1. AK and BK decided to form a partnership on October 1, 2013.

Their Statement of Financial Position

on this date are:
AK BK
Cash P 65,625 P164,062.50
Accounts Receivable 1,487,500 896,875
Merchandise Inventory 875,000 885,937.50
Equipment 656,250 1,268,750
Total 3,084,375 3,215,625

Accounts Payable 459,375 1,159,375
AK, Capital 2,625,000
BK, Capital 2,056,250
Total 3,084,375 3,215,625

They agreed to have the following adjustments shall be made:
- Equipment of AK is underdepreciated by P87,500 and that BK is overdepreciated by P131,250.
- Allowance for doubtful account is to be set up amounting to P297,500 for AK and P196,875 for BK.
- Inventories of P21,875 and P15,312.50 are worthless in the books of AK and BK respectively.
- The partnership agreement provides for a profit and loss ratio of 70% to AK and 30% to BK.
Assuming the use of transfer of capital method, how much is the agreed capital of AK to bring the capital
balances proportionate to their profit and loss ratio.

A. P2,390,937.50 C. P2,935,406.25
B. P2,218,125 D. P1,024,687.50

2. On December 1, 2013 MV and CD agreed to invest equal amounts and share profits equally to form
a partnership. MV invested P3,120,000 cash and a piece of equipment. CD invested some assets
which are shown below.
Book Value
Accounts Receivable P 400,000
Inventory 1,120,000
Machineries, net 2,240,000
Intangibles, net 920,000

The assets invested by CD are not properly valued. P32,000 of the accounts receivable are proven
uncollectible. Inventories are to be written down to P1,040,000. Included in the machineries is an obsolete
apparatus acquired for P384,000 with an accumulated depreciation balance of P336,000. Part of the
intangibles is a patent with a carrying value of P56,000 which was sued upon by a competitor. CD
unsuccessfully defended the case and the final decision of the court was released on November 29, 2013.
What is the fair value of the equipment invested by MV?
A. P1,400,000 C. P968,000
B. P1,344,000 D. P1,560,000

3. On December 1, 2012, AB invited MZ to join him in his business. MZ agreed provided that AB will
adjust the accumulated depreciation of his Equipment account to a certain amount, and will
recognize additional accrued expenses of P50,000. After that, MZ is to invest additional pieces of
equipment to make her interest equal to 45%. If the capital balances of AB before and after
adjustment were P695,000 and P605,000 respectively, what is the effect in the carrying value of
the equipment as a result of the admission of MZ?

A. P495,000 C. P455,000
B. P(40,000) D. P(405,000)

4. On December 1, 2013, MG and AN are combining their separate businesses to form a partnership.
Cash and noncash assets are to be contributed. The noncash assets to be contributed and the
liabilities to be assumed are as follows:
MG AN
Book Value Fair Value Book Value Fair Value
Accounts Receivable P 250,000 P 262,000 P 200,000 P 195,000
Inventory 400,000 450,000 200,000 207,500
PPE 1,000,000 912,500 862,500 822,500
Accounts Payable 150,000 1,475,000 112,500 1,112,500

MG and AN are to invest equal amounts of cash such that the contribution of MG would be 10%
more than the investment of AN. What is the amount of cash presented on the partnerships
Statement of Financial Position on December 1, 2013.

A. P2,762,500 C. P2,512,500
B. P5,525,000 D. P5,025,000

5. PJ, SR and MJ are partners sharing profits and losses of 5:3:2, respectively. As of Dec 31, 2012, their
capital balances were P997,500, P840,000 and P630,000 respectively. On January 1, 2013, the
partners admitted AX as a new partner and according to their agreement AX will contribute
P840,000 in cash to the partnership and also pay P105,000 for 15% of SRs share. AX will be given a
20% share in profits, while the original partners share will be proportionately the same as before.
After admission of AX, the total capital will be P3,465,000 and AX capital will be P735,000. The
amount of asset revaluation is:
A. P231,000 C. P157,500
B. P73,500 D. P388,500

