Вы находитесь на странице: 1из 8


INSTRUCTIONS: Select the best answer for each of the following questions. ALL questions are compulsory and
MUST be attempted. Mark only one answer for each item on the answer sheet provided. Strictly NO ERASURES
ALLOWED. Erasures will render your examination answer sheet INVALID. Use PENCIL NO. 2 only. GOODLUCK!

1. The partnership agreement between Ken and Avery 7. State the proper order of partnership liquidation.
stipulates that Ken is to receive a 20% bonus on I. Outside creditors
profits, with residual profit and loss to be apportioned II. Owners’ interests
in the ratio 3:2, respectively. Which partner has a III. Inside creditors
greater advantage when the partnership has a profit a. I, II, III c. II, I, III
and hen it incurred a loss? b. III, I, II d. I, III, II
a. Profit – Ken; Loss – Avery
b. Profit – Avery; Loss – Avery 8. Under cash priority program, when all of the priorities
c. Profit – Ken; Loss – Ken are paid, any remaining cash distribution is
d. Profit – Avery; Loss – Ken a. allocated to the partners based on their respective
profit or loss ratios.
2. The estimated amount available for free assets in a b. allocated to the partners based on the balances in
Statement of Affairs for a business enterprise their capital accounts after allocation of losses.
undergoing bankruptcy liquidation is equal to the c. allocated to the partners based on their pre-
assets computed priorities.
a. Current fair value less carrying amounts d. allocated to the partners based on the relative
b. Carrying amounts less current fair values values of their capital balances.
c. Carrying amounts plus gain or less loss on
realization 9. Under the cost recovery method,
d. Carrying amounts plus loss or less gain on a. the initial collections on the sale are treated as
realization recovery of the inventory sold. Thus, no gross
profit or interest income is recognized until total
3. As suggested by Article 1787 of the Philippine Civil collections from the sale equals the cost of
Code and relevant PFRSs, the net contributions (assets inventory sold.
and related liabilities assumed by the partnership) of b. the initial collections on the sale are treated as
the partners to the partnership are measured at recovery of the inventory sold. Thus, no gross
a. fair value profit is recognized until total collections from the
b. cost sale equals the cost of inventory sold.
c. discretionary amount determined by partners c. A or B
d. any of these d. None of the above.

4. On November 1, 2014, Klaus Co. obtained franchise 10. Under PAS 11 – Construction Contracts, the primary
rights from “The Originals” Co. The initial franchise fee issue in accounting for construction contracts is
included consideration for inventory and equipment to a. the allocation of contract revenue to the
be delivered to Klaus. All of the necessary preparations accounting periods in which construction work is
were completed, and Klaus Co. started operations, on performed.
January 31, 2015. The inventory and equipment were b. the allocation of contract costs to the accounting
delivered to Klaus on December 1, 2014. How would periods in which construction work is performed.
“The originals” Co. recognize revenue for the supply of c. the determination of percentage of completion.
inventory and equipment? d. A and B.
a. recognize in full on November 1, 2014 e. All of the choices.
b. recognize in full on December 1, 2014
c. recognize in full on January 31, 2015 11. PAS 11 – Construction Contracts provides that any
d. deferred and amortize over the franchise term expected loss on the construction contract is
starting January 31, 2015 a. recognized as an expense immediately.
b. recognized as an expense immediately as an
5. An advance cash distribution plan is prepared adjustment to the revenue already recognized.
a. Each time cash is distributed to partners in an c. recognized as an expense immediately adjunct to
installment liquidation the costs of construction already recognized.
b. Each time a partnership asset is sold in an d. deferred and amortized over the remaining
installment liquidation construction period.
c. To determine the order and amount of cash each
partner will receive as it becomes available for 12. Which of the following appears on the statement of
distribution financial position of a contractor who is applying PAS
d. None of these 11 – Construction Contracts?
a. Construction in progress as current asset.
6. The interest of the withdrawing, retiring, or deceased b. Progress billings as current liability.
partner shall be adjusted for which of the following? c. Amount of due from (due to) customers for
I. His share of any profit or loss up to the date of his contract work.
withdrawal, retirement or death, if he withdraws, d. Any of the choices.
retires or dies during the year
II. His share of any revaluation gains or losses as at 13. The realization of income on installment sales
the date of his withdrawal, retirement, or death transactions involves
a. I only c. I or II a. Recognition of the difference between the cash
b. II only d. I and II collected on installment sales and the cash
expenses incurred

