Cvcitc: College of Business and Accountancy Department of Accountancy

CVCITC
Cagayan Valley Computer & Information Technology College, Inc.

No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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COLLEGE OF BUSINESS AND ACCOUNTANCY

DEPARTMENT OF ACCOUNTANCY
FINACIAL ACCOUNTING AND REPORTING
Midterm Examination
INSTRUCTIONS: CHOOSE THE BEST ANSWER FOR EACH OF THE FOLLOWING. FULLY
SHADE ONLY ONE BOX FOR EACH ITEM. STRICTLY NO ERASURES ALLOWED.
1. Rosalyn Company reported the following items as part of cash and cash equivalents
SEC registered commercial papers 300,000
Central Bank Certificates of Indebtedness 350,000
3-month Central Bank Treasury bills, maturing
on January 31, 2006 450,000
3-year Treasury note, acquired three months from its maturity date of January 31, 2006 600,000
3-year Treasury note, acquired 2 years ago, maturing on January 31, 2006 800,000
The amount to be included from cash and cash equivalents is
a. P2,500,000 b. P1,700,000 c. P1,900,000 d. P1,100,000
2. The information below is from the books of the Seminole Corporation on June 30:
Balance per bank statement ₱11,164

Deposits in transit 1,340
Bank charges not recorded 16
Note collected by bank and not recorded on books 1,120
Outstanding checks 1,100
NSF checks - not recorded on books nor redeposited 160
Assuming no errors were made, how much is the cash balance per books on June 30 before any
reconciliation adjustments?
a. 11,404 c. 10,460
b. 10,980 d. 11,440
3. Under the allowance method of recognizing bad debts on trade accounts receivable, the effect of
writing off an account to an entity's current ratio is
a. increase
b. decrease
c. increase if the entity's current ratio is higher than 1 prior to the write-off; decrease if the entity's
current ratio is lower than 1 prior to the write-off
d. no effect
4. On December 31, Central Savings & Loan discounted a 3-month, ₱70,000, non-interest-bearing
note dated October 31, at 12 percent. How much is the proceeds from the discounting?
a. 63,900 c. 30,380
b. 48,550 d. 69,300
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5. Grant Company accepted a ₱400,000 face value, 6-month, 10 percent note dated May 15 from a
customer. On that same date Grant discounted the note at Eagle National Bank at a 12 percent
discount rate. How much cash should Grant receive from the bank on May 15?
a. ₱400,000 c. ₱394,800
b. ₱396,000 d. ₱387,200
6. Goods in transit that are shipped f.o.b. destination should be

