7/25/2019 P1 09.15.12

1/18

ReSA

The Review

School

of

8Tel.

No.

735*9807

PRACTICAL

ACCOUNTING

I

Accountancy

&734-3989

Saturday

SePtember

15,

zOLz

Illultiolc Choicc

InstructJton:

Se-lccL

t-ile

i:rlr.r'ecL

aiiswer:'l'or

t:a'':it

of

Mar.k

ott

Jy oi:,:

.)r)swr

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each

it-'r.:n

by

sh;s:

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7/25/2019 P1 09.15.12

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C

7/25/2019 P1 09.15.12

3/18

Page

3

of

12

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4/18

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6/18

, ,

I

ne enew c oo

o ccounanq

/

Page

of

12

:;ea:rs'

time'

The..,Company

uses

the

Monte-Car1o

moclel

to

estj-mate

the

fair

'.'a1ue

of the

o;zions,

the

num-ber

of

empLoyees

,

that

wi]1

vest

and

the

'

Grant

day{

-

January

1,

20L3,

estimate

or

employees

leaving

,the

company

duri

ng..,,the

vest.ing

period

-

5?.

'

l:t,,u'-,

on

of

est

imate

-

January

1,

2074

--

estimate

of

employees

Ieaving

the'ccmpany

dr:r.i-ng

the

vest-ing

period

_

6t.

o

,Actual-

number

of

employees

ieaving

the

compariy

.-

Decembe

r

37,

ZOL5

'

,,)

.,"''

what

rvould

be

the amounL

of

expense

charged

in the

income statement.

for

,.

i.= year

ended

Dec. 31, 2Cl5? ,/ \ -

-

a)

P3,760,000

d

P3,

BB0,0O0

.:

17,

r,

pj,Soo,ooo .d)

p4,ooo,ooo

*.i.,I

,/

.,

/1-Rob"rLt

company,

a

public

]imired

company,

has granted

20

share

'/

apprec"iation

rights

to

each

of its.500

employees

on

January

1,

2004.

The

right-s

are

due

to vesL

on

December

31, 2OOlt

with

payment

being

made

on

Der:ember

31,

2008.

Assume

l-hat

80.?

of the

awards

vest.

Share prlces

are

as follows:

^Janu.ary

:

2gg ,

p1 ",;.

-December

31,

ZAO4,

p1g,.

December

31,

20a'/

,

p27;

D."*;;;;

;;,

';";;;,

'-.d;r$'=,;J,

.lni".i"li,;

:::;.Jff;I":;

ii;

t.ransaction

be

accounted

for

on

beeefrkrer

31/

200g?

a)

payment

to

empioyees

of

p32,000;

no gain

recorded

b)

payment

to

employees

of

p16,000,

gain

of

p33,000

i-s

recorded

c).,rpa],.ment

to

employees

of

p4g,AO0,

no

gai.n

::ecor:ded

-{

payme-.t

to

emproyee.s

.

of

p.32,000,

gain

of 10,000

is

recor:ded

lVCruiser

Company

reported

net

income

of

P3,000,000

for year

2012.

Durlng

"/

2A72,

Cruiser

Company

sold

equj-pment

costincr

p250,000

with

accumulated

depreciation

of

P120,000

for

a

gain

of

P50,000.

In

December

2OLZ,

the

company

purchased

equipment

costi.ng

P500,000

with

cash

and

1.Zqr

note

payable

of P300,000.

Depreciation

expense

for

the

year

was

p520,000.

Changes

occurred

in

several

balance

sheet

accounts

as

folfows:

V25C

,000

increase

400,000

,increase

30C,

000

lnc::ease

of

casLi

f

lows,

net r:ash

used

in

'i

.'1

irrvest

irrq

Equ"ipment

A'ccumul

ated

7/25/2019 P1 09.15.12

7/18

RgSA:

The Review

School

o

Accountancy

Direct-

materiaf

Direct

labor

a

)

Norle

b-)

P150,000

/

,rf

PZGZ,5oo

d)

P300,000

Page

o

P320,000

200,000

It .is

estimaLed

that

inc::emerltal

.overhead

costs

for constr:uction

amount

to

l4OZ

of direct-labor

costs.

In additlon,

fixed

costs

(exclusive of

interest)

of

\P700,000,

were

irycurred

during

the construction

period

and

a.llocated

to

ploduction on

the

basis

of

total

prime costs

(direct

labor

plus

direct

mater|al).

The

prime

costs

incurred

to

build

the

new

equ,ipment

amcunted

to

35% of

the

totaf

prime

costs

incurred

fof the

period.

