Nfjpia Mock Board 2016_afar

ADVANCED FINANCIAL ACCOUNTING AND REPORTING INSTRUCTIONS: Select Select the best answer answer for each of the following following questions questions.. ALL questions are compusor! an" #UST $e attempte". Mark only only one answer answer for each each item on the answer answer sheet sheet provided provided.. Strictly Strictly NO ERS!R ERS!RES ES ""O#E$. Erasures will will render your e%amination e%amination answer sheet &N'"&$. &N'"&$. !se (EN)&" NO. * only. only. +OO$"!),-

. /he /he part partne ners rshi hip p agre agreem emen entt betw betwee een n ,en ,en and and ver very y stip stipul ulat ates es that that ,en ,en is to rece receiv ive e a *01 *01 bonu bonus s on profits2 with residual profit and loss to be apportioned in the ratio 34*2 34*2 respe respecti ctive vely. ly. #hich #hich partne partnerr has a greater advantage when the partnership has a profit and hen it incurred a loss5 a. (rofit 6 ,en7 "oss 6 very b. (rofit (rofit 6 ve very7 ry7 "os "oss s 6 very very c. (rof (rofit it 6 ,en ,en77 "os "oss s 6 ,en ,en d. (rof (rofit it 6 ve very ry77 "oss "oss 6 ,en ,en *. /he /he estim estimat ated ed amoun amountt avai availa labl ble e for for free free asset assets s in a Stat Statem emen entt of ffa ffair irs s for for a busi busine ness ss ente enterp rpri rise se underg undergoin oing g bankr bankrupt uptcy cy liquid liquidati ation on is equal equal to the assets a. )urren )urrentt fair valu value e less less carry carrying ing amoun amounts ts b. )arrying )arrying amounts amounts less current current fair values values c. )arrying amounts plu lus s gain or le les ss loss on reali8ation d. )arrying amounts plus lus loss or les less gain on reali8ation 3. s sugge suggest sted ed by rti rticl cle e 9:9 9:9 of the the (hil (hilip ippi pine ne )ivil )ivil )ode and relevant PFRSs2 PFRSs2 the net contributions ;assets and related liabilities assumed by the partnership< of  the partners to the partnership are measured at a. fair value b. cost c. discretiona discretionary ry amount amount deter determined mined by partners partners d. any of of th these =. On Novemb November er 2 *0=2 *0=2 ,laus ,laus )o. obtain obtained ed franch franchise ise rights from >/he Originals? )o. /he initial franchise fee included consideration for inventory and equipment to be delivered to ,laus. ll of the necessary preparations were completed2 and ,laus )o. started operations2 on @anuary 32 *0A. /he inventory and equipment were delivered to ,laus on $ecember 2 *0=. Bow would  >/he originals? )o. recogni8e revenue for the supply of  inventory and equipment5 a. recog recogni8 ni8e e in full full on Nove Novembe mberr 2 *0 *0= = b. recogni8e in full on $ecember 2 *0= c. recog recogni8 ni8e e in full on @anu @anuar ary y 32 32 *0A *0A d. defe deferr rred ed and amor amorti ti8e 8e over over the the fran franch chis ise e term term starting @anuary 32 *0A A.

n advan advance ce cash cash distri distributio bution n plan plan is prepared prepared a. Each Each time time cash cash is dist distri ribu bute ted d to partn partner ers s in an installment liquidation b. Each time a partnership asset is sold in an installment liquidation c. /o dete determ rmin ine e the order order and and amoun amountt of cash each each partne par tnerr wil willl rec receiv eive e as it bec becom omes es ava availab ilable le for distribution d. None one of the these

C. /he intere interest st of the withdr withdrawi awing2 ng2 retiri retiring2 ng2 or deceas deceased ed partner shall be adDusted for which of the following5 &. Bis shar share e of any any profi profitt or loss loss up to the the date date of his his withdrawal2 retirement or death2 if he withdraws2 retires or dies during the year &&. Bis share share of any revaluati revaluation on gains or losses losses as at at the date of his withdrawal2 retirement2 or death a. & only c. & or && b. && only d. & and &&

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9.

State the prope properr order order of partner partnership ship liquid liquidation ation.. &. Outside creditors &&. Owners interests &&&. &nside creditors a. &2 &&2 &&& c. &&2 &2 &&& b. &&&2 &2 &2 && && d. &2 &&&2 &&

