ADVANCED FINANCIAL ACCOUNTING AND REPORTING
ADVANCED FINANCIAL ACCOUNTING AND REPORTING
INSTRUCTIONS:
INSTRUCTIONS: Select the best answe r for each of the follow ing questions. ALL questions are compusor! an"ALL questions are compusor! an" #UST $e attempte"
#UST $e attempte". Mark only one answer for each item on the ans wer sheet provided. Strictly NO ERS!RES ""O#E$. Erasures will render your e%amination answer sheet &N'"&$. !se (EN)&" NO. * only. +OO$"!),-
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. /he partnership agreement between ,en and very stipulates that ,en is to receive a *01 bonus on profits2 with residual profit and loss to be apportioned in the ratio 34*2 respectively. #hich partner has a greater advantage when the partnership has a profit and hen it incurred a loss5
a. (rofit 6 ,en7 "oss 6 very
b. (rofit 6 very7 "oss 6 very c. (rofit 6 ,en7 "oss 6 ,en d. (rofit 6 very7 "oss 6 ,en
*. /he estimated amo unt available for free ass ets in aStatement of ffairs for a business enterprise undergoing bankruptcy liquidation is equal to the assets
a. )urrent fair value less carrying amounts b. )arrying amounts less current fair values
c. )arrying amounts plus gain or less loss on reali8ation
d. )arrying amounts plus loss or less gain on reali8ation
3. s sug gested by rticle 9:9 of the (hilippine )iv il )ode and relevantPFRSs2 the net contributions ;assets and related liabilities assumed by the partnership< of the partners to the partnership are measured at a. fair value
b. cost
c. discretionary amount determined by partners d. any of these
=. On November 2 *0 =2 ,laus )o. obt ained franchise rights from >/he Originals? )o. /he initial franchise fee included consideration for inventory and equipment to be delivered to ,laus. ll of the necessary preparations were completed2 and ,laus )o. started operations2 on @anuary 32 *0A. /he inventory and equipment were delivered to ,laus on $ecember 2 *0=. Bow would >/he srcinals? )o. recogni8e revenue for the supply of
inventory and equipment5
a. recogni8e in full on November 2 *0=
b. recogni8e in full on $ecember 2 *0= c. recogni8e in full on @anuary 32 *0A
d. deferred and amorti8e over the franchise term starting @anuary 32 *0A
A. n advance cash distribution plan is prepared a. Each tim e cash is distributed to par tners in an
installment liquidation
b. Each time a partnership asset is sold in an installment liquidation
c. /o determine the ord er and amo unt of cash ea ch partner will receive as it becomes available for distribution
d. None of these
C. /he interest of the withdrawing2 retiring2 or dec eased partner shall be adDusted for which of the following5 &. Bis share of any profit or loss up to the date of his
withdrawal2 retirement or death2 if he withdraws2 retires or dies during the year
&&. Bis share of any revaluation gains or losses as at the date of his withdrawal2 retirement2 or death
a. & only c. & or && b. && only d. & and &&
9. State the proper order of partnership liquidation. &. Outside creditors
&&. Owners interests &&&. &nside creditors a. &2 &&2 &&& c. &&2 &2 &&& b. &&&2 &2 && d. &2 &&&2 &&
:. !nder cash priority program2 when all of the pri oritiesare paid2 any remaining cash distribution is
a. allocated to the pa rtners based on thei r respective profit or loss ratios.
b. allocated to th e partners based on the ba lances in their capital accounts after allocation of losses. c. allocated to the partners based on their preF
computed priorities.
d. allocated to the par tners based on the rel ative values of their capital balances.
G. !nder the cost recovery method2
a. the initial collections on the sale ar e treated as recovery of the inventory sold. /hus2 no gross profit or interest income is recogni8ed until total collections from the sale equals the cost of inventory sold.
b. the initial collections on the sal e are treated as recovery of the inventory sold. /hus2 no gross profit is recogni8ed until total collections from the sale equals the cost of inventory sold.
c. or H
d. None of the above.
0. !nder (S 6 )onstruction )ontracts2 the primary issue in accounting for construction contracts is a. the allocation of contract revenue to the
accounting periods in which construction work is performed.
b. the allocation of contract costs to the accounting periods in which construction work is performed. c. the determination of percentage of completion.
d. and H.
e. ll of the choices.
. (S 6 )onstruction )ontracts provides that any e%pected loss on the construction contract is
a. recogni8ed as an e %pense immediately.
b. recogni8ed as an e%pense immediately as an adDustment to the revenue already recogni8ed. c. recogni8ed as an e%p ense immediately adDunct to
the costs of construction already recogni8ed. d. deferred and amorti8ed over the remaining
construction period.
