Advanced Financial Accounting and Reporting

1. On September 3, Pistachio Inc. Consigned to Minimart, 10 ladies handbags costing P30 In Janaury, other assets with book value of P16,000 were sold for P10,000 in cash. Using
each, paying freight charge of P30. At the end of month, Minimart reported sales of 6 a safe payments schedule, how much will each partner receive as cash distribution after
handbags at P60 each and expenses incurred of P25 and remitted the net proceeds due the liabilities had been paid?
to Pistachio Inc. After deducting 20% commission. A. Addy – P1,200; Bess – P1,800; Clara – P3,000
What is the total cost of the inventory of unsold bags? B. Ady – P0; Bess – P2,500; Calara – P3,500
a. P142 C. Addy – P1,800; Bess – P1,800 ; Clara – P2,400
b. P150 D. Addy – P0; Bess – P2,000 ; Clara – P4,000
c. P132
d. P120 4. A parent company uses the equity method to account for its wholly owned subsidiary but
2. Butuan Company is bankrupt and has undergone corporate liquidation. Presented below has applied it incorrectly. In each of the past four full years, the company `adjusted the
is its statement of financial position before the start of liquidation. Investment account when it received dividends from the subsidiary but did nột adjust the
Cash 300,000 Accounts Payable 100,000 account for any of the subsidiary's profits. The subsidiary had four years of profits and
Machinery 500,000 Salaries Payable 200,000 paid yearly dividends in amounts that were less than reported net incomes. Which one of
Building 1,200,000 Income Tax Payable 300,000 the following statement correct if the parent company discovered its mistake at the end of
Loan Payable 400,000 the fourth year, and is now preparing consolidation working papers?
Mortgage Payable 500,000
Contributed Capital 800,000 A. The parent company's Subsidiary Income account will be increased by the cumulative
Deficit 300,000 total four years of subsidiary profits.
B. The parent company's Retained Earnings will be increased by the cumulative total of
• Liquidation expenses amounting to P600,000 were paid. the first three years of subsidiary profit, and the Subsidiary Income account will be
increased by the profit for the current year.
• The loan payable is secured by the machinery with fair value of P300,000.
C. The parent company's Retained Earnings will be increased by the cumulative total of
• The mortgage payable is secured by the building .
four years of subsidiary profits.
• At the end of liquidation, the holder of loan payable received P340,000. D. A prior period adjustment must be recorded for the cumulative effect of four years of
What is the amount to be received by the holder of accounts payable at the end of accounting errors.
liquidation?
a. P60,000 5. What is the proper disposition of a partnership loan that was made from a partner who has
b. 85,000 a debit balance in the capital account?
c. P40,000
d. P15,000 A. The loan is offset against thee debit balance in the capital account.
3. The balance sheet of the Addy, Bess, and Clara partnership on January 1, 2019 ( date of B. The loan is charged off to the capital accounts of all the partners in their profit and loss
partnership dissolution) was as follow: sharing ratios.
C. The loan is ignored in liquidation.
Cash P4,000 Liabilities P8,000 D. The loan is held for payment after all other capital accounts are covered.
Other asset 26,000 Loan from Addy 1,000
Loan to Clara 2,000 Addy, Capital (20%) 2,000 6. In a "Build-operate-transfer", the contractual obligations to maintain or restore
Bess, Capital (40%) 9,000 infrastructure, except for any upgrade element, shall be recognized and measured at the
Clara, Capital (40%) 12,000 best estimate of the expenditure that would be required to settle the present obligation at
Total Assets P32,000 Total liab//equity P32,000 the end of the reporting period. This is done in accordance with what standard?
 B. The period when they are expected to affect profit or loss. C. A description of any forecast
A. PFRS 9 B. PAS 23 C. PFRS 15 D. PAS 37 transaction for which hedge accounting had previously been used, but which is no longer expected
to occur.
7. The following are the contract revenues and costs transaction of Charlie Builders Corp. as D. The amount of the change in fair value of the hedging instrument recognized in profit or loss.
of December 31, 2018. The project duration is from July 1, 2018 until June 30, 2019 with a
total contract cost of P5,000,000. It was agreed further that the initial contract be revised 10. Which of the following will increase consolidated retained earning?
with an increase by 15%. A. The depreciation of a P10,000 excess in the fair value of equipment over its recorded book
Revenue: value.