The

company

foJ-lows

the

policy

of capitalizing

all

possibfe

costs

on

sel-f-consLructron Projects.

To

assist

j.n

firrancing

the construction

of

the equipment,

a

P500,000,

10%

loan

was acquir:ed

at

t-he begi-nning

of the

6-month

construction

period.

The

company

car:ries

no other

clebt except

for trade

accounts

payable'

For

simplic.ity,

assume

that

aI1

construct-ion

expenditures

took

place exactly

midway

through

the

project-, that

is,

all

expenditures

took

place

with 3

months

remaining

in the

const::r-rction

period-

What

is the

c

7/25/2019 P1 09.15.12

8/18

marker-

rate

There

are

no

loan. Whet

a) PlC,000

't).)-41?.,

600

i;

t

r.c

tn;

LnsLon

Ccmpany

'.rn

no

Icnger

be

cf interest

f or

a

simi

I

a.t

tirree-year

future

pc

r

for mance

cgdit

i

ons

attachec-l

amounr-

shou

d be

iqd,uctecJ

imined

j-at-e

Iy

c

)

Pi

5,

gtlo

d) P2B,50tl

Page

8

of

12

5"5 per:

year:

(ie

the

foan

to

the entity)

.

t.o

the inter

est

-

f ree

in

the

profiL

or ioss

i

^1'

'D

@'.

29.

,,'' c)

P6zi

C,

000

./ d)

P800,cc0

C)

Pl:42.,00C1

.i)

p75_r,000

i^ o,J

)

Yy'

a)

Nil

b)

P251,000

Extract,s

f rom

the

draf

t f

i nancial

staternents;

o

f

31

December ?.012-,

a.e

set

or:t below:

Stateaent of

coryrehensirre

incozre

Revenue

Del

t,a

for

the

year

encled

P250,0C0

(

i e-q,

Q_Q i

54,

000

Cost

of sales

Opening

rrrventories

Purchases

Closing

inventories

Cr'

7/25/2019 P1 09.15.12

9/18

RsSA:

The

Review

School

of

Accountancy

If Crunch

ComPanY

is

a

reccqn

Lzed

on

November

o{i"i.

StaterarenX

of

finanajal

position

extracts

Trade

receivables

Trade

payabLes

Fl

P25,000

d)

P50,000

/

s,4,on

December

31,

2014,

woods

company

changed

its

defined

beneflt

pension

/

plan to

defined

contribution

plan. wocds

agrees

with

the

employees

to

pay

tfr"*

p18r

000,000

in tot-al

on

lhe

j-ntroduction

of

a defined

contribution

p1an.

T',he

employees

forfei-t

any

pension entitlement

for

the

defined

tenefit

pJ-an.

The

penslon

liability

recognized

1n

the

balance

sheet

at

December

31,

2C14

was

P20,000,000

How

would

this

curta,ilmenl-

be

accountecl

fqt'

in

the

ba,l-ance

sheet

at

December

31,

20L4?

a-)'A

settl.ement

gain of

P2,000,000

should

be

shown'

b)

The

pension

liabllity

should

be

credited

to

reserves'and

a

cash

payment

of

plg,000,0C0

should

be

showrr

in

efpense

in the income

statement.

c)

The cash

payment

should

go

to res/rres

and

the

pensio5r

1iabi.1j-ty

should

'

be'

shown

as

a

credit

to

the

incgtne

stat-ement

'

,l)

A

credit

to

reserves

should

k-'e/made

of

P2,000r000'

lq;(ro'ur-;^,

hords

a

portfoLio

of

receivables

with carrving

amount

"t

)/;r,

OOO,

OOfi

.

The

company

enters

int-o

a

f actor:ing

arrangement

wit'h

Finance

"

;;;;;v",r.aur

which

it

t-ransfers'the

port-folio via

,"

i.T-,"-igllil.

t:

Finance

Company

in

exchange

for

P1,800,00C

of-

cash.'

-

A11

:;mS

-EdlTected

from

debtor:s

aLe

paid by

cross

cornpany

to a

specifically

nominated

bank

account

opened

by

Einance

company.

Cross

Company

agrees

to r:eimburse

Finance

Company

ir-r cash

for

any.shortfal

between

the

amount

co1

lected

from

the

r:eceivable

ancl

consideration

feceived

of P1,800,000-

Once

the

receivabl.es

have

been

repaid,

any

sumE."i;ofl.ected

above

Pi,800r000

less any

' interest

on

the initial

payment

the'date the

debtors

pay, will.

be

paid to

Cross

ComPanY.

