DLSU

Integrated Financial Accounting

FINANCIAL STATEMENTS
I. Statement of Financial Position
Problem 1. The following elements of Financial Statements are provided from the Trial Balance of Ford Inc. for the year
ended December 31,2011:
Preference Share at par
Cash and cash equivalents (net of P200,000 overdraft)
Land Held for Sale
Bonds Payable due on December 31,2013
Deferred Tax Liability (P500,000 each to be realized in 2012, 2013, and 2014)
Revaluation Surplus
Salaries Payable
Cash surrender value of insurance
Note payable - payable in four installments semiannually on June 30 and December 31
Interest Payable
Inventory (P200,000 will be realized in 15 months)
Investment Property
Biological Assets
Prepaid Asset and Office Supplies
Accounts Payable (net of P100,000 with debit balance)

P 100,000
1,000,000
2,000,000
1,500,000
300,000
200,000
100,000
50,000
400,000
30,000
600,000
500,000
200,000
300,000
400,000
Accounts Receivable (P500,000 will be realized in 15 months) (net of P200,000 with Cr. Balance) 1,500,000
Contingent Asset
300,000
Contingent Liability
200,000
Provision for lawsuit (payable on December 31,2012)
500,000
Unamortized Premium on Bonds Payable
300,000
Investment in Trading Securities
3,000,000
Ordinary Share at par
500,000
Donated Capital
200,000
Deferred tax asset (P100,000 each to be realized in 2012, 2013 and 2014)
300,000
Income tax payable
100,000
Allowance for bad debts
200,000
Intangible Assets
2,000,000
Property, Plant and Equipment
5,000,000
Additional Paid In Capital in excess of par Ordinary Shares
1,000,000
Investment in Available for Sale Securities
2,000,000
Unamortized Discount on Bonds Payable
100,000
Unamortized Discount on Bonds Receivable
400,000
Investment in Preference Shares of SM @ cost method
3,000,000
Investment in Ordinary Shares of BDO @ equity method
4,000,000
Share options
500,000
Treasury Shares
600,000
Accumulated Depreciation PPE
800,000
Accumulated Amortization Intangible Assets
200,000
Conversion Option
400,000
Cumulative translation debit foreign operation
300,000
Subscribed Ordinary Share @ par
200,000
Retained Earnings appropriated for plant expansion December 31,2011
5,000,000
Bond Sinking Fund for the Bonds Payable
1,500,000
Plant Expansion Fund to be disbursed on January 30,2012
5,000,000
Cumulative unrealized gain on Available for Sale Securities
200,000
Additional Paid in Capital in excess of par Preference Shares
2,000,000
Utilities Payable
300,000
Share Dividends Payable @ par (large share dividend)
1,000,000
Cash Dividends Payable on January 10,2012
100,000
Cumulative Unrealized loss on derivative designated in cash flow hedge (effective portion) 300,000
Actuarial Loss Full Recognition Approach
400,000
Dividends Receivable from Investment in Associate
200,000
Interest Receivable from Notes Receivable
300,000
Investment in Joint Venture
2,000,000
Investment in Subsidiary
3,000,000
Notes Receivable due on December 31,2012
2,000,000
Loan Receivable realizable in in five equal annual installments every June 30
5,000,000
Investment in Bonds Receivable Held to Maturity Securities due on December 31,2013 2,400,000
Cumulative unrealized gain on FLFVPL due to credit risk
100,000
Total Lease Liability (P200,000 principal will be due on September 31,2012)
1,200,000
Retained Earnings unappropriated January 1,2011
2,000,000
Note: The only transactions that affect the retained earnings unappropriated for the year are the net income for 2011 and
dividends declared.

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Required: Based on the result of your audit, determine the following as of December 31,2011:
____________1. Total Current Assets
____________2. Total Noncurrent Assets
____________3. Total Assets
____________4. Total Current Liabilities
____________5. Total Noncurrent Liabilities
____________6. Total Liabilities
____________7. Total Shareholders Equity
____________8. Total Retained Earnings December 31,2011
____________9. Total Retained Earnings Appropriated - December 31,2011
____________10. Total Retained Earnings Unappropriated December 31,2011
____________11. Profit or Loss for the year ended December 31,2011
II. ACCOUNTING EQUATION
Problem 1. DLSU Co. provided the following data regarding its financial position:
January 1,2013
Current Asset
P2,000,000
Current Liability
?
Noncurrent Asset
5,000,000
Noncurrent Liability
3,000,000
The following additional data are provided:
1. The current ratio of DLSU Co. at the start of the year is 2:1.
2. The debt ratio at the end of the year is 40%.
3. Current Assets increased to P3,000,000 during the year.
4. Noncurrent assets increased by P2,000,000 during the year.
5. Noncurrent liability decreased to P1,000,000 during the year.
Required: Determine the following:
__________1. Current Liability on January 1,2013
__________2. Equity on January 1,2013
__________3. Current Liability on December 31,2013
__________4. Equity on December 31,2013
III. EVENTS AFTER REPORTING PERIOD: (Adjusting and Non-adjusting Events)
Problem 1. The financial statements of Benz Inc. are submitted to the external auditor on February 15,2012. The external
auditor issued the unqualified audit opinion on February 28,2012. The board of directors approved and authorized the
issuance of financial statements on March 15,2012. The stockholders ratified the issuance on March 31,2012. The
following events after reporting period of Benz Inc. are presented for the year ended December 31,2011:
a. On December 10,2011, Benz was charged by DENR of Environmental Regulation Violation. On December
31,2011, the defense counsel of Benz believed that it is probable that Benz will lose in the law suit and will be
liable in the range of P1,000,000 to P3,000,000. At that time, there is no best estimate of liability. On March
10,2012, the Supreme Court of the Philippines decided against the defendant Benz and award P2,500,000
amount of damages to DENR.
b. On December 15,2011, Benz was charged by the Benz Labor Union for Unfair Labor Practice in the Labor
Arbitrer. On December 31,2011, the defense counsel of Benz believed that it is reasonably possible that Benz will
lose in the labor dispute. The reasonable estimate of the liability is P1,000,000. On March 20,2012, the Supreme
Court decided in favor of the Benz Labor Union and awarded P1,500,000 amount of damages.
c. On January 10,2012, Benz was charged by Ford of Patent Infringement. On such date, the defense counsel of
Benz believed that it is probable that Benz will lose in the case. On March 12,2012, the Supreme Court ruled in
favor of Ford and awarded P500,000 of damages to the plaintiff.
d. On December 25,2011, Benz filed a civil case against Honda. The defense counsel of Benz believed that it is
probable that Benz will prevail in the civil case. The reasonable amount of damages is P3,000,000. The case was
decided by the Supreme Court on April 1,2012 and awarded P4,000,000 amount of damages to Benz.
e. On November 15,2011, Benz filed a civil case against Toyota. The defense counsel of Benz believed that it is
reasonably possible that Benz will prevail in the civil case. The reasonable amount of damages is P1,800,000.
The case was decided by the Supreme Court on April 10,2012 and awarded P2,500,000 amount of damages to
Benz.
f. On September 30,2011, an employee of Benz filed a civil case against Benz. The defense counsel of Benz
believed that it is remote that Benz will lose the case and the reliable estimate of liability is P200,000. The case
was decided by Supreme Court on March 30,2012 and awarded P300,000 amount of damages to the employee
of Benz.
g. On December 31,2011, Benz has an outstanding receivable from Way Inc. in the amount of P5,000,000. On
March 14,2012, Way Inc. declared bankruptcy and the Court placed the company under receivership. On such
date, the receiver declared that only 40% of the payable of Way will be liquidated.
h. On March 10,2012, the Investment Property of Benz Inc. was razed by fire. The carrying value of such property
on December 31,2011 is P10,000,000.
i. On March 16,2012, the warehouse containing the inventory of Benz Inc. was destroyed by earthquake. The total
from such calamity is P25,000,000.
j. On January 20,2012, Benz Inc. acquired 100% interest of Ferrari Inc. for P100,000,000.

