Documentos de Académico
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Name:__________________________________________________ Score:___________
1. The Coral Company accounts for non-current assets using the cost model. On 20 July
20X7 Coral classified a non-current asset as held for sale in accordance with IFRS5 Non-
current assets held for sale and discontinued operations. At that date the asset's carrying
amount was PHP14,500, its fair value was estimated at PHP21,500 and the costs to sell at
PHP1,450. The asset was sold on 18 October 20X7 for PHP21,200. In accordance with
IFRS5, at what amount should the asset be stated in Coral's statement of financial position
at 30 September 20X7?
a. PHP 20,050
b. PHP 21,500
c. PHP 21,200
d. PHP 14,500
2. The Markab Company has acquired a trademark relating to the introduction of a new
manufacturing process. The costs incurred were as follows:
According to IAS 38 Intangible assets, what is the total cost that should be capitalized as
an intangible non-current asset in respect of the new process?
a. PHP 3,750,000
b. PHP 3,700,000
c. PHP 3,500,000
d. PHP 3,550,000
3. The Dipper Company operates chemical plants. Its published policies include a
commitment to making good any damage caused to the environment by its operations. It
has always honored this commitment. Which ONE of the following scenarios relating to
Dipper would give rise to an environmental provision as defined by IAS 37 Provisions,
contingent liabilities and contingent assets?
4. The White Company set up a defined benefit post-employment plan with effect from 1
January 20X7. In the first year the expected return on plan assets was PHP5,000, the
actual return on plan assets was PHP4,000, the current service cost was PHP12,000 and
White's contributions paid into the plan were PHP7,500.
What is the net expense to be recognized in profit or loss for the year ended 31 December
20X7, according to IAS19 Employee benefits?
a. PHP 8,000
b. PHP 3,500
c. PHP 7,000
d. PHP 2,500
5. The Pinder Company is completing the preparation of its draft financial statements for the
year ended 31 May 20X7. On 24 July 20X7, a dividend of PHP175,000 was declared and
a contractual profit share payment of PHP35,000 was made, both based on the profits for
the year to 31 May 20X7. On 20 June 20X7, a customer went into liquidation having
owed the company PHP34,000 for the past 5 months. No allowance had been made
against this debt in the draft financial statements. On 17 July 20X7, a manufacturing plant
was destroyed by fire, resulting in a financial loss of PHP260,000.
According to IAS10 Events after the reporting period, which TWO amounts should be
recognized in Pinder's profit or loss for the year to 31 May 20X7 to reflect adjusting
events after the end of reporting period?
6. Lannister Company does not use the allowance method to account for bad debts and
instead any bad debts that do arise are written off as bad debt expense. What problem
might this create if bad debts are material?
a. Receivables likely will be understated.
b. No problems are created.
c. Receivables likely will be overstated.
d. The matching principle is violated when the write-off occurs in the same
period that the receivable is initially recorded.
7. The Happy House Company uses the allowance method to account for bad debts. During
2006, the company recorded $800,000 in credit sales. At the end of 2006, account
balances were: Accounts receivable, $120,000; Allowance for uncollectible accounts,
$3,000 (credit). If bad debt expense is estimated to be 3% of credit sales, the appropriate
adjusting entry will include a debit to bad debt expense of:
a. Zero.
b. $27,000
c. $21,000
d. $24,000
8. Juday Sporting Goods received a $60,000, 6-month, 10% note from a customer. Four
months after receiving the note, it was discounted at a local bank at a 12% discount rate.
The cash proceeds received by Harmon were:
a. $63,000
b. $64,680
c. $61,740
d. $67,200
9. At the end of June, the Kuya Dave Company factored $200,000 in accounts receivable
with Homemark Finance. The transfer is made without recourse. Homemark charges a fee
of 3% of receivables factored. During July, $150,000 of the factored receivables are
collected. What amount of loss on sale of receivables would Marquess record in June?
a. $6,000
b. $4,500
c. $1,500
d. Zero.