What

amount

of

immecliately

after

a)

none

b)

P200"

000

c)- P3C,0C0

.

dt

P600,000

/

a linancial

dsseL

with an

arnort

izeci

cost-

of

P5,126,565

as

2074-

The financial

asset

with

a

face

value of

P5',000,000

Page

9 of

12

t-., ,*:)

rllt\.lr

,'

-{

/,-

31

Dec

2011

23,000

ln(

4f.K

42,80O

i.

.",,'.i

year ended

31

3

Dec

2Al2

68,000

21,600

What

is

the

casl-t

f rom

operbtions

f or

Delta

f or

the

Deceinber

2012

using

the

direct

method?

-a)

P22,5OO

net outflow

c)

P40,400

net

outfJow

b)

P3B,

600

net outf

low

d)

P44,80t1

neL

outf

iow

zz

.,{rrnch

con,pany

decides to distribute a vehicle it

owns

to its

sole

4'

shareholdei.

tf,.

diriOend

is

approved

by

the

sharehoJ-der

on

November

30,

ZOLL.

The,

vehi.e{e

is

delivereci

to

the

sharehol-der

on January

31,

2012.

The

company,

sr.r{o:

icy

on the

vehicle

is

to account

for them

at

amortized

cost.

Crune|

co*pany

f,as

a

December

31 report-ing

date.

The

vehicle

has

a carryi-nE,

value

of

P100,000

on

November

30, 2AL1.

The

fair

value

of

the

vehicle

were

'P150,000

on

Nove:nber

30,

2071,

P1.45,000

on

December

31,

,

2OLl

and

P125,000

on

Janu-ary-3

l',

-2A12'

i*

ry5 *51 l-LV1

what

amount

of

gain should

be

30,

2411?

-

c)

P45,000

receivable

sirputo

cross

Company

continue

to

recognize

the

Lrans

f e,r?

/

;+

l];313:333

i

-

-.

'

'-

7/25/2019 P1 09.15.12

10/18

R6SA:

The

Review

School

of

Acc'ountancy

.amort-izecl

co-st- c;J. l.he

.i

risl.

ruliir.:nt

L:tt

a)

P4.,

u50,

O0o

../

b)/y'4

,

a46

|

331

',))

.

,,

r].rr,i

U-'

-.

\

Page

lO

of

12

I

ancj

a

nr.rmjnal

ratr.,_,

of i0?

r,,ras

i

-ssu.:f the

:-'l. -i.:jmelll ./I

X,-;I

'

jlrc. / .l'il

.i

,

Lorr,.,

'\'ljri r:\r':

-{r'r^),:L()

i

-'

oir

Janrrarv

2,

?.aiJ, lil-ar

compar)./

ori,:;inaLesi

a

i0-ye:ar 7ir

p4,000,000.

The

-Li-.an

i:ar:r

j-es.

an

anri,:a.i

inL.er:es:

-':at..e Ol

'/?:

.rlCJ

.lS

repaygb.l.e

at-

par

at_

the

+rtrr-i

i-ii' yea.L

lC

([)e,'i:t:mbetr'

.1

).

,

101',i,\.

S]t,,rr

(loiltF;arr],

ch;lrges

a

I.25?,

(P50,000)-

nort-re.iundab,Lr-'

1

7/25/2019 P1 09.15.12

11/18

I

I

.-1

''r'i

FrgSA:

The

Review

School

of

Accoununcy

Page

of12

TherewaSnoadditionalcostj.ncurredonthechangeofintentiononthe

property.

what

amount

of

gain

shoulcl

Havert

corporation

recognize

as

a

result

of

the

transfe::?

a)

P2\,2AA,OAA

c)

P29'475'000

b)

P2I,225,OAA

dI

P29'

5o0',

ooo

0,.,^,1Companypurchasedl0tofKindCorporation,s200,000olrtstandingshares

U#';.-;;;

;u."t

on

Januarv

2'

2at4

for,9Z's00'000'

on

Jantarv

2'

2014'

Man

Company

purchased

anoth"r

ab,000

sha.r6i

of

Kirrd

for.P6,000,000'

The.e

wasnogoodwillasaresultot-'u'.tf,tr'-'acquisitionKindreportedearnlnqs

ofP6,00C,000andP7,000,0O0for.''tr,eyearendedDecember3L'2O14and

December

31,

201-5,

respectiv":,y.-7{lo

dividends

were

declared

in

years

201"4

and

2015,

respectirrely

by

i;f{

Ccmpany'

what

amount

of

income

from

investment

should

l'1an

cr*p9i(i

-,epo.ri

i;

its

statement

of

comprehensive

income

o*r.a"J*Jo*

itI-':-""g#*ent

for

the

year

ended

December:

31'

2a15?

