DySAS Center for CPA Review 2F & 3F Mitra Building, San Pedro Street, Davao City Tel. No. (082 22!"!3"20# $"%ail ddre'' dy'a'rev)ya*oo.+o% Practical Accounting 1 John C. Frivaldo, CPA, MBA FINAL PRE-BOAR E!AMINA"ION Ma# 1, $%1% & 1'%% ( )'%% *+ IN"RC"ION' Mar- t*e letter o your +*oi+e /it* a $1TC N$ on t*e an'/er '*eet 4rovided. $1S51$S N6T 67$D. 67$D. . 9artord 9artord ndu'tri ndu'trial, al, n+. i' o/ned o/ned :y ive ive ounding ounding '*are*ol '*are*older'. der'. 6n De+e%:er De+e%:er , 200;, 200;, t*e entity de+lared a 4ro4erty dividend or ea+* '*are*older t*at i' 4aya:le on
(a P=,000,000 (: P?,=00,000 (+ P;,000,000 (d P 0 C 2. Prin Prin+e +e Co%4a Co%4any ny *ad a 4ro 4roit it ate aterr ta@ ta@ o P=,0 P=,000 00,0 ,000 00 or 200; 200;.. T*e T*e oll ollo/ o/in ing g a44ro4riation' *ave not :een +on'idered in t*i' a%ount# rrear' o +u%ulative 4reeren+e dividend or 2 year' !,000,000 6rdinary dividend' =,000,000 Preeren+e '*are 4re%iu% 4aya:le on rede%4tion ,000,000 $@+e4tional 4roit, net o ta@ !,000,000 T*e entity *ad 3,000,000 ordinary '*are' o P 4ar value out'tanding on
Net in+o%e 4er :oo$@+e4tional 4roit du'ted net in+o%e Preeren+e dividend or +urrent year (!M 2 Preeren+e '*are 4re%iu% Net in+o%e to ordinary '*are'
=,000,000 !,000,000 ;,000,000 (2,000,000 (,000,000 A,000,000 3,0 3,000,000 =0,000 !=0,000 ( 200,000 3,300,000 !.8=
te%' 3 to =# 6n
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3. 7*at a%ount o inve't%ent revenue '*ould :e re4orted in ri4' year ended De+e%:er 3, 200> (a P20,000 (: P08,000 (+ P80,000 !. 7*at i' t*e +arrying value o t*e inve't%ent in Bread ordinary 200> (a P,280,000 (: P,!3A,000 (+ P,2;A,000
in+o%e 'tate%ent or t*e (d P;2,000 C '*are' on De+e%:er 3, (d P,3A8,000 B
''u%e t*at t*e !0,000 '*are' re4re'ent a 0E intere't in t*e net a''et' o Bread rat*er t*an 30E intere't. =. 7*at i' t*e +arrying value o t*e inve't%ent in Bread ordinary '*are' at De+e%:er 3, 200> (a P,2;A,000 (: P,!3A,000 (+ P,280,000 (d P,23A,000 C te%' A to 8# 6n
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A. 7*at i' t*e total a%ount o good/ill o Bit Co. :a'ed on t*e 4ri+e 4aid :y Ca4e Co%4any> (a P300,000 (:P,080,000 (+ P20,000 (d P30,000 C ?. 7*at a%ount o inve't%ent revenue '*ould Ca4e re4ort on it' in+o%e 'tate%ent or t*e year ended De+e%:er 3, 200 under t*e eGuity %et*od> (a P202,=00 (: P200,2=0 (+ P?8,?=0 (d P23,?=0 B 8. 5nder t*e eGuity %et*od, t*e +arrying value o Ca4e Co%4any' inve't%ent in ordinary '*are' o Bit Co. on De+e%:er 3, 200 '*ould :e# (a P2,22,=00 (: P2,00,000 (+ P2,0?0,000 (d P2,2=0,000 ;. n (a P??2,000 (: P?80,000 (+ P800,000 (d P 808,000 D 6riginal inve't%ent 800,000 dd# S*are in net in+o%e (80,000 @20E 3A,000 e''# %ortiHation (200,000 0 20,000 A,000 Total 8A,000 e''# Dividend' (!0,000 @ 20E 8,000 Carrying value o Farley' inve't%ent 808,000 0. Bar:y Co%4any o/n' 30E o t*e out'tanding +o%%on 'to+- and 00E o t*e out'tanding non+u%ulative nonvoting 4reerred 'to+- o $@+el Co%4any. n ;;? $@+el de+lared dividend' o P200,000 on it' +o%%on 'to+- and P=0,000 on it' 4reerred 'to+-. 7*at a%ount o dividend revenue '*ould Bar:y re4ort in it' ;;? in+o%e 'tate%ent> (a P20,000 (: P=0,000 (+ P3=0,000 (d P 0 B Dividend on 4reerred 'to+- only