Page 1 of 8 www.prtc.com.ph AFAR


b. Deferring the net income related to installment 20. If franchise rights are repossessed and the franchisor
sales and recognizing the income as cash is refunds the consideration received,
collected I. the original franchise sale is canceled. “Gain or
c. Deferring gross profit while recognizing operating loss” from cancellation may arise after
or financial expenses in the period incurred derecognition of account balances associated with
d. Deferring gross profit and all additional expenses the franchise cancelled.
related to installment sales until cash is collected II. the transaction shall not be regarded as a sale
cancellation. However, impairment loss may arise
14. In selecting an accounting method for a newly from forfeiture of collectibles.
contracted long-term construction project, the principal a. I only c. I or II
factor to be considered should be b. II only d. I and II
a. The terms of payment
b. The nature of the contractor’s technical facilities 21. Which of the following is an inventory account of a
used in construction manufacturer but not of a merchandiser?
c. The method commonly used by the contractor for a. Cost of goods manufactured
other long-term construction contracts b. Merchandise Inventory
d. The degree to which a reliable estimate of the c. Work in process inventory
costs to complete and extent of progress toward d. Direct labor
completion is practicable
22. Cost of goods manufactured is used to compute
15. SMDC Construction Company’s project extend over a. Cost of goods sold
several years and collection of receivables is 23. b. Manufacturing overhead applied
reasonably certain. Each project has a contract that c. Direct materials used
specifies a price and the rights and obligations of all d. Finished goods inventory
parties. Both the contractor and the customer are Which of the following is a period cost?
expected to fulfill their contractual
a. Materials inventory
obligations on each project. Reliable
estimates can be made of the extent of b. Direct labor
c. Manufacturing overhead
progress and costs to complete each
project. The method that SMDC must d. Selling expenses
use to account for construction revenue is
a. Installment sales method 24. Job order costing would be an appropriate system to
account for the manufacture of
b. Percentage- of- completion method
c. Completed –contract method a. Aircraft
25. b. Matches A
d. Cost recovery method
c. Zippers
16. One of the more popular input measures used to d. Cardboard boxes
determine the progress toward completion in the written order sent to inform the purchasing
percentage- of-completion method is department of a need for materials is called a
a. Revenue-percentage basis a. Purchase order
b. Cost-percentage basis 26. b. Purchase requisition U
c. Progress completion basis c. Receiving report n
d. Cost –to- cost basis d. Materials requisition form d
17. The theoretical support for using the percentage- of- r a periodic inventory system, the purchase of
completion method of accounting for long-term materials is recorded in an account entitled
construction projects is that it a. Cost of Goods Sold
a. Is more conservative than the cost recovery 27. b. Purchases
method c. Materials inventory
b. Reports a lower net income figure than the cost d. Work in Process Inventory
recovery method The total of the materials subsidiary ledger inventory cards
c. More closely conforms to the cost principle must be equal to the amount in the following account
d. Produces a realistic matching of expenses with
a. Cost of Goods Sold
revenues 28. b. Purchases
c. Materials Inventory
18. It is the one-off payment made by the franchisee to
d. Work in Process Inventory
the franchisor to obtain the franchise right.
Which of the following is usually prepared daily by
a. Initial franchise fee
employees for each job worked on?
b. Continuing franchise fee
c. Fixer’s fee a. Job time tickets
d. Any of the choices b. Time card
c. Punch card
19. There is substantial performance when: d. Cost control card
I. the franchisor has no remaining obligation or intent
Under a perpetual inventory system, the purchase of
to refund any cash received or forgive any unpaid
materials is recorded in an account entitled
notes or receivables.
II. initial services required by the franchise agreement a. Cost of Goods Sold
30. b. Purchases
are substantially performed.
III. no other material conditions or obligations exist. c. Materials inventory
d. Work in process inventory
a. I, II and III c. I and II only Factory worker fringe benefit costs are usually charged to
b. II and III only d. I and III only a. Work in process Inventory
b. Direct labor
c. Administrative expenses
d. Factory overhead
Page 2 of 8 www.prtc.com.ph AFAR

The following condensed balance sheet is prepared for partnership and on August 1, 2014 Partner FRIDA made a
QUIEL and ROGER, who share profits and losses in the permanent withdrawal of P67,500. On May 1, 2015,
ratio of 60:40, respectively: Partner GLACE contributed machinery with a fair market
Other assets P 405,000 Accounts P108,000 value of P90,000 and a net book value of P75,000 when
payable contributed. On November 1, 2015 Partner GLACE
Quiel, loan 18,000 Quiel, capital 175,500 contributed an additional P45,000 cash to the partnership.
Roger, capital 139,500 Both partners withdrew one-fourth of their salary
Total P 423,000 Total P 423,000 allowances in 2015.