Initial amount of contract P7,000,00 B. An increase in the value of goodwill associated with a subsidiary subsequent to the parent's date
Additional incentives P200,000 of acquisition.
Other contract claims P50,000 C. The sale of inventory by a subsidiary that had a P10,000 excess in fair value over recorded book
Incidental income directly related to the P20,000 value on the parent's date of acquisition
project D. The amortization of a P10,000 excess in the fair value of a note payable over its recorded book
Costs and expenses: value.
Direct Labor P1,000,000
Cost of materials P2,000,000 11. Which of the following formulas would calculate the net realizable value of a product?
Depreciation of plant equipment P300,000 A. Final sales value minus separable costs
Contract Design and technical assitance P150,000 B. Sales value at the split-off point less cost to produce up to the split-off point
Administrative expenses P100,000 C. Sales value x constant gross-margin
D. Final sales value minus cost of goods sold
Selling expenses P50,000
12. The unadjusted balance in the Allowance, for Overvaluation account at year-end represents
A. the mark-up on the merchandise available for saie by the branch for the year.
B. the mark-up on the merchandise shipped to the branch during the year.
Using the stage of completion measured by the proportion that contract costs incurred for C. the mark-un on merchandise shipped to the branch during the year less the mark-up on the
work performed to date bear to the estimated total contract costs, compute the amount of
merchandise returned by the branch during the year.
revenues for the year ended December 31, 2018. D. the mark-up on the cost of goods sold by the branch for the year.
A. P5,727,000 B. P5,250,000 C. P5,693,800 D. P5,719,182 13. On consolidated working papers, a subsidiary's, net income is
8. Parent has a 100% direct interest in Subl and Sub2. As a part of a group reorganization, the A. only an entry in the parent company's general ledger.
parent transfers its direct interest in Sub2 to Sub) in exchange for consideration of P200M (equal to B. deducted from beginning consolidated retained earnings.
the fair value of Sub2).
C. allocated between the noncontrolling interest share and the parent's share.
The carrying amount of the investment in Sub2 in the separate financial statements of Parent is D. deducted from ending consolidated retained earnings.
P50M. The carrying amount of Sub2’s net asset in he separate financial statements of Sub2 is 14. In partnership liquidations, what are safe payments?
P11OM. Sub 1 account for the acquisition of Sub2 using the pooling of interest method in its A. The amounts of distributions that can be made to the partners during the liquidation based on
consolidated financial statements. the partner's contributed capital return.
What is Subl's cost of the investment in the subsidiary? B. The amounts of distributions that can be made to the partners, after all creditors have been paid
A. P200M B. P160M C. P110M D. P50M in full.
9. If an entity uses hedge accounting for a hedge of variable interest rate risk, foreign exchange C. The amounts of distributions that çan be made to the partners with assurance that such
risk, or commodity price risk in a firm commitment or highly probable forecast transaction it is amounts will not have tO be returned to the partnership.
required to disclose certain matters. required to be disclosed? D. The anounts of distributions that can be made to the partners, after all non-cash assets have
A. The amount that was reclassified from hedging reserve to profit or loss for the period.
been adjusted to fair market value.
 B. possession
15. Entity S is a wholly owned subsidiary of Entity P. Entity P provides an interest free loan in the C. control
amount of P100,000 to Entity S. The loan is repayable in full after 3 years. The fair value of the D. recognition
loan (based on current market rates of 10%) is P75,131. During the periods to repayment
(assuming no payment before maturity), the journal entry in the books of Entity P at the end of Year 21. Conglomerate Inc. has two divisions, electronics and music, each of which is a separate
2 shall be subsidiary. On December 18, 2018, the shareholders approve a non-cash dividend in the form of
A. Credit to Profit or loss- notional interest in the amount of P7,513 the electronics division. The distribution is to be made on January 17, 2019.