=0,000
. 6n (a PA;,!=0 (: P;;,=00 (+ P300,000 (d P?;,=00 2. 6n (a P,=00,000 (: P,000,000 (+ P=00,000 (d P 0 C 200! 232008 ?200;
nve't%ent in :ond' P=,000,000 Ca'* P=,000,000 %4air%ent lo'' ,000,000 nve't%ent in :ond' ,000,000 nve't%ent in 'to+3,=00,000 o'' on e@+*ange =00,000 nve't%ent in :ond' !,000,000 Fair value o a''et re+eived (=0,000 @ ?0 3,=00,000 Boo- value o a''et given (!,000,000 o'' on e@+*ange ( =00,000
3. 6n (a P?,382,!00 (: P8,A?,A00 (+ P8,A!8,800 (d P?,3=,200 C !. 9ide Co%4any re4ort' on a +alendar"year :a'i'. T*e 2008 and 200; inan+ial 'tate%ent' +ontained t*e ollo/ing error'# 2008 200; 6ver (under 'tate%ent o ending inventory (00,000 !0,000 De4re+iation under'tate%ent !0,000 A0,000 Failure to a++rue 'alarie' at year"end 80,000 20,000 ' a re'ult o t*e a:ove error', 200; net in+o%e /ould :e# (a P2!0,000 under'tated (+ P220,000 over'tated (: P2!0,000 over'tated (d P2A0,000 over'tated B =. (a P,200,000 (: P,300,000 (+ P,A00,000 (d P,?=0,000
A.$a't Co%4any *a' 'everal +ontingent lia:ilitie' at De+e%:er 3, 2008. T*e auditor o:tained t*e ollo/ing :rie de'+ri4tion o ea+* lia:ility# " n May 2008, $a't :e+a%e involved in litigation. n De+e%:er 2008, t*e +ourt a''e''ed a udg%ent or P,A00,000 again't $a't. $a't i' a44ealing t*e a%ount o t*e udg%ent. t' attorney' :elieve it i' 4ro:a:le t*at t*ey +an redu+e t*e a''e''%ent on a44eal :y =0E. T*e a44eal i' e@4e+ted to ta-e at lea't at year. " n (a P,A00,000 (: P,=00,000 (+ P3,00,000 (d P2,300,000 D ''e''%ent on a44eal (=0E @ ,A00,000 $nviron%ent +o't Total 4rovi'ion
800,000 ,=00,000 2,300,000
T*e lo'' ro% guaranty i' not a++rued :e+au'e it i' re%ote. ?. During 2008, Mig*t Co%4any iled 'uit again't 7e't Co%4any 'ee-ing da%age' or 4atent inringe%ent. t De+e%:er 3, 2008, Mig*t' legal +oun'el :elieved t*at i' /a' 4ro:a:le t*at Mig*t /ould :e 'u++e''ul again't 7e't or an e'ti%ated a%ount o P,=00,000. n Mar+* 200;, Mig*t /a' a/arded P,000,000 and re+eived ull 4ay%ent t*ereo. n Mig*t' 2008 inan+ial 'tate%ent' i''ued Fe:ruary 200;, *o/ '*ould t*i' a/ard :e re4orted> (a ' a re+eiva:le and revenue o P,000,000. (: ' a re+eiva:le and deerred revenue o P,000,000. (+ ' a di'+lo'ure o a +ontingent a''et o P,000,000. (d ' a di'+lo'ure o a +ontingent a''et o P,=00,000. D 8. n 4a+-age' o it' 4rodu+t', Care Co%4any in+lude' +ou4on' t*at %ay :e 4re'ented at retail 'tore' to o:tain di'+ount' on ot*er Care 4rodu+t'. 1etailer' are rei%:ur'ed or t*e a+e a%ount o +ou4on' redee%ed 4lu' 0E o t*at a%ount or *andling +o't'. Care *onor' reGue't' or +ou4on rede%4tion :y retailer' u4 to t*ree %ont*' ater t*e +on'u%er e@4iration date. Care e'ti%ate' t*at ?0E o all +ou4on' i''ued /ill ulti%ately :e redee%ed. nor%ation relating to +ou4on' i''ued :y Care during 200? i' a' ollo/'# Con'u%er e@4iration date De+e%:er 3, 200? Total a+e a%ount o +ou4on' i''ued PA00,000 Total 4ay%ent' to retailer' a' o De+. 