6. The following Statement of Financial Position for the Partnership of CD, NH and GV were taken
from the books on October 1, 2013.
Assets Liabilities and Capital
Cash P100,000 Liabilities P200,000
Other Assets 400,000 CD, Capital 120,000
NH, Capital 95,000
GV, Capital 85,000
Total Assets 500,000 Total Liabilities and Capital 500,000


The partners agreed to distribute profits as follows:
Annual salaries to CD and NH of P50,000 each
Annual interest of 5% on beginning capital
Bonus of 15% to CD based on income after salaries, interest and bonus
Remaining profit: 25% to CD, 35% to NH and 40% to GV

The amount of bonus in the admission of AX would be:
A. P69,300 C. P126,000
B. P115,500 D. P231,000

7. PV, BK and TF were partners with capital balances on January 2, 2013 of P350,000, P525,000 and
P700,000, respectively. Their profit ratio is 5:3:2 while their capital interest ratio is 4:4:2. On July 1,
2013, JP was admitted by the partnership for 20% interest in capital and 25% in profits by
contributing P87,500 cash, and the old partners agreed to bring their interest to their old capital
and profit interest sharing ratio. The partnership had net income of P210,000 before admission of
JP and the partners agree to revalue its overvalued equipment by P35,000. The capital balance of
PV after admission of JP is:

A. P297,500 C. P354,200
B. P588,000 D. P470,400


8. A, B and C are partners in a business being liquidated. The partnership has cash of P22,000,
noncash assets with a book value of P264,000 and liabilities of P173,250. The following data relates
to the patterns as of June 1, 2013:

(a) A has a capital balance of P129,250, personal assets of P27,500, personal liabilities of P13,750.
(b) B extended a loan to the partnership in the amount of P13,750,deficit of P38,500, personal
asset of P41,250,personal liabilities of P16,500.
(c) C has a capital balance of P8,250, personal assets of P68,750 and personal liabilities of P41,250.
(d) Their profit and loss ratio is 3:1:1, A, B and C, respectively.
On June 12, 2013, assets with a book value of P82,500 were sold for P55,000 cash. The proceeds were used
to pay off liabilities of the partnership. During the remainder of June, no additional assets were realized and
outside creditors began to pressure the partnership for payment.
On July 3, the partners agreed to contribute personal assets, to whatever extent possible, in order to
eliminate their respective deficits. Shortly thereafter, assets with book value of P55,000 and a fair value of
P63,250 were distributed to A.
Assuming additional noncash assets with book value of P110,000 were sold in July for P148,500.
How much cash would be distributed to C?
A. P12,100 C. P3,850
B. P8,800 D. P550

9. JCA Partnership is entering into liquidation and you are given the following account balances:

Cash P 775,000 Liabilities P 1,100,000
Noncash assets 6,750,000 Loan from A 150,000
J, Capital (20%) 1,275,000
C, Capital (20%) 1,625,000
A, Capital (60%) 3,375,000
Total Assets 7,525,000 Total Liabilities and capital 7,525,000

During June, noncash assets with a book value of P1,875,000 were sold for P1,600,000. JCA paid P175,000
for the liquidation expenses it incurred and it also paid half of its liabilities to outside creditors. Creditors
whose account balances amount to P150,000 decided to condone JCAs liabilities to of the cash received
from the sale of noncash assets were distributed to the partners.

How much is (1) Js share in the maximum possible loss? (2) As interest after the first cash distribution?