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Required: Based on the result of your audit, provide the treatment of the preceding events after reporting period:
________________________1. Event A
________________________2. Event B
________________________3. Event C
________________________4. Event D
________________________5. Event E
________________________6. Event F
________________________7. Event G
________________________8. Event H
________________________9. Event I
________________________10. Event J
IV. Statement of Comprehensive Income
Problem 1. The income tax rate for the year is 30%. The following income and expense accounts are obtained from the
Trial Balance of Ferrari Inc., which is a diversified company, for the year ended December 31,2011:
Deferred Tax Expense
P1,200,000
Impairment loss on Non-current Asset Held for Sale, before tax
300,000
Gain on sale of Non-current Asset Held for sale, before tax
400,000
Sales
40,000,000
Purchases of Raw Materials
10,000,000
Bad debts expense
100,000
Impairment loss on Loans Receivable
200,000
Gain on factoring of Accounts Receivable
400,000
Loss on Notes Receivable Discounting
100,000
Purchase discount and allowance on Raw Materials
300,000
Sales discount and allowance
400,000
Purchase return on Raw Materials
500,000
Sales return
200,000
Freight In on Raw Materials
300,000
Direct Labor
1,000,000
Factory Overhead 50% of Direct Labor
?
Raw Materials, January 1
2,000,000
Raw Materials, December 31
3,000,000
WIP, January 1
1,500,000
WIP, December 31
2,500,000
Finished Goods, January 1
5,000,000
Finished Goods, December 31
3,000,000
Gain on changes in Fair Value less cost to sell of Biological Assets
1,000,000
Unrealized holding gain on Trading Securities
2,000,000
Realized loss on sale of Trading Securities
500,000
Unrealized holding loss on Available for Sale Securities Equity Instruments
3,000,000
Realized gain on sale of Available for Sale Securities Equity Instruments
1,000,000
Unrealized holding gain on Available for Sale Securities Debt Instruments 2,000,000
Realized gain on sale of Available for Sale Securities Debt Instruments
1,500,000
Share dividend received from Investment in SMC @ cost method(fair value of OS) 500,000
Cash and property dividend received from Investment in SMC @ cost method
300,000
Cash and property dividend received from Investment in BDO @ equity method
200,000
Share in net loss from Investment in BDO @ equity method
500,000
Interest received from Investment in Held to Maturity Securities
300,000
Amortization of Premium on Held to Maturity Securities
20,000
Realized loss on sale of Investment in Held to Maturity Securities
400,000
Loss on changes in far value of Investment Property
500,000
Realized gain on sale of Investment Property
100,000
Unrealized holding loss on derivative designated as fair value hedge
500,000
Unrealized holding gain on derivative designated as cash flow hedge
1,000,000
Translation adjustment debit Foreign Operation
2,000,000
Transaction gain from foreign exchange transaction
500,000
Realized deferred income from government grant
400,000
Depreciation on Property, Plant and Equipment
3,000,000
Depletion of Wasting Asset
2,000,000
Loss on sale of an item of Property, Plant and Equipment
1,000,000
Increase in Revaluation Surplus during 2011
2,000,000
Realized Revaluation Surplus during 2011
200,000
Impairment loss of Property, Plant and Equipment
500,000
Amortization of Intangible Asset
400,000
Pre-organization cost
200,000
Research and development cost
300,000
Stock issuance cost of Ordinary Shares
200,000
Warranty Expense
500,000

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Premium Expense
Current Tax Expense
Interest Paid on Bonds Payable
Amortization of Discount on Bonds Payable
Amortization of Bonds Payable Issue cost
Actuarial Gain Full Recognition Approach
Employee Benefit Expense
Gain on debt restructuring asset swap
Gain on debt restructuring equity swap
Gain on debt restructuring modification of terms (5% of original liability)
Interest Expense on Finance Lease
Gain on sale and leaseback operating lease
Loss on sale and leaseback finance lease
Compensation Expense Share Options
Compensation Expense Share appreciation rights
Revenue from discontinued operation, before tax
Expenses from discontinued operation, before tax
Impairment loss of assets of discontinued operation, before tax
Realized gain on sale of assets of discontinued operation, before tax
Expense from Law Suit
Freight Out
Sales Commission
Salary of Marketing Departments employees
Advertising Expense
Salary of legal counsel
Salary of directors and executives
Salary of accounting department
Office Supplies used
Rental Expense on Main building
Utilities Expense
Extraordinary loss from calamity
Unrealized holding loss from FAFVPL due to credit risk
Unrealized holding loss from FAFVPL not due to credit risk

200,000
2,000,000
200,000
50,000
50,000
100,000
200,000
200,000
300,000
100,000
200,000
300,000
400,000
100,000
200,000
1,000,000
500,000
300,000
400,000
500,000
200,000
100,000
100,000
500,000
500,000
900,000
200,000
100,000
1,000,000
100,000
300,000
400,000
200,000

Additional notes during 2011 are also provided as follows:

1.
2.
3.
4.

