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‘ ReSA The Review School of Accountancy ® Tel. Nos, 734-3989 / 735-9807 PRACTICAL ACCOUNTING 1 C. Uberita/C. Bspenilla/G. Macariola hensive Incom : 4. X Company, jequires vehicles with the intention of bolding them as rental cars for listed period and then selling them. As of December 20, 2014, ear A. was sold for P120,000 and ear 1 way so sold for P100,000. ‘The earrying valucs of cars A and Ib were P80,000 and P70,000 respectively. What (ota)amount should X company disclosed in the profit or loss of 2014 in relation to the above ears? ~ a) None y 3. ©) P150.000 by P70,000 2-0220,000 ceting Co. enters into an opreement to sell heavy equipinent to Cynthia Company. ‘The agreement requires Carm to install and comission the Beavy equipment to a daar currently under construction by Cynthia. The installation and commissioning sa significant part of the agreement. Also, Carm is tequited to service the nt for a period of 3 years. fronthe date of ecmpletion of the installation and-commissioninig, The total, onsideration in the agreement i PS0-aulion-payable upon Of the installation and conissioning. Naar ee oe occasion abe bea y ea lipacas slit ni cantata Nong eat reatermn es tee ¢ gre P25 million, PS milion and PLO million respectively. A 40% mark up on costs is considered a fait basis to allocate rever ¢ instalation “and commissioning and the service components. What amexiat of revenve from ie sale of dhe cquipment should Carm Company recognize? Tae er a) PIL4,000,000 Se AF V29,00,000 1 by 925,000,000 Atedmn,y Ajasng; of suIBpad HOH oUUOfUT FULMOL!O) 21h. “SL ono ood'va Ae doo'oas'sd (4 2 g00'005'9 © > qovaoL'ed 24 pinous 9102 UF TONT SSO, ‘oO'odEd ‘anDAAH 5H so\Ne pum QQOT Vode “AJOADAMT soos poustN, ssvatony pu “oper OE 'onioau ssaocud ur om ul axieUa9C] [0G HOOT Pema’ A016 UT TGaSl “N09 Joga] ONC ORTONFA “Goward spouse aves UL aseDsoU, “OGTHOOR “Poseyosnd s{euOeUl Ay, 00TTOTeal SasuNhxo aanensiimwpy SodTDOSTeL"SosUadNd Bu|96 SOHTTOTECA ‘S910 40102 “Le s9autaorct Papua 4994 a4p 40} Kundiuo;) uHDAL,| JO spuodos TuuNODaH oY Wel} UDyE) sum UORRALORN SuAwoHoF aH. “pL Ang. (se yp em 000° ‘oon:cet At go G o0'sakd © oo'tssa aa av S ‘51 9107 23900 1¢ 1 {1.J9 980] 40, youd axp tf osuadxa ue se pazeyD 24 0110 05 aL “000'86d ve ponlen sow AtoWoet Tony [OsHP “OI logeIvO Le HV “pBaIONEL a4 ov ok pt ooo" 1a wk SEE TOOTS Jo SO} on SP ‘910 s9HOIDD 1 MEO Hu ‘HOO 1e 20) Pomwase SSSTOATI'SA9W SINK} PUR GOO'SETA soa ¢CARMANON,T-TF-RIOMUSHUTSFPIay 19M) FAOICL “CL coved ©, é Lod @ €eR'sld gee GAM L99'id wudaus aaistinjauduuos jo wowioiey’g Oz “is saquioang Ut Loos y AuPeluo pyno4s ant9N91 yo mou yu “booed SVgeIED OF s299y LOONIE tEH-UC -tOOFEA AysR 2 prnom oak oy lowaease los JE 99!A49s Yowa Op aay areavdas w aBOyD OL dHAAW ILI! “ERP SoUMLAISP V kUAdUIO.) “pou 2 we9A0 ‘ost Bop 8, VATED OT S89998 pur a9{ApH HD Uo — sadmAe-FUTTTO Om purr IO} DONTE {4 datuoysny soeys, 11 4f spuiowsn.y 0» Suayo aauuns poqpung v sgpisea y Audlue y1Oz *E AtEHUN NC) “Ef. 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"1L 00°00 «P : 00'Ord AF ‘onoata (0 aon Ce onooad syeic pnous anuosai Jo amour ey ‘mo998 uno so Ste uno olay se anuAoA ogy sOmsE COU 439 ode ue se) Kuoduos aura a4 eq to spa4s pave op Rayoyon st Aad) SC HOTT, 000'00cq4e" ooo'ord ooo09td 200N peas corquifongs Suwidune > axeuey pynoys ap uTAE ap 09's} Sued 2yeacy j) :THOMEMCY ‘woy on “HO Gel St 2] 2m) Jo nye ATO} ayn WIN SOHEUIISS SuPduKO a¥WAC| “SO|ULE QOO'OOA suas pu QOO'HOO'D I imtoi01 uoneaprsuos 40} spood tB>4sI99}9 S|fos Suedwuo-y ayRACL OLE “AEA UAL a4p BUN, “>| STD 30 09 Tarsmnave-syy-sAtetT.UIex TEL “AnaeHese on rsAkqns “Suma ayy epi JaAtN aye 0 Sa|UAW 94R Magp94 “ure Sioguisur suuutsBorg “spoo8 [woqnda|9 uo punds Say gOIal Yer ypla-ojMRAN 9W ssoquaanNl qusUesOAd Squnt | —Atmcoco-ompAE uw q. paytuado sunumesdoud Kyesoy doigoysnd ¥ ul soyedionwd “Sesu2>14 SIC “OL 30 aa jn AROSE ns vo spa. pe ap 000°0Sd (P > 000'0Ed es ge f y yp -tae T5295 te i, 00 ORL 94 pinoys SuTuDARoad AERO, ayy WOH SHUSAAI JO. yuNOWE yA, usaq aan SIHIOT POOR GLOZ “1 sHqwoeaC] INK. UUM 34 JO PHD s4p IV" pounjap Jo ano ayp pur sqaq, o1 jwiod Ayesoy ypu. jo axijes.suPy oq SarEUMSS feIsK49 “papapad 94 O1 FeO siaodxo iowsseurw pur siuted QOO'Oc PaluEB sey [eIsK49 “Poudd Andxo ou oacy siutod one suturing SAO pram Tl AsO Serie esi area) pene a ou saan ; a SEL SRUSE Finca jy caste yumminO eh by unde tdoe Auto] ouolnaw pando Aeeduon, just -v¥ ‘ 000008 Ld P_ ooo Td 4 ‘OU OrE Sd 27 anon (t {910z "1 UIE papLD > pease sto wHO9Pu 10M [PURITY THIER 7 VSO ee RAOSOAT MOT 9 MIO) OID OY "BF SUSE SECO t Ly eF ‘er an Dr ReSA/ Practical Accountiiy k:___~ Compretemsive Income, Aecounting Changes & locerim Reporting 16. Cedar Company has the following account balances: “Sales revenue, P180.000; Cost of goods sold, P90,000; salaries and wages, P15,000; depreciation, P30,000: revenue, P36,000;_ interest expense, 218,006; sales return, P16,500 and advertisin 3 amotint would Cedar Company report xs income from operations in ily statement of comprehensive income? a) P15,000 PA, 000 : (0) 833.000 PEPTSO0 NG 17, Cheese Company has the following secdunt balances: Sales revennt, P1,600,0005 income from continuing, ‘operation, P200,000' net income, P180,000; income from