47. Paddocks Inc.

had a rec eivable from a foreign custo mer that is payab le in the custo mers loc al curren cy. On Decemb er 31, 2011,
Paddocks correct ly includ ed this receivable for 200,000 local currency units (LCU ) in its balance sh eet at P 110,000. Wh en Paddocks
collect ed th e receivab le o n Febru ary 15, 2 012, th e P hilippine p eso equivalent was P 95, 000. In Posts 20 12 conso lidat ed inco me statement,
how muc h should it report as a for eign exch an ge loss? National Federation of Junior Philippine Institute of Accountants
a. P 0 b. P 10,000 c. P 15,000 d. P 25,00 0
In cooperation with
48. Can lub an g Inc. manufactures go lf bags in a two dep art ment proc ess. Th e Ass emb ly D epart ment us es w eigh ted aver age costin g The
Finishing Depart ment adds h ardwar e to th e ass embled b ags and us es FIFO costing; overhead is ap plied in this d epar tment on a direct Isla Lipana & Co. and CRC-ACE
labor b asis. For June, th e following production d ata and costs w ere gat hered .

Assembly Department
Units
Beginning WIP inventory ( 100%complete for DM, 40 % for DL, 30% for OH) 250
Units started
Ending WIP Inventory (100% complete for DM, 70% for DL, 90% for OH)
8,800
400 National mock board examination 2014
Costs DM DL OH Total February 15-16, 2014
WP Beg. P3,755 P 690 P250 P4,695
Current 100,320 63,606 27,681 191,607

Finishing Department
Units
Beginning WIP inventory (15% complete for DM, 40% for conversion cost) 100
Ending WIP inventory (30% complete for DM, 65% complete for conversion) 200

PRACTICAL ACCOUNTING 2
Costs Transferred-in DM Conversion Cost Total

WP Beg. P 2,176 P 30 P 95 P 2.301

Current 188,570 15,471 21,600 225,641
Total costs of units completed and transferred to the warehouse

a. P217,938 b. P220,848 c. P 223,149 d. P 227,942

49. On Dec ember 1, 2 011, Courage Co mp any p aid P6, 000 to purch as e a 90 -day o ption for Yuan 400,0 00. The options purpos e is to hedge
an expos ed accou nts receivab le of Yu an 4 00,000 from a s ale of merchandise to a buyer fro m Beijin g, C hina. The merch andise is to b e
shipped by Courage on Dec ember 1, 201 1, p ayment for which is du e on March 1, 20 12.Relevant rates an d mark et valu es at differ ent d at es
are as follows:

12/01/11 12/31/11 03/01/12

Spot rate (market price) P6.80 P6.68 P6.70
Exercise price P6.80 P6.80 P6.80
Calculate the fair value of the option contract at December 31, 2011 assuming the time value component is amortized Instruction: On the answer sheet provided, Shade the letter representing
by straight-line method.
a. P-0- b. P 48,000 c. P 4,000 d. P 52,000 the best answer for each of the following questions. Necessary
50. Th e following infor mation was available fro m St. Louis Hospitals financial records on donor contributions for various ho spit al computations should be made on separate sheets of paper. Avoid
exp ens es. Th e don ations w ere received d uring th e year-en ded Dec ember 31, 2012. The hospital is a private non-profit organization.
Not und er the aut hority of NPOs Board of Trus tees: making erasures. The scanning machine may invalidate your answer.
Exp end ed P100,000
Not expended 300,000
Under th e authority of NPOs Board of Trustees:
Exp end ed P 600,000
Not expended 75,000
How much total unrestricted revenues were recognized in the statement of activities of St. Louis in 2012?
a. P600,000 b. P 775,000 c. P 700,000 d. P675,000
 Use the follo wing information for items 1 and 2 43. Work in process of Alonzo Corporation on July 1, 2012 (per general ledger) is P23,900.
The partnership of Maring and Habagat began business on January 1, 2013. The following
assets were contributed by each partner (the non-cash assets are stated at their fai r values on Per cost sheets : Job 101 Job 102
January 1, 2013): Direct materials P 6,000 P 8,000
Direct labor 3,000 2,500
Maring Habagat Amount charged to Work in process for July, 2012
Cash P 30,000 P 20,000 Job 101 Job 102 Job 103 Job 104
Inventories 50,000 - Direct materials 3,000 2,000 6,000 4,500
Land - 200,000 Direct labor 1,000 1,500 2,600 2,000
Equipment 100,000 - Factory overhead is applied to production bas ed on direct labor cost. Jobs 101 and 103 are
completed during the month. The cost of goods manufactured for the month of July is
The land was subject to a P65,000 mortgage, which the partnership assumed on January 1, a. P 21,600 b. P15,400 c. P 25,560 d. P 26,880
2013. The equipment was subject to an installment note payable that had an unpaid principal 44. ACE, CRC and CERTS formed a joi nt venture. CERTS is to act as manager and is designated to
amount of P35,000 on January 1, 2013. The partnership also assumed this note pay able. record the joi nt v enture transactions in his books. As a manager, he is allowed a salary of P
According to the partnershi p agreement, each partner was to hav e a 50% capital i nterest on 17,000. Remaini ng profit (loss) is to be divided equally.The following balances appear the end of
January 1, 2013, with total partnership capital being P300,000. Maring and Habagat agreed to 2011 before adjustment for venture inventory and profit.
share partnership incom e and losses in the following manner:
Maring Habagat Debit Credit
Interest on beginni ng capital 4% 4% Joint venture cash P 50,000
Salaries P 15,000 P 10,000 ACE, capital P 30,000
Remai nder 60% 40% CRC 4,000
The venture is to terminate on December 31, 2011 with unsold merchandise costing P 14,100.
During 2013, the following events occurred: Assuming the joint venture loss is P 7,200, what is the balance of the joint v enture account
Inventory was acqui red at a cost of P30,000. At December 31, 2013, the partners hip owed before distribution of profit?
P6,000 to i ts suppliers. The partnership inv entory at December 31, 2013 was P20,000. a. P 6,900 (debit) c. P 38,300 (debit)
Principal of P10,000 was paid on the mortgage. Interest expens e incurred on the mortgage b. P 21,300 (debi t) d. P 6,900 (credit)
was P4, 000, all of which was paid by December 31, 2013.
Principal of P7, 500 was paid on the installment note. Interes t expense incurred on the 45. Property was purchased on D ecember 31, 2010 for 20 million won. The general price index in
installment note was P2,500, all of which was paid by December 31, 2013. the country was 60.1 on that date. On December 31, 2012, the general price i ndex had risen to
240.4. If the entity operates in a hyperinflationary economy. What would be the carrying amount
Sales on account amounted to P115,000. At December 31, 2013, customers owed the
partners hip P10,000. in the fi nancial statements of property after restatement?
Selling and general expens es, excluding depreciation, amounted to P21,000. At December
a. 20 million won c. 80 million won
31, 2013, the partnership owed P3,000 of accrued expenses. Depreciation expense was
b. 1,200.2 million won d. 4.808 million won
P5,000.
Each partner withdrew P225 each week in anticipation of partners hip profits.
46. On December 1, Quaker Company took merchandise worth 10,00 Swiss francs. Payment is
The partners allocated the net income for 2013 and closed the accounts. due on January 30, 2012. On the same date, Quaker paid P 5, 000 cash to acquire a 60 day call
option for 10,000 Swiss francs.
Additional information:
On January 1, 2014, the partnership decided to admit Nando to the partnershi p. On that date, Spot rate Strike Price Fair value of Option Forward Rate
Nando invested P100,900 of cash into the partners hip for a 20% capital interes t. December 1, 2011 P 23 P 23 P 5,000 P 24
December 31, 2011 27 23 8,000 26
1. The share of Habagat on the net income of 2013 mus t be:
January 30, 2012 25 23 10,000 25
a. P 42,300 b. P 40,500 c. P 29,000 d. P 10,200 How much is the forex gai n or loss upon exercising the call option? (Assume the option was
2. The capital balance of Maring after Nandos admission must be: exercised on December 31, 2011)
a. P 163,140 b. P 167,300 c. P 175,040 d. P 181,340 a. P 5,000 LOSS b. P 32,000 GAIN c.P 48,000 LOSS d. P 35,000 GAIN
3. Leonel contributed P50,000 and Pancho contributed P75,000 to form a par tnership, and they 40. A taxpay er from the city of Las Pinas has the following information rel ating with his real
agreed to share profits in the ratio of their original capital contributions. The first y ear of property: FMV of Land, P500,000; FMV of Res. House, P1,500,000. The one percent (1%) real
operations resulted in a loss P29,500; Leonel made additional investment of P12,000 while property tax and 1% special education tax are both bas ed on the assessed value of the real
Pancho made a withdrawal of P7,000. At the start of the following year, they agreed to admit property. The assessed value is 20% of the fai r market value. Garbage fees amounted to P500.
Xenon into the partnershi p. He was to receive a one-third interest i n the capital and profi ts upon
payment of P24,000 to Leonel and Pancho, whose capital accounts were to be reduced by How much is the total amount collected from the taxpay er?
transfers of Xenons capi tal account of amounts sufficient to bring them back to their ori ginal a. P40,500 b. P 8,500 c. P 400,500 d. P4,500
capital ratio. Upon admission of Xenon, which of the following statements is wrong?
41. The David Company makes and sells a single product called Goliath and employs a standard
a. The amount of cash paid by Xenon to Pancho is P10,100. costing system. The following standards have been established for one Goliath.
b. The capital account of Xenon will be credited in the amount of P33,500.
c. The capital account of Leonel will be debited in the amount of P23,400. Direct materials 6 board feet P9.00
d. The balance of the capital account of Pancho will be P40,200. Direct labor 0.8 hours 9.60