-'f-7)o^e

c)

P1'

400'

000

bl.-

-P600,000

d)

P2'

100,000-

"

Ai'.at

Dec.

31,

2010,

Pr:oof

Company

had

4

50rp00

.

sl.rarel

of

,

ordinary

shares

.-/"'

tti"i""jr*.

on

september

i,

Zalt,.

.

?s'

acid

j-tional

150,

000

shares

ot

ordinary

shares

were

i"",-,",1

.

In

acld'lUion,

Proof

l-rad

Pl-0'000'000

of

6%

convertiblebondsoutstandingatDecember3l,2OLO.whi,llrareconvertj-ble

into

300,000t

"rrntu=

of

ordi-n-a::y

shar'ies

'

The

carrying

value

of

the

bonds

as of

Deceniber

j1,

2010 and based

on

a rate of

8?

is

Pgt7a5,B00'

,No

bonds

}Jerecor}vertedintoordina.ysha.esirr20ll.Thenetincomefortheyear

endedDecember:31,2011wasP3,750,000.AssunLj.ngtheincometaxratewas

32z,whatshouldbethedilutedear:n-i'ngspbrshareforthe.,y.u'.endedDeC.

t

I

i:)

eP

it

3.1

,

2U.1

of

Proof

ComPatrY?

a)

85.20

_9t"''P5

-3L

c)

P5.44

d)

P7.

s0

c)

P44',000,000

d)

P50,000,000

yf

P115

|

ooo

i

ncrease

d)

P1,

300,000

increase

t

20L5

000

P10,000,000

:

On

,January

2,

201L

,

B::and

Company

rece

j-ved

grant

of

P60

'

000

'

000

to

compensate

i-t

f or

costs

it

ir-r"L.r-*a

in

planti

ng

trees

over

a

period

of

fiveyears.BrandCompanywil],lrrcursuch.costlnthisnianner:

}OLL

2Ot2

2AL3

2OL4

P2,;oo,

ooo

P,4,

coo,

ooc

P6,

ooo,

ooo

PB'

ooo'

cosLSj'ncurredlnplant-ingtheLreesshowedP2,000,000and

000

in

years

201i

and

2012,

respect-rve1y'

However'

in

2013

and

up

2A74,

the

company

has

stopped

planting

trees

Due

to

the

non-fulfillment

of

its

obli

an

i-mmediate

repa)'Toent

of

tlre

grant

irr

considered

reasonable'

Whatamountshouldberecognizedasanexpenserelatedtotherepalanentof

C]r

ant

?

ffione

b)t

P2,000,0c0

'

1"

Ac'

7/25/2019 P1 09.15.12

12/18

1,

lr

RsSA:

The

Review

School

of Accountancy

Pagel2of12

repor:teci

by Monkey

in it-s

Liie re.s1.r'ut:turinq

a-ssuminq

r,iJhal-jst-}.leamount'cfs;harepreITI'iuITi.o..e

statemerrt

of

f inanc ia.l

po.s

i t.orr

as a

r.esi: it_ c;l

-ia

l-.;.;ur.

,l

C.{u-ty

rS

a

C(-1rrV" r.

rioi,

.:l

rjr.'Lrl.l

.,

)

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gr

P

9i10, OcL)

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(j)

Pl,00il

,0aJ0

t'

1r..,.-,

l:)tr,:i

t'.(\.

purchasr:d

two

rriacLrlrres

for-

p2ll

0r 000

eai:h

oir

,Jarrrtary

2,

?.072..

-'-'lle--

r'1.1

.:hirres

I, 'erc

pirt

irri,o

irsli::

i.nrnLediat,eLy.

Mai:hi.ne 7\ iras

a usefuf

iife

ol i.ii,e

years

ancl

cJn

onIy

be

u:,;ecl in

on.e

re-qearr-:h.

pr6l-]

er-:L.

Mach.ine

B

',,'i

i

I Lrr.:

i-i::ecl

f-or

two

y-en

rs

orr

;:l

rese,rrrt}l

arirl rjr:ve I

o;:ment

pro

j

r-:t-:1.,

arrrl

then

'-;sr:d

i>y l-l,e pro

7/25/2019 P1 09.15.12

13/18

ReSA

The Revi.cw

Sc.r,.rnl

of

.p.ccountancy

.

t

'I:t

No.