operation, P440,000; selling and administrative ‘expenses, P1,000,000; income before income tax, P400,000. What is The amount of finance cost? 20,000 ©) PI60,000. a, 40,000 «@) P200,000 Os otc sth), ater 01 Oh unl ena: ie eke 0 eRe bone to aie Iran PDH OCG Wl {oR DNGE "furthering ems (gree mount). Utusal lows P7400 leoned pertos oss, P202 000; gain \io8 Cozalt) om the disposal of equipment. P1600 ail change in aecountng principle insrtsing prior ya's income, ~ 106,000. What is the amount of income tax expense Hazel Corporation would report on its statement of wo) ‘comprehensive income? ae ay PRA ©) P177920 ne B) Prav.i20 a) P13,040 qv © 19. the following information pertains to Wendy Company during 2016 OME © January 1, 2016 inventory, P4S0,000: December 31, 2016 inventory, P480.000; Purchases during the year, PL,800.000; Purchase returns and allowances, 105,000; Purchase discounts, P25,000; transportation in, Alu 10,000: Sales during the year, P3,850,000; Sales discounts granted, P70,000; Sales returns, P120,000; Selling i expenses, 990,000; Administrative expenses, P825,000; Rental revenue; P65,000; Dividend received, 0 PISH.000; Income tax expense, P43.200; and Retained earnings, January 1, 2016, P200,000-Unealized. gain ‘suit investment at fie value to other comprebensive income, nt of tax, #20,000: Revaluation surpls, net of tan 10,000 nd Dividend pi of PISO, on resemble preerences shares acounted ay aii, esto 1: be coc) prepares is > fran iets or Hs en Sen ve REGIE whi rt comprehensive income should the company report? 2) 176,800 26) 8206800 b) P186,800 ‘dy P288, 800 Question 2: "What is the amount’of comprehensive incorhe assuming the company is considered -as a mediame sized enterprise’? a) 176,800 BY P1960. by PI86.800 4) P206.800 20. Presented below are \d halances of the ussets anid liabilities pertaining to Glacier Merchandising: 5 2016 2015 Cath aden Dae AR ees OKs en B150,000 120,000 Tequity investnsent at Fu value to profit or loss 260,000 230,000 Accounts receivable net s.ssssevestseenepeitnttvetein 360,000 400,000 Inventories. jabs 70.000 635,000 repaid expenses sevens 130,000 128,000 182,900 136,000 ‘Accounts payable ah i 141,000 125,000" Other current ib Bonds payable .. i 200,000", 200,000. torn 16 Additional investment made by the owner during 201 Gavas P150,000 but a 20.00 prsnal abity was paid ‘out of company’s funds. What isthe company's profit or loss for the year ended December 31, 2016? a) P 30,000. ©) P190,000 b= PLA0.000 ay 290.000 21. Monarch Company's account balances during 2016 showed the following ebanges: See eres Non-current assets s: 500,000 decrease: Canc tain ‘apn dates Se ute Wael 4 ORON Share Copa 1200 000 Sa rear an . 300,000 a {Bess eins ses oes er G6 ube tn PSU DOD Svea pee Ellyn Mean open Hon sisi uae vit Gy 20167 9 ps0 St erno00 Bs Peo0.000 3 faotono Page 3 of 3 ReSA The Review School of Accountancy ‘Brel. No. 735-9807 & 734-3989 rij eecisin Siniilar CCONOINC Ary PRACTICAL ACCOUNTING 1 C. Uberita/ C. Espenilla/Macariola c Operating Segment, Discontinued Operation and Non-current Asset Held-for-Sale 1, Presented below are four segments that have been identified by Haley Productions: USefu) a fopoiiad. Total Revenue Operating i ‘Segments (Unaffiliated) Profit(Loss) Identifiable Assets A 255,000 7 30,000 _ 'P900,000 B 600,000 ~ (55,000) 800,000 7S U Yuk c 225,000 6,000 450,000 Se D 90,000 4,000 225,000, ene Fe, Shih ac rg dd abt ve 1 dae cence ih ro ‘pronouncements? 4 , Seaments A, B,C, and D ¢ Seaments A, B, and ‘e Segments A and B dd. Seaments.A and D c avigide pia\ oN SiR te 2. Buddy Company and its divisions are engaged solely in manufactiring operations. The following data pertains 1, 17") fo the indus in which apertiona were conducted forte yearend Dee. 31,2016 Segments Revenue from Revenue from Operating Profit Identifiable Assets nee thin ree A 18,000,000, 3,600,000 40,000,000, B 13,000,000 2000007 436,000,000 ¢ 3.000.000, 3.400.000 2800000 D 4,500,000 1,200,000“ 16,000,000, E 500,000 1400000 ~ 000,000 F 3,000,000 600,000 6.000.000 Total, saongnn 12,000,000 140,000,000 ¢ Using the quanta trdsbok ow many reponableseginens does Boddy Company have? a ayen ow tre ‘dave 3. Operating profit and loss figures for the seven segments of Mobile Company are as follows: i oO P Q Total dperating Profit 14,000,000 © — 2,000,000 8,000,000. — at 900,000, Operating Loss Using the quantitative threshold, which of the above operating scements are reportable based on the operating profit or loss criterion? a). segments K, L, Mand P ). segments N, O and Q J segments K, M, and N «d)_ none is reportable 4, On January 1, 2016, Power Company approved a plan to dispose of a business segment. It is expected thatthe sale will occur on April 30, 2017. On December 31, 2016. the carrying value of net assets of the segment was 4,000,000 and the net recoverable amount was P3,600,000. During 2016, the company paid employees severance and relocation costs of P200,000 as a direet result of the discontinuing operations. ‘The revenues and ‘expenses of the discontinuing segment during 2014 were: Income tx rate is 35% Clto99 00) L4ovnw) 2000000. bc el 3202 Page 1 of 3 LZ) 686E-VEL 8 L086-SEC “ON TOL ‘ApuewnoD9y Jo 100s mor vseu zoze ‘000'000'S6¢a 1 parewtTso s4 asm UI onjua axp UseoouQ} aso) Ysn poroudde s,quaKOsTEUENE UO Posty “I94aMOH] ‘O90'000"OPEd OF PastAou st os OF yS09 S89] oNYEA AIR} ay Jo dHeMNYSD ay, “TPH aq, JOU pmo uORNEDHISse|> 46] R4DIH 94p yeIp s9pnfou09 iMotHOHeUENE“SIEp SHIA. 