1 pts On February 1, 2016, Baby Corporation purchased a parcel of land as a factory site si te fo forr P3 P320 20,0 ,000 00.. An ol old d bu buil ildi din n on th the e pr prop oper erty ty !a !as s de de"o "oli lish shed ed an and d construction beun on a ne! !arehouse that !as co"pleted April 1#, 201$. Costs incurred on the construction pro%ect are listed belo!.
&e"olition of old buildin Architect's fees (eal fees ) title in*estiation Construction costs -"puted interest based on stoc financin (andfill for buildin site Clearin of trees fro" buildin site /e"porary buildins used for construction acti*ities (and sur*ey ca*ation for base"ent Additional infor"ation "aterials fro" de"olition al*ae /i"ber sold for P3,300 &eter"ine the cost of the land.
P 21,000 31,$00 +,100 #0,000 1+,000 1,300 ,600 2,000 +,000 13,200 sold
for
P1,400
P3$2,00 P3#3,600 P3+$,300 P366,600 1 pts an Antonio Co"pany is enaed in the operation of public hih!ays and sy!ays in the Philippines. On 5o*e"ber 2, 2016, 2016, a catastrophe de*astated the so"e of the co"pany's operated hih!ays and sy!ays. /he co"pany suffered P#.6 billion loss due to catastrophe. On anuary 1, 201$, the Philippine o*ern"ent decided to co"pensate the co"pany for the incurred loss. /he o*ern"ent loaned P# billion at #7 per annu" !ith "aturity period of # years. /he current "aret rate for si"ilar type of loan after considerin credit riss attached !as 107. /he conditions stipulated on the loan aree"ent pro*ide that the proceeds !ill be used for reconstruction of the sy!ays and hih!ays. On anuary 1, 201$, ho! "uch should the co"pany reconi8e as o*ern"ent rant 9round off to nearest "illion:;
5il P+,0#2 "illion P302 "illion P +4 "illion
1 pts /he &ecca Co"pany purchased a "achine for P360,000 on 1 anuary 2016 and recei*ed a o*ern"ent o*ern"ent rant of P#0,000 to!ards the capital cost. Co"pany policy is to treat the rant as a reduction in the cost of the asset. /he "achine !as to be depreciated on a straiht)line basis o*er 4 years and !as esti"ated to ha*e a residual *alue of P#,000 at the end of this period.
P31#,62# P266,4$# P2$1,4$# P2$1,2#0 1 pts On anuary 1, 2016, (A( Corp. bean construction of ho"es for those fa"ilies that !ere hit by the tsuna"i disaster and !ere ho"eless. /he construction is epected to tae 3.# years. -t is bein financed by issuance of bonds for P$ "illion at 127 per annu". annu". /he bonds !ere issued at the beinnin of the construction. /he bonds carry a 1.#7 issuance cost. /he pro%ect is also financed by issuance of P3 "illion share capital !ith a 1+7 cost of of capital. /he borro!in costs to be capitali8ed in 2016 is (Use straight line amortization method)
P4+0,000 P1,20,000 P4$0,000 P1,260,000 1 pts Aries Co"pany started construction on a buildin on anuary 1 of this year and co"pleted construction on &ece"ber 31 of the sa"e year. Aries had only t!o inter in terest est no note tes s ou outst tstan andin din du durin rin th the e ye year ar,, an and d bo both th of th thes ese e no notes tes !e !ere re outstandin for all 12 "onths of the year. /he follo!in infor"ation is a*ailable
A*erae accu"ulated ependitures ndi ndin n bala balanc nce e in cons constr truc ucti tion on in pror rores ess s befor efore e capitali8ation of interest i percent note incurred specifically for the pro%ect 5ine percent lon)ter" note >hat a"ount of interest should Aries capitali8e for the current year; P2$,00 P1#,000 P22,#00
P2#0,000 360,000 1#0,000 #00,000
P14,000 1 pts Pantabanan Co"pany taes a full year?s depreciation in the year of an assets ac@uisition, ac@uis ition, and no depreciation depreciation in the year of disposition. disposition. &ata relatin relatin to one depreciable asset ac@uired in 201#, !ith residual *alue of P00,000 and esti"ated useful life of 4 years, at &ece"ber 31, 2016 are
Co C ost P,00,000 Accu"ulated depreciation 3,$#0,000
P6,000 P21,000 P3,000 P0 1 pts On anuary 1#, 201#, Alatura Co"pany paid P#,+00,000 for property containin natural resource of 2,000,000 tons of ore. /he entity is leally re@uired to restore the site after "inin operations. operations. /he esti"ated cost of restorin the land after the resource is etracted is P+#0,000 and the land !ill ha*e a *alue of P6#0,000 after it is restored for suitable use. /unnels, bun houses and other fied installations are constructed at a cost of P4,000,000 and such ependitures are chared to "ine i"pro*e"ents. Operations bean on anuary 1, 2016 and resources re"o*ed totaled 600,000 tons. &urin 2011, 2011, a disco*ery !as "ade indicatin that a*ailable resource after 201$ !ill total 1,4$#,000 tons. At the beinnin of of 201$, additional bun houses !ere constructed in the a"ount of P$$0,000. -n 201$, only +00,000 +00,000 tons !ere "ined because of a strie. Alatura Co"pany should report depletion for 201$ at .
