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0081S 256 ¢sR008 paUTISTO 0 Sojes me 40 9gc sem sored SunoesnH Alt-syfUTE gg PuE s0UF/suoD o4p OF POUL o Zd.J0 809 wonPHodsumsy, G'ZATE TAS OF paid a10% KM pu “y>"9 49" Td SBI S!OAEOgPUK 94) JO} 1809 8,1, 105 BH, Woy} IUDUNSUED UO SUOYRAAGPUI Jo SUN OHO'T paH!BDAA sIOIS KDUOOT “FIOE “T 4PqUNDI9CT WO ‘090'Prd PUP OOO'S Led “—P — 000'0rd Pur ov0'sEcd “> 00 (000'9¢¢ PUP 000" G10g “1 s9quis99q] te Hoda BY Pinoys ‘Ajanyysadsau ‘sun pfos a4} 0) pore|a4 awoout 19U pure WoLUUB|stioD UO AGO]MOAUT JO JUNOWE Jey ‘aonaanay TDNIENTOIIF WOTLIPH / FSOReSA/ PRACTICAL ACCOI Question: Using the INTING 1 Inventory ist In First Out method, what amount oF inventory should Forlora Company report in its January 31. 2016 statement of financial position? a. P240,000 . P280,000, b. P260,000 7A.P282,000 Question 2+) Using the moving average method, what amount of inventory should Forlom Company report in. its January 31, 2016 statement of financial position? a P240,000 «. P280,000 “te P260,000 4. P300,000~ following information pertains to Forsce Company, seller of reeliners for the year ended Dee. 31,2016 Unit Cost Total Cost Tiivery | Inventory on hand 73,000 600,000 April 3 Purchase 3.200 960,000 uly Purehase 3300 90,000 October 1 Purehase 3.400 980,000 December 26 Purchase 31500 700,000 Total says P5930.000 ‘The company sold 400-récliners on June 25 and 500 on December 10. What is the weighted average cost of the inventory on December 31, 2016? 2 P9200 ®. P_ 060,000 A Po92.500 aL P1a10.000 1B: Gal Grperatlon le el provict ding inverory, ech accounted fx ate lye of cost oot alsable vale, Spotl dat wil Feet neath prafent follows " Product #1 Product #2 Selig pee poo Psd Historical cost 40 70 Cont sel 10 so 26 — cea bene me 0 In prising its ending inventory sing the lower-s(éost-ornet realize Value, what nit values sould Oslo for products #1 and ¥2,reypectively? P35 and P64, PAD and P70 b P50 and P104. d. P45 and P90. arity Company's closing inventories as of December 31, 2016 consist of three groups of inventory items and, their respective costs and net realizable values (NRV) are as follows: Group! Hem [Cost NRV | Ttem NRV A P1000 500 P1800 B 2.000 800 6.000. c 3,000 | 2.600. “4.0001 3,000. | 3.400 ‘Total | P6,000 | P6,900 | Total PiL800 | Total | P7.000__| 76.600 0 £0 O29 Question 1: What is HE Ratuc ofthe closing inventories for Deceifber 31, 2016 under the item BPtem Basis? ae P20,600 ©. P2160 722,000 P28,300 Question 2. What is the value of the closing inventories for Devember 31, 2016 under the group for similar, items basis? a P20,600 + £921,600 'b. P22,000 : a. P28,300 15. ‘The following informatin relate to an item of rw materials of Radiant Company a of une 30,2016. AFY gp 8M Fepl- cy Historical cost of raw materials 500,000 Replacement cost of raw materials A as at 30 June 2016 400,000 Conversion costs to finished product A (labor, P200,060 and production overhead, P100,000. Question 1: What isthe value of the closing raw material if the finshed product A to be produced s ‘apes o fetch P1,000,002 a Pav0,000- © Ps00.090 % paso © Fer. 3206 Pgs 093 ReSA ‘The Review School of Accountancy ‘Tel. No. 735-9807 & 734-3989of Teese cov'or ie ws, 6868-bEL 9 L086-sEx “ON OL Aouejunasay Jo [oo4ss vsoy ooo'zeR dP 907 ooesed ooo'ct id ‘aoa spf Fa ana nde ay 01 AT HA ‘onion aspaniaioi jo aoa pasa a4 24 qo" oss ue snoyaunN pose 249 26] onsadiuoo sv Audios axrmst 241 Woe} 9O0-00O'Sa PaA!d9N8 udRAOS A 910E “1 43qUIDNNCT UO “Boor Osa 4 s9ggotw 01 pIos aq sonrnis pu HMI spook pau ayqesn paso|otp Ronan oot Papioans uo srouoysna 4 ude StuNODSIP Spe [P01] “AN0-091 Sul} 50 91° 6} papuoaas pur poumodoe su} Sas [10 | oo'ooe ‘PavaaH1ap spoot! 40} aoxoai sop papsooa.ty ‘oo0"o09e ‘uy Jo sop 6 Aaenui sexy papuoaga pu patonsfap Sf fo O51 ooo'0e! rutod Sunddys 40d "91 0¢ "0¢ 19quIMd>g oO ‘poddnys sien un jp nq paseypinal spoo8 30} paatava1 2310aU, oov08 Ay soseypund to way sjuneastp [eo “000002 1p9sta9a1 pu pasiyjnd spood uo pastanas owt P99 [0 =000'09 [poatsaa4 pun posnypund spoo8 Jo 3S09 181ay PIO *900'000'E ———_a44] JO a.ep 61 Aaenuny ayy papuodos pu pasidsaL soseyaind foro f ooo'nss. 91/10/10 # Gowuanuy "910i “0¢ oquiaidag popu sypuous aut agp 405 sp09D1 SHV WOH, OO} DHL -SSTEAUTJoeesHEJo wjoad sso. w soy fy “AAowsty 109904 Ho pose] Syqeqeae st wonowuojut Su Agoditio [WV 23y)# FTOT “OE Ioquiandos WO) “0 ~Aao uaa oan st 1 eIUEP 2xD49% posed asnoYyauae 00 y2a.59 AUN 01 Azonsoau onp94{ 61 SoURMOITY 01 4POI9 Y_—P i ‘000°91d.10 AUN 81 i0}saau onpay oF aaueMOHTY OF GP YS oil “000'FCa 10 S07] SAO]UDAN 0 £49A0993) 09 NPOI> “000°91e 10 $57] Atowtoat] 30 Az9n099y 01 NGOp Yb coal 2$102 u poaas ony SOF TH FuLMO|OS 50 YA ‘OOUTDTEA JO AYN 01 sees Gorda sou ong pu etm psc ty supa soe HAI YN Sonpau oy numopne sowesoIfe UF soem ar waueNfpe AapssaNoN gp fU0IN LOE HH PORTE S80} aH) post ‘undo 2414 “000'DOEA 01 OOOTOFEd toy owsaAWY SH Jo'UROp-aTLaN w al Bunfsas Aioquana} si yo one Mh uy aupap & poououiodso “suf SOR FLOe WL(SRAD SPuspueis Stod>at Hour EMONEARDHAY SIAN UT SORA. “OL 00°009'6id oo'00s'#id 4 00° H0'otd ooo'o0z8id_ é919¢ Buumnp