31. The partners have decided to liquidate the partnership. The partnership reported a net income of P257,400 in
If the other assets are sold for P346,500, what amount 2014 and the profit and loss agreement are as follows:
of the available cash should be distributed to QUIEL? a. Interest at 6% is allowed on average capital
a. P136,000 c. P122,400 balances;
b. P156,000 d. P195,000 b. Salaries of P2,700 per month to each partner;
c. Bonus to FRIDA of 10% of net income after interest,
salaries, and bonus; and
On January 1, 2014, the partners SELYA, TESSA, and d. Balance to be divided in the ratio of 6:4 to FRIDA
URSULA, who share profits and losses in the ratio of 5:3:2, and GLACE, respectively.
respectively, decided to liquidate their partnership. On this
date the partnership condensed balance sheet was as 34. Determine how the net income will be allocated to the
follows: partners:
a. FRIDA, P160,000 and GLACE, P126,000
Cash P 45,000 Liabilities P 54,000 b. FRIDA, P 180,000 and GLACE, P106,000
Other assets 225,000 Selya, capital 72,000 c. FRIDA, P170,000 and GLACE, P116,000
Tess, capital 81,000 d. FRIDA, P153,000 and GLACE, P104,400
Ursula, capital 63,000
Total P 270,000 Total P270,000
HAIDEE and ISABEL are partners sharing profits and losses
in the ratio of 60% and 40%, respectively. The partnership
On January 15, 2014, the first cash sale of other assets balance sheet at August 30, 2014 follows:
with a carrying amount of P135,000 realized P108,000.
Safe installment payments were made on the same date. Cash P 12,150 Accounts payable P 13,500
32. How much cash should be distributed to each partner? Other assets 119,700 Haidee, Loan 5,850
SELYA TESSA URSULA Isabel, Loan 9,000 Haidee, capital 81,000
a. P15,000 P51,000 P44,000 Isabel, capital 40,500
b. P40,000 P45,000 P35,000 Total P 140,850 Total P140,850
c. P55,000 P33,000 P22,000
d. P13,500 P45,900 P39,600
At this date, JOSIE was admitted as a partner for a
consideration of P43,875 cash for a 40% interest in capital
CLAIRE, DAISY, and ELSIE formed the CDE Partnership on and in profits.
August 1, 2015, with the following assets, measured at fair 35. Assume JOSIE is admitted by purchase of 40% each
market values, contributed by each partner: of the original partners’ interest, determine how the
CLAIRE DAISY ELSIE P43,875 will be apportioned to HAIDEE and ISABEL
Cash P 324,000 P108,000 P129,600 a. HAIDEE, P32,850 and ISABEL, P15,900
Accounts b. HAIDEE, P32,450 and ISABEL, P16,300
receivable 73,080 - 91,800 c. HAIDEE, P29,565 and ISABEL, P14,310
Plant, Property, & d. HAIDEE, P32,950 and ISABEL, P15,800
Equipment (PPE) 1,620,000 340,200 -

A part of CLAIRE’s cash contribution, P216,000, comes

from personal borrowings. Also, the PPE of CLAIRE and
DAISY are mortgaged with the bank for P972,000 and
P72,000, respectively. The partnership is to assume
responsibility for these PPE mortgages. The partners have
agreed to share profits and losses on a 5:2:3 ratio, to
CLAIRE, DAISY, and ELSIE, respectively.
33. What is the capital balance for each partner at the
opening of business on August 1, 2015?
a. CLAIRE, P1,045,080; DAISY, P376,200; & ELSIE,
b. CLAIRE, P1,161,200; DAISY, P418,000; & ELSIE,
c. CLAIRE, P1,987,500; DAISY, P189,000; & ELSIE,
d. CLAIRE, P1,095,120; DAISY, P547,560; & ELSIE,

