REY OCAMPO ONLINE

(With Ram Ocampo and Rian Soliman)

FAR and AP Undergraduate Review Companion

FAR REFRESHER

SAMPLE QUESTIONS/PROBLEMS
1. (31) The Commission on Audit is represented in 4. (29) The following pertains to Smile Company’s
I. FSRSC biological assets:
II. AASC Price of the asset in the principal market P18,000
III. PIC Price of the asset in a different market 19,000
IV. PSRC Selling price in a binding contract to sell 20,000
a. I, II, III, and IV c. I, II and IV only Estimated commissions to brokers 1,800
b. I, II and III only d. I and II only Estimated transport and other costs
necessary to get asset to the market 1,200
2. (3) La Union Corp. is considering the following items The entity’s biological assets should be valued at
for inclusion in ‘Inventories’: a. P17,200 c. P16,000
Materials on hand P1,200,000 b. P16,200 d. P15,000
Materials in transit shipped FOB
shipping point 470,000 5. The following information pertains to Queen
Materials in transit shipped FOB Corporation’s property, plant and equipment:
destination 350,000 Carrying amount, beginning P5,000,000
Advances for materials ordered 200,000 Acquisitions 1,800,000
Goods in process 900,000 Capitalized subsequent expenditures 500,000
Finished goods in factory 3,000,000 Repairs and maintenance 160,000
Finished goods in company-owned Reclassifications to 380,000
retail stores, including 50% profit Reclassifications from 410,000
on cost 750,000 Disposals/retirements 1,240,000
Finished goods in hands of consignees Depreciation 630,000
including 40% profit on sales 400,000 Impairment 290,000
Goods held on consignment, at sales
price, cost P150,000 300,000 The carrying amount of Queen’s property, plant and
Finished goods in transit to customers, equipment at the end of the period is
shipped FOB seller, at cost 250,000 a. P5,110,000 c. P5,170,000
Finished goods in transit to customers, b. P5,140,000 d. P5,270,000
shipped FOB buyer, at cost 150,000
Unsalable finished goods, at cost 30,000 6. (21) Entity A acquired an asset that had a cost of
Office supplies 40,000 P130,000. The asset is being depreciated over a 5-
Advertising catalogs and shipping year period using the sum-of-the-years’ digit method.
boxes 150,000 It has a salvage value estimated at P10,000. The
loss/gain if the asset is sold for P38,000 at the end of
Compute the amount to be presented as ‘Inventories’ the third year is
under current assets. a. P4,000 gain c. P68,000 loss
a. P6,460,000 c. P6,560,000 b. P20,000 loss d. P92,000 loss
b. P6,510,000 d. P6,610,000
7. (4) The following pertains to an entity using the
3. (8) The work-in-process inventory of Burp Corp. were revaluation model for its land belonging to the same
completely destroyed by fire on June 1 of the current class:
year. You were able to establish physical inventory
figures as follows: Land A – Acquired in 2020. Revalued at the end of
2023 resulting in revaluation increase of P3,000,000.
Jan. 1 June 1
Raw materials P 60,000 P120,000 Land B - Acquired in 2017. Revalued at the end of
Work-in-process 200,000 - 2023 resulting in revaluation increase of P2,000,000.
Finished goods 280,000 240,000 The entity previously recognized revaluation decrease
of P1,500,000 in profit or loss at the end of 2020.
Sales from Jan. 1 to May 31, were P546,750.
Purchases of raw materials were P200,000 and freight
The balance of revaluation surplus at the end of 2023
on purchases, P30,000. Direct labor during the period
is
was P160,000. It was agreed with insurance adjusters
a. P5,000,000 c. P3,500,000
that an average gross profit rate of 35% based on cost
b. P4,500,000 d. P3,000,000
be used and that direct labor cost was 160% of factory
overhead.
8. (7) An entity’s properties included the following items:
The work in process inventory destroyed by fire is • Building held for administrative purposes and
a. P366,000 c. P265,000 leased out under operating lease (60% is for
b. P314,612 d. P185,000 administrative purposes), P20,000,000.
• Building, which cannot be sold or leased out
separately, used in the production of goods and
around 2% of the area being leased out to canteen
operators, P10,000,000.