4. A, B and C decided to dissolve the partnership on November 30, 2013. Their capital balances There were no inventories of any kind on August 1. During Augus t, the following events
and profit ratio on this date follows: A, P50,000 (40%); B, P60,000 (30%); C, P20,000 (30%). The occurred.
net income from January 1 to November 30, 2013 is P44,000. Also on this date, cash and Purchased 15,000 board feet at the total cost of P24,000.
liabilities are P40,000 and P90,000, respectively. For A to receive P55,200 i n full settlement of Used 12,000 board feet to produce 2,100 Goliath
his interest in the firm, how much mus t be realized from the sale of the firms non cash assets? Used 1,700 direct labor hours at a cost of P20,000

a. P177,000 b. P187,000 c. P193,000 d. P196,000 To record the purchase of direct materi als, the general ledger would include what kind of entry
to the Material Price Variance account?
5. Twitter Corporation, which began business on January 1, 2013, appropriately uses the a. P1,500 credit b. P1,500 debit c. P6,000 credit d. P6,000 debit
installment sales method of accounting for tax purpos es, but records net income under the 42. Arizona Company has produced two joint products A and B from a single i nput. Further
accrual method. The following data were obtained for the years 2013 and 2014: processing cost of product A results in a by-product X. A summary of production for 2012
follows:
2013 2014
Installment s ales P 7,500,000 P 8,400,000 Arizona Company input 600,000 tons of raw material into the Processing Department.
Cost of installment sales 5,250,000 6,048,000 Total joint processing cost was P520, 000. During the processing, 90,000 tons of material
General & administrative expenses 700,000 840,000 were lost.
Outstanding accounts on sales of 2013 4,400,000 1,400,000 After joint processing, 60% of the joint process output was transferred to Division 1 to
Outstanding accounts on sales of 2014 -0- 4,000,000 produce product A and 40% was transferred to Division 2 to produce product B.
A 2013 sale resulted in a default in 2014. At the date of defaul t, the balance on the installment Further processing in Division 1 resulted in 70% of the input in becoming product A and
receivable was P120, 000, and the repossessed merchandise had a fair value of P80,000. 30% of the input in becoming the by-product X. The separate processing cost for product A
Determine the net i ncome for the year 2014 under ins tallment method and full accrual method, in Division 1 P648,884,000.
respectively. Total packaging cost for product A was P321,300,000. After Division 1 processing and
a. P 1,252,000; P 1,472,000 c. P 1,472,000; P 1,252,000 packaging cost, product A is salable at P6,000 per ton.
b. P 1,288,000; P 1,392,000 d. P 2,132,000; P 2,352,000 Each ton of by-product X can be sold for P120 after selling cost of P 5,000,000. Arizona
Company accounts for the by-product using the net realizabl e method and showing the
6. On October 1, 2013, Instagram Company sold Article One costing P270,000 for P400,000. NRV as deduction in the cost of goods sold of the main product.
Article Two, a used article was accepted as down payment and the balance on monthly In Division 2, product B was further processed at a separate cost of P 408,000,000. A
installments for two years that include both principal and interest at 15% per y ear, s tarting completed ton of product B sells for P3,700.
October 31, 2013, as evidenced by a note. P120,000 was allowed on the article traded-in. The Selling cost for both product A and B is P 200 per ton.
company es timates reconditioni ng cost of P8,000 on this article and a sales price of P110,000 The share of product A in the joint cos t is
after reconditioning. The company normally expects 20% gross profit on sale of used article. a. P207,495 b. P244,790 c. P244,400 d. P269,390
There is a very high degree of uncertainty about the collectability of the note, thus, Instagram How much is the non-controlling interest in net assets at D ecember 31, 2013.
opted to use the cost recovery method. How much is the increase in profit or loss related to a. P463,992 b. P 435,992 c. P436,552 d. P 464,552
interest i ncome in 2014? (Round of PV factors to 4 decimal places) 36. On July 1, 2013, Hot Company purchased 80% of the outs tanding shares of Issue Company at
a cost of P1,600,000. On that date, Issue had P1,000,000 of share capital and P1,400,000 of
a. P -0- b. P 10,121 c. P 13,640 d. P 28,412
accumulated profits. For 2013, Hot had i ncome of P560,000 from its separate operations and
7. Samsung Company consigned 10 refrigerators to Apple Sales Company. Each refri gerator cost paid dividends of P300,000. For 2013, Issue reported income of P130,000 and paid dividends of
P12,000. The freight on the shipment amounting to P5,000 was paid by Samsung. Apple Sales P60,000. All the assets and liabilities of Issue hav e book values equal to their respective fair
Company returned 2 units to Samsung in good condi tion. Apple Sales Company paid P200 for the market values. Assume income was earned evenly throughout the year except for the
shipment of the returned units. Apple Sales Company reported that all 8 units were sold at a intercompany transaction on October 1. On October 1, 2013, Hot purchased an equi pment from
price that yields 33 1/2% profit based on cos t. Apple Sales Company remi tted the amount due to Issue for P200,000. The book value of the equi pment on that date was P240,000. The loss of
Samsung Company after deducting 20% commission and freight of the returned uni ts. The net P40,000 is reflected in the income of Issue indicated above. The equipment is expected to have a
profit to be recognized by Samsung Company on the consignment amounted to: useful life of 5 years from the date of sale. In the D ecember 31, 2013 consolidated s tatement of
financial statements, how much is the consolidated net income attributable to the parent?
a. P1,200 b. P1,720 c. P 1,220 d. P2,320
a. P642,400 b. P930,400 c. P946,400 d. P962,400
8. On June 1, 2013, Janet Construction Corp. contracted to build an office building for Napoles Inc.
Estimated total contract costs is P180,000,000. It incurs the following costs relating to the 37. A national gov ernment agency purchas ed office supplies from a VAT registered company for
contract during the first year: P212,800. The agency also paid MERALCO bill and PLDT bill with invoice amounts of P44,800
and P33,600, respectively.How much is the net amount pai d to M ERALCO?
Cost of direct materials used P25,000,000.00
Site labor cost 20,000,000.00 a. P 42,000 b. P41,664 c. P 31,500 d. P73,500
Cost of indirect materials used 5,000,000.00
Half year depreciation of plant and equipment used on the contract 4,285,714.29
Payroll of design and technical department allocated to the contract 2,500,585.55 38. A government agency ordered an office equipment for P1, 000,000 on August 20, 2013. The
Insurance costs allocable to the contract 1,499,414.45 equipment was delivered to the government agency on September 11, 2013. The asset has an
Depreciation of idle equipment that is not used on a particular contract 500,000.00
estimated useful life of 10 years. The book v alue of the equipment on December 31, 2014 is:
Marketing costs for selling apartments when they are ready 10,000,000.00
Agreed administrative costs per contract to be reimbursed by the customer 4,555,500.00
Borrowing cost incurred during the construction period 1,444,500.00
a. P787,500 b. P977,500 c. P887,500 d. P857,500

