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1 pts

On February 1, 2016, Baby Corporation purchased a parcel of land as a factory


site for P320,000. An old building on the property was demolished and
construction begun on a new warehouse that was completed April 15, 2017.
Costs incurred on the construction project are listed below.

Demolition of old building P 21,000


Architect's fees 31,700
Legal fees - title investigation 4,100
Construction costs 950,000
Imputed interest based on stock financing 14,000
Landfill for building site 19,300
Clearing of trees from building site 9,600
Temporary buildings used for construction activities 29,000
Land survey 4,000
Excavation for basement 13,200
Additional information:
Salvage materials from demolition sold for P1,800
Timber sold for P3,300
Determine the cost of the land.
P372,900
P353,600
P347,300
P366,600

1 pts
San Antonio Company is engaged in the operation of public highways and
skyways in the Philippines. On November 2, 2016, a catastrophe devastated the
some of the company's operated highways and skyways. The company suffered
P5.6 billion loss due to catastrophe. On January 1, 2017, the Philippine
government decided to compensate the company for the incurred loss. The
government loaned P5 billion at 5% per annum with maturity period of 5 years.
The current market rate for similar type of loan after considering credit risks
attached was 10%. The conditions stipulated on the loan agreement provide that
the proceeds will be used for reconstruction of the skyways and highways.
On January 1, 2017, how much should the company recognize as government
grant (round off to nearest million)?
Nil
P4,052 million
P302 million
P 948 million
1 pts
The Decca Company purchased a machine for P360,000 on 1 January 2016 and
received a government grant of P50,000 towards the capital cost. Company
policy is to treat the grant as a reduction in the cost of the asset. The machine
was to be depreciated on a straight-line basis over 8 years and was estimated to
have a residual value of P5,000 at the end of this period.
Under PAS20 Government grants and government assistance, what should be the
carrying amount of the machine at 31 December 2016?
P315,625
P266,875
P271,875
P271,250

1 pts
On January 1, 2016, LAL Corp. began construction of homes for those families
that were hit by the tsunami disaster and were homeless. The construction is
expected to take 3.5 years. It is being financed by issuance of bonds for P7
million at 12% per annum. The bonds were issued at the beginning of the
construction. The bonds carry a 1.5% issuance cost. The project is also financed
by issuance of P3 million share capital with a 14% cost of capital. The borrowing
costs to be capitalized in 2016 is (Use straight line amortization method)
P840,000
P1,290,000
P870,000
P1,260,000

1 pts
Aries Company started construction on a building on January 1 of this year and
completed construction on December 31 of the same year. Aries had only two
interest notes outstanding during the year, and both of these notes were
outstanding for all 12 months of the year. The following information is available:
Average accumulated expenditures P250,000
Ending balance in construction in progress before
capitalization of interest 360,000
Six percent note incurred specifically for the project 150,000
Nine percent long-term note 500,000
What amount of interest should Aries capitalize for the current year?
P27,900
P15,000
P22,500
P18,000

1 pts
Pantabangan Company takes a full year’s depreciation in the year of an assets
acquisition, and no depreciation in the year of disposition. Data relating to one
depreciable asset acquired in 2015, with residual value of P900,000 and estimated
useful life of 8 years, at December 31, 2016 are:
Cost P9,900,000
Accumulated depreciation 3,750,000
Using the same depreciation method in 2015 and 2016, how much depreciation
should Pantabangan record in 2017 for this asset?
P1,125,000
P1,650,000
P1,250,000
P1,500,000

1 pts
A machine has a cost of P60,000, has an annual depreciation of P12,000, and has
accumulated depreciation of P30,000 on December 31, 2016. On April 1, 2017,
when the machine has a fair value of P24,000, it is exchanged for a similar
machine with a fair value of P72,000 and the proper amount of cash is paid. The
loss to be recognized on exchange is _____________.
P6,000
P21,000
P3,000
P0

1 pts
On January 15, 2015, Alaturka Company paid P5,400,000 for property containing
natural resource of 2,000,000 tons of ore. The entity is legally required to restore
the site after mining operations. The estimated cost of restoring the land after the
resource is extracted is P450,000 and the land will have a value of P650,000 after
it is restored for suitable use. Tunnels, bunk houses and other fixed installations
are constructed at a cost of P8,000,000 and such expenditures are charged to
mine improvements.
Operations began on January 1, 2016 and resources removed totaled 600,000
tons. During 2011, a discovery was made indicating that available resource after
2017 will total 1,875,000 tons. At the beginning of 2017, additional bunk houses
were constructed in the amount of P770,000. In 2017, only 400,000 tons were
mined because of a strike.
Alaturka Company should report depletion for 2017 at ________________.
P1,560,000
P640,000
P1,040,000
P776,000