soos Jo 1503 0 yuHouLE ayy St yA “Sap 3009 24H UH SJoSI9ASL Pu SHDN Spmjaur ov Kypod s,Sudt0> a4p tL "990" 000' tel 40} PLoS 94 PIMOD Kou) HNL PoIHUIISD stay} PUY ON so, 20 punuap oxp uy Ssvausuy ue sea alo “pu ava ve pyosun Pru Ie96 sou wos] PAPA} wFHOA4 SUI V Aoquaamy“os|y_“000'00C Id SE ane aygezHIAH HoIEUNIS 2tA Ing YON'OOO EA Sb HOIUAANL BUISEID 9H, {4 papmyouy 000000 el Jo wuHOUI YoY w pa|eOKa4 H PU poranpHO> stad UND Atowuanus joIssyd e°OLOZ “TE squ209q pu sea yy” “9000S PalEOL Isno4runs O1 soLONRAUE oy BuFBUIR Ur Paamous Hs09 2qqNINGA {yoautp 42in0 pur uoweuedsuen “poo79pO"OEA PAIOL sasMNE 4K WasND oq FUNCT -opNODEKT se suuoy 2504) Jo 809 1euFA0 a4 GOO" DOEd.10 DoE alates Iu ato Ye PLD 9HOM Yo! Sw, Y CHOTUDA Papniox, now SMH “9OOTODO'SA SPH 9LOZ “1 AimuRG uo AimdaH0.y atom jo Aigwudatn Funado oi) “$1 000'000"8a oooroos'sa @) ‘000°000'Ld > 0o-o0s'94 {auno22e aoueaoyTe vorntes pus yuna Gye Suse 204 ARN 30 1809 J 1960} 2 soydde Cundwos ayy Surunsse pjOSSpoos JO KOFI Wey|Ay "809 MOfaq juNOWE ue oF KzojUdAUE s SuedLIOD auf uMop amas O} oU'e pasnpodd JOAdU 9]Ru AYN 40 Ko JO FAM} ayp. JO WonEDHAdE 919¢ 4POK sip. UO}OEL ooo'o02"t Coon 000" AUN) 899 “1 = sBMI9D9¢ *KLOIUDAL] 00°009°9, 3896 Bun Sostyaung (000°008"1 1 Aan “£20404 9102 “Le 49quid9nd we AuEdaI0> 294119 NOG 0} SuIEUO UoNPULE;UE TuMWOH;O} MLL “LT oov'o0r't ap 00'006d “4 000086 A 000'0Sed ae ‘pane 2q ed Jo 1198 041809 $89] On OHIDAUT SIU (9 ‘aoquauy 9g pinogs yunowe ing iooHs aoUN|EY 5 ny ® soy AONIDAUE MB 910Z “TE BAUIDADKL UO "Ss TT se Sanday uOLOY, 910g 3K ay BuLINCL“GHHOSLA J0 1% 011909 ss9f aMIEA mew AHO ING GOTT Sujsoa Aiojuannt Saypu> uv sey usldo.y BRYA “SL “Te !aguld>acL UO Uaye) AloNUDAtE eagsAl ap UO pase (0000094 'P. 000'0std ‘000'00sd. “> op0'oova : 2000°9S9d Ho19}.01 par9sH9 1 paonposd aq 01 y Tonpoad paystuy oq) JE V [euoIeUL AE BUISOTD OF Jo ONfN ay St YEU “TWOTPIC) Woriaany TONTINTODIY TF ILLIVAE 7 PSOse pricing sructure has Been cablished To yeldw gross manga OT 6 The Tale Pertain to the year ended December 31, 2014: Sales, P2200,000% tavern: Janigy 1, 2018, P10n00 Purchases, PR0O,000; Freight cost on purchases, P20,000; FYeight cost on merchandise sold, P30,000: Inventory inside the company’s warehouse, per actual count on 12/31/14, P160,000; Credit memo issued to customers for Boods retuned & reecived, P50,000; Credit. memo issued to customers for merchandise to. be retumed, (01/02/15, P40,000; Sales discount, P100,000 . Gorgeous is satisfied that al sales and purchases have been filly and properly recorded. How much would Gorgeous, reasonably estimate as a shortage in inventory at December 31, 2014? a P343,000 6G) P135,000 + P183,000 143,000 22. “Drake Comporation had the following amounts, al at retail Beginning inventory P 3,600 Purchases P120,000 Purchase returns 6,000. ‘Net markups 18,000, Abnormal shortage 4.000) Net markdowns 2,800 Sales Tr900° Sales returns 1800 Employee discounts ° 1,600 Normal shortage 2,600 What is Drake's ending inventony at retail? (a) P54,400 Ste . PS7,600 P56,000 sk. P58,400 24 The records of Moming Company show the folowing forthe current year ¥ i Cost tail Beginning inventory : 340,000 {40,000 Purchases 4,500,000 7,300,000 Freight in : 100,000 Purchase ftw 150,000 250,000 Purtbage allowaoe 90,000 dyucp Departmental transfer in 100,000, 160,000 : Net markup Ae is0.000/ya GE Net markdown 500,0007%0m Gf Sales 6,600,000 Gi Soles allowance 50,000 Sales return - 150,000 Employee discount 100,000 Spoilage and breakage 200.006 5047 \ Wiat is he mewn of elinald ending inventory ner the conven eal and avempe #2 rea repesveh? convenient rales TP H0.00 & »S12.000 AE r450,000 8 P480,000 80.000 soso 4. P5100 & P480,000 24 Arvening Company uses the firs-in, first out retail inventory method of determining the value of their inventory. The following information is made available: + Got Market Inventory beginning 00,000 1,500,000 Purchases 3,048,400. 5,500,000 Freight in 80.000 90g fg Purchase returns 140,000 180,000 gy, Mark-ups «00,000 Mark-up cancellation 100,000 Mark-downs 1,300,000" 4g 20% Mark-own cancellation 300,000 : Sales 4.470.000, Sales returns 150,000 Sates discounts 200.000 Employee discounts 400,000 ‘What would be the estimated cost ofthe ciding inventory? a. 662,000 i ©. P896,000 b. P774,000 #992, 000 3206 Page $0 § ReSA . ‘The Review School of accountancy Tel. No. 735-9807 & 734-3989Aahwor 4 Oa 90 es 0) een a NS fs prot va Oy Sun fr Wropd -< ue a Py oe 4809 sabres z baa Give qh stv fo avo Bauhsy0)— x0ubSu09, Me ASE Ash o ar mh 9095 Ad 19 Hh Oe ae M5e2 AOS) ANE UNE od 4 St % Og Pua Phrajay P15 34ReSA The Review School of Accountancy ‘Tel. No. 735-9807 & 734-3989 PRACTICAL ACCOUNTING 1 .