*. #hich of the follo wing appears on the statement of financial position of a contractor who is applying (S 6 )onstruction )ontracts5
a. )onstruction in progress as current asset. b. (rogress billings as current liability.
c. mount of due from ;due to< customers for contract work.
d. ny of the choices.
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3. /he reali8ation of income on installment sales transactions involves
a. Recognition of the difference between the cash collected on installment sales and the cash e%penses incurred
b. $eferring the net income related to installment sales and recogni8ing the income as cash is collected
c. $eferring gross profit whi le recogni8ing operating or financial e%penses in the period incurred
d. $eferring gross profit and all additional e%penses related to installment sales until cash is collected =. &n selecting an accounting method for a newly
contracted longFterm construction proDect2 the principal factor to be considered should be
a. /he terms of payment
b. /he nature of the con tractors technical facilities used in construction
c. /he method commonly used by the contractor for other longFterm construction contracts
d. /he degree to which a reliable est imate of the costs to complete and e%tent of progress toward completion is practicable
A. SM$) )onstruction )ompanys proDect e%tend over several years and collection of receivables is reasonably certain. Each proDect has a contr act that specifies a price and the rights and obligations of all parties. Hoth the contractor and the customer are e%pected to fulfill their contractual
obligations on eac h proDect. Reliable estimates can be made of the e%tent of progress and costs to complete each proDect. /he method that SM$) must use to account for construction revenue is a. &nstallment sales method
b. (ercentageF ofF completion method
c. )ompleted 6contract method d. )ost recovery method
C. One of the more popular input measures used to determine the progress toward completion in the percentageF ofFcompletion method is
a. RevenueFpercentage basi s b. )ostFpercentage basis c. (rogress completion basis
d. )ost 6toF cost basis
9. /he theoretical support for using the perce ntageF ofF completion method of accounting for longFterm construction proDects is that it
a. &s more conservative than the cost recovery method
b. Reports a lower net inco me fig ure than the cos t recovery method
c. More closely conforms to the cost principle
d. (roduces a realistic matc hing of e%penses with revenues
:. &t is the oneFoff payment made by the franchisee to the franchisor to obtain the franchise right.
a. &nitial franchise fee
b. )ontinuing franchise fee c. Ii%ers fee
d. ny of the choices
G. /here is substantial performance when4
&. the franchisor has no remaining obligation or intent to refund any cash received or forgive any unpaid notes or receivables.
&&. initial services required by the franchise agreement are substantially performed.
&&&. no other material conditions or obligations e%ist.
a. &2 && and &&& c. & and && only b. && and &&& only d. & and &&& only
*0. &f franchise righ ts are repossessed and the franchisor refunds the consideration received2
&. the original fra nchise sal e is can celed. >+a in or loss? from cancellation may arise after derecognition of account balances associated with the franchise cancelled.
&&. the transaction shall not be reg arded as a sale cancellation. Bowever2 impairment loss may arise from forfeiture of collectibles.
a. & only c. & or && b. & & only d. & and &&
*. #hich of the foll owing is an inven tory account of a manufacturer but not of a merchandiser5
a. )ost of goods manufactured b. Merchandise &nventory
c. #ork in process inventory
d. $irect labor
**. )ost of goods manufactured is used to compute *3. #hich of the following is a period cost5
*=. @ob order costing would be an appropriate system to account for the manufacture of
*A.
written order sent to inform the purchasing department of a need for materials is called a
*C. !
n d e r a periodic inventory system2 the purchase of materials is recorded in an account entitled
*9.
/he total of the materials subsidiary ledger inventory cards must be equal to the amount in the following account *:.
#hich of the following is usually prepared daily by employees for each Dob worked on5
Page
of
a. )ost of goods sold
b. Manufacturing overhead applied c. $irect materials used
d. Iinished goods inventory a. Materials inventory b. $irect labor c. Manufacturing overhead d. Selling e%penses a. ircraft b. Matches c. Jippers d. )ardboard bo%es a. (urchase order b. (urchase requisition c. Receiving report d. Materials requisition form
a. )ost of +oods Sold
b. (urchases
c. Materials inventory d. #ork in (rocess &nventory
a. )ost of +oods Sold b. (urchases
c. Materials &nventory
d. #ork in (rocess &nventory
a. @ob time tickets
b. /ime card c. (unch card d. )ost control card
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*G. !nder a perpetual inventory system2 the purchase of materials is recorded in an account entitled
30.