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Discontinued Operation, Operating Seaments & NCAHES Question J: What amount of impairment loss should Strange Company recognize at the date the asset was reclassified as held for sale? a), None ©) P100,000,000 50,000,000 4) P150,000,000 Question 2: What amount of impairment recovery should Strange Company recognize on the date the asset is, reclassified back to property, plant and equipment? a) None 'P40,000,000. b)_P30,000,000 ‘d) PA45,000,000 9, On October 1, 2014, Builder Company has a building with a cost of P4,000,000 and accumulated depreciation ‘of P3,100,000. ‘The company commits to @ plan to sell the building by February 1, 2015. On October 1, 2014, ‘the building has an estimated selling price of P800,000, and i i estimated that selling costs associated with the disposal of the building will be P120,000. On December 31, 2014, the estimated selling price of the building hhas inereased to 1,200,000, with estimated selling costs remaining at P120,000. Question 1: At the time of reclassification as held for sale, what amount should the noncurrent asset held for sale be recognized? 680,000. ©) P800,000 by P780,000 «é) P900,000 Question 2; What amount of loss should Builder Company recognize at the time the building was reclassified ‘as held for sale? a) None ©), P120,000 b) P100,000 A¥P220,000 Question 3: As of December 31, 2014, what amount of gain on recovery should Builder Company. related to the asset held for sale? a) None BY P220,000 b) P180,000 «) P400,000 10. On April 30, 2014, Mindful Company classifies a property in Southern Tagalog as held for sale. The camying, amount of the property on this date is P300,000,000 (cost of P400,000,000, accumulated depreciation of 60,000,000 and aceumulated impairment loss of P40,000,000). The estimate of the fair value tess cost to sell ‘om this date is P280,000:000. ma iy ‘On December 31, 2014, the estimate of the fair value less cost sell is P350,000,000, ‘The sudden increase in the fair value is attributed to the increase in demand for properties in Souther Tagalog, when the region is ‘earmarked as the Philippine Development Region by the government as the next phase for economic growth, (Question 1: What is the amount of impairment loss on April 30, 20142 a, None . P30,000,000 A. P20,000,000 <4, P40,000,000 Question 2: What is the amount of impairment loss reversal on December 31, 20147 a. None 50,000,000 b. P20,000,000 60,000,000 3202 Pages of 3 Resa ‘The Review School of Accountancy ‘BTel. No. 735-9807 & 734-3989 ReSA The Review School of Accountancy Bel. No. 735-9807 & 734-3989 PRACTICAL A\ AL . Uberita/C. Espenilla/G. Macariola Statement of Financial Position 1. ‘The accounts and halances shovm helow were gathered from Clown Company’s ral balance on Decent 2016. All adjusting entries have been made. ‘Cash and cash equivalents, 200,000; Loans ‘und. Reveivables, P300,000; Prepaid Expenses, P100,000;_ Merchandise inventory, P800,000: Financial asset at fair value to profit or loss, P500,000: Financtal asset a fair value 10 other coniprehensive income, P300,000; Investment, in Associates, P1,000,000; Investment property, 291,000; Long-term fund investments, P500,000; Property Plant & Equipment ~ net, P8,000,000; Patents and trademarks~ net, P600,000; Goodwill, P800,000; Accounts Payable, P150,000; Notes payable, 300,000; Uncamed revenues, P250.000; Bonds Payable, P1,000,000; Dividends Payable, P140,000; Premium ‘on Bonds Payable, P100,000; Taxes Payable, P250,000 and Adygnces from shareholders’, 500,000, Question 1: How much should be the amount of euspent asset on Clowns December 31, 2016 balance sheet? ‘8. 1,400,000 41,900,000 b. 1.700.000, <4. 2,200,000 Question 2: How much shouldsbe the amount of current liabil balance sheet of Clown Company? a. 840,000. AX 1:450,000 21,090,000 «1,590,000 ities, to be reported in the December 31, 2016 2. ‘The following information pertains to agricultural entities a the end of the current aecounting reporting period a Atthe end ofthe reporting period a tomato grower's vines are bearing partially developed tomatoes. ‘The life of the tomato Vine is about six months. ‘The estimated fair wilue of the tomato-vines i P50,000 and «estimated cost to sell is P3,000 and the fruits they bear can be Soldat an active market for P50,000,. The timated cost to sell of The fruit is P2,000 and estimated transportation cost is P3000. ‘At the eid of the reporting period eit growers fruit trees partially bear developed oranges. Citrus trees bear fruit over many years. The estimated fair value of the citrus tres is P125,000. and estimated cost 10 sell is P4,000; and the frit they bear can be soldat an active market at P110,000. Estimated cost to sell the ‘oranges is P4,000 and estimated transportation cost is P6,000. ei Vif Whe Hye Sy ‘Wat Soacupe Or Cec Sele ld ie Bes bate ha SHENG Worle ysl la P92,000 © PEE Hoe ON we . pos.000 a. P231,000 gu 8 : Per tnd 51 ree et ein a cnt ert 31,215 tol Decy Cota HBS a A {Cash on hand and in hank, P1.200,000; Accounts receivable, P9S0,0000; Notes Receivable, P1.000,000; Merchandise inventory, P1,500,000; Prepaid expenses, P400,000. The following ate elevant information related to the above aecounts: - 1. Included in the cash in bank account isa time depesit of P200,000_with aterm ofsix me 2, Provisions of P50,000 fs io be made on the account receivable for future retums and discounts whieh were considered probable. ‘The account receivable includes °$00,000-assigned-reecivable, and 300,000) factored to a finance company for which the company has transfered significant amount of risks and rewards of ownership, 4. The note receivable does not include u P200,000 discounted 10 a finance company for whieh the company is contingent liable in ease the maker fais to settle on March 31, 2016 (maturity dae). 