The depreciation of Property, Plant and Equipment is 60% administrative and 40% selling.
The depletion of Wasting Asset is considered part of Other Expenses.
The employee benefit expense is 80% administrative and 20% selling.
The compensation expense from share option is for administrative department employees while that from share
appreciation rights is for selling department employees.
5. The rental, utilities and office supplies expense is equally divided between administrative and selling departments.
6. Finance cost is separated from other expenses.
7. Ferrari uses the functional or cost of sale format in preparing its Statement of Comprehensive Income.
Required: Based on the result of your audit, determine the following for the year ended December 31,2011:
____________1. Cost of Sales
____________2. Gross Profit
____________3. Total Other Income
____________4. Administrative Expense
____________5. Selling Expense
____________6. Total Other Expense
____________7. Total Income Tax Expense
____________8. Income from Continued Operation
____________9. Income or (loss) from discontinued operation
____________10. Profit or Loss
____________11. Net Other Comprehensive Income
____________12. Total Comprehensive Income

V. CAPITAL MAINTENANCE APPROACH

Problem 1. On January 1, 2013, the total assets of LLB Inc. is P2,000,000 while its total liabilities is P1,200,000. During
the year, the corporation issued 20,000 ordinary shares with par value of P10 for P20/share. The corporation also
declared and paid cash dividends in the amount of P100,000 and distributed property dividends with book value of
P100,000 and fair value of P500,000.
During 2013, the total assets increased to P5,000,000 while the total liabilities increased by P1,800,000. Nothing
affects the total stockholders equity accounts except the transactions provided and profit or loss. What is the profit/
(loss) of LLB Inc. for the year ended December 31,2013?

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VI. NON-CURRENT ASSET HELD FOR SALE

Problem 1. On January 1, 2013, JD Inc. constructed a building classified as owner-occupied property for a total cost of
P2,200,000 with useful life of 10 years and residual value of P200,000. It is the companys policy to use the cost method
of valuation for property, plant and equipment. On December 31, 2013, the company determined that the carrying amount
of the building will be recovered principally through a sale transaction rather than through continuing use. The following
amounts are provided by a qualified appraiser:
12/31/2013
12/31/2014
12/31/2015
Value in Use
P2,500,000
P2,300,000
P2,000,000
Fair Value less Cost to Sell
1,500,000
1,400,000
1,300,000
On December 31, 2015, JD Inc. decided not to sell the building and it no longer met the criteria for being classified
as held for sale.
Required: Based on the result of your audit, determine the following:
____________1. Carrying amount of building on 12/31/2013
____________2. Impairment loss of building for the year ended 12/31/2013
____________3. Carrying amount of building on 12/31/2014
____________4. Impairment loss of building for the year ended 12/31/2014
____________5. Depreciation expense of building for the year ended 12/31/2014
____________6. Carrying amount of building on 12/31/2015
____________7. Reversal of impairment loss for the year ended 12/31/2015
VII. DISCONTINUED OPERATION
Problem 1. On January 1,2013, ABS-CBN, a communication entity, has decided to dispose one of its radio operations
known as DZMM SAIS TRENTA. During 2013, the total revenues from the operation of DZMM is P50,000,000 while its
total operating expenses is P40,000,000. During 2013, the post-tax impairment loss of the assets of DZMM amounts to
P5,000,000. On December 31,2013, DZMM sold one of its satellites with a cost of P5,000,000 and accumulated
depreciation of P2,000,000. The selling price of the satellite is P6,000,000 and its fair value is P4,000,000. During 2013,
DZMM also incurred pre-tax termination costs of P1,000,000 as a result of the discontinuance. The normal corporate
income tax for year 2013 is 30%. What is the single amount to be presented in the line item-discontinued operation
of the 2013 Statement of Comprehensive Income of ABS-CBN?
VIII. Change in Accounting Estimate
Problem 1. On January 1,2013, Wayne Inc. acquired a machine for P530,000 with useful life of 5 years and residual
value of P30,000. It is the companys policy to use SYD method for depreciation of its property, plant and equipment. On
January 1, 2015, due to new information, Wayne Inc. changed its depreciation method from SYD to Straight Line Method.
Aside from that, the revised useful life is 7 years from the date of acquisition. There is no change in the residual value.
Required: Based on your audit, determine the following:
____________1. Depreciation expense for the year ended December 31,2015
____________2. Carrying value of the machine as of December 31,2015
Problem 2. On January 1,2013, Queen Inc. purchased an equipment for P120,000 with useful life of 4 years and residual
value of P20,000.It is the companys policy to use 200% Double Declining Balance Method for depreciation of its property,
plant and equipment. On January 1,2014, due to new information, Queen changed its depreciation method from Double
Declining Balance Method to SYD Method. The remaining useful life as of January 1,2014 is 2 years. The residual value is
also revised to P15,000. What is the cumulative effect of these accounting changes in the January 1,2014 Retained
Earnings to be presented in the 2014 Statement of Changes in Equity assuming the tax rate is 30%?
IX. Change in Accounting Policy
Problem 1. On January 1,2013, Arrow Inc. started its operation. It is the companys policy to provide bad debts expense
based on 5% of its ending receivables. The following data are also provided on December 31,2013:
Accounts Receivable
P1,000,000
Allowance for Bad Debts
50,000
Credit Sales
3,000,000
Written off Receivables
30,000
On January 1,2014, the company changed its accounting policy for providing bad debts expense from 5% of
ending receivables to 10% of credit sales. During 2014, the following data are also provided:
Accounts Receivable 12/31/2014
P2,000,000
Credit Sales
5,000,000
Recovery of previously written off AR
20,000
Written off Receivables
40,000
What is the cumulative effect of this accounting change in the January 1,2014 Retained Earnings to be presented
in 2014 Statement of Changes in Equity assuming the tax rate is 30%?