A. P985,000; P3,105,000 C. P975,000; P2,955,000
B. P985,000; P2,955,000 D. P975,000; P2,805,000

10. SCA Partnership has the following account balances before liquidation:
Cash P 350,000 Liabilities P 1,125,000
Noncash assets 7,375,000 Loan from A 50,000
Loan to C 150,000 S, Capital (40%) 1,250,000
Receivable from S 20,000 C, Capital (40%) 1,900,000
Expenses 2,230,000 A, Capital (20%) 1,000,000
Revenues 4,800,000
During June, some noncash assets were sold that results to a loss of P46,125. Liquidation expenses
of P175,000 were paid and additional expenses amounting to P90,000 were expected to be
incurred through the following months of liquidation the partnership. Liabilities to outsiders
amounting to P875,000 were paid.

What is the book value of the noncash assets which were sold for C to receive P555,550?

A. P2,375,000 C. P2,130,000
B. P2,328,875 D. P2,083,875

Problems 11-13, refer to the problem below:

The partnership of C, A, and G decided to liquidate their partnership on May 31, 2013. Before liquidating
and sharing of net income, their capital balances are as follows: C (30%) P1,250,000, A (30%) P900,000, and
G (40%) P1,100,000. Net income from January 1 to May 31 is P600,000. Liabilities of the partnership
amounted to P1,050,000 and its total assets include cash amounting P350,000.

Unsettled liabilities are P550,000. C invested additional cash enough to settle their partnerships
indebtedness. A is personally solvent, G is personally insolvent, and C becomes insolvent after investing the
cash needed by the partnership.

11. How much were the partnerships non-cash sold for?
A. P150,00 C. P4,400,000
B. P225,000 D. P750,000

12. How much cash will A invest in the partnership?
A. P450,000 C. P420,000
B. P240,000 D. P100,000

13. How much will C receive as a result of their liquidation?
A. P550,000 C. P450,000
B. 0 D. P660,000

On January 1, 2013, ACJ Partnership entered into liquidation. The partners capital balances on this date are
as follows:

A (25%) P625,000 C (35%) P1,350,000 J (40%) P925,000

The partnership has liabilities amounting to P1,100,000, including a loan from C (P150,000). Cash on hand
before the start of liquidation is P200,000.

With the information given, answer the following independent situations:

14. Noncash assets amounting to P1,850,000 were sold at book value and the rest of the noncash
assets will be sold at a loss of P1,050,000.

How much cash will be distributed to the partners?

A. P2,000,000 C. P1,100,000
B. P1,850,000 D. P2,950,000

15. After exhausting the noncash assets of the partnership, assuming all partners has personal assets
more than their personal liabilities.

How much cash must be invested by the partners to satisfy the claims of the outside creditors and
to pay the amount due to the partner/s?

A. P920,000 C. P1,120,000
B. P1,090,000 D. P950,000

16. If C received P563,750,

How much was the loss from the realization of the noncash assets?

A. P1,313,750 C. P2,675,000
B. P2,631,000 D. P2,486,250



17. The following information are related to Terminal Corporation which is undergoing liquidation:

a. Bonds payable amounting to P73,600 is secured by Merchandise Inventory with book value of
P123,000 and net realizable value of 2/3 of the recorded amount.
b. Of the P195,600 accounts payable, P55,000 is secured by equipment with a carrying amount of
P76,800 which is 70% realizable.
c. Building with a carrying amount of P129,000 has a net realizable value of P99,000.
d. Other unrecorded liabilities are accrued interest payable on bonds, P3,100; salaries payable,
P17,400; taxes payable, P11,600; and trustees fee, P8,500.
e. Cash available prior to liquidation amounts to P11,900.
f. Total assets of Terminal Corp. Presented in the statement of financial position prior to
liquidation amounts to P480,000, except for prepaid expenses and goodwill with recorded
amounts of P7,600 and P22,000, respectively, remaining assets other than those whose
realizable values were mentioned above have a realizable value of 60% of the recorded
amount.
g. Total liabilities of Terminal Corp. Presented in the statement of financial position prior to
liquidation amounts to P380,000.
Compute for the estimated deficiency to unsecured liabilities.
A. P51,696 C. P108,120
B. P120,020 D. P67,520