P1,#60,000 P6+0,000 P1,0+0,000 P$$6,000 1 pts &inalan Corporation?s in*est"ent properties included the follo!in ite"s held as potential plant site, P#,000,000. (and A *acant buildin to be leased out under an operatin lease, P20,000,000. Property held for sale in the ordinary course of its business, P30,000,000. held for ad"inistrati*e purposes, P10,000,000. Property hotel o!ned and "anaed, P#0,000,000. A buildin bein leased out to a subsidiary, P4,000,000. A A buildin, !hich cannot be sold or leased out separately, used in the production of oods and around 27 of the area bein leased out to canteen operators, P2,000,000. o! "uch !ill be reported as in*est"ent properties in &inalan Corporation?s separate financial state"ents;
P20,000,000 P2#,000,000 P24,000,000 P33,000,000 1 pts &urin 2016, Broca Co, had the follo!in transactions On anuary 2, Broca purchased the net assets of A"p Co. for P360,000. /he fair *alue of A"p's identifi identifiable able net assets !as P1$2,000, Broca belie*es that, due du e to th the e po popu pular larity ity of A" A"p? p?s s co cons nsu"e u"err pr produ oducts cts,, th the e li life fe of th the e re resu sulti ltin n ood!ill is unli"ited. On February 1, Broca purchased a franchise to operate a ferry ser*ice fro" the state o*ern"ent for P60,000 P60,00 0 and an annual fee of 17 of ferry re*enues. /he franchise franchise epires after fi*e years. Broca recei*ed P20,000 of ferry re*enues in 2016. On April #, Broca !as ranted a patent that had been applied for by A"p. &urin 2016, Broca incurred leal costs of P#1,000 to reister the patent and an additional P4#,000 to successfully succes sfully prosecute prosecute a patent infrine"ent suit aainst aainst a co"peti co"petitor tor.. Broca esti"ates the patent's econo"ic life to be ten years. Broca has deter"ined that it is appropriate to a"orti8e these intanibles on the straih str aiht)li t)line ne bas basis is o*e o*err the "ai "ai"u" "u" per period iod per per"itt "itted ed by en eneral erally ly acc accept epted ed accountin principles, tain a full year's a"orti8ation in the year of ac@uisition. Calculate the total epense to be reconi8ed in 2016 inco"e state"ent resultin fro" the foreoin intanible assets.
P102,300 P2#,600 P111,$00 P3#,200 1 pts /he /h e co co"pa "pany ny's 's ac acco coun untin tin re reco cords rds sh sho! o! th that at ch chan ane es s in led lede err ac acco coun untt balances occurred durin 2016 as follo!s
-ncrease P400,000
&ecrease
Cash Accounts recei*able 9net: P+0,000 -n*entories 300,000 @uip"ent 9net: 360,000 Buildin 9net: 600,000 (oans payable 1,000,000 Accounts payable 300,000 hare capital, P10 par 600,000 hare pre"iu" 200,000 etained earnins ; Assu"in that there !ere no transactions affectin retained earnins other than the P2#0,000 cash di*idends, co"pute the net inco"e for 2016. P2$0,000 P2,1$0,000 P#20,000 P$$0,000 1 pts Pious sells oods supplied by &e*out. /he oods are classed as A rade 9perfect @uality: or B rade, ha*in ha*in sliht faults. faults. Pious sells the A rade oods oods actin as an aent for &e*out at a fied price calculated to yield a ross profit "arin of #07. Pio Pious us recei*es recei*es a co" co""iss "ission ion of 12. 12.#7 #7 of the sales sales it achie*es achie*es for the these se oods. oo ds. /he arrane arrane"ent "ent for B rad rade e oods is that they are sol sold d by &e* &e*out out to Piou Pi ous s an and d Pi Pious ous sells sells th the" e" at a ro ross ss pr profi ofitt "a "ari rin n of 2# 2#7. 7. /h /he e fo follo llo!in !in infor"ation has been obtained fro" Pious' financial records
=A& A =A& B -n*entory held on pre"ises, 1D1D1$ P 2,+00,000 P1,000,000 =oods fro" &e*out year to 12D31D1$ 14,000,000 4,400,000 -n*entory held on pre"ises, 12D31D1$ 2,000,000 1,2#0,000 o! "uch should be reported as sales re*enue in Pious? inco"e state"ent for the year ended &ece"ber 31, 201$;
P11,+00,000 P36,400,000 P26,#0,000 P+4,200,000 1 pts On 1 uly 201$, Een Co"pany handed o*er to a client a ne! co"puter syste". /he contract price for the supply of the syste" and after)sales support for 12 "onths !as P400,000. Een esti"ates the cost of the after)sales support at P120,000 and it nor"ally "ars up such costs by #07 !hen tenderin for support contracts. /he re*enue Een should reconi8e in its financial year ended 31 31 &ece"ber 201$ is .
