| | | | Foreign Currency Transaction PAS 21 The Effects of Changes in Foreign Exchange Rates Scope This Standard shall be applied: (a) in accounting for transactions and balances in foreign currencies, except for those derivative transactions and balances that are within the scope of PAS 39 Financial Instruments: Recognition and Measurement; (b) in translating the results and financial position of foreign operations that are included in the financial statements of the entity by consolidation, proportionate consolidation or the equity method; and (c) in translating an entity’s result and financial position into a presentation currency. PAS 39 Applies to many foreign currency derivatives and, accordingly, these are excluded from the scope of this Standard. However, those foreign currency derivatives that are not within the scope of PAS 39 (e.g. some foreign currency derivatives that are embedded in other contracts) are within the scope of this Standard. In addition, this Standard applies when an entity translates amounts relating to derivatives from its functional currency to its presentation currency. This Standard does not apply to hedge accounting for foreign currency items, including the hedging of a net investment in a foreign operation. PAS 39 applies to hedge accounting. . This Standard applies to the presentation of an entity’s financial statements in a foreign currency and sets out requirements for the resulting financial statements to be described as complying with Philippine Financial Reporting Standards (PFRSs). For translations of financial information into a foreign currency that do not meet these requirements, this Standard specifies information to be disclosed. PAS 21 does not apply to the presentation in a statement of cash flows of the cash flows arising from transactions in a foreign currency, or to the translation of cash flows of a foreign operation (see PAS 7 Statement of Cash Flows). Definitions The following terms are used in this Standard with the meanings specified: 1. Closing rate is the spot exchange rate at the end of the reporting period. 2. Exchange difference is the difference resulting from translating a given number of units of one currency into another currency at different exchange rates. 3. Exchange rate is the ratio of exchange for two currencies.Foreign Currency Transaction & Translation 545 Fair value is the amount for which an asset could be exchanged, or a + ability settled, between knowledgeable, willing parties in an arm’s length transaction. 5, Foreign currency is a currency other than the functional currency of the entity. Functional currency is the currency of the primary economic environment in which the entity operates. ‘ group is a parent and alll its subsidiaries. Monetary items are units of 7 Currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency. g. Net investment ina foreign operation is the amount of the reporting " entity’s interest in the net assets of that operation. 9, Presentation currency is the currency in which the financial statements are presented. 10, Spot exchange rate is the exchange rate for immediate delivery. Functional currency ‘The primary economic environment in which an entity operates is normally the one in which it primarily generates and expends cash. An entity considers the following factors in determining its functional currency: (a) the currency: () that mainly influences sales prices for goods and services (this will often be the currency in which sales prices for its goods and services are denominated and settled); and (ii) of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services. (b) the currency that mainly influences labor, material and other costs of providing goods or services (this will often be the currency in which such costs are denominated and settled). ‘The following factors may also provide evidence of an entity’s functional currency: (a) the currency in which funds from financing activities (i. issuing debt and equity instruments) are generated. (b) the currency in which receipts from operating activities are usually retained. The following additional factors are considered in determining the functional currency of a foreign operation, and whether its functional currency is the same as that of the reporting entity (the reporting entity, in this context, being the entity that has the foreign operation as its subsidiary, branch, associate or joint venture): (a) whether the activities of the foreign operation are carried out as an extension of the reporting entity, rather than being carried out with aPoreign Currency Frausaction & Translation 546 significant degree of autonomy. An example of the former is when the foreign operation only sells goods imported from the reporting entity and remits the proceeds to it. An example of the latter is when the operation accumulates cash and other monetary items, incurs expenses, generates income and arranges borrowings, all substantially in its local currency. whether transactions with the reporting entity are a high or a low proportion of the foreign operation’s activities. (0 whether cash flows from the activities of the foreign operation directly affect the cash flows of the reporting entity and are readily available for remittance to it. ( whether cash flows from the activities of the foreign operation are sufficient to service existing and normally expected debt obligations without funds being made available by the reporting entity. (d) When the above indicators are mixed and the functional currency is not obvious, management uses its judgement to determine the functional currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. Change in Functional Currency An entity’s functional currency reflects the underlying transactions, events and conditions that are relevant to it. Accordingly, once determined, the functional currency is not changed unless there is a change in those underlying transactions, events and conditions. ‘The Functional Currency is the Currency of a Hyperinflationary Economy If the functional currency is the currency of a hyperinflationary economy, the entity's financial statements are restated in accordance with PAS 29 Financial Reporting in Hyperinflationary Economies. Monetary items The essential feature of a monetary item is a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency. Examples of monetary assets include: (a) Cash and cash equivalents (b) Financial assets at amortized cost (c) Notes and accounts receivables and their related allowance (d) Advances to employees (ec) Prepaid interest (9) Receivable or obligation under finance lease (g) Cash surrender value (h) Pensions and other employee benefits to be paid in cash; ‘ovisions that are to be settled in cash; and :Foretgn Currency Transaction & Translation 547 () Cash dividends that are recognized as a liability, (k) Accounts and notes payable () Bonds payable (m) A contract to receive (or deliver) a variable number of the entity's own equity instruments or a variable amount of assets in which the fair value to be received (or delivered) equals a fixed or determinable number of units of currency Conversely, the essential feature of a non-monetary item is the absence of a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency. Examples of non-monetary items include: (a) Amounts prepaid for goods and services (e.g. Prepaid rent, insurance, advertising, taxes); (b) Goodwill; (c) Intangible assets; (d) Inventories; (¢) Property, plant and equipment; and ( Provisions that are to be settled by the delivery of a non-monetary asset. (e) Advances to and from suppliers (h) Financial assets held for trading (i) Financial assets at fair value through other comprehensive income () Ordinary and preference share capital (k) Share premium () Non-controlling interest Foreign Currency Transactions ‘A foreign currency transaction is a transaction that is denominated or requires settlement in a foreign currency, including transactions arising when an entity: (a) Buys or sells goods or services whose price is denominated in a foreign currency; (b) Borrows or lends funds when the amounts payable or receivable are denominated in a foreign currency; or (c) Otherwise acquires or disposes of assets, or incurs or settles liabilities, denominated in a foreign currency. Initial recognition A foreign currency transaction shall be recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange at the date of the transaction. The date of a transaction is the date on which the transaction first qualifies for recognition in accordance with PFRSs. (date of shipments or date of invoice)Sd Foreign Currency Transaction & Prat, For practical reasons, a rate that approximates the actual rate at t Se the transaction is often used, for example, an average rate for g © date, month might be used for all transactions in each foreign currency g° ee during that period. However, if exchange rates fluctuate Significant, use of the average rate for a period is inappropriate. Rtly, 2 Reporting at the ends of subsequent reporting periods At the end of each reporting period: 5 {a) Foreign currency monetary items shall be translated usin, fate: ig the Clos, 5 . e (b) Non-monetary items that are measured in terms cf historicg a foreign currency shall be translated using the exchange rat, date of the transaction; and Cost q at thy {c) Non-monetary items that are measured at fair value in currency shall be translated using the exchange rates at the q the fair value was determined. 8 fore teu Direct and Indirect Quotation : A. Direct Quotation - the exchange rate is stated as a number of | currency in exchange for one unit of foreign currency. Example ($1 = P50) B. Indirect Quotation - the exchange rate is stated as a number of fore} currency in exchange for one unit of local currency. Example (P1 = $0.29) Selling and Buying Spot Rates A. Selling Spot Rate ~ it refers to the rate of the currency where the broker (bank) is willing to sell the foreign currency. B, Buying Spot Rate - it refers to the rate of the currency where the broke, (bank) is willing to buy the foreign currency. Non-Monetary Items that are measured other than historical cost (a) Property, plant and equipment may be measured in terms of fair value or historical cost in accordance with PAS 16 Property, Plant and Equipment. (b) Inventories are measured at the lower of cost and net realizable value in accordance with PAS 2 Inventories. (c) The carrying amount of an asset for which there is an indication of impairment is the lower of its carrying amount before considering possible impairment losses and its recoverable amount in accordance with PAS 36 Impairment of Assets, , When such an asset is non-monetary and is measured in a foreign currency, the carrying amount is determined by comparing:Foreign Currency Transaction & Translation S49 ) The cost OF carrying amount, as appropriate, translated at the exchange & rate at the date when that amount was determined (i.e. the rate at the date of the transaction for an item measured in terms of historical cost); and (b) The net realizable value or recoverable amount, as appropriate, translated tt the exchange rate at the date when that value was determined (e.g, the iosing rate at the end of the reporting period). effect of this comparison may be that an impairment loss is recognized in ie functional currency but would not be recognized in the foreign currency, or vice Versa. recognition of Exchange Difference Exchange differen ces arising on the settlement of monetary items or on translating mont ry items at rates different from those at which they were tapslated on initial recognition during the period or in previous financial tatements shall be recognized in profit or loss in the period in which they sige, except when the exchange differences are required by the standards to be recognized in Other Comprehensive Income (e.g. Exchange difference arising on a monetary item that forms part of a reporting entity’s net investment in foreign operations shall be recognized initially as a separate component of equity (OCI) and recognized in profit or loss on disposal of the net jnvestment.). a. When monetary items arise from a foreign currency transaction and there is a change in the exchange rate between the transaction date and the date of settlement, an exchange difference results. When the transaction is settled within the same accounting period as that in which it occurred, all the exchange difference is recognized in that period. Example: Transaction Date } Profit or loss Settlement Date However, when the transaction is settled in a subsequent accounting period, the exchange difference recognized in each period up to the date of settlement is determined by the change in exchange rates during each period. Example: Transaction Date } Profit or loss Balance Sheet Date } Profit or I Settlement Date a.Foreign Currency Transaction & Translation 559 Exchange Difference Recognized in Other Comprehensive Income (Ocl) When a gain or loss on a non-monetary item is recognized in othe, comprehensive income, any exchange component of that gain or loss shal] be