5. The merchandise inventory includes a(P100,000 irom w Cons 6. ‘The prepaid expense isthe total cost of a Wo year insurance expiring on June 30,2017. \UvIc ‘What amount of current asset should be reported in the December 31, 2015 statement of financial position of 1100000" «. 4,700,000 3203 rd] ot gui tac yg 15" qolll /wee PE 4990.00 # 4om.000 ae) 4) Page fof 3 ee pose < | Gly mule Peters Sa In2\) Prot} ¥ tits ee Wat vidi pie ~ 1154 ay G8GE-EL ® £086-SEL “ON OLS ‘AouBjunoazy Jo Jooyos MaINoy vseu 40z obeg £0ce pee ee a eens ms atoll her Sabian oot a ean EAT cotast mee RTT Hust anst onnh Euecie Opie eect ios ster i ores oe Ines a = yn gH OPC Poet ea ae oooo'e Pp ‘000'006'% "4 00°000'" > ono'ogs’c ‘ulonysod joisueuy yo uations 910 ‘LE Jaquia99q om) UE poyiedas awe wp JeISUEUY Oro HOREIaaLdap Xe} $s9O%9 st AN|EGEAL XE) POUD}OP SUL ‘000°02 1.49 anyea ae yuassn9 v sou puw soma IsouONt MW SjuDULAAONE UHo}-HONS HOA UN oye 09 wu) anou 94 UF asmysandad o1 spuontn Aan 2qp eM IWSUMNSUT Ig>p ponss! 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GtsnosteALNS Jo 99s OF onUU Sy SEHPpE AuPdaN0> uaz] wow Sop SITU UIE sav Sou uodanory av9984 "S102 “LE 29qu00¢1 JO SV“ ‘on0'00s"sca “P o00'00s"¢zd “4 000°000'sca “> ono'oos acd (.) eroueuy 910¢ “TE 12qua0aC] sH uy Hodax undo xX pInoYs 95S MOAT JO WNOWE soaMH09 aq SE IHN pur ys 102 Ie psoite paupdos sey Sueduos wuid e Cuediue> x “Inquiaang 3 se spuonas (ryaumuy sat a) HEE HHAAIND Te uonisog jeoueUt Jo IWawWEIeIS *T SNILNNODDV TWSLLSWud 10, PRACTICAL A‘ \CCOUNTING 1- Statement of Financial Position ‘What portion of the P300,000 shoud be shown as current and long-term liability in Glow’s December 31, 2015 statement of financial position? a ae a 300,000 A 275,000 150,000 © PL50,000 P 75,000 a. 150,000 P150,000 ‘On December 31, 2016, Star Company showed the following information: Ordinary share 10,000 shares is Iair value to other 6 (4000 shares not ye 50,000 to be collected on Jan. 2044; Revalat shares, P100,000 snd Unrealized gain on hedges of foreign ex capital, no par, 50,000 shares issued at a price of P12 per sh sued sind outstanding, prehensive in sued), subscription pri P20 per share: ‘Star Company has a total shareholders’ equity of a. 1,160,000 b. 1,460,000 & 1,510,000 4d. 1,610,000 Preference share capital, par PS, jin on financial asset measured at rp 1S pe ens taeda me P180,000 Retained proms, P200,000; Preference share subscribed diaper abe cr pelea oe a Revaluation reserve, P250,000; ‘Treasury share, ordinary share, 10,000 inge risks of firm commitments, P150,000. The December 31, 2015 balance sheet of Quiver Company reported a total shareholders’ equity of P1,830,000 . ‘The following information relates to 2016: ‘© Quiver Company issued an additional 5,000 shares of P100 par ordinary stock at P125 per share on July 1, 2016. + Reacgured 2,000 treasury shares st P120 per share and latr reissued 1,000 shares for P130 per share Remaining easury shares were retired al the end of the accounting yeu. «The company realized a net income of PS50,000 in 2016 * Cash dividends delared an pain 2014 was 400.0000 + Quiver Company declared is real property as dividend having a carrying value of P400,000 but with « market value oF 700,000. + Share dividend declared in 2016 has a total par of PRD0,000 tut with a market valué of P1,000,000 on declaration date while its year-end value was P1,200,000,. The share di outstanding. ind represents 10% of the shares ‘* Quiver Company ‘issued Gn’ December 31, 2016 an 8%, 5-year P5,000,000 convertible bond for a total proceeds of P5,100,000 but with a fair value of P4,750,000 at the time of issue. 50) ‘The sharcholders’ equity section of Dee. 31, 2016, statement of finaneial position would report a balance of a, 1,195,000 b. 1,915,000 £ 2,165,000 . 