:. !nder !nder cash cash priorit priority y program program22 when all of the prior prioritie ities s are paid2 any remaining cash distribution is a. all alloca ocated ted to the partn partner ers s based based on their their respect respective ive profit or loss ratios. b. alloca allocated ted to the the partne partners rs based based on the balan balance ces s in their capital accounts after allocation of losses. c. alloc llocat ated ed to the the partn artne ers bas based on their heir preF computed priorities. d. allo alloca cate ted d to the partn partner ers s base based d on the relat relativ ive e values of their capital balances. G. !nder !nder the the cost cost recov recovery ery method method22 a. th the e in init itia iall co coll llec ecti tion ons s on th the e sale are are tr trea eate ted d as recov re covery ery of the inv invent entor ory y so sold. ld. /hu /hus2 s2 no gr gross oss profit or interest income is recogni8ed until total coll co llec ecti tion ons s fr from om th the e sa sale le eq equa uals ls th the e co cost st of  inventory sold. b. the the init initia iall coll collec ecti tion ons s on the sale sale are are trea treate ted d as recov recovery ery of the invent inventor ory y sold. sold. /hus2 /hus2 no gross gross profit is recogni8ed until total collections from the sale equals the cost of i nventory sold. c.  or H d. None None of the the abo above ve.. 0. !nder !nder (S  6 )onstruc )onstruction tion )ontracts2 )ontracts2 the primary issue in accounting for construction contracts is a. the allo allocat cation ion of of contra contract ct reve revenue nue to the the accounting periods in which construction work is performed. b. the alloca allocation tion of of contract contract cos costs ts to the account accounting ing periods in which construction work is performed. c. the determin determination ation of percentag percentage e of of compl completion etion.. d.  and H. e. ll ll of of the the cho choic ices es.. . . (S  6 )onstr )onstruct uction ion )ontr )ontract acts s provid provides es that that any e%pected loss on the construction contract is a. re recog cogni8 ni8ed ed as an e%pe e%pens nse e immedi immediate ately. ly. b. reco recogn gni8 i8ed ed as an e%p e%pense ense imme immedi diat atel ely y as an adDustment to the revenue already recogni8ed. c. recog recogni8 ni8ed ed as an e%pens e%pense e immedia immediatel tely y adDunc adDunctt to the costs of construction already recogni8ed. d. defer eferrred and and amo amorti8e ti8ed d over over the the rema emainin ining g construction period. *. *. #hich #hich of the followin following g appear appears s on the statem statement ent of  financial position of a contractor who is applying (S  6 )onstruction )ontracts5 a. )onstruc )onstruction tion in prog progress ress as current current asset asset.. b. (rogr (rogress ess billin billings gs as curr current ent liabil liability ity.. c. m moun ountt of due due from from ;due ;due to< cust custome omers rs for for contract work. d. ny ny of of the the choi choice ces. s. 3. 3. /he /he real reali8 i8at atio ion n of inco income me on inst instal allm lmen entt sale sales s transactions involves a. Reco Recogn gnit itio ion n of the diff differ eren ence ce betwe between en the the cash cash coll collec ecte ted d on inst instal allm lmen entt sale sales s and and the the cash cash e%penses incurred

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b. $eferring the net income related to installment sales and recogni8ing the income as cash is collected c. $eferring gross profit while recogni8ing operating or financial e%penses in the period incurred d. $eferring gross profit and all additional e%penses related to installment sales until cash is collected =. &n selecting an accounting method for a newly contracted longFterm construction proDect2 the principal factor to be considered should be a. /he terms of payment b. /he nature of the contractors technical facilities used in construction c. /he method commonly used by the contractor for other longFterm construction contracts d. /he degree to which a reliable estimate of the costs to complete and e%tent of progress toward completion is practicable

*0. &f franchise rights are repossessed and the franchisor refunds the consideration received2 &. the original franchise sale is canceled. >+ain or loss? from cancellation may arise after derecognition of account balances associated with the franchise cancelled. &&. the transaction shall not be regarded as a sale cancellation. Bowever2 impairment loss may arise from forfeiture of collectibles. a. & only c. & or && b. && only d. & and && *. #hich of the following is an inventory account of a manufacturer but not of a merchandiser5 a. )ost of goods manufactured b. Merchandise &nventory c. #ork in process inventory d. $irect labor

**. )ost of goods manufactured is used to compute A. SM$) )onstruction )ompanys proDect e%tend over a. )ost of goods sold several years and collection of receivables is *3. b. Manufacturing overhead applied reasonably certain. Each proDect has a contract that c. $irect materials used specifies a price and the rights and obligations of all d. Iinished goods inventory parties. Hoth the contractor and the customer are #hich of the following is a period cost5 e%pected to fulfill their contractual a. Materials inventory obligations on each proDect. Reliable estimates can be made of the e%tent of  b. $irect labor c. Manufacturing overhead progress and costs to complete each d. Selling e%penses proDect. /he method that SM$) must use to account for construction revenue is *=. @ob order costing would be an appropriate system to a. &nstallment sales method account for the manufacture of  b. (ercentageF ofF completion method a. ircraft c. )ompleted 6contract method *A. b. Matches  d. )ost recovery method c. Jippers d. )ardboard bo%es C. One of the more popular input measures used to written order sent to inform the purchasing determine the progress toward completion in the department of a need for materials is called a percentageF ofFcompletion method is a. RevenueFpercentage basis a. (urchase order *C. b. (urchase requisition ! b. )ostFpercentage basis n c. (rogress completion basis c. Receiving report d d. )ost 6toF cost basis d. Materials requisition form e r a periodic inventory system2 the purchase of  9. /he theoretical support for using the percentageF ofF materials is recorded in an account entitled completion method of accounting for longFterm construction proDects is that it a. )ost of +oods Sold *9. b. (urchases a. &s more conservative than the cost recovery method c. Materials inventory b. Reports a lower net income figure than the cost d. #ork in (rocess &nventory recovery method /he total of the materials subsidiary ledger inventory cards c. More closely conforms to the cost principle must be equal to the amount in the following account d. (roduces a realistic matching of e%penses with a. )ost of +oods Sold revenues *:. b. (urchases :. &t is the oneFoff payment made by the franchisee to the franchisor to obtain the f ranchise right. a. &nitial franchise fee b. )ontinuing franchise fee c. Ii%ers fee d. ny of the choices G. /here is substantial performance when4 &. the franchisor has no remaining obligation or intent to refund any cash received or forgive any unpaid notes or receivables. &&. initial services required by the franchise agreement are substantially performed. &&&. no other material conditions or obligations e%ist. a. b.