18. Ended Corporation is undergoing liquidation. The trustee of Ended Corp. Presents the following
information:
P70,000 assets are available to unsecured creditors, P10,000 of which represents
Inventories. It was ascertained that inventories were not pledged to any liabilities.
Unpaid liabilities are as follows: administrative expenses: P3,500; taxes: P6,000 and wages:
P2,500
Accounts payable and notes payable totalled P100,000. No assets were pledged on the said
liabilities.
Payment to fully secured creditors and partially secured creditors amounts to P68,000 and
P135,000 respectively.
If the recovery percentage is 35 percent, determine the amount of (1) Assets pledged to fully secured
liabilities and (2) partially secured liabilities.
A. (1) P150,000; (2) P100,000
B. (1) P150,000; (2) P200,000
C. (1) P140,000; (2) P200,000
D. (1) P140,000; (2) P100,000



19. Finish Corporation has been undergoing liquidation since January 1. As of June 30, its condensed
statement of realization and liquidation is presented below:
Assets realized P525,000
Interest on Investment 2,625
Purchases 26,250
Assets Acquired 87,500
Liabilities Assumed 26,250
Payments of Expense of Trustee 131,250
Liabilities to be liquidated 1,137,500
Sales on Account 87,500
Assets not realized 735,000
Liabilities not liquidated 557,375
Sales for cash 437, 500
Assets to be realized 1,662,500
Liabilities Liquidated 612,500

The net gain (loss) on realization and liquidation is:

A. P 306,250 C. P(126,000)
B. P(306,250) D. P 126,000

20. The following data were taken from the statement of realization and liquidation of Gone
Corporation for the quarter ended June 30, 2013

Liabilities to be liquidated P 285,000
Supplementary charges 169,100
Liabilities not liquidated 210,000
Supplementary credits 192,500
Assets acquired 136,000
Liabilities liquidated 158,000
Assets to be realized 107,500
Assets realized 175,000
Liabilities assumed 83,000

The beginning capital balances of ordinary shares and retained earnings are P102,000 and P29,600,
respectively. A net of P87,400 for the period.

How much is the ending balance of cash?

A. P293,000 C. P209,100
B. P296,500 D. P309,100

21. A, B, and C formed a joint venture. The contractual arrangement provides that C is to manage the
venture and is to receive a salary of 13% of the profit after deduction of the salary as an expense.
The net profit after the salary is to be divided as follows: A, 40%; B, 25% and C, 35%. No separate
books are used for the Joint Venture.

Joint venture is terminated after six months of operation. The trial balance prepared by C shows
the following balances.

.
Debit Credit
Joint Venture Cash P 315,000
Joint Venture P 209,500
A, Capital 180,000
B, Capital 85,000
The venture has still some unsold merchandise worth P10,850 which is to be taken by C.

How much is the total interest of C?

A. P 294,100
B. P 283,250
C. P 200,500
D. P 93,600


22. N, J, and B formed a joint venture on June 1, 2013. N acts as manager of the venture and is allowed
a bonus of 25% of the profit after the bonus. J and B are to be allowed 6% interest on their original
investments. The balance of the profit after bonus is to be divided equally.

J and B contributed merchandise of P99,000 and P135,000 respectively. The venture sales on
account amounted to P360,000. Sales discount of P1,875 were taken. Sales return amounted to
P4,200 and P9,675 were written off. Venture expenses of P87,840 were paid. They decide to
terminate the joint venture on August 31 and to charge unsold merchandise of P22,500 and
P17,100 to J and B respectively.

How much cash was received by J and B upon settlement?

