Quiz 4

QUIZ 4
Read the questions carefully and select the best answer.
Good luck!
Points: 30/30
1. NAME (Last Name, First Name, Middle Initial *
Gantala, Jehu C.
Correct 1/1 Points
2. In a period of falling prices, the use of which of the following inventory

cost flow methods would typically result in the highest of cost of goods
sold? *
https://forms.office.com/Pages/ResponseDetailPage.aspx?id=d onseToken=LijYAnp71TtxbnAXSeld6DIMbhUINGzf6LEdv6Km268 2/23/24, 2 54 PM

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x
FIFO
LIFO
Weighted average cost
Specific identification
Correct 1/1 Points
3. When an investor uses the equity method to account for investment in

associate, the investment account will be increased when the investor
recognizes *
impairment of the goodwill related to the purchase
cash dividend received from the investee
proportionate interest in the profit of the investee
depreciation related to the excess of market value over the carrying amount
of the investee's depreciable assets at the date of purchase by investor
Correct 1/1 Points
4. Interest revenue for debt investments at fair value through profit or loss
is computed based on the instruments' *

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x
face value using effective interest rate
carrying amount using effective interest rate
face value using nominal interest rate
carrying amount using nominal interest rate
Correct 1/1 Points
5. Impairments of debt investments at amortized cost are *
evaluated at each reporting date
recognized as component of OCI
based on fair value for nontrading investments
based on discounted contractual cash flows
Correct 1/1 Points
6. The interest income reported for a debt investment at amortized cost

initially acquired at a premium is equal to *

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x
the stated interest rate multiplied by carrying amount of bond investment at
the beginning of the year
the effective interest rate multiplied by the carrying amount of the bond
investment at the beginning of the year
the effective interest rate multiplied by the face amount of the bond invest-
ment
stated interest rate multiplied by face amount of bond investment
Correct 1/1 Points
7. Which of the following statements is correct regarding the disposal of

equity investments? *
No gain or loss is recognized on disposal of investment in associates
A gain or loss is recognized on the disposal of investment in associates

for the difference between the net disposal proceeds and the carrying
amount of investment
No gain or loss is recognized on disposal of equity investments at fair value

through profit or loss
A gain or loss is recognized on the disposal of equity investments at fair value

for the difference between net disposal proceeds and acquisition cost of equi-
ty investment
Correct 1/1 Points

Page 4 of 20
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x
8. When there is objective evidence of impairment in value of debt
investments measured at amortized cost, the carrying amount of the
asset shall be reduced either directly or through the use of an allowance
and the amount of the loss shall be *
ignored
deferred until date of derecognition
recognized in equity
recognized in profit or loss
Correct 1/1 Points
9. Assuming constant inventory quantities, which of the following inventory-

costing methods will produce a lower inventory turnover ratio in an
inflationary economy? *
Moving average
LIFO
FIFO
Weighted average
Correct 1/1 Points

Page 5 of 20
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x
10. The original cost of an inventory item is above the replacement cost.
The inventory item's replacement cost is above the net realizable value.
Under the lower of cost or market method, inventory item should be
valued at *
Net realizable value
Original cost
Net realizable value less normal profit margin
Replacement cost
Correct 1/1 Points
11. What method is used to account for investments in associate? *
Fair value method
Cost method
Equity method
Consolidation method
Correct 1/1 Points
12. Goodwill arising from investment in associate is *

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x
Presented as separate account from investment
Recognized separately from investment account
Included in carrying amount of investment and not recognized separately
Presented under non-current asset
Correct 1/1 Points
13. Previously held securities shall be remeasured at *
Carrying amount
Cost
Fair value less cost to sell
Fair value
Correct 1/1 Points
14. Bond investments are classified on the basis of *

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x
Contractual cash flow characteristics of financial asset
Entity's business model for managing financial asset
Entity's intent on usage of security
A&B
Correct 1/1 Points
15. Interest revenue on bond investments classified at amortized cost is

based on *
Stated rate
Effective rate
Coupon rate
Nominal rate
Correct 1/1 Points
16. Bond investments at fair value through other comprehensive income are
reported at *