Page 1 of 8 www.teamprtc.com.ph FAR Refresher

TEAM PRTC

• Building leased out under an operating lease (the The entity sold a new bicycle for P5,000 (cost P4,000)
entity supplies security and maintenance services and a second-hand bicycle for P1,000 (carrying
to the lessees), P15,000,000. amount P500).
• Hotel owned and managed, P50,000,000.
Which statement is correct?
• Building being leased out to a subsidiary,
a. The bicycles for hire are reported in the statement
P8,000,000.
of financial position as property, plant and
How much should be reported as investment equipment.
properties in the entity’s separate financial b. The entity shall reclassify the bicycles for hire as
statements? non-current assets held for sale when they cease
a. P23,000,000 c. P31,000,000 to be rented and become held for sale.
b. P27,000,000 d. P35,000,000 c. The difference between the net disposal proceeds
and the carrying amount of the second-hand
9. (19) Batangas Company purchased a patent from the bicycles is recognized as other income in profit or
inventor, who asked P110,000 for it. Batangas paid loss.
for the patent as follows: cash, P40,000; issuance of d. All of the above.
1,000 shares of its own ordinary shares, par P10
(market value, P20 per share); and a note payable due 13. (17) Lively Inc. received a consolidated grant of P120
at the end of three years, face amount, P50,000, million. Three-fourths of the grant is to be utilized to
noninterest-bearing. The current interest rate for this purchase a college building for students from
type of financing is 12 percent. Batangas Company underdeveloped or developing countries. The balance
should record the cost of the patent at of the grant is for subsidizing the tuition costs of those
a. P110,000 c. P95,590 students for four years from the date of grant.
b. P 98,800 d. P85,590
The college building, which costs P100 million, will be
depreciated using the straight-line method over 10
10. (19) Zambales Corp. acquired property which contains
years. Assuming that the tuition subsidy will be
mineral deposit. The acquisition cost of the property
offered evenly over the period of 4 years, the amount
was P20,000,000. After acquisition, the following costs
that should be recognized as income at the end of year
were incurred:
1 is
Exploration cost P13,000,000 a. P12.0 million c. P16.5 million
Development cost related to drilling b. P10.0 million d. P17.5 million
of wells 10,000,000
Development cost related to 14. (15) An entity had the following loans outstanding in
production equipment 15,000,000 2023: Specific construction loan, 8% interest,
P1,000,000; General purpose loan, 10% interest,
For P2,000,000, the entity is legally required to restore
P20,000,000. The entity began the self-construction of
the land to a condition appropriate for resale. It is
a building on Jan. 1, 2023 and the building was
estimated that the property can be sold for P5,000,000
completed on Dec. 31, 2023. The following
following mineral extraction. Geological estimates
expenditures were made during the year: Jan. 1,
indicate that 5,000,000 tons of mineral may be
P3,000,000; July 1, P6,000,000; Nov. 1, P9,000,000.
extracted.
In the current year, the entity extracted 600,000 tons The total cost of Flexibility’s new building is
of the mineral and sold 450,000 tons. In the entity’s a. P18,830,000 c. P18,730,000
current year income statement, what amount of b. P18,750,000 d. P18,620,000
depletion is included in cost of sales?
a. P3,600,000 c. P4,800,000 15. (10) The following data pertain to an entity on Dec.
b. P4,050,000 d. P5,400,000 31, 2023:
Current account at Bangko Dito P1,800,000
11. (8) Autobots Bottling purchased for P800,000 a Current account at Bangko Doon (100,000)
trademark for a very successful soft drink it markets Payroll account at Bangko Dyan 500,000
under the name OK!. The trademark was determined Foreign bank account
to have an indefinite life. A competitor recently (in equivalent pesos) 800,000
introduced a product that is in direct competition with Savings account in a closed bank 150,000
the OK! product, thus suggesting the need for an Postage stamps 1,000
impairment test. Data gathered by Autobots suggests Employee’s post dated check 4,000
that the useful life of the trademark is still indefinite, IOU from employees 10,000
but the cash flows expected to be generated by the Credit memo from a vendor for a
trademark have been reduced either to P30,000 per purchase return 20,000
year (with a probability of 80%) or to P60,000 per Traveler’s check 50,000
year (with 20% probability). The appropriate risk-free Money order 30,000
interest rate is 5%. The appropriate risk-adjusted Sinking fund 2,000,000
interest rate is 10%. DAIF check of customer 15,000
The loss on impairment of trademark is Customer’s check dated 1/1/24 80,000
a. P440,000 c. P200,000 Time deposit – 30 days 200,000
b. P320,000 d. P 80,000 Money market placement (due 6/30/24) 500,000
Treasury bills, due 3/31/24
12. (20) A chain of bicycle shops holds bicycles for short- (purchased 12/31/23) 200,000
term hire and for sale. The bicycles available for hire Treasury bills, due 1/31/24
are used for two or three years and then sold by the (purchased 2/1/23) 300,000
shops as second-hand models. All shops sell both new
and second-hand bicycles.