7is-98,17

& 734-3999

_

*,

Final

Pre-board

-

?4uatsb-Gglut-rsd-

PracticalAeountine

i

1.

4- D

6A

1.

c

n

Caslt

ou

hand

P

186,000

-

30,C00

*

t

s,00C

Peffy

casrr fund

P5,150

*

800

-

600

-

400

As,ar,

barrk

P475,000

+

25,0CC

+

43,0C0

I-andhank

P640,000

-

20,000

rlerrohank

tir te

deposit

-l'otal

B

balanccs

DIT

P"oceeds

o1'lcan

Bank

e;ror

Procc

eds

Ftom

a customer

Outstanding

cl^ecks

Bank

service

charge

Bank

eror

bank dehir

memo

NStr

Correct

cash barance

B

hventory

beginning

Net

Purchases(4,000,000 +

.120,00Cr

+

30,q00-

500,000

-

30,000)

Goods

availa,ble for

sale

Estimated

cost

of

sale

(6,2

10,0')0

-

10,001

x

600,o1

Es"imated

inventory,

December-

31, 2012

Actual

inventory

phvsical

counr

Inventon

.,hortage

P

141,000"

3,350,

543.000

/

620,000

/

[q-00q/

P

r.457.3s0tcl

b,

,

P3 19,480.-

Pl7l,94O/

4g,gov

8,OOQ/1

(

67,250t'

(

g$oov

(

t,2s0Y

c

7.60Cr"

PUgJAo_

P300.000

P 450,000

3 920.000

P4,370,000

3.720.000

P

650,000

__4?-0J0a

P

230.0C0

P

350,u00

6,000,000

30,000

20,000

10,000

(

200.000)

P6.210.000

Accr:runt

receivable.

l2l'3

1

l

l?

Collection

Sales

discou:tt

Write-off

Sales returns

Account

receivable.

l2/3

I I 1 I

Gross

sales

Jan. 1,2010

Dec.

3

l.

2010

500.000

*

dl4.266

:

85,734

Dec.

31. 201

1

500,000

-.+07,4(t7

:92.5q2

Present

value:

P2,000,000

x .925926:

F

1,851,fl5i1

P3,000,000

x.8573-r9

: 2.5i2011.

'

Total

P4.423.8@_

Amortized

cost

Less:

Present

value

Impairment

loss

110

(3-yec--old

onimols)x

P6,OOO

l0

(0.-5

year-old

aninrals)

x P4,0i)(.1

Total

fair

value

as

of

Decemhr

r

3 I

Carrying

value

Value in

use

Impairment

loss

5,779,326

s.092,592

:,c00,000

Cost

AD

(l-5,000

x l5/50)

r.5,000,000

(

,1,500,c00

P5.092,592

P4J_).3.869

P_

6tE

Z2l

50

years

(

l5)

P660,000

40.000

P700.000

P3

59,0'00

P2

75.895

93"1C5

2.

l

7/25/2019 P1 09.15.12

14/18

BV

l/r/ll

De'preciation

-

I

I

BY

yltz

10,500

i,:;,r

(

30u.(,fi))

10,200,000

--98{000

-15

l

ears

(

l)

34

14.700.{xx}

(

42().{X,())

I

r.290.000

.1.200.J(

0

(

r20.100)

4,080,000

Fair

value

(1,500,000

x 6.144) 9.216.000

i

Impairment

loss

B

Acquisition

cost

Net

asset acquired

Goodwill

P1.000.000

?.000

)00

-.vvY: a-:-

I'

'.00C,,]00

Particulars

Gp25lgiil 0Ss 'fu .b-t$9 l

Total

Cross

carrying amour$

1/1

/i

I

Accumulated

depreciation

Carrying amount

,

n8Vll

Impairment

loss

-

I

l.

.

DePrecia'ion

-

2Ol2'

.

Carrying

veLlue

-

l2/3|ll2

Carrying

vaiue

-

1/1/1t

Depreciaiion

-

I

I

P1,000,000

rJ00J900)

P2,000.000

P3,000.000

L-

2C1.000)

(--200.t/00)

i

04

Decertber

31, 20t

l,

the

recoverable amounl

o"t.lncient

Ltd

is

Pl,-260,C00.

I

D i'roject A

-'cost

incurred

during 2010

P.2,200,0)t)

{'roject

C

-

cost

incurred during

2010

3.800.00

ltotal

cost 16 e

s3nitalized

L6.ulQ.O(tQ

De,preciation

-

12

(2,000,000

-

200,0u0

>