recognized in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss shall be recognize in profit or loss. Other PFRSs require some gains and losses to be recognized in othe comprehensive income. For example, PAS 16 requires some gains and losses arising on a revaluation of property, plant and equipment to be recognized jn other comprehensive income. When such an asset is measured in a foreign currency, the standard requires the revalued amount to be translated using the rate at the date the value is determined, resulting in an exchange difference that is also recognized in other comprehensive income. Net investment in a foreign operation An entity may have a monetary item that is receivable from or payable to g foreign operation. An item for which settlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the entity's net investment in that foreign operation, such monetary items may include long. term receivables or loans. They do not include trade receivables or trade payables. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation shall be recognized a. In profit or loss in the separate financial statements of the reporting entity or the individual financial statements of the foreign operation, as appropriate. b. In the financial statements that include the foreign operation and the reporting entity (e.g., consolidated financial statements when the foreign operation is a subsidiary), such exchange differences shall be recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investmen* Change in functional currency When there is a change in an entity’s functional currency, the entity shall apply the translation procedures applicable to the new functional currency prospectively from the date of the change. The functional currency of an entity reflects the underlying transactions, events and conditions that are relevant to the entity. Accordingly, once the functional currency is determined, it can be changed only if there is a change to those underlying transactions, events and conditions. For example, a change in theForeign Currency Transaction & Translation 551 currency that mainly influences the sales prices of goods and services may lead ency, toa change in an entity’s functional ew ‘The effect of a change in functional currency is accounted for prospectively. In other words, an entity translates all items into the new functional currency using the exchange rate at the date of the change. ‘The resulting translated amounts for non-monetary items are treated _as their historical cost. historical cost. ‘qranslation of Foreign Operation Exchange differences arising from the translation of a foreign operation previously recognized in other comprehensive income are not reclassified from equity to profit or loss until the disposal of the operation. ‘Translation to the Presentation Currency ‘An entity may present its financial statements in any currency (or currencies). If the presentation currency differs from the entity’s functional currency, it translates its results and financial position into the presentation currency. For example, when a group contains ‘individual entities with different functional currencies, the results and financial position of each entity are expressed in a common currency so that consolidated financial statements may be presented. 1. The results and financial position of an entity whose functional currency is not the currency of a hyperinflationary economy shall be translated into a different presentation currency using the following procedures: a) Assets and liabilities for each statement of financial position presented (i.e. including comparatives) shall be translated at the closing rate at the date of that statement of financial position; Income and expenses for each statement of comprehensive income or separate income statement presented (ic. including comparatives) shall be translated at spot exchange rates at the dates of the transactions; ) For practical reasons, an average rate for the period, is often used to translate income and expense items. However, if exchange rates fluctuate significantly, the use of the average rate for a period is inappropriate. ) ( All resulting exchange differences shall be recognized in other comprehensive income. The exchange differences referred (c) result from: () Translating income and expenses at the exchange rates at the dates of the transactions and assets and liabilities at the closing rate. (i) Translating the opening net assets at a closing rate that differs from the previous closing rate.Foreign Currency Transaction & Translation 55) ‘These exchange differences are not recognized in profit or loss because th, changes in exchange rates have little or no direct effect on the present ang future cash flows from operations. The cumulative amount of the exchange differences is presented in a separate component of equity until disposa] of the foreign operation and any cumulative amount of exchange differences jg reclassified to profit and loss as reclassification adjustment. Il. The results and financial position of an entity whose functional currency is the currency of a hyperinflationary economy shall be translated inty a different presentation currency using the following procedures: {a) All amounts (i.e. assets, liabilities, equity items, income and expenses, including comparatives) shall be translated at the closing rate at the date of the most recent statement of financial position, except that (b) When amounts are translated into the currency of a non-hyperinflationary economy, comparative amounts shall be those that were presented as current year amounts in the relevant prior year financial statements (ie not adjusted for subsequent changes in the price level or subsequent changes in exchange rates). When the economy ceases to be hyperinflationary and the entity no longer restates its financial statements in accordance with IAS 29, it shall use as the historical ‘costs for translation into the presentation currency the amounts restated to the price level at the date the entity ceased restating its financial statements. Translation of a foreign operation. Disposal of Foreign Operation On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, shall be reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss on disposal is recognized In addition to the disposal of an entity’s entire interest in a foreign operation, the following are accounted for as disposals even if the entity retains an interest in the former subsidiary, associate or jointly controlled entity: (a) The loss of control of