a. included in the inventory of the seller.
b. included in the inventory of the buyer.
c. included in the inventory of the shipping company.
d. none of these.
7. Cross Co. accepted delivery of merchandise which it purchased on account. As of December 31,
Cross had recorded the transaction, but did not include the merchandise in its inventory. The
effect of this on its financial statements for December 31 would be
a. net income, current assets, and retained earnings were understated.
b. net income was correct and current assets were understated.
c. net income was understated and current liabilities were overstated.
d. net income was overstated and current assets were understated.
8. All of the following costs should be expensed in the period they are incurred except for
a. manufacturing overhead costs for a product manufactured and sold in the same accounting
period.
b. costs which will not benefit any future period.
c. depreciation of idle manufacturing capacity resulting from an unexpected plant shutdown.
d. storage costs that are necessary in bringing the asset to its intended condition.
9. Which of the following cost flow formulas can be applied by an entity whose inventories that are
purchased last are sold first?
a. LIFO c. Weighted average cost
b. FIFO d. b or c
10. On June 1, 2004, Noll Corp. sold merchandise with a list price of ₱30,000 to Linn on account. Noll
allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made f.o.b.
shipping point. Noll prepaid ₱600 of delivery costs for Linn as an accommodation. On June 12,
2004, Noll received from Linn a remittance in full payment amounting to
a. ₱16,464. b. ₱17,052. c. ₱17,064. d. ₱16,794.
11. The following information was derived from the 2004 accounting records of Kelly Co.:
Kelly's Goods
Kelly's Central Warehouse Held by Consignees
Beginning inventory ₱260,000 ₱ 28,000
Purchases 950,000 140,000
Freight-in 20,000
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Transportation to consignees 10,000
Freight-out 60,000 16,000
Ending inventory 290,000 40,000
Kelly's 2004 cost of sales was
a. ₱940,000. c. ₱1,068,000.
b. ₱1,000,000. d. ₱1,078,000.
12. Dial Corp.'s accounts payable at December 31, 2004 totaled ₱800,000 before any necessary year-
end adjustments relating to the following transactions:
• On December 27, 2004, Dial wrote and recorded checks to creditors totaling ₱350,000 causing an
overdraft of ₱100,000 in Dial's bank account at December 31, 2004. The checks were mailed out on
January 10, 2005.
• On December 28, 2004, Dial purchased and received goods for ₱200,000, terms 2/10, n/30. Dial
records purchases and accounts payable at net amounts. The invoice was recorded and paid
January 3, 2005.
• Goods shipped f.o.b. destination on December 20, 2004 from a vendor to Dial were received
January 2, 2005. The invoice cost was ₱65,000.
At December 31, 2004, what amount should Dial report as total accounts payable?
a. ₱1,411,000. c. ₱1,050,000.
b. ₱1,346,000. d. ₱1,000,000.
13. The balance in Iwig Co.'s accounts payable account at December 31, 2004 was ₱400,000 before any
necessary year-end adjustments relating to the following:
• Goods were in transit to Iwig from a vendor on December 31, 2004. The invoice cost was ₱50,000.
The goods were shipped f.o.b. shipping point on December 29, 2004 and were received on January
4, 2005.
• Goods shipped f.o.b. destination on December 21, 2004 from a vendor to Iwig were received on
January 6, 2005. The invoice cost was ₱25,000.
• On December 27, 2004, Iwig wrote and recorded checks to creditors totaling ₱30,000 that were
mailed on January 10, 2005.
In Iwig's December 31, 2004 balance sheet, the accounts payable should be
a. ₱430,000 c. ₱475,000.
b. ₱450,000. d. ₱480,000.
14. Gear Co.'s accounts payable balance at December 31, 2004 was ₱1,100,000 before considering the
following transactions:
• Goods were in transit from a vendor to Gear on December 31, 2004. The invoice price was ₱80,000,
and the goods were shipped f.o.b. shipping point on December 29, 2004. The goods were received
on January 4, 2005.
• Goods shipped to Gear, f.o.b. shipping point on December 20, 2004, from a vendor were lost in
transit. The invoice price was ₱50,000. On January 5, 2005, Gear filed a ₱50,000 claim against the
common carrier.
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In its December 31, 2004 balance sheet, Gear should report accounts payable of
a. ₱1,230,000. c. ₱1,150,000.
b. ₱1,180,000. d. ₱1,100,000.
15. Dark Co. recorded the following data pertaining to raw material X during January 2004:
Date Units Unit cost
1/1/04 On hand 3,200 ₱2.00
1/11/04 Issue 1,600
1/22/04 Purchase 4,000 ₱2.35
The moving-average unit cost of X inventory at January 31, 2004 is