On January 1, 2015, FRIDA and GLACE formed a

partnership by contributing cash of P405,000 and
P270,000, respectively. On February 1 2015, Partner
FRIDA contributed an additional P135,000 cash to the

Page 3 of 8 www.prtc.com.ph AFAR


PRINCESS COMPANY filed a voluntary bankruptcy P1,176,000. Operating expenses (includes losses on
petition on August 15, 2013 and the statement of repossession) total to 75% of the realized gross profit.
affairs reflect the following amounts: 39. What is the net income for the year ended December
CARRYING CURRENT a. P329,142 c. P 543,984
VALUE VALUE b. P546,000 d. P 279,918

Pledged with fully secured

P 150,000
creditors P 185,000 BEIGE STALKS CORPORATION, which began operations on
Pledged with partially January 1, 2014, appropriately uses the installment
secured creditors 60,000 method of accounting for revenues. The following
Free Assets 160,000 information is available for the years ended December 31,
P 450,000
P 405,000 2014 and 2015:
2014 2015
P 35,000
Liabilities with priority Cost of installment sales P 960,000 P1,920,000
Fully secured creditors GP realized on sales made in
Partially secured creditors 2014 144,000 86,400
Unsecured creditors 2015 - 192,000
P 535,000
GPR based on cost 30% 40%
40. What is the ending balance of installments receivable
36. How much cash will be available to pay the unsecured
at December 31, 2015?
non-priority claims?
a. P2,265,600 c. P1,632,000
a. P240,000 c. P160,000
b. P1,704,000 d. P1,176,000
b. P180,000 d. P125,000

On January 1, 2014, MAXX SERVICES, INC. signed an

The following data were taken from the statement of
agreement authorizing LALLA COMPANY to operate as a
franchisee over a 20-year period for an initial franchise fee
Assets pledged for fully secured liabilities
of P137,500 received when the agreement was signed.
(current fair value, P75,000) P 90,000
LALLA commenced operations on July 1, 2014, at which
Assets pledged for partially secured
date all of the initial services required of MAXX SERVICES
liabilities (current fair value P52,000) 74,000
had been performed. The agreement also provides that
Free assets (current fair value , P40,000) 70,000
LALLA must pay annually to MAXX a continuing franchise
Unsecured liabilities with priority 7,000
fee equal to 5% of the revenue from the franchise. LALLA
Fully secured liabilities 30,000
COMPANY’s franchise revenue for 2014 was P1,100,000.
Partially secured liabilities 60,000
41. For the year ended December 31, 2014, how much
Unsecured liabilities without priority 112,000
should MAXX SERVICES record as revenue from
franchise fees with respect to the LALLA account?
37. The amount that will be paid to creditors with priority
a. P192,500 c. P123,750
b. P137,500 d. P 60,500
a. P7,000 c. P7,500
b. P6,000 d. P6,200
GREAT DANE, INC., franchisor, entered into a franchise
agreement with PITBULL COMPANY, franchisee, on July 1,
SILVER PLATTER COMPANY which began operations on
2015. The total franchise fees agreed upon is P550,000, of
January 2, 2014, appropriately uses the installment
which P50,000 is payable upon signing and the balance is
method of revenue recognition. The following information
to be covered by a note payable in four equal annual
pertains to the company’s operations for 2014 and 2015
installments. The direct franchise cost incurred was
2014 2015
P325,000. Indirect franchise expenses of P31,250 was also
Sales P 307,200 P460,800
paid. The relevant interest rate is 12% and the note is
Collections from
reasonably assured of collection. The agreement also
2014 sales 102,400 51,200
provides for the payment of continuing franchise fees at
2015 sales 0 153,600
4% of the franchisee’s gross sales. The franchise outlet
Accounts written off from
commences its operations on December 1, 2015 and had a
2014 sales 25,600 76,800
gross sales of P250,000 for the month.
2015 sales 0 153,600
42. Assuming the notes are interest-bearing, how much
Gross profit rates 40% 30%
net income will be reported for 2015?
a. P198,750 c. P 233,750
38. What amount should SILVER PLATTER COMPANY report
b. P 77,550 d. P 73,750
as deferred gross profit in its December 31, 2015
balance sheet?
On January 2, 2015, QUICKBUILD ERECTORS entered into
a. P 76,800 c. P 114,688
contract to construct two projects. The following data
b. P102,400 d. P 66,560
relate to the construction activities.
Project A Project B
Contract price P945,000 P675,000
BROWN DERBY COMPANY began operations on June 1,
Cost incurred during 2015 540,000 630,000
2015. The following information are extracted from its
Estimated costs to complete 270,000 157,500
records at year-end. Cost of installment sales, P2,991,424;
Billings to customer 337,500 607,500
Cost of Regular Sales, P1,680,000. Mark-up on installment
sales is 40% of cost while regular sales is 33-1/3% based
on sales. At the end of 2015, the balance of Installment
accounts receivable is P2,520,000; Accounts receivable is