a subsidiary that includes a foreign operation; (b) The loss of significant influence over an associate that includes a foreign operation; and (c) The loss of joint control over a jointly controlled entity that includes a foreign operation. On disposal of a subsidiary that includes a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation that have been attributed to the non-controlling interests shall be derecognized, but shall not be reclassified to profit or loss.Petip6 Cerenay 9, te 8 Penta, 553 ‘ign Operation Disposal of Foreig: a subsidiary that include, ial dis + On sh entity & foreign operat fenate share of the 2 date tio, in other co differences recognized nr ange exe tne tro con ‘MUlative ™Prehensive in in that foreign operation, sts in thi intere: g int ial disposal of a forcign operatio ethall rectassty tg er partial on Bae share of the cumulative amount of the In any ee only Se Berens other comprehensive inane? fit OF differences ‘ ae Prenange diffe ing amount of foreign inet OM, ether because ofits 7 wn of the sao oF an impaitment recognized by the in ite sins an eaaralseaeat Accordingly, no Part of ie) a Mae a partial other comprehensive income ig req tit ize cons! cognized ? -down. e eee a of a write- the at n the enti lan, Ssified to Profit or lossForeign Currency Transaction & Translation S54 EXERCISES Import Transactions Problem 1: Manila Company purchased merchandise for 300,000 pounds from a vendor in London on November 30, 2022. Payment in British pounds was due on January 30, 2023. The exchange rates for the British pound were ag follows: November 30, 2022 December 31, 2022 Spot rate £1.65 1.62 30-day rate 1.64 1.59 60-day rate 1.63 1.56 In its December 31, 2022 income statement, what is the amount to be reported by Manila Company as foreign exchange difference? a. P9,000 gain c. P3,367 gain b. P3,367 loss d. P9,000 loss Answer B Suggested Solution Dec. 31: Spot rate (P1 / $1.62) P0.61728 Nov. 30: Spot rate (P1 / $1.65) _P0.60606 Difference - loss P0.01122 x Foreign Currency Forex loss P(3,367) The foreign exchange rate is quoted at indirect exchange rate. It should be converted first to direct exchange rate before computing the foreign exchange gain or loss. Problem 2: On January 2, 2030, Pagani Inc. acquired building for $100,000 from a company based on Australia. The building estimated useful life is 10 years. Pagani Inc. uses the straight line method of depreciation and revaluation model. On December 31, 2030, the building revaluation amount was determined at net appraised value of $120,000. The relevant exchange rates are as follows: January 1, 2030 $1 = P30 December 31, 2030 $1 = P32% __Poretga Casseaey Transaction & Translation 555 Le Seen or loss to be presented in the financial statement on ‘a. P40,000 Forex gain b, P200,000 Forex gain c. P1,140,000 Revaluation surplus - OCI d. 200,000 Revaluation surplus - OCI Answer C Suggested Solution Appraised value of equipment on Dec. 31, 2030 ($120,000 x P32) P3,840,000 Carrying amount of equipment on Dec. 31, 2030 ($100,000 x 9 yrs. /10 yrs. x P30) 2,700,000 Revaluation Surplus - OCI —?1,140,000~ Other PFRSs require some gains and losses to be recognized in other comprehensive income. For example, PAS 16 requires some gains and losses arising on a revaluation of property, plant and equipment to be recognized in other comprehensive income. When such an asset is measured in a foreign currency, the standard requires the revalued amount to be translated using the rate at the date the value is determined, resulting in an exchange difference that is also recognized in other comprehensive income. Problem 3: On December 1, 2030, Asahi Inc., a Philippine company, purchased inventory worth $100,000 from a U.S supplier, payable within 30 days. Asahi Inc., issued a 30-day notes payable in U.S dollars. On December 31, 2030, it paid the note. The following are the relevant exchange rates: Date Buying Selling December 1, 2030 $0.04161 $0.04141 December 31, 2031 $0.04149 $0.04129 The foreign exchange gain or loss on the transaction is: a. P7,000 loss c. P10 gain b. P12 gain d. P5,000 loss Answer A Suggested Solution Indirect to direct quote - Dec. 1 (1/.04141) —P24.15 Indirect to direct quote - Dec. 31 (1/.04129) __P24.22 Difference - loss (0.07) X Foreign currency 100,000 Forex loss P(7,000)Foreign Currency Trassacting é7 Problem 4: An entity purchases plant from a foreign suppliey fo on January 2, 2030, when the exchange rate was 2 Yen = PL. a) mil year end, December 31, 2030, the amount has not been paid, yt the ent, was Yen 1.50 = P1. The entity’s functional currency is the peso. * Closing . tay Which of the following statement is correct? a. Cost of the plant is P2 million, exchange loss PO.50 million, , P2 million ” Wade Pay b. Cost of the plant P1.5 million, exchange loss PO.50 mijjion t le P2 million ent Dey, c. Cost of the plant is P2 million, exchange loss PO.50 miilion fe ms P1.5 million ce Pay d. Cost of the plant P1.5 million, exchange loss PO.60 miition, trad I P2 million © Paya, Answer B Suggested Solution Cost of the plant (3 million yen x 1 / 2) ‘ P1,500,000 Change first the exchange rate to direct quotation Indirect to direct quotation: Jan. 1, 2030 (1/2) PO.50 Indirect to direct quotation: December 31, 2030 (1/1.50) P0.66 Difference - loss (0.166) x Foreign Currency —3,000,000 Forex loss P(500,000) Trade payable (3 million yen x P0.66) P2,000,000 Problem 5: On September 1, 2030, Baby Co. acquired a computer for $100,099 when the exchange rate is Pl = $20. Baby reported foreign exchange loss of P15,000 in its 2030 financial statement and P10,000 foreign exchange gain in its 2031 financial statements. Req. 1: What is the exchange rate on December 31, 2030? a. P 9.85 c. $1 = PO.20 b. $1=P20.15 d. None of the choices Req. 2: What is the amount of computer on December 31, 2030 statement of financial position? a. P2,000,000 c. P5,000 b. 2,015,000 d. P20,000Forel Currency Transaction & Translation 557 Req. 3: The exchange rate on settlement date "Pl = $0.10 c. $1 = P20.15, b. P1= $20.05 d.P1=$10 low much is the cost of computer on December 31, 2031 statement of fi position? a. P10,000 c. P5,000 b. 20,000 d. P2,000,000 Req. 5: How much is the total accounts payable on December 31, 2030 statement of financial position’ a. P20,000 . P2,000,000 b. P2,015,000 d. P5,000 Answer 1) C 2) C 3) D4) C 5) A suggested Solution Req. 1 5 ' Indirect quotation to direct quote Sept. 1: 1/ 20 PO.05 Multiply: Foreign Currency 100,000 Total Inventory on September 1 5,000 ‘Add: Foreign exchange loss 15,000 Total