EASY

1. It is one of the basis for determining impairment loss. It is the present value of
discounted value of future cash fows expected to be derived from an asset.
What is it? Value in use
2. A Qualifying asset is an asset that necessarily taes a substantial period of
time to get ready for its intended use or sale.
!. "heoretically# receivables and payables are presented in the balance sheet at
discounted value. If receivables are short$termed they are presented at face
value. What is the principle that %usti&es the presentation at face value?
Materiality
'. (on$current assets ac)uired with the intention of leasing or renting them out
are called investment properties.
*. +n ,anuary 1# 2--.# the balance sheet of ,a// 0omp showed total assets of
12#---#---# total liabilities of !#---#--- and retained earnings of '--#---.
3uring the year the corporation issued 2-#--- shares at112* per share.
3ividend were paid amounted to 1'*-#---. "he balance sheet at the end of
2--. showed totals assets of 14#!--#--- and total liabilities of 1'#---#---.
"he result of operations during the year is (1,750,000. 5nclosed in
parenthesis if loss.
.. "he following changes in account balances of 6anhattan 0orp. during 2--.
were
1resented below7

Assuming there were no changes to retained earnings other than for dividend
payment of 1*--#---# the net income or 8loss9 for the year 2--. is
(1,000,000.
2. "he partnership of :3 0ompany had a net income of 14#---.-- for the month
ended ;eptember !-# 2--*. ;arsi purchased an interest in the :3 0ompany of
:i/ and 3ic by paying :i/ 1!2#--- for half of her *-< pro&t sharing interest
on +ctober 1# 2--*. At this time :i/ capital balance was 12'#--- and 3ic
capital balance was 1*.#---. :i/ should receive a debit to her capital account
of 1!,000.
4. "he following information is available for Al ,arreau 0orp. for the year 2--..
0ost of goods sold for the year is 5,"00,000.
=. In ,anuary 2--2# :ee >it 0ompany purchased a machine for 12#.'-#--- and
depreciated it by the straight lime method using and an estimated life of 4
years with no salvage. +n ,anuary 1# 2--.# :ee >it determined that the asset
had a useful life of 1- years and a salvage value of '-#---.
"he accumulated depreciation at the end of the year 2--2 is 1,7#$,$$$.
1-. 3uring 2--.# 1atti Austin 0orporation decided to change from :I?+ to ?I?+ to
conform with the new 1hilippine Accounting ;tandards. Inventory balances
under each method were as follows7
Ignoring income tax# in its 2--. statement of changes in e)uity# retained
earnings beginning should be increased or decreased by %00,000 8enclosed in
parenthesis if decreased9.
AVE&A'E
1. :arry 0arlton 0ompany had net income of 2#4--#--- for the year ended
3ecember !1# 2--. after giving e@ect to the following events which occurred
during the year.
"he decision was made on 6ay 1# 2--. to discontinue the meat pacing
segment. "he meal pacing segmentAs assets was sold on ?ebruary 2-# 2--2.
+perating gain from ,anuary 1# 2--. to April !-# 2--. was '--#---. ?rom 6ay
1 to 3ecember !1# 2--.# the gain is 2--#---# ,anuary 1 to ?ebruary 1*# 2--2#
operating loss of 11--#---. Impairment loss was recogni/ed at 3ecember !1#
2--. at 2--#---. "he tax is !*<.
"he income from continuing operation is !,5#0,000.
2. "otal debits and total credits in selected accounts of 0hic 0ompany# after
closing entries were posted on 3ecember !1# 2--. are given below7
What is the cost of ending inventory? %70,000.
!. In its &rst year of operations# Bood 0ompanyAs sales were as follows7
"he cost of goods sold for the year was 1=--#---. If collection on installment
during the year amounted to 12'-#---# how much was the total gross pro&t
reali/ed at the end of the year? !"0,000.
'. ;tan Bet/ 0orporation and its division are engaged solely in manufacturing.
"he following data presents the operating pro&ts and losses of the segments7
A segment is reportable if the operating pro&t or loss of a segment is at least
$%0,000.
*. "ony Cennett 0ompanyAs 1#2--#--- net income for the )uarter ended ,une !-#
2--.# included the following after$tax items7
A 2-*#--- gain from change in accounting policy recogni/ed in April. :oss due
to earth)uae on ,anuary 2-# 1'--#--- was allocated e)ually during the year.
In addition "ony Cennett paid 1'4-#--- commissions to sales employees due
to excellent performance in the third )uarter# was allocated e)ually during the
year.
"he corrected income for the )uarter ended ,une !-# 2--. is 1,170,000.