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x
Fair value
Cost
Carrying amount
Fair value less cost of disposal
Correct 1/1 Points
17. On January 1, 2022, ABC Company purchased four-year, P4,000,000,

10% interest bonds at fair value. The prevailing market rate of interest
was 8%, which is payable annually every December 31. The company's
business model is to collect contractual cash flows and to sell asset.
The prevailing market rate of interest on December 31, 2022, 2023, and
2024 are provided below:
12/31/2022 9%
12/31/2023 10%
12/31/2024 7%
PV of 1 at 8% for 4 periods- 0.7350

PV of ordinary annuity of 1 at 8% for 4 periods- 3.3121
What amount shall be reported on January 1, 2022? *

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x
4,264,840
4,000,000
3,746,368
4,206,040
Correct 1/1 Points

12/31/2022 9%
12/31/2023 10%
12/31/2024 7%

How much shall the investment be presented on December 31, 2022? *

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x
4,206,040
4,101,320
4,000,000
4,070,440
Correct 1/1 Points

12/31/2022 9%
12/31/2023 10%
12/31/2024 7%


PV of ordinary annuity at 9% for 3 periods- 2.5313

How much is the interest income for year 2023? *

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x
328,106
369,119
400,000
336,482
Correct 1/1 Points

12/31/2022 9%
12/31/2023 10%
12/31/2024 7%



How much shall be reported in OCI section of the statement of

comprehensive income for year 2023? *

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x
(142,709)
142,709
38,002
(38,002)
Correct 1/1 Points

12/31/2022 9%
12/31/2023 10%
12/31/2024 7%



What cumulative amount of unrealized gain (loss) should be reported as

a component of other comprehensive income in statement of changes in
equity on December 31, 2023? *

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x
142,709
(142,709)
38,002
(38,002)
Correct 1/1 Points
22. On August 1,2022, ABC Co acquired 40% of XYZ Company. XYZ

Company reported net income of P1,000,000 for 2022, of which 400,000
was for the 7 months ended July 31, 2022. XYZ Company paid no cash
dividends during 2022.
How much should be reported as income from investment in XYZ

Company for the year 2022? *
240,000
400,000
600,000
160,000
Correct 1/1 Points

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x
23. At the beginning of 2022, ABC Company purchased 20% of XYZ
Company's ordinary shares outstanding for P3,000,000. Transaction
cost incurred is 10% of purchase price of the shares. At date of
acquisition, the carrying amount of identifiable net assets were equal to
their fair values. During 2022, the investee reported net income of
P3,500,000 and paid cash divided of P2,000,000.
How much is the investment income for 2022? *
400,000
700,000
3,500,000
Correct 1/1 Points

How much is the carrying amount of investment in associate on

December 31, 2022? *

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x
3,000,000
3,600,000
4,000,000
3,300,000
Correct 1/1 Points

In 2023, investee reported net loss of P500,000 and issued 10% stock
dividends
How much is the investment loss for 2023? *
100,000
90,000
500,000

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x
Correct 1/1 Points

In 2023, investee reported net loss of P500,000 and issued 10% stock
dividends
How much is the carrying amount of investment in associate on

December 31, 2023? *
3,600,000
3,200,000
3,900,000
3,500,000
Correct 1/1 Points

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x
27. ABC Company is a manufacturing entity and the cost of its inventory is
shown on its stock cards as follows:
Material cost P450,000

Production labor cost 200,000
Production overhead cost 50% of production labor
cost
General administrative cost 215,000
Marketing cost 220,000
How much should be reported as inventory? *
300,000
1,185,000
450,000
750,000
Correct 2/2 Points
28. ABC Company had the following inventory at year-end:
NRV COST
Boxing gloves 2.7M 3.7M

Boxing shoes 1.8M 1.5M
Wrist band 500K 660K
Boxing apparel 870K 920K
How much should be the inventory at year-end? *

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x
7,080,000
5,570,000
4,700,000
5,070,000
Correct 1/1 Points
29. On November 19, 2021, ABC Company entered into purchase

commitment of 10K units of product Z on February 15, 2022 at a price of
P310 per unit.
On December 31, 2021, the market price of product Z is P270 per unit.
On February 15, 2022, the market price of the said product is P300 per
unit.
The purchase commitment is noncancelable.
What is the loss on purchase commitment on December 31, 2021? *
100,000
300,000
400,000