&2 && and &&& && and &&& only

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c. & and && only d. & and &&& only

c. Materials &nventory d. #ork in (rocess &nventory #hich of the following is usually prepared daily by employees for each Dob worked on5 a. b. c. d.

@ob time tickets /ime card (unch card )ost control card

*G. !nder a perpetual inventory system2 the purchase of  materials is recorded in an account entitled a. )ost of +oods Sold 30. b. (urchases c. Materials inventory d. #ork in process inventory Iactory worker fringe benefit costs are usually charged to a. b. c. d.

#ork in process &nventory $irect labor dministrative e%penses Iactory overhead

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/he following condensed balance sheet is prepared for K!&E" and RO+ER2 who share profits and losses in the ratio of C04=02 respectively4 Other assets ( =0A2000 ccounts (0:2000 payable Kuiel2 loan :2000 Kuiel2 capital 9A2A00 Roger2 capital 3G2A00 /otal ( =*32000 /otal ( =*32000

partnership and on ugust 2 *0= (artner IR&$ made a permanent withdrawal of (C92A00. On May 2 *0A2 (artner +")E contributed machinery with a fair market value of (G02000 and a net book value of (9A2000 when contributed. On November 2 *0A (artner +")E contributed an additional (=A2000 cash to the partnership. Hoth partners withdrew oneFfourth of their salary allowances in *0A.

3. /he partners have decided to liquidate the partnership. &f the other assets are sold for (3=C2A002 what amount of the available cash should be distributed to K!&E"5 a. (3C2000 c. (**2=00 b. (AC2000 d. (GA2000

/he partnership reported a net income of (*A92=00 in *0= and the profit and loss agreement are as follows4 a. &nterest at C1 is allowed on average capital balances7 b. Salaries of (*2900 per month to each partner7 c. Honus to IR&$ of 01 of net income after interest2 salaries2 and bonus7 and d. Halance to be divided in the ratio of C4= to IR&$ and +")E2 respectively.

On @anuary 2 *0=2 the partners SE"L2 /ESS2 and !RS!"2 who share profits and losses in the ratio of A434*2 respectively2 decided to liquidate their partnership. On this date the partnership condensed balance sheet was as follows4 )ash Other assets

(

=A2000 **A2000

/otal

( *902000

"iabilities Selya2 capital /ess2 capital !rsula2 capital /otal

(

A=2000 9*2000 :2000 C32000 (*902000

On @anuary A2 *0=2 the first cash sale of other assets with a carrying amount of (3A2000 reali8ed (0:2000. Safe installment payments were made on the same date. 3*. Bow much cash should be distributed to each partner5 SE"L /ESS !RS!" a. (A2000 (A2000 (==2000 b. (=02000 (=A2000 (3A2000 c. (AA2000 (332000 (**2000 d. (32A00 (=A2G00 (3G2C00

)"&RE2 $&SL2 and E"S&E formed the )$E (artnership on ugust 2 *0A2 with the following assets2 measured at fair market values2 contributed by each partner4 )"&RE $&SL E"S&E )ash ( 3*=2000 (0:2000 (*G2C00 ccounts receivable 9320:0 F G2:00 (lant2 (roperty2  Equipment ;((E< 2C*02000 3=02*00 F

3=. $etermine how the net income will be allocated to the partners4 a. IR&$2 (C02000 and +")E2 (*C2000 b. IR&$2 ( :02000 and +")E2 (0C2000 c. IR&$2 (902000 and +")E2 (C2000 d. IR&$2 (A32000 and +")E2 (0=2=00

B&$EE and &SHE" are partners sharing profits and losses in the ratio of C01 and =012 respectively. /he partnership balance sheet at ugust 302 *0= follows4 )ash Other assets &sabel2 "oan