P620,000 P400,000 P$10,000 5il 1 pts /he /ier Corporation Corporation included the follo!in follo!in in its unad%usted trial balance as of &ece"ber 31, 201$
-n*entory, 12D31D16 P 1,+#0,000 Purchases 12$,4#0,000 Additional infor"ation /he in*entory at &ece"ber 31, 201$ !as counted at a cost of P4.# "illion. /his includes P#00,000 of sl slo! o! "o "o*i *in n in in*e *ent ntor ory y th that at is e epe pect cted ed to be so sold ld fo forr a ne nett a" a"ou ount nt of P300,000. ales include P4 "illion for oods sold in &ece"ber 201$ for cash to Beer Finance Co"pany Co"pany.. /he costt of the cos these se oods !as P6 "illion. "illion. Bee Beerr Fin Financ ance e Co"pany Co"pany has the option option to re@uire /ier to repurchase these oods !ithin one "onth of year)end at their oriinal sellin price plus a facilitatin fee of P2#0,000. /he cost of sales for the year ended &ece"ber 31, 201$ is . P134,400,000 P133,000,000 P132,400,000 P13,000,000 1 pts ai"i a i"ilia lian n us uses es th the e pe perp rpetu etual al in in*e *ento ntory ry sy syste ste". ". transactions for the "oth of Auust !ere as follo!s
ai"i a i"ilia lian's n's in in*en *entor tory y
&ate Particulars Gty
ai"i a i"ilia lian's n's in in*en *entor tory y
&ate Particulars Gty
these parts can be sold as scrap for P2 per unit. >hat a"ount of probable probable loss fro" the purchase co""it"ent should orse report in its 2016 profit or loss; P2,+00,000 P2,000,000 P1,600,000 P 400,000 1 pts On Auust 1#, 2016, a typhoon da"aed a !arehouse of Parlophone erchandise Co"pan Co" pany y. /he entire in*entory in*entory and "an "any y acc accoun ountin tin records records stor stored ed in the !arehouse !areho use !ere co"pletely destroyed. destroyed. Althou Althouh h the in*ento in*entory ry !as not insured insured,, a portion could be sold for scrap. scrap. /hrou /hrouh h the use of the re"ainin records, records, the follo!in data are asse"bled
-n*entory, anuary 1 Purchases, anuary 1)Auust 1# Cash sales, anuary 1)Auust 1# Collection of accounts, an. 1)Au. 1# Accounts ecei*able, anuary 1 Accounts ecei*able, Auust 1# al*ae *alue of in*entory =ross profit percentae on sales Co"pute the in*entory loss as a result of the typhoon.
P 3$#,000 1,34#,000 22#,000 2,11#,000 1$#,000 26#,000 #,000 327
P102,600 P10$,600 P10+,200 P2##,600 1 pts A public public li"ited co"pany, co"pany, =atas Pure, produces produces "il on its far"s. -t produces 307 of the country?s country?s "il that it consu"ed. consu"ed. =atas o!ns o!ns se*eral far"s and has has a stoc of 210,000 co!s and 10#,000 heifers. Additional infor"ation At &ece"ber 31, 2016 the herds are a: 210,000 co!s 93 years old:, all purchased on or before &ece"ber 31, 201# b: $#,00 000 0 hei eiffer ers, s, a*erae a ae e 1.# ye yea ars rs,, purchase sed d on u uly ly 1, 2016 c: 30,000 heifers, a*erae ae 2 years, purchased on &ece"ber 31, 201# ani"als !ere born or sold in the year. 5o /he unit fair *alues less esti"ated costs to sell !ere
1 ) year old ani"al at &ec. 31, 2016 2 ) year old ani"al at &ec. 31, 2016
P32 +#
1.# ) year old ani"al at &ec. 31,2016 36 3 ) year old ani"al at &ec. 31, 2016 #0 1)year old ani"al at &ec. 31, 2011 and uly 1, 2011 +0 /he increase in fair *alue of bioloical assets in 2016 due to physical chane is . . P1,#00,000 P1,260,000 P1,$+0,000 P1,+$0,000 1 pts /he follo!in is infor"ation related to the de*elop"ent of a particular soft!are pacae in the first year of product life
&e*e &e*elo lop" p"en entt cost costs s prior rior to reac reachi hin n tech techno nolo loi ica call P +,000 feasibility &e*elop"ent costs after reachin technoloical feasibility 6,000 Costs of duplicatin salable product ,000H sti"ated re*enues o*er 3 year total product life 300,000 e*enue in the first year of product life 1#0,000 HThis represents the entire inventory expected to be sold over the 3-year period. >hat is the total epense related related to this soft!are pacae pacae to be reconi8ed in its first)year; P16,000 P11,#00 P12,000 P $,000 1 pts P100,000. -n ac@uirin Sacramento has %ust ac@uired the net assets of Iins for P100,000. Iins, the o!ners of Sacramento felt that Iins had unrecorded ood!ill. /hey decided to capitali8e the esti"ated annual superior earnins of Iins at 207 to deter"ine the a"ount of ood!ill. /he co"putation resulted in an esti"ated ood!ill of P10,000. A rate of 107 on net assets before reconition of ood!ill !as used to deter"ine nor"al annual earnins of Iins, because it is the rate that is earned on net assets in the industry in !hich Iins operates. All other assets of Iins !ere !ere properly recorded. /he esti"ated annual earnins of Iins is .
P10,000 P2,000 P,000
P11,000 1 pts On anuary 1, 2012, the /!ine Corporation purchased "achinery for P6#0,000 !hich it installed in a rented factory. factory. -t is depreciatin the "achinery o*er 12 years by the straiht)line "ethod to a residual *alue of P#0,000. (ate in 2016, because of increasin co"petition in the industry, the co"pany belie*es that its asset "ay be i"paired and !ill ha*e a re"ainin useful life of # years, o*er !hich it esti"ates the asset !ill produce total cash inflo!s of P1,000,000 and !ill incur total cash outflo!s of P42#,000. /he cash flo!s are independent of the co"pany's other acti*ities and !ill occur e*enly each year. year. /he co"pany is not not able to deter"ine the fair *alue based on a current sellin price of the "achinery. /he co"pany's discount rate is 107. /he i"pair"ent loss to be reconi8ed in 2016 profit or loss is .