Page 4 of 8 www.prtc.com.ph AFAR


43. What amount of gross profit should QUICKBUILD 46. What is the net income (loss) of the branch insofar as
ERECTORS report in its 2015 income statement under the home office is concerned?
the following methods? a. P534,000 c. P315,000
Percentage of Zero Profit b. P681,750 d. (P147,750)
Completion Method Method
a. P 0 P (90,000)
b. P (112,500) P (22,500) Teardrops Commercial Corp. maintains a branch in Iloilo
c. P ( 22,500) P 0 City. Selected balances taken from the books of Teardrops
d. P ( 22,500) P(112,500) and its Bacolod City branch as of December 31, 2015 are
as follows:
Home Office Branch
44. BEST - EVER CONSTRUCTION, INC . recognizes Office
construction revenue and costs using the percentage of Merchandise Inventory,
completion method. During 2014, a single long-term Jan 1 P 12,000 P 8,000
project was begun which continued through 2015. Purchases 150,000 30,000
Information on the project follows: Shipments from Home
2014 2015 Office 93,750
Accounts receivable P350,000 P1,050,000 Shipments to Branch 75,000
Incurred costs during year 367,500 672,000 Branch Inventory
Construction in progress 427,000 1,274,000 Allowance 19,750
Billings on contract 350,000 1,470,000 Sales 115,000 176,500
The construction accounts are at amounts t0-date. Merchandise Inventory,
Dec 31 14,000 10,350
What is the gross profit recognized from this long-term
contract? P4,350 of the branch's ending inventory came from
2014 2015 purchases from suppliers other than the home office.
a. P 77,000 P 798,000
b. 77,000 350,000 47. As far as the home office is concerned, the cost of
c. 59,500 448,000 sales of the branch was:
d. 59,500 175,000 a. P 97,120 c. P121,400
b. P102,850 d. P131,850

CIGNAL ERECTORS began operations on January 2,

2015. During the year, the company entered into a During the year 2015 the Bacolod Corporation bills its Iloilo
contract with TEAM Company to construct a branch at 140% of cost. Goods billed at P346,500 were
manufacturing facility. At that time CIGNAL estimated shipped to the branch. The account Allowance for
that it would take five years to complete the facility at overvaluation has a balance of P122,400 before
a cost of P3,937,500. The total contract price for the adjustment. The beginning inventory of the branch from
construction of the facility is P5,468,750. During the the home office at cost is P93,600; the beginning
year, the company incurred P962,500 in construction inventory of the branch from outsiders is P15,200,
costs related to the construction project. The purchases from outsiders is P130,500.
estimated cost to complete the contract is P2,730.000 48. Cost of goods available for sale of the Iloilo Branch in
TEAM was billed and paid 30% of the contract price 2015 is
subject to a 10% retention. a. P486,800 c. P609,200
b. P623,240 d. P463,500
45. Using the percentage of completion method, how much
is the excess of Construction in Progress over Contract
Billings or Contract Billings over Construction in GHI Company bills its Bulacan Branch for merchandise
Progress? shipments at 125% of cost. As of cut-off date, December
a. P273,437 (current liability) 31, 2015, the following data were available:
b. P273,437 (current asset) Mdse. Fr Mdse.
c. P437,500 (current asset) Home Purchased
d. P437,500 (current liability) Office(at from
billed prices) Outsiders Total
Presented below are items taken from the unadjusted trial December 1 P300,000 P120,000 P420,000
balances of NCR Company and its Manila Branch on Additions to
December 31, 2015: stock during
Home Office Branch December 450,000 360,000 810,000
Books Books Merchandise,
Shipment to branch P2,250,000 December 31 420,000 150,000 570,000
AFOVOBI 749,250
Shipment from HO P2,925,000 The branch returned P15,000 worth of merchandise to the
Purchases (from OV) 1,084,500 Home Office acquired at billed price.
MI, January 1 921,375 49. The amount of the allowance for overvaluation account
MI, December 31 365,625 that was realized as income in view of branch sales for
Sales 4,800,000 the month of December was:
Expenses 382,500 a. P63,000 c. P87,500
b. b. P66,000 d. P84,000
Assuming that the branch ending inventory acquired from
other vendors (OV) is P73,125