(

*2A0 G2900 G2000

/otal

( =02:A0

ccounts payable Baidee2 "oan Baidee2 capital &sabel2 capital /otal

( 32A00 A2:A0 :2000 =02A00 (=02:A0

t this date2 @OS&E was admitted as a partner for a consideration of (=32:9A cash for a =01 interest in capital and in profits. 3A. ssume @OS&E is admitted by purchase of =01 each of the original partners interest2 determine how the (=32:9A will be apportioned to B&$EE and &SHE" a. B&$EE2 (3*2:A0 and &SHE"2 (A2G00 b. B&$EE2 (3*2=A0 and &SHE"2 (C2300 c. B&$EE2 (*G2ACA and &SHE"2 (=230 d. B&$EE2 (3*2GA0 and &SHE"2 (A2:00

 part of )"&REs cash contribution2 (*C20002 comes from personal borrowings. lso2 the ((E of )"&RE and $&SL are mortgaged with the bank for (G9*2000 and (9*20002 respectively. /he partnership is to assume responsibility for these ((E mortgages. /he partners have agreed to share profits and losses on a A4*43 ratio2 to )"&RE2 $&SL2 and E"S&E2 respectively. 33. #hat is the capital balance for each partner at the opening of business on ugust 2 *0A5 a. )"&RE2 (20=A20:07 $&SL2 (39C2*007  E"S&E2 (**2=00 b. )"&RE2 (2C2*007 $&SL2 (=:20007  E"S&E2 (*=C2000 c. )"&RE2 (2G:92A007 $&SL2 (:G20007  E"S&E2 (*92A00 d. )"&RE2 (20GA2*07 $&SL2 (A=92AC07  E"S&E2 (:*2A*0

On @anuary 2 *0A2 IR&$ and +")E formed a partnership by contributing cash of (=0A2000 and (*9020002 respectively. On Iebruary  *0A2 (artner IR&$ contributed an additional (3A2000 cash to the

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(R&N)ESS )OM(NL filed a voluntary bankruptcy petition on ugust A2 *03 and the statement of  affairs reflect the following amounts4 HOO, ES/&M/E$ )RRL&N+ )!RREN/ '"!E '"!E (ledged with fully secured creditors (ledged with partially secured creditors Iree ssets

"iabilities with priority Iully secured creditors (artially secured creditors !nsecured creditors

( A02000 G02000 *02000 ( =A02000

( :A2000 HE&+E S/",S )OR(OR/&ON2 which began operations on @anuary 2 *0=2 appropriately uses the installment C02000 method of accounting for revenues. /he following C02000 information is available for the years ended $ecember 32 ( =0A2000 *0= and *0A4

"iabilities ( 3A2000 302000 002000   *902000 ( A3A2000

3C. Bow much cash will be available to pay the unsecured nonFpriority claims5 a. (*=02000 c. (C02000 b. (:02000 d. (*A2000

/he following data were taken from the statement of  affairs of MR)"R )OR(OR/&ON4 ssets pledged for fully secured liabilities ;current fair value2 (9A2000< ( G02000 ssets pledged for partially secured liabilities ;current fair value (A*2000<   9=2000 Iree assets ;current fair value 2 (=02000< 902000 !nsecured liabilities with priority   92000 Iully secured liabilities   302000 (artially secured liabilities   C02000 !nsecured liabilities without priority   *2000 39. /he amount that will be paid to creditors with priority is4 a. (92000 c. (92A00 b. (C2000 d. (C2*00

S&"'ER ("//ER )OM(NL which began operations on @anuary *2 *0=2 appropriately uses the installment method of revenue recognition. /he following information pertains to the companys operations for *0= and *0A *0= *0A Sales ( 3092*00 (=C02:00 )ollections from *0= sales 0*2=00 A2*00 *0A sales 0 A32C00 ccounts written off from   *0= sales *A2C00 9C2:00 *0A sales 0 A32C00 +ross profit rates =01 301 3:. #hat amount should S&"'ER ("//ER )OM(NL report as deferred gross profit in its $ecember 32 *0A balance sheet5 a. ( 9C2:00 c. ( =2C:: b. (0*2=00 d. ( CC2AC0

HRO#N $ERHL )OM(NL began operations on @une 2 *0A. /he following information are e%tracted from its records at yearFend. )ost of installment sales2 (*2GG2=*=7 )ost of Regular Sales2 (2C:02000. MarkFup on installment sales is =01 of cost while regular sales is 33F31 based on sales. t the end of *0A2 the balance of &nstallment accounts receivable is (*2A*020007 ccounts receivable is

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(29C2000. Operating e%penses ;includes losses on repossession< total to 9A1 of the reali8ed gross profit. 3G. #hat is the net income for the year ended $ecember 32 *0A5 a. (3*G2=* c. ( A=32G:= b. (A=C2000 d. ( *9G2G:

