ReSA B43 AFAR Final PB Exam - Questions, Answers - Solutions
ReSA B43 AFAR Final PB Exam - Questions, Answers - Solutions
ReSA B43 AFAR Final PB Exam - Questions, Answers - Solutions
CPA Review Batch 43 May 2022 CPALE 24 April 2022 1:00 – 4:00 PM
INSTRUCTIONS: Select the correct answer for each of the questions. Mark only one
answer for each item by shading the box corresponding to the letter of your choice on
the answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 2 only.
1. DD entered into the first forward contract to manage the foreign currency risk
from a purchase of inventory in November 2022, payable in March 2023. The forward
contract is not designated as a hedge. At December 31, 2022, what amount of
foreign currency transaction gain should DD include in income from this forward
contract?
a. P -0-
b. P 3,000
c. P 5,000
d. P10,000
3. DD entered into the third forward contract for speculation. At December 31, 2022,
what amount of foreign currency transaction gain should DD include in income
from this forward contract?
a. P -0-
b. P 3.000
c. P 5,000
d. P10,000
4. Property was purchased on December 31, 2019 for 20 million baht. The general
price index in the country was 60.1 on that date. On December 31, 2021, the
general price index had risen to 240.4. If the entity operates in a
hyperinflationary economy, what would be the carrying amount in the financial
statements of the property after restatement?
a. 20 million baht
b. 1,200.2 million baht
c. 80 million baht
d. 4.808 million baht
5. Reyes, Silva, and Tan formed a joint venture. Reyes was designated as the manager
and was to record the joint venture’s transactions in his own books. As a manager,
Reyes was to be allowed a salary of P12,000; the remaining profit or loss was to
be divided equally.
The following balances appeared at the end of 2018, before adjustment for venture
inventory and profit:
Debit Credit
Joint venture cash P 48,000 P -
Joint venture - 15,000
Silva, capital 1,000
Tan, capital 27,000
The venture was terminated on December 31, 2018, and unsold merchandise costing
P10,500 were taken over by Tan. Reyes made cash settlement with Silva and Tan.
8. What amount of exchange gain or (loss) was included in Swan’s 2022 income?
a. P(8,800)
b. P(4,400)
c. P 4,400
d. P 8,800
9. Connie Corporation had a realized foreign exchange loss of P15,000 for the year
ended December 31, 2022 and must also determine whether the following items will
require year-end adjustment:
• Connie had an P8,000 loss resulting from the translation of the accounts of
its wholly-owned foreign subsidiary for the year ended December 31, 2022.
• Connie had an account payable to an unrelated foreign supplier payable in the
supplier’s local currency. The Philippine peso equivalent of the payable was
P64,000 on the October 31, 2022 invoice date, and it was P60,000 on December
31, 2022. The invoice is payable on January 30, 2023.
10. On April 1, 2022, Argo Company imported 10,000,000 barrels of oil from an
Indonesian Company at a price of P3,185 per barrel payable in Indonesian rupiah.
The invoice was paid 30 days later. Indirect exchange rates for the Indonesian
rupiah were:
April 1, 2022: P1 = 132 rupiah
April 30, 2022: P1 = 130 rupiah
Job 1234 contains 3,000 units. It weighs 10,000 grams and uses 300 hours of
labor.
Compute the total overhead costs that should be assigned to Job 1234.
a. P31,955
b. P27,750
c. P26,000
d. P32,000
12. The following accounts were taken from the separate company financial statements
of a parent and its 100%-owned subsidiary (created in 20x1) at the end of 20x6:
Parent Subsidiary
Equity in net income (of subsidiary)……………………… P 80,000
Investment in subsidiary…………………………………………………… 640,000
Common stock…………………………………………………………………………………… 100,000 P 5,000
Additional paid-in capital……………………………………………… 500,000 395,000
Retained earnings……………………………………………………………………… 450,000 240,000
Dividends declared…………………………………………………………………… (140,000) (50,000)
What amount should be reported for consolidated retained earnings at the end of
2006?