A. P108,499 ; P138,249
B. P94,296 ; P137,256
C. P110,202 ; P152,682
D. P93,351 ; P135,291

23. On September 1, 2013 entities A and B each acquired 30% of the ordinary shares that carry voting
rights at a general meeting of shareholders of entity Z for P950,000 and transaction cost of
P12,500. Entities A and B immediately agreed to share control over entity Z. For the year ended
December 31, 2013 entity Z recognized a profit of P1,200,000. On December 30, 2013, entity Z
declared and paid a dividend of P105,000 for the year 2012. At December 31,2013 the fair value of
each venturers investment in entity Z is P1,065,000 and cost to sell of P18,000. However, there is
no published price quotation for entity Z. Under fair value model,
The amount of profit or loss to be reported by Entity A is:

A. P116,000 C. P31,500
B. P134,000 D. P146,500

24. On March 1, 2013 entities X and Y each acquired 25% of the ordinary shares that carry voting rights
at a general meeting of shareholders of entity C for P680,000. Transaction cost is 6% of the
transaction price. Entities X and Y immediately agreed to share control over entity C. For the year
ended December 31, 2013 entity C recognized a profit of P750,000. On December 30,2013 entity C
declared and paid a dividend of P320,000 for the year 2013. On December 31, 2013 the fair value
of each venturers investment in entity C is P840,000. Cost to sell is 4% of the fair value. However,
there is no published price quotation for entity C. Assuming Entity X uses the equity model to
account for its investment in entity C,

How much is the investment in Dec. 31, 2013?

A. P806,400 C. P797,050
B. P840,000 D. P828,300

25. On May 1, 2013 entities J and K each acquired 40% of the ordinary shares that carry voting rights at
a general meeting of shareholders of entity F for P918,000. Transaction cost amount to P5,000.
Entities J and K immediately agreed to share control over entity F. On December 31, 2013 entity F
declared a dividend of P30,000 for the year 2013. Entity F reported a loss of P270,000 for the year
ended December 31, 2013. On December 31, 2013 the fair value of investment is P862,500 and
costs to sell is P9,000. There is a published price quotation for entity F. Assuming Entity K uses cost
model to account for its investment.

The amount of profit or loss to be reported by entity K is:

A. P57,500 C. P62,500
B. P14,500 D. P48,500

26. RV, KP, and JM formed a joint venture during 2012 to sell school supplies. RV is assigned to manage
the venture. The three of them agreed to divide profits and losses equally. After two months, the
joint venture was terminated and there were unsold school supplies. RVs trial balance contains the
following:
Dr(Cr)
Joint Venture Cash P 297,500
Joint Venture 131,250
KP, Capital 78,750
JM, Capital (183,750)
JM received P194,250 as settlement for her interest in the venture while RV agreed to be charged
for the unsold products.

What is the cost of the unsold merchandise at the termination of the venture?

A. P99,750 C. P162,750
B. P105,000 D. P31,500

27. QR Appliances sells home theatre set both on instalment and cash basis. Mr. X purchased a set
from QR Appliances on March 30, 2013 for P367,500 which has a cost of P289,800. A used set is
accepted as down payment, P89,600 being allowed on the trade in. The used set can be resold for
P112,140 after reconditioning cost of P5,362. The company expects to make a 20% gross profit on
the sale of used set. The balance of the sale is to be paid on a 10-month instalment basis starting
May 1, 2013. Mr. X defaulted payment starting November 1, 2013 and the set was immediately
reprocessed. The reprocessed merchandise was appraised at a value of P65,625 at the time of
repossession. QR had to incur additional cost of repairs amounting to P6,475 before the car was
subsequently resold on December 1, 2013 for P90,125 cash to Mr. Y.

Compute for the net income to be recognized for the year 2012.