3, 200? P220,000 7*at a%ount '*ould Curran re4ort a' a lia:ility or unredee%ed +ou4on' at De+e%:er 3, 200?> (a P 0 (: P200,000 (+ P2!2,000 (d P308,000 C Total +ou4on' i''ued and to :e redee%ed (A00,000 @ ?0E @ 0E Total 4ay%ent' to retailer' ia:ility or unredee%ed +ou4on' 232000
P!A2,000 (220,000 P2!2,000
;. n 4a+-age' o it' 4rodu+t', Cor- Co%4any in+lude' +ou4on' t*at %ay :e 4re'ented to gro+er' or di'+ount' on +ertain 4rodu+t' o Cor- on or :eore a 'tated e@4iration date. T*e gro+er' are rei%:ur'ed /*en t*ey 'end +ou4on' to Cor-. n Cor-' e@4erien+e, !0E o t*e +ou4on' are redee%ed, and one %ont* generally la4'e' :et/een t*e date a gro+er re+eive' a +ou4on ro% a +u'to%er and t*e date Cor- re+eive' it. During 200?, Cor- i''ued t/o 'erie' o +ou4on' a' ollo/'# Con'u%er %ount di':ur'ed ''ued on Total value e@4iration date a' o 23200? 200? P00,000 A30200? P3!,000 ?200? 20,000 23200? P!0,000 Cor-' De+e%:er 3, 200? :alan+e '*eet '*ould in+lude a lia:ility or unredee%ed +ou4on' o# (a P 0 (: P8,000 (+ P!,000 (d P!8,000 B 20. 6n 4ril , 200?, '* Cor4oration :egan oering a ne/ 4rodu+t or 'ale under a one"year /arranty. 6 t*e =0,000 unit' in inventory at 4ril , 200?, 30,000 *ad :een 'old :y (a P;0,000 (: PA0,000 (+ P?0,000 (d P330,000 C 7arranty e@4en'e (30,000 @ 8 P2!0,000
e''# +tual /arranty +o't 7arranty lia:ility
?0,000 P?0,000
2. Jou are given t*e data a' ollo/' or C9N 5P C61P61T6N# Net ''et' at t*e :eginning o t*e year P30,000 Net ''et' at t*e end o t*e year ?=,000 Dividend' de+lared 8,000 Ca4ital Sto+- ''ued ?0,000 T*e net in+o%e (lo'' i'# (a Net lo'' P0?,000 (+ Net in+o%e P0?,000 (: Net in+o%e P?,000 (d Net lo'' P?,000 Net a''et' at t*e end o t*e year Net a''et' at t*e :eginning o t*e year n+rea'e in net a''et' Dividend' de+lared Ca4ital Sto+- i''ued Net lo''
D
P ?=,000 (30,000 P !=,000 8,000 ( ?0,000 P ?,000
22. Jou are given t*e ollo/ing +lo'ing entrie' o PSS N67 NC.# $ntry ntere't 1evenue !,?00 ++ount' Paya:le ,;00 Ca4ital Sto+0,000 Sale' !=,000 n+o%e Su%%ary A,A00 $ntry 2 n+o%e Su%%ary !8,?00 ain on Sale o and 3,000 ++ount' 1e+eiva:le 2,000 64erating e@4en'e' !,200 6t*er ''et' 3,=00 Co't o ood' Sold 32,000 $ntry 3 n+o%e Su%%ary 2,;00 1etained $arning' 2,;00 T*e 4ro4erly +o%4uted net in+o%e i'# (a P,800 (: P8,800 (+ P2,;00 (d PA,=00 T*e an'/er i' illu'trated :y t*e ollo/ing +lo'ing entrie'# ntere't revenue !,?00 Sale' !=,000 ain on 'ale o land 3,000 Co't o good 'old 64erating e@4en'e' n+o%e 'u%%ary n+o%e Su%%ary A,=00 1etained $arning' (net in+o%e
D
32,000 !,200 A,=00
A,=00