a. P450,000
b. P480,000
c. P530,000
d. P690,000
e. None of the above
13. The following accounts are as they appear on the separate company financial
statements of a parent and its 100%-owned subsidiary (created in 20x1) at the
end of 20x6:
Parent Subsidiary
Equity in net income (of subsidiary)……………………… P 7,000
Investment in subsidiary…………………………………………………… 280,000
Common stock…………………………………………………………………………………… 100,000 P 25,000
Additional paid-in capital……………………………………………… 900,000 175,000
Retained earnings……………………………………………………………………… 390,000 80,000
Dividends declared…………………………………………………………………… (55,000) (3,000)
17. Assume that the FC (foreign currency) is the subsidiary’s functional currency.
What balances does a consolidated balance sheet report as of December 31,20x4?
a. Marketable equity securities = P16,000 and Inventory = P16,000.
b. Marketable equity securities = P17,000 and Inventory = P17,000.
c. Marketable equity securities P19,000 and Inventory = P16,000.
d. Marketable equity securities P19,000 and Inventory P19,000.
18. Assume that the peso is the subsidiary’s functional currency. What balances does
a consolidated balance sheet report as of December 31, 20x4?
a. Marketable equity securities = P16,000 and Inventory = P16,000.
b. Marketable equity securities = P17,000 and Inventory = P17,000.
c. Marketable equity securities P19,000 and Inventory = P16,000.
d. Marketable equity securities P19,000 and Inventory P19,000.
19. The following selected data were taken from the books of the Bixby Box Company.
The company uses job costing to account for manufacturing costs. The data relate
to June operations.
(a)Materials and supplies were requisitioned from the stores clerk as
follows:
Job 405, material X, P7,000.
Job 406, material X, P3,000; material Y, P6,000.
Job 407, material X, P7,000; material Y, P3,200.
For general factory use: materials A, B, and C, P2,300.
(1) If Job 406 were sold on account for P41,500 how much gross profit would be
recognized? (2) The balance in the factory overhead account would represent the
fact that overhead:
a. (1) P5,900; (2) P1,050 overapplied
b. (1) P 5,900; (2) P1,050 underapplied
c. (1) P18,500; (2) P1,050 underapplied
d. (1) P18,500; (2) P1,000 undearpplied
20. Andrews And Block are partners in an engineering consulting firm sharing profits
and losses 40% and 60%, respectively, and their capital balances are P110,000
and P150,000, respectively. The recorded net assets of the company are as follows:
Book Value Fair Value
Working capital P240,000 P220,000
Net property and equipment 80,000 108,000
Noncurrent liabilities 60,000 60,000
In addition to the recorded assets, the partners feel that the company has
goodwill valued at P40,000 because the company enjoys a strong client base and
has earnings that are consistently above industry averages.
Budgeted direct labor cost was P100,000 and budgeted direct material cost was
P280,000.
Compute the cost of each unit of Job 102 using Activity-Based Costing:
a. P340
b. P392
c. P440
d. P520
22. The Hotel Dian Manufacturing Company has a cycle of 3 days, uses a raw and in
process (RIP) account, and charges all conversion costs to Costs of Good Sold.
At the end month, all inventories are counted, their conversion cost components
are estimated and inventory account balances are adjusted. Raw material cost is
back flushed from RIP to Finished Goods.
The following information is for June:
Beginning balance of RIP account, including P2,000
of conversion cost…………………………………………………………………………………… P 15, 000
Beginning balance of finished goods account,
including P3,000 of conversion cost………………………………………… 23,000
Raw materials credit on credit.……………………………………………………………… 500,000
Ending RIP inventory per physical count,
including P2,500 conversion cost estimate………………………… 22,500
Ending finished goods inventory per physical count,
including P1,000 conversion cost estimate………………………… 16,000
Compute the amount of Cost of Goods Sold after adjustments were made:
a. P499,500
b. P493,000
c. P498,000
d. P500,000
23. The value of Zest to be deducted from the joint costs is:
a. P5,000
b. P3,000
c. P2,000
d. Zero
Perry, Quincy and Renquist had shared profits and losses in a ratio of 2:4:4.
