REVPA1

SEATWORK NO. 1
Answer Key with Solutions

EASY ROUND

Problem 1
Cash receipts from subscribers ₱ 7,200,000.00
Divided by: No. of months in a year 12
Monthly cash receipts from the subsciber ₱ 600,000.00

Monthly cash receipts from the subsciber ₱ 600,000.00

Multiplied by: No. of mos. before the cut-off date 9
Cash receipts earned during the year ₱ 5,400,000.00

Deferred Revenue
₱ 5,400,000.00 ₱ 7,200,000.00
Answer for Problem 1:
₱ 1,800,000.00 A. P 1,800,000

Problem 2
Asset ₱ 210,000.00 Year end balances:
Liabilities (120,000.00) Assets ₱ 270,000.00
Equity ₱ 90,000.00 Liabilities (171,000.00)
Equity ₱ 99,000.00
Changes during the year: Equity, adj. (87,000.00)
Equity, beginning ₱ 90,000.00 Net Income ₱ 12,000.00
Investments 72,000.00
Withdrawals (75,000.00) Answer for Problem 2:
Equity, ending ₱ 87,000.00 D. P 12,000

Problem 3
Market Value of Biological Asset ₱ 5,000.00
Estimated Commission to brokes and dealers (500.00)
Estimated Transfer Cost and other costs (300.00)
Valuation of Biological Assets ₱ 4,200.00

Answer for Problem 3:

D. P 4,200

Problem 4
Purchase of shirts: Journal Entries:
List Price ₱ 100,000.00 Date of Purchase of Shirts
1st Trade discount 20% 27-May Purchase 72,000.00
List Price after TD ₱ 80,000.00 Accounts Payable 72,000.00
2nd Trade discount 10% To record the purchase of shirts
Invoice Price ₱ 72,000.00
Payment of shirts purchased on May 27, 2009
Payment of shirts puchased: 8-Jun Accounts Payable 70,560.00
Invoice Price ₱ 72,000.00 Purchase Disc. Lost 1,440.00
Purchase Discount 2% Cash 72,000.00
Purchase disc. lost ₱ 1,440.00
Answer for Problem 4:
B. Debit on purchase discount lost

Problem 5 This problem follows the order of

priority, if the cash equivalent of the
Answer for Problem 5: asset is given, it wil be the amount
D. P 651,460 that will be used to capitalize the
asset.

Problem 6
Accumulated Depreciation ₱ 42,000.00
Sum of the Years rate
Remaining Useful Life 7
SYD 55
Cost of Equipment (Residual Value is deducted) ₱ 330,000.00
Residual Value 5,000.00
Cost of Equipment on December 31, 2005 ₱ 335,000.00

Answer for Problem 6:

C. P 335,000

Problem 7
Accumulated Depreciation ₱ 42,000.00
Sum of the Years rate
Remaining Useful Life 7
SYD 55
Cost of Equipment (Residual Value is deducted) ₱ 330,000.00
Residual Value 5,000.00
Cost of Equipment on December 31, 2005 ₱ 335,000.00

Answer for Problem 7:

C. P 335,000

Bonus Question:

Intramuros is also known as the walled city.

AVERAGE ROUND

Problem 1
Accounts Receivable- beginning ₱ 1,300,000.00
Credit Sales 5,400,000.00
Collections from customers (4,750,000.00)
Accounts written off (125,000.00)
Aging of Accounts Receivable (165,000.00)
Accounts Receivable- ending ₱ 1,660,000.00

Accounts Receivable
₱ 1,300,000.00 ₱ 4,750,000.00 Answer for Problem 1:
5,400,000.00 125,000.00 D. P 1,600,000
165,000.00

₱ 1,660,000.00

Problem 2
Land held by Quirino Inc. for undetermined future use ₱ 5,000,000.00
A vacant building owned by Quirino Inc. and to be leased out ₱ 20,000,000.00
A hotel owned by Sugo Inc., a subsidiary of Quirino Inc,
and for which Sugo Inc. provides security services for
the guest belonging ₱ 50,000,000.00
Investment Properties of Quirino Inc. ₱ 75,000,000.00

Answer for Problem 2:

A. P 75,000,000

Problem 3
Puchased Annuity ₱ 418,250.00
First Installment 50,000.00
Contest prize expense for 2009 ₱ 468,250.00

Answer for Problem 3:

C. P 468,250

Problem 4
The criteria for Intangible Asset has not been met
Answer for Problem 4: therefore it is expensed for the current year and
D. 0 cannot be used as a tax base.