1 pts
Dingalan Corporation’s investment properties included the following items:
Land held as potential plant site, P5,000,000.
A vacant building to be leased out under an operating lease, P20,000,000.
Property held for sale in the ordinary course of its business, P30,000,000.
Property held for administrative purposes, P10,000,000.
A hotel owned and managed, P50,000,000.
A building being leased out to a subsidiary, P8,000,000.
A building, which cannot be sold or leased out separately, used in the
production of goods and around 2% of the area being leased out to canteen
operators, P2,000,000.
How much will be reported as investment properties in Dingalan Corporation’s
separate financial statements?
P20,000,000
P25,000,000
P28,000,000
P33,000,000

1 pts
During 2016, Broca Co, had the following transactions:
On January 2, Broca purchased the net assets of Amp Co. for P360,000.
The fair value of Amp's identifiable net assets was P172,000, Broca believes that,
due to the popularity of Amp’s consumer products, the life of the resulting
goodwill is unlimited.
On February 1, Broca purchased a franchise to operate a ferry service
from the state government for
P60,000 and an annual fee of 1% of ferry revenues. The franchise expires after
five years. Broca received P20,000 of ferry revenues in 2016.
On April 5, Broca was granted a patent that had been applied for by
Amp. During 2016, Broca
incurred legal costs of P51,000 to register the patent and an additional P85,000 to
successfully prosecute a patent infringement suit against a competitor. Broca
estimates the patent's economic life to be ten years.
Broca has determined that it is appropriate to amortize these intangibles on the
straight-line basis over the maximum period permitted by generally accepted
accounting principles, taking a full year's amortization in the year of acquisition.
Calculate the total expense to be recognized in 2016 income statement resulting
from the foregoing intangible assets.
P102,300
P25,600
P111,700
P35,200

1 pts
The company's accounting records show that changes in ledger account
balances occurred during 2016 as follows:
Increase Decrease
Cash P800,000
Accounts receivable (net) P40,000
Inventories 300,000
Equipment (net) 360,000
Building (net) 600,000
Loans payable 1,000,000
Accounts payable 300,000
Share capital, P10 par 600,000
Share premium 200,000
Retained earnings ?
Assuming that there were no transactions affecting retained earnings other than
the P250,000 cash dividends, compute the net income for 2016.
P270,000
P2,170,000
P520,000
P770,000

1 pts
Pious sells goods supplied by Devout. The goods are classed as A grade (perfect
quality) or B grade, having slight faults. Pious sells the A grade goods acting as
an agent for Devout at a fixed price calculated to yield a gross profit margin of
50%. Pious receives a commission of 12.5% of the sales it achieves for these
goods. The arrangement for B grade goods is that they are sold by Devout to
Pious and Pious sells them at a gross profit margin of 25%. The following
information has been obtained from Pious' financial records:
GRADE A GRADE B
Inventory held on premises, 1/1/17 P 2,400,000 P1,000,000
Goods from Devout year to 12/31/17 18,000,000 8,800,000
Inventory held on premises, 12/31/17 2,000,000 1,250,000
How much should be reported as sales revenue in Pious’ income statement for
the year ended December 31, 2017?
P11,400,000
P36,800,000
P26,950,000
P48,200,000

1 pts
On 1 July 2017, Zen Company handed over to a client a new computer system.
The contract price for the supply of the system and after-sales support for 12
months was P800,000. Zen estimates the cost of the after-sales support at
P120,000 and it normally marks up such costs by 50% when tendering for support
contracts. The revenue Zen should recognize in its financial year ended 31
December 2017 is ________________.
P620,000
P800,000
P710,000
Nil

1 pts
The Tiger Corporation included the following in its unadjusted trial balance as of
December 31, 2017:
Inventory, 12/31/16 P 19,450,000
Purchases 127,850,000
Additional information:
The inventory at December 31, 2017 was counted at a cost of P8.5 million.
This includes P500,000
of slow moving inventory that is expected to be sold for a net amount of
P300,000.
Sales include P8 million for goods sold in December 2017 for cash to Beer
Finance Company. The
cost of these goods was P6 million. Beer Finance Company has the option to
require Tiger to repurchase these goods within one month of year-end at their
original selling price plus a facilitating fee of P250,000.
The cost of sales for the year ended December 31, 2017 is ________________.
P138,800,000
P133,000,000
P132,800,000
P139,000,000