Liquidation expenses were expected to be P8,000. All partners were solvent. What
would be the minimum amount for which the non-cash assets must have been sold
for, in order for Quincy to receive some cash from the liquidation?
a. Any amount in excess of P175,000
b. Any amount in excess of P117,000
c. Any amount in excess of P183,000
d. Any amount in excess of P198,667
31. Jenny Co Acquired 80 per cent of the equity share capital of Smith Co on 1
October 20x3. The consideration given was P2,000,000 in cash and 400,000 equity
shares of Jenny Co. On 1 October 20x3 the market value of each Jenny Co’s shares
was P3 and the fair value of Smith Co’s net tangible assets was P2,000,000. The
non-controlling interest was measured at the proportionate share of the
acquirer’s net assets. Due to poor trading conditions the goodwill arising on
the acquisition of Smith Co, goodwill was determined to be impaired by 25 per
cent by the reporting date of 31 March 20x4.
32. For Job Order No. 369, Escalera Company incurred the following costs for the
manufacture of 200 units of a novelty gadget:
Original cost accumulation:
Direct materials…………………………………………………………………………………………………P 13,200
Direct labor…………………………………………………………………………………………………………… 16,000
Factory overhead (150% of direct labor)……………………………………… 24,000
Total………………………………………………………………………………………………………………………………P 53,200
Page 8 of 25 0915-2303213 resacpareview@gmail.com
ADVANCED FINANCIAL ACCOUNTING & REPORTING
ReSA Batch 43 - May 2022 CPALE Batch
24 April 2022 1:00 PM to 4:00 PM AFAR Final Pre-Board Exam
33. The Moon Company acquired a 70% interest in The Swan Company for P1,420,000 when
the fair value of Swan's identifiable assets and liabilities was P1,200,000.
Moon acquired a 65% interest in The Homer Company for P300,000 when the fair
value of Homer's 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. Under PFRS 3 Business
combinations, what figures in respect of goodwill and of gains on bargain
purchases should be included in Moon's consolidated statement of financial
position?
a. Goodwill: P580,000; Gains on the bargain purchases: P116,000
b. Goodwill: Nil or zero; Gains on the bargain purchases: P116,000
c. Goodwill: Nil or zero; Gains on the bargain purchases: Nil or zero
d. Goodwill: P580,000; Gains on the bargain purchases: Nil or zero
34. Summary adjusted trial balance for the home office and branch of TJ Corporation
at December 31, 20x4 are as follows:
Debits: Home Office Branch
Other assets . . . . . . . . . . . . . P 530,000 P 165,000
Inventories, January 1, 20x4 . . . . . 50,000 45,000
Branch . . . . . . . . . . . . . . . . 200,000 -
Purchases . . . . . . . . . . . . . . . 500,000 -
Shipments from home office . . . . . . - 240,000
Expenses . . . . . . . . . . . . . . . 120,000 50,000
Dividends . . . . . . . . . . . . . . . ___100,000 ____ _ -
Total debits . . . . . . . . . . . . . . P1,500,000 P 500,000
Credits:
Other liabilities . . . . . . . . . . P 90,000 P 25,000
Capital stock . . . . . . . . . . . . 500,000 -
Retained earnings . . . . . . . . . . 100,000 -
Home office . . . . . . . . . . . . . - 175,000
Unrealized profit in branch inventory 10,000 -
Sales . . . . . . . . . . . . . . . . 537,500 300,000
Shipments to branch . . . . . . . . . 200,000 -
Branch profit . . . . . . . . . . . . ____62,500 _________
Total credits . . . . . . . . . . . . . P1,500,000 P 500,000
Additional information:
a. The home office ships merchandise to its branch at 120% of home office
cost.
b. Inventories at December 31, 20x4 are P70,000 for the home office and
P60,000 for the branch. The branch inventory is at transfer prices.