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Problem 2. On January 1,2014, IRON Inc. decided to change its accounting policy for costing of its inventory from FIFO
to Weighted Average. The following data are provided:
FIFO
WEIGHTED AVERAGE
12/31/2012
P1,000,000
P1,500,000
12/31/2013
2,000,000
1,000,000
12/31/2014
3,000,000
5,000,000
What is the cumulative effect of this accounting change in the January 1,2014 Retained Earnings to be presented
in 2014 Statement of Changes in Equity assuming the tax rate is 30%?
Problem 3. On January 1,2013, THOR Inc. acquired a building to be held as investment property in the amount of
P3,300,000. The building has a residual value of P300,000 and has a useful life of 6 years. It is the companys policy to
use cost method for the valuation of its investment property. On January 1,2015, THOR Inc. decided to change its
accounting treatment of its investment property from cost method to fair value method. The following fair values are also
provided:
December 31,2013
P3,500,000
December 31,2014
3,000,000
December 31,2015
3,200,000
What is the cumulative effect of this accounting change in the January 1,2015 Retained Earnings to be presented
in 2015 Statement of Changes in Equity assuming the tax rate is 30%?
Problem 4. On January 1,2010, Stretchy Inc. acquired 10,000 Ordinary Shares of PLDT Inc. which has 100,000
outstanding shares for P200,000. The book value of net asset of PLDT is P1,000,000. There is no difference between the
book value and fair value of assets of PLDT Inc. On December 31,2010, PLDT reported P500,000 net income and paid a
cash dividend of P2 per share. On January 1,2011, Stretch acquired additional 10,000 Ordinary Shares of PLDT Inc. for
P300,000. The outstanding shares of PLDT on such date is still 100,000. On December 31,2011, PLDT reported net
income of P1,000,000 and paid P2 per share dividends. On January 1,2012, Stretch sold 5,000 Ordinary shares of PLDT
for P30 per share. The fair value of PLDTs ordinary share is quoted at P35 per share on the date of sale.
Note: The income tax rate is 30%.
Required: 1. What is the retroactive adjustment in the January 1,2011 Retained Earnings as a result of the step-up
acquisition?
2. What is the gain as a result of step-up acquisition on January 1, 2011?
3. What is the gain or (loss) on the disposal of PLDTs ordinary share on January 1,2012?
4. What is the gain or (loss) as a result of the cessation of Equity Method on January 1,2012?
X. Statement of Changes in Equity
Problem 1. The following data are provided by BMW Inc. for the year ended December 31,2011 regarding its Statement
of Changes in Equity:
Retained Earnings, January 1,2011
P2,000,000
Ordinary Share Capital, January 1,2011
1,000,000
Preference Share Capital, January 1,2011
500,000
Profit or (Loss) for the year 2011
2,000,000
Dividends Declared during 2011
1,500,000
Prior Period Error understatement of 2010 Net Income (net of tax)
700,000
Change in Accounting Policy overstatement of 2010 Ending Inventory (net of tax) 350,000
Treasury Shares @ cost
200,000
Additional Paid In Capital in excess of par Ordinary Shares
2,000,000
Additional Paid in Capital in excess of par Preference Shares
1,000,000
Subscribed Ordinary Shares
1,500,000
Subscription Receivable (collectible beyond one year)
500,000
Realization of Revaluation Surplus during 2011
200,000
Realized holding loss on AFS Securities Equity Instruments
100,000
Realized holding gain on AFS Securities Debt Instruments
400,000
Realized translation debit on Foreign Operation
500,000
Realized gain on derivative asset classified as cash flow hedge effective portion 300,000
Realized loss on FAFVPL due to credit risk
600,000
Realized actuarial gain on defined benefit plan
400,000
Excess over cost in Reissuance of Treasury Shares
300,000
Translation Credit Adjustment Foreign Operation
200,000
Unrealized holding loss Available for Sale Securities
500,000
Unrealized holding gain Derivative designated as Cash Flow Hedge
400,000
Actuarial Loss Full Recognition Approach
600,000
Unrealized loss on FAFVPL due to credit risk
300,000
Required: What is the adjusted balance of Retained Earnings on December 31,2011?

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XI. Classification of Operating, Investing and Financing Activities. Indicate the proper classification of the following
cash flows by using O for Operating, I for Investing and F for financing.
___Cash paid for the acquisition of merchandise inventory
___Cash received from the sale of available for sale securities
___Cash received from the sale of trading securities
___Cash paid for the acquisition of treasury shares
___Cash paid for salaries of employees and officers
___Cash paid to stockholders as distribution of earnings
___Cash received from investment in associate
___Cash paid for interest on loans payable
___Cash received for interest on notes receivable
___Cash paid for acquisition of call option
___Cash received from the sale of investment property
___Cash paid for acquisition of land to be classified as property, plant and equipment
___Cash received from bank loan
___Cash paid for advances to subsidiary
___Cash received from customers
___Cash paid for utilities
___Cash paid for taxes
___Cash received from investment of stockholders
___Cash paid for acquisition of held to maturity securities
___Cash paid for acquisition of patent
___Cash paid for the disposal of trademark
___Cash paid for acquisition of prepaid insurance
___Cash received from the sale of factory equipment
XII. Direct Method.
A. Collection from Customers.
Problem 1. The following data are provided by James Inc. for the year ended December 31,2013:
Total Sales
P20,000,000
Cash received from cash customers
5,000,000
Factored accounts receivable
1,000,000
Dishonored notes receivable
3,000,000
Interest on dishonored notes receivable
500,000
Recovery of previously written off accounts receivable
300,000
Written off accounts receivable during the year
200,000
Sales discount availed by customers during the year
100,000
Credit memo issued by James Inc. during the year
400,000
Bad debt expense during the year
800,000
The following balances are provided:
Accounts Receivable, January 1,2013
P10,000,000
Net realizable value of AR, January 1,2013
9,500,000
Net realizable value of AR, December 31,2013
12,000,000
What is the total collection from customers for the year ended December 31, 2013?
Problem 2. The following data are provided by Lebron Inc. for the year ended December 31,2013:
12/31/2012
12/31/2013
Trade AR
P1,000,000
P2,000,000
Trade NR
3,000,000
3,500,000
Unearned Revenue
5,000,000
2,000,000
The total revenue reported by Lebron Inc. on its Income Statement for the year ended December 31,2013 is P10,000,000.
What is the total cash collected from customers for the year ended December 31, 2013?
B. Cash Paid to Suppliers
Problem 1. The following data are provided by Dwayne Inc. for the year ended December 31,2013:
12/31/2012
12/31/2013
Merchandise Inventory P2,000,000
P2,500,000
Accounts payable
3,000,000
4,000,000
Purchase discount
500,000
Credit memo issued by suppliers
300,000
Note payable issued for some accounts payable 200,000
Cost of goods sold for year 2013
9,000,000
What is the total cash paid to suppliers for the year ended December 31, 2013?
C. Cash Paid for Operating Expense
Problem 1. The following data are provided by Wade Inc. for the year ended December 31,2013:
12/31/2012
12/31/2013
Prepaid salary
P1,000,000
P1,500,000

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Accrued salary
2,500,000
5,000,000
Salary expense for year 2013
7,000,000
What is the total cash paid for salaries for the year ended December 31, 2013?
Problem 2. The following information are provided concerning the operating expenses of TY Inc.:
12/31/2010
Prepaid Expenses
1,000,000
Accrued Expenses
2,000,000
Total Operating Expenses
Acc. Depreciation
3,000,000
Acc. Amortization
2,000,000