B. Debit Loans receivable from subsidiary' in the amount. of P8, 264
C. Credit to `Loans payable to parent' in the amount of P7, 513 In Conglomerate Inc.'s separate financial statements at December 18 and 31, 2018, the investment
D. Debit Profit or loss - notional interest P8,264 in Electronics Inc., which holds the electronics division, is caried at Pl100M- The division has
16. An agency received a Notice of Cash Allocation (NCA)in the amount of P1,226,618 It paid a consolidated net assets of P210M. The fair value of the electronics division at December 18 and
total of P1,094,422. The accounting entry to recognize reversion of unused NCA shall have a 31, 2018, is P375M of Conglomerate Inc. shall have
A. credit to `Subsidy from National Government' in the amount of P1,226,618. A. A credit to `Equity' of P375M in its consolidated financial statement S The entry in the books
B. debit to `Subsidy from National Government' in the amount of P132,196. B. A credit to Liability' of P375M in its separate financial statements
C. debit to Subsidy from National Government' in the amount of P1,226,618. C. A credit to Liability' of P210M in its consolidated financial statements
D. credit to "Subsidy from National Government' in the amount of P132,196. D. A debit to Equity of P210M in its separate financial statements
22. Which of the following reconciling transactions will require credit to home office current account
17. Entity S provides a below market rate loan in the amount of P100,000 to Entity P. The loan in Branch A's Book for the adjustment?
bears interest at 4 and is repyable in full after 3 years. The fair value of the loan, based dn currint A. Collection by Branch A of Branch B's account receivable
market rates of 10 is P84,147. The journal during the periods to repayment, in the books of the B. Credit memo received by Branch A from, Home Office
Entity S (Subsidiary Company) at the end of Year 1, includes a C. Payment by Branch A of Home Office 's accounts payable
A. Credit to Profit or loss - notional interest in the amount D. Reshipment of goods received by Branch A to Branch B .
of P8,415 23. Austin contributes his computer equipment to the landscaping partnership he starts with
B. Debit to Profit or loss - notional interest in the amount Bentley. At what amount should the computer equipment b credited to Austin's partnership capital?
of P8,415 A. At the amount that Bentley contributes, with the assumption that they both contribute equally to
C. Credit to Loan receivable from parent in the amount of the partnership
P9,256 B.Austin's original cost
D. Debit to Loan receivable from parent in the amount of P9,256 C. The tax basis
D. The fair value at the date of contribution C.
18. On June 1, 2019, Puell Company acquired 100& of the stock of Sorrell Thc. On this date, Puell 24. When a secured claim is not fully settled by the selling of the underlying collateral, the
had Retained Earnings of P100,000 and Sorrell had Retained Earnings of P50,000. On December remaining portion
31, 2019, Puell had Retained Earnings of P120,000 and Sorrell had Retained Earnings of P60,000. A. of the claim cannot be collected by the creditor.
What is the amount of Retained Earnngs that would appear in the December 31, 2019 consolidated B. is classified as an unsecured with priority claim.
balance sheet? C. remains as a secured claim.
A.P170,000. D. is classified as an unsecured without priority claim.
B.P130,000. 25. Which of the following statements is TRUE of joint costing?
C.P120,000 A. The costs of a production process that yields multiple products simultaneously are called joint
D. P180,000 costs.
20. Under PFRS 15, an asset is transferred to the customer when the it obtains B. Joint costing is less useful for companies which manufacture multiple products simultaneously
A. satisfaction from the same production process.
C. Distribution costs incurred beyond the split-off point that are assignable to each of the specific Which of the following statements is TRUE about the arrangement described above?
products identified at the split-off point are considered as joint costs. A. The joint arrangement is not a joint venture.
D. The primary purpose of joint costing is to allocate the separable costs to the individual products B. The agreement established that the parties have rights to the net assets of Entity X. I
that are eventually sold. C. The joint arrangement is a not joint operation.
26. Percy Inc. acquired 80% of the outstanding stock of Sillson Company i business combination. D. The agreement established both joint operation and joint venture.
The book values of Sillson's net assets are equal to the fair values except for the building, whose 30. The following assets of Poole Corporation's Romanian subsidiary have been converted into
net book value and fair value are P500,000 and P800,000, respectively. At what amount is the U.S. dollars, at the following exchange rates:
building reported on the consolidated balance sheet?