Page 2 of 8 www.teamprtc.com.ph FAR Refresher

TEAM PRTC

The total amount to be reported as cash and cash • The aging of Lender A’s loans on Dec. 31, 2023
equivalents as of Dec. 31, 2023 is follows:
a. P2,780,000 c. P3,780,000 Current P1,400,000
b. P3,080,000 d. P3,580,000 More than 30 days past due 75,000
More than 60 days past due 100,000
16. (8) The following data pertaining to the cash More than 90 days past due 125,000
transactions and bank account of Mandirigma Total P1,700,000
Company for the month of May are available to you:
• Lender A monitors certain loans more closely on an
Cash balance, per records, May 31 P17,194
individual basis given their significance and unique
Cash balance, per bank statement, 5/31 31,948
characteristics. These loans are not included in the
Bank service charge for May 109
P1,700,000 loan portfolio. The following
Debit memo for the cost of printed checks
information is available without undue cost or
delivered by the bank 125
effort on an individual loan basis:
Outstanding checks, May 31 6,728
Deposit of May 30 not recorded by bank PV of
until June 1 4,880 Expected
Proceeds of a bank loan of May 30, net of Past Due Future Cash
interest of P300 5,700 Loan Amount Status Flows
Proceeds from a customer's promissory 1 P200,000 90 days P180,000
note, including interest of P100 8,100 2 150,000 Current Not calculated
Check No. 2772 issued to a supplier 3 50,000 60 days 37,000
entered in the accounting records at
Other information:
P2,100 but deducted in the bank
Loan 1 – The borrower has filed for bankruptcy.
statement at an erroneous amount of 1,200
Loan 2 – None
Stolen check lacking an authorized
Loan 3 – The borrower recently lost his job due to
signature, deducted from Mandirigma's
an economic recession and was granted a
account by the bank in error 800
concession to skip payments.
Customer's check returned by the bank
marked NSF; no entry has been made • Additional information taking into account historical
in the accounting records to record the information, current conditions and forward-
returned check 760 looking information, including actual loss
experience and recoveries from the sale of
What is the correct cash balance at May 31?
collateral, is as follows:
a. P29,200 c. P30,000
b. P30,300 d. P30,900 Probability of default in the next 12
months 2%
17. (31) John Corp. has the following data relating to Lifetime probability of default
accounts receivable for the year ended Dec. 31, 2023: Credit-impaired loans 100%
Not credit-impaired loans 5%
Accounts receivable, Jan. 1, 2023 P480,000
Loss given default on all loans 25%
Allowance for doubtful accounts,
Jan. 1, 2023 19,200
The required loss allowance at Dec. 31, 2023 is
Sales during the year, all on account,
a. P73,438 c. P74,938
terms 2/10, 1/15, n/60 2,400,000
b. P74,188 d. P75,688
Cash received from customers during
the year 2,560,000
19. (14) Sipalay Co. assigned P500,000 of accounts
Accounts written off during the year 17,600
receivable to Hinigaran Finance Co. as security for a
An analysis of cash received from customers during the loan of P420,000. Hinigaran charged a 2%
year revealed that P1,411,200 was received from commission on the amount of the loan; the interest
customers availing the 10-day discount period, rate on the note was 10%. During the first month,
P792,000 from customers availing the 15-day discount Sipalay collected P110,000 on assigned accounts after
period, P4,800 represented recovery of accounts deducting P380 of discounts. Sipalay accepted returns
written-off, and the balance was received from worth P1,350 and wrote off assigned accounts totaling
customers paying beyond the discount period. P3,700. Entries to record the foregoing transactions
would include a
The allowance for doubtful accounts is adjusted so that a. debit to Cash of P110,380.
it represents certain percentage of the outstanding b. debit to Bad Debts Expense of P3,700.
accounts receivable at year end. The required c. debit to Allowance for Doubtful Accounts of P3,700.
percentage at Dec. 31, 2023 is 125% of the rate used d. debit to Accounts Receivable of P115,430.
on Dec. 31, 2022.
The doubtful accounts expense for 2023 is 20. (25) On July 1, 2023, Morales Corp. acquired
a. P6,880 c. P8,720 P4,000,000 face value of X Corporation bonds with a
b. P7,120 d. P8,960 nominal rate of interest of 4%. The bonds mature on
July 1, 2028 and pay interest semi-annually each July
18. (25) The following information pertains to Lender A’s 1 and Jan. 1, with the first interest payment due on
loan portfolio at Dec. 31, 2023: Jan. 1, 2024. The bonds are held for collection. At the
date of issuance, the bonds had a market rate of
• Lender A considers all loans over 90 days past due interest of 6%. On Dec. 31, 2023, the market value of
to be credit-impaired based on historical the bonds was P3,700,000. The amount to be
experience with recovering the associated debt. recognized in 2023 profit or loss related to the bond
investment is
a. P109,764 c. P219,529
b. P109,896 d. P219,791