Using cost-to-cost method of PAS 11i n determining the stage of completion, the percentage of 39. A municipality of the province of Cavite received the following operating and service income
completion of this contract at year end is: for the month of January 2014:
a. 30.80% b. 32.94% c. 33.33% d. 36.11%
Garbage fees P 300,000
Markets 200,000
9. Applause Corporation entered in a long term project in 2012 and continued through 2013. Hospitals 100,000
Applause Corp. presently has av ailable dependable and reliable estimates. As of 2013, Applause Cemeteries 50,000
billed 2/5 of the total contract price. Some other information about the project were as follows: Slaughterhous e 50,000
All receipts and collections of operating and service income were deposited
2012 2013
Construction cost to date P 148,500 P 420, 000 The entry to record the deposit of collections from operating and service income includes a:
Excess of CIP ov er Billings due from (due to) 38,750 (62,250) a. debit to Cash in Vault, P700,000
Billings made 105,000 507,500 b. debit to Cash in Bank, Local Currency Current Account, P700,000
Collection from the contract 97,500 537,500 c. Credit to Cash in Vault, P700,000
d. Both b and c
Compute the estimated cost to complete i n 2012:
 a. P 746,667 b. P 1,089,000 c. P 1,387,500 d. P 1,650,000 For 2014, Sabi ne reported operating income of P5,000,000, and Celest reported net income of
P3,600,000.What is the consolidated income attributable to shareholders of parent for 2014?
10. On January 1, 2013, ALI, a real estate company, entered into a contract to construct a building
on a piece of land it has acquired and, when construction is complete, to deliver the entire a. P8,550,000 b. P8,330,000 c. P8,330,500 d. P8,365,000
property to a customer. The following information pertains to the said contract: Total cost of 34. On December 31, 2011, Jane Company purchased 70% of the outs tanding shares of Jasmine
land P2M; Estimated total cos t of construction P8M ; Estimated total cost of contract P10M; Company for P245,000. On that date, Jasmine Company had P100,000 of ordinary share capital
Agreed purchase price P11M. In CY 2013, total construction cost incurred amount to P2M while and P250,000 of accumulated profi ts. For 2012, Jane Company had income of P200,000 from its
the fair value of the land is P2.5M. The contract is considered to be a multiple contract. The own operations and paid dividends of P100,000. For 2012, Jasmine Company reported income of
amount included as current asset in the financial statements of ALI related to the above P30,000 and pai d dividends of P20,000. All assets and liabilities of jasmine have book values
information under zero profi t method: approximately equal to thei r fair values. The begi nning inventory of Jane Company includes
P6,000 of merchandise purchased from Jasmine Company on December 31, 2011 at 150% of
a. P 2,000,000 b. P 2,125,000 c. P 2,750,000 d. P 4,000,000 cost. The ending inventory of Jane Company includes P9,000 of merchandise purchased from
11. On 12/31/2013, Contis Inc. authorized M ary Grace Co. to operate as a franchisee for an Jasmine at the same mark up. Jane Company uses FIFO inventory costi ng.What is the non-
initial franchise fee of P3. 40 million (M). Upon signing the contract, P0.90M was received and the controlling interest in Jasmine Company for the year ended December 31, 2012?
balance is paid by a note, due in 5 equal annual installments inclusive of interest, beginning
12/31/2014. The prev ailing market rate is 12%. The down payment is nonrefundable and it a. P117,000 b. P110,700 c. P 107,700 d. P 105,000
repres ents a fair measure of the services already performed by Contis and subs tantial future
services are still requi red. How much is the deferred revenue to be recognized as of 35. Pete Enterprises owns 60% of the outstanding shares of Susie Co., which it purchas ed for
12/31/2013? P50,000 abov e the underlying book value of P720,000 on December 31, 2011. For the year 2014,
Susie included in its net income P90,000 of unrealized gain on a year-end s ale of depreciable
a. P1,518,677 b. P1,802,390 c. P2,500,000 d. P2,702,390 assets to Pete. The NCI of Susie was assigned P12,000 of income in 2014 consolidated fi nancial
statements. The unrealized gai n on equipment is amortized over 20 years. What is the net
12. On June 1, 2013, Mike Inc. entered into a franchise agreement with Ross Co. to sell their income reported by Susie for 2014?
products. The agreement provides for an initi al franchise fee of P3M which is payable as follows:
a. P125,000 b. P120,000 c. P155,000 d. P 150,000
P1M cas h to be paid upon signing the contract, and the balance i n four equal annual installments
every D ecember 1, starti ng in 2013 as evidenced by a noninterest bearing note for the said
36. On January 1, 2013, IOU Company purchased 80% of the shares of DOM Corp. at book value
balance signed by Mike Inc. Prevailing market rate is 10% on June 1, 2013.The agreement further
which is the same as its fair value at the date of acquisition. The shareholders equity of DOM
provides that Mike Inc. must pay a continuing franchise fee equal to 5% of its monthly gross
Corporation on this date showed: Ordi nary share capital P1,140,000 and Accumulated profits
sales. Ross Co. incurred direct cost of P930,564 and indi rect costs of P167,400. Mike Inc. started
P980,000.
operations on July 1, 2013 and was able to generate s ales of P1,240, 000 for 2013. The first
installment payment was made in due date. Assuming collectability of the note is not reasonably
On April 30, 2013, DOM Company acquired a used machinery for P168,000 from IO U Corp.
assured, how much is the net income of the franchisor for the year ended December 1, 2013?
that was being carried in the latters books at P210, 000. The asset still has a remai ning
(Round off PV factors to 4 decimal places and G P % to whole %)
useful life of 5 years.
a. P 883,128 b. P 892,829 c. P 898,657 d. P 909,019 On the other hand, On August 31, 2013, IO U Corp. purchas ed land from DOM for P690,000.
The ori ginal cost of this land was P550, 000.
Furthermore, there was an upstream s ales of P112,000 in 2012 and P168,000 in 2013. The
13. Crab Claw Co. charges P90,000 for a franchise, with P18,000 paid when the agreement is buying affiliate reported inventory on December 31, 2012 amounti ng to P70, 000 of which
signed and the balance i n four annual payments. The pres ent value of the annual payments, 20% comes from the selling affiliate and inventory on December 31, 2013 amounting to
discounted at 9% is P58,315. The franchisee has the ri ght to purchas e P20,000 of equi pment for P84,000 of which 30% comes from the selling affiliate. IOU Co. uses 30% mark up on cost
P16,000. If the collectability of the payments is reasonably assured and substanti al performance and DOM Corp. uses 25% mark up on cost from their s elling prices.
by Crab Claw has occurred, what is the amount of rev enue from franchise fee that should be Net income of IOU Co. and DOM Corp. for 2013 amounted to P720,000 and P310,000.
recognized? Dividends paid totaled to P230,000 and P105,000 for IO U Co. and DOM Corp., res pectively.