A. P400,000 Current Rates Historical Rates
B. P800,000 Accounts receivable $850,000 $875,000
C. P640,000 Trademark 600,000 575,000
D. P500,000 PPE 1,200,000 900,000
Totals $2,650,000 $2,350,000
27. Neither the Palmer Branch nor the home office of Rupert Company had completed any
intracompany transactions during the last half of May, the credit balance of the branch'ş Home Assume the functional currency of the subsidiary is the U.S. dollar and the books are kept in a
Office ledger account on May was larger than the debit balance of the home office's Investment in different currency: The assets should be reported in the consolidated financial statements of Poole
Palmer Branch account. The most likely reason for this discrepancy is: Corporation and Subsidiary in the total amount of
A. The home office reported a net loss for the month of May. A. $2,350,000. B. $2,375,000. C. $2,325,000. D. $2,650,000.
B. The branch reported a net income for the month of May.
C. The branch reported a net loss for the month of May.
D. The branch returned merchandise to the home office.
31. On October 4, 2018, Sooty Corporation, a US firm, borrowed 250,000 British pounds from a
29. Two real estate companies (the parties) set up a separate vehicle (entity X) for the purpose of London bank, evidenced by an interest-bearing not payable due in one year. The note was
acquiring and operating a shopping center. The contractual agreement between the parties payable in pounds. Exchange rates for pounds were: October 4, 2018 December 31, 2018
establishes joint conti of the activities that are conducted in Entity X. The main feature of Entity X's October 4, 2019 $1.59 $1.55 $1.61
legal form is that the entity, not the parties, has rights the assets, and obligations for the liabilities, October 4, 2018 $1.59
relating to the arrangement. These activities include the rental of the retail units managing the car December 31, 2018 $1.55
park, maintaining the center and its equipment, such lifts, and building the reputation and customer October 4, 2019 $1.61
base as a whole.
The terms of the contractual arrangement are such that: What exchange gain or loss appeared on Sooty's 2018 income statement?
• Entity X owns the shopping center. does not specify that the parties have rights to the A. a gain of $15,000
shopping The contractual agreement center; B. a loss of $10,000
• The parties are not liable in respect of the debts, The liabilities or obligations of Entity X. If C. a loss of $15,000
Entity X is' unable to pay any of its debts or other liabilities or to discharge its obligations D. a gain of $10", 000
to third parties, the liability of each party to any third party will be 1imited to the unpaid
amount of that party's capital contribution; 32. On January 1, 2019, Star Company established a branch in a nearby city At the close of the
• The parties have the right to sell or pledge their interests in Entity X; calendar year ended December 31, 2019, the investment in branch account on the books of the
• The party receives a share of the income from operating the shopping center, in home office had a balance of P66,000. The branch books reflected another amount thus the
accordance with its interest in Entity X. difference in the reciprocal accounts is due to the following data:
 • Cash of P10,000 forwarded to the home office by the branch is in transit and has not 34. If a sale on account by a U.S. company is made with a foreign company, and the U.S. company
been recorded on the home office books. has no foreign currency risk, then
• Merchandise costing the home office P8,000 was transferred to the branch at a billing A. the foreig: company has measured the transaction in their own currency.
price of P9,000. The merchandise is in transit and has not been recorded on the branch B. the U.S. company has measured the transaction in U.S. dollars.
books. C. the foreign company has denominated the transaction in their own currency.
• Notification sent by the home office to the branch, informing the branch of P5,000 of D. the U.S. company has denominated the transaction in U.S. dollars.
operating expenses that the home office paid on behalf of the branch, has not been
received by the branch and thus has not been recorded by the branch. the home office 35. Gains and losses incurred at liquidation are distributed to the partner using the residual profit
books. and loss sharing ratios because
• Cash of P2 ,000 received by the brar.ch from the home office was erroneously recorded A. using ownership percentages would permit solvent partners to not share profits with insolvent
by the branch as P20,000. partners.