a. ₱2.18. c. ₱2.25.
b. ₱2.22. d. ₱2.35.
16. Barlow Company's Accounts Payable balance at December 31, 2002, was ₱1,800,000 before
considering the following transactions:
• Goods were in transit from a vendor to Barlow on December 31, 2002. The invoice price was
₱100,000, and the goods were shipped FOB shipping point on December 29, 2002. The goods were
received on January 4, 2003.
• Goods shipped to Barlow FOB shipping point on December 20, 2002, from a vendor were lost in
transit. The invoice price was ₱50,000. On January 5, 2003, Barlow filed a ₱50,000 claim against the
common carrier.
In its December 31, 2002 balance sheet, Barlow should report Accounts Payable of
a. 1,950,000 b. 1,900,000 c. 1,850,000 d. 1,800,000
17. The balance in Master Company's accounts payable account at December 31, 2002, was ₱1,100,000
before considering the following information:
• Goods shipped FOB shipping point on December 20, 2002 from a vendor to Master were lost in
transit. The invoice cost of ₱20,000 was not recorded by Master. On January 6, 2003, Master filed
a ₱20,000 claim against the common carrier.
• On December 27, 2002, a vendor authorized Master to return, for full credit, goods shipped and
billed at ₱35,000 on December 2, 2002. The returned goods were shipped by Master on December
27, 2002. A ₱35,000 credit memo was received and recorded by Master on January 6, 2003.
What amount should Master report as accounts payable in its December 31, 2002, balance sheet?
a. 1,120,000 b. 1,115,000 c. 1,085,000 d. 1,065,000
18. The balance in Stockwell Company's accounts payable account on December 31, 2002, was
₱1,225,000 before the following information was considered:
• Goods shipped FOB destination on December 21, 2002, from a vendor to Stockwell were lost
in transit. The invoice cost of ₱45,000 was not recorded by Stockwell. On December 28, 2002,
Stockwell notified the vendor of the lost shipment.
• Goods were in transit from a vendor to Stockwell on December 31, 2002. The invoice cost was
₱60,000, and the goods were shipped FOB shipping point on December 28, 2002. Stockwell
received the goods on January 6, 2003.
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What amount should Stockwell report as accounts payable in its December 31, 2002, balance sheet?
a. 1,330,000 b. 1,285,000 c. 1,270,000 d. 1,225,000
19. When using the periodic inventory system, which of the following generally would not be
separately accounted for in the computation of cost of goods sold?
a. Trade discounts applicable to purchases during the period
b. Cash (purchase) discounts taken during the period
c. Purchase returns and allowances of merchandise during the period
d. Cost of transportation-in for merchandise purchased during the period
20. Goods out on consignment are

a. included in the consignee's inventory.
b. recorded in a Consignment Out account which is an inventory account.
c. recorded in a Consignment In account which is an inventory account.
d. all of these
21. Miller Company needs an estimate of its ending inventory balance. The following information is
available:
Cost Retail
Sales revenue ............................. ₱180,000
Beginning inventory ....................... ₱ 35,000 62,000
Net purchases ............................. 100,000 135,000
Gross margin percentage ................... 30%
Given this information, when using the gross margin estimation method, ending inventory is
approximately
a. ₱1,000. b. ₱9,000. c. ₱19,000. d. ₱11,650.
22. The following information is available for the Becca Company for the three months ended June 30
of this year:
Inventory, April 1 of this year ...................... ₱1,200,000

Purchases ............................................ 4,500,000
Freight-in ........................................... 300,000
Sales ................................................ 6,400,000
The gross margin was 25 percent of sales. What is the estimated inventory balance at June 30?
a. ₱880,000 b. ₱933,000 c. ₱1,200,000 d. ₱1,500,000
23. Petersen Menswear, Inc. maintains a markup of 60 percent based on cost. The company's selling
and administrative expenses average 30 percent of sales. Annual sales were ₱1,440,000. Petersen's
cost of goods sold and operating profit for the year are
Cost of Goods Sold Operating Profit
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a. ₱864,000 ₱144,000
b. ₱864,000 ₱432,000
c. ₱900,000 ₱108,000
d. ₱900,000 ₱432,000
24. On October 31, a flood at Payne Company's only warehouse caused severe damage to its entire
inventory. Based on recent history, Payne has a gross profit of 25 percent of net sales. The
following information is available from Payne's records for the ten months ended October 31:
Inventory, January 1 .................................. ₱ 520,000
Purchases ............................................. 4,120,000
Purchase returns ...................................... 60,000
Sales ................................................. 5,600,000
Sales discounts ....................................... 400,000
A physical inventory disclosed usable damaged goods which Payne estimates can be sold for ₱70,000.
Using the gross profit method, the estimated cost of goods sold for the ten months ended October 31
should be
a. ₱680,000. b. ₱3,830,000. c. ₱3,900,000. d. ₱4,200,000.
25. Davis Company's accounting records indicated the following information:
Inventory, 1/1/02 ..................................... 1,000,000