a. P 72,000 b. P 72,315 c. P 76,315 d. P 81,563

14. Amounts related to the statement of affai rs of Distressed Company as of April 30, 2014 SEC registration for the share issue paid 10,000
follow:Assets pl edged for fully secured liabilities, P80,000; Assets pledged for partially secured Other share issuance costs paid (inclusive of taxes) 10,000
liabilities, P50,000; Free assets, P272,000; Fully secured liabilities, P60,000; Partially secured Stock transaction tax paid 3,625
liabilities, P80,000; Uns ecured liabilities with priority, P40,000; Unsecured liabilities without Other indirect costs paid 16,000
priority, P330,000. Calculate the expected amount recoverable by partially secured creditors in
the event of liquidation. The total amount debited to expense should be
a. P201,125 b. P 197,625 c. P 194,000 d. P 153,000
a. P50,000 b. P69,500 c. P 71,000 d. P80,000

15. At the end of July 2014, the Capi tol Company es tablishes an organization in District 12 to act 30. ABC sold 90% of GHI, a wholly-owned subsidiary, for P800,000. The net assets of GHI before
as a s ales agency. The following assets are s ent to the agency on the same date: Working fund the disposal were accounted for at P570,000. The fair value of the retained investment of 10%
(impres t), P1,000; Samples from the merchandise stock, P5, 000; Advertising materi als and (assume no significant influence) is 150,000. Which of the following statements is correct?
literature, P1,250.The following month, the agency submits sales on account of P17,600 that are
a. ABC shoul d derecognize the inves tment in the subsidiary, recognize 800, 000 of cash,
approved by the home office; cost of merchandise shipped in filling the orders is P10,500. Home
recognize the retained investment of 150,000 in accordance with PFRS 9 and recognize
office disbursements chargeable to the agency are as follows: Furniture and fixtures for agency,
a gain on the loss of control of the subsidiary of 380,000 in profit in loss.
P2,400; M anagers and salesmens salari es and commission, P1,750; Rent, P800. At the end of the
b. ABC shoul d derecognize the inves tment in the subsidiary, recognize 800, 000 of cash,
month, the agency working fund is replenished, paid expense vouchers being submitted by the
agency totaled P925. Agency s amples will be useful until the end of 2014 with a salvage value of recognize the retained investment of 150,000 in accordance with PFRS 9 and recognize
a gain of loss of control of the subsidiary of 380,000 in equity.
30% from the time it was delivered. Approximately 1/5 of the adv ertising materials and
c. ABC shoul d derecognize the inves tment in the subsidiary, recognize 800, 000 of cash,
literature remains on hand. Furniture and fixtures are to be depreciated on a 5-year basis. The
agency manager is to receive a bonus of 10% of all sales, the bonus to be paid by the home office recognize the retained inves tment of 57,000 (570.000* 10%) in accordance with PFRS 9
and recognize a gain of loss of control of the subsidiary of 287,000 in profit or loss.
at quarterly intervals. How much is the net income of the agency for the first month of operation?
d. None of the abov e
(Round off answer to the nearest peso)