• The branch purchased, for cash P15,000 of equipment for its use; fixed asset accounts B. using the established profit and loss sharing ratios is not permitted.
of the branch are maintained at the home office. Notification sent to the home office by C. the residual profit and loss ratios represent the ownership percentages.
the branch, informing the home office of the branch's action has not been received, by D. these amounts represent profits and losses from prior periods hat would have been shared
the home office and thus has not been recorded by the home office. using the residual profit and loss ratios.
36. In which of the following ways can debt be restructured?
How much is the unadjusted balance of home office account on branch's books? I. Assets can be transferred to the creditor,
A. P87,000 B. P41,000 C.. P62,000 -D: P45,000 II. An equity interest can be granted to the creditor. III. The terms of the debt can be,
33 The Green Company processes unprocessed goat milk up to the split-off point where two modified.
products, condensed goat milk and skim goat milk result. The following information was collected A. I and III only
for the month of October: B. II and III only I. II. III.
Direct materials processed: 102,000 gallons ( after shrinkage) c. 1 and II only
Production: D. I, II, and III
Condensed goat milk 42,500 gallons 37. Which of the following factors would guide you in classifying a product as a main product or
Skim goat milk 59,500 gallon byproduct?
Sales: A. Weight or volume of outputs per period
Condensed goat milk P3.25 per gallon B. Number of units per processing period
Skim goat milk P2.75 per gallon C. Joint costs incurred up to the split-off point
D. Percentage of total sales value
The costs of unprocessed goat milk and processing purchasing it up to the split-off point to yield ä
tötal of 102,000 gallons of saleable product was P188,480. There were no inventory balances of 38. Identify the following statements whether these are true or false.
either product. Condensed goat milk may be processed further to yield 42,000 gallons (the Statement 1: A contract must create enforceable rights and obligations to fall within the scope of
remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of P4 PFRS 15.
per usable gallon. Xyla can be sold for P20 per gallon. Statement 2: The contract referred to in Statement 1 must be in writing for it to fall under the scope
Skim goat milk can be processed further to yield 58, 200 gallons of skim goat ice cream, for an of PFRS 15.
additional processing cost per usable gallon of P4. The product can be sold for P12 per gallon and A. Statement 1 is true; Statement 2 is false.
ending inventory balances. There are no beginning B. Statements 1 and 2 are all false.
What is the estimated net realizable value of the skim goat ice cream the split-off point? C. Statement 1 is false; Statement 2 is true.
A. P680,000 B. P465,600 C. P672,000 D. P476,000 D. Statements 1 and 2 are all true.
40. What is the authorization issued by the DBM to NGAS to incur obligation for specified amounts • If the trailing 12 months earnings in two years' time are between million and F2 million,
contained in a legislative appropriation in the form of budget release documents? then 2 times 12-month earnings will be paid
A. Appropriations B. Approved Budget C. Allotment D. Automatic • If the trailing 12 months earnings in two years' time are greater than P2 million, then 3
41. Appropriations Identify the following statements if these are TRUE or FALSE. times 12-month earnings will be paid
Statement 1: If a joint venturer loses joint control but retains an interest in an associate, it would
continue to apply the equity method At the date of acquisition, the possible twelve-month earnings of Entity H in two years'
Statement 2: An entity has to remeasure its retained interest in an associate when it loses joint time are determines to be as follows :
control over a joint venture. PO.8 million - 40%
A. Statements 1 and 2 are all true. P1.5 million - 40%
B. Statemeint 1 is false; Statement 2 is true. P2.5 million - 20$
C. Statement 1 is true; Statement 2 is false. The probability-weighted payout is
D. Statements 1 and 2 are all false. A. P2.7 million B. P2.3 million C. P2.0 million D. P2.5 million

42. What is the primary goal behind consolidating financial statements of controlled subsidiary? 46. A business merger differs from a business consolidation because
A. Representing the company's underlying economic condition. B. Assuring that the subsidiary A. a consolidation is created when two entities join, but a merger is created when more than two
financial statements are the same under the temporal method or the current rate method. entities join.