Purchases during 2002 ................................. 5,000,000
Sales during 2002 ..................................... 6,400,000
A physical inventory taken on December 31, 2002, revealed actual ending inventory at cost was
₱1,150,000. Davis' gross profit on sales has regularly been about 25 percent in recent years. The
company believes some inventory may have been stolen during the year. What is the estimated
amount of missing inventory at December 31, 2002?
a. ₱50,000 b. ₱200,000 c. ₱350,000 d. ₱450,000
26. On June 19, 2002, a fire destroyed the entire uninsured merchandise inventory of the Allen
Merchandising Company. The following data are available:
Inventory, January 1 .................................. ₱ 80,000

Purchases, January 1 through June 19 .................. 560,000
Sales, January 1 through June 19 ...................... 776,000
Markup percentage on cost ............................. 25%
What is the approximate inventory loss as a result of the fire?

a. ₱19,200 b. ₱27,200 c. ₱34,000 d. ₱58,000
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27. Product X sells for ₱12.00; selling expenses are ₱2.40; normal profit is ₱3.00. If the cost of
Commodity X is ₱7.80, the lower of cost and NRV is
a. ₱5.40. b. ₱6.00. c. ₱6.60. d. ₱7.80.
28. The following information is available for Torino Corp. for its most recent year:
Net sales ............................................. ₱3,600,000

Freight-in ............................................ 90,000
Purchase discounts .................................... 50,000
Ending inventory ...................................... 240,000
The gross margin is 40 percent of net sales. What is the cost of goods available for sale?
a. ₱1,680,000 b. ₱1,920,000 c. ₱2,400,000 d. ₱2,440,000
29. Changes in fair value are recognized in profit or loss for which type of financial assets?
a. Financial assets measured at amortized cost
b. FVOCI securities
c. Held to maturity debt securities
d. Financial assets designated at FVPL
30. Which securities are purchased with the intent of selling them in the near future?
a. Financial assets measured at amortized cost
b. FVOCI securities
c. Held for trading securities
d. Held-for-sale securities
31. Which of the following is not a debt security?

a. Convertible bonds
b. Commercial paper
c. Loans receivable
d. All of these are debt securities.
32. An unrealized holding loss on a company's FVOCI securities should be reflected in the current
financial statements as
a. an extraordinary item shown as a direct reduction from retained earnings.
b. a current loss resulting from holding securities.
c. a note or parenthetical disclosure only.
d. other comprehensive income and deducted in the equity section of the balance sheet.
33. An entity has financial assets held under a business model with the objective of holding financial
assets in order to collect contractual cash flows. Prior to maturity date, the entity sells a significant
portion of the financial assets. Which of the following statements is correct?
a. The change in circumstance is a prior period error.
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b. Under the “hold to collect” business model, the entity needs to hold financial assets until their
maturity dates. A significant sale of financial assets before their maturity date evidences an
inability to hold and collect cash flows. Therefore, the remaining financial assets shall be
reclassified to either FVPL or FVOCI.
c. The remaining financial assets within the “hold to collect” business model need not be
reclassified. However, the change in circumstance may be relevant in assessing the business
model for new financial assets that have been acquired or originated.
d. The entity shall change its business model because of the change in circumstance. The
remaining financial assets shall be reclassified after the entity changes the business model.
Use the following information for the next two questions:

On January 1, 20x1, Gina Co. acquired 10%, ₱4,000,000 bonds for ₱3,807,853. The principal is due on
January 1, 20x4 but interest is due annually. The yield rate on the bonds is 12%.
34. How much is the interest income recognized in 20x1?