Compute the combined:
Net Income Cost of Goods Sold
a. P 370,000 P 480,000
b. P 200,000 P 480,000
c. P 132,500 P 467,500
d. P 200,000 P 467,500
35. 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 P150,000. The following information are ascertained:
(1) What is the balance of the Home Office account on the books of the branch as
of December 31, before adjustments? (2) What is the adjusted balance of the
reciprocal accounts?
a. (1) P117,420; (2) P106,920
b. (1) P123,000; (2) P 96,420
c. (1) P117,420; (2) P179,920
d. (1) P121,920; (2) P179,920
A company enters into bankruptcy proceedings on April 30. Its balance sheet on
that date is as follows:
Cash P 25,000 Accounts payable P 70,000
Merchandise 60,000 Loan payable 150,000
Plant and equipment, net 100,000 Stockholders’ equity (35,000)
Total P185,000 Total P185,000
None of the liabilities are secured. The following transactions occur between April
30 and August 31:
• Merchandise with a book value of P45,000 was sold for P30,000.
• Plant and equipment with a book value of P40,000 was sold for P25,000.
• Wages and administrative expenses of P10,000 were accrued.
• An initial payment of 30 cents per peso of indebtedness was paid to the unsecured
creditors.
36. The statement of realization and liquidation would show total: (a) “assets to
be realized” and (b) “liabilities not liquidated”:
a. (a) P160,000; (b) P164,000
b. (a) P185,000; (b) P164,000
c. (a) P160,000; (2) P154,000
d. (a) P185,000; (2) P154,000
37. On 25 June 20x9 Cambridge Co received an order from a new customer, Circus Co.
for products with a sales value of P900,000. Circus Co enclosed a deposit with
the order of P90,000.
On 30 June 20x9 Cambridge Co had not completed credit checks on Circus Co and
had not despatched any goods. Cambridge Co is considering the following possible
entries for this transaction in its financial statements for the year ended 30
June 20x9.
(i) Create a trade receivable for P810,000.
(ii) Include P90,000 in revenue for the year.
(iii) Recognise P90,000 as a contract liability.
(iv) Include P900,000 in revenue for the year.
(v) Do not include anything in revenue for the year
According to PFRS 15 Revenue from Contracts with Customers, how should Cambridge
Co record this transaction in its financial statements for the year ended 30
June 20x9?
a. (i) and (iv) only
b. (ii) and (iv) only
c. (ii) and (v) only
d. (iii) and (v) only
45. What amount would Joey calculate as the stand-alone selling price of the five
year right to operate as a Joey Monitor retail establishment?
a. P135,000
b. P150,000
c. P585,000
d. P600,000
46. What journal entry would Joey Monitor record on July 1, 20x6, to reflect the
sale of a franchise to Althea?
a. Cash . . . . . . . . . . . . . . . . . 600,000
Unearned franchise revenue . . . . 600,000
b. Cash . . . . . . . . . . . . . . . . . 75,000
Notes receivable . . . . . . . . . . . 525,000
Unearned franchise revenue . . . . 600,000
c. Cash . . . . . . . . . . . . . . . . . 75,000
Notes receivable . . . . . . . . . . . 525,000
Franchise revenue . . . . . . . . 75,000
Unearned franchise revenue . . . 525,000
d. Cash . . . . . . . . . . . . . . . . . 75,000
Notes receivable . . . . . . . . . . . 525,000
Franchise revenue . . . . . . . . 600,000
47. How much revenue would Joey Monitor recognize in the year ended December 31,
20x6, with respect to its franchise arrangement with Althea? (Ignore any interest
on the note receivable.)
a. P 9,000
b. P450,000
c. P465,000
d. P474,000
48. Gupta Industries received a P300,000 prepayment from Packard Associates for the
sale of new equipment. Gupta will bill Packard an additional P100,000 upon
delivery of the equipment. Upon receipt of the P300,000 prepayment, how much
should Holt recognize for a contract asset, a contract liability, and accounts
receivable?
a. Contract asset: P0; contract liability: P300,000, accounts receivable, P0.
b. Contract asset: P300,000; contract liability: P0, accounts receivable, P0.
c. Contract asset: P0; contract liability: P300,000, accounts receivable,
P100,000.
d. Contract asset: P300,000; contract liability: P0, accounts receivable,
P100,000.