23. 9ilda %ade t*e ollo/ing e@4enditure' or re'ear+* and develo4%ent early in 2003K P=,000 or %aterial'K P20,000 or +ontra+t 'ervi+e'K P30,000 or e%4loyee 'alarie'K and P2=0,000 or a :uilding /it* an e@4e+ted lie o 20 year' to :e u'ed or +urrent and uture re'ear+* 4roe+t'. T*e +o%4any u'e' t*e 'traig*t line %et*od o de4re+iation. T*e +o%4any allo+ated P=,000 in over*ead to re'ear+* and develo4%ent. 7*at i' t*e +o%4any' re'ear+* and develo4%ent e@4en'e> (a P3=,000 (: P82,=00 (+ P300,000 (d P??,=00 B Material' Contra+t 'ervi+e' $%4loyee 'alarie' De4re+iation o :uilding (2=0,000 20 6ver*ead allo+ated to 1 & D 1e'ear+* and develo4%ent e@4en'e
P=,000 20,000 30,000 2,=00 =,000 P82,=00
2!. 1o'e Co%4any *ad 'ale' o P=,000,000 during De+e%:er 200;. $@4erien+e *a' '*o/n t*at %er+*andi'e eGualing ?E o 'ale' /ill :e returned /it*in 30 day' and an additional 3E /ill :e returned /it*in ;0 day'. 1eturned %er+*andi'e i' readily re'ala:le. n addition, %er+*andi'e eGualing =E o 'ale' /ill :e e@+*anged or %er+*andi'e o eGual or greater value. 7*at a%ount '*ould 1o'e re4ort or net 'ale' in it' in+o%e 'tate%ent or t*e %ont* o De+e%:er 200;> (a P!,=00,000 (: P=,000,000 (+ P3,?=0,000 (d P!,2=0,000 Sale' Sale' return' (0E @ =,000,000 Net 'ale'
P=,000,000 ( =00,000 P!,=00,000
2=.T*e o/ner' o Loot Suit Clot*ing Store are +onte%4lating 'elling t*e :u'ine'' to ne/ intere't'. T*e +u%ulative net earning' or t*e 4a't = year' a%ounted to P!=0,000 in+luding e@traordinary gain' o P0,000. T*e annual earning' :a'ed on an average rate o return on inve't%ent or t*i' indu'try /ould *ave :een P?A,000. e@+e'' earning' are to :e +a4italiHed at 0E, t*en i%4lied good/ill '*ould :e# (a P20,000 (: P!0,000 (+ P!!0,000 (d P!=0,000 verage earning' (!=0,000 0,000 = Nor%al earning' $@+e'' annual earning' %4lied good/ill (2,000 0E
P88,000 (?A,000 P2,000 P20,000
T*e o/ner' o t*e 1ST Trading Co%4any are 4lanning to 'ell t*e :u'ine'' to ne/ intere't'. T*e +u%ulative net earning' or t*e 4a't = year' a%ounted to P==0,000 in+luding e@traordinary gain' o P=0,000. T*e a44rai'ed value o net a''et' /a' P?=0,000. 2A. T*e general ledger o t*e Flint Cor4oration a' o De+e%:er 3, 2002 in+lude' t*e ollo/ing a++ount'# 6rganiHation +o't' P=,000 De4o'it' /it* adverti'ing agen+y (/ill :e u'ed to 4ro%ote good/ill 8,000 Di'+ount on :ond' 4aya:le =,000 $@+e'' o +o't over :oo- value o net a''et' o a+Guired 'u:'idiary ?0,000 Trade%ar-' 2,000 n 4re4aration o Flint' :alan+e '*eet a' o De+e%:er 3, 2002, /*at '*ould :e re4orted a' total intangi:le a''et'> (a P82,000 (: P8?,000 (+ P;=,000 (d P0,000 $@+e'' o +o't over :oo- value o net a''et' o a+Guired 'u:'idiary Trade%ar-' Total
P?0,000 2,000 P82,000
2?. Bend Co%4any, *aving e@4erien+ed inan+ial dii+ultie' in 200?, negotiated /it* a %aor +reditor and arrived at an agree%ent to re'tru+ture it' note' 4aya:le on De+e%:er 3, 200?. T*e +reditor /a' o/ed 4rin+i4al o P3,A00,000 and intere't o P!00,000 :ut agreed to a++e4t eGui4%ent /ort* P?00,000 and note re+eiva:le ro% a Bend Co%4any' +u'to%er /it* +arrying a%ount o P2,?00,000. T*e eGui4%ent *ad an original +o't o P;00,000 and a++u%ulated de4re+iation o P300,000. 9o/ %u+* '*ould :e re+ogniHed a' gain ro% de:t re'tru+turing on De+e%:er 3, 200?> (a P?00,000 (: PA00,000 (+ P!00,000 (d P 0 Note' 4aya:le ++rued intere't Total lia:ility ''et' tran'erred# Note' re+eiva:le 2,?00,000 $Gui4%ent at :oo- value (;00,000 300,000 A00,000 ain ro% de:t re'tru+turing