a. 456,942 b. 463,776 c. 471,429 d. 400,000
35. How much is the carrying amount of the investment on December 31, 20x1?
a. 3,807,853 b. 3,864,796 c. 3,928,571 d. 4,000,000
36. A gain or loss arising on the initial recognition of a biological asset and from a change in the fair
value less cost to sell of a biological asset should be included in
a. The net profit or loss for the period.
b. The statement of recognized gains and losses.
c. A separate revaluation reserve.
d. A capital reserve within equity.
37. When agricultural produce is harvested, the harvest should be accounted for by using PAS 2
Inventories or another applicable standard. For the purposes of that Standard, cost at the date of
harvest is deemed to be
a. Its fair value less costs to sell at point of harvest.
b. The historical cost of the harvest.
c. The historical cost less accumulated impairment losses.
d. Market value.
38. Contract prices are not necessarily relevant in determining fair value and the fair value of a
biological asset or agricultural produce is not adjusted because of the existence of a contract.
a. True.
b. False.
c. Maybe.
d. I don’t know.
39. Land that is related to agricultural activity is valued

a. At fair value.
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b. In accordance with PAS 16 Property, Plant, and Equipment or PAS 40 Investment Property.
c. At fair value in combination with the biological asset that is being grown on the land.
d. At the resale value separate from the biological asset that has been grown on the land.
40. An unconditional government grant related to a biological asset that has been measured at fair
value less cost to sell should be recognized as
a. Income when the grant becomes receivable.
b. A deferred credit when the grant becomes receivable.
c. Income when the grant application has been submitted.
d. A deferred credit when the grant has been approved.
41. If a government grant is conditional on certain events, then the grant should be recognized as
a. Income when the conditions attaching to the grant are met.
b. Income when the grant has been approved.
c. A deferred credit when the conditions attached to the government grant are met.
d. A deferred credit when the grant is approved.
42. Where there is a production cycle of more than one year, PAS 41 encourages separate disclosure
of the
a. Physical change only.
b. Price change only.
c. Total change in value.
d. Physical change and price change.
43. Which of the following information should be disclosed under PAS 41?
a. Separate disclosure of the gain or loss relating to biological assets and agricultural produce.
b. The aggregate gain or loss arising on the initial recognition of biological assets and agricultural
produce and the change in fair value less cost to sell of biological assets.
c. The total gain or loss from biological assets, agricultural produce, and from changes in fair
value less cost to sell of biological assets.
d. There is no requirement in the Standard to disclose separately any gains or losses.
44. Buyer Co. regularly buys shirts from Vendor Company and is allowed trade discounts of
20% and 10% from the list price. Buyer purchased shirts from Vendor on May 27, 2010 and
received an invoice with a list price of P100,000 and payment terms 2/10, n/30. If Buyer
uses the net method of recording purchases, the journal entry to record the payment on June 8,
2010 will include
a. A debit to Accounts payable of P72,000.
b. A debit to Purchase Discounts Lost of P1,440.
c. A credit to Purchase Discounts of P1,440.
d. A credit to Cash of P70,560.
45. Storm Company began business in May of 2015. During the year, Storm purchased the three
trading securities listed below. There was no change during 2016 in the composition of Storm’s
portfolio of trading securities. Pertinent data are as follows:
Security Cost December 31, 2016
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Market Value
G P 400,000 P 350,000
O 500,000 350,000
D 900,000 800,000
1,800,000 P1,500,000
What amount of unrealized loss on these securities should be included in Storm’s income
statement for the year ended December 31, 2016?
a. P0 c. P350,000
b. P300,000 d. P400,000
The Killjoy Company sells Product A. During the year, the company moved to a new location,
the inventory records for Product A were misplaced. The bookkeeper has been able to gather
some information from the sales records and gives you the data shown below:
July sales: 57,200 at P100
July purchases:
Date Quantity Unit Cost
July 5 10,000 P65.00
July 9 12,500 62.50
July 12 15,000 60.00
July 23 14,000 62.00
46. On July 31, 16,000 units were on hand with a total value of P988,000. Killjoy has always used a
periodic FIFO inventory costing system. Gross profit on sales for July was P2,058,750. What is
the total cost and unit cost, respectively, of the beginning inventory?
a. 1,345,400 and 62.00
b. 1,353,538 and 62.38
c. 1,367,100 and 63.00
d. 1,450,000 and 66.82
47. The Alena Corporation sold a piece of equipment to Ybarro, Inc. on April 1, 2015, in exchange for
an P800,000 non-interest bearing note due on April 1, 2017. The note had no ready market, and
there was no established exchange price for the equipment. The prevailing interest rate for a note
of this type at April 1, 2015, was 12%. The carrying value of the note receivable on December 31,
2015 is
a. P800,000 c. P694,984
b. P620,864 d. P714,112
48. Nakba Company installs replacement siding, windows, and louvered glass doors for family
homes. At December 31, 2005, the balance of raw materials inventory account was P502,000, and
the allowance for inventory writedown was P33,000. The inventory cost and market data at
December 31, 2005, are as follows:
Cost Replacement Sales Price Net Normal

