Accounts payable trade Unrealized gross profit 2008 Unrealized gross profit 2009 Unrealized gross profit 2010

2010 Capital stock Retained earnings Gain on repossession Operating expenses Total

P 50,000 10,000 86,000 100,000 600,000 80,000 6,000 50,000 P 932,000 P 932,000

Cost of goods sold has been uniform over the years at 60% of sales. Sterling Products Corporation adopts perpetual inventory procedures. On installment sales, the corporation charges installment accounts receivable and credits inventory gross profit accounts. Repossessions of merchandise have been made during 2010 due to some customers failure to pay maturing installments. Analyses of these transactions were summarized as follows: Inventory 7,500 Unrealized gross profit 2008.. 800 Unrealized gross profit 2009.. 2,400 Installment Accounts Receivable - 2008 2,000 Installment Accounts Receivable 2009 ... 6,000 Gain on repossession. 2,700 The repossessed merchandise was unsold at December 31, 2010. It was ascertained that they were booked upon repossession at original costs. A fair valuation of these items would be a sale price of the repossessed merchandise at P10,000 after incurring costs of reconditioning of P5,000 and cost to dispose them in the market at P500 Realized gross profit on 2010 sales was: A. P44,000 C. P124,000 B. P56,000 D. P136,000 Gain/loss on repossession was: A. P200 loss C. P300 loss B. P200 gain D. P300 gain The balance sheet as of June 30, 2012 for the partnership of Dom, Joe, and Rey show the following information: Total assets (at cost).. P 360, 000 Dom, loan P 20, 000 Dom, capital.. 83, 000 Joe, capital.. 77, 000 Rey, capital.. 180, 000 Total.P 360, 000 It was agreed among partners that Dom retires from the partnership and it was further agreed that the assets be adjusted to their fair values of P408, 000 as of June 30, 2012. The partnership would pay Dom P121, 000 cash for Doms partnership interest and includes the payment of loan to Dom. No goodwill is to be recorded.

23.

24.

25.

Dom, Joe, and Rey share profits and losses: 25%, 25%, and 50% respectively. After Doms retirement, what is the balance of Reys capital account? A. P180, 000 C. P200, 000 B. P204, 000 D. zero The Natural Company acquired 80% of The Loco Company for a consideration transferred of P100 million. The consideration was estimated to include a control premium of P 24 million. Locos net assets were P85 million at the acquisition date. Are the following statements true of false, according to PFRS3 Business combinations? (1) Goodwill should be measured at P32 million if the non-controlling interest is measured at its share of Locals net assets. (2) Goodwill should be measured at P34 million if the non-controlling interest is measured at fair value Statement (1) Statement (2) Statement (1) Statement (2) A. False False C. True False B. False True D. True False The Moon Company acquired a 70% interest in The Swan Company for P1, 420, 000 when the fair value of Swans identifiable assets and liabilities was P1, 200, 000. Moon acquired 65% interest in The Homer Company for P300, 000 when the fair value of Homers identifiable assets and liabilities was P640, 000. Moon measures non-controlling interests at the relevant share of the identifiable net assets at the acquisition date. Neither Swan nor Homer had any contingent liabilities at the acquisition date and the above fair values were the same as the carrying amounts in their financial statements. Annual impairment reviews have not resulted in any impairment losses being recognized.

26.

27.

Under PFRS 3 Business combinations, what figures in respect of goodwill and gains on bargain purchases should be included in Moons consolidated statements of financial position? A. Goodwill: P580, 000;Gains on the bargain purchases: P 116, 000 B. Goodwill: Nil or zero; Gains on the bargain purchases: P 116, 000 C. Goodwill: Nil or zero; Gains in the bargain purchases: Nil or zero D. Goodwill: P580, 000; Gains on the bargain purchases: Nil or zero Items 28 and 29 are based on the following information: The income statement submitted by the Pampanga Branch to the Home Office for the month of December, 2010 is shown below. After effecting the necessary adjustments the true net income of the Branch was ascertained to be P156, 000. Sales ... P 600, 000 Cost of sales Inventory, December 1.. 350, 000 Shipments from Home Office 30, 000 Local purchases.. P 460, 000 Inventory, December 31.. 100, 000 360, 000 Gross margin. P240, 000 Operating expenses. 180, 000 Net Income P 60, 000 The branch inventories were: 12/01/2010 12/31/2010 Merchandise from home office P 70, 000 P 84, 000 Local Purchases.. 10, 000 16, 000

Total. 28.

80, 000

100, 000

29.

30.