December 31 20,000 Divide by Foreign Currency 100,000 Exchange rate December 31; Direct quote 0.20 Req. 2 Indirect quotation to direct quote Sept. 1: 1/ 20 PO.0S Multiply: Foreign Currency 100,000 Total Inventory on December 31, 2030 P5,000 Req. 3 Exchange rate December 31; Direct quote PO.20 Multiply: Foreign Currency 100,000 Total 20,000 Less: Foreign exchange gain 10,000 Total 10,000 Divide by Foreign Currency 100,000 Exchange rate on Settlement date - direct quote PO.10 Direct to Indirect quote = 1 / 0.10 = 10 or P1 = $10 Req. 4. It will not change because it will be carried at exchange rate on the date of transaction since it is a non-monetary item.Foreign Currency Transaction & Translation 558 .5 Fes ange rate December 31; Direct quote PO.20 Multiply: Foreign Currency _—__100,000_ eee P20,000 Problem 6: Nagal Inc., a Philippine company, had the following foreign currency transactions during 2030: - Inventory was purchased from a foreign supplier on January 20, 2030, for the Philippine peso equivalent of P90,000. The invoice was paid on March 20, 2030, at the Peso equivalent of P96,000. - On July 1, 2030, Nagal borrowed the peso equivalent of P500,000 evidenced by a note that was payable in the lender’s local currency on July 1, 2032. On December 31, 2030, The Philippine peso equivalents of the principal amount and accrued interest. were P520,000 and P26,000, respectively . Interest on the note is 10% per annum. In Nagal’s 2030 income statement, what amount should be included as foreign exchange transaction loss as part of net income? a. PO c. P21,000 b. P6,000 d. P27,000 Answer D Suggested Solution Transaction 1 Jan. 20 - Transaction date 90,000 Mar. 20 - Settlement date 96,000 Forex loss (6,000) Transaction 2 July 1 - principal 500,000 Accrued Interest (500,000 x 10% x 6/12) 25,000 525,000 December 31 Peso equivalent (520,000 + 26,000) 546,000 Forex loss (21,000) Total Forex loss (6,000 + 21,000) P27,000 Problem 7: On January 1, 2010 an entity purchased a tract of vacant land that is situated overseas for 90,000 Baht. The entity classified the land as an investment property. The fair value of the land at December 31, 2010 is 100,000 Baht.Foreign Currency Transaction & Tanta 559 tity’s functional currency is the Php (Peso) ni eee currency exchange rates: seeaary 1, 2010: 1 Baht = P2 ted average exchange rate in 20X0: 1 Baht = P2.04 December 31, 2010: 1 Baht = P2.1 1; What is the carrying amount of the investment property at Rea, 910 and what amount/s would be presented in profit or TY &t December loss for thy ended December 31, 2010? eras ing amount of investment property = P210,000. Profit for the % iacludes P30,000 increase in the fair value of investment property." 32 Carrying amount of investment property = P210,000. Profit for be [eludes P20,400 increase in the fair value of investment propery 9,600 foreign exchange gain. and c. Carrying amount of investment property = P180,000. Profit for the ” includes no amount in respect of the investment property. Year 4. Carrying amount of investment property = P189,000. Profit for the year includes P9,000 foreign exchange gain. Req. 2: Assuming the entity cannot, without undue cost or effort, determine the fair value of its investment property reliably on an ongoing basis. What is the carrying amount of the investment property at December 31, 2010 and what amount/s would be presented in profit or loss for the year ended December 31, 2010? a. Carrying amount of investment property = P210,000. Profit for the year includes P30,000 increase in the fair value of investment property. b. Carrying amount of investment property = P210,000. Profit for the year includes P20,400 increase in the fair value of investment property and P9,600 foreign exchange gain. c. Carrying amount of investment property = P180,000. Profit for the year includes no amount in respect of the investment property. d. Carrying amount of investment property = P189,000. Profit for the year includes P9,000 foreign exchange gain. Answer 1) A 2) C Suggested Solution Req. 1 Fair value: Baht 100,000 x P2.1 = 210,000 Profit = (Baht 100,000 x P2.1) - (Baht 90,000 x P2) = P30,000Foreign Currency Transaction & 7, Si Req. 2 Investment property at Cost = Baht 90,000 x P2 = P180,000 Profit or loss = No profit or loss Problem 8: On November 19, 2022, Risk Company, a Philippine C ordered merchandise from Wales Company for 31,800 Pounds. "&y merchandise was delivered on December 18, 2022. The invoice wag , tte December 2, 2022, the shipping date (FOB shipping point). Risk Comp, : dates the invoice on January 28, 2023. any pai The spot rates for a pound on the respective dates were: November 19, 2022 P76.90 December 2, 2022 P76.15 December 18, 2022 P75.75, December 31, 2022 P72.35 January 28, 2023 P73.15 What amount will affect profit or loss in 2022? a. P120,840 gain c. P25,440 loss b. P108,120 gain d. P144,690 gain Answer A Suggested Solution Transaction date: Dec. 2 - P7615 Balance sheet date: Dec. 31 P72.35 Difference - gain 3.80 x Foreign Currency ____31,800___ Forex gain P120,840 Problem 9: On 1 December 20X1 an SME entity purchases raw materials costing FCU10,000 on credit. At the entity’s year-end, 31 December 20X1, the raw materials have not yet been used and are not impaired. The SME entity pays the supplier on 15 January 20X2. The SME entity has a functional currency of CU. Exchange rates are as follows: e 1 December 20X1: FCU1 = CU2 * 31 December 20X1: FCU1 = CU2.3 « 15 January 20X2 FCU1 = CU1.8 On 1 December 20X1 the entity recognizes the following journal entry Debit: Inventory CU20,000 Credit: Trade Payables CU20,000Foreign Currency Transaction & Translation 561 ‘What are the correct journal entries on 31 December 20Xi1 for the transaction? No adjustment on 31 December 20X1 so both the trade payable and the | a. Mw materials continue to be recorded at CU20,000 b. Debit Inventory cU3,000 | 7 Credit Profit or loss (exchange difference) CU3,000 Debit Profit or loss (exchange différence) __ CU3,000, Credit Trade payable cU3,000 on 31 December, both the trade payable and the raw materials are measured at CU23,000. There is no effect on profit or loss as the two exchange differences offset cach other. ¢. On 31 December 20X1: No adjustment for inventory Debit Profit or loss (exchange difference) CU3,000 \ Credit Trade payable CU3,000 On 31 December, the trade payable is measured at CU23,000 and the inventory is measured at CU20,000, There is an exchange loss of CU3,000 on the trade payable. 