On September 1, 2011, Ramus Company purchased machine parts from Jacky Chan Company

for P6,000,000 Hong Kong dollars to be paid on January 1, 2012. The exchange rate on
September 1 is HK$ 7.7 = P1. On the same date, Ramus enters into a forward contract and agrees
to purchase HK$ 6,000,000 on January 1, 2012 at the rate of HK$ 7.7 = P1. On December 31,
2011 and on January 1, 2012, the exchange rate is HK$ 8.0 = P1.

1. What is the fair value of the forward contract on December 31, 2011?
a. 0 c. 750,000
b. 29,221 d. 779,221

2. The nominal value of the forward contract on December 31, 2011?

a. 0 c. 750,000
b. 29,221 d. 779,221

3. What is the notional value of the HK$ forward contract?

a. 0 c. 750,000
b. 29,221 d. 779,221

On April 4, 2011, Conrado Uberita Beauty Products delivered to Pakistan firm inventory if sold
for 100,000 rupees. Payment is due to be received on August 2, 2011. The company’s fiscal year
ends June 30. Also on April 4, Condrado Uberita Beauty Products entered into a foreign
exchange forward to sell 100,000 rupees on august 2, 2018.
4/4/11 6/30/11 8/2/11
Spot rate (rupee) .80 .84 .82
Forward rate (rupee) .77 .83 .82
4. What was the net impact on Condrado Uberita’s income in 2011 as a result of this hedge?
a. o c. 2,000 decrease
b. 2,000 increase d. 3,000 increase

5. What is the forward Contract on June 30, 2011?

a. o c. 6,000
b. 4,000 d. 83,000

6. The fair value of the forward contract on August 2, 2011?

a. 1,000 c. 82,000
b. 5,000 d. 83,000

On October 2, 2011, Asser Tamayo, Inc. ordered a custom-built passenger van from a Japanese
firm. The purchase order is noncancelable . the purchase price is 1,000,000 yens with delivery
and payment to be on March 31, 2012. On October 1, 2011, Asser Tamayo, Inc. entered into a
forward contract to buy 1,000,000 yens on March 31, 2012 for P.57. On March 31, 2012, the
custom-built passenger van was delivered.
10/2/11 12/21/11 3/31/12
Spot rate (rupee) .50 .56 .57
Forward rate (rupee) .53 .58 .57

7. The December 31, 2011 profit and loss statement, net foreign exchange gain or loss (forward
contract an commitment):
a.10,000 net gain c. zero
b. 10,000 net loss d. not applicable since hedge
accounting does not apply
8. The firm Commitment account balance s shown in the December 31, 2011 balance sheet
amounted to:
a. 50,000 asset c. 50,000 liability
b. 60,000 liability d. none, since it is a fair value hedge

9. What is the fair value of the forward contract on December 31, 2011?
a. 50,000 receivable c. 60,000 receivable
b. 50,000 payable d. 60,000 payable

10. What is the fair value of the contract on March 31, 2012?
a. 50,000 asset c. 40,000 receivable
b. 50,000 payable d. 40,000 payable

11. The Firm Commitment account balance on March 31, 2012 amounted to:
a. 10,000 asset c. 40,000 asset
b. 50,000 liability d. 40,000 liability

12. The value of the equipment on March 31, 2012 amounted to:
a. 500,000 c. 560,000
b. 530,000 d. 570,000

13. The December 31, 2011 profit or loss statement, foreign exchange gain or loss on hedged
item/commitment amounted to:
a. 50,000 loss c. 60,000 loss
b. 50,000 gain d. not applicable, since it is cash
flow hedge
14. The December 31, 2011 foreign exchange gain or loss on the hedging instrument (forward
contract) amounted to:
a. 50,000 gain, other comprehensive income
b. 50,000 gain, current earnings
c. 60,000 loss, other comprehensive income
d. 60,000 gain, current earnings

15. The Firm Commitment account balance amounted on March 31, 2012 amounted to:
a. 10,000 asset c. 40,000 liability
b. 50,000 liability d. none, since it is a cash flow hedge

16. The value of the equipment on March 31, 2012 assuming that Asser Tamayo, Inc. has
elected to apply PAS 39 par. 98 (b), and adjust the cost of non-financial items acquired:
a. 500,000 c. 560,000
b. 550,000 d. 700,000

On September 9, 2011, Selma Inc. accepted a non-cancellable merchandise sales order from a
Japanese firm. The contract price was 100,000 yens. The merchandise was delivered on
December 14, 2011. The invoice was dated December 11, 2011. The shipping date (FOB
shipping point). Full payment was received on January 22, 2022. The spot direct exchange rates
for the Japanese yens on the respective dates are as follows:

September 9, December 11, December 14, December 31, January 22

2011 2011 2011 2011 2012
P.75 P.78 P.77 P.73 P.725

17. What is the reportable sales amount in the 2011 income statement?
a.) P73,000 c.) P77,000
b.) 75,000 d.) 78,000

18. Using the same information in number 1, what is the reportable foreign exchange gain or loss
amount in the 2011 income statement?
a. P2000 gain c. P5000 loss
b. 4000 loss d. 5000 gain

19. Using the same information in number 1, what is the reported value of the receivable from
the customer at December 31, 2011?
a. P73,000 c. P77,000
b. 75,000 d. 78,000

20. Which of the following transaction of a voluntary health and welfare organization would
increase temporarily restricted net assets on the statement of activities for the year ended June
30, 2011.