Iactory worker fringe benefit costs are usually charged to
/he following condensed balance sheet is prepared for K!&E" and RO+ER2 who share profits and losses in the ratio of C04=02 respectively4
Other assets ( =0A2000 ccounts payable
(0:2000 Kuiel2 loan :2000 Kuiel2 capital 9A2A00
Roger2 capital 3G2A00
/otal ( =*32000 /otal ( =*32000
3. /he partners have decided to liquidate the partnership. &f the other assets are sold for (3=C2A002 what amount of the available cash should be distributed to K!&E"5
a. (3C2000 c. (**2=00
b. (AC2000 d. (GA2000
On @anuary 2 *0=2 the partners SE"L2 /ESS2 and !RS!"2 who share profits and losses in the ratio of A434*2 respectively2 decided to liquidate their partnership. On this date the partnership condensed balance sheet was as follows4
)ash ( =A2000 "iabilities ( A=2000 Other assets **A2000 Selya2 capital 9*2000
/ess2 capital :2000 !rsula2 capital C32000
/otal ( *902000 /otal (*902000
On @anuary A2 *0=2 the first cash sale of other assets with a carrying amount of (3A2000 reali8ed (0:2000. Safe installment payments were made on the same date. 3*. Bow much cash should be distributed to each partner5
SE"L /ESS !RS!" a&
a& (A2000 (A2000 (==2000 $&
$& (=02000 (=A2000 (3A2000 c&
c& (AA2000 (332000 (**2000 "&
"& (32A00 (=A2G00 (3G2C00
)"&RE2 $&SL2 and E"S&E formed the )$E (artnership on ugust 2 *0A2 with the following assets2 measured at fair market values2 contributed by each partner4
)"&RE $&SL E"S&E
)ash ( 3*=2000 (0:2000 (*G2C00
ccounts
receivable 9320:0 F G2:00
(lant2 (roperty2
Equipment ;((E< 2C*02000 3=02*00 F part of )"&REs cash contribution2 (*C20002 comes from personal borrowings. lso2 the ((E of )"&RE and $&SL are mortgaged with the bank for (G9*2000 and (9*20002 respectively. /he partnership is to assume responsibility for these ((E mortgages. /he partners have agreed to share profits and losses on a A4*43 ratio2 to )"&RE2 $&SL2 and E"S&E2 respectively.
33. #hat is the capital balance for each partner at the opening of business on ugust 2 *0A5
a. )"&RE2 (20=A20:07 $&SL2 (39C2*007 E"S&E2 (**2=00
b. )"&RE2 (2C2*007 $&SL2 (=:20007 E"S&E2 (*=C2000
c. )"&RE2 (2G:92A007 $&SL2 (:G20007 E"S&E 2 (*92A00
d. )"&RE2 (20GA2*07 $&SL2 (A=92AC07 E"S&E2 (:*2A*0
On @anuary 2 *0A2 IR&$ and +")E formed a partnership by contributing cash of (=0A2000 and (*9020002 respectively. On Iebruary *0A2 (artner IR&$ contributed an additional (3A2000 cash to the partnership and on ugust 2 *0= (artner IR&$ made a permanent withdrawal of (C92A00. On May 2 *0A2 (artner +")E contributed machinery with a fair market value of (G02000 and a net book value of (9A2000 when contributed. On November 2 *0A (artner +")E contributed an additional (=A2000 cash to the partnership. Hoth partners withdrew oneFfourth of their salary allowances in *0A.
/he partnership reported a net income of (*A92=00 in *0= and the profit and loss agreement are as follows4
a. &nterest at C1 is allowed on average capital balances7
b. Salaries of (*2900 per month to each partner7 c. Honus to IR&$ of 01 of net income after interest2
salaries2 and bonus7 and
d. Halance to be divided in the ratio of C4= t o IR&$ and +")E2 respectively.
3=. $etermine how the net income will be allocat ed to the partners4
a. IR&$2 (C02000 and +")E2 (*C2000 b. IR&$2 ( :02000 and +")E2 (0C2000 c. IR&$2 (902000 and +")E2 (C2000
d. IR&$2 (A32000 and +")E2 (0=2=00
B&$EE and &SHE" are partners sharing profits and losses in the ratio of C01 and =012 respectively. /he partnership balance sheet at ugust 302 *0= follows4
)ash ( *2A0 ccounts payable ( 32A00 Other assets G2900 Baidee2 "oan A2:A0 &sabel2 "oan G2000 Baidee2 capital :2000 &sabel2 capital =02A00
/otal ( =02:A0 /otal (=02:A0
t this date2 @OS&E was admitted as a partner for a consideration of (=32:9A cash for a =01 interest in capital and in profits.