Page 3 of 8 www.teamprtc.com.ph FAR Refresher

TEAM PRTC

21. (13) On June 1, 2023, Ping Corp. purchased 10,000 of In relation to the changes in fair value of call option
Pong’s 50,000 outstanding ordinary shares at a price and the shares acquired, how much should be
of P6.00 per share. Pong had earnings of P3,000 per recognized in the entity’s 2023 profit or loss and other
month during 2023 and paid dividends of P10,000 on comprehensive income (OCI)?
Mar. 1, 2023 and P12,500 on Dec. 1, 2023. The fair Profit or loss OCI
value of Pong’s shares was P6.50 per share on Dec. a. Nil P 800,000
31, 2023. b. Nil P 200,000
c. P100,000 P1,200,000
Which statement is correct?
d. P600,000 P 200,000
a. Assuming that the investment is FVTPL, the total
effect on Ping’s profit or loss for the year ended
25. (6) An entity furnishes you with the following list of
Dec. 31, 2023 is P2,500.
accounts:
b. Assuming that the investment is FVTOCI, the total
effect on Ping’s profit or loss for the year ended Accounts payable P480,000
Dec. 31, 2023 is P7,500. Bank overdraft 45,000
c. Assuming that the investment is an associate, the Bonds payable 800,000
total effect on Ping’s profit or loss for the year Cash dividends payable 40,000
ended Dec. 31, 2023 is P3,600. Commissions payable 55,000
d. After all closing entries for 2023 are completed, the Deferred tax liability 85,000
effect of the increase in fair value on total Income tax payable 35,000
shareholders' equity would be the same amount Interest payable 48,000
under the FVTOCI and FVTPL approaches. Liability for premiums 25,000
Liability for warranties 130,000
22. (6) Kobe Corp. owns 50% of Lakers Corp.’s cumulative Mortgage payable 500,000
preference shares and 30% of its ordinary shares. Notes payable 240,000
Lakers’ shares outstanding at Dec. 31, 2023 include Notes payable to bank 300,000
P10,000,000 of 10% cumulative preference shares and Salaries payable 130,000
P40,000,000 of ordinary shares. Share dividends payable 60,000
SSS premiums payable 22,000
Lakers reported profit of P8,000,000 for the year Unearned rent 36,000
ended Dec. 31, 2023. Lakers declared and paid Withholding tax payable 27,000
P1,500,000 preference share dividends during 2023.
Lakers paid no preference share dividends during Compute for the amount to be reported as Trade and
2022. Other Payables.
a. P1,042,000 c. P1,087,000
How much is the total amount to be recognized by b. P1,077,000 d. P1,122,000
Kobe Company in its 2023 profit or loss related to
these investments? 26. (4) On Dec. 31, 2023, Park Corp. purchased
a. P2,450,000 c. P2,700,000 equipment from Ott Corp. and issued a noninterest-
b. P2,600,000 d. P2,850,000 bearing note requiring payment of P50,000 annually
for ten years. The first payment is due Dec. 31, 2023,
23. (14) On Jan. 1, 2023, CDO Corporation created a and the prevailing rate of interest for this type of note
special building fund by depositing a single sum of at date of issuance is 12%. The interest expense to be
P100,000 with an independent trustee. The purpose of reported by Park in its 2024 income statement is
the fund is to provide resources to build an addition to a. P37,969 c. P30,301
the older office building during the latter part of 2027. b. P31,969 d. P27,901
The company anticipates a total construction cost of
P500,000 and completion by Jan. 1, 2028. The 27. (10) On Dec. 31, 2022, Ulster Corp. issued P200,000
company plans to make equal annual deposit from of 8% serial bonds, to be repaid in the amount of
Dec. 31, 2023 through 2027, to accumulate the P40,000 each year. Interest is payable annually on
P500,000. The independent trustee will increase the Dec. 31. The bonds were issued to yield 10% a year.
fund each Dec. 31 at an interest rate of 10%. The The bond proceeds were P190,280 based on the
accounting periods of the company and the fund end present values at Dec. 31, 2022 of the five annual
on Dec. 31. payments. In its Dec. 31, 2023 statement of financial
How much is the fund balance as of Dec. 31, 2023? position, at what amount should Ulster report the
(Round off future value factors to five decimal places) carrying amount of the bonds?
a. P165,519 c. P110,000 a. P139,380 c. P150,280
b. P155,519 d. P100,000 b. P149,100 d. P153,308