Page 19 of 20
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x
Correct 1/1 Points
30. On November 19, 2021, ABC Company entered into purchase

commitment of 10K units of product Z on February 15, 2022 at a price of
P310 per unit.
On December 31, 2021, the market price of product Z is P270 per unit.
On February 15, 2022, the market price of the said product is P300 per
unit.
The purchase commitment is noncancelable.
What is the gain on purchase commitment on February 15, 2022? *
100,000
300,000
400,000
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QUIZ 4

Read the questions carefully and select the best answer.

1. NAME (Last Name, First Name, Middle Initial *

Correct 1/1 Points

2. In a period of falling prices, the use of which of the following inventory

https://forms.office.com/Pages/ResponseDetailPage.aspx?id=d onseToken=LijYAnp71TtxbnAXSeld6DIMbhUINGzf6LEdv6Km268 2/23/24, 2 54 PM

Weighted average cost

Correct 1/1 Points

3. When an investor uses the equity method to account for investment in

impairment of the goodwill related to the purchase

cash dividend received from the investee

proportionate interest in the profit of the investee

Correct 1/1 Points

https://forms.office.com/Pages/ResponseDetailPage.aspx?id=d onseToken=LijYAnp71TtxbnAXSeld6DIMbhUINGzf6LEdv6Km268 2/23/24, 2 54 PM

carrying amount using effective interest rate

face value using nominal interest rate

carrying amount using nominal interest rate

Correct 1/1 Points

5. Impairments of debt investments at amortized cost are *

evaluated at each reporting date

recognized as component of OCI

based on fair value for nontrading investments

based on discounted contractual cash flows

Correct 1/1 Points

6. The interest income reported for a debt investment at amortized cost

https://forms.office.com/Pages/ResponseDetailPage.aspx?id=d onseToken=LijYAnp71TtxbnAXSeld6DIMbhUINGzf6LEdv6Km268 2/23/24, 2 54 PM

stated interest rate multiplied by face amount of bond investment

Correct 1/1 Points

7. Which of the following statements is correct regarding the disposal of

No gain or loss is recognized on disposal of investment in associates

A gain or loss is recognized on the disposal of investment in associates

No gain or loss is recognized on disposal of equity investments at fair value

A gain or loss is recognized on the disposal of equity investments at fair value

Correct 1/1 Points

https://forms.office.com/Pages/ResponseDetailPage.aspx?id=d onseToken=LijYAnp71TtxbnAXSeld6DIMbhUINGzf6LEdv6Km268 2/23/24, 2 54 PM

deferred until date of derecognition

recognized in profit or loss

Correct 1/1 Points

9. Assuming constant inventory quantities, which of the following inventory-

Correct 1/1 Points

https://forms.office.com/Pages/ResponseDetailPage.aspx?id=d onseToken=LijYAnp71TtxbnAXSeld6DIMbhUINGzf6LEdv6Km268 2/23/24, 2 54 PM

Net realizable value

Net realizable value less normal profit margin

Correct 1/1 Points

11. What method is used to account for investments in associate? *

Fair value method

Correct 1/1 Points

12. Goodwill arising from investment in associate is *

https://forms.office.com/Pages/ResponseDetailPage.aspx?id=d onseToken=LijYAnp71TtxbnAXSeld6DIMbhUINGzf6LEdv6Km268 2/23/24, 2 54 PM

Recognized separately from investment account

Included in carrying amount of investment and not recognized separately

Presented under non-current asset

Correct 1/1 Points

13. Previously held securities shall be remeasured at *

Fair value less cost to sell

Correct 1/1 Points

14. Bond investments are classified on the basis of *

https://forms.office.com/Pages/ResponseDetailPage.aspx?id=d onseToken=LijYAnp71TtxbnAXSeld6DIMbhUINGzf6LEdv6Km268 2/23/24, 2 54 PM

Entity's business model for managing financial asset

Entity's intent on usage of security

Correct 1/1 Points

15. Interest revenue on bond investments classified at amortized cost is