SUGGESTED SOLUTION-AFAR

FINAL PREBOARD – April 28, 2019 SET B starts at no. 33

1. D
Cost of investment P 385,000
Less book value of net assets 437,500
Overstatement of building P (52,500)
Annual amortization P 5,250
CNI = P78,750 – P8,750 + P5,250) P 75,250

2. D
Parent’s Retained Earnings, 1/2/15 P 446,250
Plus CNI (subsidiary is fully-owned) 75,250
Less Parent’s Cash dividends 8,750
Consolidated Retained Earnings, 12/31/15 P 512,750

3. D
4. B
Upstream adjustments
RGP on beginning inventory (P6,125 x 25%) P 1,531
Downstream adjustments
DGP on ending inventory (P10,500 x 30%) 3,150

COGS = P1,232,000 + P882,000) –P56,000 -P1,531 + 3150 P2,059,619

5. D
CNI = P80,500 + P78,750 + P1,531 – P3,150 P 157,631

6. B
PNI (from own operations (P122,500 – P42,000) P 80,500
Plus parent’s investment income:
Adjusted SNI (P78,750 + P1,531 ) P80,281
X CI% 80%
Investment income before dwnstrm adjstmnt P64,225
Less dwnstrm adjstmnt 3,150 61,075
Share of parent’s shareholders from CNI P 141,575

7. B
Adjusted SNI P 80,280
X by NCI% 20%
NCI in CNI (P161,043 – P145,249) P 16,056

8. A
9. D
10. A
On the equipment (P200,000 x 80%) / 3 P 53,333
On the machinery [(P200,000 x 90%) /3] – P4.500 55,500
Net amount of plant assets in CCC’s balance sheet P 108,833
11. A
12. D
13. D
 Net assets (P200,000 + P800,000 – P180,000 – P20,000) x P0.34 P 272,000
Less SHE: Legal capital (P400,000 + P100,000) x P0.31 P155,000
Retained earnings (computed) 91,525 246,525
Cumulative translation adjustment, credit P 25,475

14. B
Net monetary assets (P200,000 - P180,000) x P0.34 P 6,800
Net non-monetary assets (P800,000 - P20,000) x P0.31 241,800 P 248,600
Less Legal capital (P400,000 + P100,000) x P0.31 155,000
Retained earnings, to balance P 93,600
15. D
16. C

Cost of investment @ FV P755,000

Less Fair value of Stir’s net assets 497,000
Goodwill recognized P258,000
17. D

Investment cost (600,000 P50) + P300,000 P30,300,000

Less GW recognized upon acquisition 6,120,000
Total fair value of Unilateral’s net assets at DOA P24,180,000

Increase in Stockholders’ equity (P30,000,000 - P30,000) P29,970,000

18. C

19. D All obligations incurred must first be entered by memo entry into the appropriate register.

20. B
21. D
22. A

Estimated total cash to become available P402,000

Less: Prioritized claims
Fully secured P60,000
Partially secured (SP) 50,000
With priority 40,000 150,000
Net amount to unsecured amounts P252,000
Partially-secured (UP) P 30,000
Without priority 330,000 360,000
Estimated deficiency P(108,000)
Estimated recovery rate (P252,000 divide by P360,000) 70%
PSC (TBV) P80,000
Less Secured portion 50,000 x 100% P 50,000
Balance (U. P.) P30,000 x 70% 21,000 P 71,000

23. B
24. D
Total manufacturing cost 600,000
Finished goods inventory, beg. 25,000
Total goods available for sale 625,000

25. D
Red (16,000+ 14,400+ 200,000) 230,400
White ( 24,000+ 12,000+ 480,000- 96,000) 420,000
26. A
27. A
Red White Blue
Beg 230,400 420,000
NI 8,000 12,000
Adj 238,400 432,000
30% (71,520) (129,600) 201,120
Bal 166,880 302,400 201,120

28. A
29. B
Red White Blue
28% 42% 30%
Adj 238,400 432,000
Inv 201,120
Bonus (24,134) (36,202) 60,336
Bal 214,266 395,798 261,456
NI 8,400 12,600 9,000
Adj 222,666 408,398 270,456
Ret (270,456)
Bal 222,666 408,398 -

30. B
31. C
Inventory 450,000/ 1.5 300,000
Nov 30 300,000
Dec 31 450,000/1.45 310,345
Difference (Loss) (10,345)

32. B
33. A
DOT (250,000/ 1.6) 156,250

BSD (250,000/ 1.61) 155,280

Forex Gain 970

Since the LC is also the FC of the subsidiary, the Current Rate Method is used. The 20,000
exchange gain is being presented as part of OCI and not in the Income Statement

34. A
35. A
Net Assets (630,000- 170,000)/ 2 230,000

SHE
SC (360,000/3) 120,000
RE 82,500 (202,500)
CTA 27,500
36. C
37. A
38. D
HO 120,000
Br ONE (72,000/1.2) 60,000
Br TWO @ cost 80,000
TOTAL 260,000
39. D
Br One; COGS (60,000+300,000-72,000) 288,000
Divide by 120%
COGS @ Cost 240,000
Multiply by 20%
Realized Deferred Profit 48,000

40. B
Original Cost of Inv (6,250* 80) 500,000
Capitalized cost 10,500
Total cost of Cons Inv 510,500
Multiply by unsold units 35/80
Cost of unsold Inv 223,343.75

41. A
Sales (45 * 9,375) 421,875
COS (510,500* 45/80) (287,156.25)
GP 134,718.75
Commission (421,875 * 6%) (25,312,50)
Adv Exp ( 2,500)
Install cost ( 4,000)
Net Profit 102,906.25