*0= *0A )ost of installment sales ( GC02000 (2G*02000 +( reali8ed on sales made in *0= ==2000 :C2=00 *0A F G*2000 +(R based on cost 301 =01 =0. #hat is the ending balance of installments receivable at $ecember 32 *0A5 a. (*2*CA2C00 c. (2C3*2000 b. (290=2000 d. (29C2000

On @anuary 2 *0=2 M SER'&)ES2 &N). signed an agreement authori8ing """ )OM(NL to operate as a franchisee over a *0Fyear period for an initial franchise fee of (392A00 received when the agreement was signed. """ commenced operations on @uly 2 *0=2 at which date all of the initial services required of M SER'&)ES had been performed. /he agreement also provides that """ must pay annually to M a continuing franchise fee equal to A1 of the revenue from the franchise. """ )OM(NLs franchise revenue for *0= was (2002000. =. Ior the year ended $ecember 32 *0=2 how much should M SER'&)ES record as revenue from franchise fees with respect to the """ account5 a. (G*2A00 c. (*329A0 b. (392A00 d. ( C02A00

+RE/ $NE2 &N).2 franchisor2 entered into a franchise agreement with (&/H!"" )OM(NL2 franchisee2 on @uly 2 *0A. /he total franchise fees agreed upon is (AA020002 of  which (A02000 is payable upon signing and the balance is to be covered by a note payable in four equal annual installments. /he direct franchise cost incurred was (3*A2000. &ndirect franchise e%penses of (32*A0 was also paid. /he relevant interest rate is *1 and the note is reasonably assured of collection. /he agreement also provides for the payment of continuing franchise fees at =1 of the franchisees gross sales. /he franchise outlet commences its operations on $ecember 2 *0A and had a gross sales of (*A02000 for the month. =*. ssuming the notes are interestFbearing2 how much net income will be reported for *0A5 a. (G:29A0 c. ( *3329A0 b. ( 992AA0 d. ( 9329A0 On @anuary *2 *0A2 K!&),H!&"$ ERE)/ORS entered into contract to construct two proDects. /he following data relate to the construction activities. (roDect  (roDect H )ontract price (G=A2000 (C9A2000 )ost incurred during *0A A=02000 C302000 Estimated costs to complete *902000 A92A00 Hillings to customer 3392A00 C092A00

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=3. #hat amount of gross profit should K!&),H!&"$ ERE)/ORS report in its *0A income statement under the following methods5 (ercentage of Jero (rofit )ompletion Method Method a. ( 0 ( ;G02000< b. ( ;*2A00< ( ;**2A00< c. ( ; **2A00< ( 0 d. ( ; **2A00< (;*2A00<

==. HES/ F E'ER )ONS/R!)/&ON2 &N) . recogni8es construction revenue and costs using the percentage of  completion method. $uring *0=2 a single longFterm proDect was begun which continued through *0A. &nformation on the proDect follows4 *0= *0A ccounts receivable (3A02000 (20A02000 &ncurred costs during year 3C92A00 C9*2000 )onstruction in progress =*92000 2*9=2000 Hillings on contract 3A02000 2=902000 /he construction accounts are at amounts t0Fdate. #hat is the gross profit recogni8ed from this longFterm contract5 *0= *0A a. ( 992000 ( 9G:2000 b. 992000 3A02000 c. AG2A00 ==:2000 d. AG2A00 9A2000

)&+N" ERE)/ORS began operations on @anuary *2 *0A. $uring the year2 the company entered into a contract with /EM )ompany to construct a manufacturing facility. t that time )&+N" estimated that it would take five years to complete the facility at a cost of (32G392A00. /he total contract price for the construction of the facility is (A2=C:29A0. $uring the year2 the company incurred (GC*2A00 in construction costs related to the construction proDect. /he estimated cost to complete the contract is (*2930.000 /EM was billed and paid 301 of the contract price subDect to a 01 retention. =A. !sing the percentage of completion method2 how much is the e%cess of )onstruction in (rogress over )ontract Hillings or )ontract Hillings over )onstruction in (rogress5 a. (*932=39 ;current liability< b. (*932=39 ;current asset< c. (=392A00 ;current asset< d. (=392A00 ;current liability<

(resented below are items taken from the unadDusted trial balances of N)R )ompany and its Manila Hranch on $ecember 32 *0A4 Bome Office Hranch Hooks Hooks Shipment to branch (*2*A02000 IO'OH& 9=G2*A0 Shipment from BO (*2G*A2000 (urchases ;from O'< 20:=2A00 M&2 @anuary  G*239A M&2 $ecember 3 3CA2C*A Sales =2:002000 E%penses 3:*2A00

=C. #hat is the net income ;loss< of the branch insofar as the home office is concerned5 a. (A3=2000 c. (3A2000 b. (C:29A0 d. ;(=929A0<