__C, Uberita/c. Espenilta/G, Macariola Government Grant & Agriculture Question 1) ow should Bugs account for the government grant? © Debit Intangible asset for P 180,000 and credit Other Income for PL80,000 b. Debit Intangible asset for P 180,000 and eredit Deferred Income for P180,000 and amortize over 9 years, © Debit Intangible asset for P 180,000 and credit Retained earnings for P180,000 4. Debit Intangible asset for P180,000 and eredit Revaluation surplus for P180,000 Question 2: Assuming, that Bugs is required t0 operate at least 10 taxis in the deprived neighborhood of the capital city during that nine-year period and failure to do so will result in, the license being. revoked immediately, how should Bugs account for the government grant? Debit Intangible asset for P180,000 and eredit Other Income for P180,000 Are Debit Intangible asset for P180,000 and credit Deferred Income for P180,000 and amortize over 9 yeurs, ¢. Debit Intangible asset for P180,000 and credit Retained earnings for P180,000 A Debit Intangible asset for P180,000 and credit Revaluation surplus for P180,000, 2 Jam Company is an ultimate holding company ofa diverse sroup of entities, witha reporting date of December 731, On January 1, 2014, Jam Company decided to, build @ nursery school for its employees? children Government approved a cash grant of P1,000,000 provided the building is completed by March 31. 2015, and fy used as nursery school for at least 10 years. A pro-rata portion is ref iso a nursery. sehool for ten years. “Tam Company fecelved the eash grant on Novem 1, 2014 I completed the Sehool on Janiary 31, 2015 at a total cost of P2,000,000 and immediately started fo use the building as a nursery. P1,600,000 of the smount was incurred on December 31, 2014. What amount of deferred income should Jam Company recognized in its December 31, 2015 statement of financial po a. tone (BP OR333 b. P900,000- 'd. P1,000,000 On January 2, 2014, MJ Company received a grant related to «factory building, ‘The total amount of the grant s P18,000,000.. Kelly Company acquired the building from a industrialist identified by the government, If PE ‘Or MI Company did not purchase the factory building, which was located in the slums ofthe city: it would have Cash tp been repossessed by a government agency. MJ Company purchase the building for P54,000,000. "The use life of the building is not considered to be more than three years,:mainly due to the fae thatthe previous owner «did not properly maintain it. Assuming the grant is treated as a reduction of the gross carrying amount ofthe asset, what isthe earrying value of building in the December 31, 2014 statement of financial position? &P1R,000.000 © P36,000,000 b P,o0oo00- &. Rst000.000 4, Fortitude Company sold some of their Biologia! assets o Graham for P200.000 cn Tuy 1,2014. “Theale was tnade at Eortitude's farm, However, if th Biological assets are hein ol at an ation Tey could have boo sold ata higher price But the company has (o incur transportation costs of F2,000. Fettade company pat 6.000 comin in relation tothe sale: Graham Comypany incured 3,000 as trport cox in raw the ase thei ow farm, i ‘Question 1: At what amnount should Graham Company recognize the afsets a. P192,000 ©. 7196000 5° P194,000 «.78200,000 Question 2: What amount of loss should the Graham company recognize on initial recognition related to the asset? a. ‘none . P6,000 - b. P3,000. é ShP9,000. Fortune Company purchased Diary cattle aan auetion for P300,000 on July 1, 2014. Cost of transporting the cattle back to the company’s farm was P3,000 and the company would have to incur Gost similar transportation | 31k vas to sell the cate in the auction, in addition an auctioneer's fee of 29 af sales price: On December “2 31, 2014, after taking into account and location, the fair value of the biological assets had increased to 500,000 (that is, the market price including the auctioncer’s fee of P10,000 ard transportation cost of P5000) ‘What mount of net ain or loss should the company disclosed in the statement of comprehensive income related tothe biological assets? a. P190,000 «. 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No. 735-9807 & 734-3989 Uberita/C. Espenilla/G. Macariola PRACTICAL ACCOUNTING 1 nancial Instruments — Equity Instruments 1 Candy Company purchased the following portfolio of equity instruments during 2014 and reported the following balances at December 31, 2014. No sales occurred during 2014. All declines are considered to be temporary. 3 December 31,2014 ‘Security Cost ‘Market Value perc P 800,000 P 820,000 Y 1,400,000 1,300,000 Z 1,320,000 1,380,009 is 73P Question 1: I the securities were designated as investment to profit or loss, how much should Candy Company report as unrealized gain or loss related to the securities in its 2014 siatement of comprehensive income? @ None «, P100,000 unrealized gain b. 