a. P b. P125 c. P1,125 d. P1,992 31. On June 30, 2012, Precy, Inc. purchased 70% of the ordinary shares outs tanding of Sus an
Company for P700, 000. At that date, Susan had P650,000 of ordinary share capital and
16. Shipments received from the home office are billed at 120% abov e cost. During the year, the accumulated profits of P250,000. All of the purchase difference was related to a building with a
branch received shipments billed at P360,000, and returned damaged goods with billed price of book value of P175,000 and a remaining life of 10 years. Precys accumulated profits bal ance at
P24,000. The branch has an ending inventory of P72,000. The branch reported a loss of P10,000. December 31, 2012 was P755,000. The income and dividend figures for both Precy and Susan for
How much is the balance of the loading account b efore year-end adjustment? 2012 are as follows:
a. P56,000 b. P80,000 c. P 183,272 d. P44,000
Income Dividends
17. Home office bills its branch for merchandise shipments at 30% above cost. The following are Precy(own operations) P275,000 P70,000
some of the account balances in the books of home office and its branch as of D ecember 31, Susan Company: Jan. 1 to June 30 80,000 30,000
2012: July 1 to Dec. 31 100,000 0
Home Office Books Branch Books
On December 31, 2012, the consolidated retained earnings (accumulated profits) is:
Inventory, January 1 P5,000 P14,500 a. P 821,500 b. P856,500 c. P1,026,500 d. P 1,021,500
Shipments from Home Office 37,700
Purchases 225,000 50,000 32. Sabine Co. purchased 95% of the shares of Celest Co. on January 1, 2013. On that date, the
Shipments to Branch 36,250 book value of Cel ests net assets approximated fair value. As a result of the purchase, Sabine
recognized P600,000 goodwill. During 2013, Celes t sold inv entory to Sabine. On D ecember 31,
Branch Inventory Allowance 13,125
2013, Celes t had unrealized profi ts on its books of P100,000. By December 31, 2014, the entire
Sales 300,000 180,000 inventory left on Sabines books had been sold to outside parties. During 2014, Sabine sold
Operating Expens es 72,500 27,500 inventory to Celes t and had P150,000 of unrealized profits left on its books at the end of 2014.
 Per physical count, the ending inv entory of the branch is P10,500 including goods from outside Trans action costs of P600,000 have been expensed and are included in administrative
purchases of P6,925; the ending inventory of the home office is P30,000. What is the combined expens es. The attributabl e costs of the issuance of the equi ty instruments of P32,000 have been
net i ncome for the year? charged directly to equity as negative share premium. Said costs were already paid.
a. P 136,850 b. P 134,675 c. P 135,771 d. P 124,550
As part of the purchase agreement with the previous owner of JonJon Limited, a contingent
18. The home office transfers inventory worth P600,000 to Branch#1. Freight pai d by the home consideration has been agreed. There will be additional cash payments to the previous owner
office is P40,000. Later on, the home office instructs Branch#1 to transfer the merchandise to of JonJon Limited of:
Branch#2. Branch#1 pays freight of P12,000. If the merchandise had been shipped from home
office to Branch#2, freight cos t would have been P56,000. Entries to record the trans actions P675,000, if the entity generates P1,000, 000 of profi t before tax in a 12 -month period
described includes after the acquisition date, or
a. a credit to savings on frei ght of P 4, 000 in the books of Branch#1. P1,125,000, if the entity generates P1,500,000 of profit before tax in a 12 -month period
b. a credit to savings on frei ght of P 4, 000 in the books of Branch#2. after the acquisition date.
c. a credit to savings on frei ght of P 4, 000 in the books of the home office.
d. none of these. As at the acquisition date, the fair value of the contingent consideration was estimated at
P714,000. As at December 31, 2014, the key performance indicators of JonJon Limited show
19. The following pertains to American EagleInc. home office and its branch: clearly that target (a) will be achiev ed and the achievement of target (b) is probable due to a
significant expansion of the business and synergi es implemented. Accordingly, t he fair value of
Home Office Books Branch Books the contingent consideration was determined to be P1,071,500. The entity was able to generate
Inventory, January 1- From outside purchases P480,000 P32,000 more than P1,500,000 of profi t before tax on the settlement date, thus, was required to pay
Inventory, January 1- From home office, at 110% of cost 132,000 P1,125,000.
Purchases from outsiders 1,200,000 320,000 26. In the consolidated statements of financial position, the amount of goodwill as of December
Shipments to Branch 360,000 31, 2014 is
Shipments from home office 372,000
Inventory, December31- From outside purchases 300,000 160,000 a. P328,200 b. (P22, 000) c. Zero d. P335,500
Inventory, December31- From home office, at 110% of cost 130,000 27. In the consolidated financial statements, what is the net effect in equity of the above