49. Accorsi& Sons specializes in selling and installing upscale home theater
systems. On March 1, 20x6, Accorsi sold a premium home theater package that
includes a projector, set of surround speakers, and high quality leather seats,
along with complete installation service, for P32,500. If sold separately, each
of these goods and services would have cost P15,000 (projector), P12,500
(speakers), P17,500 (seats), and P3,000 (installation), respectively.
50. NN Company consigns sign pens to retailers, debiting Accounts Receivable for
the retail sales price of the sign pens consigned and crediting Sales. All costs
relating to the consigned sign pens are debited to expenses of the current
accounting period. Net remittances of the consignees are credited to Accounts
Receivable
In December, 800 sign pens costing P60 each and retailing for P100 a unit were
consigned to SS Store. Freight cost of P800 was debited to Freight Expense by
the consignor. On December 31, SS Store remitted P35,505 to NN Company in full
settlement of the balance due. Accounts Receivable was credited for this amount.
The consignee deducted a commission of P10 on each sign pens sold and P45 for
delivery expense. The number of sign pens sold by SS Store is:
a. 355
b. 395
c. 400
d. None of the above
51. How should the cost of issuing debt in an acquisition be recognized in business
combination?
a. Expensed
b. Amortized over the term of the debt
c. Deducted from the value of the debt
d. Deducted from shareholders' equity
52. How should accounting fees for an acquisition be treated in business combination?
a. Expensed in the period of acquisition
b. Capitalized as part of the acquisition cost
c. Deferred and amortized
d. Deferred until the company is disposed of or wound-up
53. A parent company received dividends in excess of the parent company’s share of
the subsidiary’s earnings subsequent to the date of the investment. How will
the parent company’s investment account be affected by those dividends under
each of the following accounting methods?
Cost Method Fair Value Model
a. No effect Decrease
b. Decrease No effect
c. No effect No effect
d. Decrease Decrease
60. The exchange rate quoted for future delivery of foreign currency is the
definition of a(n):
a. direct exchange rate.
b. indirect exchange rate.
c. spot rate.
d. forward exchange rate.
61. The best definition for direct quotes would be "direct quotes” measure
a. how much foreign currency must be exchanged to receive 1 domestic currency.
b. current or spot rates.
c. how much domestic currency must be exchanged to receive 1 foreign currency.
d. exchange rates at a future point in time.
63. Which is not one of the four types of hedging categories that exist?
a. Cash flow hedge.
b. Fair value hedge.
c. Net investment hedge.
d. Designated hedge.
e. None of the above
64. The arrangement is governed by a contract between the operator and the government
(the grantor) that sets out performance standards, mechanisms for adjusting
prices or rates and arrangement for arbitrating disputes. Such arrangements are
often described as:
a. a “build-operate-transfer” (BOT) arrangement, a “rehabilitate-operate-
transfer” (ROT) or “public-to-private” service concession arrangement.
b. Conditional Cash Transfer Program
c. Feeding Program
d. Housing Program
Page 15 of 25 0915-2303213 resacpareview@gmail.com
ADVANCED FINANCIAL ACCOUNTING & REPORTING
ReSA Batch 43 - May 2022 CPALE Batch
24 April 2022 1:00 PM to 4:00 PM AFAR Final Pre-Board Exam
65. The PFRIC 12 applies only if:
a. the grantor controls or regulates what services the operator must provide
with the infrastructure, to whom it must provide them, and at what price;
and
b. the grantor controls – through ownership, beneficial entitlement or
otherwise - any significant residual interest in the infrastructure at the
end of the term of the arrangement.
c. Both a and b
d. None of the above
66. In comparing the translation and the remeasurement process, which of the
following is true?
a. The reported balance of inventory is normally the same under both methods
b. The reported balance of equipment is normally the same under both methods.
c. The reported balance of sales is normally the same under both methods.
d. The reported balance of depreciation expense is normally the same under both
methods.
