1.

Paulita Company reported the following information on December 31, 2019:

11% registered debentures, callable in 2024 due in 2030 700,000

12% collateral trust bonds, convertible into ordinary shares 600,000
beginning in 2023 due in 2035
10% subordinated debentures P30,000 maturing annually 300,000
Beginning in 2020

What is the total amount of term bonds?

a. 600,000
b. 700,000
c. 1,000,000
d. 1,300,000
2. Reynaldo Company provided the following share transactions for the current year:

Jan 1 Shares Outstanding 44,000 shares

Feb 1 Issued shares for cash 56,000
May 1 Acquired treasury shares 25,000
Aug 1 25% stock dividend
Sept 1 Resold treasury shares 10,000
Nov 1 Issued 3 for 1 share split

What is the weighted average number of shares for EPS computation?

a. 305,000
b. 307,500
c. 103,750
d. 311,250
3. At the beginning of the current year, Kenneth Company traded in an old machine having
a carrying amount of P3,500,000 and paid a cash difference of P1,200,000 for a new
machine having a cash price of P4,000,000. What amount of loss should be recognized
on the exchange?
a. 1,700,000
b. 1,200,000
c. 700,000
d. 0
4. Bill Company was granted a patent on January 1, 2011 and appropriately capitalized
P4,500,000 of related costs. The entity was amortizing the patent over the estimated
life of 15 years. During 2014, the entity paid P1,500,000 in legal costs in
successfully defending an attempted infringement of the patent. After the legal action
was completed, the entity sold the patent to the plaintiff for P7,500,000. The policy
is to take no amortization in the year of disposal. What amount should be reported as
gain from sale of patent?
a. 1,500,000
b. 2,400,000
c. 2,700,000
d. 3,900,000
5. Christian Company was incorporated on January 1, 2014 with proceeds from the issuance
of P7,500,000 in shares and borrowed funds of P1,100,000. During the first year of
operations, revenue from sales and consulting amounted to P820,000 and operating costs
and expenses totaled P640,000. On December 15, the entity declared a P30,000 cash
dividend payable to shareholders of January 15, 2015. No additional activities
affected the owners’ equity in 2014. The liabilities increased to P1,200,000 by
December 31, 2014. What amount should be reported as total assets on December 31,
2014?
a. 8,850,000
b. 8,820,000
c. 7,870,000
d. 8,750,000
6. Mike Company reported inventory on December 31, 2014 at P6,000,000 based on a physical
count at cost and before any necessary year-end adjustment relating to the following:
 Included in the physical count were goods billed to a customer FOB Shipping
Point on December 30, 2014. These goods has a cost of P125,000 and were picked
up by the courier on January 7, 2015.
 Goods shipped FOB Shipping Point on December 28, 2014 from a vendor to Mike
Company were received on January 4, 2015. The invoice cost was P300,000.

What amount should be reported as inventory on December 31, 2014?

a. 5,875,000
b. 6,000,000
c. 6,175,000
d. 6,300,000
7. For the year ended December 31, 2015, Enden Company reported pretax financial income
of P7,500,000. The taxable income was P6,500,000. The difference is due to accelerated
depreciation for income tax purposes. The income tax rate is 30% and the entity made
estimated tax payment of P900,000 during the current year. What amount should be
reported as current tax expense for the current year?
a. 1,050,000
b. 1,950,000
c. 1,350,000
d. 2,250,000
8. Kevin Company has a herd of 100 2 year-old animals on January 1, 2015. Ten animals
aged 2.5 years were purchased on July 1 2015 for P10,800 each and ten animals were
born on July 1, 2015. No animals were sold or disposed of during the year. The fair
value less cost of disposal per unit were:
2-year old animal on Jan 1 10,000
2.5 year old on July 1 10,800
New born animal on July 1 7,000
2 year old animal on Dec 31 10,500
2.5 year old animal on Dec 31 11,100
New born animal on Dec 31 7,200
3 year old animal on Dec 31 12,000
0.5 year old animal on Dec 31 8,000
What is the carrying amount of the biological assets on December 31, 2015?