What is the combined cost of sales for the year? acquisition for the year ended December 31, 2014? (disregarding any income earned from
a. P 532,000 b. P1,020,000 c. P1,552,000 d. P2,084,000 operations by both the acquirer and acquiree)
20. On January 1, 2013 enti ties Paolo and Uneta each acquired 30% of the ordinary shares that a. P8,140,000 b. P8,110,700 c. P7,782,500 d. P8,468,200
carry voting ri ghts at a general meeting shareholders of entity Kawayan for P3,000,000. Entity
Paolo and Uneta immediately agreed to s hare control over entity Kawayan. For the y ear ended 28. In the consolidated financial statements, determine the i ncrease in liabilities as a result of the
December 31, 2013, entity Kaway an recognized profit of P4,000,000. On December 30, 2013, above acquisition for the year ended D ecember 31, 2014?
enti ty Kawayan declared and paid a dividend of P1,500,000 for the year 2013. At December 31,
a. P714,000 b. P4,300,000 c. P5,014,000 d. P5,371,500
2013, the fair v alue of each venturers investments in entity Kawayan is P4,250, 000. However,
there is no published price quotation for entity Kawayan. At D ecember 31, 2013, P600, 000 of the 29. Zedd Company acquired Haley Companys net assets by issuing its own P 14 par value
goods purchas ed by entity Kaway an were in entity Paolos inventories. Entity Kawayan sells ordinary shares totaling 50,000 shares at market price of P 14.50. Zedd Company had the
goods at a 50% mark-up on cost. Under PFRS 11 Joint Arrangements, what is the income of following expenditures incurred:
enti ty Paolo from the joint v enture?
a. P 1,000,000 b. P 1,060,000 c. P 1,140,000 d. P 1,200,000 Finders fee paid P 50,000
Pre-acquisition audit fee, 30% was paid 40,000
21. On December 31, 2011 enti ty A, an SM E, acqui red 30% of the ordinary shares that carry Document stamp paid on the issuance for the 3,500
voting rights of entity Z for P100,000. In acqui ring those shares, entity A incurred transaction combination
costs of P1,000. Entity A has entered into a contractual arrangement with another party (entity General administrative costs 15,000
C) that owns 25% of the ordi nary shares of enti ty Z, whereby entities A and C jointly controlled Legal fees for the combination paid 32,000
enti ty Z. Entity A us es cost model to account for its investment in JCE. A fair valuation of the Audit fees for SEC registration of share issue 46,000
investment in entity Z, determined using a reliable earnings multipl e approach, exists. In January Use the follo wing information for items 24 and 25
2012, entity Z declared and paid dividend of P20,000 out of profits earned in 2011. No further On December 31, 2014, the following figures were taken from the trial balances of 2ne1
dividends were paid in 2012, 2013 and 2014. At December 31, 2012, 2013 and 2014, Company and BigBang Company:
management assessed the fair value of its inv estment in enti ty Z as P102,000, P110,000 and 2ne1 BigBang
P90,000, respectively. Costs to sell are estimated at P4,000 throughout. Entity A measures its Cash P 160,000 P 40,000
investment in entity Z on December 31, 2013 at Receivabl es 120,000 120,000
a. P 95,000 b. P 101,000 c. P 106,000 d. P 110,000 Inventory 200,000 140,000
22. The statement of financial position of Kimmy Company as of December 31, 2014 is as follows: Property and equipment net 400,000 200,000
Goodwill --- 60,000
Current liabilities 40,000 20,000
Assets Liabilities and Shareholders Equi ty Long-term liabilities 140,000 100,000
Cash P 175, 000 Current liabilities P 250, 000 Ordinary Share Capi tal 220,000 200,000
Accounts receivable 250,000 Mortgage payable 450,000 Share Premium 40,000 ---
Inventories 725,000 Ordinary share capital 200,000 Accumulated profi ts (losses) 440,000 240,000
Property, plant and equi pment 950,000 Share premium 400,000
Accumulated profi ts 800,000 On December 31, 2014, 2ne1 issues 10,000 shares of its P 10 par v alue shares for the net assets
P 2,100,000 P 2,100,000 of BigBang. 2ne1s shares had a P 34 per share fair market value. 2ne1 would also issue bond
debentures with face value of
On December 31, 2014 the Dora Inc. bought all of the outstanding shares of Kimmy Company P 200,000 maturing 3 years from date of issue. Discount related to the bonds issued amounted
for P 1.80 million (M) cash. On the date of acquisition, the fai r market value of Kimmy to P 40,000. 2ne1 also incurred the following expenses and paid some with its av ailable cas h: P
inventories was P 675,000, while the fai r value of Kimmys property, plant equipment was P 50,000 for brokers fee, P 40,000 for pre-acquisition audit fee, P 43,000 for legal fees, P 36,000
1,100,000. The fai r value of all other assets and liabilities of Kimmy were equal to their book for audit for SEC registration of share issue and
values. After the acquisition, the consolidated statement of financial position should reflect P 11,000 for printi ng of share certificates. BigBang holds an equipment that is worth P 80,000
goodwill in the amount of more than its current book value. The accumulated profits of BigBang on January 1, 2014
a. Zero b. P 300,000 c. P400,000 d. P 500,000 amounted to P 140,000.