3,A00,000 !00,000 !,000,000
(3,300,000 ?00,000
28. (a P00,000 (: P2=,000 (+ P2!0,000 (d P3?=,000 B Contra+t 4ri+e e''# Total +o't in+urred n+o%e to :e re4orted
P=00,000 (3?=,000 P2=,000
2;. 6n
P;0,000
30. S-y Co%4any *a' e'ta:li'*ed a deined :eneit 4en'ion 4lan or it' e%4loyee'. nnual 4ay%ent' under t*e 4en'ion 4lan are eGual to 3E o an e%4loyee' *ig*e't lieti%e 'alary %ulti4lied :y t*e nu%:er o year' /it* t*e +o%4any. n e%4loyee' 'alary in 200; /a' P=00,000. T*e e%4loyee i' e@4e+ted to retire in 0 year', and *i' 'alary in+rea'e' are e@4e+ted to average !E 4er year during t*at 4eriod. ' o De+e%:er 3, 200;, t*e e%4loyee *a' /or-ed or = year'. T*e uture value o at !E or 0 4eriod' i' .!8. 7*at i' t*e a%ount o annual 4en'ion 4ay%ent t*at '*ould :e u'ed in +o%4uting t*e e%4loyee' 4roe+ted :eneit o:ligation a' o De+e%:er 3, 200;> (a P===,000 (: P3?=,000 (+ P333,000 (d P22=,000 C Future 'alary (=00,000 @ .!8 nnual 4en'ion 4ay%ent PB6 (?!0,000 @ 3E @ = year'
?!0,000 333,000
nnual 4en'ion 4ay%ent B6 (=00,000 @ 3E @ = year'
22=,000
Proe+ted :eneit o:ligation i' :a'ed on uture 'alary /*ile a++u%ulated :eneit o:ligation i' :a'ed on +urrent 'alary. PS di+tate' t*e +on+e4t o 4roe+ted :eneit o:ligation /*i+* rele+t' uture 'alary in+rea'e'. l'o, 4roe+ted unit +redit %et*od +on'ider' uture 'alary in+rea'e in +o%4uting t*e deined :eneit o:ligation. 3. rant Co%4any o:tain' t*e ollo/ing ro% it' a+tuary on (a P2,2=0,000 (: P2,200,000 (+ P2,3=0,000 (d P3,!00,000 5nre+ogniHed net a+tuarial lo'' Corridor (0E @ 0,000,000 $@+e'' to :e a%ortiHed
,=00,000 (,000,000 =00,000
Current 'ervi+e +o't ntere't +o't $@4e+ted return %ortiHation o a+tuarial lo'' (=00,000 0 Total :eneit e@4en'e
P2,=00,000 ;00,000 (,200,000 =0,000 P2,2=0,000
32. t*e a''et' o a :u'ine'' in+rea'ed P20,000 during a 4eriod o ti%e and it' lia:ilitie' in+rea'ed P!8,000 during t*e 'a%e 4eriod, o/ner' eGuity in t*e :u'ine'' %u't *ave#
(a in+rea'ed P?2,000 (: de+rea'ed P?2,000
(+ in+rea'ed PA8,000 (d de+rea'ed PA8,000
33. T*e ollo/ing inor%ation 4ertain' to Malt Co%4any on De+e%:er 3 o t*e +urrent year# Pro4erty, 4lant and eGui4%ent P=,000,000 ++u%ulated de4re+iation ,=00,000 ++ount' re+eiva:le ,000,000 Pre4aid in'uran+e =0,000 S*ort"ter% note 4aya:le =0,000 Ca'* =00,000 Bond' 4aya:le !,000,000 Total a''et' 8,;=0,000 and 2,000,000 ++ount' 4aya:le 800,000 llo/an+e or dou:tul a++ount' 00,000 Mer+*andi'e inventory ,300,000 S*ort"ter% inve't%ent' ?00,000 7age' 4aya:le 200,000 Total lia:ilitie' =,!=0,000 Pre%iu% on :ond' 4aya:le 300,000 T*e De+e%:er 3 /or-ing +a4ital i'# (a P3,!=0,000 (: P2,300,000 (+ P3,==0,000 (d P2,000,000 B ++ount' re+eiva:le Pre4aid in'uran+e S*ort"ter% note 4aya:le Ca'* ++ount' 4aya:le llo/an+e or dou:tul a++ount' Mer+*andi'e inventory S*ort"ter% inve't%ent' 7age' 4aya:le 7or-ing +a4ital