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No, 735-9807 & 734-3989 PRACTICAL ACCOUNTING 1 Investment in Associates On January 2, 2014, Parker Company, a medium-sized entity, acquired 25% of the equity of each of entities, A, Band C for P100,000, 150,000 and P280,000. Parker Company has significant influence over entities A, B and C. Transaction costs of 1% of the purchase price of the shares were incurred by Parker Company. On December 31, 2014 A Company declared and paid dividends of P10,000. On December 31, 2014 B Company declared « dividend of P80,000 for the year ended 2014 which will be paid in 2015. For the year ended December 31, 2014 A Company and B Company recognized profits of P50,000 and P180,000 respectively, However, C Company recognized a loss of P200,000 for the year 2014. Published price quotations do not exist for the shares of entities A, B and C. Using appropriate valuation techniques Parker Company determined the fair value of its investments in entities A, B and C at December 31, 2014 as P130,000, P290,000 and P150,000 respectively. Costs to sell are estimated at 5% of the fair value of the investments, Parker Company has no subsidiaries and therefore does not produce consolidated finaincial statements, Question 1: If Parker Company uses the cost mode! in measuring its investment in associates, at what amount should the investment in A, B and C, respectively, be reported in its December 31, 2014 statement of financial position’ 8. P100,000, P150,000, P280,000 _ P101,000, P151,500, Pi42,s00 / "7° ’. PI01,000,P151,500, P282,800 4. P123,500, P275,500, P142,500 Question 2: Assume that the shares of A, B and C are publicly traded and Parker Company uses the fair value ‘model fo measure its investment in associates, at what amount should the investment in A, B and C, respectively, be reported in its December 31, 2014 statement of financial position? a, P100,000, P150,000, P280,000 . P123,500, P275,500, P142,500 'b- -PIO1,000, P151,500, P282,800 4 P 130,000, P290,000, P150,000 ‘Question 3: Assume that Parker Company’ uses the equity method in measuring its investment ip associates, at ‘what amount should the investment ia AB and C, respectively, be reported in its December 31, 2014 statement of financial postion? . 4 P100,000, P150,000, P280,000 A PI11,000, P176,500, P142,500 7°94, 'bP101,000, PtSt,500, P282,800 4. PLL1,000, P176,300, 2232800 ‘On January 2, 2014, Marco Company purchased 20,000 shares (20%) of Polo Company's ordinary share for 4,500,000. ‘The fair value of the net asset acquired is P4,200,000. During 2014, Polo reported the following. in its statement of comprehensive income a P4,000,000 net income and a P500,000 revaluation surplus recognize at the end of the year. Polo Company paid cash dividends of P3,000,000 on December 31, 2014 Question 1: What is the carrying value of the investment as of December 31, 2014? a P4,600,000 .P'4,770,000 b. P4.670,000 =a P4,800,000 Question 2: Assuming Marco Company is a medium size enterprise, what is the carrying value of, the investment as of December 31, 20147 1. 4,600,000 . P4,770,000 B PA670,000 4. P4,800,000. In Apéil1, 2014. Holy Company acquired 30% of the 100,000 shares outstanding ordinary share of ‘Company for P3,000,000. This investment gave Holy the ability to exercise significant influence over ‘The book value of the aequired shares was P2,400,000. ‘The excess ofthe eost over book value ws attributed Io an identifiable intangible asset which was undervalied on Trinity's balance sheet and which had a remaining life of 20-ye% For the year ended December 31, 2014, Trinity reported a comprehensive ineome of P1,100,000 which includes 1 P300,000 revaluation reserve on its land and paid cash dividends of P200,000 on its ordinary share and thereafter issued 15% share dividend. Assuming the investment has a net realizable value of P2,900,000, what is the amount of impairinent loss? a, None 4 P287,500 Sri. b.. PI87.500 aM a. 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Macario} Financial Instrument —Debt Instruments Ainancial Instrument —Debt Instruments 1 On May 12014, Golden Company purchased a short-term P4,000,000 face value 9% debt instruments for P3,720,000 including the accrued interest and designated as an investment to profit or loss which is based on the business modet ofthe entity o buy and sell portfolio of securities and to make profit for shorterm movements in the market rate of terest.’ Golden Company incurred and paid P20,000 ‘ransacton cost related to the acquisition of the inument. The debt instruments mature on Janvaty J, 2017, and pay interest semi-annually on January 1 and July 1, On December 31, the fair marker alue of the instruments is P3.880.000 and estimated eost to sel of P40,000.. Wha ammount of gain ot Joss should Golden Company disclose in the profit or loss in the stulement of comprehensive income forthe year ended December 31,2014? a. 120,000 «. P240,000 b. 160,000 8. 280,000 b 3, Graham Company, with a business model of trading debi securities, purchased a 2,000,000 face value 9% debt instruments for with a ‘remaining term of 2years and three months for P2,174,867.. The prevailing market rate of interest at the time of acquisition was 8%. Interest is being reeeived every December 31, On December 31, the ftir market valuc ofthe instruments is P2,072,321 based on prevailing market rate of 7%. What amount of unrealized: gain or loss should Graham. December 31, 2013. profit or loss? ©. P102,546 4 P135,000 3+, OnJanuary 1, 2014, Suh Company purchased the debt instrunints OF SiTR Company’ with’ a face Value of P5.000,000 bearing interest rate of 8% for P4,621,006 to yield 10% interest per Year. “The bonds ‘mature on January 1, 2019 and pay interest annually