I. Received a contribution of P10,000 from a donor on May 15, 2011, who stipulated
that the donation not be spent until August of 2011.
 II. Spent P25,000 for fund-raising on June 20, 2011. The amount expended came from a
P25,000 contribution on March 12, 2011. The donor stipulated that the contribution be
used for fund-raising activities

a. Both I and II c. I only

b. Neither I nor II d. II only

21. On December 31, 2011, Faith Heaven, voluntary health and welfare organization, received a
pledge of donor who stipulated that P1000 would be given to the organization each year for the
next 5 years, starting on December 31, 2012, present value factor at 6% for 5 periods are
presented below.

Present value of an ordinary annuity for 5 periods at 6%.................. 4.21236

Present value of an annuity due for 5 periods at 6%.................. 4.46511

For the year ended December 31, 2011. Faith Haven should report, on its statement of activities

a. Unrestricted revenues of P5,000

b. Temporarily restricted revenues of P4,465
c. Unrestricted revenues of P4,465
d. Temporarily restricted revenues of P4,212

22. A statement of functional expenses is required for which one of the following private non-
profit organization.
a. Colleges
b. Hospital
c. Voluntarily health and welfare organization
d. Performing arts and organization

23. In 2011, the Board of Trustees of Ayala Foundation designated of P100,000 from its current
fund for college scholarships. Also in 2011, the foundation received a bequest of P200,000
from an state of benefactor whose specified that the bequest was to be used for hiring teachers to
tutor handicapped students. What amount should be accounted for as current restricted funds ?

a. P 0 c. P200,000
b. 100,000 d. 300,000

24. On January 2, 2011, a non profit Botanical Society received a gift of an exhaustible fixed
asset with an estimated useful life of 10 years and no salvage value. The donor’s cost of this
asset was P20,000 and its fair market value at the date of the gift was P30,000. What amount of
the depreciation of this asset should the society recognize in its 2011 financial statement?

a. P 3000 c.P2,000
b. 2,500 d. 0
25. Royal Anchor, a community foundation, incurred P5,000 in management and the general
expenses during 2011. In Royal Anchor statement of operation and changes in net asset for the
year ended December 31, 2011, the P5,000 should be reported as

a. A contra account offsetting revenue and support

b. Part of program service
c. Part of supporting activities
d. A direct reduction of fund balance

26. The following expenditures were made by Green Community, a society for the protection of
the environment.

Printing the annual report ……………………….… P12,000

Unsolicited merchandise sent to encourage contributions …… 25,000
Cost of an audit performed by a CPA firm …………………... 3,000

What amount should be classified as fund-raising cost in the society’s activity statement?

a. P 37,000 c. P25,000
b 28,000 d. 0

27. In 2011, the Board of Trustees of Ayala Foundation designated of P100, 000 from its current fund for
college scholarships. Also in 2011, the foundation received a bequest of P200, 000 from a state of benefactor
who’s specified that the bequest was to be used for hiring teachers to tutor handicapped students. What
amount should be accounted for as current restricted funds?

a. P 0 c. P200,000
b. 100,000 d. 300,000

28. On January 2, 2011, a non-profit Botanical Society received a gift of an exhaustible fixed asset with an
estimated useful life of 10 years and no salvage value. The donor’s cost of this asset was P20, 000 and its
fair market value at the date of the gift was P30, 000. What amount of the depreciation of this asset should
the society recognize in its 2011 financial statement?

a. P 3000 c.P2,000
b. 2,500 d. 0

On October 17, 2011, Shirley Ireneo Co. purchased from a Thailand firm an inventory costing
10,000 baht. Payment is due on January 15, 2012. Also on October 17, Shirley Ireneo Co.
entered into a foreign exchange forward to buy 10,000 baht on January 15, 2012.
10/17/11 12/13/11 11/15/12
Spot rate (baht) P1.30 P1.42 P1.40
Forward rate (baht) P1.30 P1.42 P1.40

29. The December 31, 2011 profit and losses statement, foreign exchange gain or loss due to
hedged items amounted to:
a. 200 gain c. 1,200 gain
b.1,000 loss d. 1,200 loss

30. The December 31, 2011 profit and loss statement, foreign exchange gain or loss due to
hedging instrument-forward contract:
a. 200 gain c. 1,200 gain
b.1,000 loss d. 1,200 loss