2,515,000 The Magic Lamp Corporation was incorporated on January 1, 2016, with following authorized capitalization: * 40,000 ordinary shares, no par value, stated value P40 per share 10,000 shares of 5% cumulative preference share, par Value P10 per share During 2016, Magic Lau ‘at P16 per share, In addi issued 24,000 ordinary shares for a total of P1,200,000 and 6,000 preference share on December 19, 2016, subscriptions for 2,000 preference Shares were taken at & purchase price of P17. These subscribed shares were paid for on January 2, 2017. What should Magic Lamp report as total contributed capital in its December 31 016 balance sheet? a P1,040,000 .P1,294,000 AP 1,330,000 capital uccounts are shown in the balance sheet of Laughing Corporation: Ordinary share, 10,000 shares, par value P100 1,000,000 Premium on ordinary share 2 Share premium - teasury share ‘Accumulated profits and losses 750,000 Treasury share, 2,000 shares at cost 250,000, The entire 2,000 treasury shares were sold for (200,000. ‘What would be the balance of the Accumulated Profits and Losses account after this sale? a, P250,000 b. P700,000 2& P730,000 . P750,000 ReSA ‘The Review School of Accountancy ‘BTel. No. 735-9807 & 734-3989 3203 Page 30f3 ReSA The Review School of Accountancy Tel. Nos. 734-3989 / 735-9807 PRACTICAL ACCOUNTING 1 C. Uberita/C. Espenilla/G. Macariola Cash & Cash Equivalents records as of December 31, 2014: 1. Lipton Company shows th ‘Crrcing acnunt at Morgen Bank, PO6,000}Checking account at Land Dank, P500,00: Payroll account aeaeins ek, P100,000; Foreign bank account-resricted , P 750,000; Postage stumps, P 22,000; Employees, Postdated checks, P 30,000; .0.U. fom presents brother. P75,000; Travelers check BS0.000: Nosuticens following aceount balances ponds check, P18,000; Petty cash fund (P16,000 in currency & expenses receipts for P84,000), P100,000 and Cashier's checks, P36,000, ‘What is the correct cash balance to be reported in the balance sheet of Lipton Company on Dee. 31,2014? a. P582,000 FE 102,000 b. P6R6,000 ‘d. P704,000, 2) The cath account in the current astetscaton ofthe balance shect for Heater Company showed a balance of 00. Tt was found fo inelade te following items oe Peity cash fund (P1,000 is in the form of paid vouchers), B5,000; Checking account balance, per bank statement (A P25,000 check is. still outsta 255,000; Undeposited receipts (including a ae heck. for PS:000)P120,000; Currencies and coins availing deposit, PS5.0005, Bond sinking fund — cash, 100,000; Check draviPby manager, returned by bank marked NSF, P20,000 \What is the correct ensh balance for Heater’ Company's balance sheet? sa, P404,000 . 430,000 b) P429,000 dd, P529,000 sta Caoratinn hs sup! you th the following softs Bak accounts and eh at December 31, ao a et ompematng balance of P1S.K0 with no restriction, CARO: Savings aeeoan Sooner eats of deposit 6 month, 10%, duc April 20,2013, Po0,000; Money market GO-day 2 Fa. repay 00: beyrll acount, 20,000 Coreateof depos, 3 months, 10% due Seen te Sots, P2850 and Pty ea, P1,500. What should fe the balanee to be reported as "Cash aid ‘Gash Equivatents” in the December 31, 2014 statement of financial position of Delta Corporation? a. P139,500 Ya P21A,500) b. P199,500 a 274,500 £4. -On December 31, 2014, First Company had the following cash balances: Cash in banks ~ 1,800,000 Py cash finds (ll funds wore reiribirsedon 12/31/14) 50.000 asl in banks included P600,000 in a separate bank where-in the company is required fo maintain a minimum average of P800,000 of 10 workings on a rolling basis. {In the current assets section of First's December 31, 2014 statement of financial position, what fotal amount should be shown as cash? a. PF,200,000 , P1,800,000 b. P1250,000 A 11850,000 5. On December 31, 2014, Everlasting Company has the following composition of its cash and eash equivalents: Demand deposit, P1,500.000; Ceniticate of deposit-30 days, 500,000; NSF check of custon 20.000; Money niaeket placement (due date: June 30, 2015), P1,000,000; Savings deposit in 1,960,000 2,360,000 3204 poze o'0s9a “P, ooo'0e9d “4 000'6¢9 4 “2 00'06sd_ ‘ty MH yo0q Jod sydia9a4 ysmo Jo sumo ft EYAL “000°00Sd [dy 40) 1u9WSINqsIp yuEq v puR 000'009d-1dy 10), sttoo1 ung yiuow aso uo posau09 ma OO‘ ~IHAY Uo aoo04 Yoo smOMOLE sao pay ay user gp *000'0Re-Hady 40j owoUHpa43) ‘OOO'DS Ll 6 PanIMoKAE yBuN.n M1 syS0dap “yon'sLa poe oe “ve mly yw epoy> Fang, dy wr yoeg mn YBHOwIN paworo pLOc "Ig YuBIA We sty HoT DeoesE ee OO0'U6EE - 1€/€0 ‘009 s0d sounyog wOSET O00 — ‘out p93) 00'S Sypoyp BmpunsNG, 891 o0'saset imo, ovOTT oor “ourour goed 00'00t4 uisuen uw ysodo¢) 00'S 1e/e0 ‘tuowrowys yung tod anrey, {7102 “1 YOM ® YonenFoiosas yung AuEoHOy 9p poy SuRdUIO> YOY “O| 00'S684 P o0'dske@ 000'S98d "> 000'Stgd 0 weUuNS. 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No. 735-9807 & 734-3989 PRACTICAL ACCOUNTING 1 C. Uberita/C. Espenilla/ G Macariola Loans and Receivables fables (On December 31, 2014, the “Res Subsidiary details show the following: account of G Company shows a debit balance of P5.950,000. ‘Accounts receivable, 725,000? Notes receivable, 100,000; Installments receivable, normally due 1 year 10 pean pao, G00 Customers’ accounts reporting credit Balanes arising, from sales rtums, P30,000: Rivence payments for purchase of merchandise, P150,000; Cash advances to subsidiary, 400.000; Claim paeanspetrance company, P15,000; Subscriptiow teceivable duc in 60 days, P300,000; Acerued inferest ror suble, P10,000, Depesit on contract bids, P3,000,000 and Advances to shareholders (collectible in 2016), }'1,.000.000-Howrmuch fs the amount to be peesented a8 “loans and receivables” under current assets seetion of the statement of financial position’? ay P725,000 1,590,000 b.