on December 30. On December 31, 2014 the fair value ofthe investment is P4,838,014 which is based on the prevailing market rate of 9% 2 Question 1: Af the company’s business model hias the objective of trading and making u profit trom ‘changes inthe fai value of the securities, what amount of unrealized gain or loss should the company disclose in their December 31, 2014 profit or loss? a. None ©. P154,907 unrealized gain b. P26,559 unrealized gain 4k P217,008 unrealized gain Question 2: If the company’s business model hay the objective of collecting all the contractual cash flows including interest and prinejpal, at what amount. should the investment be reported in the ‘company’s statement of financial position for the year ended December 31,2014? a. 4,621,006 © P4,751,418 b-P4,683,107 d. PA838,014 4. On January 2, 2013, Saint Company invested inf 4-year 10% bond with a face value of P6,000,000 in ‘which interest is to be paid every December 31.The bonds has an effective interest rate of 9% and ‘Was acquired for P6,194.383._ Saint Company has a portfolio of coramercial Joans'that it holds to sell in the short term, On December-34-2013, the security has « fair value of P6,229,862 which is based ‘on the prevailing market rate ee, eo (On December 31, 2013, Saint Company atquires Joseph Company that manages commercial loans and has «business model that hos the loans inorder o collect he contracialeash flows, Sain Company original portfolio of commercial loans is no longer fr sale, and the portfolio is now managed togethg with the acquired commercial loans and all are held to collet the contractual cash flows, On December 31, 2014, the debt investment has a fair value of P6,213,992 which is based on the Prevaing rate of 8%. What amount should the debt investment be reported in the December 31.201 statement bf financial positon’? BP5,082.949 ©, P6213,992 3210 Page 1of2686E-PEC LOB6-SEL ‘ON OLB ‘A2ueqUNODDY 40 ]OOUDS MOINS OULL vsou atria ein Re kgs coeing Oz ovo'00e -P css'a0e eue'zse > cevbee jatoout 40 nowoves (0 jt 1 Hoda Aue) Kon, poy aun ani JO wow WHA =F HOTEOND te LLy'ost 'P Ltrs “a Lpr'soc > £ct'ool puso ayo ao 9 aqme Aandi) Ao ens 0410 39 you amy ST UOTE “el 8a Jo 2003 arens4d oMn ye sprog 2p pYos Atwde> KOH “pLOZ"TE JOANIE NO 1909 pars0M 1b nibtiisonay se iusumaser iqop ay) powwUdisap soy Audio SOUT “¥ZL'RGI"Ed 40F Pasimbse sem jue ggg Jo ames ysaionl anfianyja ue sey Spuiog aH, “TE 49quI209C] A3Dx9 prod ago) St ISAIOIMY K>KY ‘UL 000°000'ed Jo SnJeA a9Ry © YM puog o%OT AHAd-p w UL prsoauL Kudo? 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No. 735-9807 & 734-3989 PRACTICAL ACCOUNTING G. Uberita/C. Espenilia/G. Macariole Investment Property & Other Investments ‘and. administrative expenses, recognized? (a¢ P82,400,000 ©. P 83,200,000 “b. P82,800,000 , P103,000,000 meget many Asses on etre shoppiig complex from Joural Compay under «20-year operating lease. adore lease agreement, Mortal would manage and ake the risks of operating the Siopplngeomptee es income from the sublease to be about P35,000,000 per year for 20 years. The borrowing, costs of Mortal Gameany is 8% per year. ‘The cost of constructing the complex-incured by Journal Companys 480,000,000, transaction anid other incidental costs amount to P20,000,000. f Mortal ‘Company elects to treat its interest in the shopping complex as an investment property, being. its interest in the underlying asset, at what amount should the investment property be initilly recognized by Mortal Company’? none ©. P400,000,000 (be P343,640,000 d. P500,000,000 3+ On Jontaty 1, 2014, Trunk Company uses the ctl model for all investment properties, acquired an invesument Te athe s000.000. ‘The estimated life of te property is 40. years, however: based on curio ema, {ed for similar propery that:isused-for-renta, its economic Iie 30 years. The eetnted salvage values {ie am it lie is 1100.00, white basi-on is eonornic ie i; P4005000. The eatinaid eevee eens the property on December 31, 2016 is P3,700,000. At what amount should the loveseat property be reported on December 31, 2016 statement of financial position? 3,640,000 , P3,707,500 be P3,700,000 4. 3,760,000 4 On tly 1 2014, Strata Company purchases an investment property ata cost of P$0,000,000 including BOLE eas aa ee Obes 2014 the fae value ofthe priperty inreases to 51,000,000. At Decches 2014 the fir value ofthe property is P 48,000,000. ‘The rental income reecived peF quater te :P1,500,000, The Property has a useful life of 50 years, > Question 1: If the company uses the cost model, what is the net effect on the profit or loss. forthe six months ave December 31,2014 in relation io he investment propeny sae) 3. (P500,000).- © P1300,000 €rrce 6) P1.000,000 & P2}000.000 Cie) {Question 2: If the company uses the fir value model, what is the net effect on the profit or loss forthe six months ended December 31, 2014 in relation to the investment property? @ P1,000,000 . 2,000,000 b. P1,500,000 4d. P3,500,000 5 On Tanuary 2, 2016, Denmark's investment property bas carrying vilue of 13,600,000 under the fair value Donates nabecember 31.2016 the property has afar value of P3,000,000, what amount of gain or loscahnca Denmark continue to revognize if Denmark would shift to cost model? 