QUIZ INVENTORIES

AND INVESTMENTS
Irene Company’s inventory as of December 31, 2020 and found the following items:
(a) A packing case containing a product costing P100,000 was standing in the shipping room when the physical inventory
was taken. It was not included in the inventory because it was marked “Hold for shipping instructions.” The customer’s
order was dated December 18, but the case was shipped and the costumer billed on January 10, 2021.
(b) Merchandise costing P600,000 was received on December 28, 2020, and the invoice was recorded. The invoice was in
the hands of the purchasing agent; it was marked “On consignment”.
(c) Merchandise received on January 6, 2021, costing P700,000 was entered in purchase register on January 7. The invoice
showed shipment was made FOB shipping point on December 31, 2020. Because it was not on hand during the inventory
count, it was not included.
(d) A special machine costing P200,000, fabricated to order for a particular customer, was finished in the shipping room on
December 30. The customer was billed for P300,000 on that date and the machine was excluded from inventory although it
was shipped January 4, 2021.
(e) Merchandise costing P200,000 was received on January 6, 2021, and the related purchase invoice was recorded January
5. The invoice showed the shipment was made on December 29, 2020, FOB destination.
(f) Merchandise costing P150,000 was sold on an installment basis on December 15. The customer took possession of the
goods on that date. The merchandise was included in inventory because Alcala still holds legal title. Historical experience
suggests that full payment on installment sale is received approximately 99% of the time.
(g) Goods costing P500,000 were sold and delivered on December 20. The goods were included in the inventory because the
sale was accompanied by a purchase agreement requiring Alcala to buy back the inventory in February 2021.
Based on the above, how much of these items should be included in the inventory balance at December 31, 2020?
Irene Company is a producer of coffee. The entity is considering the
valuation of its harvested coffee beans. The industry practice is to value
the coffee beans at market value and uses as reference a local
publication “ Accounting for Successful Farms”
On December 31, 2019, the entity harvested coffee beans costing
P 3,000,000 and with fair value less cost of disposal of P 3,500,000 at
the point of harvest.
Because of the long aging maturation process after harvest, the
harvested coffee beans were still on hand on December 31, 2020. On
such date, the fair value less cost of disposal is P 3,900,000 and the
net realizable value is P 3,200,00.
What is the measurement of the coffee beans inventory on
December 31, 2020?
Irene Company acquired a financial asset at the market value of P
3,200,000. Broker fees of P 200,000 were incurred in relation to the
purchase. At what amount should the financial asset initially be
recognized respectively if it is classified at Fair Value thru P/L or
as at FV thru OCI?
On Jan 1 2019, Irene Company purchased 25,000 shares of the 100,000 outstanding shares of Mae
Company for a total of P 1,000,000. At the time of the purchase, the carrying amount of Mae Company’s
equity was P 3,000,000. Mae company assets having a market value greater than carrying amount at the
time of the acquisition were as follows:
 
Carrying amount Market Value Rem. Life
Inventory 400,000 500,000 less than 1 yr
Equipment 2,000,000 2,500,000 5 yrs
Goodwill 0 400,000 Indefinite
Mae Company’s net income in 2019 was P 700,000. Dividends per share paid by Mae Company
amounted to P 3 in 2019. What is the carrying amount of the investment in associates on December
31 2019.
On December 31, 2019, Irene Company has outstanding
purchase commitment for 50,000 gallons at P 20 per gallon of
raw material. It is determined that the market price of the raw
material has declined to P 17 per gallon on December 31, 2019
and it is expected to decline further to P 15 in the first quarter of
2020. What is the loss on purchase commitment that should
be recognized in 2019?
Irene Company provided the following data for 2019:
 On September 1, Irene received P 500,000 cash dividend from Mae Company
in which Irene owns a 30% interest.
 On October 1, Irene received a 60,000 liquidating dividend from Mirage
Company. Irene owns a 5% interest in Mirage.
 Irene owns a 2% interest in Anastacia Company, which declared a P 2,000,000
cash dividend on November 15, 2019 payable on Jan 15, 2020
 What amount should be reported as dividend income for 2019?
Irene Company has two products in the inventory
Product A Product B
Selling Price 2,000,000 3,000,000
Materials and conversion costs 1,500,000 1,800,000
General administrative costs   300,000   800,000
Estimated selling costs 600,000 700,000

At the year-end, the manufacture of items of inventory has been completed but no
selling costs have yet been incurred. What is the measurement of Product A and
B, respectively?
Irene Company used the moving average method to determine the cost of the
inventory. During January of the current year, the entity recorded the following
information pertaining to its inventory:

Units Unit cost Total Cost

Beg Inv 40,000 50 2,000,000
Sold on Jan 17 35,000
Purchased on Jan 28 20,000 80 1,600,000

What amount of inventory should be reported on Jan 31?

On Jan 1 2019, Irene Company purchased bonds with face value of
P 8,000,000 for P 7,679,000 as a long-term investment. The stated
rate on the bonds is 10% but the bonds are acquired to yield 12%.
The bonds mature at the rate of P 2,000,000 annually every
December 31 and the interest is payable annually also every
December 31. The entity used the effective interest method of
amortizing discount. What is the carrying amount of the
investment in bonds on December 31, 2019?
On Jan 1 2019, Irene Company purchased equity securities to be held as “FVOCI” on December
31 2019 the cost and market value were:
Cost Market Value
Security A 2,000,000 2,400,000
Security B 3,000,000 3,500,000
Security C 5,000,000 4,900,000
 
On July 1 2020, the entity sold Security A for 2,500,000. What amount of gain on sale of
financial asset should be reported in 2020?
 
Irene Company incurred the following costs in relation to a certain product:
Direct materials and labor 180,0000
Variable production overhead   25,000
Factory administrative costs   15,000
Fixed production costs     20,000

What is the correct measurement of the product?

On December 28, 2019 Irene Company purchased goods costing P 500,000. The terms were FOB destination.
The costs incurred in connection with the sale and delivery of the goods were:
Packaging for shipment 10,000
Shipping 15,000
Special Handling charges 25,000
These goods were received on December 31, 2019.

On December 31, 2019, What total costs should be included in inventory?

Irene Company had trading and nontrading investments held throughout 2019
and 2020. The nontrading investments are measured at fair value thru OCI. The
investments had a cost of 3,000,000 for trading and 3,000,000 for nontrading. The
investments had the following FV at year- end:

12/31/2019 12/13/2020
Trading 4,000,000 3,800,000
Nontrading 3,200,000 3,700,000

a. What amount of unrealized gain or loss should be reported in the income

statement for 2020?
b. What amount of cumulative unrealized gain or loss should be reported as
component of OCI in the statement of changes in equity on December 31
2020?