P26$,322 P2+6,+0 P31$,322 P0 1 pts On anuary 1, 201+ Ilatten Corporation ac@uired all the assets and liabilities of 5e! Corporation. 5e! Corporation has a nu"ber of operatin di*isions, includin one !hose "a%or industr ind ustry y is the "anu "anufact facture ure of toy tra train, in, part particul icularly arly tho those se ha*i ha*in n hist histori orical cal sinificance. sinific ance. /he toy trains trains di*ision di*ision is rearded rearded as a cash)ene cash)eneratin ratin unit. unit. -n payin P20 "illion for the net assets of 5e! Corporation, Ilatten calculated that it had ac@uired ood!ill of P2,+00,000. /he ood!ill !as allocated to each of the di*isions, and the assets and liabilities ac@uired are "easured at fair *alue at ac@uisition date. At &ece &ece"ber "ber 31, 201 2016, 6, the the carryi carryin n a"ou a"ounts nts of of the asse assets ts of of the the toy toy train train di*ision !ere
Factory P2,#00,000 -n*entory 1,#00,000 Brand J KChoochooL #00,000 =ood!ill #00,000 /O/A( P#,000,000 /here is a declinin interest in toy trains because of the aressi*e "aretin of co"puter)based toys, so the "anae"ent of Ilatten "easured the *alue in use of the toy train di*ision at &ece"ber 31, 2016, deter"inin it to be P+,230,000. /he %ou ourrnal entr try y to record the i"p "pa air" r"e ent lo loss ss includ ude es a credi ditt to . . =ood!ill of P$$0,000.
Brand)KChoochooL of P2$0,000. Accu"ulated depreciation)Factory P1#0,000. -n*entory of P41,000. 1 pts /he 107 bonds payable of 5ion Co"pany had a net carryin a"ount of P#$0,000 on &ece"ber 31, 2010. /he bonds, !hich had a face *alue of M600,000, !ere issued at a discount to yield 127. /he a"orti8ation of the bond discount !as recorded under the effecti*e)interest "ethod. -nterest !as paid on anuary 1 and uly 1 of each year. On uly 2, 2011, se*eral years before their "aturity, 5ion retired the bonds at 102. /he interest pay"ent on uly 1, 2011 !as "ade as scheduled. >hat is the loss that 5ion should record on the early retire"ent of the bonds on uly 2, 2011; -nore taes.
P12,000. P3$,400. P33,600. P+2,000. 1 pts /he follo!in pertains to eatron, -nc. on &ece"ber 31 of the current year Checin account balance P2#,000N an o*erdraft in special checin account at sa"e ban as nor"al checin account of P1$,000N certificate of deposit P+00,000N cash held in a bond sinin fund P200,000N postdated chec fro" custo"er P11,000N certified chec fro" custo"er P,400N 5F chec recei*ed fro" custo"er P1#,000N cash ad*ance to subsidiary of P300,000N postae sta"ps on hand P620N utility deposit paid to electric co"pany P4,000N currency and coins in a petty cash fund 9the co"pany has not replenished the fund to the i"prest a"ount of P#,000: P400. /he correct a"ount that should be reported as cash is . .
P04,400 P1,314,600 P14,600 P1,322,400 1 pts On anuary 1, 200$, anoi Co"pany sold a "achine !ith a carryin a"ount of P300,000 and accepted in echane a pro"issory note !ith a face *alue of P#00,000, a due date of &ece"ber 31, 2016, and a stated rate of +7, !ith interest recei*able at the end of each year. year. /he fair *alue of the "achine is not readily deter"inable and the note is not readily "aretable.
/he a"orti8ed cost of the note recei*able as of &ece"ber 31, 2011 is . . P#00,000 P+0$,#+$ P36#,402 P+20,1#+ 1 pts On 5o*e"ber 30, 2016, accounts recei*able in the a"ount of P00,000 !ere assined to Iaban Finance Co. by Ialan as security for a loan of P$#0,000. Iaban chared a 37 co""ission on the accountsN the interest rate on the note is 127. &urin the &ece"ber 2016, Ialan collected P3#0,000 on assined accounts after deductin P#60 of discounts. Ialan !rote off a P#30 assined account. On &ece"ber 31, 2016, Ialan re"itted to Iaban the a"ount collected plus one "onth's interest on the note. o! "uch is Ialan?s e@uity in the assined accounts recei*able as of &ece"ber 31, 2016;
P1+,+$0 P1+1,+10 P1+1,$0 P1+4,10 1 pts On anuary 1, 2016, O< /OO Corporation purchased P1,000,000 107 bonds desinated as held)to)"aturity. /he bonds bonds !ere purchased to yield 127. -nterest is payable annually e*ery &ece"ber 31. /he bonds "ature on &ece"ber 31, 2020. On &ece"ber 31, 2016 the bonds !ere sellin at . On &ece"ber &ece"ber 31, 201$, O< /OO /OO sold P#00,000 face *alue bonds at 101. /he bonds !ere sellin at 103 on &ece"ber 31, 2014. o! "uch is the reali8ed ain on sale of the in*est"ent in bonds in 201$;
P+1,060 P3#,34$ P2,010 P10,000
1 pts d!a d !ards rds Co Co"pa "pany ny be bea an n bu busin sines ess s in Fe Febr brua uary ry of 20 2016. 16. &u &urin rin th the e ye year ar,, d!ards d!ard s purchased the three tradin securities securities listed belo!. belo!. On its &ece"ber 31, 2016, balance sheet, d!ards appropriately reported a P+,000 credit balance in its ar aret et Ad%ust"en Ad%ust"ent))/ t))/radi radin n ec ecurit urities ies acc accoun ount. t. /he /here re !as no cha chane ne durin du rin 20 201$ 1$ in th the e co co"po "posit sition ion of d d!a !ard rd's 's po portf rtfol olio io of tra tradin din se secu curit rities ies.. Pertinent data are as follo!s
ecurity A B C
Cost
Fair Qalue 12D31D1$ P120,000 P126,000 0,000 40,000 160,000 1#$,000
>hat a"ount of loss on these securities should be included in d!ard's inco"e state"ent for the year ended &ece"ber 31, 201$; P11,000 P3,000 P$,000 P0 1 pts On uly 1, 2012, Cleopatra Corporation ac@uired 2#7 of the shares of arcus, -nc. for P1,000,00 P1,000,000. 0. At that date, the e@uity of arc arcus us !as P+, P+,000, 000,000, 000, !ith all the identifiable assets and liabilities bein "easured at a"ounts e@ual to fair *alue. /he table belo! sho!s the profits and losses "ade by arcus durin 2012 to 2016
ear ear Profit 9(oss: 9(oss: 2012 P200,000 2013 92,000,000: 201+ 92,#00,000: 201# 160,000 201$ 300,000 >hat is the carryin a"ount of the in*est"ent in arcus, -nc. as of &ece"ber 31, 2012; P+0,000 P$#,000 P1#,000 P0 1 pts On anuary 1, 2013, u"bo Corporation issued a P3 "illion 67 con*ertible bonds at par. par. /he bonds are redee"able at a pre"iu" of 107 on &ece"ber 31, 2016 or it "ay be con*erted into ordinary shares on the basis of #0 shares for each P1,000 bond at the option of the holder. /he interest rate for an e@ui*alent bond !ithout the con*ersion rihts !ould ha*e been 107. /he issuance of con*ertible bonds on anuary 1, 2013 increased the entity?s e@uity by .