24. (19) Entity L entered into a call option contract on Dec.
1, 2022. The contract gives the entity the right to
purchase 100,000 shares issued by Entity M on Apr. 1,
2023, at an exercise price (i.e., strike price) of P100
per share. The entity paid P3 per option. Market data
suggests that Entity L could sell each option for P4 on
Dec. 31, 2022.
On Apr. 1, 2023, the fair value of each option is P10.
The share price on this date is P110. Since the share
price is higher than the exercise price, Entity L decided
to exercise the option by buying 100,000 shares for
P100 per share. The shares acquired were designated
as FVTOCI. The shares are selling at P112 per share
on Dec. 31, 2023.
28. (19) Miya Corp. has leased an item of plant under the
following terms:
• Commencement of the lease - Jan. 1, 2022
• Term of the lease - 5 years
• Economic life – 8 years
• Annual payments in advance - P12,000
• Present value of lease payments – P51,745
• Implicit interest rate – 8% per annum
The total lease related expenses for the fiscal year
ended Sept. 30, 2023 is
a. P 9,119 c. P13,000
b. P12,823 d. P13,529

Page 4 of 8 www.teamprtc.com.ph FAR Refresher

TEAM PRTC

29. (19) An entity’s defined benefit plan has the following g) Damages awarded against Maybe resulting from a
information: court case decided on June 26, 2023. The judge
12/31/22 12/31/23 has announced that the amount of damages will be
Fair value of plan assets P10 million P12 million set at a future date, expected to be in Sept. 2023.
Defined benefit obligation 8 million 9 million Maybe has received advice from its lawyers that
Discount rate 10% 10% the amount of the damages could be anything
Present value of available between P50,000 and P8,000,000.
future refunds and The total amount to be recognized as provisions in
reduction in future Maybe’s statement of financial position as of June 30,
contributions 1.6 million 2 million 2023?
In relation to the asset ceiling, the amount that the a. P9,125,000 c. P5,500,000
entity would recognize in other comprehensive income b. P5,600,000 d. P5,000,000
for the year 2023 is
a. P1,000,000 c. P560,000 32. (14) Salisbury Corp. made an accounting profit before
b. P 600,000 d. P400,000 tax of P40,000 for the current year. Included in the
accounting profit were the following items of income
30. (20) At the beginning of year 1, an entity grants 100 and expense.
share options to each of its 200 employees. Each Donations to political parties
grant is conditional upon the employee remaining in (non-deductible) P 5,000
service over the next three years. The entity Depreciation - machinery (20%) 15,000
estimates that the fair value of each option is P21. On Annual leave expense 5,600
the basis of a weighted average probability, the entity Rent income 12,000
estimates that 60 employees will leave during the
For tax purposes the following applied:
three-year period and therefore forfeit their rights to
the share options. Annual leave paid P 6,500
Rent received 10,000
Suppose that 15 employees leave during year 1. Also Depreciation rate for machinery 25%
suppose that by the end of year 1, the entity’s share Income tax rate 30%
price has dropped, and the entity reprices its share