3A. ssume @OS&E is admitted by purchase of =01 eachof the srcinal partners interest2 determine how the (=32:9A will be apportioned to B&$EE and &SHE" a. B&$EE2 (3*2:A0 and &SHE"2 (A2G00 b. B&$EE2 (3*2=A0 and &SHE"2 (C2300
c. B&$EE2 (*G2ACA and &SHE"2 (=230
d. B&$EE2 (3*2GA0 and &SHE"2 (A2:00
Page
of
a. )ost of +oods Sold b. (urchases
c. Materials inventory
d. #ork in process inventory a. #ork in process &nventory b. $irect labor
c. dministrative e%penses
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(R&N)ESS )OM(NL filed a voluntary bankruptcy petition on ugust A2 *03 and the statement of affairs reflect the following amounts4
(ledged with fully secured creditors
(ledged with partially secured creditors Iree ssets
"iabilities with priority Iully secured creditors (artially secured creditors !nsecured creditors HOO, )RRL&N+ '"!E ( A02000 G02000 *02000 ( =A02000 "iabilities ( 3A2000 302000 002000 *902000 ( A3A2000 ES/&M/E$ )!RREN/ '"!E ( :A2000 C02000 C02000 ( =0A2000
3C. Bow much cash will be avail able to pay the unsec ured nonFpriority claims5
a. (*=02000 c. (C02000
b. (:02000 d. (*A2000
/he following data were taken from the statement of affairs of MR)"R )OR(OR/&ON4
ssets pledged for fully secured liabilities ;current fair value2 (9A2000< ssets pledged for partially secured
liabilities ;current fair value (A*2000< Iree assets ;current fair value 2 (=02000< !nsecured liabilities with priority Iully secured liabilities (artially secured liabilities !nsecured liabilities without priority
( G02000 9=2000 902000 92000 302000 C02000 *2000 39. /he amount that will be paid to creditors with priority
is4
a. (92000 c. (92A00
b. (C2000 d. (C2*00
S&"'ER ("//ER )OM(NL which began operations on @anuary *2 *0=2 appropriately uses the installment method of revenue recognition. /he following information pertains to the companys operations for *0= and *0A
*0= *0A
Sales ( 3092*00 (=C02:00
)ollections from
*0= sales 0*2=00 A2*00
*0A sales 0 A32C00
ccounts written off from *0=
sales *A2C00 9C2:00
*0A sales 0 A32C00
+ross profit rates =01 301
3:. #hat amount should S&"'ER ("//ER )OM(NL report as deferred gross profi t in its $ecember 32 *0A balance sheet5
a. ( 9C2:00 c. ( =2C::
b. (0*2=00 d. ( CC2AC0
HRO#N $ERHL )OM(NL began operations on @une 2 *0A. /he following information are e%tracted from its records at yearFend. )ost of installment sales2 (*2GG2=*=7 )ost of Regular Sales2 (2C:02000. MarkFup on installment sales is =01 of cost while regular sales is 33F31 based on sales. t the end of *0A2 the balance of &nstallment accounts receivable is (*2A*020007 ccounts receivable is
(29C2000. Operating e%penses ;includes losses on repossession< total to 9A1 of the reali8ed gross profit. 3G. #hat is the net income for the year ended $ec ember
32 *0A5
a. (3*G2=* c. ( A=32G:=
b. (A=C2000 d. ( *9G2G:
HE&+E S/",S )OR(OR/&ON2 which began operations on @anuary 2 *0=2 appropriately uses the installment method of accounting for revenues. /he following information is available for the years ended $ecember 32 *0= and *0A4
*0= *0A
)ost of installment sales ( GC02000 (2G*02000 +( reali8ed on sales made in
*0= ==2000 :C2=00
*0A F G*2000
+(R based on cost 301 =01
=0. #hat is the ending balance of installme nts receivable at $ecember 32 *0A5
a. (*2*CA2C00 c. (2C3*2000 b. (290=2000 d. (29C2000
On @anuary 2 *0=2 M SER'&)ES2 &N). signed an agreement authori8ing """ )OM(NL to operate as a franchisee over a *0Fyear period for an initial franchise fee of (392A00 received when the agreement was signed. """ commenced operations on @uly 2 *0=2 at which date all of the initial services required of M SER'&)ES had been performed. /he agreement also provides that """ must pay annually to M a continuing franchise fee equal to A1 of the revenue from the franchise. """ )OM(NLs franchise revenue for *0= was (2002000. =. Ior th e year ended $ecember 32 *0 =2 how much
should M SER'&)ES record as revenue from franchise fees with respect to the """ account5 a. (G*2A00 c. (*329A0
b. (392A00 d. ( C02A00
+RE/ $NE2 &N).2 franchisor2 entered into a franchise agreement with (&/H!"" )OM(NL2 franchisee2 on @uly 2 *0A. /he total franchise fees agreed upon is (AA020002 of which (A02000 is payable upon signing and the balance is to be covered by a note payable in four equal annua l installments. /he direct franchise cost incurred was (3*A2000. &ndirect franchise e%penses of (32*A0 was also paid. /he relevant interest rate is *1 and the note is reasonably assured of collection. /he agreement also provides for the payment of continuing franchise fees at =1 of the franchisees gross sales. /he franchise outlet commences its operations on $ecember 2 *0A and had a gross sales of (*A02000 for the month.