1 pts
Maximilian uses the perpetual inventory system. Maximilian's inventory
transactions for the moth of August were as follows:
Date Particulars Qty Unit Cost Total Cost
01 Aug. Beginning inventory 20 P4.00 P80.00
07 Aug. Purchases 10 4.20 42.00
10 Aug. Purchases 20 4.30 86.00
12 Aug. Sales 15 ? ?
16 Aug. Purchases 20 4.60 92
20 Aug. Sales 40 ? ?
28 Aug. Sales returns 3 ? ?
Using the information, assume that the Maximilian uses the FIFO cost flow
method and that the sales returns relate to the 20 August sales. The sales return
should be costed back into inventory at what unit cost?
P4.00
P4.07
P4.60
P4.30

1 pts
Maximilian uses the perpetual inventory system. Maximilian's inventory
transactions for the month of August were as follows:
Date Particulars Qty Unit Cost Total Cost
01 Aug. Beginning inventory 20 P4.00 P80.00
07 Aug. Purchases 10 4.20 42.00
10 Aug. Purchases 20 4.30 86.00
12 Aug. Sales 15 ? ?
16 Aug. Purchases 20 4.60 92
20 Aug. Sales 40 ? ?
28 Aug. Sales returns 3 ? ?
Assuming that Maximilian uses the weighted average cost flow method, the 12
August sales should be costed at what unit cost?
P4.07
P4.16
P4.30
P4.60

1 pts
On January 1, 2016, Horse Corp. signed a three-year noncancelable purchase
contract, which allows Horse to purchase up to 500,000 units of a computer part
annually from Dark Supply Co. at P10 per unit and guarantees a minimum annual
purchase of 100,000 units. During 2016, the part unexpectedly became obsolete.
Horse had 250,000 units of this inventory at December 31, 2016, and believes
these parts can be sold as scrap for P2 per unit. What amount of probable loss
from the purchase commitment should Horse report in its 2016 profit or loss?
P2,400,000
P2,000,000
P1,600,000
P 800,000

1 pts
On August 15, 2016, a typhoon damaged a warehouse of Parlophone Merchandise
Company. The entire inventory and many accounting records stored in the
warehouse were completely destroyed. Although the inventory was not insured,
a portion could be sold for scrap. Through the use of the remaining records, the
following data are assembled:
Inventory, January 1 P 375,000
Purchases, January 1-August 15 1,385,000
Cash sales, January 1-August 15 225,000
Collection of accounts, Jan. 1-Aug. 15 2,115,000
Accounts Receivable, January 1 175,000
Accounts Receivable, August 15 265,000
Salvage value of inventory 5,000
Gross profit percentage on sales 32%
Compute the inventory loss as a result of the typhoon.
P102,600
P107,600
P104,200
P255,600

1 pts
A public limited company, Gatas Pure, produces milk on its farms. It produces
30% of the country’s milk that it consumed. Gatas owns several farms and has a
stock of 210,000 cows and 105,000 heifers.
Additional information:
At December 31, 2016 the herds are:
a) 210,000 cows (3 years old), all purchased on or before December 31, 2015
b) 75,000 heifers, average age 1.5 years, purchased on July 1, 2016
c) 30,000 heifers, average age 2 years, purchased on December 31, 2015
No animals were born or sold in the year.
The unit fair values less estimated costs to sell were:
1 - year old animal at Dec. 31, 2016 P32
2 - year old animal at Dec. 31, 2016 45
1.5 - year old animal at Dec. 31,2016 36
3 - year old animal at Dec. 31, 2016 50
1-year old animal at Dec. 31, 2011
and July 1, 2011 40
The increase in fair value of biological assets in 2016 due to physical change is
__________.
P1,500,000
P1,260,000
P1,740,000
P1,470,000

1 pts
The following is information related to the development of a particular software
package in the first year of product life:
Development costs prior to reaching technological P 4,000
feasibility
Development costs after reaching technological feasibility 6,000
Costs of duplicating salable product 9,000*
Estimated revenues over 3 year total product life 300,000
Revenue in the first year of product life 150,000
*This represents the entire inventory expected to be sold over the 3-year period.
What is the total expense related to this software package to be recognized in its
first-year?
P16,000
P11,500
P12,000
P 7,000

1 pts
Sacramento has just acquired the net assets of Kings for P100,000. In acquiring
Kings, the owners of Sacramento felt that Kings had unrecorded goodwill. They
decided to capitalize the estimated annual superior earnings of Kings at 20% to
determine the amount of goodwill. The computation resulted in an estimated
goodwill of P10,000. A rate of 10% on net assets before recognition of goodwill
was used to determine normal annual earnings of Kings, because it is the rate
that is earned on net assets in the industry in which Kings operates. All other
assets of Kings were properly recorded. The estimated annual earnings of Kings
is __________.
P10,000
P2,000
P9,000
P11,000