4. Debit Inventory FCU3,000 Credit Profit or loss (exchange difference) FCU3,000 | No adjustment for trade payable On 31 December, the trade payable is measured at FCU20,000 and the inventory is measured at FCU23,000. There is an exchange gain of CU3,000 on the inventory. Answer C Suggested Solution Inventory will not be adjusted since it is a non-monetary item and it will be carried at historical cost. The trade payable will be adjusted on December 31, since it is a monetary item | and Forex loss will be recognize for the increase in foreign exchange rate amounting to 3,000 = CU 2 - CU 2.3 = CU 0.30 x 10,000.Foreign Currency Transaction & Translation 562 Problem 10: Emperador Inc., a parent company of a group of companies acquired equipment for $50,000 on August 31, 2030 when the exchange rate ig $1 = P26, the liability is to be paid six months after. By the end of the year, the exchange rate increased to P32 and this is considered as a devaluation or severe fluctuation. On this year-end financial position, the company should report the equipment at: a. P1,600,000 b. P1,280,000 c. P1,300,000 d. P1,040,000 Answer C Equipment ($50,000 x P26) P1,300,000 It should be recorded at spot rate on the date of transaction since it is a non- monetary item carried at historical cost. Problem 11: Paul purchases raw material from its foreign supplier, Maxim, on February 1, 2030. Payment of 4,700,000 foreign currency units (FC) is due in 30 days. June 30, 2030 fiscal year-end. The pertinent exchange rates were as follows: : Date Spot Rate February 1 P1.25 June 30 P1.26 July 31 P1.20 Reg. 1: For what amount should Paul’s accounts payable be reported at June 30, 2030? a. 5,875,000 c. 3,730,159 b. 5,922,000 d. 3,760,000 Req. 2: For what amount should Paul’s accounts payable be reported at February 1, 2030? a. P5,875,000 c. P3,730,159 b. P5,922,000 d. P3,760,000 Req. 3: How much foreign exchange gain or loss should Paul record on June30, 2030? a. P470 loss c. P47,000 gain b. P470 gain d. P47,000 loss Req. 4: How much Philippine peso will it cost Paul to finally pay the accounts payable July 31, 2030?Foreign Currency Transaction & Translation 563 ee c. P5,734,000 40,000 d. P5,922,000 6 o. PO 75,875,000 b. ss quacapes 4 solution age 2st Red: see ee Currency wecous! 'ts Payable ree han ante Payable Req. 3 February 1 June 30 ifference: loss Multiply: Foreign Currency ‘Total Forex loss Req. 4 July 31 Multiply: Foreign Currency Total Forex loss Problem12: Ivonne Inc., a P1.26 ___ 4,700,000 5,922,000 P1.25 4,700,000 5,875,000) P1.25 P1.26 (0.01) 4,700,000 (47,000) P1.20 4,700,000 P5,640,000 Philippine Corporation, purchased an inventory items from a supplier in Japan on November 5, 2030, for 100,000 yen, when the spot rate was P0.4295. At Ivonne's December 31, 2030, the spot rate was P0.4245. On January 15, 2031, Ivonne bought 100,000 yen at the spot rate of P0.4345 and paid the invoice. How much should Ivonne report as part of net income for 2030 and 2031 as foreign exchange transaction gain or loss? Year 2030 a. 500 b. : ‘ (500) a. (1,000) Answer A Year 2031 (1,000) (500) 500= Forcgn Oorenty Pectioe & Trt, St, Suggested Solution * Teansaction date - Nov. 5 PO,4295 December 31, 2030 Balance sheet rate pi *P0.4245 wee Difference - gain 0.0050 x Foreign Currency 100,000 Forex gain - December 31, 2030 P500_ December 31, 2030 Balance sheet rate PO.4245 January 15, 2031 - Settlement date PO.4345_ Difference - loss (0.0100) x Foreign Currency 100,000 Forex loss - January 15, 2031 P(1,000} Problem 13: Ortigas Holdings, Inc. is the parent company companies. But also does its own trading. It bought its fixed ye Cot on November 1, 2030 when the exchange rate was P44.00 to stone December 31, 2030, the supplier of the fixed asset has not been fee exchange rate at that time was P46.00 = $1.00. The company ee ~ out a forward exchange contract for this payment to hedge egainst at exchange rate movements. pe eee On the statement of financial positi i position of Orti, ii i year-end value for Accum payable to the G@udiiar? ce eteee a. P1,584,000 b. P1,656,000 ai Plisee-000 Answer B Suggested Solution $36,000 x P46 closing spot rate = P1,656,000 5 Problem 14: Alabang Tradin payable in Hong Kong dollars at « eeceora® f° Kowloon Inc. of Hong Ko the Statement of Financi: ition vail term of 6 eae repredeatine moe of Alabang Tada On June 30, 2030, Kong dollars was going at HKS1/Phoy 8eods worth ne elle Pa if the prevailing excha : ; a. P6,250 loss "ge rate is HK$ 0.975 Py a or loss on June 30, 2035, b. P6,250 gain c- P6,410 log. , Ss 4. P6,410 gain What will be Alabang Trading’. 9's foreign exc) hang / PIPoreiza Currency Transaction & Translation 565 Answer C Suggested Solution Transaction Date June 30, 2030 Difference x Foreign Currency Forex loss Problem 15: Mandaluyong Company buys goods from Tokyo Company of Japan, worth 2,500,000 yen. Th: ling exchange rate is P0.1302136/Yen. Mandaluyong Company settles the account 60 days later when the exchange rate is going at P0.118376/Yen. Req. 1: What is the forex gain or loss of Mandaluyong? a. P29,594 gain c. P1,920,000 loss b. P29,594 loss d. P1,920,000 gain Req. 2: What is the forex gain or loss of Tokyo? a. P29,594 gain cP O b. P29,594 loss d. Yen 2,500,000 Answer 1) A 2) C Suggested Solution Req. 1 Settlement Date. PO.118376 Transaction Date PO.130214 Difference - loss 0.011838 x Foreign Currency 2,500,000 Forex Gain P29,594 Req. 2 Zero, no forex gain or loss since there is no foreign currency transaction. BorrOwing Transaction Problem 16: Vector Corporation issued a promissory note denominated in foreign currency for the purchase made from a supplier in England on December 1, for a 60-day, 18% promissory note for 108,000 pounds, at a selling rate of 1FC to P74.20. On December 31, the selling spot rate is 1FC to P74.85. On January 30, the selling spot rate is 1FC to P75.75.Porelgn Cumency Transacting &, On the settlement date, how much is the foreign exchange paj ff a. P172,422 gain ©. P172,422 losg loss b. P100,116 loss d. P98,658 loss Answer D Suggested Solution Notes Payable 108,000 Interest Payable - December 31: (108,000 x 18% x 30/360) 1,620 Total Payables 109,620 x (Dec. 31: P74.85 - Jan. 30: P75.75) Increase 0.9 Forex loss __98,658" Export transactions Problem 17: Mike Co., a Philippine corporation, sold inventory 2030, with payment of 32,500 British pounds to be received in atep cette 1 pertinent exchange rates were as follows: ty days, The Date Spot rate December 1, 2030 P1.7241 December 31, 2030 P1.8182 January 30, 2031 P1.6666 Req. 1: For what amount should Sales be credited on December 1? a. P18,850 c. P59,091.50 