Cost Realizable Profit
value
Aluminum siding
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89,000 86,000 91,500 87,000 5,000
Mahogany siding 94,000 92,000 93,000 85,000 7,000
Louvered glass door 125,000 135,000 129,000 111,000 10,000
Glass windows 194,000 114,000 205,000 197,000 20,000
Total 502,000 427,000 518,500 480,000 32,000
The loss on inventory write down is

a. P 8,000 c. P11,000
b. P25,000 d. P 0
49. Aparri Company included the following items in its inventory on December 31, 2015:
Merchandise out on consignment, at sales price,
including 25% markup on cost P4,000,000
Goods purchased in transit, FOB destination 2,000,000
Goods held on consignment by Aparri Company 1,000,000
By what amount should the inventory at December 31, 2015 be reduced?

a. P3,800,000 c. P1,800,000
b. P2,000,000 d. P1,000,000
50. Major company revealed the following investments at cost and fair value:
Cost Fair Value-12/31/18 FairValue-12/31/19
Bond investments 2,000,000 1,400,000 1,800,000
Share investment 3,500,000 3,700,000 4,000,000
The business model for the bond investment to sell the asset. The bonds were purchased at face
amount of P2,000,000. The ordinary shares are held for trading. On January 1,2019, the entity sold the
bonds and shares for P2,500,000 and P4,500,000 respectively.
What amount of gain is recognized in the statement of operations for 2018?
a. 300,000 c. 700,000
b. 400,000 d. 0
51. What amount is recognized as net gain/(loss) on disposal included in profit or loss for 2019?
a. 700,000 c. 1,900,000
b. 500,000 d. 1,100,000
52. On January 1,2018, Coroma Bank granted a P2,000,000, 8% loan to Basa Company. Interest is
receivable at the end of each year with the principal due at December 31,2022. At the end of 2018,
the first year’s interest was received. At the end of 2019, the interest was not received due to
financial difficulties and thus Basa negotiated a restructuring of the loan. Corona forgave the 2019
interest but the principal will be collected in two equal installments of P1,000,000 at December
31,2021 and December 31,2022. The bank did not accrue interest at December 31,2019.
What is the present value of the expected cash flows from the loan on December 31,2019?
a. 2,000,000 b. 1,714,000
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c. 1,651,000 d. 1,588,000
53. What is the impairment loss on December 31,2019?