* PI,125.000 P1,600,000, On January 1, 2014, F Company” Trade Loans ankd Receivable has an outstanding balance of PS00,000. Below tie the transactions in its Trade Loans and Receivables and other related aécotnts during 2014: ‘Total Sales. including a PS00,000 cash sales, P7,700.000; Account receivable writer-off, P50,000; Purchases ‘on aecount, P7-800,000; Payments to creditors, P6,400,000; Purchase discounts, P520,000; Total Sales retums, £50,000 of which P20,000 were sales on a cash basis; Amount reccived from eredit customers, P4,900,000; Sales discount fost,P80,000: Notes given to settle accounts, PS00,000; Purchase returns, P140,000, Payments Gr notes, P200,000; Prosseds from collection on notes receivable including interest of P10,000,, 370,000. Provision for fature returns and discounts on outstanding receivables, P25,000.. What is the amortized cost of the Loans and Receivable on December 31, 20142 fa, 2,255,000 cc. P2,415,000, b. 2,280,000: , P2,440,000 Mould Comp, sells to wholesalers on terms of 2/15, 1/30, Mould has no cash sales biat based on historical Cxpericnce $0%6 of Mould’s customers take advange of the diseaunt. | Mould.uses the gross method of econding sales and trade receivables. An analysis of Moulds trade receivables balances at December 31, 2014 revealed the following: Amount contcesinty Vn fe" Drage 300,000 100% % 16-30 days 180,000, 95%9 31260 days 15,000 90% rs Over 60 days * __7,500 PILSO0LES 502,500 Queition 1: In its December.31, 2014 stalement of financial position, what amount should Mould report for provision for discounts? Q “P3,000, e: PS,025- 4,860 d, P6.000 ‘Question 2: What is the amortized edst of the receivable on Deceinber 31, 20147 a. P483,000, ae ‘c. P493,000 b. PA86,000 de PA99,500 Megsbaok granted an 8%, 3-year P6,000,000 loan to Global Company on January 1.3013. The interes on the Tota is payable every December 31. Megabank incurred P148,122 of diréct origination cost but an origination fea of P300.000 was charge agninst Global Company.” The effective rate on the foan as a:result of the ofiginatfon fee and cost isnow 9%. ‘Question 1: What i the amortized cost of the Joan on Decimber 31.2014 in Megabank’s accounting books? a PS848,122 ©. 15,944,954 b, P5,894,453 6,000,000 Question 2: What amo a, P526331 . b, PS30.S00/ a nt of interest income should Megabank disclose in its December, 31, 20142, 3205 Page of 6 S86E-VEC 9 LoNG-SEz “ON “OLE oe ‘AouEUnoDDY Jo 1ooKDS mornaN StL dee 2yi ere cpoceing soce envizcaD sol'zecd “4 £19d 3 DIE Teed “e €spqUB91 wo >}geatsand a4 Jo 1809 pazmoUE 9p 94 PINON yp siciso L Lres0 9 RaTeT 6 spon "SIFUIPION JO Aa amos SEG “wll 1 0}e) ane nasaud wo vont ~Sf9y Sew smn Jo amp a aE J0 aA sy 29) Wovotu Jo 976 Bamenaad ay “MST UAOSIOY Te Taq (000°09d JO wiouiked Buyinbo rou Bul aia aOM we pours xan, “Kuno: mat 0} spoo8 pos Kuedato- asamp] o¢-P~IEATay% ooo'0e94 “P ooorozd “a 000029 ouou ow fluo vs peas sin Zuyuno>stp sun SunuMSse-+10 “Le saqus99C_ Jo se UoRsod erly Jo Mourayms mF w so}xp Aandi 2p poys(e|goAissN) ane FINN) Jo MEN Teel We eee soN orkid *P o0'sd A ova > ouoa” -e 2 a Zo}ts Y s0 pawean s1 Runumoosip 2d colygy 8 Rewmnsee saya 9 oy a7us#oo01 udu puousei pinoy ss 0 me Jo WnOUAP ys“ SONS eee) Z tt "941 YW aI0U aq portmoasep UE OU Poe IV POP a1qeay on ep 0 01 “GF IFAs Sena seen a a Em a 0F'L9%d “‘P OOFL% “4 covieia 3 aoe 20h loot-o. uns preys sorta jo SEN 3M Whos 30fFOAUROUN BIN! YM -ODH'OCLALH UoNsNa 20 asta20! Jo one sy SU, sKRP Ly 40 sqqulooa tp Jo AaunMe oy aa aBesoahpanon so papas (24 Wap 41 pony> “02 woop "uoRIPPE UL “sIquABIaN YEON 3p JH 01 [dO AEGON W SUIT: pu age 30.99) ¥ aside 09 woo -iuauLCHhMU Jo aunipar olan sokent9a1 omy paieose "o> WOW, ey ane ‘4 papain son fous’) “> wooo sqgeaioas shinerse Jo-OOOTGOTF HOPE SU] Une SNe Ae wep 000'0bLa 00 led 4 00'9Ld > Duo“ uonysod jprounuy jo iuowiaie8 by gh WE “TE PaLII09C st W asO}>N] 01 animIU0 KuBdIBO ymog PINON D[QKaodo Jo YUMOUE HELA, MOTTON chet 00°94 ono%td “a Seay O09. did ‘ 000'bId DU0N 2 BE gp ee. js0ysuea oun Jo ynsas we se azqtooo1 Kavdwuo.y 19%>q pyrioys $80] Jo MOU ey, “THT, Hy snoose poufse Jo a.m pun_OOO Tre wom suumas poydasoe Kuma 194 sumoDstp Jo 000'sa Sunanpapsayv smoo9e poutisse wo O90's Ped Pa9|109J0h0qsoqulDa9CL Sue! “spl stm sich a oo 234 ton a oy 2Mh Jo runoUR an wo UOASSMNOD ¥GE t paAaOY> SOUL! IRE “OONOOSAL Fo eer mak ove 3 40} unas w se sou iM OF a}qRAI2001 sD" 0 90O"OOOLa Pouss SuNdule> soled vine ose wes ov'ors -P 00'06rd 4 000°06Sd > ooo‘orrd |v {stune23e jangnop 40} souEmo|E 241 2u0}04 a}gvala9ausiuno99e Se “EOZ “TE HAqU9RC Ie Uonod yoFsaNUN Jo moWAINS SH Uo vodas AuBduies 2p. 000 oF atgssD994 sunoo9R 9 quDao9uN SH Jo sim PE OBO. I ato wep peo soflary pay usdwoo om) °¢10¢ Fu1and “stmnoooe qujgnop 405 ommoyte paread ayn MUHonpap sae OOOTOPSL J0 atgeaysaas siinooae poy Kunduion Buy *ct0z “Le sagmiasacl “sueresdo Jo Oe Hayy aH Jo mop oN “5 ovo'0z6'ta “P o00'0zsd 9 ‘oozes > G00'R0Sd_ {496 am 40y pazuBoanx asuadx iqap peg jo uno 2424 [lt ves 9] qH99IF09uN 94 js S9}qpato2o4 H;puRISINO si Jo 96g IHD SorEUHNSD AuBdAOD ap J “sHUNOD9E. Inpiqnop Joy SoMENOTTY 2y) UEHHO'ZIA Jo souM.EG YPasD v OsTE St IDK, “MONIKA PEM Jo aos op Susp pos luo saves pur jg s9quIBd5C1 Jo se UONTHUE "gq uy[eIO} 2}qoaiaoay syUNG: rjsimo sey “dio UoreUf Pie S00 Re HW 12. 