P1$#,#14 b. P340,+14 P $3,064 d. P 0 1 pts On anuary 1, 2013, u"bo Corporation issued a P3 "illion 67 con*ertible bonds at par. par. /he bonds are redee"able at a pre"iu" of 107 on &ece"ber 31, 2016 or it "ay be con*erted into ordinary shares on the basis of #0 shares for each P1,000 bond at the option of the holder. /he interest rate for an e@ui*alent bond !ithout the con*ersion rihts !ould ha*e been 107. /he carryin a"ount of the bonds payable as of &ece"ber 31, 2013 is
P3,000,000 P3,03,62# P2,$01,#+0 P2,26,30 1 pts Presented belo! is pension infor"ation related to nri@ue, -nc. for the year 2016
er*ice cost -nterest on pro%ected benefit obliation -nterest on *ested benefits A"orti A"orti8a 8atio tion n of prio priorr ser*i ser*ice ce cost cost du due e to incr increas ease e in benefits pected return on plan assets Actual return on plan assets Contributions to the plan Benefits paid /he a"ount of pension epense to be reported for 2016 is .
P6,000 $2,000 32,000 16,000 2+,000 30,000 100,000 120,000
P1++,000 P12,000 P160,000 P216,000 1 pts On anuary 2, 2016, Ar%a" Co. established a noncontributory defined benefit plan co*erin all e"ployees and contributed P+#0,000 to the plan. At &ece"ber 31, 2016, Ar%a" deter"ined that the 2016 ser*ice and interest costs on the plan !ere P620,000. /he epected and the actual rate of return on plan assets for 2016 !as 107. /here are are no other co"ponents of Ar%a"'s pension epense. >hat a"ount
should Ar%a" report in its &ece"ber 31, 2016 state"ent of financial position as accrued pension epense; P#$#,000 P12#,000 P1$0,000 P 40,000 1 pts &unn Co.?s 2016 inco"e state"ent reported P0,000 inco"e before pro*ision for inco"e taes. /o co"pute the pro*ision for current current inco"e ta, the follo!in 2016 data are pro*ided
ent recei*ed in ad*ance -nco"e fro" ee"pt "unicipal bonds &epreciation deducted for inco"e ta purposes in ecess of depreciation reported for financial state"ent purposes
P16,000 20,000
10,000 nacted corporate inco"e ta rate 307 >hat >h at a"o a"oun untt of cu curr rren entt in inco co"e "e ta li liab abili ility ty sh shou ould ld be re repo porte rted d in &u &unn nn??s &ece"ber 31, 2016, balance sheet; P14,000 P2#,400 P22,400 P24,400 1 pts >est Corporation leased a buildin and recei*ed the P36,000 annual rental pay"ent on une 1#, 2016. /he beinnin of the lease !as uly 1, 2016. ental inco"e is taable !hen recei*ed. >est?s ta rates are 307 307 for 2016 and +07 thereafter. >est had no other per"anent or te"porary differences. >est deter"ined that no *aluation allo!ance !as needed. >hat a"ount of deferred ta asset should >est report in its &ece"ber 31, 2016 state"ent of financial position;
P#,+00 P10,400 P$,200 P1+,+00 1 pts /he &ece"ber 31, 2016 balance sheet of Ca"ille Corp. sho!ed shareholders? e@uity of P++4,$00. /ransactions durin 2016 !hich affected the shareholders? e@uity !ere 91: an ad%ust"ent to etained arnins for an o*erstate"ent of
depreciation in 201# P10,000N 92: ain on the sale of treasury shares, P,000N 93: declared di*idends of P60,000 of !hich P+0,000 !ere paid durin the yearN and 9+: net inco"e after ta of P$#,#00. /he share capital balance of P300,000 re"ain unchaned durin the year. /he retained earnins balance on anuary 1, 2016 !as . P13+,200 P123,200 P132,300 P11+,200 1 pts At &ece"ber 31, 201#, a"a Corp. had 20,000 shares of P1 par *alue treasury shares that had been ac@uired in 2010 at P12 per share. -n ay 2016, a"a issued 1#,000 of these treasury shares at P10 per share. At &ece"ber 31, 2016, 2016, !hat a"ount should a"a sho! in notes to financial state"ents as a restriction of retained earnins as a result of its treasury shares transactions;
P #,000 P 0,000 P60,000 P2+0,000 1 pts eeni Corp. has the follo!in classes of shares outstandin at &ece"ber 31, 2016
Ordinary share capital, P100 par P360,000 67 Preference share capital, P100 par, cu"ulati*e and fully participatin 120,000 &i*idends on preference shares are in arrears for 201+ and 201#. -f P#$,600 are to be distributed as di*idends, the total di*idends to be i*en on preference shareholders !ould be . P32,+00 P2#,200 P30,000 P26,+00 1 pts /he shareholders? shareholders? e@uity account balances for the
127 Preference share capital, P100 par, 20,000 shares
P2,000,000