1 pts
On January 1, 2012, the Twine Corporation purchased machinery for P650,000
which it installed in a rented factory. It is depreciating the machinery over 12
years by the straight-line method to a residual value of P50,000. Late in 2016,
because of increasing competition in the industry, the company believes that its
asset may be impaired and will have a remaining useful life of 5 years, over which
it estimates the asset will produce total cash inflows of P1,000,000 and will incur
total cash outflows of P825,000. The cash flows are independent of the
company's other activities and will occur evenly each year. The company is not
able to determine the fair value based on a current selling price of the machinery.
The company's discount rate is 10%. The impairment loss to be recognized in
2016 profit or loss is ______________.
P267,322
P246,490
P317,322
P0

1 pts
On January 1, 2014 Klatten Corporation acquired all the assets and liabilities of
New Corporation.
New Corporation has a number of operating divisions, including one whose major
industry is the manufacture of toy train, particularly those having historical
significance. The toy trains division is regarded as a cash-generating unit. In
paying P20 million for the net assets of New Corporation, Klatten calculated that
it had acquired goodwill of P2,400,000. The goodwill was allocated to each of the
divisions, and the assets and liabilities acquired are measured at fair value at
acquisition date.
At December 31, 2016, the carrying amounts of the assets of the toy train
division were:
Factory P2,500,000
Inventory 1,500,000
Brand – “Choochoo” 500,000
Goodwill 500,000
TOTAL P5,000,000
There is a declining interest in toy trains because of the aggressive marketing of
computer-based toys, so the management of Klatten measured the value in use of
the toy train division at December 31, 2016, determining it to be P4,230,000.
The journal entry to record the impairment loss includes a credit to
______________.
Goodwill of P770,000.
Brand-“Choochoo” of P270,000.
Accumulated depreciation-Factory P150,000.
Inventory of P81,000.

1 pts
The 10% bonds payable of Nixon Company had a net carrying amount of
P570,000 on December 31, 2010. The bonds, which had a face value of $600,000,
were issued at a discount to yield 12%. The amortization of the bond discount
was recorded under the effective-interest method. Interest was paid on January 1
and July 1 of each year. On July 2, 2011, several years before their maturity, Nixon
retired the bonds at 102. The interest payment on July 1, 2011 was made as
scheduled. What is the loss that Nixon should record on the early retirement of
the bonds on July 2, 2011? Ignore taxes.
P12,000.
P37,800.
P33,600.
P42,000.

1 pts
The following pertains to Megatron, Inc. on December 31 of the current year:
Checking account balance P925,000; an overdraft in special checking account at
same bank as normal checking account of P17,000; certificate of deposit
P400,000; cash held in a bond sinking fund P200,000; postdated check from
customer P11,000; certified check from customer P9,800; NSF check received
from customer P15,000; cash advance to subsidiary of P300,000; postage stamps
on hand P620; utility deposit paid to electric company P8,000; currency and coins
in a petty cash fund (the company has not replenished the fund to the imprest
amount of P5,000) P800. The correct amount that should be reported as cash is
______________.
P908,800
P1,318,600
P918,600
P1,322,800

1 pts
On January 1, 2007, Hanoi Company sold a machine with a carrying amount of
P300,000 and accepted in exchange a promissory note with a face value of
P500,000, a due date of December 31, 2016, and a stated rate of 4%, with interest
receivable at the end of each year. The fair value of the machine is not readily
determinable and the note is not readily marketable. Under the circumstances,
the note is considered to have an appropriate imputed rate of interest of 8%.
The amortized cost of the note receivable as of December 31, 2011 is
________________.
P500,000
P407,547
P365,802
P420,154

1 pts
On November 30, 2016, accounts receivable in the amount of P900,000 were
assigned to Kaban Finance Co. by Kalan as security for a loan of P750,000.
Kaban charged a 3% commission on the accounts; the interest rate on the note is
12%. During the December 2016, Kalan collected P350,000 on assigned accounts
after deducting P560 of discounts. Kalan wrote off a P530 assigned account. On
December 31, 2016, Kalan remitted to Kaban the amount collected plus one
month's interest on the note.
How much is Kalan’s equity in the assigned accounts receivable as of December
31, 2016?
P149,470
P141,410
P141,970
P148,910

1 pts
On January 1, 2016, YOU TOO Corporation purchased P1,000,000 10% bonds
designated as held-to-maturity. The bonds were purchased to yield 12%. Interest
is payable annually every December 31. The bonds mature on December 31,
2020. On December 31, 2016 the bonds were selling at 99. On December 31,
2017, YOU TOO sold P500,000 face value bonds at 101. The bonds were selling at
103 on December 31, 2018.
How much is the realized gain on sale of the investment in bonds in 2017?
P41,060
P35,387
P29,010 ‘
P10,000