.. +n (ovember 1*# 2--*# Durly of 6anila# ordered merchandise ?+C shipping
point from (ippon 0ompany of ,apan for *--#--- yen. "he merchandise was
shipped and invoiced to Durly on 3ecember 1-# 2--*. Dobbies paid the
invoice on ,anuary 1-# 2--.. "he exchange rates for yens on the respective
dates are as follows7
In Dobbies 3ecember !1# 2--* income statement# the forex gain 8loss9 to be
reported is 5,000.
2. +n ,anuary 2# 2--=# Daraya 0ompany 1urchased 1-< of >oss 0ompanyAs
outstanding common shares for 1*#---#---. Daraya is the largest single
shareholder in >oss reported net income of 1!#---#--- and paid dividends of
11#---#---. In its 3ecember !1# 2--= balance sheet# what amount shall Daray
report as investments in >oss? 5,!00,000.
4. A branch store in 0agayan was established by 6arco on 6arch 1. ;hipments of
merchandise billed to this branch at 12*< of cost# were as follows7 6arch *#
112-#---E 6arch 1-# 1*-#---E and 6arch 2-# 1!*#---.
+n 6arch 2'# the branch returned defective merchandise worth 1!#-*- and on
6arch !1# it reported a net loss of 1.#2-- and merchandise inventory of
14*#---. In the home oFce boos# the branch net income 8loss9 is 17,1(0.
=. Gatherine 0ompany was incorporated on ,anuary 1# 2--=# with 1'#---#---
form the issuance of stoc and borrowed funds of 11#---#---. 3uring the &rst
year of operations# net income was 1!#---#---. +n 3ecember 1*# Gatherine
paid a 12#---#--- cash dividend. (o additional activities a@ected ownerAs
e)uity in 2--=. At 3ecember !1# 2--=# balance sheet# total assets should be
reported at 7,000,000
1-. Information on >ex 0ompanyAs direct material$costs for 6ay 2--. is as
follows7
Actual )uantity of direct materials purchase and used !-#---
ilos
Actual cost of direct materials 14'#---.--
Hnfavorable direct materials usage variance 1 !#---.--
;tandard )uantity of direct materials allowed for 6ay
production.
2= ilos
?or the month of 6ay# what was >exAs direct materials price variance? $,000
favora)le.
*+,,+-./0
1. +n ,anuary 2# 2--.# ,0 0ompany established a non$contributory de&ned
bene&t plan covering all employees and contributed 11#---#--- to the plan.
At 3ecember !1# 2--.# ,0 determined that the 2--. current service and
interest cost on the plan amount to 1.2-#---. "he expected and actual rate of
return on plan assets for 2--. was 1-<.
What should be reported on 3ecember !1# 2--. as prepaid pension cost?
#%0,000.
2. An analysis of the records of a proprietor disclosed the changes for the year
2--. and the supplementary data listed below7
3uring 2--.# the proprietor borrowed 11#---#--- in notes from the ban and
paid o@ notes of .--#--- and interest of 12-#---. Interest of .-#--- is accrued at
the end of 2--.. "here was no accrued interest on notes payable at the beginning
of the year.
In 2--.# the proprietor paid obligations of the business worth '--#--- and made
withdrawals of 2*-#---.
What is the net income or 8loss9 for the year 2--.? (!10,000.
!. "rue Ialue 0ompany manufactured electric drills to the exact speci&cations of
various customers. 3uring April 2--*#,ob '-! for the production of 1#1-- units
was completed at the following costs per unit7
3irect materials 11-
3irect labor 4
Applied factory overhead 12
?inished inspection of ,ob disclosed *- defective units and 1-- spoiled
units. "he defective units were rewored at a total cost of 1*--# and the
spoiled units were sold to an employee for 11#*--.
What would be the unit cost of the good units produced on ,ob? 1"!.
'. +n April 1# 2--= Beraldine began operating a service proprietorship with an
initial cash investment of 1*--#---. "he 1roprietorship provided 11#---#--- of
service in April and received full payment in 6ay. "he proprietorship incurred
expenses of 1'--#--- in April which# were paid in ,une. 3uring 6ay# Beraldine
drew 11--#--- against the capital account. What was the proprietorship
income for the two months ended 6ay !1# 2--= under the cash basis
1,000,000.
*. Breen 0ompany provided the following information with respect to its de&ned
bene&t plan for the year 2--..
1ro2e3te4 )ene5t o)ligation
,anuary 1 !#---#---
3ecember !1 !#*--#---
0ontribution to the plan .--#---
Cene&ts paid to retirees *--#---
;ettlement discount rate 1-<
What is the current service cost for the year 2--.? 700,000.