=*. ssuming the notes are interestFbearing2 how much net income will be reported for *0A5
a. (G:29A0 c . ( *3329A0
b. ( 992AA0 d. ( 9329A0
On January 2, 2015, QUICKBUILD ERECTORS
entered into contract to contruct t!o "ro#ect$ T%e
&o''o!in( data re'ate to t%e contruction acti)itie$
(roDect (roDect H
)ontract price (G=A2000 (C9A2000
)ost incurred during *0A A=02000 C302000 Estimated costs to complete *902000 A92A00 Hillings to customer 3392A00 C092A00
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=3.What amount of gross prot should QUICKBUILD
ERECTORS report n ts !"#$ n%ome statement under the follo&ng methods'
(ercentage of Jero (rofit )ompletion Method Method
a. ( 0 ( ;G02000<
b. ( ; *2A00< ( ;**2A00<
c. ( ; **2A00< ( 0
d. ( ; **2A00< (;*2A00<
==. HES/ F E'ER )ONS/R!)/&ON2 &N) . recogni8es construction revenue and costs using the percentage of completion method. $uring *0=2 a single longFterm proDect was begun which continued through *0A. &nformation on the proDect follows4
*0= *0A
ccounts receivable (3A02000 (20A02000 &ncurred costs during year 3C92A00 C9*2000 )onstruction in progress =*92000 2*9=2000 Hillings on contract 3A02000 2=902000 /he construction accounts are at amounts t0Fdate. #hat is the gross profit recogni8ed from this longFterm contract5 *0= *0A a. ( 992000 ( 9G:2000 b. 992000 3A02000 c. AG2A00 ==:2000 d. AG2A00 9A2000
)&+N" ERE)/ORS began operations on @anuary *2 *0A. $uring the year2 the company enter ed into a contract with /EM )ompany to construct a manufacturing facility. t that time )&+N" estimated that it would take five years to complete the facility at a cost of (32G392A00. /he total contract price for the construction of the facility is (A2=C:29A0. $uring the year2 the company incurred (GC*2A00 in construction costs related to the construction proDect. /he estimated cost to complete the contract is (*2930.000 /EM was billed and paid 301 of the contract price subDect to a 01 retention.
=A. !sing the percentage of completion method2 how much is the e%cess of )onstruction in (rogress over )ontract Hillings or )ontract Hillings over )onstruction in (rogress5
a. (*932=39 ;current liability< b. (*932=39 ;current asset< c. (=392A00 ;current asset<
d. (=392A00 ;current liability<
(resented below are items taken from the unadDusted trial balances of N)R )ompany and its Manila Hranch on $ecember 32 *0A4
Bome Office Hooks
Hranch Hooks Shipment to branch (*2*A02000
IO'OH& 9=G2*A0
Shipment from BO (*2G*A2000
(urchases ;from O'< 20:=2A00
M&2 @anuary G*239A
M&2 $ecember 3 3CA2C*A
Sales =2:002000
E%penses 3:*2A00
ssuming that the branch ending inventory acquired from other vendors ;O'< is (932*A
=C. #hat is the net incom e ;loss< of the bran ch insofar as the home office is concerned5
a. (A3=2000 c. (3A2000 b. (C:29A0 d. ;(=929A0<
/eardrops )ommercial )orp. maintains a branch in &loilo )ity. Selected balances taken from the books of /eardrops and its Hacolod )ity branch as of $ecember 32 *0A are as follows4
Bome Office Hranch
Office Merchandise &nventory2
@an ( *2000 :2000(
(urchases A02000 302000
Shipments from Bome
Office G329A0
Shipments to Hranch 9A2000
Hranch &nventory
llowance G29A0
Sales A2000 9C2A00
Merchandise &nventory2
$ec 3 =2000 023A0
(=23A0 of the branchPs ending inventory came from purchases from suppliers other than the home office. =9. s far as the home office is concerned2 the cost of
sales of the branch was4
a. ( G92*0 c. (*2=00
b. (0*2:A0 d. (32:A0
$uring the year *0A the Hacolod )orporation bills its &loilo branch at =01 of cost. +oods billed at (3=C2A00 were shipped to the branch. /he account llowance for overvaluation has a balance of (**2=00 before adDustment. /he beginning inventory of the branch from the home office at cost is (G32C007 the beginning inventory of the branch from outsiders is (A2*002 purchases from outsiders is (302A00.