a. 1,400,000
b. 1,440,000
c. 1,178,000
d. 1,320,000
9. What is the gain from biological assets attributable to price change?
a. 237,000
b. 292,000
c. 222,000
d. 55,000
10. What is the gain from biological assets attributable to physical change?
a. 167,000
b. 237,000
c. 229,000
d. 70,000
11. Krispy Company had 200,000 ordinary shares outstanding on January 1, 2014. On March
31, 2014 the entity declared a 2 for 1 share split when the fair value of a share was
P80. On December 31, 2014, the entity declared a P5 per share cash dividend payable
January 31, 2015. In the statement of changes to equity for 2014, what amount should
be reported as dividends?
a. 2,000,000
b. 1,000,000
c. 500,000
d. 0
12. The balance in Moon Co.’s accounts payable at December 31, 2010 was P700,000 before
any necessary year-end adjustments relating to the following:
 Goods were in transit to Moon from a vendor on December 31, 2010. The invoice
cost was P40,000. The goods were shipped FOB shipping point on December 29,
2010 and were received on January 4, 2011.
 Goods shipped FOB destination on December 21, 2010 from a vendor to Moon were
received on January 6, 2011. The invoice cost was P25,000.
 On December 27, 2010, Moon wrote and recorded checks to creditors totaling
P30,000 that were mailed on January 10, 2011.

In Moon’s December 31, 2010 statement of financial position, the accounts payable
should be:

a. 730,000
b. 765,000
c. 740,000
d. 770,000
13. The cash account shows a balance of P 45,000 before reconciliation. The bank statement
does not include a deposit of P2,300 made on the last day of the month. The bank
statement shows a collection by the bank of P940 and a customer’s check for P320 was
returned because it was DAIF. A customer’s check for P450 was recorded on the books
as P540, and a check written for P79 was recorded as P97. The correct balance in the
cash account was
a. 45,512
b. 45,728
c. 45,548
d. 47,848
14. Presented below is the equity section of Oaks Corporation at December 31, 2010:
Share capital-ordinary, par value P20; authorized 75,000 shares
issued and outstanding 45,000 shares 900,000
Share premium ordinary 250,000
Retained earnings 500,000

During 2011, the following transactions occurred relating to equity:

 3,000 shares were reacquired at P28 per share
 3,000 shares were reacquired at P35 per share
 1,800 shares of treasury shares were sold at P30 per share.

For the year ended December 31, 2011, Oaks reported net income of P450,000.

What should be reported as total equity on its December 31, 2011 statement of financial
position?

a. 1,965,000
b. 1,957,800
c. 1,961,400
d. 1,515,000
 Written, Inc. has outstanding 300,000 shares of P2 par ordinary shares and 60,000
shares of no-par 8% preference shares with a stated value of P5. The preference shares
are cumulative and non participating. Dividends have been paid in every year EXCEPT
the past two years and the current year.

15. Assuming that P150,000 will be distributed as a dividend in the current year, how
much will the ordinary shareholders receive?
a. 0
b. 102,000
c. 78,000
d. 126,000
16. Assuming that P63,000 will be distributed as a dividend in the current year, how much
will the preference shareholders receive?
a. 21,000
b. 48,000
c. 24,000
d. 63,000
17. Assuming that P183,000 will be distributed, and the preference shares are ALSO
participating, how much will the ordinary shareholders receive?
a. 111,000
b. 93,000
c. 90,000
d. 48,000
18. On January 2, 2020, Roca Company began marketing a new soft drink. To help promote
the product, the management is offering a special gift, a T-shirt, to each customer
who returns 10 bottle caps. Roca estimates that only 80% of the sold bottles of soft
drinks will be redeemed. On December 31, 2020 the following information was collected:

Units Amount
Bottles sold 250,000
Shirts purchased 18,000 1,800,000
Shirts distributed 15,000

How much is the premium liability to be recorded as of December 31, 2020?

a. 700,000
b. 200,000
c. 300,000
d. 500,000
19. Boni Corporation issued P5,000,000 face value, 12%, 10-year bonds on October 1, 2019,
at 95. The bonds are dated October 1, 2019 and pay semiannual interest on April 1 and
October 1. What is the interest expense to be reported for the year 2019?
a. 150,000
b. 600,000
c. 156,250
d. 165,520
20. Yasmin Company provided the following information on December 31, 2016:
Petty cash fund 50,000
Current Account-First Bank 4,000,000
Current Account-Second Bank(overdraft) ( 250,000)
Money market placement-Third Bank 1,000,000
Time Deposit-Fourth Bank 2,000,000
 The petty cash fund included un
 replenished December 2016 petty cash expense vouchers for P15,000 and an
employee check for P5,000 dated January 31, 2017.
 A check for P100,000 was drawn against First Bank current account dated and
recorded December 29, 2016 but delivered to payee on January 15, 2017.
 The Fourth Bank time deposit is set aside for land acquisition in early 2017.
 What total amount should be reported as cash and cash equivalents on December 31,
2016?