P,000,000 =0,000 ( =0,000 =00,000 ( 800,000 ( 00,000 ,300,000 ?00,000 ( 200,000 P2,300,000
3!.Dean Co%4any a+Guired 00E o More Cor4oration 4rior to 200;. During 200;, t*e individual +o%4anie' in+luded in t*eir inan+ial 'tate%ent' t*e ollo/ing# Dean More 6i+er' 'alarie' P?=0,000 P=00,000 6i+er' e@4en'e' 200,000 00,000 oan' to oi+er' ,2=0,000 =00,000 nter+o%4any 'ale' ,=00,000 7*at a%ount '*ould :e re4orted a' related 4arty di'+lo'ure' in t*e note' to Dean' 200; +on'olidated inan+ial 'tate%ent'> (a P,=00,000 (: P,==0,000 (+ P,?=0,000 (d P3,300,000 C oan' to oi+er' (,2=0,000 =00,000
P,?=0,000
3=. T*e a++ount' :elo/ /ere ta-en ro% t*e unadu'ted trial :alan+e o Ia'e Cor4oration a' at De+e%:er 3, 200;# Ca'*, net o :an- overdrat o P=0,000 PA00,000 Note' re+eiva:le (in+luding di'+ounted note o P00,000 =00,000 Trade a++ount' re+eiva:le, net o +u'to%er' +redit :alan+e o P=0,000 ?00,000 Mer+*andi'e inventory 800,000 Trade a++ount' 4aya:le, net o +reditor' de:it :alan+e' o P00,000 800,000 7*at i' t*e +orre+t a%ount o +urrent a''et' on De+e%:er 3, 200;> (a P2,800,000 (: P2,?00,000 (+ P2,A00,000 (d P2,;00,000 Ca'* (=0,000 A00,000 Note' re+eiva:le (=00,000 " 00,000 Trade a++ount' re+eiva:le (?00,000 =0,000 Mer+*andi'e inventory Creditor' de:it :alan+e' Total +urrent a''et'
te%' 3A to !#
P ?=0,000 !00,000 ?=0,000 800,000 00,000 P2,800,000
Pre'ented :elo/ are t*e +onden'ed in+o%e 'tate%ent o ital Cor4oration or t*e year' ended De+e%:er 3, 200 and 200;# 200 200; Sale' =,000,000 !,;00,000 Co't o good' 'old 3,3=0,000 3,300,000 ro'' in+o%e ,A=0,000 ,A00,000 64erating e@4en'e' A?=,000 A=0,000 64erating in+o%e ;?=,000 ;=0,000 ain on 'ale o divi'ion 200,000 0 Net in+o%e :eore in+o%e ta@ ,?=,000 ;=0,000 n+o%e ta@ e@4en'e (3=E !,2=0 332,=00 Net in+o%e ?A3,?=0 A?,=00 6n 6+to:er 0, 200, ital entered into an agree%ent to 'ell t*e a''et' o one o it' geogra4*i+al 'eg%ent'. T*e geogra4*i+al 'eg%ent +o%4ri'e' o4eration' and +a'* lo/' t*at +an :e +learly di'tingui'*ed, o4erationally and or inan+ial re4orting 4ur4o'e', ro% t*e re't o t*e +o%4any. T*e 'eg%ent /a' 'old on De+e%:er 3, 200, or P,?=0,000. T*e :oo- value o t*e 'eg%ent' a''et' /a' P,==0,000. T*e 'eg%ent' +ontri:ution to ital' o4erating in+o%e :eore ta@ or ea+* year /a' a' ollo/'# 200 3,?=0 lo'' 200; 8,2=0 in+o%e Ba'ed on t*e a:ove data, +al+ulate t*e ollo/ing# 3A. n+o%e ro% +ontinuing o4eration' in 200;# (a PA?,=00 (: PA?0, 32 (+ P=A!,A88 (d PA;!,A88 C 64erating in+o%e or 200;, a' re4orted ;=0,000 n+o%e ro% di'+ontinued o4eration' ( 8,2=0 n+o%e ro% +ontinuing o4eration' :eore ta@ 8A8,?=0 n+o%e ta@ (3=E (30!,0A2 n+o%e ro% +ontinuing o4eration' =A!,A88 3?. n+o%e ro% +ontinuing o4eration' in 200# (a P83?,A88 (: P?0?,A88 (+ P==;,82 64erating in+o%e or 200, a' re4orted o'' ro% di'+ontinued o4eration' n+o%e ro% +ontinuing o4eration' :eore ta@ n+o%e ta@ (3=E n+o%e ro% +ontinuing o4eration' 38. Net in+o%e in 200;# (a PA!=,;38 (: P;=0,000 (+ PA?,=00 n+o%e ro% +ontinuing o4eration' in 200; Po't"ta@ in+o%e ro% di'+ontinued o4eration' (8,2=0 @ A=E Net in+o%e in 200; 3;. Net in+o%e in 200# (a P?A3,?=0 (: PA=,A2A (+ PA33,?=0 n+o%e ro% +ontinuing o4eration' in 200 Po't"ta@ in+o%e ro% di'+ontinued o4eration'# ain on 'ale o a''et' (200,000 @ A=E 30,000 o'' ro% di'+. o4eration' (3,?=0 @ A=E (?3,;38 Net in+o%e in 200