1 pts
Edwards Company began business in February of 2016. During the year,
Edwards purchased the three trading securities listed below. On its December
31, 2016, balance sheet, Edwards appropriately reported a P4,000 credit balance
in its Market Adjustment--Trading Securities account. There was no change
during 2017 in the composition of Edward's portfolio of trading securities.
Pertinent data are as follows:
Security Cost Fair Value 12/31/17
A P120,000 P126,000
B 90,000 80,000
C 160,000 157,000

What amount of loss on these securities should be included in Edward's income


statement for the year ended December 31, 2017?
P11,000
P3,000
P7,000
P0

1 pts
On July 1, 2012, Cleopatra Corporation acquired 25% of the shares of Marcus, Inc.
for P1,000,000. At that date, the equity of Marcus was P4,000,000, with all the
identifiable assets and liabilities being measured at amounts equal to fair value.
The table below shows the profits and losses made by Marcus during 2012 to
2016:
Year Profit (Loss)
2012 P200,000
2013 (2,000,000)
2014 (2,500,000)
2015 160,000
2017 300,000
What is the carrying amount of the investment in Marcus, Inc. as of December 31,
2012?
P40,000
P75,000
P15,000
P0

1 pts
On January 1, 2013, Jumbo Corporation issued a P3 million 6% convertible bonds
at par. The bonds are redeemable at a premium of 10% on December 31, 2016 or
it may be converted into ordinary shares on the basis of 50 shares for each
P1,000 bond at the option of the holder. The interest rate for an equivalent bond
without the conversion rights would have been 10%.
The issuance of convertible bonds on January 1, 2013 increased the entity’s
equity by ________.
P175,518
b. P380,418
P 73,068
d. P 0

1 pts
On January 1, 2013, Jumbo Corporation issued a P3 million 6% convertible bonds
at par. The bonds are redeemable at a premium of 10% on December 31, 2016 or
it may be converted into ordinary shares on the basis of 50 shares for each
P1,000 bond at the option of the holder. The interest rate for an equivalent bond
without the conversion rights would have been 10%.
The carrying amount of the bonds payable as of December 31, 2013 is
P3,000,000
P3,039,625
P2,701,540
P2,926,930

1 pts
Presented below is pension information related to Enrique, Inc. for the year 2016:
Service cost P96,000
Interest on projected benefit obligation 72,000
Interest on vested benefits 32,000
Amortization of prior service cost due to increase in 16,000
benefits
Expected return on plan assets 24,000
Actual return on plan assets 30,000
Contributions to the plan 100,000
Benefits paid 120,000
The amount of pension expense to be reported for 2016 is ___________.
P144,000
P192,000
P160,000
P216,000

1 pts
On January 2, 2016, Arjam Co. established a noncontributory defined benefit plan
covering all employees and contributed P450,000 to the plan. At December 31,
2016, Arjam determined that the 2016 service and interest costs on the plan were
P620,000. The expected and the actual rate of return on plan assets for 2016 was
10%. There are no other components of Arjam's pension expense. What amount
should Arjam report in its December 31, 2016 statement of financial position as
accrued pension expense?
P575,000
P125,000
P170,000
P 80,000

1 pts
Dunn Co.’s 2016 income statement reported P90,000 income before provision for
income taxes. To compute the provision for current income tax, the following
2016 data are provided:
Rent received in advance P16,000
Income from exempt municipal bonds 20,000
Depreciation deducted for income tax purposes in excess
of depreciation reported for financial statement purposes
10,000
Enacted corporate income tax rate 30%
What amount of current income tax liability should be reported in Dunn’s
December 31, 2016, balance sheet?
P18,000
P25,800
P22,800
P28,800

1 pts
West Corporation leased a building and received the P36,000 annual rental
payment on June 15, 2016. The beginning of the lease was July 1, 2016. Rental
income is taxable when received. West’s tax rates are 30% for 2016 and 40%
thereafter. West had no other permanent or temporary differences. West
determined that no valuation allowance was needed. What amount of deferred
tax asset should West report in its December 31, 2016 statement of financial
position?
P5,400
P10,800
P7,200
P14,400

1 pts
The December 31, 2016 balance sheet of Camille Corp. showed shareholders’
equity of P448,700. Transactions during 2016 which affected the shareholders’
equity were: (1) an adjustment to Retained Earnings for an overstatement of
depreciation in 2015 P10,000; (2) gain on the sale of treasury shares, P9,000; (3)
declared dividends of P60,000 of which P40,000 were paid during the year; and (4)
net income after tax of P75,500. The share capital balance of P300,000 remain
unchanged during the year.
The retained earnings balance on January 1, 2016 was _____________.
P134,200
P123,200
P132,300
P114,200