12/31/2011
3,000,000
2,500,000
10,000,000
4,000,000
2,500,000

The following notes are also provided:

a. Non-cash expenses such as amortization expense and depreciation expense are included in the total operating
expenses.
b. During the year, TY sold equipment with a cost of P2,000,000. The net proceeds from the sale of equipment is
P2,100,000 and the gain on disposal is P500,000.
c. During the year, TY sold patent with a cost of P1,000,000. The net proceeds from the sale of patent is P600,000
and the loss on disposal is P200,000.
What is the cash basis operating expenses for the year ended December 31, 2011?
Problem 3. The following information are provided by LA Inc. concerning its interest expense:
12/31/2010
12/31/2011
Prepaid Interest
100,000
150,000
Accrued Interest Payable
250,000
100,000
Discount on Bonds Payable
300,000
150,000
Premium on Bonds Payable
250,000
50,000
The following data are also provided:
a. During 2011, LA extinguished some Bonds Payable originally issued at a discount with a face value of P1,000,000
through asset swap. The book value of the land given up is P1,100,000 and the fair value is P1,200,000. The
extinguishment of Bonds Payable resulted to a loss of P150,000.
b. During 2011, LA extinguished some Bonds Payable originally issued at a premium with a face value of
P2,000,000 by payment of P2,000,000. The extinguishment resulted to a gain of P100,000.
c. The total interest expense for the year is P2,000,000.
What is the cash paid for interest for the year ended December 31, 2011?
D. Cash Paid for Taxes
Problem 1. The following data are provided by Chris Inc. for the year ended December 31,2013:
12/31/2012
12/31/2013
Prepaid taxes
P1,500,000
P1,000,000
Income tax payable
2,000,000
3,000,000
Deferred tax asset
2,000,000
4,000,000
Deferred tax liability
3,000,000
2,000,000
Current Tax Expense for year 2013
5,000,000
Deferred Tax Expense for year 2013
6,000,000
What is the total cash paid for taxes for the year ended December 31, 2013?
E. Cash Collected from Interest
Problem 1. The following data are provided by Bosh Inc. for the year ended December 31,2013:
12/31/2012
12/31/2013
Interest receivable
P3,000,000
P2,000,000
Unearned interest
2,000,000
2,500,000
Interest revenue for year 2013
12,000,000
What is the total collected interest for the year ended December 31, 2013?
Problem 2. The following information are provided concerning the interest income of AT Inc. for 2011:
Unearned Interest Income
Accrued Interest Income
Discount on Bonds Rec.
Premium on Bonds Rec.

12/31/2010
200,000
400,000
500,000
400,000

12/31/2011
100,000
500,000
300,000
100,000

The following data are also provided:

a. During 2011, AT sold the Bonds Rec. with a face value of P1,000,000 and which was originally purchased at a
discount. The net proceeds of the sale was P950,000. Gain on derecognition of Bonds Receivable was P100,000.

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b. During 2011, AT sold the Bonds Rec. with a face value of P1,000,000 and which was originally purchased at a
premium. The net proceeds of the sale was P1,100,000. Loss on derecognition of Bonds Receivable was
P50,000.
c. The total interest revenue for the year was P3,000,000.
What is the total cash collected from interest for the year ended December 31, 2011?
F. Cash Paid for Dividends
Problem 1. The following information are provided regarding the Retained Earnings of AIM Inc.:
Retained Earnings
Cash Dividends Payable

12/31/2010
2,500,000
3,500,000

12/31/2011
2,000,000
1,000,000

The following notes are also provided:

1. On January 1,2011, AIM changed its inventory costing method from FIFO to Weighted Average. The FIFO cost on
January 1, 2011 is P1,000,000 while the Weighted Average Cost is P2,000,000. The tax rate is 30%.
2. On June 1,2011, AIM reissued treasury shares with a total cost of P1,000,000 in the amount of P500,000. There
was no share premium arising from treasury shares transaction at the time of re-issuance of treasury shares.
3. On December 31,2011, AIM declared cash dividends and property dividends. The book value of property
dividends at that date is P400,000 while the fair value is P600,000.
4. The adjusted net income for 2011 was P1,500,000.
What is the amount of dividends paid in cash for 2011?
G. Investing Activity
Problem 1. The following information are provided affecting JTs Land:
12/31/2010
12/31/2011
Land
2,000,000
1,000,000
The following notes are also provided:
1. On January 1,2011, JT purchased land by paying P100,000 in cash.
2. On February 1,2011, JT received a land from government with a book value P200,000 and fair value of P300,000.
3. On March 1,2011, JT issued 10,000 ordinary shares in exchange of a land with a fair value of P400,000. The fair
value of ordinary shares is P30 per share and the par value is P10.
4. On April 1, 2011, JT sold land to another company. In exchange to the lan, JT received a promissory note of
P500,000.
5. On May 1,2011, JT sold land to the government for cash. JT realized P200,000 gain on disposal of land.
What is the net cash inflow (outflow) from investing activitiy for 2011?

Problem 2. The following information are provided affecting DVs Noncurrent Asset:
12/31/2010
12/31/2011
Machinery & Equip.
3,500,000
1,500,000
Patent
3,000,000
1,000,000
Accumulated Dep.
500,000
300,000
Accumulated Amort.
600,000
200,000
The following notes are also provided:
1. On January 1,2011, DV purchased machinery by paying P500,000 in cash.
2. On February 1,2011, DV purchased patent by paying P300,000 in cash.
3. On March 1,2011, DV received equipment as dividend from an investee company with a book value of P300,000
and fair value of P400,000.
4. On April 1,2011, DV purchased a patent in the amount of P600,000. DV issued a promissory note in that amount.
5. On May 1,2011, DV issued 5,000 Preference Shares with a fair value of P20 per share and par value of P10 in
exchange for a machinery. The fair value of the machinery is P300,000.
6. On June 1,2011, DV sold a patent for cash. The total amortization expense for the year was P400,000. The loss
on disposal of patent was P600,000.
7. On July 1,2011, DV sold an equipment for cash. The total depreciation expense for the year was P800,000. The
gain on disposal was P500,000.
What is the net cash inflow (outflow) from investing activity for 2011?

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Problem 3. The following information are provided affecting JDs Investment in Associate with a 20% ownership:
Investment in Associate

12/31/2010
2,000,000

12/31/2011
1,000,000

The following notes are also provided:

1. The investee company reported a net income of P1,000,000 and total other comprehensive income with a debit
balance of P500,000 as of December 31,2011.
2. The investment was acquired in the beginning of 2009 and the total fair value of consideration given up is higher
than book value of net assets acquired. The differences are attributed to the following:
Book Value
Fair value
Land
1,000,000
1,100,000
Building
1,200,000
1,700,000
Equipment
1,200,000
1,100,000
Inventory
1,200,000
1,400,000
All beginning inventories of Investee in 2009 were sold in that year. The building has a useful life of 10 years
from January 1,2009 while the equipment has 4 years useful life.
3. JD Inc. received a property dividend and cash dividend for the year. The book value of the property dividend is
P200,000 while the fair value is P300,000.
Assuming the company presents dividend received as part of Operating Activity, What is the amount of cash
received from Investment in Associate?