1 ‘cour L 1s and receivable ‘On December 31,2014, Dwart Corporation sold Tor P480,000 an old machine having an original cost of 800,000 and a book value of P600,000, the term of the Sle were as FollGws: 120,000 down payment P120,000 payable on December 31 each of the next three years i ‘The agreement of sale made no mention of interest; howevery/9% would be a fair rate for this type of = - 6m spo ‘Question 2: What should be the amortized cost ofthe note receivable on December 31, 2015? a, PLiO092 , P303,785. BE v211,003 4. P360,000 On December 31, 2015, Ball Company finished consultation serviges and accepted in exchange a promissory note with fice value of P200,000, a dic date of December 31.2018, and a stated rate of 3%, with tateest receivgble atthe end ofeach year. ‘The fair value of the services isnot readily determinablé and the not is not ‘Soci marogble Under te cccumstnezs, the note considered fo ave an appropriate inputd ate of interest of 10% ‘The follc fact ided: ee lowing interest factors are provided: © y amy Interest Rate Sealy: 864 “oble Fastin for Thee Periods it 10% Future value of 1.15763 133100) MI ap Prescot value of eae 73132 Four value ofordoary amiityot |=" /3,5350 sai CM Ho Present vale of ordinary annuity of 272325 2an6es gy 240 - to ‘by Wht i the smontzed cost ofthe note on Desernber 3420172. Oey fay! t PLsI31 ie iP P190309 Ne piaziets 1 p200.000 oe Spores en aceon rei oe implicit rate on December 31, 2014 is 15% ‘Question 1. What amount should Queen report in its December 31, 2014 statement of financial postion as the amortized cost ofthe receivable? 4. P226.843 ye P270360 b P230,840 “A. PaKa210 ‘Question 2: What amount of bad-debt/impairment loss should Queen Company recognize related to its account receivable on in 2014? a. PI1S,790 . P169,160 ye 129,640 4. PI73,157 Maxim Company sold its inventory for P300,000 to Maxwell on Janvary 2, 2015-and received a one-year note bearing an interest rate or 12% for the full amount. On December 31, 2015. Maxim determined based on ‘Maxwell's recent financial crisis, there’s a delay and change in the pattern of collection. ‘The delay and change in the pattern shows that 150,000 will be due on December 31, 2016 and-P80,000 will be due on December 4 F80,000. 31, 2017, Ags ‘What amount of impairment loss should Maxivell Company recognize on December 31, 2015? a. none ©. P106,000 b. 102,300 +N PI38296 3205 Pages of 3 ResA ‘The Review School of Accountancy ‘Tel. No. 735-9807 & 734-3089 COS 20¢ 20/7 , ee tok wv ABI 2 Honey Zork ReSA ‘The Review School of Accountancy Tel, No. 735-9807 & 734-3989 PRACTICAL ACCOUNTING 1 berita/C. Espenilla/G. Macariola Inventory é 3x tacary 2,014, Journal Company purchased goods Tom Ties Company @coinpaay in Singapore for an invoice amount of $$100,000 if paid within the normal eet period of 10 days. However, pament mayte deterred up ta -tuonis subject to a revised invoice in the antunt of S$102,000, On Janiary 2, 207% the echange re wes P3400 io SS100. Inport dts and transport charge amounted o PSUD.000 nd P300.000 respectively, Journal Company paid the invoiced amount on April 1, 2014, on this dated le was 35.00 to $81.00 : Question 1: What amount should the goods be initially recorded? ‘ a P3,400,000 (Fe PA200,000 b. 3,570,000 4. P4,370,000 Question 2: What total amount of exchange loss and interest costs should the company recognize? a None es hs b. P68,000 PI70,000 3 December 20, 2014, Rolex Company purchase goods costing P100,000. The terms were FOB dest Somé ofthe cost incre in contetio with the sale en delivery ofthe goods vers aa ONO PoCLRGIRE Tok shipment, P2.000; Shipping, 3,000 and special handing cartes, PAGDO. ‘These goods were reeeel DDecbe 31 2014. tthe Decerner 31,2014 date of ftsncal peion, what ementof these gue dielabs exis tverin? ; EP 100,000 ©. P107,000 4 SIA - ou h. Plos.o00 4. P109,000 32” On January 1, 2014 the entity purchased raw materials to be consumed in the production process for P550,000, {including 50,000 refundable purchase taxes. The puréhase price was funded by raising a loan of PS55,000, (including P5,000 loan-raising fees). The loan is secured by the inventories. During January 2014 the entity designed the corporate gifts forthe customer, the design costs included: Cost of external designer, P7,000 and labor cost, P3,000. During February 2014, the entity's production (eam developed the manufacturing technique and made further modifications necessary to bring the inventories to the conditions specified in the ‘agreement. The following costs were incurred in the testing phase: Material, net of P3,000 recovered from the sale of the scrapped output, P21,000; Labor, P11,000 and depreciation of plant used to perform the modifications, P5,000, During February 2014 the entity incurred the following additional costs in manufacturing the customized corporate gifts; consumable stores, PS5,000; labor, P65,0000 and depreciation of plant used t perform the modifications, P15,000. The customized gifts were ready for sale on March 1, 2014, No abnormal wastage occurred in the developmemt and manufacture of the corporate gifts. What is the cost ofthe finished inventory of customized gifls? ‘ ress se toto bets 4 Poo ier im etki mea cg once of 0. PSUR Tt pent tet teeae ic oenerh rack tOR ieassoa Gekalne 00 pipieon SSE ne Merchandise in transit, l'ree Alongside, including delivery cost alongside the! Vessel of P6,000 ut exclding the cos of shipment of P3.000- 250,000 279 Merchandise in transit, IF (exeliding