The billing price based on cost imposed by the home office to the branch, and A. 140% C. 40% B. 100% D. 29% The balance of allowance for overvaluation branch December 31, 2008 after adjustment A. P10, 000 C. 16, 000 B. P24, 000 D. None of the above The partners of M&N Partnership started liquidating their business on July 1, 2010, at which time the partners were sharing profits and losses 40% to M and 60% to N. The balance sheet of the partnership appeared as follows: Assets Cash Receivable Inventory Equipment Accumulated Depreciation Total P 8, 800 24, 400 39, 400 Liabilities & Capital Accounts Payable P M, capital P 31, 000 M, drawing 5, 400 N, capital P 33, 200 N, drawing 200 N, loan Total P

32, 400 25, 600 33, 000 14, 000 105, 000

P65, 000 30, 800 P 34, 400 105, 000

During the month of July, the partners collected P600 of the receivables with no loss. The partners also sold during the month the entire inventory on which they realized a total of P32,400. How much of the cash was paid to Ms capital on July 31, 2010? A. P25, 600 C. P 320 B. P 5, 400 D. P 0 The following data pertain to Matiisin Company which sells appliances in an installment basis: 2008 P 390, 000 237, 000 2009 P 420, 000 243, 600 2010 P 480, 000 288, 000

31.

Installment sales Cost of sales From Sales Made in: Installment accounts receivable balances: January 1, 2010 P December 31, 2010 2008

2009 P P 300,000 60,000

2010

24, 000

320,000

Repossessions on defaulted accounts were made during 2010, as follows: 2009 Account balance P 10,000 Net resale value of repossessed merchandise P 4,500 The net gain (loss) on repossession on defaulted sales on 2009 and 2010 was: A. P500 C. P 800 B. P(800) D. P 1,300

P P

2010 5,000 3,500

32.

Pasig Garment Company operates a branch in Cabanatuan City. At the end of the year, the Branch account in the books of the home office at Manila shows a balance of P 150,000. The following information are ascertained: 1. The home office has billed the branch the amount of P37,500 for the merchandise, which was in transit on December 31. 2. The home office accounts receivable for P10,500 was collected by the branch. Said collection was not reported to the home office by the branch 3. Supplies of P4,500 was returned by the branch to the home office but the home office has not yet reflected in its records the receipt of the supplies. 4. The branch made profit of P10,100 for the month of December but the home office erroneously recorded it as P11,180. 5. The branch has not received the cash in the amount of P25,000 sent by the home office on December 31. This was charged to General expense account. All transactions are presumed to have been properly recorded. What is the adjusted balance of the reciprocal accounts? A. P96,420 C. P117,420 B. P106, 920 D. P170,920 The Carly Company owns 75% of the Halley Company. The following figures are from their separate financial statements: Carly: Trade receivables P1,040,000, including P30,000 due from Halley. Halley: Trade receivables P215,000, including P40,000 due from Carly. According to PAS 27 Consolidated and separate financial statements, what figure should appear for trade receivable in Carlys consolidated statement of financial position? A. P1,215,000 C. P1,255,000 B. P1,225,000 D. P1,185,000 The white company acquired an 80% interest in The Pulley Company when Pulleys equity comprised share of capital of P100,00 and retained earnings of P500,000. Pulleys current statement of financial position shows share capital of P100,000, a revaluation reserve of P400,000 and retained earnings of P1,400,000. Under PAS27 Consolidated and separate financial statements, what figure in respect of Pulleys retained earnings should be included in the consolidated statement of financial position? A. P720,000 C. P1,040,000 B. P1,440,000 D. P1,520,000 The Snipes Company owns 65% of the Genie Company. On the last day of the accounting period Genie sold to Snipes a non-current asset for P200,000. The asset originally cost P500,000 and at the end of the reporting period its carrying amount in Genies books was P160,000. The groups consolidated statement of financial position has been drafted without any adjustment in relation to this non-current asset. Under PAS27 Consolidated and separate financial statements, what adjustments should be made to the consolidated statement of financial position figures for non-current assets and retained earnings? Non-current assets Retained earnings

33.

34.

35.

36.

A. Increase by P300,000 Increase by P195,000 B. Reduce by P40,000 Reduce by P26,000 C. Reduce by 40,000 Reduce by P40,000 D. Increase by P300,000 reduce by 300,000 Bonifacio contractors had a 3-year construction contract in 2012 for P900,000. The company uses the percentage-of-completion method for the financial statement purposes. Income to be recognized each year is based on the ratio of cost incurred to total estimated cost to complete the contract. Data on this contract follows: Accounts receivable construction contract billings Construction in progress..P93,750 Less: Amounts billed.. 84,375 10% retention . Net income recognized in 2012 (before tax).. P 30,000

9,375 15,000

Bonifacio Contractors maintains a separate bank account for each construction contact. Bank deposits to this contract amounted to P50,000. What was the estimated total income before tax on this contract? A. P45,000 C. P135,000 B. P94,000 D. P144,000