevocable election to present in other comprehensive

7|P a g e T SIY /AT ANG /JSaripada/JBugatan

Revaluation surplus before tax 30,000

33. What is the amount of discontinued operations?

34. What is the comprehensive income?

38. What is total revaluation surplus on December 31, 2025?

8|P a g e T SIY /AT ANG /JSaripada/JBugatan

41. What is the 2023 interest expense?

9|P a g e T SIY /AT ANG /JSaripada/JBugatan

Number of shares Cost

46. What is the investment in stock rights to be recognized by Reese?

10 | P a g e T SIY /AT ANG /JSaripada/JBugatan

50. What is the cost of the building at December 31, 2023?

51. What is the interest expense for 2023?

11 | P a g e T SIY /AT ANG /JSaripada/JBugatan

54. What is the approximate inventory loss as a result of the fire?

2022 2023 2024

55. What is the cost of goods sold in 2023?

56. What is the gross profit in 2024?

Segments External Intersegment Identifiable

12 | P a g e T SIY /AT ANG /JSaripada/JBugatan

58. What minimum amount of revenue must be recognized for a customer to be

13 | P a g e T SIY /AT ANG /JSaripada/JBugatan

* A patent for P4,000,000. Because of market conditions, it is expected that

Because of a decline in the economy, the trademark us now expected to generate

* A trademark valued at P1,500,000.

14 | P a g e T SIY /AT ANG /JSaripada/JBugatan

b. Enables interested parties to express their views on issues under consideration.

15 | P a g e T SIY /AT ANG /JSaripada/JBugatan

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