24. At date of acquisition, how much is the total identifiable assets after the merger?
23. Shadow Company acqui red the net assets of Recruit Company on July 1, 2014, and made the
following entry to record the acquisition (both using PFRS for SME): a. P1,340,000 b. P 1,320,000 c. P 1,300,000 d. P 1,280,000

Current and Non-current assets 3,600,000 25. At date of acquisition, how much is the total liabilities after the merger?
Goodwill 600,000
Liabilities 480,000 a. P300,000 b. P 480,000 c. P500,000 d. P520,000
Ordinary share capital, P1 par 600,000 Use the follo wing information for the next three items
Share Premium 3,120,000
On May 1, 2014, the Geri Inc. acqui red 80% of the voting shares of JonJon Limited.The fair
The agreement further provides that additional cash consideration would be pai d on June 30, value of the identifiable assets and liabilities of the acquiree as at the date of acquisition were
2015, equal to twice the amount by which net earnings of Recruit Company exceed P300,000 P13,786,000 and P4,300,000, respectively. The fair value of NCI at the date of acquisition is
with the firs t 12 months of acquisition. Net income was P260, 000 in 2014 (earned evenly) and P1,547,000. The fair value of the NCI has been es timated by applyinga discounted earnings
P160,000 for the first six months of 2015. Included in the goodwill computation and liabilities approach. Geri issued 2,500,000 ordinary shares as consideration for the 80% i nterest in the
is the fai r value of the contingent consideration which was estimated to be P100,000 as of July acquiree. The fair v alue of the shares is the published price of the shares of Geri at the
1, 2014, although assessed as not probabl e at this date. What should be the amount of Goodwill acquisition date, which was P2.88 each (rounded off from P2.8812). The fair value of the
on December 31, 2014? consideration given is therefore P7,203,000.
a. P 425,000 b. P510,000 c. P475,000 d. P 600,000