XIII. Indirect Method

Problem 1. The following summarized data are provided from the Statement of Financial Position and Income Statement
of Miami Heat Inc.
STATEMENT OF FINANCIAL POSITION
Current Asset Section
Current Liability Section
12/31/2012
12/31/2013
12/31/2012
12/31/2013
Cash and CE P1,000,000
P2,000,000
Accounts Payable
P2,000,000
P3,000,000
Trading Securities 300,000
200,000
Accrued Expenses
1,000,000
500,000
AR, net
500,000
300,000
Income tax payable
500,000
600,000
Inventory
1,500,000
2,500,000
Interest payable
300,000
100,000
INCOME STATEMENT
Net Sales
P10,200,000
Less: Cost of Goods Sold
(5,000,000)
Gross Profit
P 5,200,000
Less: Operating Expenses (including P200,000 depreciation) ( 2,000,000)
Net Operating Income
P 3,200,000
Add: Gain on sale of investment property
500,000
Less: Amortization of patent
(300,000)
Loss on sale of factory equipment
(400,000)
Income before tax
P 3,000,000
Less income tax expense
900,000
Net Income
P 2,100,000
What is the net cash flow from operating activities for the year ended December 31, 2013?

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XIV. Comprehensive Problem

Problem 1. The net changes in the statement of financial position of ACER Corporation for the year 2008 are shown
below:
Accounts
Debit
Credit
Cash
82,000
Available for sale securities
121,000
Accounts receivable
83,200
Allowance for bad debts
13,300
Inventory
74,200
Prepaid expenses
17,800
Investment in wholly owned subsidiary at equity
20,000
Plant and equipment
210,000
Accumulated depreciation
130,000
Accounts payable
80,700
Accrued liabilities
21,500
Deferred tax liability
15,500
8% Serial Bonds
80,000
Ordinary share capital, P10 par
90,000
Share premium
150,000
Retained earnings Appropriation for bonds
60,000
Retained earnings Unappropriated
38,000
643,600
643,600
An analysis of the Retained earnings account follows:
Retained earnings unappropriated, 12/31/2007
Add: Net Income for 2006
Transfer from appropriation for bonds
Total
Deduct: Cash dividends
Share dividends
Retained earnings unappropriated 12/31/2008

1,300,000
327,000
60,000
1,687,000
185,000
240,000

425,000
1,262,000

The following notes are also provided by the company:

1. On January 2,2008, marketable securities (classified as available for sale) costing P121,000
were sold for P155,000.
2. The company paid a cash dividend on February 1,2008.
3. Accounts receivable of P16,200 and P19,400 were considered uncollectible and written off in
2008 and 2007, respectively.
4. Major repairs of P33,000 to the equipment were debited to the Accumulated Depreciation
account during the year. No assets were retired during 2008.
5. The wholly owned subsidiary reported a net loss for the year of P20,000. The parent recorded
the loss.
6. At January 1,2008, the cash balance was P166,000.
1. How much should be the amount of net cash flows from operating activities?
a. 295,000
c. 285,000
b. 275,000
d. 265,000
2. Assuming the same data provided in number 56, how much should be the amount of net cash flow from
investing activities?
a. (88,000)
c. (108,000)
b. (121,000)
d. (68,000)
3. Assuming the same data provided in number 56, how much should be the amount of cash flow from
financing activities?
a. (135,000)
c. (105,000)
b. (85,000)
d. (185,000)

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Problem 2. ASUS Corporation has recently decided to go public and has hired you as an independent CPA. One
statement that the entity is anxious to have prepared is a statement of cash flows. Financial statements of ASUS for
2010 and 2009 are provided below.
Statement of Financial Position
12/31/2010
12/31/2009
Cash
153,000
72,000
Accounts Receivable
135,000
81,000
Merchandise Inventory
144,000
180,000
PPE (net of Acc. Dep. of P120,000 and P114,000 as
of 12/31/2010 and 12/31/2009, respectively) 108,000
246,000
540,000
579,000
Accounts payable
Income taxes payable
Bonds payable
Share capital
Retained earnings

66,000
132,000
135,000
81,000
126,000
540,000

36,000
147,000
225,000
81,000
90,000
579,000

Income Statement
For the Year Ended December 31,2010
Sales
Cost of sales
Gross profit
Selling expenses
Administrative expenses
Income from operations
Interest expense
Profit before taxes
Income taxes
Profit or loss

3,150,000
2,682,000
468,000
225,000
72,000

297,000
171,000
27,000
144,000
36,000
108,000

The following additional data were provided:

1. Dividends for the year 2010 were P72,000.
2. During the year, equipment was sold for P90,000. This equipment cost P132,000 originally and had a book
value of P108,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales.
3. All depreciation expense is in the selling expense category.
1. What is the net cash provided by operating activities?
a. 153,000
c. 108,000
b. 90,000
d. 75,000
2. Assuming the same data provided in number 59, what is the net cash provided (used) by investing
activities?
a. (132,000)
c. 18,000
b. 90,000
d. (108,000)
3. Assuming the same data provided in number 59, what is the net cash provided (used) by financing
activities?
a. (90,000)
c. 18,000
b. (162,000)
d. 72,000