options, and that the repriced share options vest at the If the income tax paid during the year is P10,000, the
end of year 3. The entity estimates that a further 35 current tax liability at the end of the year is
employees will leave during years 2 and 3. During a. P11,505 c. P3,005
year 2, a further 10 employees leave, and the entity b. P 6,080 d. P1,505
estimates that a further 10 employees will leave during
year 3. During year 3, a total of 8 employees leave. 33. (9) Open Sesame Company undertakes an IPO for the
listing and issuance of 700,000 new shares and
The entity estimates that, at the date of repricing, the 300,000 existing shares. In relation to this, the
fair value of each of the original share options granted company incurred the following costs:
(ie before taking into account the repricing) is P10 and
that the fair value of each repriced share option is P13. Documentary stamp tax P 25,000
Fairness opinion and valuation report 125,000
The amount to be recognized as expense in year 2 is Tax opinion 75,000
a. P159,000 c. P150,750 Newspaper publication 200,000
b. P105,000 d. P135,750 Listing fee 300,000
Other joint costs 275,000
31. (11) Maybe Corp. is evaluating whether each of the P1,000,000
following would be a liability, a provision or a
contingent liability, or none of these, in the financial How much should be recognized immediately in profit
statements of Maybe as of June 30, 2023. Assume that or loss in accordance with PIC Q&A 2011-4?
Maybe’s financial statements are authorized for issue a. P300,000 c. P525,000
on Aug. 20, 2023: b. P442,500 d. P557,500
a) Maybe expects it will incur operating losses of
between P10 million and P20 million in the next 34. (4) At Dec. 31, 2023, the equity accounts of Batch
accounting period. Corporation were as follows:
b) Maybe entered into a commitment to purchase Preference share capital (P100 par,
10,000 units of a certain raw material for P100 per 12% participating and cumulative,
unit to be delivered on Aug. 30, 2023. The contract 100,000 shares) P10,000,000
can be cancelled. The purchase price of this Preference share capital (P100 par,
material had fallen to P90 per unit at June 30, 10% nonparticipating,
2023. noncumulative, 50,000 shares) 5,000,000
c) An amount of P350,000 owing to Perhaps Corp. for Ordinary share capital (P10 par,
services rendered during May 2023. 1,000,000 shares) 10,000,000
d) Long-service leave, estimated to be P5,000,000, Retained earnings 9,500,000
owing to employees in respect of past services.
Batch has never paid cash or share dividend. The
e) Costs of P260,000 estimated to be incurred for
capital accounts have not changed since Batch began
relocating employee D from Maybe’s head office
operations on Jan. 1, 2019. If the maximum amount
location to another city. The staff member will
available for cash dividend is declared on Dec. 31,
physically relocate during July 2023.
2023, how much dividend is payable to the ordinary
f) Provision of P500,000 for the overhaul of a
shareholders?
machine. The overhaul is needed every 5 years
a. P2,100,000 c. P1,200,000
and the machine was 5 years old as at June 30,
b. P1,920,000 d. P4,500,000
2023.