(d P?A3,?=0 B ;?=,000 3,?=0 ,088,?=0 (38,0A2 ?0?,A88
(d P=A!,A88 C =A!,A88 =2,82 A?,=00
(d P833,?=0 ?0?,A88
=A,0A2 ?A3,?=0
!0. ''u%e t*at :y De+e%:er 3, 200, t*e 'eg%ent *ad not yet :een 'old :ut /a' +on'idered *eld or 'ale. T*e air value o t*e 'eg%ent' a''et' on De+e%:er 3 /a' P,?=0,000. T*e 4o't"ta@ in+o%e (lo'' ro% di'+ontinued o4eration' or 200 '*ould :e# (a (P?3,;38 (: P?3,A2 (+ (P3,?=0 (d P38A,2=0 Po't"ta@ lo'' ro% di'+ontinued o4eration' (3,?=0 @ A=E (P?3,;38 !. ''u%e t*at :y De+e%:er 3, 200, t*e 'eg%ent *ad not yet :een 'old :ut /a' +on'idered *eld or 'ale. T*e air value o t*e 'eg%ent' a''et' on De+e%:er 3 /a' P,2=0,000. T*e 4o't"ta@ lo'' ro% di'+ontinued o4eration' or 200 '*ould :e# (a P=2,82 (: P=A,0A2 (+ P?3,;38 (d P2A8,;38 D Po't"ta@ lo'' ro% di'+ontinued o4eration' (3,?=0 300,000 !3,?=0 @ A=E P2A8,;38 Fair value o a''et' P,2=0,000 Carrying value (,==0,000 %4air%ent lo'' P 300,000
!2. Leta Co%4any *ad t*e ollo/ing oreign +urren+y tran'a+tion' during 200;# Mer+*andi'e /a' 4ur+*a'ed ro% a oreign 'u44lier on (a P3A0,000 (: P=0,000 (+ P20,000 (d P 0 ++ount' 4aya:le =200; Pay%ent on 3=200; $@+*ange lo''
P!,=00,000 !,A=0,000 P =0,000
Note' 4aya:le ?200; $@+*ange eGuivalent 23200; $@+*ange lo''
P=,000,000 =,200,000 P 200,000
++rued intere't 4aya:le (=,000,000 @ 0E @ A2 $@+*ange eGuivalent $@+*ange lo''
P 2=0,000 2A0,000 P 0,000
Total e@+*ange lo'' (=0,000 200,000 0,000
P 3A0,000
!3. During 200;, Fig*t Cor4oration a+Guired a 4lot o land or P,000,000. t t*e end o 200;, t*e land /a' a44rai'ed at P,A00,000 and *a' a Honal valuation o P,=00,000. During t*e year, t*e general 4ri+e level ro'e to 2E. n t*e 4re4aration o t*e +on'tant"4e'o 'tate%ent', land '*ould :e 4re'ented on t*e :alan+e '*eet a'# (a P,20,000 (: P,=00,000 (+ P,A00,000 (d P,000,000 alue o land (,000,000 @ 200
P,20,000
!!. 'tore u'e' t*e gro'' 4roit %et*od to e'ti%ate inventory and +o't o good' 'old or interi% re4orting 4ur4o'e'. Pa't e@4erien+e indi+ate' t*at t*e average gro'' 4roit rate i' 2=E o 'ale'. T*e ollo/ing data relate to t*e %ont* o 6+to:er# nventory +o't, 6+to:er P2==,000 Pur+*a'e' during t*e %ont* at +o't A83,!00 Sale' 8=A,800 Sale' return' 30,A00 5'ing t*e data a:ove, /*at i' t*e e'ti%ated ending inventory at 6+to:er 3> (a P20A,==0 (: P2!,200 (+ P2;=,800 (d P38,?=0 D nventory +o't, 6+to:er Pur+*a'e' during t*e %ont* at +o't Co't o good' 'old (8=A,800 30,A00 @ ?=EO $'ti%ated inventory, 6+to:er 3
P2==,000 A83,!00 (A;,A=0 P38,?=0