1 pts
At December 31, 2015, Rama Corp. had 20,000 shares of P1 par value treasury
shares that had been acquired in 2010 at P12 per share. In May 2016, Rama
issued 15,000 of these treasury shares at P10 per share. At December 31, 2016,
what amount should Rama show in notes to financial statements as a restriction
of retained earnings as a result of its treasury shares transactions?
P 5,000
P 90,000
P60,000
P240,000

1 pts
Mekeni Corp. has the following classes of shares outstanding at December 31,
2016:

Ordinary share capital, P100 par P360,000


6% Preference share capital, P100 par, cumulative and
fully participating 120,000
Dividends on preference shares are in arrears for 2014 and 2015.
If P57,600 are to be distributed as dividends, the total dividends to be given on
preference shareholders would be _________.
P32,400
P25,200
P30,000
P26,400

1 pts
The shareholders’ equity account balances for the Unforgiven, Inc. on December
31, 2016 follows:
12% Preference share capital, P100 par, 20,000 shares P2,000,000
Ordinary share capital, P25 par, 145,000 shares 3,625,000
Subscribed share capital, net of P500,000 subscriptions 1,000,000
receivable
Share premium 500,000
Retained earnings 695,000
Treasury shares, 5,000 shares, at cost 400,000
Preference shares have a liquidation value of P110; shares are cumulative, with
dividends in arrears for 3 years including the current year and fully payable in the
event of liquidation. The book value of an ordinary share is _____________.
P25.00
P27.78
P22.50
P29.00

1 pts
Ket Company’s capital structure was as follows:
Outstanding Shares 2015 2016
Ordinary 1,000,000 1,000,000
Convertible Preference 100,000 100,000
10% bonds payable 30,000,000 30,000,000
During 2016, Ket paid dividends of P15 per share on its preference shares. The
preference shares are convertible into 150,000 ordinary shares and the 10%
bonds are convertible into 300,000 ordinary shares. Profit for 2016 was
P10,000,000. The income tax rate is 35%. The diluted earnings per share for 2016
should be __________.
P8.50
P8.04
P8.24
P7.50

1 pts
The Alcala Company counted its ending inventory on December 31. None of the
following
items were included when the total amount of the company’s ending inventory
was computed:
P150,000 in goods located in Alcala’s warehouse that are on
consignment from another company.
P200,000 in goods that were sold by Alcala and shipped on December 30
and were in transit on December 31; the goods were received by the customer on
January 2. Terms were FOB Destination.
P300,000 in goods were purchased by Alcala and shipped on December
30 and were in transit on December 31; the goods were received by Alcala on
January 2. Terms were FOB shipping point.
P400,000 in goods were sold by Alcala and shipped on December 30 and
were in transit on December 31; the goods were received by the customer on
January 2. Terms were FOB shipping point.
The company’s reported inventory (before any corrections) was P2,000,000. What
is the correct amount of the company’s inventory on December 31?
P2,550,000
P2,500,000
P1,950,000
P2,700,000

1 pts
The Mary I Mfg. Co. in its balance sheet as of December 31, 2017 has an inventory
the amount of P176,000 which consists of:

Direct materials P55,000


Direct materials purchases in transit, FOB destination
12,000
Direct materials purchases in transit, FOB shipping
point 9,000
Prepaid insurance on inventory 2,000
Work-in-process 38,000
Finished goods 45,000
Goods shipped on consignment, at selling price with
20% profit on sales 15,000
What is the cost of inventory to be shown in the statement of financial position of
Mary I Mfg. Co. as of December 31, 2017?
P162,500
P159,000
P150,000
P159,500

1 pts
Skyfall Co. records purchases at net amounts. On May 5 Skyfall purchased
merchandise on account, P32,000, terms 2/10, n/30. Skyfall returned P2,000 of the
May 5 purchase and received credit on account. At May 31 the balance had not
been paid.
By how much should the account payable be adjusted on May 31?
P600
P680
P640
P0

1 pts
Compute for the cost of inventory lost in fire using the data below:
Inventory, July 1, 2016 P51,600
Purchases, July 1, 2016 to Jan. 19, 2017 368,000
Sales, July 1, 2016 to Jan. 19, 2017 583,000
Purchase returns 11,200
Purchase discounts taken 5,800
Freight in 3,800
Sales returns 8,600
A fire destroyed the entire inventory except for purchases in transit, FOB
shipping point, of P2,000 and goods having selling price of P4,900 that were
salvaged from the fire. The average gross profit rate on net sales is 40%.
P59,760
P56,940
P62,660
P56,820