Page 5 of 8 www.teamprtc.com.ph FAR Refresher

TEAM PRTC

35. (5) The shareholders’ equity of Windy Corp. consists of The amount that should be reported as current assets
the following: on Central's statement of financial position is
Preference share capital, 10% a. P218,000 c. P288,000
cumulative, 3 years in arrears, P100 b. P368,000 d. P298,000
par, P110 liquidation price 150,000
shares P15,000,000 40. (26) The accountant for an entity has determined the
Ordinary share capital, P100 par, following information for the current year.
200,000 shares 20,000,000 Profit or loss P300,000
Subscribed ordinary share capital, net Share of total comprehensive income
of subscription receivable of (after tax) of associates 20,000
P4,000,000 6,000,000 Share of profit (after tax) of associates 15,000
Treasury shares-ordinary, 50,000 Exchange difference gain (net of tax of
shares at cost 4,000,000 P3,000) on translation of foreign
Share premium 3,000,000 operation up to the date sold 7,000
Retained earnings 20,000,000 Exchange difference gain (net of tax of
P9,000) on disposal of foreign
The book value per share of ordinary is operation recognized in profit for
a. P156.00 c. P172.00 the year 21,000
b. P190.00 d. P286.67 Increase in asset revaluation surplus
(net of tax) 45,000
36. (17) Faith Corp. had 200,000 ordinary shares, 20,000
What is the total amount of other comprehensive
convertible preference shares, and P1,000,000 of 10%
income for the year?
convertible bonds outstanding during 2023. The
a. P36,000 c. P57,000
preference share is convertible into 40,000 ordinary
b. P51,000 d. P72,000
shares. During 2023, Faith paid dividends of P1.20 per
share on ordinary shares and P4.00 per share on
41. (8) Entity N uses the direct method to prepare its
preference shares. Each P1,000 bond is convertible
statement of cash flows. The entity had the following
into 45 ordinary shares if converted before 2025 and
cash flows during the current year
40 shares if converted after 2025. The profit for 2023
was P800,000 and the income tax rate was 30%. Cash receipts from the issuance of
ordinary shares P400,000
Diluted earnings per share for 2023 is
Cash receipts from customers 200,000
a. P2.77 c. P2.81
Cash receipts from dividends on long-
b. P3.05 d. P3.08
term investments 30,000
Cash receipts from repayment of loan
37. (9) A company has decided to switch from using the
made to another company 220,000
FIFO method of inventory valuation to using the
Cash payments for wages and other
average cost method (AVCO). In the first accounting
operating expenses 120,000
period where the change is made, opening inventory
valued by the FIFO method was P53,200. Closing Cash payments for insurance 10,000
inventory valued by the AVCO method was P59,800. Cash payments for dividends 20,000
Total purchases during the period were P136,500. Cash payments for taxes 40,000
Using the AVCO method, opening inventory would Cash payment to purchase land 80,000
have been valued at P56,200.
The net cash provided by (used in) operating activities
What is the cost of goods that should be included in is
the income statement for the period? a. P60,000 c. P30,000
a. P129,900 c. P135,900 b. P40,000 d. (P20,000)
b. P132,900 d. P140,100
42. (7) A listed entity is in the process of determining its
38. (16) To be a faithful representation as described in the reportable segments for purposes of complying with
Conceptual Framework, information must be all of the PFRS 8. The following data pertain to the entity’s eight
following, except: operating segments:
a. Complete. c. Confirmatory.
Segment Revenue Profit Assets
b. Free from error. d. Neutral.
1 P12,000,000 P1,800,000 P15,000,000
2 10,000,000 1,500,000 12,500,000
39. (14) The general ledger trial balance of Central
3 8,000,000 1,200,000 9,000,000
Corporation includes the following statement of
financial position accounts: 4 3,500,000 700,000 7,000,000
5 3,000,000 450,000 6,000,000
Inventory (including inventory expected 6 2,500,000 375,000 3,000,000
in the ordinary course of operations to 7 1,500,000 225,000 3,500,000
be sold beyond 12 months amounting 8 1,000,000 150,000 1,500,000
to P70,000) P110,000 P41,500,000 P6,400,000 P57,500,000
Trade receivables 120,000
Prepaid insurance 8,000 How many reportable segments does the entity have?
Listed investments held for trading a. Three c. Five
purposes at fair value 20,000 b. Four d. Six
Financial assets at FVTOCI 80,000
Cash and cash equivalents 30,000
Deferred tax asset 15,000
Bank overdraft 25,000

Page 6 of 8 www.teamprtc.com.ph FAR Refresher

TEAM PRTC

43. (8) Parent entity has a controlling interest in
Subsidiaries A, B and C and has significant influence
over Associates 1 and 2. Subsidiary C has significant
influence over Associate 3. This situation is illustrated
as follows:
45. (16) An entity prepares quarterly interim financial
reports in accordance with PAS 34. The entity sells
electrical goods, and normally 5% of customers claim
on their warranty. The provision in the first quarter
was calculated as 5% of sales to date, which was
P20,000,000. However, in the second quarter, a
design fault was found and warranty claims were
expected to be 10% for the whole year. Sales in the
second quarter were P30,000,000. What would be the
provision charged in the second quarter’s interim
income statement?
a. P3,000,000 c. P2,250,000
b. P4,000,000 d. P5,000,000