2. Gain of P600,000 reported in, other comprehcasive income Loss of P600,000 reported in the profit or loss &-_ Less of P600,000 reported in equity as decrease in evaluation surplus > rer0 FRereT ohn oot Double Company which uses the fir vale model, purchases an nvestinent property ta sacri, 000. At December 31, 2014 the marke! value of tie property is P60,000,000" The far ant Tans ofthe property on December 31,2015 i P5S.000,000, On Janay 1, 2016, the propery wes saeane (2prersny Plant and equipment. At what amount should te property plant and equpmen be aly recone? 3211 Pate fof? b P50,000,000 ‘d. 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AundMOD WISH “ELOT “CADET UD “6 P 000°00Sd 000°000'%d >. POR Avro wronnsoau 0; suonuanyt Jo sama 249 W S709 Sui: vuow0g pnoys sso] 0 we yo JUNO jm “JUNUD) 6) yHo Busy Aq Aodoud NounsaAu ses. xp PO fn sopioap Stwonbosgns wousdeunpy arid GOONS st sou Bayos TOU Dyn ASN. TBH OHTTODO CA ut axa) Jo 809 OA, “SHTOH0DAT ca sre Senet duo tod aie 38) supa 24 30 sem OE Jo tad a PPE? Uodoarap Aundoxl ¥ Kudo HUG. -g sso] 40 goad out w paniodad uorsio4u09 wo sso] 000'00Ed bio. yooo) fy Stoo asa po puss een 1 000 TNEA.“F ta ‘0 }IRs24 pynow NoIsI9AUO 21, “GOO'OO6d St YoISI9ALOD Jo OVP tw rosso wey ax jo anya ame ay, uodooRE UMTSSAUE OL osse THEY 24} DAUO 0 PAPIDAP Auredaioa amp 9102 41 kamu uo "s19¢ Te Fats39GJ0 5 ONC TOT JO sea HorKan> 8 Hs oss0 sey AuEduIOD MAY a BRN TOOT TRIE IED COGPRACTICAL ACCOUNTING 1 £ __C. Uberita/C. Espenilis 6 2. ReSA The Review School of Accountancy ‘WTel. No. 735-9807 & 734-3989 Macariota Intangibles (On January 1, 2014, M Company aequired an intangible asset from a foreign company. ‘The invoice price of the Intangible was P10,000,000 subject 10 a 10% discount if aequired on a eash basis. M Company paid P2,000,000 ‘import duties and professional fees of P100,000 in relation to its acquisition. At what amount should the intangible asset be initially recorded in the books of M Company? 1a. 9,000,000 ‘e, P11,000,000 bb. 9,100,000 Ak P11,100,000,, Mini Corp, acquires patent from Maxi Co in exchange for 2,500 shares of Mini Corp.’s PS par valuc ordinary shares and P85,000 cash. Wren the patent was initially issued fo Maxi Co. Mini Conp’s shares were selling. at {PSO per shure. When Mini Corp. atquired the poten, its shares were selling for P9 a share. Mini Corp, should record the patent at what amount? a P85,000 ©. P103,750. b. P97.500 - P107.500,, Michelle Company exchanges the Fights to distribute « product in Brishane which have a canrying- amount of 2,000,000, for cash of P500,000 and the rights 40 distribute the same product in Canberra. ‘The fair market W,000. The exchange is cAnsidered having the necessary. commercial xxchang®, the intangible asset should be initially recorded by Michelle Conapany at 24. PI,300,000 ‘c. P2,000,000. ue cg ¢ Laver Wo b.. PI.700,000 ae Buc Sky Company's 12/31/15 statement of Financial position reports assets of 5,000,000 and liabilities of ge Ba Sg aaa en alate Gn Me er value that is P300,000 greater than fts book value, On 12/31/15, Horace Wimp Corporation paid P5,400, acquire Blue Sky. What amount of goodwill shou! Horace Wimp record as a result of this purchase? ‘ «, P2,100,000,- 72,400,000 saa Cap aAY FrcRONe RS He RT OF Way Corporation TF PLIWOLOO8! OW the die ot The transaction, May kad P00,000 of bili. The fur value of May’ assets when acquired were as follows 200,000, Current assets P_ 540,000 Nonicurrent assets 1,260,000 1,800,000 How should the P200,000 diference between te fair value ofthe net asets acquired (P,$00,000) snd the cost (1,300,000 be accounted for by Bon? 2, The P200.00 difference shoul be cried 1 relaincd earning, b The P200,00 difference should Be recozizcd pin, 6 The current assets. should be reconded at 1'540,000 and the-noncurpent assets shouldbe recorded at 1,060,000. 4A gefered credit of P200,000 should be set up and then amortized to income over a petiod not to exesed forty Years (On July 1, 2009, Flat Co. signed an agreement to operate asa franchise of Tire Co. for an intial franchise fee of 1,200,000. On the same date, Flat paid P400,000 and sayeed to pay the balance in four equal payments of 200,000 bewinning July 1, 2010. ‘The dowai payment is not refundable and no future serviees are required of the franchisor. Flat can borrow at 14% for a loa ofthis type. What is the carrying value of the franchise to be reported on the December 31, 2011 statement of finsncial position assuming the franchise has a definite life of 20. a PRS9,950¢ ©. P1,110,000 b, P982,800 4. 21,352,000 1, 2096 fo 128400, THe patent wa eng amt over sry 1.2009, Pirate determined that the from the date of acquisition. What amount Pirate Company purchased @ patent on January remaining legal life of 15 ‘economic benefits of the pi int would not list longer tan 10 Ye: should be reported inthe balance shee a pat, nt of accumulated amorizafon at December 31, 2012? a. 146880, 244800 Fane b. 19840 &. 