ib. P17,875 d. P56,033.25 Req. 2: What amount of foreign exchange gain or loss should be recorded on December 31? a. P975 loss c. P3,058.25 gain b. P975 gain d. P3,058.25 loss Req. 3: What amount of foreign exchange gain or loss should be recorded on January 30? a. P1,625 loss c. P4,927 gain b. P1,625 gain d. P4,927 loss Answer 1) D 2) C 3)D Suggested Solution December 1, 2030: Exchange rate P1.7241 Multiply: Foreign Currency 32,500 Total Sales _?56,033.25 —_—_——SPerson Coen Tremere & rset 67 ——— Req. 2 December 31, 2030 P1.8182 December 1, 2030 PL7241 Difference: Gain 0.0941 Multiply: Foreign Currency 32,500 Total Forex gain Req. 3 January 30, 2031 P1,6666 December 31, 2030 P1.8182 Difference: loss (0.1516) Multiply: Foreign Currency ___ 32,500 Total Forex loss (4,927) Problem 18: Makati Trading sells goods to MBK Co. of Bangkok, for 1,000,000 Baht. The exchange rate at this time is P0.9875/ baht. MBK Co. pays 31 days later when the prevailing exchange rate is P1: Baht 1. By reason of exchange fluctuation, how much is the foreign exchange gain or loss if the agreed currency is Thailand Baht? a. P12,500 loss c. P12,658 loss b. P12,500 gain d. P12,658 gain Answer B Suggested Solution Balance Sheet Date P1.00 Transaction Date P0.9875 Difference - gain PO.0125 x Foreign Currency 1,000,000 Forex Gain Problem 19: On September 1, 2030, Tristan Inc., a Philippine Corporation sold inventory to a foreign entity for $2,500. Terms of the sale require payment in U.S dollars on February 1, 2031. On September 1, 2030, the spot exchange rate was P50 per dollar. At December 31, 2030, Tristan’s year-end, the spot rate was P49, but the rate increase to P52 by February 1, 2031, when payment was received. How much should Tristan report as foreign exchange transaction gain or loss as part of 2031 income? a. P5,000 loss c. P7,500 gain b. P5,000 gain d. P7,500 lossForeign Currency Transaction & Translation Sey Answer C Suggested Solution February 1, 2031 Settlement date rate P52 December 31, 2030 Balance sheet rate P49 Difference - gain 3 x Foreign Currency $2,500 Forex gain P7,500_ Problem 20: Irvin Corp sold handicrafts goods to a US firm for $100,000 in 2029. Pertinent information on exchange rate follows: Buying Selling Sept.4 Receipt of order 45.80 46.00 Oct.15 Date of shipment 47.00 48.00 Dec.31 Balance Sheet date 47.20 48.50 Jan.6, 2030 Date of Settlement 46.00 47.00 The sale would appropriately recorded at: a. P4,700,000 c. P4,580,000 b. P4,600,000 d. P4,800,000 Answer A Suggested Solution P47 date of shipment x $100,000 = P4,700,000 Problem 21: On September 1, 2030, Bruce Corp. received an order for equipment from a foreign customer for 300,000 Yen when the peso equivalent was P96,000. Bruce shipped the equipment on October 15, 2030, and billed the customer for 300,000 Yen when the Philippine peso equivalent was P100,000, Bruce received the customer’s remittance in full on November 16, 2030, and sold the 300,000 Yen for P105,000. In its income statement for the year ended December 31, 2030, Brice should report as part of net income a foreign exchange transaction gain of: a. PO c. P5,000 b. P4,000 d. P9,000 Answer C Suggested Solution Transaction date Oct. 15 100,000 Settlement date Nov. 16 105,000 Forex gain 5,000Prreiga Currency Transaction & Translation 569 Problem 22: Greyhoundz Co., a Philippine corporation, sold inventory on credit to a British company on May 1, 2030. Greyhoundz received payment of 262,500 British pounds on Oct 1, 2030. The exchange rate was Pl = £0.65 on May 1 and P1 = £0.70 on Oct 1. Req. 1: What amount of foreign exchange gain or loss should be recognized? (Round to the nearest peso) a. P5,250,000 loss c. P13,125 gain b. P13,125 loss di. P28,846 loss Req. 2: What amount should be statement of Greyhoundz in 20 a. P262,500 c. P170,625 b. P183,750 d. P403,846 rded as sale of inventory in the income Answer 1) D 2) D Suggested Solution Sale Transaction - Receivable October 1: 1/0.70 P1.428571 May 1: 1/0.65 P1.538462 Difference: loss (0.109890) Multiply: Foreign Currency 262,500 Foreign Exchange loss P(28,846) Req. 2 May 1: 1/0.65 P1.538462 Multiply: Foreign Currency 262,500 Total Sales 403,846 Problem 23: On October 5, 2022, Density Company sold goods on account to Britain Corporation for 50,320 pounds. The date of invoice is October 29, 2022 and payment is due on January 30, 2023. Exchange rates were as follows: BID rate OFFER rate Oct. 05, 2022 P67.50 P69.20 Oct. 29, 2022 P68.70 P66.80 Dec 31, 2022 P64.10 P63.40 Jan. 30, 2023 P62.40 P65.50 Req. 1: How much is the total sales to be presented in the income statement on December 31, 2022?Foreign Currency Transaction & Trang fs 0 a. P3,396,600 c. P3,456,984 b. P3,482,144 d. P3,190,288 Req. 2: What amount will affect profit or loss in 2023? a. P171,088 loss 3 P231,472 loss b. P85,544 loss d. P105,672 gain Answer 1) C 2) B Suggested Solution Req. 1 P68.70 x 50,320 = 3,456,984. Use the spot rate on the date of transact, which is the shipping date. However if shipping date is not given use the a date. Woie Req. 2 Bid rate Settlement date - Jan. 30, 2023 P62.40 Transaction date - Dec. 31, 2022 P64.10 Foreign exchange loss (1.70) x Foreign Currency 50,320 Forex loss Pi (85,544) Lending Transaction Problem 24: A Corporation received a promissory note denominated in foreign currency. from the sales made to a Singaporean customer. The following were the related transactions: (in Singapore Dollars). On December 1, A Corporation sold merchandise to a Singaporean customer for 60-day, 12% promissory note for $32,000, at a buying rate of $1 to P34.20. On December 31, the buying spot rate is $1 to P34.85. On January 30, the buying spot rate is $1 to P33.75. Req. 1: On the settlement date, how much is the forex gain or loss? a. P35,552 gain c. P35,904 gain b. P35,904 loss d. P35,552 loss Req. 2: How much is the total notes receivable to be recorded in the Dec. 31, financial position? a. P1,126,352 c. P1,094,400 b. P1,115,200 d. P918.22 Answer 1) D 2)B Suggested Solution) Foreign Currency Transaction & Translation STL Req. 1 Notes Receivable 32,000 Interest Receivable - December 31: (32,000 x 12% x 30/360) 320 Total Receivable 32,320 x (Dec. 31: P34.85 - Jan. 30: P33.75) Decrease 1.10 Forex loss P(35,552) Req. 2 $32,000 x P34.85 Dec. 31 spot rate = 1,115,200 nslation Problem 25: On December 31, 2032 a foreign subsidiary in Hongkong submitted the following balance sheet stated in foreign currency: Total assets $500,000 Total Liabilities 100,000 Common stock 250,000 Retained Earnings 150,000 The exchange rate are: Current rate P3.40 Historical rate 3.10 Weighted average 3.00 Assuming the functional currency of the subsidiary is the not the currency of the hyperinflationary economy was used and the retained earnings of the subsidiary on December 31, 2032 translated to Peso is P 460,000. What amount of Cumulative translation -adjustment is to be reported in the consolidated balance sheet on December 31, 2032? a. P25,000 c. P50,000 b. P10,000 d. P125,000 Answer: D Suggested Solution Total Assets 500,000 3.40 1,700,000 Less: Total Liabilities 100,000 3.40 340,000 Common Stock 250,000 3.10 775,000 Retained earnings ~ 150,000 460,000 Total Cumulative Translation Adjustments 125,000Foreign Currency Transaction & Translating 5 Problem 26: Emperador, Ltd. is a British subsidiary of a Philippine com, Emperador's functional currency is the pound sterling. The following exchar?” rates were in effect during 2030: lange January. 