Ordinary share capital, P2# par, 1+#,000 shares 3,62#,000 ubscribed share capital, net of P#00,000 subscriptions 1,000,000 recei*able hare pre"iu" #00,000 etained earnins 6#,000 /reasury shares, #,000 shares, at cost +00,000 Preference shares ha*e a li@uidation *alue of P110N shares are cu"ulati*e, !ith di*idends in arrears for 3 years includin the current year and fully payable in the e*ent of li@uidation. /he boo *alue of an ordinary ordinary share is . P2#.00 P2$.$4 P22.#0 P2.00 1 pts Iet Co"pany?s capital structure !as as follo!s
Outstandin hares 201# 2016 Ordinary 1,000,000 1,000,000 Con*ertible Preference 100,000 100,000 107 bonds payable 30,000,000 30,000,000 &urin 2016, 2016, Iet paid di*idends di*idends of P1# per share on its preference preference shares. shares. /he prefere pre ference nce sha shares res are con con*ert *ertible ible into 1#0 1#0,000 ,000 ordinary ordinary sha shares res and the 107 bond bo nds s ar are e co con* n*er erti tibl ble e in into to 30 300, 0,00 000 0 or ordi dina nary ry sh shar ares es.. Pr Prof ofit it fo forr 20 2016 16 !a !as s P10,000,000. /he inco"e ta rate is 3#7. /he diluted earnins per share for 2016 should be . P4.#0 P4.0+ P4.2+ P$.#0 1 pts /he Alcala Alcala Co"pany counted counted its endin in*entory in*entory on &ece"ber 31. 5one of the follo!in ite"s !ere included !hen the total a"ount of the co"pany?s endin in*entory !as co"puted ,000 00 in o oo ods locat ate ed in Alcal ala? a?s s !ar areh eho ouse that are on P1#0,0 consin"ent fro" another co"pany. P200,000 in oods that !ere sold by Alcala and shipped on &ece"ber 30 and !ere in transit on &ece"ber 31N the oods !ere recei*ed by the custo"er on anuary 2. /er"s !ere FOB &estination. P300,000 in oods !ere purchased by Alcala and shipped on &ece"ber
30 and !ere in transit on &ece"ber 31N the oods !ere recei*ed by Alcala on anuary 2. /er"s !ere FOB shippin point. P+00,000 in oods !ere sold by Alcala and shipped on &ece"ber 30 and !ere in transit on &ece"ber 31N the oods !ere recei*ed by the custo"er on anuary 2. /er"s !ere FOB FOB shippin point. point. /he co"pany?s co"pany?s reported in*entory 9before any corrections: !as P2,000,000. >hat is the correct a"ount of the co"pany?s in*entory on &ece"ber 31; P2,##0,000 P2,#00,000 P1,#0,000 P2,$00,000 1 pts /he ary - f. Co. in its balance sheet as of &ece"ber 31, 201$ has an in*entory the a"ount of P1$6,000 !hich consists of
&irect "aterials &irect "aterials purchases in transit, FOB destination
P##,000 12,000
&irect "aterials purchases in transit, FOB shippin point ,000 Prepaid insurance on in*entory 2,000 >or)in)process 34,000 Finished oods +#,000 =oods shipped on consin"ent, at sellin price !ith 207 profit on sales 1#,000 >hat is the cost of in*entory to be sho!n in the state"ent of financial position of ary - f. Co. as of &ece"ber 31, 201$; P162,#00 P1#,000 P1#0,000 P1#,#00 1 pts yfall Co. records purchases at net a"ounts. On ay # yfall purchased "erchandise on account, P32,000, ter"s 2D10, nD30. yfall returned P2,000 of the ay # purchase and recei*ed credit on account. account. At ay 31 the balance had not been paid. By ho! "uch should the account payable be ad%usted on ay 31;
P600 P640
P6+0 P0 1 pts Co"pute for the cost of in*entory lost in fire usin the data belo!
-n*entory, uly 1, 2016 P#1,600 Purchases, uly 1, 2016 to an. 1, 201$ 364,000 ales, uly 1, 2016 to an. 1, 201$ #43,000 Purchase returns 11,200 Purchase discounts taen #,400 Freiht in 3,400 ales returns 4,600 A fir fire e de dest stro royed yed th the e en entir tire e in in*en *ento tory ry e ecep ceptt fo forr pu purch rchase ases s in tra trans nsit, it, FO FOB B shippin point, of P2,000 and oods ha*in sellin price of P+,00 that !ere sal*aed fro" the fire. /he a*erae ross profit rate on net sales is +07. P#,$60 P#6,+0 P62,660 P#6,420 1 pts On &ece"ber 31, 201$, 5orala Co"pany purchased an e@uip"ent fro" aasi" Co"pany.. i"ultaneous !ith the sale, aasi" leased bac the e@uip"ent for 12 Co"pany years for its use in the ne! far" that it is de*elopin. /he sales price of of the e@uip"ent !as P4,000,000 !hile the carryin a"ount in the boos of aasi" as of the date of of the sale !as !as P6,#00,000. aasi"?s enineers ha*e esti"ated that the re"ainin econo"ic life of the e@uip"ent is 1# years. aasi" Co"pany should report deferred ain fro" sale of the e@uip"ent on &ece"ber 31, 201$ at . .