Page 5 of 8 www.prtc.com.ph AFAR


The Batangas Corporation operates a branch in Lipa City. Additional paid-in capital 256,000
The Home Office ships merchandise to the branch at 125% Retained earnings 320,000
of its cost. Selected information from the December 31,
2015 trial balance are as follows: 53. To have a goodwill of P 120,000, the number of shares
Home Office Branch Office to be issued by Carl Company should be
Books Books a. 30,000 shares c. 29,000 shares
Sales P600,000 P300,000 b. 30,400 shares d. 35,000 shares
Shipments to branch 200,000
Purchases 350,000
Shipments from Home On August 1, 2014, Blite Company paid P850,000 for all
Office 250,000 the net assets of Ong Enterprises in a transaction properly
Inventory, January 1 100.000 40,000 recorded as a purchase. The recorded assets and liabilities
Allowance for Overvaluation of Ong Enterprises on August 1, 2014, follow:
of branch Inventory 58,000 Cash P 80,000
Expenses 120,000 50,000 Inventory 240,000
Property and equipment, net 480,000
Inventory at December 31, 2015: Liabilities (180,000)
Home Office P30,000
Branch Office 60,000 On August 1, 2014 it was determined that the inventory of
Ong had a fair market value of P190,000, and the property
50. The combined net income of the home office and the and equipment (net) had a fair market value of P560,000.
branch after adjustment is: 54. What is the amount of goodwill resulting from the
a. P326,000 c. P500,000 business combination?
b. P496,000 d. P280,000 a. P 0 c. P200,000
b. P 20,000 d. P230,000

Quad Corporation purchases all of the net assets of

Chrome, Inc., for P320,000. Immediately prior to the 55. Stain Corporation is an 80%-owned subsidiary of Paint
combination, Chrome’s net assets were carried on the Corporation. During 2014 Stain sold merchandise that
books at P180,000, and Chrome had retained earnings of cost P96,000 to Paint for P128,000. Paint's ending
P24,000. The fair value of Chrome’s net assets at the date inventory at December 31, 2014 contained unrealized
of combination is P248,000. Quad Corporation had profit of P6,400 from the intercompany sales. During
retained earnings of P40,000 and no goodwill immediately 2015 Stain sold merchandise that cost P112,000 to
prior to the combination Paint for P152,000. One-half of this remained unsold
51. Immediately after the combination, the combined by Paint at December 31, 2015 For 2015 Paint's
company reports goodwill and retained earnings of: separate income was P200,000 and Stain's reported
Goodwill Retained Earnings net income was P152,000.
a. P 0 P 40,000
b. P 0 P 64,000 The consolidated net income for 2015 will be:
c. P 72,000 P 40,000 a. P302,000 c. P310,720
d. P 72,000 P 64,000 b. P338,400 d. P274,500

The Carl Company will issue P10 par value common stock 56. P Company acquired a 90% interest in S Company in
for the net assets of PBA Company. The fair market value 2013 at a time when S Company's book values and fair
per share of Carl’s common stock is P40. The following is values were equal to one another. On January 1, 2015,
the list of accounts of PBA Company on the date of the S sold a machine with a P24,000 book value to P
acquisition. Company for P48,000. P depreciates the machine over
Book Value Fair Market Value 10 years using the straight line method. Separate
Current assets P280,000 P 320,000 incomes for P and S for 2015 are as follows:
Plant assets (net) 680,000 P Co. S. Co.
1,280,000 Sales P960,000 P560,000
Liabilities 320,000 Gain on sale of 24,000
Common stock 64,000 machinery
Additional paid-in capital Cost of goods sold (400,000) (152,000)
256,000 Depreciation expense (240, 000) (72,000)
Retained earnings 320,000 Other expenses (96,000) (240,000)
52. To have an income from acquisition of P120,000, the Separate incomes P224,000 P120,000
number of shares to be issued by Carl Company should
be” The consolidated net income for 2015 is:
a. 30,000 shares c. 29,000 shares a. P344,000 c. P310,400
b. 30,400 shares d. 35,000 shares b. P322,400 d. P312,560