67. Which of the following would be used in the calculation of the gross profit
recognized in the third and final year of a construction contract that is
accounted for using the percentage-of-completion (overtime) method?
Actual contract Price Total Costs Income Previously Recognized
a. Yes Yes No
b. Yes Yes Yes
c. Yes No Yes
d. No Yes Yes
68. When comparing the percentage-of-completion (overtime) and cost recovery methods
of accounting for long-term construction contracts, both methods will report
a. the same balances each period in the Progress Billings account.
b. the same expense for cost of construction each year.
c. the same amount of income in the year of completion.
d. the same inventory carrying value each year during the construction period.
- END –
6. To equate P40,000 to P25,000 plus bonus, the bonus should amount to P15,000 (P40,000 –
P25,000). Based on the foregoing the following equation should be developed:
Bonus = 10% (NI – Salaries – Bonus)
P15,000 = .10 [NI – (P100,000 + P25,000) – P15,000]
P15,000 = .10 [NI – P140,000]
P15,000 = .10 NI – P14,000
P29,000/. = NI
NI = P290,000 (b)
OR, Alternatively
P40,000 = P25,000 + .10 (NI – salaries – bonus)
P40,000 = P25,000 + .10 [NI – (100,000 + P25,000) – P15,000]
P40,000 = P25,000 + .10 [NI – P140,000]
P40,000 = P25,000 + .10 NI – P14,000
P40,000 = P11,000 + .10 NI
P29,000 = .10 NI
NI = P290,000 (b)
7. (220,000 FCUs) x (P0.68) = P149,600
8. (220,000 FCUs) x (P.68 - P.70) = P4,400 loss
9. Foreign exchange loss before adjustments………………………………………………………P 15,000
Add (deduct): adjustments
Gain on accounts payable – buyer (P64,000 – P60,000)……………………… ( 4,000)
Adjusted foreign exchange loss in the income statement.………………………………P 11,000
The P8,000 loss resulting from translation of a subsidiary is presented at the
stockholders’ equity section of the consolidated balance sheet.
Page 18 of 25 0915-2303213 resacpareview@gmail.com
ADVANCED FINANCIAL ACCOUNTING & REPORTING
ReSA Batch 43 - May 2022 CPALE Batch
24 April 2022 1:00 PM to 4:00 PM AFAR Final Pre-Board Exam
10. Cost of the oil: 10,000,000 barrels x P3,185 = P31,850,000,000;
or, alternatively: for every P1:132 rupiah, therefore for P3,185: 420,420 rupiahs. If
converted, the cost of oil in terms of Indian rupiah amounted to 4,204,200,000,000
(10,000,000 barrels x 420,420 rupiahs. The 4,204,200,000,000 rupiah peso equivalent would
be P31,850,000,000 (4,204,200,000,000 x P1/132 rupiah).
12. under equity method, the Parent’s retained earnings is the same with Consolidated RE.
16. it should be noted that Parent Company established the transfer price based on its
normal price (in this case it is assumed that the mark-up of the parent which is 25%
is also the normal transfer price).