C. Representing the conversion of statements at, the historical exchange rate. B. a consoiidation dissolyes all but one of the prior entities, but a merger dissolves all of the prior
D. Assuring that the individual nature of the subsidiary entity is not lost in the consolidation. entities.
43. Five parties jointly bought an aircraft. By contractual agreement, each party has the right to use C. a merger dissolves all but one of the prior entities, but a consolidation dissolves all of "the prior
the aircraft for a certain number of days each year and shares proportionately in the maintenance entities and forms a new corporation.
cost. They share decision-making regarding the maintenance and disposal of the aircraft, which are D. a merger is created when two entities join, but a consolidation is created when more than two
the relevant activities for the aircraft. These decisions require the unanimous agreement of all of entities join.
the parties. The contractual agreement covers the expected life of the aircraft and can be changed 47. The gift shop of a nonprofit, private, hospital has cash revenue of P24,000. What account will
only by agreement of parties holding 75% of the voting rights. Which of the following statements is the hospital credit?
TRUE about this arrangement? A. Temporarily restricted revenue
A. The agreement is a joint arrangement. B. Other operating revenue - unrestricted
B. The multiple combinations of how the 75% can be achieved They These The created joint C. Unrestricted revenue
control. D. Unrestricted support
C. The agreement is not a joint arrangement. 48. On October 4, 2018, Sooty Corporation, a US firm, borrowed 250,000 British pounds from a
D. There is joint control established by the agreement. London bank, evidenced by an interest-bearing note payable due in one year. The note was
44. When the stand-alone selling price is not directly observable, an estimate of the stand-alone payable in pounds. Exchange rates for pounds were':
selling price is made through maximizing the use of observable inputs. Which of the following is October 4, 2018 $1.59
NOT a possible estimation approach? December 31, 2018 $1.55
A. Residual approach B. Adjustment market assessment approach C. Net realizable value October 4, 2019 $1.61
approach D. Expected cost plus a margin approach What is the final amount of the loan payable that Sooty repaid? A. $287,500 B. $402,500 C.
$397,500 D. $250,000
45. Entity G acquires Entity H and as part of the arrangement, Entity G agrees to pay an additional
amount of consideration to the seller in the future, as follows: 49. A, B and C enter into a joint arrangement to conduct an activity in Entity z. The contractual
• If the 12–month earnings in two years' time (also referred to as trailing 12 months) are Pl agreement between A and B states that they must agree to direct all the activities of 2. The
million or less, nothing will be paid
agreement of C is no required, except that C has the right to veto the issuance of debt or equity B. function and natural classification.
instruments by z. In this situation, what exists between A, B and Z? C. restriction, function and natural classification.
A. C is not a party to the joint arrangement. D. restriction.
B. A and B have joint control over
C. C holds a protective right with respect to Z and therefore holds a joint control over Z. SITUATIONAL:
D. A and B have joint control over z. Situational 1: Manila Manufacturing Co. Uses a job order cost system. Its cost sheet for the month
50. Accounts representing an allowance for uncollectible accounts are converted into U.S. dollars of April 2019 were as follows:
at Job 410 Job 411 Job 412 Job 413 Job 414 Job 415
A. current rates regardless of the functional currency. Work in
B. current rates only when the U.s. dollar is the functional currency. progress April
C. historical rates regardless of the functional currency. 1 2019
D. historical rates when the U.S. dollar is the functional currency. Direct 1,200 750
51. A U.S. importer that purchased merchandise from a South Korean firm would be exposed to a Materials
net exchange gain on the unpaid balance if the Direct Labor 1,800 1,440
A. dollar weakened relative to the Korean won and the dollar was the denominated currency. Applied 1,170 936
B. dollar strengthened relative to the Korean won and the won was the denominated currency. factory
C. dollar weakened relative to the Korean won and the won was the denominated currency. overhead
D. dollar strengthened relative to the Korean won and the dollar was the denominated currency. Finished
52. Anna and Bess share partnership profits and losses at 60% and 40%, respectively. The goods April 1,
partners agree to admit Cal into the partnership for 50% interest in capital and earnings. Capițal 2019
accounts immediately before the admission of Cal are: Direct 9,000 3,360
Anna (60%) P300,000 material s
Bess (40%) P300,000 Direct Labor 12,000 4,200
Total P600,000 Applied 7,800 2,730
Cal invested r400,000 for the ownership interest, and that this is a fair price for that share of, the overhead
partnership to be acquired. Cal paid the money directly to Anna and to Bess for 50 of each of their
respective capital interests. The partnership records goodwill. After recording the admission of Cal, Cost utilized