10. Lucky Chan is in the process of reconciling its bank account for the month of November.
The following information is available:
a. P6,870
b. P7,140
c. P6,835
d. P7,105
11. A corporations accounting records provided the following information (in 000s):
Account Balances
12/31/2001 12/31/2002
Current assets P 240 P ?
Property, plant and equipment 1,600 1,500
Current liabilities ? 130
Non-current liabilities 580 ?
Working capital of P92 remained unchanged from year 2001 to 2002. (Working capital is
current assets less current liabilities). Net income in year 2002 was P88. No dividends
were declared during year 2002 and there were no other changes in owners’ equity. Total
long-term liabilities at the end of year 2002 would be:
12. A corporation prepared financial statements each December 31. On December 31, year
2002, a P2,500 decrease in cash is reported on the statement of cash flows. If the cash
account had a balance of P12,500 at December 31, year 2002, the cash account balance at
December 31, year 2001 was:
13. S Company has the following partial bank reconciliation shown below:
Assuming a combination entry, when the adjusting journal entry is made to record the
preceding bank reconciliation, cash should be debited for:
14. IF Company held the following trading securities at the end of the current reporting
period:
Security Cost Market
J P60,000 P55,200
K 7,000 8,000
L 20,800 19,200
What amount should the company report on its balance sheet for net trading securities?
15. Delly Company is offering one toy shovel for 15 box tops of its cereal. Year-to-date
sales have been off, and it is hoped that this offer will stimulate demand. Each shovel set
costs the company P3. The following data are available for the last three months of 2003:
It is estimated that only 70% of the box tops will be redeemed. The cereal sells for P2.50
per box. How much is the inventory of shovel sets at December 31, 2003?
16. Adverse financial and operating circumstances warrant that LEBRON Company undergo
a quasi-reorganization at December 31, 2002. The following information may be relevant
in accounting for the quasi-reorganization.
a. Inventory with a cost of P2,150,000 is currently recorded in the accounts at its
market value of P2,000,000.
b. Plant assets with a fair value of P7,000,000 are currently recorded at P8,500,000
net of accumulated depreciation.
c. A creditor agrees to extend the maturity date of a loan for five years, although
interest as originally stated must continue to be paid.
d. Individual stockholders contribute P5,000,000 to create additional paid-in capital
to facilitate the reorganization. No new shares of stock are issued, although
control of a majority of the company’s outstanding stock passes to the company’s
creditors.
e. The par value of the common stock is reduced from P25 to P15.
Immediately before those events, the stockholders’ equity section appears as follows:
17. The following accounts are taken from the ledger of Angel Company for the year 2002:
Debit Credit
Dec. 31 50,000
April 1 20,000
31 Stock dividend
on common
stock 100,000
Dec. 31 Appropriated
How much is the retained earnings for the year ended December 31, 2002?
18. On June 30, 2002, ROCKY Company purchased 30% of the outstanding common stock
of Rex Company for P15,000,000. At that time, Rex Company’s net assets amounted to
P40,000,000. The level of investment is sufficient to provide ROCKY significant
influence over the activities of Rex. The difference between the purchase price and the
underlying book value of Rex’s net asses is due to the following:
1. Land is undervalued of P2,000,000.
2. Depreciable assets with a 10-year remaining life are worth P3,000,000 more than the
book value.
3. Goodwill is determined to exist for any remaining difference between cost and book
value. Goodwill is estimated to have a useful life of 15 years from the date of the
stock purchase.
Rex Company reported net income of P20,000,000 for the year 2002 and paid cash
dividends of P5,000,000 on December 31, 2002. What amount should be reported by
ROCKY Company as investment in Rex Company on December 31, 2002?
IMO Corporation is in the process of negotiating a loan for expansion purposes. The
books and records have never been audited and the bank has requested that an audit be
performed.