1 625 June 30 610 December. 31 620 Weighted average rate for the year Pl =£.630 Emperador reported sales of £2,625,000 during 2030. Req. 1: What amount (rounded) would have been included for this subsid; calculating consolidated sales? "ary in a. P1,653,750 c. P4,233,871 b. 4,166,667 d. 1,627,500 Req. 2: On December 31, Emperador had accounts receivable of £490,000, What amount (rounded) would have been included for this subsidiary jn calculating consolidated accounts receivable? a. P303,800 c. P784,000 b. P306,250 Answer 1) B 2) D d. P790,323 Suggested Solution Req. 1 Average rate P1/P0.63 Multiply: Foreign Currency 2,625,000 Total Sales P4,166,667 Req. 2 Average rate P1/ P0.62 Multiply: Foreign Currency 490,000 Total Sales P790,323 Problem 27: Irish Corp, a Philippine Corp, acquired all the share capital of Irvin Corp. a foreign company, for FC 400,000 (P400,000). Irvin's functional currency is the FC. At the date of acquisition, December 31, 2030, the foreign subsidiary had net assets of FC 300,000 which was fairly valued. Assume that there is a goodwill impairment of FC20,000 in 2031 (deemed to be progressively occurring throughout the year). Further assume that the averageexchange rate for 2031 is 1F' 1FC=P1.25. Determine the effect of these adjustments for 2031: a. P5,000 gain b. P24,000 gain Answer B Suggested Solution Acquisition Cost Les: FMV of net assets Goodwill Less: Impairment Goodwill - Dec. -2031 Closing rate Total Goodwill at closing rate Goodwill date of acquisition FC 100,000 x P1 Less: Impairment loss (FC20,000 x P1.20 average rate) Goodwill per book Less: Goodwill in at closing rate ‘Translation gain ee oe ES 1.20 and the closing rate for the year 2031 is transactions on the cumulative translation c. P24,000 loss d. P4,000 loss 400,000 300,000 100,000 20,000 80,000 1,25 100,000 In Peso 100,000 24,000 76,000 100,000 24,000 Problem 28: TRANS Corp. owns a subsidiary in Singapore whose statement of financial position in Singapore Dollars for the last two years follows: December 31, 2022 | December 31, 2023, ‘Assets Cash and Cash equivalents S$____450,000 S$__ 375,000 Receivables 1,837,500 2,212,500 Inventory 2,400,000 2,550,000 Property and Equipment, net 3,825,000 3,450,000 Total Assets S$__ 8,512,500 S$_ 8,587,500 Liabilities and Equity ‘Accounts Payable S$__825,000 S$_1,125,000 Long-term debt 4,837,500 4,275,000 Common stock 1,725,000 1,725,000 Retained earnings 1,125,000. 1,462,500 Total Liabilities and Equity S$__ 8,512,500 S$_ 8,587,500 Relevant exchange rates are:Foreign Currency Transaction & Translating 5% January 1, 2022 S$1=P45 +] December 31, 2022 S$ 1 = P 42.50 December 31, 2023 S$ 1 = P 47.50 Average 2022 S$ 1 = P 43.75 September 12, 2022 S$ 1= P40 | TRANS Corp. formed the subsidiary on January 1, 2022. Income subsidiary was earned evenly throughout the years and the subsidiary q Of the eck; dividends worth $75,000 on September 12, 2022 and none were dean during 2023. lated Req. 1: How much is the translation adjustment for year 2023? a. P15,093,750 credit c. P6,000,000 debit b. P9,093,750 credit d. P9,093,750 debit Req. 2: How much is the cumulative translation adjustment for 2023? a. P9,093,750 credit ¢. P15,093,750 credit b, P8,531,250 debit d. P13,125,000 debit Answer 1) A 2) A Suggested Solution Year 2022 FC Rate Peso Net Asset, beg. 1,725,000 45 77,625,000 Net Income 1,200,000 43.75 52,500,000 Dividend (75,000) 40 Net asset, end. 2,850,000 100 Net asset, end at closing rate 2,850,000 42.50 _ 121,125,000 Translation adjustment - 2022 - Debit (6,000,000) Year 2023 FC - Rate Peso Net Asset, beg. 2,850,000 43 121,125,000 Net Income (1,462,500 - 1,125,000) 337,500 45 15,187,500 Dividend - 5 : Net asset, end. 3,187,500 136,312,500 Net asset, end at closing rate 3,187,500 47.50 _ 151,406,250 Translation adjustment - 2023 - Credit 15,093,750 Add: Translation Adj. - beg. ‘ (6,000,000, Cumulative Translation Adjustment 2023 P9,093,750 Problem 29: Honda Phil. is a subsidiary of Honda Japan. The functional currency of Honda Phil. is peso while the presentation currency of its parent, Honda Japan is yen. For the year ended December 31, 2031, Honda Phil. hasPoreign Currency Transaction & Translation S75, the following foreign currency denominated assets: Accounts Receivable of FC1,000 and Prepaid Asset of FC100. The historical rates of Accounts receivable and Prepaid asset are 30 and FC1=P20 and Pl=2¥en and Pi=4Yen, respectively. The exchange rate on December 31, 2031 is FC1=P40 and P1=3yen. In the separate statement of financial position of Honda Phil. on December 31, 2031. Req. 1: What is the book value of accounts receivable and prepaid asset, respectively? a. P30,000 and P2,000 b. P40,000 and P4,000 c. P40,000 and P2,000 d. P30,000 and P4,000 Req. 2: What is the book value of accounts receivable and prepaid asset, respectively, in the Consolidated Statement of Financial Position of Honda Japan? a. Y120,000 and Y6,000 « b. Y90,000 and Y4,000 c. Y120,000 and Y8,000 d. Y90,000 and Y24,000 Answer 1) C2) A Suggested Solution Req. 1 C Monetary Item: Accounts Receivable = FC1,000 x P40 = P40,000 (Closing rate) Non-Monetary Item: Prepaid Asset = FC100 x P20 = P2,000 (Historical rate) Req. 2A Accounts Receivable = P40,000 x 3 yen = 120,000 yen (Closing rate] Prepaid Assets = P2,000 x 3 yen = 6,000 yen (Closing rate) Problem 30: Certain balance sheet accounts of a foreign subsidiary of the Charm Co. had been stated in Philippine peso as follows: Stated at Current Rates Historical Rates Accounts Receivable - current 280,000 308,000 Accounts Receivable - long term P140,000 P154,000 Prepaid Insurance P70,000 P77,000 Goodwill P112,000 P119,000 Total 602,000 658,000 ———