Sales – Pot (parent) 1,120,000
- Skillet (subsidiary) 420,000
Total 1,540,000
Add(Deduct): Intercompany sales - down ( 140,000)
Consolidated Sales 1,400,000
Unrealized Profit in
Ending Inventory of
Skillet (subsidiary)-down
Page 19 of 25 0915-2303213 resacpareview@gmail.com
ADVANCED FINANCIAL ACCOUNTING & REPORTING
ReSA Batch 43 - May 2022 CPALE Batch
24 April 2022 1:00 PM to 4:00 PM AFAR Final Pre-Board Exam
EI of Skillet :
Sales of Pot 140,000
x: EI of Skillet 40%
EI of Skillet 56,000
X: GP of Pot
(1,120 – 840)
1,120 25% 14,000
Consolidated CGS 966,000
On the other hand, if there was no indication as to the established transfer price as
stated in the problem, then the mark-up of Subsidiary Skillet should be used. The
answer then, would be: P1,400,000 and P974,400 (upstream sales)
17. The foreign currency is the functional currency, so a translation (or current rate method) is
appropriate. All assets are translated at the current exchange rate of P.19.
18. The peso is the functional currency, so a remeasurement (or temporal method) is appropriate.
Inventory is a nonmonetary asset (carried at cost) is remeasured at the historical exchange
rate of P.16. Marketable equity securities is a nonmonetary asset (carried at market value)
are remeasured at the current exchange rate of P.19.
19. I. - b
P41,500 - [(P3,000 + 6,000) + P14,000 + (P3.50 x 3,600)] ……P 5,900
II. - a
Actual Factory Overhead (Control):
P2,300 + P3,700 + P19,400 + P5,400 = P30,800
Less: Applied Manufacturing Overhead: P3.50 x 8,500 = 29,750
Underapplied Overhead = P30,800 P29,750 P 1,050
20. CC AC Additional
Old 308,000 308,000 / 70%
New 110,000 132,000 22,000
418,000 440,000 = 100%
22.
Raw and In Process Finished Goods Cost of Goods Sold
13,000 20,000 500
500,000 493,000 493,000 498,000 498,000
2,000
2,500 1,000
24.
Hyp. MVJt. Costs
Pep: 5,000 x (P50-P10)= P 200,000 x 50% = P100,000
Vim: 4,000 x (P40-P 5) = 140,000 x 50%
P340,000 P170,000*
Joint Costs………………………………………………………………………………………………P172,000
Less: Joint costs allocated to By-product…………………………………………….. 2,000
Joint costs to joint products…………………………………………………………………..P170,000
29.
Quincy capital before liquidation …………………………………………………………. P 50,000
Less: Share in liquidation expenses (8,000 x 40%) …………………………….P 3,200
Quincy capital before realization of non-cash assets ……………………………P 46,800
Less: Cash received by Quincy (minimum) ………………………………………... P 0
Share in the loss on realization ……………………………………………………………..P 46,800
Divided by: Profit and loss ratio …………………………………………………………… P 40%
Loss on realization ………………………………………………………………………………..P 117,000
Less: Non-cash assets ………………………………………………………………………….. 300,000
Proceeds from sale ………………………………………………………………………………..P 183,000
30.
The shares valued at P5,000,000 should be classified as temporary restricted net assets since
it is intended for a particular purpose (purpose restrictions) which were not yet released. While,
the P2,000,000 should be considered as permanently restricted for reason that they are to be
retained indefinitely (perpetually).
31.
FV of Subsidiary:
Consideration transferred:
Cash P 2,000,000
Shares: 400,000 shares x P3 1,200,000
FV of NCI (20% x P2,000,000) 400,000 P 3,600,000
Less: BV of Smith 2,000,000
Allocated excess P 1,600,000
Less: O/U of A & L (BV=FV) -0-
Positive Excess: Goodwill P 1,600,000
Less: Goodwill impairment (25%) ____400,000
Positive Excess: Goodwill (net of impairment) P 1,200,000
32.
Original costs charged to Work-in-Process P 53,200
Add: Rework Costs
Direct Materials P 2,000
Direct Labor 3,200
Applied Overhead (150% of P3,200) 4,800 10,000
Total Costs of Job No. 369 P 63,200
Divided by: Good Units _____200
P 316
33.