P1,#00,000 P1,+00,000 P1,3$#,000 P0 1 pts A director of an entity recei*es a retire"ent benefit of 107 of his final salary per annu" for his contractual contractual period of three years. /he director does not not contribute to the sche"e. is anticipated salary o*er the three years is ear 1 P100,000, ear ear 2 P120,000, P120,000, and ear ear 3 P1++,000. P1++,000. Assu"e a discount discount rate of #7. /he pension liability at the end of the second year is .
P2,#20 P2$,+2 P22,#00 P26,$$# 1 pts Bailey Co. leased e@uip"ent to =reco, -nc. on anuary 1, 2016. /he lease is for an 4)year period. /he first eiht e@ual annual pay"ents of P600,000 !as "ade on anuary 1, 2016. Bailey had purchased the e@uip"ent on &ece"ber &ece"ber 2, 201# for P3,600,000. /he lease is appropriately accounted for as a sales)type lease by Bailey. Assu"e that the present *alue at anuary 1, 2016 of all rent pay"ents o*er the lease ter" discounted at a 107 interest rate !as P3,#20,000. >hat a"ount of interest inco"e should Bailey record in 201$ as a result of the lease;
P261,200 P320,000 P22,000 P32$,200 1 pts On &ece"ber 31, 201$, -ria Co"pany sold an e@uip"ent to aarao Co"pany for P4,000,000 and si"ultaneously leased it bac for 2 years. /he carryin a"ount of the e@uip"ent is P6,000,000 and the re"ainin econo"ic life is 10 years. >hat should -ria report as ain in its 201$ inco"e state"ent;
P2,000,000 P1,000,000 P#00,000 P200,000 1 pts li8abeth, a public li"ited co"pany, has ranted 100 share appreciation rihts to each of its 1,000 e"ployees in anuary 201$. /he "anae"ent feels that as of &ece"ber 31, 201$, 07 of the a!ards !ill *est on &ece"ber &ece"ber 31, 201. /he fair *alue of each share appreciation riht on &ece"ber 31, 201$, is P10. >hat is the fair *alue of the liability to be recorded in the financial state"ents for the year ended &ece"ber 31, 201$;
P10,000,000 P300,000 P100,000 P 0,000 1 pts
-n arri*in at its profit before ta for the year ended 31 &ece"ber 201$ /he yan Co"pany has accrued royalties recei*able of P200,000 and interest payable of P2#0,000. Both royalties and interest are dealt !ith on a cash basis in ta co"putations. >hat are yan's yan's net te"porary differences at 31 &ece"ber 201$, accordin to PA12 -nco"e taes; /aable te"porary differences of P#0,000 &eductible te"porary differences of P+#0,000 &eductible te"porary differences of P#0,000 aable te"porary differences of P+#0,000 1 pts /he uan Co"pany has a non)current asset !hich had a carryin a"ount in the financial state"ents of P14,000 at 31 31 &ece"ber 201$. -ts ta !ritten do!n *alue 9the ta base: at that date !as P,000. /he ta rate is 307. -n accordance !ith PA12 -nco"e taes, !hat is the deferred ta balance in respect of this asset at 31 &ece"ber 201$;
P,000 asset P2,$00 asset P2,$00 liability P,000 liability 1 pts For the year ended &ece"ber 31, 201$, /alisay Co"pany reported accountin profit of P,#00,000. -ts taable profit !as P,000,000. /he difference is due to accelerated depreciation for inco"e ta purposes. /he inco"e ta rate is 3#7 and /alisay /alisay "ade esti"ated ta pay"ent durin 201$ of P1,000,000. >hat should /alisay report as current ta payable as of &ece"ber 31, 201$;
P3,1#0,000 P3,32#,000 P2,1#0,000 P2,32#,000 1 pts At &ece"ber 31, 31, 201$ indoro Corporation?s taable profit is P#,000,000. /he follo!in ite"s are the te"porary differences that caused indoro?s inco"e in the inco"e ta return to differ fro" the a"ount reported in the inco"e state"ent Future deductible a"ounts epected to re*erse in 2014 of P+00,000 and future taable a"ounts epected to re*erse in 2014 and 201 of P#00,000 and P00,000, respecti*ely. indoro?s inco"e ta rate is 3#7. /he inco"e ta epense reported by indoro in its &ece"ber 31, 201$ inco"e state"ent is .
P2,100,000
P1,$#0,000 P1,+00,000 P1,$4#,000 1 pts /he Coral Co"pany applies the PF for s. On 20 uly 201$ Coral !ishes to classify a non)current asset as held for sale. At that date the asset's carryin a"ount !as P1+,#00, its fair *alue !as esti"ated at P21,#00 and the costs to sell at P1,+#0.