A. P69,293 C. P44,940
B. P51,415 D. P68,243

For numbers 28-30, refer to the problem below:
On July 1, 2012, Foundation Construction Corp. Contracted to build an office building for Western, Inc. For
a total contract price of P3,900,000.
2012 2013 2014
Contract cost incurred to date P300,000 P2,400,000 P4,200,000
Estimated costs to complete the contract 2,700,000 1,600,000 -
Billings to Western, Inc. 600,000 2,200,000 1,100,000

28. How much is the Construction in Progress account balance at December 31, 2013, using the
percentage of completion method?
29. How much is the Construction in Progress, net of Progress Billings at December 31, 2012, using the
zero-profit method?
30. How much is the realized gross profit/(loss), using percentage of completion method in 2013?
A. P2,300,000; P100,000; P(300,000)
B. P2,390,000; P100,000; P(200,000)
C. P2,300,000; P500,000; P(300,000)
D. P2,300,000; P500,000; P(200,000)



31. AGC Inc., franchisor, entered into franchise agreement with AYZ Inc., franchisee on July 1, 2013.
The initial franchise fees agreed upon is P5,950,000, of which P1,050,000 is payable upon signing
and the balance to be covered by a non-interest bearing note payable in four equal annual
instalments. It was agreed that the down payment is not refundable, notwithstanding lack of
substantial performance of services by franchiser. Probability of collection is unlikely. The following
expenses were incurred: Direct cost: Initial services, P1,645,000 and Continuing Services, P167,300.
Indirect Cost: Initial Services, P448,000 and Continuing Services, P63,000. The management of AYZ
has estimated that they can borrow loan at the rate of 12%. The franchise commenced its
operations on July 31, 2013. Continuing franchise fee is equal to 5% of its monthly gross sales. AYZ
reported gross sales of P6,650,000 for the month. When AGC prepares its financial statements on
August 31,2013,

How much is the net income to be reported? PV factor is 3.04.

A. P342,370 C. P416,850
B. P379,610 D. P509,670

32. On July 10, 2013, PM Motors, which maintains a perpetual inventory records sold a new
automobile to ANX for P1,700,000. The car costs the seller P1,301,250. The buyer paid 30% down
and received P160,000 allowance for an old car traded, the balance being payable in equal monthly
instalment payments. The monthly amortization amounts to P60,000 inclusive of 12% interest on
the unpaid amount of the obligation. The car traded in has a wholesale value of P240,000 after
expending the reconditioning cost of P45,000. After paying three instalments, the buyer suffered
major financial setback incapacitating him to continue paying so the car was subsequently
repossessed. When reacquired, the car was appraised to have a fair value of P600,000.

How much is the realized gross profit on instalment sales during the year?

A. P212,500 C. P221,250
B. P213,899 D. P205,149

33. Builders Corporation entered in a long term project in 2012 and continued through 2013. Builders
Corp. presently has available dependable and reliable estimates. As of 2013, Builders billed 2/5 of
the total contract price. Some other information about the project were as follows:

2012 2013
Construction cost to date P148,750 P420,000
Excess of Construction in Progress Over Billings
due from/ (due to)
38,750 (61,250)
Contract Billings 145,000 612,500
Collections from the contract 135,000 437,500

Compute the percentage of completion rate as of 2012:
A. 28% C. 36%
B. 12% D. 44%

34. TY restaurant sold a fastfood restaurant franchise to VJ. The sale agreement, signed on January
2013 called for a P100,000 down payment plus two P50,000 annual payments representing the
value of initial franchise services rendered by TY restaurant. In addition, the agreement required
the franchisee to pay 8% of its gross revenues to the franchisor. The restaurant opened early in
2013 and its sales for the year amounted to P750,000

Assuming a 12% interest rate is appropriate, TYs 2013 total revenue will be (PV of annuity of P1 at
12% for two periods is 1.6901)

A. P84,505 C. P254,646
B. P244,505 D. P266,646

35. Prestige Corporation began operations on July 1, 2013. The following information extracted from
its records at year-end:

Cost of instalment sales P546,875
Cost of regular sales 525,000
Mark-up on instalment sales 140% of cost
Mark-up on regular sales 33 1/3 on sales
Balances at December 31, 2013:
Accounts Receivable 367,500
Operating expenses 398,125
Net Income 170,625

A write-off of installment receivable amounting to P126,000 was made prior to the closing of 2013.