a. 286,000 c. 349,000
b. 412,000 d. 0
54. What is the carrying amount of the loan receivable on December 31,2021?
a. 1,925,726 c. 1,852,243
b. 1,999,210 d. 925,726
55. On November 30, 2010, 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 2010, Kalan collected P350,000
on assigned accounts after deducting P560 of discounts. Kalan wrote off a P530 assigned
account. On December 31, 2010, 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,
2010?
a. P149,470 b. P141,410 c. P141,970 d. P148,910
56. The accountant of Spanglish Corp. has just completed the bank reconciliation schedule at June 30,
2007 which included the following information: unadjusted balance per bank statement, P288,500;
bank charge for printing checkbook, P1,650; outstanding checks, P38,000; check #522 for P1,200
incorrectly entered in the cash payments journal as P2,100; interest on the deposit placement with
the bank automatically credited to the company’s account, P20,000; adjusted cash balance per
books, P302,500. There were no other missing elements in the bank reconciliation except the
deposits in transit. The amount of deposits in transit must be
a. P57,250 b. P52,000 c. P33,250 d. P32,350
57. Entity A’s assets have a carrying amount of ₱100,000 before year-end adjustments. The PFRSs
require these assets to be measured at fair value at each reporting date. Location is a characteristic
of the assets. Information at year-end is as follows:
Active Market #1 Active Market #2
Quoted price ₱130,000 Quoted price ₱135,000
Transport costs 10,000 Transport costs 12,000
Costs to sell 2,000 Costs to sell 3,000
If neither Active Market #1 nor Active Market #2 is the principal market, how much is the fair
value?
a. 135,000 c. 120,000
b. 132,000 d. 123,000
58. Where there is a production cycle of more than one year, PAS 41 encourages separate disclosure
of the
a. Physical change only.
b. Price change only.
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c. Total change in value.
d. Physical change and price change.
59. Independence Day Company’s inventory purchases during 2007 were as follows:
Units Unit Cost Total Cost
Purchases, quarter ended March 31 12,000 P8.25 P 99,000
Purchases, quarter ended June 30 15,000 7.90 118,500
Purchases, quarter ended September 30 13,000 7.50 97,500
Purchases, quarter ended December 31 7,000 7.70 53,900
47,000 P368,900
Independence Day Company’s inventory at January 1, 2007 consisted of 8,000 units purchased for
P65,600. Independence Day Company uses the FIFO method of inventory costing.
Independence Day Company’s cost of goods sold for the year ended December 31, 2007 is
a. P315,100 b. P267,300 c.P262,500 d. P254,300
On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used
to finance the construction of a qualifying asset:
Principal
12% bank loan (1.5 years) ₱ 1,000,000
10% bank loan (3-year) 8,000,000
Expenditures made on the qualifying asset were as follows:

Jan. 1 ₱ 5,000,000
March 1 4,000,000
August 31 3,000,000
December 1 2,000,000
Construction was completed on December 31, 20x1.
60. How much borrowing costs are capitalized to the cost of the constructed qualifying asset?
a. 1,045,000 c. 1,026,667
b. 971,111 d. 920,000
61. How much is the cost of the qualifying asset on initial recognition?
a. 13,010,000 c. 14,920,000
b. 15,045,000 d. 14,971,111
The following information pertains to Madagascar Co.

Sheep 500,000 Wool 6,000
Rubber products 10,000 Thread 3,000
Trees in a timber plantation 95,000 Felled trees 8,000
Maize plants 40,000 Clothing 150,000
Lumber 62,000 Milk 9,000
CVCITC
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Pigs 200,000 Carcass 7,000
Roasted peanuts 20,000 Sugar 67,000
Cotton plants 10,000 Harvested cotton 13,000
Peanut plants 5,000 Harvested peanuts 140,000
Sugarcane 25,000 Harvested cane 22,000
Tobacco plants 45,000 Picked leaves 3,000
Tea bushes 800,000 Oil palms 300,000
Dairy cattle 1,000,000 Picked grapes 2,000
Fruit trees 600,000 Picked fruit 10,000
Tea 43,000 Grape vines 2,000,000
Yarn 22,000 Cured tobacco 320,000
Carpet 33,000 Wine 500,000
Logs 45,000 Processed fruit 20,000
Wheat plants 60,000 Palm oil 50,000
Cheese 75,000
62. How much is classified as biological assets that are accounted for under PAS 41 Agriculture?
a. 2,660,000 b. 1,980,000 c. 2,000,000 d. 2,250,000
63. How much is classified as property, plant and equipment that are accounted for under PAS
16 Property, Plant and Equipment?
a. 4,000,000 b. 4,860,000 c. 4,560,000 d. 3,700,000
64. How much is classified as agricultural produce?

a. 149,000 b. 248,000 c. 220,000 d. 230,000
65. How much is classified as inventory?

a. 1,420,000 b. 1,600,000 c. 1,540,000 d. 1,880,000
66. Which of the following is a qualifying asset?