how much will be the respective capital balances of Anna and Bess? in April
A. P120,000; P80,000
Direct 5,460 6,600 18,000 2,400
B. P210,000; P190,000:
material s
C. P190,000; P210,000
Direct Labor 7,200 8,400 21,000 3,600
D. P80,000; P120,000
Applied 4,680 5,460 13,650
53. Which of the following is not a general objective of bankruptcy procedures? overhead
A. Assurance of an equitable distribution of the debtor's property among creditors
B. Assurance that all obligations of the debtor will be satisfied completely
C. Protect the interest of the company.
5. Attempt to give the debtor a fresh start The company completed three jobs (Job Nos. 412,413 and 414) during April 2019. The applied
54. Voluntary health and welfare organizations must report expenses classified by factory overhead rate is 65% of direct labor cost, is the same for each job. Thus, overhead was
A. restriction and natural classification.
added to the cost sheets of said jobs on the aforementioned rate. Actual factory overhead as at Carrying Amount Fair value
April1, 2019 amounted to Php18,000. Actual overhead for the month of April totaled Php 9,000 Cash and receivables P8,000 P8,000
55. The cost of goods manufactured for the month of April 2019 is A. Php97,746 B. Php97,647 C. Land 6,000 11,000
Php97,476 D. Php97,674 Total P14,000 P10,000
56. The cost of goods manufactured for Jobs 412 is Issued equity, 1,000,000 P5,000
A. Php 52,650 B. Php 21,510 C. Php 23,586 D. Php 51,650 ordianry shares
57. The cost of goods manufactured for Job 413 is Retained earnings 9,000
A. Php 23,566 B. Php 23,586 58. C. Php 21,150 D. Php 21,510. Total 14,000
58. The cost of goods manufactured for Jobs 414 and 415, respectively, are
A. Php 4,170 and Php 3,126 B. Php 28, 800 and Php 10,290 On January 1, 2019, Investor acquires a further 60% ownership interest in Investee for
C. Php 17,340 and Php 20,460 P22,000,000 cash, thereby obtaining control. Throughout the period January 1, 2018 to January 1,
D. Php 52,650 and Php 8,340 2019, Investor's issued equity was P30,000,000. Investor's only Asset apart from its investment in
Investee is cash.
Situation 2 - Investor acquires a 20% Ownërship interest in Investee (a ser company) at January 1, Investor'e initial 20% investment in Investee is measured at its fair value at the acquisition date of P
2013 for P3,500,000 cash, which is the fair value of the investment at that date. The Investor has 3,500,000. Investee's 1,000,000 ordinary shares have a quoted market price at December 31,
concluded that despite of its 20% holding it does not have a significant influence over the Investee. 2018 of P30 per share. Therefore the carrying amount of Investor's initial 20% investment is
At that date, the fair value of Investee's identifiable assets is P10,000,000 and the carrying amount remeasured in Investor's Einancial statements to P6,000,000 at December 31, 2018, with the
of those assets is P8,000,000. Investee has no liabilities or contingent liabilities at that date. P2,500,000 increase recognized as a component of other comprehensive income. Investor's
following shows Investee's statement of financial position at January 1, 2018 together with the fair statement of financial position before the acquisition of the additional 608 ownership tnterent is as
values of the identifiable assets: follows:
The Investee' s Statement of Financial Position
As at January 1, 2018 (000) Cash P26,500
Carrying Amount Fair value Investment in Investee 6,000
Cash and receivables P2,000 P2,000 Total P32,500
Land 6,000 8,000 Issued equity, P30,000
Total P8,000 P10,000 Gain on remeasurement of the 2,500
Issued equity, 1,000,000 P5,000 equity investment designated as
ordianry shares FVOIC (without recycling)
Retained earnings 3,000 Total P32,500
Total 8,000

During the year ended December 31, 2018, Investee reported a profit of P6,000,000 but does not
pay any dividends. In addition, the fair value of the Investee's land increases by P3,000,000 to
Pl1,000,000. However, the amount recognized by Investee in respect of the land' remain
unchanged at P6,000,000. The following shows Investee's statement of financial position at
December 31, 2018 together with the fair values of identifiable In assets:
Investee's Statement of Financial Position
As at December 31, 2018 (000)
59. Assume that Investor, in measuring the non-controlling interest in Investee, the option that
proportionate of the value of the net identifiable assets acquired is adopted, the amount of goodwill