a. 5,130,000
b. 5,150,000
c. 4,130,000
d. 4,880,000
21. Josey Company entered into a contract to acquire a new machine which had a cash price
of P2,000,000.
Downpayment 400,000
Note Payable in 3 equal annual installments 1,200,000
20,000 ordinary shares with a par value of P25
And fair value of P40 per share 800,000

Prior to use, installation cost of P50,000 was incurred. The machine has an estimated
residual value of P100,000.
What is the initial cost of the machine
a. 2,000,000
b. 2,400,000
c. 2,050,000
d. 2,450,000
22. Kay Company purchased for P4,500,000 a tract of land as a factory site. An existing
building on the property was razed to pave the way for the construction of the new
factory building.
Cost of razing old building 300,000
Title insurance and legal fees to
purchase land 200,000
Architect fee 950,000
New building construction cost 8,000,000

What is the cost of the land?

a. 4,700,000
b. 5,000,000
c. 4,500,000
d. 4,800,000
23. What is the cost of the factory building?
a. 9,250,000
b. 9,450,000
c. 8,000,000
d. 9,150,000
24. Tobin Company incurred P1,600,000 of research and development costs to develop a
product for which a patent was granted at the beginning of the current year.

Legal fees and other costs associated with the registration of the patent totaled
P300,000. At year-end, the entity paid P450,000 for legal fees in a successful defense
of the patent.

What is the total amount that should be capitalized for the patent at year-end?
a. 750,000
b. 300,000
c. 2,050,000
d. 2,350,000
25. Mariz Company acquired a trademark relating to the introduction of a new manufacturing
process. The entity incurred the following costs:

Cost of trademark 3,500,000

Expenditure on promoting the new product 50,000
Employee benefits relating to testing of new process 200,000

What total cost should be capitalized as intangible noncurrent asset in respect of

the new process?

a. 3,750,000
b. 3,700,000
c. 3,500,000
d. 3,550,000
26. On January 1, 2016, Hart Company signed an agreement to operate as a franchisee of
Ace Company for an initial franchise fee of P12,000,000.
The same date, Hart Company paid P4,000,000 and agreed to pay the balance in four
equal annual payments of P2,000,000 beginning January 1, 2017.

Hart Company can borrow at 14% for a loan of this type. The present value factors at
14% are as follows:

Present value of 1 at 14% for four periods 0.59

Present value of an ordinary annuity of 1 at
14% for four periods 2.91

What is the acquisition cost of the franchise?

a. 13,520,000
b. 12,000,000
c. 9,820,000
d. 8,720,000
27. Java Company purchased an entity for P6,000,000 cash at the beginning of the current
year.
The carrying amount and fair value of the assets of the acquiree on the date of the
acquisition are as follows:
Carrying Amount Fair Value
Cash 50,000 50,000
Accounts Receivable 500,000 500,000
Inventory 1,000,000 1,500,000
Patent 0 250,000
Property, Plant and Equipment 2,000,000 3,000,000
Total 3,550,000 5,300,000

In addition, the acquiree had liabilities totaling 2,000,000 at the time of

acquisition. The acquiree had no other separately identifiable intangible assets.

What is the goodwill arising from the acquisition?

a. 2,700,000
b. 2,450,000
c. 4,450,000
d. 700,000
28. During 2020 Day Company sold 500,000 boxes of cake mix ender a new sales promotional
program. Each box contains one coupon, which entitles the customer to a baking pan
upon remittance of P40. Day pays P50 per pan and P5 for handling and shipping. Day
estimates that 80% of the coupons will be redeemed, even though only 300,000 coupons
had been processed during 2020. What amount should Day report as a liability for
unredeemed coupons at December 31, 2020?

a. 1,000,000
b. 1,500,000
c. 3,000,000
d. 5,000,000
29. Carlo Company prepared an aging of account receivable on December 31, 2015 and
determined that the net realizable value of the accounts receivable at the date is
P5,000,000

Accounts receivable on December 31, 2014 4,800,000

Accounts receivable on December 31, 2015 5,400,000
Allowance for doubtful accounts on December 31, 2014 600,000
Accounts written off as uncollectible during 2015 500,000

What was the bad debt expense for 2015?

a. 500,000
b. 300,000
c. 400,000
d. 700,000
30. On January 1, 2015, Cruz Company had 50,000 ordinary shares outstanding with a P100
par value. On July 1, 2015, a bonus issue was made in the ratio of one additional
ordinary share for each original share. The net income for 2015 was P2,000,000. What
amount of basic EPS should be reported in the 2015 income statement?
a. 20.00
b. 10.00
c. 26.67
d. 13.33

Optimism is the faith that leads to achievement. Nothing can be done without hope and
confidence.