Problem 5
Total Expense on the vesting date ₱ 8,000,000.00
Expenses incurred:
2007 (2,000,000.00)
2008 (2,100,000.00)
Total expense charged to income statement for 2009 ₱ 3,900,000.00

Answer for Problem 5:

C. P 3,900,000

Problem 6
 1st Quarter 2nd Quarter
Sales ₱ 20,000,000.00 ₱ 30,000,000.00
Provision of warranty claims 5% 10%
Total ₱ 1,000,000.00 ₱ 3,000,000.00

Provision of warranty claims:

1st quarter ₱ 1,000,000.00
2nd quarter 3,000,000.00
Total ₱ 4,000,000.00

Answer for Problem 6:

B. P 4,000,000

Problem 7
Principal ₱ 180,000.00
PV 0.74
Total ₱ 132,300.00
Answer for Problem 7:
Principal ₱ 200,000.00 A. P 67,700
PV (132,300.00)
Difference ₱ 67,700.00

DIFFICULT ROUND

Problem 1
Membership Fee ₱ 6,000.00
No. of mos over 12 3/4 Answer for Problem 1:
Total membership A. P 4,600
fee earned ₱ 4,500.00

Problem 2
Interest ₱ 180,000.00
PV of OA of 1 of 10%, 4 periods 3.1699
Total ₱ 570,582.00

Principal Amount ₱ 3,000,000.00

PV of 1 0.683
Total ₱ 2,049,000.00

Principal Amount ₱ 2,049,000.00

Interest ₱ 570,582.00

Bonds without
conversion ₱ 2,619,582.00

Principal amount of bonds ₱ 3,000,000.00

Bonds without conversion 2,619,582.00
 ₱ 380,418.00
Interest of bonds (P2,049,000 x .10) (204,900.00)
Total increase in equity ₱ 175,518.00

Answer for Problem 2:

A. P 175,518

Problem 3
The answer is nil because it is an
Answer for Problem 3: operating lease in which there is no
D. Nil recognition of profit because it is
recognized at the end of lease term.

Problem 4
1,200 shares x P 48 57600
1,000 shares x P 50 50000
7600
No. of years 3
Total 2533.3

Year 1
No. of shares 1,000
Share Price 52
Total 52000
Vesting period 3
Total 17333.3 Answer for Problem 4:
A. P 21,867
Year 2
No. of shares 1,000
Share Price 55
Total 55000
Rem. vesting period 2/3
Total 36666 2/3

Compensation Expense
for Year 2 21866.7

Problem 5
Estimated Cost for Year 1 ₱ 20,000,000.00
Estimated Cost for 3 years 100,000,000.00
Fair Value of Land 120,000,000.00
Income from government grant ₱ 24,000,000.00

Answer for Problem 5:

B. P 24,000,000

Problem 6
Cost ₱ 130,000.00 Third Year
Residual Value (10,000.00) Carrying Amount ₱ 120,000.00
Total ₱ 120,000.00 Remaining UL 3
SYD 15
Firat Year Depreciation ₱ 24,000.00
Carrying Amount ₱ 120,000.00
Remaining UL 5 Cost ₱ 130,000.00
SYD 15 Accumulated Depreciation (96,000.00)
Depreciation 40000 Carrying Amount ₱ 34,000.00

Second Year Selling Price ₱ 38,000.00

Carrying Amount ₱ 120,000.00 Carrying Amount 34,000.00
Remaining UL 4 Gain on sale ₱ 4,000.00
SYD 15
Depreciation ₱ 32,000.00 Answer for Problem 6:
A. P 4,000

Problem 7

Principal ₱ 3,000,000.00 ₱ 2,000,000.00

Interest Rate 12% 12%
Total Interest ₱ 360,000.00 ₱ 240,000.00

Total Interest ₱ 360,000.00 ₱ 240,000.00

No. of mos over 12 3/7 4/7
Interest earned ₱ 150,000.00 ₱ 140,000.00

Total Interest earned

in 2019 ₱ 290,000.00 Answer for Problem 7:
B. P 290,000
 Our assumption is that this amount
should be divided by 12 in order to get
the monthly cash receipts from the
subsciber.

Since the cut-off date is September 30.

We must only include cash receipts
from January 1 to September 30.

Since we already computed the changes

during the year in the equity account, we
must compare it to equity at year end with
the provided Asset and Liability amount.

Biological Assets is governed by IAS 41

and it is stated that valuation is Fair Value
or Market Value of the asset less Selling
costs.
 Since the payment for the purchase of
shirts is made on June 8, 2009, it did not
meet the following terms provided by the
seller. Therefore incurring a 1,440 as
Purchase Discount Lost.

The initial cost of equipment is not given

in the problem so we need to work back
using the Accumulated Depreciation. Sum
of the years digit is computed by UL of
the asset plus 1 divided by 2 multiplied by
UL of the asset.

The initial cost of equipment is not given

in the problem so we need to work back
using the Accumulated Depreciation. Sum
of the years digit is computed by UL of
the asset plus 1 divided by 2 multiplied by
UL of the asset.