to be recognized in its consolidated financial statements shall be
A. P6,000,000 B. P3,000,000 C. P13,000,000 D. P12,800,000 60.
60. Investor's consolidated financial statements imumediately after the acquisition of the additional
60% ownership in Investee will show a balance in its `Investmert in Investee' account of
A. P2,500, 000 B. P5,000,000 C. PO. D. P3,800,000 Cash P8,000 Accounts Payable P14,000
61. Investor's consolidated financial statements immediately after the acquisition of the additional Accounts receivable 12,000 Loan from Charlie 10,000
60% ownership in Investee will show a balance in its `Retained Earnings' account of Inventory 28,000 Alpha, Capital ( 20%) 28,000
A. P2,500,000 B. P30,000,000 C. P11,000,000 D. P12,800,000 Plant asset – net 24,000 Bravo, Capital (20%) 20,000
Loan to Able 12,000 Charlie, Capital (60%) 12,000
62. Investor's consolidated financial statements immediately after the acquisition of the additional Total Asset P84,000 Total Liab./equity P84,000
60 & ownership in Investee will show a balance in its Non-controlling Interest'account of
A. P3,800,000 The percentages shown are the residual profit ,and loss sharing ratios. The partners dissolved the
B. P0 partnership on July 1, 2019 and began the liquidation process. During July the following events
C. P5,000,000 occurred:
S. 2,500,000
• Receivables of P6,000 were collected.
Situation 3 - Alpha sells a product to, a "customer for P121,000 that is payable 24 months after • All inventory was sold for P8,000. :
delivery. The customer obtains control of the product at contract inception. The contract permits the
• All available cash was distributed on: July 31, except for P4,000 that was set aside for
customer to return the product within 90 days. The product is new, 'and Alphe has no relevant
contingent; expenses.
historical evidence of product returns or any available market evidence.
The cash selling price of the product, is P100,000, which represents the amount that the customer
67. The book value of the partnership equity (i.e., total equity of the partners) on June 30, 2019 is
would pay upon delivery Cor the same product sold under otherwise identical terms and conditions
as at contract inception. The cost of the product is P8O,000.
A. P 84,000
B. P120,000
63. What is the amount of revenue that shall; be recognized when control of the product transfers
C. P 60,000
to the customer?
D. P. 58,000
A. P100,000 B. P5,042 C. P121,000 D. PO
68. The cash available for distribution to the partners on July 31, 2019 is
64. When the product is transferred to the customer, what shall be the accounting entry?
A. P22,000
A. Debit Asset for right to recover product to be returned P100,000: Credit Revenue P100,000
B. P14,000
B. Debit Accounts receivable P121,000; Credit Revenue P121,000.
C. P 4,000
C. Debit Asset for right to recover product to be returned P80,000; Credit Inventory P80,000
D. P 8,000
D. Debit Accounts receivable Pl00,000; Credit Revenue P100,000.
69. How much cash would Bravo receive from the cash that is available for distribution on Kuly 31?
65 During the 3-month right of return eriod, how much interest income shall be recognized?
( Assume a safe payments schedule is used).
A. PO B. P1,708 C. P5,125 D. P2,625
A. P0
66. When the right of return lapses and the product is not returned what amount of revenue shall
B. P2,400
be. recognized?
C. P4,000
A. PO B. P121,000 C. P100,000 D. P80,000
D. 800
70. How much cash would Alpha receive from the cash that is available for distribution on July 31?
Situation 4 - On June 30, 2019, the Alpha, Bravo, and Charlie partnership h. the following fiscal
(Assume a safe payments schedule is used.)
year-end balance sheet:
A. P4, 000
B. P0
C. P2,400
D. P800