/he asset !as sold on 14 October 201$ for P21,200. -n accordance !ith PF for s, at !hat a"ount should the asset be stated in Coral's state"ent of financial position at 30 epte"ber 201$; P20,0#0 P21,200 P21,#00 P1+,#00 1 pts Ca"il Co"pany?s leder sho!ed a balance in its cash account at &ece"ber 31, 2016 of Php1,36+,#00, !hich !as deter"ined deter"ined to consist of the follo!in
Petty cash fund Checin account in Iapa"ilya ban 9 chec of Php12,000 is still outstandin: 5otes recei*able in the possession of a collectin aency
P $,200 6$3,#00 #0,000 3#6,000 2##,000 ,00 12,00 1,36+,#00
At !hat a"ount should Kcash on hand and in banL be reported on Ca"il Co"pany?s state"ent of financial position; P1,003,$00 P1,2#4,$00 Php1,01+,200 Php1,32+,#00
1 pts /he &ece"ber 31, 2016 trial balance of ari Co"pany includes the follo!in accounts
Petty cash fund P $00,000 Current account)Iapuso ban +0,000,000 Current account)Iapa"ilya ban 9o*erdraft: 9 2, 2 ,#00,000: 120)day "oney "aret place"ent)I ban 10,000,000 /i"e deposit)IB ban 20,000,000 Additional infor"ation /he petty cash fund includes unreplenished &ece"ber 2016 petty cash epense *ouchers for Php1#0,000 and an e"ployee chec for Php#0,000 dated anuary 31, 201$. A chec for Php1,000,000 !as dra!n aainst Iapuso ban current account dated and recorded &ece"ber 2$, 2106 but deli*ered to payee on anuary 10, 201$. /he IB ban ti"e deposit is set aside for land ac@uisition in early anuary 201$. >hat should be reported as Kcash and cash e@ui*alentsL on &ece"ber 31, 2016; Php#1,300,000 Php+1,#00,000 Php#1,#00,000 Php+4,400,000 1 pts Assu"e the follo!in data of Pau Co"pany of its cash and short)ter", hihly li@uid in*est"ents for &ece"ber 31, 201$ Cash on hand P400,000 Checin in acco cou unt 5o. +21, Iapuso ban an 2,0 ,00 00, 0,0 000 Checin account 5o. $2+, Iapuso ban 9 300,000:
ecurities 120)day certificate of deposit BP)/reasury bills 95o.1: BP)/reasury bills 95o.2: 140 days co""ercial papers oney "aret funds
&ate Ac@uired aturity &ate
A"ount
12D10D1$ 11D30D1$ 10D31D1$
1D31D14 +D30D14 1D20D14
P6,000,000 #0,000,000 10,000,000
12D1D1$ 11D21D1$
6D20D14 2D10D14
1+,000,000 20,000,000
/he co /he corr rrec ectt ca cash sh an and d ca cash sh e@ e@ui ui*a *ale lent nts s ba bala lanc nce e on &e &ece ce"b "ber er 31 31,, 20 201$ 1$ is ; ; P34,#00,000
P#2,#00,000 P34,400,000 P#2,400,000 1 pts /otal cash and cash e@ui*alent of Php63,2#0,000 reported by ari Co"pany on &ece"ber 31, 201$ include the follo!in infor"ation /!o certificates of deposits, each totalin Php#,000,000, ha*in a "aturity of 120 days da ys.A .A ch chec ec is da date ted d a anu nuary ary 12 12,, 20 2014 14 in th the e a"o a"oun untt of Ph Php1 p1,2 ,2#0, #0,00 000. 0. A co""ercial paper of Php21,000,000 !hich due due in 0 days. Currency and coins on hand a"ounted to Php$$0,000.
ari Co"pany has areed to "aintain a cash balance of Php#,000,000 in one of its bans at all ti"es to ensure future credit a*ailability 9this a"ount is leally restricted as to !ithdra!al and !as included in the abo*e balance: o! o ! "uc "uch h is th the e co corr rrect ect a"ount a"ount of cas cash h an and d ca cash sh e@ e@ui* ui*ale alent nts s th that at a ari ri Co"pany should report in its &ece"ber 31, 201$ state"ent of financial position; P#$,000,000 P+$,000,000 Php31,000,000 Php62,000,000 1 pts /he follo!in pertains to Pau Co"pany on &ece"ber 31, 2016
Postae sta"ps P #,000 Credit "e"o fro" a *endor for a purchase e eturn 100,000 Current account Iapa"ilya ban 9#00,000: Current account at Iapuso ban 10,000,000 "ployees postdated chec 20,000 Forein ban account)restricted 9in e@ui*alent peso: #,000,000 -O< fro" Finance anaer ?s brother in la! #0,000 /radin securities $#,000 Payroll account 2,#00,000 Petty Petty cash fund 9Php20,00 9Php20,000 0 in currenc currency y and epens epenses es receipts for Php30,000: #0,000 Postal "oney order 1#0,000 /ra*eler?s ra*eler ?s chec 2#0,000 /reasury bills, due 1D31D1$ 9purchased 1D31D16: 1,#00,000 /reasury bills, due 3D31D1$ 9purchased 12D31D16: 1,000,000 /reasury !arrants 1,#00,000
Additional infor"ation Chec Ch ec of Ph Php1 p1,00 ,000,0 0,000 00 in pa pay"e y"ent nt of ac acco coun unts ts pa paya yable ble !a !as s re reco cord rded ed on &ece &e ce"b "ber er 31 31,, 20 2016 16 bu butt "a "ail iled ed to su supp ppli lier ers s on a anu nuar ary y #, 20 201$ 1$.. Ch Chec ec of Php#00,000 dated anuary 1#, 201$ in pay"ent of accounts payable !as recorded and "ailed on &ece"ber 31, 2016.Chec of Php2#0,000 dated anuary 1#, 2016 in pay"ent of accounts payable !as recorded and "ailed on anuary 1#, 2016. As of the reportin period, the sa"e has not been encashed by the payee and still outstandin. o! "uch cash and cash e@ui*ale e@ui*alents nts should should Pau Co"pany Co"pany report on the &ece"ber 31, 2016 state"ent of financial position; Php1#,6#0,000 Php1$,1$0,000 Php1$,000,000 Php14,6#0,000