insurance costs an right of P,O00. ) 175,000 lf ‘What amount should Marker Company report as Value of its inventory in its 2014 balance sheet? a. 749,000 e P770,000 b. 760,000 " 4. P876,000 _3© On October 1.2014, Act Company consigned 50 fiezer it wit cost gf315,000 to King Company for sate at 20,000 each an paid P20,000 in tanspenation cost On December 31,2014, King reported te sale ofthe 25 eves an returied 10 nits, Cost paid by the cinsignee ‘on the retared nits was P4000. “Amount dt consigpor ws TemiTST onthe same date. Commission rte as aged upon Wo 3206 + Page 1 of 5 696-bE2 8 £096-SEL ‘ON 181 ‘Anuequno22y jo ]00yDs moInoU OUL vsow ly 500001 soes 1¢ Asonuny, 00°01 ‘ 00°PL soseypand og zene sacana OIE Pe ayoone creer een, QOZE wih Fe] Moons stand oz tee odie t ‘voo'oe oveypand gt Avene i AS on0'st soe Aro 00° 0ea old ‘00°02 sounjng | Aaeaieg ors 9 Ruud one Bay) aN EPH HRB) oO 0 Em 000°9ELd “P 000°869d “4 o00'Sead > oos'exod THIET 2pun prog “Le >quIaNaCL Ye Aojuanut a4 Jo 1909 4p SE EUAN ‘puny uO Y NPIL TO STMANTGH IT SMoys PLOT “TE 1oquinaacy Mo tm eaussyd y oo0's9e o 0008 « ‘oov'sze st Zo00's z ‘ooo'ar wv £00001 i 00's 9 tr 00'S 31 ‘000"F0Set Zh OL aaquaae¢ 0D moa ssmol[oy S# 315m Cienuey Jo tnuou! ap Sun Vy oMposd any uo ¥ onpesd so sm oo'DT Poy kumdO.y ag OP osr Lae i — osrysing “SE TFA Bas09 4165“ BRT © bth ib ase av oov'eta P Mre29 by 008'Cld > ‘suoU e tontey _ a1¢ EW to parsnipe a9 aed wanoo3b ap Pinoys yonus wo4 Kf “pyed UID YU poy 20UEIE DMD Te Rew ny unos90 wo pais paNIsAax pu soIpANd s AON OUN.16-OOTREA NOWMIEL JosuIA\ “O/H “OTT SAO, “OUTTPIA"moaae wo asypuByaso.t posepand Los ys APA Ud) SIROTT AU y saseypund spuo9as "0° sos 2y0pe S80°PLE RK vscssa @) ovc'oed >, wscobd © ons qa30m° +4 san ganiaoad a5 pip SU FIDT SHY YUH W047 -Whouo; 04 |} WE UNED>H SW pOINES HEPUER ‘PLO “PL UAL YO “siag}9P JOU oF anp-OOO'OSd JA THE aot un gi Spinto paum: Japa Wop peasy aaBaD “ploz*¢ 2am uo “woRMpEATE FATTY IG} sis0> Laaatap 40 Goor Pa PHbdand wdooue,y “used Saddnys Os ope sem a]Us ay} puE OP 'S|/Z AIAN SLID) PSL “~Y6OT PLE RET “OE JO sIMMODSI apr POmofTE rdaou0.) suno29e uo jepuey 1 DOO Jo 224 Is # Is asipumyow pos din wdadUO PLATT AUF UD “g M0099 K+ 00'0094-4 ‘O00'FE9d 2) 00'0Sd ‘sea sa}b8 40 1809 $10 829474 505 S45 00°02 ‘oo'srt Aoousaur Spee, 00's «000908 mo-nygiauy 00's soouiiisuoa 0) uoneuodsta 00" mest 00°00 oo0'sts soseyaunl O0O'FE o0'0E La Aaoqua nun SuruTdogt Sp009 §, 72104 ‘502779804 Jo spuono1 Bayjunosow ¢ 9g ap wow pantap seas uonPUUIE}UL ZUEKOT SM, —~Z ‘000° 000'%d “P oov'oce'td 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 / FSO ReSA/ 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 & 734-3989 of 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! 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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 PSO se 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 & 734-3989 Aahwor 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 34 ReSA 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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KxeUIpso raaj>A_ Jo SazeYS QOO'D| paseyamnd AueduIOD WoW “¢ 00'00ra Cp) oo0'ostd “a c 000°00Pd “9 00009 d _inoou puapayp se vodai sont pros nour ep “p07 1 BAUD Pops sO ap In OU aisuoyauuon fo tmouisi Uf oun od plo pooptp peo ® Pontoon ssOM) FLUE "S| SMAI UO "OE AOGUIDAON, UO “Opel SE amYS ayp Jo oud JEU 4p Uy PLOT “TE YO WO 9% | Jo pupEAEp auwys v poatooda song. “Plog $1 Armnary uo uedaioy ots 50 (dssuno 946) so20ys OO0'0S poseund Kaedtuo> ss5N)“b ov0'00Ed op'001d “4 000%Led “9 000'89d gnomisod peroueuy yo mourayeis LOZ *1e raquis9qc] aM ut aso|9sIP Audios oI PInoys SSo] 40 WB pacyywauuN Jo NOL yyy ~ZTONEIMG 00°00 “P| Aooo'vord “4 00'%Lzd > 00'00cd a tog a simounsonuy oy Jo anyea joys 24p ut asrasoUr oyp Jo YSU v Se owdouE aassuaqosdaoD Jo qUoWOINS 192 Si tt wodas MO Prnoys Yon MOH “990'00S‘Zal SeA OOFOd 2xp 40 aNjeA JrJOUE mM “HL OZ “LE ADAUDDNCL Uo: WOREDACS T sanunses Ayinb3 ul quaunsaaut T ONLLNNODV TwOLLDVud / vse ReSA The Review School of Accountancy ‘Tel. 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 1of2 686E-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 COG PRACTICAL 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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ZLOc Si Uy wodou Pinoys ueduto> UeRIE asuodxo Jo wunoUte jeIos Hy. “Sadun LEROY Jo Zone loc 1 AME Ao S100 uwouy Som oypind yeu yy, “SIE YZ JOA yasN-W sOH uA a4], “HuONRl sy Reese and oe 249 Jo} $001 1H 0) OgO'oG PIPL Auda wEROW “cLOc “¢AlEMutG UC) ‘GaE'eOte paren waved 2qp Jo Wonensfiou yum porEloosse i609 Joyo pup S09} [eB] “Suge “¢ Aumuny US poms oda onal "42H 4 ronpoud ¥ doponap 01 809 matudoanap pub Ypusosss JO Qe Yee PAUNaUL WwnEAOdIe Uedaony._-g 00'00ca ’P. ‘oov'ovd 4 000'00Id “> 00rd 801 40 oad sy ut Yodsu Cueduro > uonoug pmnoys worre/ALoUE wed Jo JUNO yep HOG Le oquunooqL si vy Auto’) worosd 091809 a Jo Yl 40} DIE ain 'Kng 01 panic siya) Soygestoay TONTINAODOV TVOTLIVHE7 FSH. ReSA / PRACTICAL ACCOUNTING 1 Intangibles 14. 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 & 734-3989 PRACTICAL 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 VSPH ReSA / 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

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