1 pts
On December 31, 2017, Norala Company purchased an equipment from Maasim
Company. Simultaneous with the sale, Maasim leased back the equipment for 12
years for its use in the new farm that it is developing. The sales price of the
equipment was P8,000,000 while the carrying amount in the books of Maasim as
of the date of the sale was P6,500,000. Maasim’s engineers have estimated that
the remaining economic life of the equipment is 15 years. Maasim Company
should report deferred gain from sale of the equipment on December 31, 2017 at
_________.
P1,500,000
P1,400,000
P1,375,000
P0

1 pts
A director of an entity receives a retirement benefit of 10% of his final salary per
annum for his contractual period of three years. The director does not contribute
to the scheme. His anticipated salary over the three years is Year 1 P100,000,
Year 2 P120,000, and Year 3 P144,000. Assume a discount rate of 5%. The
pension liability at the end of the second year is _______.
P29,520
P27,429
P22,500
P26,775

1 pts
Bailey Co. leased equipment to Greco, Inc. on January 1, 2016. The lease is for
an 8-year period. The first eight equal annual payments of P600,000 was made on
January 1, 2016. Bailey had purchased the equipment on December 29, 2015 for
P3,600,000. The lease is appropriately accounted for as a sales-type lease by
Bailey. Assume that the present value at January 1, 2016 of all rent payments
over the lease term discounted at a 10% interest rate was P3,520,000. What
amount of interest income should Bailey record in 2017 as a result of the lease?
P261,200
P320,000
P292,000
P327,200

1 pts
On December 31, 2017, Iriga Company sold an equipment to Magarao Company
for P8,000,000 and simultaneously leased it back for 2 years. The carrying
amount of the equipment is P6,000,000 and the remaining economic life is 10
years. What should Iriga report as gain in its 2017 income statement?
P2,000,000
P1,000,000
P500,000
P200,000

1 pts
Elizabeth, a public limited company, has granted 100 share appreciation rights to
each of its 1,000 employees in January 2017. The management feels that as of
December 31, 2017, 90% of the awards will vest on December 31, 2019. The fair
value of each share appreciation right on December 31, 2017, is P10. What is the
fair value of the liability to be recorded in the financial statements for the year
ended December 31, 2017?
P10,000,000
P300,000
P100,000
P 90,000

1 pts
In arriving at its profit before tax for the year ended 31 December 2017 The Ryan
Company has accrued royalties receivable of P200,000 and interest payable of
P250,000. Both royalties and interest are dealt with on a cash basis in tax
computations. What are Ryan's net temporary differences at 31 December 2017,
according to PAS12 Income taxes?
Taxable temporary differences of P50,000
Deductible temporary differences of P450,000
Deductible temporary differences of P50,000
axable temporary differences of P450,000

1 pts
The Huang Company has a non-current asset which had a carrying amount in the
financial statements of P18,000 at 31 December 2017. Its tax written down value
(the tax base) at that date was P9,000. The tax rate is 30%. In accordance with
PAS12 Income taxes, what is the deferred tax balance in respect of this asset at
31 December 2017?
P9,000 asset
P2,700 asset
P2,700 liability
P9,000 liability

1 pts
For the year ended December 31, 2017, Talisay Company reported accounting
profit of P9,500,000. Its taxable profit was P9,000,000. The difference is due to
accelerated depreciation for income tax purposes. The income tax rate is 35%
and Talisay made estimated tax payment during 2017 of P1,000,000. What should
Talisay report as current tax payable as of December 31, 2017?
P3,150,000
P3,325,000
P2,150,000
P2,325,000

1 pts
At December 31, 2017 Mindoro Corporation’s taxable profit is P5,000,000. The
following items are the temporary differences that caused Mindoro’s income in
the income tax return to differ from the amount reported in the income statement:
Future deductible amounts expected to reverse in 2018 of P400,000 and future
taxable amounts expected to reverse in 2018 and 2019 of P500,000 and P900,000,
respectively. Mindoro’s income tax rate is 35%. The income tax expense
reported by Mindoro in its December 31, 2017 income statement is ___________.
P2,100,000
P1,750,000
P1,400,000
P1,785,000

1 pts
The Coral Company applies the PFRS for SMEs. On 20 July 2017 Coral wishes to
classify a non-current asset as held for sale. At that date the asset's carrying
amount was P14,500, its fair value was estimated at P21,500 and the costs to sell
at P1,450.

The asset was sold on 18 October 2017 for P21,200.