a. Biological asset measured at fair value less costs to sell
b. A multi-million dollar executive jet plane that is ready for its intended use upon purchase
c. A second-hand heavy machinery that takes 2 years to refurbish and customize for its intended
use
d. A long-term note receivable (financial asset)
67. On January 1, 20x1, Entity A obtained a 12%, ₱6,000,000 loan, specifically to finance the
construction of a building. The proceeds of the loan were temporarily invested and earned interest
income of ₱180,000. The construction was completed on December 31, 20x1 for a total construction
cost of ₱7,000,000. How much is the historical cost of the newly constructed building?
CVCITC
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a. 7,540,000 c. 7,000,000
b. 7,480,000 d. 6,460,000
68. Which of the following is a qualifying asset?

a. Biological asset measured at fair value less costs to sell
b. A multi-million dollar executive jet plane that is ready for its intended use upon
purchase
c. A second-hand heavy machinery that takes 2 years to refurbish and customize for its
intended use
69. A public limited company, Cromwell Dairy Products, produces milk on its farms. As of Jan. 1,
2014 Cromwell has a stock of 1,050 cows (average age, 2 years old) and 150 heifers (average age, 1
year old). Cromwell purchased 375 heifers, average age 1 year old, on July 1, 2014. No animals
were born or sold in the year. The unit values less estimated cost to sell were:
1-year-old animal at Dec. 31, 2014: P3,200
2-year-old animal at Dec. 31, 2014: 4,500
1.5-year-old animal at Dec. 31, 2014: 3,600
3-year-old animal at Dec. 31, 2014: 5,000
1-year-old animal at Jan. 1, 2014 and July 1, 2014 3,000
2-year-old animal at Jan. 1, 2014: 4,000
The increase in value of biological assets in 2014 due to price changes is
a. P1,500,000 c. P 555,000
b. P 630,000 d. P 460,000
70. The increase in value of biological assets in 2014 due to physical changes is
a. P870,000 c. P590,000
b. P720,000 d. P780,000
-end of examination-
“YOU ARE A CPA! I KNOW YOU CAN AND YOU WILL. NEVER SETTLE FOR ANYTHING
LESS! TRUST GOD AND PUT EVERYTHING IN HIS HANDS. JUST CALM YOUR HEART
BECAUSE HE IS ALWAYS IN CONTROL!”
GOD BLESS YOU CPA!
Prepared by:
Reymar A. Gulan, CPA, CB, CHTS

Instructor
Noted by:
CVCITC
_____________________________________________________________________________________________________________________
Christian Lloyd A. Rivera, CPA
BSA/AT Program Chair
Approved by:
Cristina G. Gallato, CPA, DBE, Ed. D.

Vice-President for Academics

Cvcitc: College of Business and Accountancy Department of Accountancy

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COLLEGE OF BUSINESS AND ACCOUNTANCY

Balance per bank statement ₱11,164

6. Goods in transit that are shipped f.o.b. destination should be

The moving-average unit cost of X inventory at January 31, 2004 is

20. Goods out on consignment are

Inventory, April 1 of this year ...................... ₱1,200,000

25. Davis Company's accounting records indicated the following information:

Inventory, 1/1/02 ..................................... 1,000,000

Inventory, January 1 .................................. ₱ 80,000

What is the approximate inventory loss as a result of the fire?

Net sales ............................................. ₱3,600,000

31. Which of the following is not a debt security?

Use the following information for the next two questions:

34. How much is the interest income recognized in 20x1?

39. Land that is related to agricultural activity is valued

Cost Replacement Sales Price Net Normal

The loss on inventory write down is

By what amount should the inventory at December 31, 2015 be reduced?

53. What is the impairment loss on December 31,2019?

Expenditures made on the qualifying asset were as follows:

Construction was completed on December 31, 20x1.

The following information pertains to Madagascar Co.

64. How much is classified as agricultural produce?

65. How much is classified as inventory?

66. Which of the following is a qualifying asset?

68. Which of the following is a qualifying asset?

GOD BLESS YOU CPA!

Reymar A. Gulan, CPA, CB, CHTS

Cristina G. Gallato, CPA, DBE, Ed. D.

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