42. D
Sales (45 * 9,375) 421,875
Commission (421,875 * 6%) (25,312,50)
Adv Exp ( 2,500)
Install cost ( 4,000)
Freight (10,500 * 40%) ( 4,200)
Net Remittance 385,862.50

43. D
DM 13,700
DL 4,800
FOH-A (800* 25) 20,000
Total Manuf Cost 38,500
Divide by # of Units 7,000
Unit Cost 5.50

44. A
2018:(6,720,000- 6,936,000) (216,000)
2017: (6720,000- 6,768,000) ( 48,000)
Realized Loss for 2018 (168,000)

45. D
Loss is realized in full under the zero profit method

46. D
Collection (297,500- 11,000) 286,500
Multiply by GPR 25/125
RGP 57,300
47. A
Inst Sales/ AR,beg (525,000 * 125%) 656,250
Less collection 286,500
AR, end 369,750
Multiply by GPR 25/125
DGP 73,950

48. B
49. D
Prod SV Rate JC Allocation
W 80,000 80% 64,000
X 60,000 80% 48,000
Y 40,000 80% 32,000
Z 20,000 80% 16,000
TOTAL 200,000 160,000
Rate= 160,000/200,000= 80%
50. A
51. B
52. A
53. D
Cost Units Unit Cost
Original Cost 360,000 20,000 18.00
Rework Cost 3,500
Cash proceeds (3,000)
Cost After Rework 360,500 10,700 18.2995
Increase in Unit Cost 0.2995

54. B
IFF
DP 525,000
PV (571,875* 2.4) 1,372,500 1,897,500
CFF (450,000* .05) 22,500
Int Rev ( 1,372,500 * 24%) 329,400
Franchise Cost ( 417,450)
Expenses ( 70,500)
Net Income 1,761,450

55. A
CIP: 3M * 75% (1.8/2.4) 2,250,000
PB 1,200,000
Asset 1,050,000

Since the entity has an estimated gross profit as of the end of 2017, CIP is simply computed as Conract
Price * %age of completion

56. C
CIP 1,800,000
PB 1,200,000
Asset 600,000

Since the entity has an estimated gross profit as of the end of 2017,under the zero profit method no GP
is realized. Therefore the actual cost of 1,800,000 was debited to the CIP account.

57. B
 58. D
Available cash (P67,600 + P220,000 + P130,000) P 417,600
Less prioritized claims (P16,000 + P220,000 +
12,000 + P120,000 + P20,000) 388,000
Net cash available (free assets) P 29,600
Less unsecured amounts (P20,000 + P54,000) 74,000
Estimated deficiency P( 44,400)
Estimated recovery rate (P29,600 / P74,000) 40%

Notes payable (TBV) P 240,000

Less RV of pledged asset 220,000 x 100% P 220,000
Balance (unsecured amt)P P 20,000 x 40% 8,000
Estimated recoverable amount P 228,000

59. B
Initial franchise fee P2,500,000
Continuing franchise fee (P450,400 x 3%) 13,512
Interest revenue (P1,500,000 x 12% x ½) 90,000
Franchise cost (800,000)
Expenses ( 18,000)
Net income P1,785,512

60. A
61. C
Equivalent Units for
Actual Materials Conversion
C& T: In Process, beg. 2,000 2,000 1,200
Received 6,000 6,000 6,000
IP, end 5,000 - 3,500
Abnormal lost units 1,000 - 900
14,000 8,000 11,600

C&T IP, beg : Cost last month P 16,000

Cost added this month: M (2,000 x P3.00) 6,000
C (1,200 x P 3.90) 4,680
Total cost of completed units from IP, beg. P26,680

62. A
Total cost of competed units from received (6,000 x P13.90) P 83,400

63. D
Cost last month (1000 units x P7) P 7,000
Conversion ( 900 units x P3.90) 3,510
Total cost of units lost charged to FOH Control P10,510

64. D
Cost from preceding department (5,000 x P7) P35,000
Conversion (3,500 x P3.90) 13,650
Total cost of IP, end P48,650
65. B
Units Sales Value ESTIMATED COST Unit
Prod Prod @ Final Point To complete To sell NRV Joint Cost Total Cost Cost
X 800 P 40,000 P 5,000 P 4,000 31,000 21,700 26,700 33.38
A 600 34,200 4,000 4,200 26,000 18,200 22,200 37.00
K 400 32,000 3,000 2,000 27,000 18,900 21,900 54.75
1,800 P106,200 P12,000 P10,200 84,000 58,800 70,800 -

66. D
RGP : 2013 Inst sales (P180,000 – P22,500 – P12,000) x 35% P 50,925
2014 Inst Sales (P637,500 – P300,000) x 38% 128,250
2014 Reg Sales (P577,500 x 30%) 173,250
Total RGP in 2014 P352,425

67. B
DGP ; 2013 Inst sales (P 22,500 x 35%) P 7,875
2014 Inst sales (P300,000 x 38%) 114,000
Total DGP, 12/31/14 P121,875

68. BONUS
69. A
500,000* .8250 (AR) = 412,500

70. A

Net Assets (4.2M – 400,000) 1,800,000 * .8175 (CR) 1,471,500

Less: Share Capital 1,0000,0000 * .8150 815,000
Retained Earnings
Beg 400,000* .8150 326,000
NI 412,500
Dividends 100,000*.8125 (81,250) 657,250
LOSS 750