/eardrops )ommercial )orp. maintains a branch in &loilo )ity. Selected balances taken from the books of /eardrops and its Hacolod )ity branch as of $ecember 32 *0A are as follows4 Bome Office Hranch Office Merchandise &nventory2 @an  ( *2000 ( :2000 (urchases A02000 302000 Shipments from Bome Office G329A0 Shipments to Hranch 9A2000 Hranch &nventory llowance G29A0 Sales A2000 9C2A00 Merchandise &nventory2 $ec 3 =2000 023A0 (=23A0 of the branchPs ending inventory came from purchases from suppliers other than the home office. =9. s far as the home office is concerned2 the cost of  sales of the branch was4 a. ( G92*0 c. (*2=00 b. (0*2:A0 d. (32:A0

$uring the year *0A the Hacolod )orporation bills its &loilo branch at =01 of cost. +oods billed at (3=C2A00 were shipped to the branch. /he account llowance for overvaluation has a balance of (**2=00 before adDustment. /he beginning inventory of the branch from the home office at cost is (G32C007 the beginning inventory of the branch from outsiders is (A2*002 purchases from outsiders is (302A00. =:. )ost of goods available for sale of the &loilo Hranch in *0A is a. (=:C2:00 c. (C0G2*00 b. (C*32*=0 d. (=C32A00

+B& )ompany bills its Hulacan Hranch for merchandise shipments at *A1 of cost. s of cutFoff date2 $ecember 32 *0A2 the following data were available4 Mdse. Ir Mdse. Bome (urchased Office;at from billed prices< Outsiders /otal Merchandise2 $ecember  (3002000 (*02000 (=*02000 dditions to stock during $ecember =A02000 3C02000 :02000 Merchandise2 $ecember 3 =*02000 A02000 A902000 /he branch returned (A2000 worth of merchandise to the Bome Office acquired at billed price. =G. /he amount of the allowance for overvaluation account that was reali8ed as income in view of branch sales for the month of $ecember was4 a. (C32000 c. (:92A00 b. b. (CC2000 d. (:=2000

ssuming that the branch ending inventory acquired from other vendors ;O'< is (932*A

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/he Hatangas )orporation operates a branch in "ipa )ity. /he Bome Office ships merchandise to the branch at *A1 of its cost. Selected information from the $ecember 32 *0A trial balance are as follows4 Bome Office Hranch Office Hooks Hooks Sales (C002000 (3002000 Shipments to branch *002000 (urchases 3A02000 Shipments from Bome Office *A02000 &nventory2 @anuary  00.000 =02000 llowance for Overvaluation of branch &nventory A:2000 E%penses *02000 A02000 &nventory at $ecember 32 *0A4 Bome Office Hranch Office

(302000 C02000

A0. /he combined net income of the home office and the branch after adDustment is4 a. (3*C2000 c. (A002000 b. (=GC2000 d. (*:02000

Kuad )orporation purchases all of the net assets of  )hrome2 &nc.2 for (3*02000. &mmediately prior to the combination2 )hromes net assets were carried on the books at (:020002 and )hrome had retained earnings of  (*=2000. /he fair value of )hromes net assets at the date of combination is (*=:2000. Kuad )orporation had retained earnings of (=02000 and no goodwill immediately prior to the combination A. &mmediately after the combination2 the combined company reports goodwill and retained earnings of4 +oodwill Retained Earnings a. ( 0 ( =02000 b. ( 0 ( C=2000 c. ( 9*2000 ( =02000 d. ( 9*2000 ( C=2000

/he )arl )ompany will issue (0 par value common stock for the net assets of (H )ompany. /he fair market value per share of )arls common stock is (=0. /he following is the list of accounts of (H )ompany on the date of the acquisition. Hook 'alue Iair Market 'alue )urrent assets (*:02000 ( 3*02000 (lant assets ;net< C:02000 2*:02000 "iabilities 3*02000 )ommon stock C=2000 dditional paidFin capital *AC2000 Retained earnings 3*02000 A*. /o have an income from acquisition of (*020002 the number of shares to be i ssued by )arl )ompany should be?  a. 302000 shares c. *G2000 shares b. 302=00 shares d. 3A2000 shares /he )arl )ompany will issue (0 par value common stock for the net assets of (H )ompany. /he fair market value per share of )arls common stock is (=0. /he following is the list of accounts of (H )ompany on the date of the acquisition. Hook 'alue Iair Market 'alue )urrent assets (*:02000 ( 3*02000 (lant assets ;net< C:02000 2*:02000 "iabilities 3*02000 )ommon stock C=2000

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dditional paidFin capital Retained earnings

*AC2000 3*02000

A3. /o have a goodwill of ( *020002 the number of shares to be issued by )arl )ompany should be a. 302000 shares c. *G2000 shares b. 302=00 shares d. 3A2000 shares

On ugust 2 *0=2 Hlite )ompany paid (:A02000 for all the net assets of Ong Enterprises in a transaction properly recorded as a purchase. /he recorded assets and liabilities of Ong Enterprises on ugust 2 *0=2 follow4 )ash ( :02000 &nventory *=02000 (roperty and equipment2 net =:02000 "iabilities ;:02000< On ugust 2 *0= it was determined that the inventory of  Ong had a fair market value of (G020002 and the property and equipment ;net< had a fair market value of (AC02000. A=. #hat is the amount of goodwill resulting from the business combination5 a. ( 0 c. (*002000 b. ( *02000 d. (*302000