In accordance with PFRS for SMEs, at what amount should the asset be stated in
Coral's statement of financial position at 30 September 2017?
P20,050
P21,200
P21,500
P14,500

1 pts
Camil Company’s ledger showed a balance in its cash account at December 31,
2016 of Php1,364,500, which was determined to consist of the following:
Petty cash fund P 7,200
Checking account in Kapamilya bank ( check
of Php12,000 is still outstanding) 673,500
Notes receivable in the possession of a collecting
agency 50,000
Undeposited receipts, including a postdated check for
Php10,500 and traveller’s check for Php10,000 356,000
Bond sinking fund cash 255,000
IOUs signed by employees 9,900
Paid vouchers, not yet recorded 12,900
TOTAL 1,364,500

At what amount should “cash on hand and in bank” be reported on Camil


Company’s statement of financial position?
P1,003,700
P1,258,700
Php1,014,200
Php1,324,500
1 pts
The December 31, 2016 trial balance of Mari Company includes the following
accounts:
Petty cash fund P 700,000
Current account-Kapuso bank 40,000,000
Current account-Kapamilya bank (overdraft) ( 2,500,000)
120-day money market placement-K bank 10,000,000
Time deposit-KB bank 20,000,000
Additional information:
The petty cash fund includes unreplenished December 2016 petty cash
expense vouchers for Php150,000 and an employee check for Php50,000 dated
January 31, 2017.
A check for Php1,000,000 was drawn against Kapuso bank current
account dated and recorded December 27, 2106 but delivered to payee on
January 10, 2017.
The KB bank time deposit is set aside for land acquisition in early
January 2017.
What should be reported as “cash and cash equivalents” on December 31, 2016?
Php51,300,000
Php41,500,000
Php51,500,000
Php48,800,000

1 pts
Assume the following data of Pau Company of its cash and short-term, highly
liquid investments for December 31, 2017:
Cash on hand P800,000
Checking account No. 421, Kapuso bank 2,000,000
Checking account No. 724, Kapuso bank ( 300,000)
Securities Date Acquired Maturity Date Amount
120-day certificate of deposit
12/10/17 1/31/18 P6,000,000
BSP-Treasury bills (No.1) 11/30/17 4/30/18 50,000,000
BSP-Treasury bills (No.2) 10/31/17 1/20/18 10,000,000
180 days commercial papers
12/1/17 6/20/18 14,000,000
Money market funds 11/21/17 2/10/18 20,000,000

The correct cash and cash equivalents balance on December 31, 2017 is
_________?
P38,500,000
P52,500,000
P38,800,000
P52,800,000

1 pts
Total cash and cash equivalent of Php63,250,000 reported by Mari Company on
December 31, 2017 include the following information:
Two certificates of deposits, each totaling Php5,000,000, having a maturity of 120
days.A check is dated January 12, 2018 in the amount of Php1,250,000. A
commercial paper of Php21,000,000 which due in 90 days. Currency and coins on
hand amounted to Php770,000.

Mari Company has agreed to maintain a cash balance of Php5,000,000 in one of


its banks at all times to ensure future credit availability (this amount is legally
restricted as to withdrawal and was included in the above balance)
How much is the correct amount of cash and cash equivalents that Mari
Company should report in its December 31, 2017 statement of financial position?
P57,000,000
P47,000,000
Php31,000,000
Php62,000,000

1 pts
The following pertains to Pau Company on December 31, 2016:

Postage stamps P 5,000


Credit memo from a vendor for a purchase Return 100,000
Current account Kapamilya bank (500,000)
Current account at Kapuso bank 10,000,000
Employees postdated check 20,000
Foreign bank account-restricted (in equivalent peso) 5,000,000
IOU from Finance Manager’s brother in law 50,000
Trading securities 75,000
Payroll account 2,500,000
Petty cash fund (Php20,000 in currency and expenses
receipts for Php30,000) 50,000
Postal money order 150,000
Traveler’s check 250,000
Treasury bills, due 1/31/17 (purchased 1/31/16) 1,500,000
Treasury bills, due 3/31/17 (purchased 12/31/16) 1,000,000
Treasury warrants 1,500,000
Additional information:
Check of Php1,000,000 in payment of accounts payable was recorded on
December 31, 2016 but mailed to suppliers on January 5, 2017. Check of
Php500,000 dated January 15, 2017 in payment of accounts payable was recorded
and mailed on December 31, 2016.Check of Php250,000 dated January 15, 2016 in
payment of accounts payable was recorded and mailed on January 15, 2016. As
of the reporting period, the same has not been encashed by the payee and still
outstanding.

How much cash and cash equivalents should Pau Company report on the
December 31, 2016 statement of financial position?
Php15,650,000
Php17,170,000
Php17,000,000
Php18,650,000

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