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XV. Interim Reporting

Problem 1. NYY Inc. prepares quarterly interim financial reports. On February 14, 2013, the company incurred a calamity
loss resulting from an earthquake in the amount of P200,000. The calamity loss was paid by the company on November
1,2013. How much calamity loss shall be recognized in the interim income statements for the 1 st quarter, 2nd
quarter, 3rd quarter and 4th quarter, respectively?
Problem 2. NYM Inc. prepares quarterly interim financial reports. On the March 31,2013, the following data for inventory
are provided:
Cost
P2,000,000
Estimated selling price
2,500,000
Gross profit rate based on sale
20%
Estimated cost to complete
300,000
Estimated cost to sell
400,000
On June 30,2013, the following data for inventory are also provided:
Cost
P2,000,000
Estimated selling price
3,000,000
Gross profit rate based on sale
20%
Estimated cost to complete
200,000
Estimated cost to sell
400,000
How much loss on inventory writedown shall be recognized in the interim income statements for the 1 st
quarter, 2nd quarter, 3rd quarter and 4th quarter, respectively? How much gain on reversal of loss on inventory
writedown shall be recognized in the interim income statements for the 1 st quarter, 2nd quarter, 3rd quarter and 4th
quarter, respectively?
Problem 3. BYN Inc. prepares quarterly interim financial reports. On January 1, 2013, the company paid P200,000 for
advertisement which will benefit the whole year 2013. On April 1,2013, the company incurred repairs and maintenance in
the amount of P300,000 and paid it on December 15,2013. The repairs and maintenance will only benefit the remainder of
the year. How much advertising expense shall be recognized in the interim income statements for the 1 st quarter,
2nd quarter, 3rd quarter and 4th quarter, respectively? How much repairs and maintenance expense shall be
recognized in the interim income statements for the 1 st quarter, 2nd quarter, 3rd quarter and 4th quarter,
respectively?
Problem 4. LAA Inc. prepares quarterly interim financial reports. The company provides bad debt expense 10% based on
credit sales for the quarter. The company estimated that the total bad debt expense for year 2013 is P200,000. The
company recognized bad debt expense for the 1 st, 2nd, and 3rd quarter in the amount of P30,000, P50,000 and P80,000
respectively. During the 4th quarter, the total credit sales is P600,000 and the company wrote off P50,000 accounts
receivables. How much bad debt expense shall be recognized in the 4th quarter income statement?
XVI. Operating Segment
Problem 1. LAD Inc. has several operating segments. The following data are provided concerning its segments:
Segment
Total Assets Total External Revenue
Total Internal Revenue
Profit/(Loss)
A
P2,000,000
P 50,000
P 550,000
P 50,000
B
100,000
200,000
100,000
20,000
C
200,000
30,000
270,000
(100,000)
D
3,000,000
20,000
180,000
30,000
E
700,000
100,000
1,900,000
(200,000)
Required: Determine the following amounts:
__________1. Quantitative threshold in assets to be considered as reportable segment
__________2. Quantitative threshold in revenues to be considered as reportable segment
__________3. Quantitative threshold in profit or loss to be considered as reportable segment
__________4. 75% Quantitative threshold for reportable segments
__________5. How many reportable segments should LAD Inc. disclose?
Problem 2. TBR Inc. is considering providing disclosures for its major customers. The following data are provided
concerning its operating segments:
Segment
T
Total External Revenue
Total Internal Revenue
A
P 500,000
P 100,000
B
200,000
50,000
C
300,000
150,000
D
100,000
180,000

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400,000

20,000

What is the minimum revenue to be provided by a customer to be considered a major customer which will
require disclosures from TBR Inc.?

XVI. PFRS for SMEs

1. On January 1, 2014, PKI , a small and medium enterprise, borrowed a one-year P10,000,000 loan from BDO Inc. to finance
specifically the construction of its new administrative building. The loan has an interest rate of 15%. Construction of the building started
on January 1, 2014 and it was completed at the end of year 2014. Out of the total loan, P4,000,000 was temporarily invested by PKI to
the BDO for a 90-day time deposit with 10% interest. PKI prepares financial statements in compliance with PFRS for SMEs.
Assuming a 360-day period, what is the amount of borrowing cost to be capitalized to the building?
a. P1,500,000
b. P1,100,000
c. P1,400,000
d. Zero
2. On January 1, 2014, BCH Inc.,a small and medium enterprise, acquired a trademark of HUMAN for P2,000,000. The remaining legal
life of the trademark from the date of acquisition is 5 years but the Philippine Intellectual Property Law allows renewable of the useful
life of any trademark before its expiration. BCH Inc. prepares financial statements in compliance with PFRS for SMEs.
What is the amortization expense to be recognized by BCH Inc. for the year ended December 31, 2014?
a. P200,000
b. P400,000
c. P2,000,000
d. Zero
3. LINE Inc., a small and medium enterprise, acquired 20,000 ordinary shares out of 100,000 ordinary shares of BDO Inc., a publicly
traded entity in Philippine Stock Exchange on January 1, 2014. LINE Inc. purchased the BDO ordinary shares at P20/share. LINE
incurred transaction costs totaling P50,000. LINE Inc. presents financial statements based on PFRS for SMEs. It decided to select fair
value method in accounting for its investment in associate. BDO reported P900,000 net income and declared a total of P300,000 cash
dividends during 2014. On December 31, 2014, the ordinary shares of BDO are trading at P30/share. The cost of selling the investment
is P150,000.
What is the initial amount recognized by LINE Inc. for its Investment in BDO Inc. on January 1, 2014?
a. P450,000
b. P400,000
c. P350,000
d. P600,000
4. Using the same data in number 3, what is the total income to be recognized by LINE Inc. from its investment in BDO for the
year ended December 31, 2014?
a. P200,000
b. P180,000
c. P260,000
d. P240,000
5. Using the same data in number 3, what is the carrying value of Investment in BDO as of December 31, 2014?
a. P520,000
b. P450,000
c. P570,000
d. P600,000
6. Using the same data in number 3, except that LINE decided to use equity method, what is the initial amount recognized by
LINE Inc. for its Investment in BDO Inc. on January 1, 2014?
a. P450,000
b. P400,000
c. P350,000
d. P600,000
7. Using the same data in number 3, except that LINE decided to use equity method, what is the total income to be recognized
by LINE Inc. from its investment in BDO for the year ended December 31, 2014?
a. P200,000
b. P180,000
c. P260,000
d. P240,000
8. Using the same data in number 3, except that LINE decided to use equity method, what is the carrying value of Investment
in BDO as of December 31, 2014?
a. P520,000
b. P450,000
c. P570,000
d. P600,000
9. On July 1, 2014, LIMA Inc., a small and medium enterprise, acquired 30,000 ordinary shares out of 100,000 ordinary shares of PKI, a
non-public entity whose stocks are not traded in the stock market. The purchase price is P10/share and LIMA paid P20,000 transaction
costs. LIMA complies with PFRS for SMEs in preparing its financial statements. LIMA does not want to employ equity method for its
investment in associate and selected the alternative. PKI reported P1,000,000 net income and declared P200,000 cash dividends
during 2014. The cost of selling the investment as of this date is P20,000.
What is the initial amount recognized by LIMA Inc. for its investment in PKI on January 1, 2014?
a. P300,000
b. P320,000
c. P280,000
d. P350,000
10. Using the same data in number 9, what is the total income to be recognized by LINE Inc. from its investment in PKI for the
year ended December 31, 2014?
a. P60,000
b. P300,000
c. zero
d. P240,000
11. Using the same data in number 9, what is the carrying value of Investment in PKI as of December 31, 2014?
a. P300,000
b. P320,000
c. P560,000
d. P540,000
12. The following income and expense accounts are obtained from the trial balance of MIZ Inc, a small and medium enterprise which
decides to adopt PFRS for SMEs, as of December 31, 2014:
Unrealized holding gain from Financial Asset at Fair Value Through OCI
Increase in Revaluation surplus
Actuarial gain from defined benefit plan
Translation gain/credit from foreign operation
Increase/gain in fair value of hedging instrument
Unrealized holding gain from derivative classified as cash flow hedge