302,400, ‘On January 2, 2012, Proton Company paid P500,000 to acquiee a patent with a remaining economic useful life ‘of LS. years. Proton Company expects to use the patert for S years and intends to sell it alter 5 years. 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Jing Company has recognized two intangible assets at their Fevalued amount. “As of December 31, 2014, their carrying amounts are as follows: a5 Asset A Asset B At valuation 20,000,000 _P15,000,000 Remaining revaluation surplus 6,000,000 ‘pone Revaluation decrease recognized as an expense ‘one (5,000,000) \ ; 24 As of January 1, 2015, the assets were revalcd by reference to thee current markt prices. ‘The market values Of Ascot A and Asset Byc-tis date were P12,000,000 and'?24,000.000. As a ths date but toss have a Feainng uel feat yeas, The ase ae being amonized on the sah hed Question 1: What amount 2015? a. None . P3,000,000 , - P2,000,000,,, «d. P5,000,000 gain or loss shat Jing Company recognize in relation to Asset A on January 1, Question 2° What amount of gain or loss should Fing Company recognize in relation to Asset Bon January 1, 2015? a. None b. P2,000,000 15. On January 1, 2014, Bingham tne. purchased 9 pasent with » cost P2.320,000, a useful fife of $ years. The company useS straight-line depreciation, At Decembet 31, 2015, the company determines thai impairment indicators are present. The fair value Tess costs to sell the patent is estimated to be P1,080,000. The patent's value-in-use is estimated to be P1,130,000. The asset's remaining useful life is estimated to be 2 years, Question J: Bingham's 2015 income statement will report Loss on [mpairment of a PO ©. P 312,000 b. 7262.00, .-P1,190,000, Question 2: The company’s 2016 income statement will report amortization expense for the patent of ‘a: 377,000, ' c. PS65,000, b. P464.000 . P1,190,000 16, Service Company markets products to rea) esate agents and to new homeowners, purchased a customers ist for .P600,000 on January 2, 2010. Because of turnover anwng real-estate agents ad because new homeowners ridully become established homeowners thelist i cxpecte to have economic vale for only faut years, The coup WS the straght-line method of amortization. On January 2011, the eustomer list was texte for S50 impairment asa result of substantial turndown inthe retai-estate markt in the ara. ti eatimated that the ostomer lst wil generate future cash flows of P140,000, P120,000 and P80,000 in 2011, 2012 and 2013 respectively. and tha the fair value (less costs 1 sell ¥ of the Customer ist P240.000. The market rate of pleres on this date is 4%, What amount of impairment loss one id Service Company recognize? a. none €. P192300 b. PIS3,983, a. PAS0,000 17. Martin Company acquired Jenny Conipany on January 1, 2005. The acquisition cost exceeds the market value of the net assets of Jenny Co. by 200,000. The excess was attributed to. an unidentifiable intangible asset that ‘was assigned to Jenny's separaté reporting unit. During the current year, 2005, the scparate reporting unit reported revenues of P800,000, Publicly traded companies with operations similar to those of the separate reporting unit of Jenny had price to revenue ratios averaging 1.70, ‘The fair values and book values of the assets and of the unit are as follows: 3 Fair Values Identifiable assets ‘ 1,900,000 650,000 650,000 Cy) J eStoyy ‘What is the amount of goodwill impairment should Jenny recognize based on the above information? a none «©. P390,000,,, >. P380,000 «l. P500,000 18. On January 1, 2009, Japan Company signed a 8.year lease for warchouse space. The lease contract conti renewal option for an additional 8-year period’ on TaiMuary 1. 2012. On anuary 2, 2011, Japan completed Substantial improvements to the warehouse. The cost of these improvements was P420,000 with im estiniated 14/7 useful life of 15 years. If the likelihood of renewal is highly probable, what is the carrying value of the improvement on December 3 on! a P330,000¢ 360,000 oh paseo SL paen000 3213 Page 3 of 3 ReSA ‘The Review School of Accountancy , ‘BTel. No. 735-0807 & 734-3989PRACTICAL ACCOUNTING 1 ReSA The Review School of Accountancy ‘Brel. No. 735-9807 & 734-3989 —__C. Uberita/C. Espenilla/G. Macariola Provisions & Other Current Liabilities {he Top Bottling Corporation embarked on 2 promotional program whereby a key chain cost fuiven away for every. 10 bottle crowns returned plus PS. Top Bottling Corporation estimaies the wr aunt eTown in the hands of consumers will be presented for redemption. ‘The following inforsud available: ‘Quantity Amoun Boitles sold 1,000,000 5,000,000 Key chains bought for giveaways 15,000 225,000 Key chains distributed to customers 10,000 5 What amount of premium expense must be recognized in their Year-end financial statements? a. None 4. P300,000 b. P100,000, 400,000 Daring 2014, Vanpelt Co, introduced @ new line of machines: that camry ® three-year waraaty: against aaeag tec delits, Based on industry experince, warranty coss are estimated at 2% of ales fa ihe per ot file, in the year after sale, and 69% in the cect year afler sale Sales and actual warranty eipendiiog Ion ctual Warranty Expen Fam 2015 1,500,000, 45,000 2016 2,100,006 «135,000 Ps200,000 189,000 What amount should Vanpelt report as a liability at December 31,2016? oe = 208,000 bh P15;000, Ga) rs1s.000 Waranty4U provides extended service contacts on electronic equptient sold through major retailers. The andard contract is fr three years During the cure year, Waranty4U provided 21,000 Sonat ata average pice of PRT each. Related to hese contracts, the company pent P200, 005 Contracts during the curent year and expects to spend P1,0S0.000 more i the company will recognize in the current year related to these contricis? a. P150,333 a Tt ee ce P aS; b. 