Professional Documents
Culture Documents
1
Conceptual Framework
INSTRUCTIONS
1. Choose the best answer.
2. Encircle the answer with a permanent ink pen
3. Erasure would invalidate your answers
4. If the answer is not in the above write the correct answer on the space provided
2. These are events that are indicative of conditions that arise after the end of reporting period.
a. Adjusting events b. Non-adjusting events c. Adjusting entries d. None of the above ________
3. Non-adjusting events after the reporting period that require disclosure include all of the following, except
a. A major business combination after reporting period
b. Announcing a plan to discontinue an operation
c. Expropriation of major asset after the reporting period
d. Destruction of a major production plant by a fire before the end of the reporting period
4. Events after reporting period that provide evidence about conditions that existed at the current year-end and affect
the realizability of accounts receivable should be
a. Discussed only in the management commentary
b. Disclosed only in the notes
c. Used to record an adjustment to doubtful accounts expense
d. Used to record an adjustment to retained earnings
5. Bonus
Identification: Put A if this pertains to Adjusting events and N for Non-adjusting events
1 Settlement after the reporting period of a court case because it confirms that the entity
2 Bankruptcy of a customer which occurs after the reporting period.
3 Entering into significant commitments or contingent liabilities, for example, by issuing
4 Commencing major litigation arising solely from events that occurred after the reporting
5 Change in tax rate enacted or announced after the end of reporting period that has a
6 Sale of investments after the reporting period may give evidence about the net
7 The determination after the reporting period of the cost of assets purchased or the
The determination after the reporting period of the profit sharing or bonus payment if
8 the entity has the present obligation at the end of reporting period to make such
9 Announcing or commencing the implementation of a major restructuring.
10 Abnormally large changes after the reporting period in asset prices or foreign exchange
Final Quiz No. 2
Conceptual Framework
INSTRUCTIONS
1. Choose the best answer.
2. Encircle the answer with a permanent ink pen
3. Erasure would invalidate your answers
4. If the answer is not in the above write the correct answer on the space provided
4. These are deductions from the list of catalog price in order to arrive at the invoice price which is the amount actually
charge to the buyer.
a. Cash Discount b. Trade Discount c. Sales Discount d. None of the above _______
5. This method assumes that “the goods first purchased are the first sold” and consequently the goods remaining at the
end of the period are those most recently purchased or produced.
a. LIFO b. Weighted Average c. FIFO d. None of the above __________
6. It is computed by dividing the total cost of goods available for sale by total number of units available for sale.
a. Weighted Average b. LIFO c. FIFO d. Weighted Average Cost
9. It is the estimated selling price in the ordinary course of business less the estimated cost of completion and the
estimated cost of disposal.
a. Carrying amount b. Book Value c. Current Value d. Net Realizable Value
What is the cost of the inventory on January 31, under the FIFO Method Perpetual?
a. 5,850,000 b. 5,550,000 c. 5,607,500 d. None of the above ______
2. Marsh Company had 150,000 units of T-shirts on hand at Jan 1, costing 21 each. Purchases of T-shirts during the
month of January were:
Units Unit Cost
January 10 200,000 P22.00
18 250,000 23.00
28 100,000 24.00
What is the cost of the inventory on January 31, under the Weighted Average Method Periodic?
a. 5,850,000 b. 5,550,000 c. 5,607,500 d. None of the above ______
3. Marsh Company had 150,000 units of T-shirts on hand at Jan 1, costing 21 each. Purchases of T-shirts during the
month of January were:
Units Unit Cost
January 10 200,000 P22.00
18 250,000 23.00
28 100,000 24.00
What is the cost of sales on January 31, under the FIFO Method Periodic?
a. 15,700,000 b. 10,150,000 c. 9,850,000 d. None of the above ______
What amount should be reported as inventory using the LCNRV individual approach?
a. 3,700,000 b. 3,200,000 c. 3,800,000 d. 3,300,000
8. What amount should be reported as inventory using the LCNRV total approach?
a. 3,300,000 b. 3,200,000 c. 3,700,000 d. 2,450,000
9. Japan Company provided the following data for the current year:
Inventory - January 1
Cost 3,000,000
Net Realizable Value 2,800,000
Net Purchases 8,000,000
Inventory - December 31
Cost 4,000,000
Net Realizable Value 3,700,000
What amount should be reported as cost of goods sold?