The Carl Company will issue P10 par value common stock
for the net assets of PBA Company. The fair market value RICH Corporation paid P1,125,000 for an 80% interest in
per share of Carl’s common stock is P40. The following is HARD Corporation on January 1, 2015 at a price P37,500
the list of accounts of PBA Company on the date of the in excess of underlying book value. The excess was
acquisition. allocated P15,000 to undervalued equipment with a ten-
Book Value Fair Market Value year remaining useful life and P22,500 to goodwill which
Current assets P280,000 P 320,000 was not impaired during the year. During 2015, HARD
Plant assets (net) 680,000 1,280,000 Corporation paid dividend of P60,000 to RICH Corporation.
Liabilities 320,000 The income statements of RICH and HARD for 2015 are
Common stock 64,000 given below:

Page 6 of 8 www.prtc.com.ph AFAR


Sales P2,500,000 P1,000,000 On April 8, 2013, CALAMBA CORPORATION purchased
Cost of sales (1,250,000) (500,000) merchandise from an unaffiliated foreign company for
Depreciation 10,000 units of the foreign company’s local currency.
expense (250,000) (150,000) CALAMBA paid the bill in full on March 1, 2015 when the
Other expense (500,000) (225,000) spot rate was P0.45. The spot rate was P0.60 on April 8,
Net income P500,000 P125,000 2013 and was P0.55 on December 31, 2014.
61. For the year ended December 31, 2014, CALAMBA
should report a transaction gain of
57. Consolidated net income for 2015 is
a. P1,500 c. P1,000
a. P632,125 c. P623,125
b. P 500 d. P 0
b. P263,125 d. P632,215
On December 1, 2014, a Philippine firm purchased a
P Corporation acquired 70% of the voting common speculative hedge to buy 30,000 foreign currency when
stock of S Company at a time when S Company’s book the spot rate was P1.10 and a 60 day forward rate was
values and fair values were equal. Separate incomes P1.12. The spot rate at December 31 (the company’s year-
of P Corporation and S Company for 2015 are as end was P1.25 and a 30-day forward rate was P1.13.
follows: When the speculative hedge was exercised on January 31,
P Corporation S Company 2015 the spot rate was P1.11 and a 30 day forward rate,
Sales 633,600 350,400 P1.12.
Cost of Goods Sold 384,000 192,000 62. The journal entry to record this hedge would include a
Operating expenses 115,200 96,000 debit to Contract Receivable in the amount of
Separate income from a. P33,600 c. P33,000
own operations 134,400 62,400 b. P 600 d. P 0

Intercompany sales from P to S for 2014 and 2015 are 63. The amount of foreign exchange gain/loss that would
summarized as follows: appear on the income statements of the Philippine
Cost Selling Unsold company resulting from this speculative hedge for the
Price at year- years ended 2014 and 2015 are
end a. 2014 = P300 loss; 2015 = 600 loss
Intercompany sales b. 2014 = P300 gain; 2015 = 600 gain
– 2014 240,000 374,400 30% c. 2014 = P300 loss; 2015 = 600 gain
Intercompany sales d. 2014 = P300 gain; 2015= 600 loss
– 2015 168,000 264,000 40%