46. (17) Items of other comprehensive income of SMEs

that will be reclassified subsequently to profit or loss
when specific conditions are met include
a. Changes in revaluation surplus for property, plant
Which statement is incorrect? and equipment measured in accordance with the
a. For Parent’s separate financial statements, revaluation model.
Subsidiaries A, B and C and Associates 1, 2 and 3 b. Some gains and losses arising on translating the
are related parties. financial statements of a foreign operation.
b. For Subsidiary A’s financial statements, Parent, c. Some actuarial gains and losses.
Subsidiaries B and C and Associates 1, 2 and 3 are d. Some changes in fair values of hedging
related parties. instruments.
c. For the financial statements of Associates 1, 2 and
3, Parent and Subsidiaries A, B and C are related 47. (39) The trial balance of Entity S (a small entity)
parties. included the following assets:
d. Associates 1, 2 and 3 are related to each other.
Cash P 500,000
Accounts receivable 3,000,000
44. (10) Joy Corp. operates in hyperinflationary economy.
Inventories (at cost) 5,100,000
Its statement of financial position at Dec. 31, 2023
Investment in shares (at cost) 900,000
reported the following items:
Property, plant and equipment 8,000,000
Cash and cash equivalents P 200,000
Additional information:
Trade and other receivables 350,000
• The probable selling price of inventories to willing
Inventories 500,000
buyers as of reporting date is P5,000,000.
Prepayments 50,000
• The shares held as investment are traded in an
Debt investments at amortized cost 200,000
active market. Fair value as of reporting date is
Property, plant and equipment at cost 1,000,000
P950,000.
Accumulated depreciation ( 300,000)
Investment property at fair value 600,000 In accordance with the PFRS for Small Entities, Entity
Trade and other payables 250,000 S should report total assets of
Short-term borrowings 180,000 a. P17,400,000 c. P17,500,000
Note payable to bank 800,000 b. P17,450,000 d. P17,550,000
Share capital 400,000
Retained earnings 970,000 48. (18) Changes in the statement of financial position
account balances for the Peak Sales Co. during the
Data about the general price indices:
year follow. Dividends declared during the year were
Dec. 31, 2023 – 450 P25,000.
July 1, 2023 – 400 Increase
Dec. 31, 2022 – 180 (Decrease)
Dec. 31, 2021 – 160 Cash P95,500
Dec. 31, 2020 – 150 Accounts receivable, net 92,000
Dec. 31, 2019 – 100 Inventory (30,000)
Additional information: Buildings and Equipment (net) 190,000
Patents (5,000)
• Inventories at Dec. 31, 2023 were acquired on July Accounts payable (75,000)
1, 2023. Bonds payable 150,000
• The prepayments were made on Dec. 31, 2022. Share capital 100,000
• Property, plant and equipment were acquired on Share premium 50,000
Dec. 31, 2020.
• Investment property was acquired on Dec. 31, Calculate the net income for the year assuming that no
2021. transactions other than the dividends affected retained
earnings.
What is the retained earnings balance on Dec. 31, a. P117,500 c. P267,500
2023 after adjusting for hyperinflation? b. P142,500 d. P292,500
a. P1,032,500 c. P1,385,714
b. P1,107,500 d. P1,907,500

Page 7 of 8 www.teamprtc.com.ph FAR Refresher

TEAM PRTC

49. (7) The trial balance of Mistake Company shown below ANSWERS:
does not balance. Your review of the ledger reveals
the following: (a) Each account had a normal balance. 1. C
(b) The debit footings in Prepaid Insurance, Accounts 2. A
Payable, and Property Tax Expense were each 3. C
understated by P100. (c) A transposition error was 4. D
made in Accounts Receivable; the correct balances for 5. A
Accounts Receivable and Service Revenue are P2,750 6. A
and P6,690, respectively. (d) A debit posting to 7. C
Advertising Expense of P300 was omitted. (e) A 8. C
P1,500 cash drawing by the owner was debited to 9. C
Mistake Capital, and credited to Cash. 10. A
Mistake Company 11. D
Trial Balance 12. A
December 31 13. C
14. C
Debit Credit 15. D
Cash P 4,800 16. C
Accounts Receivable 2,570 17. B
Prepaid Insurance 700 18. B
Equipment P 8,000 19. C
Accounts Payable 4,500 20. A
Property Tax Payable 560 21. D
Mistake, Capital 11,200 22. D
Service Revenue 6,960 23. A
Salaries Expense 4,200 24. D
Advertising Expense 1,100 25. A
Property Tax Expense ______ 800 26. B
P20,890 P24,500 27. D
The corrected trial balance of the company should 28. C
show total debits of 29. C
a. P24,350 c. P22,850 30. C
b. P23,070 d. P21,570 31. D
32. D
J - end - J 33. B
34. A
35. C
36. B
37. B
38. C
39. C
40. A
41. A
42. C
43. D
44. B
45. B
46. D
47. A
48. B
49. A

Page 8 of 8 www.teamprtc.com.ph FAR Refresher