a. 7,000,000 b. 7,100,000 c. 7,300,000 d. 7,200,000
10. Bonus
Final Quiz No. 3
Conceptual Framework
INSTRUCTIONS
1. Choose the best answer.
2. Encircle the answer with a permanent ink pen
3. Erasure would invalidate your answers
4. If the answer is not in the above write the correct answer on the space provided
3. In computing basic earnings per share, the amount of preference dividends on noncumulative preference shares
should be
a. Deducted from net income whether declared or not
b. Deducted from net income only when declared
c. Added to net income only when declared
d. Ignored
4. It is group of assets to be disposed of by sale or otherwise together as a group in a single transaction, and liabilities
directly associated with those assets that will be transferred in the transaction.
a. Disposal group c. Noncurrent asset
b. Discontinued operation d. Cash generating unit
9. A financial liability
a. Must be classified as noncurrent liability.
b. Is a contractual obligation to deliver cash or another financial asset to another entity.
c. Is a contractual obligation to exchange financial assets or financial liabilities with another entity under conditions that
are potentially favorable to the entity.
d. Is a contractual obligation to deliver cash or any asset to another entity.
10. Bonus
The laboratory and research facility was completed and ready for the intended use at the end of the current year.
What amount of grant income should be included in the income statement for the current year?
a. 10,000,000 b. 2,000,000 c. 1,500,000 d. -0-
2. At the beginning of current year, Farley Company acquired 20% of the outstanding ordinary shares of Davis Company
for P8,000,000.
This investment gave Farley the ability to exercise significant influence over Davis. The carrying amount of the acquired
shares was P6,000,000.
The excess of cost over carrying amount was attributed to a depreciable asset which was undervalued on Davis’
statement of financial position and which had a remaining useful life of ten years.
The investee reported net income of P1,800,000 and paid cash dividends of P400,000 and thereafter issued a 5% share
dividend during the current year.
What amount should be reported as investment income for the current year?
a. 360,000 b. 160,000 c. 240,000 d. 340,000
3. Galore Company ventures into construction of a condominium in Makati which is rated as the largest state-of-the-art
structure.
The board of directors decided that instead of selling the condominium, the entity would hold this property for purpose
of earning rentals by letting out space to business executives in the area.
The construction of the condominium was completed and the property was placed in service on January 1, 2018.
The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and the residual value is
P5,000,000.
An independent valuation expert provided the following fair value at each subsequent year-end:
Under the cost model, what amount should be reported as depreciation of investment property for 2018?
a. 1,800,000 b. 2,000,000 c. 2,200,000 d. -0-
4. On December 31, 2019 and 2018, Gow Company had 100,000 ordinary shares and 10,000 cumulative preference
shares of 5%, P100 par value.
No dividends were declared on either the preference or ordinary share in 2019 or 2018. Net income for the current year
was P900,000.
5. At the beginning of current year, Diamond Company acquired for P1,000,000 a new machinery with useful life of 10
years.
The machine had a drum costing P200,000 that must be replaced every five years.
Continued operation of the machine required an inspection every four years after purchase and the inspection cost is
P80,000. The straight line method of depreciation is used.
6. Harmonious Company acquired a patent for a drug with a remaining legal and useful life of six years on January 1,
2017 for P5,400,000.
On January 1, 2019, a new patent is received for an improved version of the same drug. The new patent has a legal and
useful life of twenty years.
7. At the beginning of current year, Case Company issued P5,000,000 of 12% nonconvertible 5-year bonds at 103.
In addition, each P1,000 bond was issued with 30 detachable share warrant, each of which entitled the bondholder to
purchase, for P50, on ordinary share of Case Company, par value P25.
The quoted market value of each warrant was P4. The market value of the bonds ex-warrants at the time of issuance is
95.
What amount of the proceeds from the bond issue should be recognized as an increase in shareholders’ equity?
a. 600,000 b. 300,000 c. 200,000 d. 400,000
8. Arlene Company accounted for noncurrent assets using the cost model. On October 30, 2019, the entity classified a
noncurrent asset as held for sale.
At that date, the carrying amount was P1,500,000 the fair value was estimated at P1,100,000 and the cost of disposal at
P150,000.
On December 31, 2019, the asset was sold for net proceeds of P800,000.
9. At the beginning of current year, Jade Company purchased a new machine for P4,800,000 and leased it to East the
same day.
The machine has an estimated 12-year life and will be depreciated P400,000 per year.
Additionally, East Company paid P300,000 to Jade as a lease bonus to obtain the three-year lease.
Jade Company incurred insurance expense of P80,000 for the leased machine during the current year.
What amount should be reported as pretax income on the leased asset for the current year?
10. Bonus