AA. Stain )orporation is an :01Fowned subsidiary of (aint )orporation. $uring *0= Stain sold merchandise that cost (GC2000 to (aint for (*:2000. (aintPs ending inventory at $ecember 32 *0= contained unreali8ed profit of (C2=00 from the intercompany sales. $uring *0A Stain sold merchandise that cost (*2000 to (aint for (A*2000. OneFhalf of this remained unsold by (aint at $ecember 32 *0A Ior *0A (aintPs separate income was (*002000 and StainPs reported net income was (A*2000. /he consolidated net income for *0A will be4 a. (30*2000 c. (3029*0 b. (33:2=00 d. (*9=2A00

AC. ( )ompany acquired a G01 interest in S )ompany in *03 at a time when S )ompanyPs book values and fair values were equal to one another. On @anuary 2 *0A2 S sold a machine with a (*=2000 book value to ( )ompany for (=:2000. ( depreciates the machine over 0 years using the straight line method. Separate incomes for ( and S for *0A are as follows4 ( )o. S. )o. Sales (GC02000 (AC02000 +ain on sale of   *=2000 machinery )ost of goods sold ;=002000< ;A*2000< $epreciation e%pense ;*=02 000< ;9*2000< Other e%penses ;GC2000< ;*=02000< Separate incomes (**=2000 (*02000 /he consolidated net income for *0A is4 a. (3==2000 c. (302=00 b. (3**2=00 d. (3*2AC0

R&)B )orporation paid (2*A2000 for an :01 interest in BR$ )orporation on @anuary 2 *0A at a price (392A00 in e%cess of underlying book value. /he e%cess was allocated (A2000 to undervalued equipment with a tenF year remaining useful life and (**2A00 to goodwill which was not impaired during the year. $uring *0A2 BR$ )orporation paid dividend of (C02000 to R&)B )orporation. /he income statements of R&)B and BR$ for *0A are given below4

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Sales )ost of sales $epreciation e%pense Other e%pense Net income

R&)B (*2A002000 ;2*A02000<

BR$ (20002000 ;A002000<

;*A02000< ;A002000< (A002000

;A02000< ;**A2000< (*A2000

A9. )onsolidated net income for *0A is a. (C3*2*A c. (C*32*A b.

(*C32*A

d.

On pril :2 *032 )"MH )OR(OR/&ON purchased merchandise from an unaffiliated foreign company for 02000 units of the foreign companys local currency. )"MH paid the bill in full on March 2 *0A when the spot rate was (0.=A. /he spot rate was (0.C0 on pril :2 *03 and was (0.AA on $ecember 32 *0=. C. Ior the year ended $ecember 32 *0=2 )"MH should report a transaction gain of  a. (2A00 c. (2000 b. ( A00 d. ( 0

(C3*2*A

( )orporation acquired 901 of the voting common stock of S )ompany at a time when S )ompanys book values and fair values were equal. Separate incomes of ( )orporation and S )ompany for *0A are as follows4 ( )orporation S )ompany Sales C332C00 3A02=00 )ost of +oods Sold 3:=2000 G*2000 Operating e%penses A2*00 GC2000 Separate income from own operations 3=2=00 C*2=00

On $ecember 2 *0=2 a (hilippine firm purchased a speculative hedge to buy 302000 foreign currency when the spot rate was (.0 and a C0 day forward rate was (.*. /he spot rate at $ecember 3 ;the companys yearF end was (.*A and a 30Fday forward rate was (.3. #hen the speculative hedge was e%ercised on @anuary 32 *0A the spot rate was (. and a 30 day forward rate2 (.*. C*. /he Dournal entry to record this hedge would include a debit to )ontract Receivable in the amount of  a. (332C00 c. (332000 b. ( C00 d. ( 0

&ntercompany sales from ( to S for *0= and *0A are summari8ed as follows4 )ost Selling !nsold (rice at yearF end &ntercompany sales 6 *0= *=02000 39=2=00 301 &ntercompany sales 6 *0A C:2000 *C=2000 =01

C3. /he amount of foreign e%change gainloss that would appear on the income statements of the (hilippine company resulting from this speculative hedge for the years ended *0= and *0A are a. *0= Q (300 loss7 *0A Q C00 loss b. *0= Q (300 gain7 *0A Q C00 gain c. *0= Q (300 loss7 *0A Q C00 gain d. *0= Q (300 gain7 *0AQ C00 loss

A:. /he *0A consolidated income statement will show cost of goods sold of  a. ( 3020:0 c. ( 3:=2000 b. ( A9C2000 d. ( G*2000