=:. )ost of goods available for sale of the &loilo Hranc h in *0A is
a. (=:C2:00 c. (C0G2*00
b. (C*32*=0 d. (=C32A00
+B& )ompany bills its Hulacan Hranch for merchandise shipments at *A1 of cost. s of cutFoff date2 $ecember 32 *0A2 the following data were available4
Mdse. Ir Bome Office;at billed prices< Mdse. (urchased from Outsiders /otal Merchandise2 $ecember (3002000 (*02000 (=*02000 dditions to stock during $ecember =A02000 3C02000 :02000 Merchandise2
$ecember 3 =*02000 A02000 A902000
/he branch returned (A2000 worth of merchandise to the Bome Office acquired at billed price.
=G. /he amount of the allowance for overvaluation account that was reali8ed as income in view of branch sales for the month of $ecember was4
a. (C32000 c. (:92A00
b. b. (CC2000 d. (:=2000
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/he Hatangas )orporation operates a branch in "ipa )ity. /he Bome Office ships merchandise to the branch at *A1 of its cost. Selected information from the $ecember 32 *0A trial balance are as follows4
Bome Office Hooks Hranch Office Hooks Sales (C002000 (3002000 Shipments to branch *002000 (urchases 3A02000
Shipments from Bome
Office *A02000
&nventory2 @anuary 00.000 =02000 llowance for Overvaluation
of branch &nventory A:2000
E%penses *02000 A02000
&nventory at $ecember 32 *0A4
Bome Office (302000
Hranch Office C02000
A0. /he combined net income of the home office and the branch after adDustment is4
a. (3*C2000 c. (A002000
b. (=GC2000 d. (*:02000
Kuad )orporation purchases all of the net assets of )hrome2 &nc.2 for (3*02000. &mmediately prior to the combination2 )hromes net assets were carried on the books at (:020002 and )hrome had retained earnings of (*=2000. /he fair value of )hromes net assets at the date of combination is (*=:2000. Kuad )orporation had retained earnings of (=02000 and no goodwill immediately prior to the combination
A. &mmediately after the combination2 the combined company reports goodwill and retained earnings of4 +oodwill Retained Earnings
a. ( 0 ( =02000
b. ( 0 ( C=2000
c. ( 9*2000 ( =02000
d. ( 9*2000 ( C=2000
/he )arl )ompany will issue (0 par value common stock for the net assets of (H )ompany. /he fair market value per share of )arls common stock is (=0. /he following is the list of accounts of (H )ompany on the date of the acquisition.
Hook 'alue Iair Market 'alue
)urrent assets (*:02000 ( 3*02000
(lant assets ;net< C:02000 2*:02000
"iabilities 3*02000
)ommon stock C=2000
dditional paidFin capital *AC2000
Retained earnings 3*02000
A*. /o have an income from acq uisition of (*020002 the number of shares to be issued by )arl )ompany should be?
a. 302000 shares c. *G2000 shares
b. 302=00 shares d. 3A2000 shares
/he )arl )ompany will issue (0 par value common stock for the net assets of (H )ompany. /he fair market value per share of )arls common stock is (=0. /he following is the list of accounts of (H )ompany on the date of the acquisition.
Hook 'alue Iair Market 'alue
)urrent assets (*:02000 ( 3*02000
(lant assets ;net< C:02000 2*:02000
"iabilities 3*02000
)ommon stock C=2000
dditional paidFin capital *AC2000
Retained earnings 3*02000
A3. /o have a goodwill of ( *020002 the number of shares to be issued by )arl )ompany should be
a. 302000 shares c. *G2000 shares b. 302=00 shares d. 3A2000 shares
On ugust 2 *0=2 Hlite )ompany paid (:A02000 for all the net assets of Ong Enterprises in a transaction properly recorded as a purchase. /he recorded assets and liabilities of Ong Enterprises on ugust 2 *0=2 follow4
)ash ( :02000
&nventory *=02000
(roperty and equipment2 net =:02000
"iabilities ;:02000<
On ugust 2 *0= it was determined that the inventory of Ong had a fair market value of (G020002 and the property and equipment ;net< had a fair market value of (AC02000. A=. #hat is the amou nt of good will resulting from the
business combination5
a. ( 0 c. (*002000
b. ( *02000 d. (*302000
AA. Stain )orporation is an :01Fowned subsidiary of (aint )orporation. $uring *0= Stain sold merchandise that cost (GC2000 to (aint for (*:2000. (aintPs ending inventory at $ecember 32 *0= contained unreali8ed profit of (C2=00 from the intercompany sales. $uring *0A Stain sold merchandise that cost (*2000 to (aint for (A*2000. OneFhalf of this remained unsold by (aint at $ecember 32 *0A Ior *0A (aintPs separate income was (*002000 and StainPs reported net income was (A*2000.