What is the ending balance of installment receivable as of Dec. 31, 2013?

A. P661,500 C. P211,500
B. P787,500 D. P114,625

36. On January 1, 2012, LMN Construction Corp. Began constructing a P10,500,000 contract. As of
year-end, the following are relevant information provided by the corporation:
2012 2013 2014
Construction in Progress P 2,205,000 P 6,746,250 ?
Estimated costs to complete 7,998,750 3,753,750 -
Costs Incurred 2,126,250 4,845,000 P 3,378,750


How much is the (1) realized gross profit(loss) in 2013 using the percentage of completion method
and (2) realized gross profit(loss) in 2014 using zero profit method?

A. P(146, 250) ; P291,750 C. P(225,000), P375,000
B. P(303,750) ; P0 D. P(303,750), P375,000

37. On August 1, 2013, HIJ Inc. Entered into a franchise agreement with IJK franchisee. The initial
franchise fees agreed upon is P246,900, of which P46,900 is payable upon signing and the balance
to be covered by a non-interest bearing note payable in four equal annual installments. The down
payment is refundable within 95 days. IJK Inc. Has a high credit rating, thus, collection of the note is
reasonably assured. Out-of-pocket costs of P125,331 and P12,345 were incurred for direct
expenses and indirect expenses respectively. Prevailing market rate is 8%. PV factor is 3.2397. On
the fiscal year ended October 31, 2013,

How much revenue will the franchisor recognize?

A. P6,131 C. P161,985
B. 0 D. P3,645

38. The following selected accounts appeared in the trial balance of Velocity Company as of December
31, 2013:

Installment Receivable 2012 sales P144,000 Loss on repossession P 15,840
Installment Receivable 2013 sales 1,920,000 Installment Sales 4,080,000
Inventory, December 31, 2011 672,000 Regular Sales 3,696,000
Purchases 5,228,000 Selling expenses 1,104,000
Freight in 100,000

Additional Information:
Installment receivable 2012 sales, January 1, 2013-02-12 P1,370,400
Inventory of new and repossessed merchandise as of January 1, 2014 912,000

Mark-up on regular sales in 2013 is 10% lower than the gross profit percentage on installment sales
in 2012.

There was an installment account written-off amounting to P100,000 in 2013 pertaining to the
2013 sales. The write-off was made during the year and was recorded correctly. Repossession was
made during the middle of the year and was recorded correctly. It was a 2012 sale and the
corresponding uncovered cost is P44,640 ; related gross profit is P29,760.
What is the net income for 2013?

A. P1,300,320 C. P1,232,560
B. P1,170,560 D. P1,286,400

39. Jpurney Cop. Enters into a contract with Terminal CO. To construct a 10-storey building for
P8,000,000. The following data were taken from the corps files:
2013 2014
Costs incurred - P 3,136,418
Percentage of completion - 60%
Estimated costs to complete P 6,004,024 3,091,616
Income recognized to date 98,994 162,576

What is the percentage of completion in 2012 of this conduction contract?

A. 20% C. 40%
B. 35% D. 25%

40. On December 1, 2012, ZTE Inc. Authorized Fast Track Company to operate as a franchisee for an
initial fee of P600,000. Of this amount, P240,000 was received upon signing the agreement and the
balance, represented by a note, is due in three annual payments of P120,000 each beginning
December 31, 2014. The present value on December 31, 2013, for three annual payment
appropriately discounted a P288,000. According to the agreement, the non-refundable down
payment represents a fair measure for the services already performed by the ZTE and substantial
future services are still to be rendered. However, collectability of the note is reasonably certain.

ZTEs December 31, 2013 Statement of Financial Position should report unearned franchise fee
from Fast Track Company in the amount of

A. P528,000 C. P400,000
B. P360,000 D. P288,000