During the course of the audit, the following facts were determined:
a. An analysis of collections and losses on accounts receivable during the past two
years indicates a drop in anticipated losses due to bad debts. After consultation with
management, it was agreed that the loss experience rate on sales should be reduced
from the recorded 2% to 1% beginning with the year ended December 31, 2002. The
sales for 2001 and 2002 are P900,000 and P1,000,000 respectively.
b. An analysis of marketable securities revealed that this investment portfolio consisted
entirely of short-term investments in marketable equity securities that were acquired
in 2001. The total market valuation and cost for these investments as of the end of
each year were as follows:
Cost Market
c. The merchandise inventory at December 31, 2001 was overstated by P4,000 and the
merchandise inventory at December 31, 2002 was overstated by P6,100.
d. On January 2, 2001, equipment costing P12,000 (estimated life of 10 years and
residual value of P1,000) was incorrectly charged to operating expenses. IMO
records depreciation on the straight line method. In 2002, fully depreciated
equipment (with no residual value) that originally cost P17,500 was sold as scrap for
P2,500. Noble credited the proceeds of P2,500 to property, plant and equipment.
e. An analysis of 2001 operating expenses revealed that IMO charged to expense a
three-year insurance premium of P2,700 on January 15, 2001.
f. The common stock account on December 31, 2002 shows a balance of P260,000. It
was found out that the authorized common stock consists of 50,000 shares with par
value of P10 per share, of which 20,000 shares are issued and outstanding.
g. Unadjusted balances of net income per book as of 2001 and 2002 are P195,000 and
P220,000, respectively.
21. In December 2002, FAITH Company exchanged an old packing machine, which cost
P120,000 and was 50% depreciated, for a similar used machine and paid a cash difference
of P16,000. The market value of the old packaging machine was determined to be
P70,000. For the year ended December 31, 2002, what amount of gain should FAITH
recognize on this exchange?
22. RM Company prepared the following reconciliations of its pretax financial statement
income to taxable income for the year ended December 31, 2000, its first year of
operations:
Assume the income tax is 32%, what amount should RM report as income tax expense –
current portion of its 2000 income statement?
24. The following data were obtained from the actuarial valuation reports of RAMIREZ
Company on January 1, 2002:
What is the retirement benefits expense for the year ended December 31, 2002?
In 2018, a 25% stock dividend was received. Because BAMTINE needed cash, it sold at
P130 per share all the 55 shares received as stock dividend. The gain realized on the
shares sold, on the first-in, first-out basis, was:
Shares Cost
In 2018, Metro Company received 250 rights to buy North Star stock at par (P100). Five
rights are required to buy one new share. At issue date, market values were: stock ex-
rights, P120, and rights, P5 each. One hundred fifty rights were exercised, the remaining
rights were sold later at P5 each.
27. Using the FIFO basis, the cost of the new shares acquired through the exercise of rights
was:
Shantidope had the following investment transactions in the capital stock of Masaya,
Inc.:
Jan.5 Bought 400 common shares, par P100, at P88 per share.
Oct. 10 Received stock rights to buy one new share at P135 for every 5 shares
held. Market value of right, P4; market value of stock ex-right, P156.
29. The unit cost of the stock after the stock dividend on June 15 is:
a. P 75 b. P 85 c. P 90 d. P 80
30. After receipt of the stock rights on October 10, the unit cost per share is:
a. P 78 b. P 80.50 c. P 82 d. P 81.50
31. In Middle Company’s single-step income statement, the section title revenues consisted
of the following:
How much is the amount to be presented under the revenues section of the income
statement?
32. Hero Company presented the following data relative to its cost of sales for the year ended
December 31, 2002 as follows: Factory overhead (100% of direct labor); Decrease in
finished goods, 40,000; Direct labor (50% of raw materials used); Increase in goods in
process, 30,000; Raw material used, 60,000; Increase in raw materials, 10,000.