/he consolidated net income for *0A will be4 a. (30*2000 c. (3029*0
b. (33:2=00 d. (*9=2A00
AC. ( )ompany acquired a G01 interes t in S )ompany in *03 at a time when S )ompanyPs book values and fair values were equal to one another. On @anuary 2 *0A2 S sold a machine with a (*=2000 book valu e to ( )ompany for (=:2000. ( depreciates the machine over 0 years using the straight line method. Separate incomes for ( and S for *0A are as follows4
( )o. S. )o.
Sales (GC02000 (AC02000
+ain on sale of machinery
*=2000 )ost of goods sold ;=002000< ;A*2000< $epreciation e%pense ;*=02 000< ;9*2000< Other e%penses ;GC2000< ;*=02000< Separate incomes (**=2000 (*02000 /he consolidated net income for *0A is4
a. (3==2000 c. (302=00
b. (3**2=00 d. (3*2AC0
R&)B )orporation paid (2*A2000 for an :01 interest in BR$ )orporation on @anuary 2 *0A at a price (392A00 in e%cess of underlying book value. /he e%cess was allocated (A2000 to undervalued equipment with a tenF year remaining useful life and (**2A00 to goodwill which was not impaired during the year. $uring *0A2 BR$
TeamPRTC
)orporation paid dividend of (C02000 to R&)B )orporation. /he income statements of R&)B and BR$ for *0A are given below4
R&)B BR$
Sales (*2A002000 (20002000
)ost of sales ;2*A02000< ;A002000< $epreciation
e%pense ;*A02000< ;A02000< Other e%pense ;A002000< ;**A2000<
Net income (A002000 (*A2000
A9. )onsolidated net income for *0A is
a. (C3*2*A c. (C*32*A
b. (*C32*A d. (C3*2*A
( )orporation acquired 901 of the voting common stock of S )ompany at a time when S )ompanys book values and fair values were equal. Separate incomes of ( )orporation and S )ompany for *0A are as follows4
( )orporation S )ompany
Sales C332C00 3A02=00
)ost of +oods Sold 3:=2000 G*2000
Operating e%penses A2*00 GC2000
Separate income from
own operations 3=2=00 C*2=00
&ntercompany sales from ( to S for *0= and *0A are summari8ed as follows4 )ost Selling (rice !nsold at yearF end &ntercompany sales 6 *0= *=02000 39=2=00 301 &ntercompany sales 6 *0A C:2000 *C=2000 =01
A:. /he *0A consolidated income statement will show cost of goods sold of
a. ( 3020:0 c. ( 3:=2000 b. ( A9C2000 d. ( G*2000
On September 2 *0A @unDun )ompany received an order for equipment form a foreign customer for I) 3002000 when the (hilippine peso equivalent was (GC2000. @unDun shipped the equipment on October A2 *0A2 and billed the customer for I) 3002000 when the (hil. (eso equivalent was (002000. @unDun received the customers remittance in full on November C2 *0A2 and sold the I) 3002000 for (0A2000.
AG. &n its income statement for the year ended $ecember 32 *0A2 @unDun should report a foreign e%change gain of
a. (A2000 c. (G2000
b. (=2000 d. No gain no loss
lecks )orporation had the following foreign currency transactions during *0A
a. Merchandise was pur chased from foreign supplier on @anuary *02 *0A for the (eso equivalent of (G02000. /he invoice was paid on March *02 *0A at the (hil. (eso equivalent of (GC2000.
b. On @uly 2 *0A2 lecks borrowed the (hi lippine peso equivalent of (A002000 evidenced by a note that was payable in the lenders local currency on @uly 2 *0A. On $ecember 32 *0A2 the (hil. (eso equivalent of the principal amount and accrued interest were (A*02000 and (*C2000 respectively. &nterest on the note is 01 per annum.
C0. &n lecks income statem ent2 the amount that should be included as a foreign e%change loss
a. ( 0 c. ( C2000
b. (*2000 d. (*92000
On pril :2 *032 )"MH )OR(OR/&ON purchased merchandise from an unaffiliated foreign company for 02000 units of the foreign companys local currency. )"MH paid the bill in full on March 2 *0A when the spot rate was (0.=A. /he spot rate was (0.C0 on pril :2 *03 and was (0.AA on $ecember 32 *0=.
C. Ior the year ended $ecember 32 *0=2 )"MH should report a transaction gain of
a. (2A00 c. (2000
b. ( A00 d. ( 0
On $ecember 2 *0=2 a (hilippine firm purchased a speculative hedge to buy 302000 foreign currenc y when the spot rate was (.0 and a C0 day forward rate was (.*. /he spot rate at $ecember 3 ;the companys yearF end was (.*A and a 30Fday forward rate was (. 3. #hen the speculative hedge was e%ercised on @anuary 32 *0A the spot rate was (. and a 30 day forward rate2 (.*.