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AAO} 20-11 Ayia porydimo> sou 9] "awe Ajpy uo sium Stasnoy [easoaRUED snsisuo> Jodojaiop Auadoxd yg SUAOFT Pian y TAH PD ATT Dae T ONTINNOIOY TTL IVHE 7 VSPHReSA / PRACTICAL ACCOUNTING 1 Provisions and Other Current Liabilities 10. 'Westem Company recently moved lis operations 0 new premises, ‘The non-cancellable lease contrac for te 2h premises stil has another three years remaining, and Westcm is not allowed to sub-lease the vacant building in termi of its rental contraet. On December 31, 2015, the present value of rental payments still duc forthe ol Frou te oeeib00 the com to cancel the contract i estimated to be P775,000.. What amount of provision should the company recognize on December 31, 2015? er a. none €r775,000 b. PI33,000 I P908,000 1. M Company is ia the business telccommunication, is given « concession by the government 10 operate the busines for 10 yeas. In 2014, it sets up is telecomms s. The agreement with the goverment equ the company to decamision the network flies athe cal ofthe cee ie Based on the curren technology, the cost of decommissioning at the end of year 10'S een P1S0G00.00, Decuse ofthe chang inthe ecnlogy in decommissioning work Me resonate coat tal the cos of decommissioning woul be reduced by the ead of te conecscon ered the Pree catimate hat there 230% chance the cost wl be P.000,00,« 40% chanes the con el be Patent ind a.20% chane the cnt il be P110,00.00, The niu val ofthe facilis negli andes eoore losis expected fhm ther disposal aller 10 years. The current risk-ffce mle of Inert & eoan e «. the variability of the posible cashflows, an adional 10% on te exporter Co ‘vufows i considered a resonable etna. What amount provision shold the compar weleee ene set the telecommunication network? a none «©. P70,910,000 >) 6730458 4. P116,000,000 12. Molder Company bas guaranteed loan of 300,000 granted to Miller Company. After the balance sheet date of Molder Company bu! before the directors approved the final statements, Molde: Conary nee nie that Miller Company isin Hauidation, What prose accounting should Moldet Company meerear nena ‘guarantee, assuming the creditor of Miller Company wil wade te ‘guaranice? 4 "The amount of the guarante is not accounted fur in Molders bone, the amount of P300,000should be recognized as a provision The P300.000 be recoznie as ibility with necessary disclosare in the notes to financial statements 4, The contingent bitty Should be disclosed by way of note tothe Tinwmetel seat "5, 2 company gives cach of is $0 employess (assume they were allcnployed continuously through 2014 and 2015) 12 days of vacaion a year if tey are employed atthe end ofthe yew. ‘The vacuo neceeulogs ny imay be taken s e tex year. ‘The employees work & hols per day. Ih 2ULd: they made 40 per hour and in 2015 they made P85 per how. During 2015, they look ar iecrage of 9 dg on cne = BEER The company’s policy sto rc the bility exing a he cad ofeach a We ae year Wha amount of vacation Tabilty Wout he refit. on the 2014 and 2015 balance shows Soper a. P192,000; P264,000 (c))P192,000; 9270.00 : b. P216,000; 264,000 4. #216,000; P270,000 14- Vareas Company bas 35 employees who work S-hour days and are paid houtly. On January 1, 2014, the Br 2b rd eaten Program of granting its employees 10 days of paid vacation éach year. Vacalion days came jn 2014 may first be taken on January 1, 2015. information relative to these employees sax follanee Hourly Vacation Days Eamed Vacation Days Used. i Wages by Fach Employee by Each Employee 45.00 10 0 46.00 10 8 47.00 10 1 areas has chonen torte ably for compensated sbvences atthe current res of payin eect when the compensated time is cad. Question L: What is the amount of dpeise relative to compensated absences that should be reported on Vargas’s income statenient for 2015? a. PI28.800, «&. P154S60 b. Pis4.000 a. P157920 Question 2. What is the amount of the ac Vargas’s statement of financial position for the year ended December 31, 20)5? a. P1880 ©. PIS4560 @ P154,000 4. P157,920 ued liability for compensated absences that should be reported in Facation 3: What is the amount of the acerued lsblity for compensated absences tha shoud be reported. in ial position for the year ended December 31, 2016? a. P126,000 DP 157,360 PISA. & Pis7920 3214 Pane Opie ee Reman tear The Review School of accountancy ‘Tel. No. 735-9807 & 734-3089