!=. 1o+e' Co%4any a+Guired a :uilding in early 2000. T*e +o't' related to t*e a+Gui'ition in+lude# +Gui'ition 4ri+e P?,000,000 64tion' 300,000 1e4air' =00,000 T*e o4tion' in+lude P200,000 on t*e :uilding a+Guired and P00,000 on t*e :uilding /*i+* /a' note a+Guired. T*e re4air' in+lude renovation, re%odelling o oi+e '4a+e and ne/ 4artition' 4rior to t*e o++u4an+y o t*e :uilding. 7*at i' t*e 4ro4er +o't o t*e :uilding> (a P?,800,000 (: P?,300,000 (+ P?,=00,000 (d P?,?00,000 D +Gui'ition 4ri+e 64tion' 1e4air' Total +o't
P?,000,000 200,000 =00,000 P?,?00,000
!A. During t*e ir't %ont* o 200;, (a PA,?=0,000 (: PA,800,000 (+ P=,;00,000 (d PA,8=,000 B llo+ated +o't o :uilding (=,8=0,000A,=00,000 @ ?,=00,000 Ne/ entran+e Total +o't o :uilding
PA,?=0,000 =0,000 PA,800,000
!?. 1oyal Cor4oration' :oo-' di'+lo'ed t*e ollo/ing inor%ation a' o and or t*e year ended De+e%:er 3, 200;# Net +redit 'ale' P2,000,000 Net +a'* 'ale' =00,000 Mer+*andi'e 4ur+*a'e' ,000,000 nventory at :eginning A00,000 nventory at end 200,000 ++ount' re+eiva:le at :eginning 300,000 ++ount' re+eiva:le at end ?00,000 Net in+o%e 00,000 1oyal' a++ount' re+eiva:le turnover i'# (a 2.; ti%e' (: 3.A ti%e' (+ !.0 ti%e' (d =.0 ti%e' C 2,000,000 (300,000 ?00,000 2 O
! ti%e'
!8. 1e+to Co%4any i' 4re4aring it' +a'* :udget or t*e %ont* ending Nove%:er 30, 200;. T*e ollo/ing inor%ation 4ertain' to 1e+to' 4a't +olle+tion e@4erien+e ro% it' +redit 'ale'# Current %ont*' 'ale' 2E Prior %ont*' 'ale' ?=E Sale' t/o %ont*' 4rior to +urrent %ont* AE Sale' t*ree %ont*' 4rior to +urrent %ont* !E Ca'* di'+ount( 230, net ;0 2E Dou:tul a++ount' E Credit 'ale'# Nove%:er e'ti%ated P200,000 6+to:er 80,000 Se4te%:er A0,000 ugu't ;0,000 9o/ %u+* i' t*e e'ti%ated +redit to a++ount' re+eiva:le a' a re'ult o +olle+tion' e@4e+ted during Nove%:er> (a P?0,200 (: P?!,200 (+ P?A,200 (d P80,200 C Nove%:er (200,000 @ 2E 6+to:er (80,000 @ ?=E Se4te%:er (A0,000 @ AE ugu't (;0,000 @ !E $'ti%ated +redit to a++ount' re+eiva:le
P 2!,000 3=,000 ;,A00 ?,A00 P?A,200
!;. 1ain Co%4any' revenue' or t*e +urrent year /ere a' ollo/'# Con'olidated revenue 4er in+o%e 'tate%ent P,200,000 nter'eg%ent 'ale' 80,000 nter'eg%ent tran'er' A0,000 Co%:ined revenue' o all o4erating 'eg%ent' P,!!0,000 1ain *a' a re4orta:le 'eg%ent i t*at o4erating 'eg%ent' revenue' e@+eed# (a PA,000 (: P2!,000 (+ P20,000 (d P!!,000 D
=0. Ty Co%4any, a 4u:li+ly o/ned +or4oration, a''e''e' 4eror%an+e and %a-e' o4erating de+i'ion' u'ing t*e ollo/ing inor%ation or it' re4orta:le 'eg%ent'# Total revenue P?,A80,000 Total 4roit and lo'' !0A,000 n+luded in t*e total 4roit and lo'' are inter'eg%ent 4roit o PA,000. n addition, Ty *a' P=,000 o +o%%on +o't' or it' re4orta:le 'eg%ent' t*at are not allo+ated in re4ort' u'ed internally. For 4ur4o'e' o 'eg%ent re4orting, Ty re4ort 'eg%ent 4roit o# (a P3=0,000 (: P3!=,000 (+ 4!,000 (d P!0A,000 D 'eg%ent inor%ation i' u'ed :y %anage%ent to a''e'' 4eror%an+e or internal u'e, t*e 'eg%ent 4roit '*ould in+lude inter'eg%ent 4roit' :ut +o%%on +o't' are not allo+ated.
* end of the examination – practical accounting 1*