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P1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000

Unrealized holding loss on FLFVPL due to credit risk

7,000,000
How much is the total other comprehensive income that can be presented by MIZ Inc. upon complying with PFRS for SMEs?
a. P16,000,000

b. P13,000,000

c. P12,000,000

d. P14,000,000

13. Using the same data in number 12, how much among the following items can be presented as an alternative in the profit or
loss by MIZ upon complying with PFRS for SMEs?
a. P3,000,000

b. P4,000,000

c. P5,000,000

d. P6,000,000

14. On July 1, 2014, GRILL Inc., a small and medium enterprise, purchased a building classified as property, plant and equipment for
P2,300,000 with a residual value of P300,000 and useful life of 10 years. GRILL prepares its financial statements in compliance with
PFRS for SMEs. The qualified appraiser determined the fair value/sound value of the building at P3,000,000 as of December 31, 2014.
What is the carrying value of the building to be presented in GRILLs Statement of Financial Position as of December 31, 2014
upon compliance with PFRS for SMEs?
a. P3,000,000

b. P1,900,000

c. P2,100,000

d. P2,200,000

15. Using the same data in number 14, what is the revaluation surplus as of December 31, 2014 to be presented in GRILLs
December 31, 2014 Statement of Financial Position?
a. P800,000

b. P720,000

c. P640,000

d. none

16. CHAIN Inc, a small and medium enterprise, is preparing its December 31, 2014 financial statements in compliance with PFRS for
SMEs. The inventory data as of December 31, 2014 are provided below:
TYPE
S4
S3
TAB

COST
P5M
P8M
P10M

Estimated Selling Price

P7,000,000
P10,000,000
P15,000,000

Gross Profit
P1,000,000
P1,000,000
P3,000,000

Estimated Cost to Complete

P500,000
P300,000
P4,000,000

Estimated Cost to Sell

P1,000,000
P 200,000
P4,000,000

What is the amount to be presented as carrying value of inventory as of December 31, 2014 upon compliance with PFRS for
SMEs?
a. P23,000,000

b. P22,000,000

c. P20,000,000

d. P17,000,000

17. WAY Inc., a small and medium enterprise, incurred the following research and development cost during 2015:
Research cost
10,000,000
Development cost before technological feasibility
20,000,000
Development cost after technological feasibility
40,000,000
What is the amount that shall be expensed as incurred for 2015 upon compliance with PFRS for SMEs?

CURRENT COST ACCOUNTING

1. WWW had the following transactions for the current year with respect to its inventory:
On January 1, the entity purchased 50,000 units at P100 per unit.
During the year, the entity sold 40,000 units at P180 per unit.
The entity paid P700,000 for operating expenses.
The current replacement cost of the inventory on December 31 is P150 per unit.
What is the realized holding gain on inventory for 2010?
What is the unrealized holding gain on inventory for 2010?
What is the cost of sales to be reported under current cost accounting?
2. Details of UUUs property, plant and equipment on December 31,2010 are:
Year acquired
Percent depreciated
Historical cost
Current cost
2008
30
1,000,000
1,400,000
2009
20
300,000
380,000
2010
10
400,000
440,000
UUU calculated depreciation at 10% straight line. A full years depreciation is charged in the year of acquisition. There were no
disposals of property. In the statement of financial position restated to current cost, what should be reported as net current cost
of the property, plant and equipment?
a. P1,160,000
c. P1,680,000
b. P1,300,000
d. P1,820,000

3. On January 1, 2015, AXA Inc. acquired a land at a cost of P1,000,000. On December 31, 2015, the current replacement
cost of the land is P1,500,000. On December 31, 2016, the current replacement cost of the land is P1,800,000 and AXA
Inc. sold the land for P2,000,000.
What is the unrealized holding gain on land for 2015?
What is the realized holding gain on land for 2016?
What is the gain on sale/disposal of land for 2016?

4. 3. On January 1, 2015, AXA Inc. acquired a building at a cost of P2,000,000 with no residual value and useful life of 10
years. On December 31, 2015, the current replacement cost of the land is P3,000,000.
What is the unrealized holding gain on building for 2015?
What is the realized holding gain on building for 2015?
What is the depreciation expense to be reported under current cost accounting?

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HYPERINFLATIONARY FINANCIAL STATEMENTS

1. Indicate whether the item is a monetary or non-monetary item:
__Cash and Cash Equivalents
__Loans and receivables
__Held for Trading Bonds Receivables
__Held to Maturity Bonds Receivables
__Investments in Shares of Stocks
__Property, Plant and Equipment
__Inventory
__Investment Property
__Prepaid asset
__Intangible asset
__Deferred tax asset
__Accounts payable
__Income tax payable
__Deferred tax liability
__Interest payable
__Unearned revenue
__Accrued expenses
__Notes payable
__Loans payable
2. The following assets are acquired on January 1, 2015 when the general price index is 200:
Inventory
P1,000,000
Property, plant and equipment 2,000,000
Investment in Bonds Receivable 3,000,000
The company is reporting in a hyperinflationary economy. On December 31, 2015, the general price index is 300. How
shall the assets above be presented in the 12/31/2015 Statement of Financial Position?
3. The statement of financial position of ART Inc. before translation to hyperinflationary economy is presented as follows:
Cash
1,000,000
Accounts payable
1,000,000
Accounts receivable
2,000,000
Unearned revenue (1/1/2015)
1,500,000
Inventory (1/1/2015)
3,000,000
Ordinary share (1/1/2015)
2,000,000
PPE (7/1/2015)
4,000,000
Retained earnings
500,000
The general price index are provided for the following dates:
1/1/2015 100
7/1/2015 200
12/31/2015 300
How much retained earnings shall be presented in the translated statement of financial position of ART Inc. in a
hyperinflationary economy?
4. The following data are provided from the financial statement of WWE Inc. which is reporting in a hyperinflationary
economy:
Historical cost
Net Monetary Asset 1/1/2015
1,000,000
Sales
2,000,000
Cost of sales
(1,500,000)
Operating expenses
(200,000)
Dividends declared (10/1/2015)
(100,000)
Net Monetary Asset 12/31/2015
1,200,000
The general price index are provided for the following dates:
1/1/2015 100
10/1/2015 200
12/31/2015 400
Average during 2015 - 300
What is the net purchasing power gain/(loss) for year 2015?

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