C*. /he Dournal entry to record this hed ge would include a debit to )ontract Receivable in the amount of a. (332C00 c. (332000
b. ( C00 d. ( 0
C3. /he amount of foreig n e%change gain loss that would appear on the income statements of the (hilippine company resulting from this speculative hedge for the years ended *0= and *0A are
a. *0= Q (300 loss7 *0A Q C00 loss b. *0= Q (300 gain7 *0A Q C00 gain c. *0= Q (300 loss7 *0A Q C00 gain
d. *0= Q (300 gain7 *0AQ C00 loss
Irom the follo wing data2 question C to : shoul d be answered.
Opening inventory =2000 units
(ercentage of )ompletion 'alue Materials 001 (2GG* "abor A01 209= Overhead A01 :=C
(ut in process *02000 units
Materials value (*2000
"abor G2G:=
Overhead is 001 of labor cost
!nits completed and transferred *2000 units !nits in process at the end 32000 units
Materials 001
"abor and overhead C01 C=. /he equivalent production for material is
!nder verage !nder I&IO a.
*=2000 *02000
b. *02000 *2000
c. *02000 *=2000
d. *2000 *02000
San('ey, Inc$ *anu&acture a "roduct !%ic% (oe
t%rou(% t%ree conecuti)e "rocee, +roce 1, +roce
2, and +roce $ Data &or t%e *ont% o& Se"te*-er,
200. are a &o''o!/
P
PRROOCCEESSSS(( PPRROOCCEESSSS)) PPRROOCCEESSSS**
#ork in
(rocess2 beg. (:2000 (32000 (*2000
Materials added *02000 =2000 A2000
TeamPRTC )onversion costs 02000 02000 C2000 )losing work in process C2000 G2000 =2000
CA. #hat was the value of the outp ut transferred from (rocess 3 to the finished goods warehouse for the month of September5
a. (C32000 c. (C92000
b. (CA2000 d. (CG2000
"ego (lastics2 &nc. has two Doint products2 HH and $$2 and uses the net reali8able value method of allocating Doint costs. /he total Doint costs for the year *000 amounted to (3002000. $uring the year2 additional processing costs after splitFoff were (C02000 for HH and (*=02000 for $$. "ego produced C2000 units of HH and :2000 units of $$ during the year. /he selling price for HH is (*0.00 and for $$ is (A0.00.
CC. /he portion of Doint costs allocated to $$ during the year is
a. (9A2000 c. (:02000
b. (**A2000 d. (A02000
"ee )ompany produces two products in a single operation2 He% and Rom. @oint production cost for @une2 *0= were (302000. $uring the month2 further processing costs beyond the splitFoff point needed to convert the products into salab le form were (*A2000 and (3A2000 for 2C00 units of He% and :00 units of Rom2 respectively. He% sells for (A0 per unit and Rom sells for (00 per unit. "ee uses the net reali8able method for allocating Doint product costs. C9. Ior @une2 *0=2 the Doint cost allocat ed to product He%
were
a. (*02000 c. (32A00
b. (C2A00 d. (02000
/he accounting records for *0= of #agner Music )o. showed the following4
$ecrease in raw materials inventory ( =A2000 $ecrease in finished goods inventory A02000
Raw materials purchased 2*G02000
$irect labor payroll C002000
Iactory overhead G002000
IreightFout 3A2000
C:. /he cost of raw materials used for the period amounted to
a. (2*=A2000 c. (233A2000 b. (2*G02000 d. (23:02000
/he following information relates to @ob No. *=C:2 which is being carried out by Ile%y )o. to meet a customers order.
$ept. $ept. H $irect materials used (A2000 (32000 $irect labor hours
employed
=00 *00
$irect labor rate per hour (=.00 (A.00 Overhead rate per $" hour (=.00 (=.00 dm. and other overhead *01 of full production
cost
(rofit markup *A1 of selling price CG. /he selling price to the customer of @ob *=C: is4
a. (C2*A0 c. (92333
b. (*02:00 d. (G2A00
Rumors )ompany applied factory overhead as follows4 $epartment Iactory Overhead Rate Iabricating (9.9A per Machine hour Spreading A.0 per Machine hour +ossiping *.*A per Machine hour
ctual machine hours are4 G2000 hours for fabricating7 *92A00 hours for spreading and A2A00 hours for gossiping. 90. &f the actu al factory overhead cost for the peri od is (A9=239A2 how much is over ;under< applied factory overhead5
a. ;(2:9A.00< c. ;( :9.A0< b. ;(*32AC*.A0< d. ; (9C2*A.00<
+ e n " ++ e n " +