58. The 2015 consolidated income statement will show From the following data, question 16 to 18 should be
cost of goods sold of answered.
a. P 310,080 c. P 384,000 Opening inventory 4,000 units
b. P 576,000 d. P 192,000 Percentage of Value
Materials 100% P1,992
On September 1, 2015 Junjun Company received an order Labor 50% 1,074
for equipment form a foreign customer for FC 300,000 Overhead 50% 846
when the Philippine peso equivalent was P96,000. Junjun Put in process 20,000 units
shipped the equipment on October 15, 2015, and billed the Materials value P12,000
customer for FC 300,000 when the Phil. Peso equivalent Labor 9,984
was P100,000. Junjun received the customer’s remittance Overhead is 100% of labor cost
in full on November 16, 2015, and sold the FC 300,000 for Units completed and transferred 21,000 units
P105,000. Units in process at the end 3,000 units
59. In its income statement for the year ended December Materials 100%
31, 2015, Junjun should report a foreign exchange Labor and overhead 60%
gain of 64. The equivalent production for material is
a. P5,000 c. P9,000 Under Average Under FIFO
b. P4,000 d. No gain no loss a. 24,000 20,000
b. 20,000 21,000
Alecks Corporation had the following foreign currency c. 20,000 24,000
transactions during 2015 d. 21,000 20,000
a. Merchandise was purchased from foreign supplier on
January 20, 2015 for the Peso equivalent of P90,000.
The invoice was paid on March 20, 2015 at the Phil. Sangley, Inc. manufactures a product which goes through
Peso equivalent of P96,000. three consecutive processes, Process 1, Process 2, and
b. On July 1, 2015, Alecks borrowed the Philippine peso Process 3. Data for the month of September, 2006 are as
equivalent of P500,000 evidenced by a note that was follows:
payable in the lender’s local currency on July 1, 2015. PROCESS1 PROCESS2 PROCESS3
On December 31, 2015, the Phil. Peso equivalent of Work in
the principal amount and accrued interest were Process, beg. P8,000 P13,000 P2,000
P520,000 and P26,000 respectively. Interest on the Materials added 20,000 4,000 5,000
note is 10% per annum. Conversion 10,000 10,000 16,000
60. In Aleck’s income statement, the amount that should Closing work in
be included as a foreign exchange loss process 6,000 9,000 4,000
a. P 0 c. P 6,000
b. P21,000 d. P27,000

Page 7 of 8 www.prtc.com.ph AFAR


65. What was the value of the output transferred from The following information relates to Job No. 2468, which is
Process 3 to the finished goods warehouse for the being carried out by Flexy Co. to meet a customer’s order.
month of September? Dept. A Dept. B
a. P63,000 c. P67,000 Direct materials used P5,000 P3,000
b. P65,000 d. P69,000 Direct labor hours 400 200
Lego Plastics, Inc. has two joint products, ABBA and ADDA, Direct labor rate per hour P4.00 P5.00
and uses the net realizable value method of allocating joint Overhead rate per DL hour P4.00 P4.00
costs. The total joint costs for the year 2000 amounted to Adm. and other overhead 20% of full production
P300,000. During the year, additional processing costs cost
after split-off were P160,000 for ABBA and P240,000 for Profit markup 25% of selling price
ADDA. Lego produced 16,000 units of ABBA and 8,000
units of ADDA during the year. The selling price for ABBA 69. The selling price to the customer of Job 2468 is:
is P20.00 and for ADDA is P50.00. a. P16,250 c. P17,333
66. The portion of joint costs allocated to ADDA during the b. P20,800 d. P19,500
year is
a. P175,000 c. P180,000 Rumors Company applied factory overhead as follows:
b. P225,000 d. P150,000 Department Factory Overhead Rate
Fabricating P7.75 per Machine hour
Lee Company produces two products in a single operation, Spreading 15.10 per Machine hour
Bex and Rom. Joint production cost for June, 2014 were Gossiping 2.125 per Machine hour
P30,000. During the month, further processing costs
beyond the split-off point needed to convert the products Actual machine hours are: 19,000 hours for fabricating;
into salable form were P25,000 and P35,000 for 1,600 27,500 hours for spreading and 5,500 hours for gossiping.
units of Bex and 800 units of Rom, respectively. Bex sells
for P50 per unit and Rom sells for P100 per unit. Lee uses 70. If the actual factory overhead cost for the period is
the net realizable method for allocating joint product costs. P574,375, how much is over (under) applied factory
67. For June, 2014, the joint cost allocated to product Bex overhead?
were a. (P11,875.00) c. (P 187.50)
a. P20,000 c. P13,500 b. (P23,562.50) d. (P76,125.00)
b. P16,500 d. P10,000

The accounting records for 2014 of Wagner Music Co.

showed the following:
Decrease in raw materials inventory P 45,000
Decrease in finished goods inventory 150,000
Raw materials purchased 1,290,000
Direct labor payroll 600,000
Factory overhead 900,000
Freight-out 135,000
68. The cost of raw materials used for the period
amounted to
a. P1,245,000 c. P1,335,000
b. P1,290,000 d. P1,380,000
 - end - 

Page 8 of 8 www.prtc.com.ph AFAR