Irom the following data2 question C to : should be answered. Opening inventory =2000 units (ercentage of 'alue )ompletion Materials 001 (2GG* "abor A01 209= Overhead A01 :=C (ut in process *02000 units Materials value (*2000 "abor G2G:= Overhead is 001 of labor cost !nits completed and transferred *2000 units !nits in process at the end 32000 units Materials 001 "abor and overhead C01 C=. /he equivalent production for material is !nder verage !nder I&IO a. *=2000 *02000 b. *02000 *2000 c. *02000 *=2000 d. *2000 *02000

On September 2 *0A @unDun )ompany received an order for equipment form a foreign customer for I) 3002000 when the (hilippine peso equivalent was (GC2000. @unDun shipped the equipment on October A2 *0A2 and billed the customer for I) 3002000 when the (hil. (eso equivalent was (002000. @unDun received the customers remittance in full on November C2 *0A2 and sold the I) 3002000 for (0A2000. AG. &n its income statement for the year ended $ecember 32 *0A2 @unDun should report a foreign e%change gain of  a. (A2000 c. (G2000 b. (=2000 d. No gain no loss lecks )orporation had the following foreign currency transactions during *0A a. Merchandise was purchased from foreign supplier on @anuary *02 *0A for the (eso equivalent of (G02000. /he invoice was paid on March *02 *0A at the (hil. (eso equivalent of (GC2000. b. On @uly 2 *0A2 lecks borrowed the (hilippine peso equivalent of (A002000 evidenced by a note that was payable in the lenders local currency on @uly 2 *0A. On $ecember 32 *0A2 the (hil. (eso equivalent of  the principal amount and accrued interest were (A*02000 and (*C2000 respectively. &nterest on the note is 01 per annum. C0. &n lecks income statement2 the amount that should be included as a foreign e%change loss a. ( 0 c. ( C2000 b. (*2000 d. (*92000

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Sangley2 &nc. manufactures a product which goes through three consecutive processes2 (rocess 2 (rocess *2 and (rocess 3. $ata for the month of September2 *00C are as follows4 PROCESS( PROCESS) PROCESS* #ork in (rocess2 beg. (:2000 (32000 (*2000 Materials added *02000 =2000 A2000 )onversion 02000 02000 C2000 costs )losing work in process C2000 G2000 =2000

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CA. #hat was the value of the output transferred from (rocess 3 to the finished goods warehouse for the month of September5 a. (C32000 c. (C92000 b. (CA2000 d. (CG2000 "ego (lastics2 &nc. has two Doint products2 HH and $$2 and uses the net reali8able value method of allocating Doint costs. /he total Doint costs for the year *000 amounted to (3002000. $uring the year2 additional processing costs after splitFoff were (C02000 for HH and (*=02000 for $$. "ego produced C2000 units of HH and :2000 units of $$ during the year. /he selling price for HH is (*0.00 and for $$ is (A0.00. CC. /he portion of Doint costs allocated to $$ during the year is a. (9A2000 c. (:02000 b. (**A2000 d. (A02000 "ee )ompany produces two products in a single operation2 He% and Rom. @oint production cost for @une2 *0= were (302000. $uring the month2 further processing costs beyond the splitFoff point needed to convert the products into salable form were (*A2000 and (3A2000 for 2C00 units of He% and :00 units of Rom2 respectively. He% sells for (A0 per unit and Rom sells for (00 per unit. "ee uses the net reali8able method for allocating Doint product costs. C9. Ior @une2 *0=2 the Doint cost allocated to product He% were a. (*02000 c. (32A00 b. (C2A00 d. (02000

/he following information relates to @ob No. *=C:2 which is being carried out by Ile%y )o. to meet a customers order. $ept.  $ept. H $irect materials used (A2000 (32000 $irect labor hours =00 *00 employed $irect labor rate per hour (=.00 (A.00 Overhead rate per $" hour (=.00 (=.00 dm. and other overhead *01 of full production cost (rofit markup *A1 of selling price CG. /he selling price to the customer of @ob *=C: is4 a. (C2*A0 c. (92333 b. (*02:00 d. (G2A00 Rumors )ompany applied factory overhead as follows4 $epartment Iactory Overhead Rate Iabricating (9.9A per Machine hour Spreading A.0 per Machine hour +ossiping *.*A per Machine hour ctual machine hours are4 G2000 hours for fabricating7 *92A00 hours for spreading and A2A00 hours for gossiping. 90. &f the actual factory overhead cost for the period is (A9=239A2 how much is over ;under< applied factory overhead5 a. ;(2:9A.00< c. ;( :9.A0< b. ;(*32AC*.A0< d. ;(9C2*A.00<

/he accounting records for *0= of #agner Music )o. showed the following4 $ecrease in raw materials inventory ( =A2000 $ecrease in finished goods inventory A02000 Raw materials purchased 2*G02000 $irect labor payroll C002000 Iactory overhead G002000 IreightFout 3A2000 C:. /he cost of raw materials used for the period amounted to a. (2*=A2000 c. (233A2000 b. (2*G02000 d. (23:02000  + en" + 

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