Fair value of Subsidiary - Swan
Consideration transferred………………………………………………………………………………………P1,420,000
Less: Fair value of identifiable assets and liabilities of Swan (70% x P1.2 million)… 840,000
Goodwill (partial)..……………………………………………………………………………………………………….P 580,000
Gain on a bargain purchase is recognized in profit or loss not on the statement of financial
position.
Notes:
1. Moon measures non-controlling interests at the relevant share of the identifiable net assets
at the acquisition date; therefore partial goodwill is in effect.
2. Fair value is assumed to be the same with the carrying/book value.
34.
Sales (P537,500 + P300,000)……………………………………………….………………………….. P 837,500
Less: Cost of goods sold
Merchandise inventory, beg. [P50,000 + (P45,000 / 1.20)]P 87,500
Add: Purchases……………………………………………………………………. 500,000
Cost of Goods Available for Sale…………………………............. P 587,500
Less: MI, ending [P70,000 + (P60,000 / 1.20)]………………. 120,000 467,500
Gross profit……………………………………………………………………………………. P 370,000
Less: Expenses (P120,000 + P50,000..…………………………………….. 170,000
Net Income…………………………………………………………………………………….. P 200,000
36.
Statement of Realization and Liquidation
Assets to be
realized: Assets realized:
Merchandise P 60,000 Merchandise P 30,000
Plant and Plant and
equipment _100,000 P160,000 equipment _25,000 P 55,000
38.
I. - a
Budget Allowed Based on Actual Hours:
Variable: P40 per DLH x 5,595…………………………………………………………P 223,800
II. - d
Zero, there are no allocations between service departments when using the direct
method.
39.
Actual
IP, beginning 7,500
Started in Process 80,000
87,500
FIFO
Actual WD EUP- M WD EUP-CC
IP, beginning 7,500 0 0 60% 4,500
Started, Fin. and Transf 65,000 100% 65,000 100% 65,000
IP, ending 13,000 100% 13,000 70% 9,100
NL 1,100 100% 1,100 100% 1,100
AL ___900 100% ___900 100% ___900
87,500 80,000 80,600
Cost per EUP P120,000 P350,000
80,000 80,600
P1.50 P4.34
Cost of IP, ending:
CPD:…………… …………………………………………………………………………………………………………P -0-
CTD: (Current)
Materials: 13,000 x P1.50…………………………………………………………………………… 19,500
Conversion cost: 9,100 x P4.34…………………………………………………………………. 39,494
P 58,994
40. Number of units = P33,600/16.00 = 2,100
[AH (2,100 x 2)] x P2.60 = P2,080 U; AH = 5,000
Actual Quantity: (P4.00 x AQ) (2,100 x P4.00) = P500 U
AQ = 2,225
41. Amounts charged to patients of P800,000 less contractual adjustments, P110,000 = P690,000.
42. (Because of the time restriction, the amount spent for playground equipment remains in
temporarily restricted net assets until depreciated. The equipment was bought at the end of
the year so that no depreciation was recorded and no reclassification was made.)
43. B
44.
(1) Southern has 400,000 – 6,000 = 394,000 shares outstanding. 394,000 x P72 =
P28,368,000
(2) Fair value of identifiable net assets acquired = P10,000,000 + P90,000,000 + P8,000,000
+ P30,000,000 P130,000,000 = P8,000,000.
To report P40,000,000 in goodwill, the total acquisition cost must be P48,000,000. The earnings
contingency is P1,000,000, so P47,000,000 in cash must be paid.
45.
Total amount of franchise agreement P 600,000
Less: stand-alone selling price of training (15,000)
Less: stand-alone selling price of building and equip. __(450,000)
Stand-alone selling price of five-year right P 135,000
x – _P10x_ = P35,550
P100
P100x – P10x = P3,555,000
P90x = P3,555,000
x = P39,500
Number of ball pens sold = _P39,500_ = P395
P100 per unit