AFAR Finals Dec 2017

1 pts Horse Co. manufactures products A and B from a joint process. During October, sales values at the point of “split -off” were P50,000  for 4,000 units of product A and P100,000 for 12,000 units of product B. Selling prices per unit are P25.00 and P12.50, respectively, for product A and for product B.  Assume that the joint cost allocated to product A by using the market value method was P40,000. The production cost of product B would be reported at __________. P80,000 P90,000 P130,000 P140,000

1 pts Magna Co. produces three products, A, B and C. A and C are joint products while B is a by-product of A. No joint cost is allocated to the by-product. The production data for the year 2017 were as follows: In Department I, 220,000 kilos of raw materials are processed at a total cost of P240,000. After processing, 60% of the units are transferred to Department II while 40% of the units (now C) are transferred to Department III. In Department II, the materials are processed further at total additional cost of P76,000. On completion of the process, 70% of the units (now A) are transferred to Department IV while the other 30% emerge as B, the by-product, which is sold at P1.20 per kilo. The selling expenses related to B amounted to P16,200. In Department III, C is processed further at total additional cost of P330,000. In this department, a normal loss units of C occurs during processing, which is equal to 10% of the good output. The good output of C is sold at P12 per kilo. In Department IV, A is processed further at total additional cost of P47,320 after which it is ready for sale at P5 per kilo. Market value method is used in allocating joint costs and treating the NRV of by-product as an addition to product A sales. Determine how much of the total joint cost of P240,000 is allocated to product A. P101,564 P91,210 P95,267 P88,880

1 pts Magna Co. produces three products, A, B and C. A and C are joint products while B is a by-product of A. No joint cost is allocated to the by-product. The production data for the year 2017 were as follows: In Department I, 220,000 kilos of raw materials are processed at a total cost of

P240,000. After processing, 60% of the units are transferred to Department II while 40% of the units (now C) are transferred to Department III. In Department II, the materials are processed further at total additional cost of P76,000. On completion of the process, 70% of the units (now A) are transferred to Department IV while the other 30% emerge as B, the by-product, which is sold at P1.20 per kilo. The selling expenses related to B amounted to P16,200. In Department III, C is processed further at total additional cost of P330,000. In this department, a normal loss units of C occurs during processing, which is equal to 10% of the good output. The good output of C is sold at P12 per kilo. In Department IV, A is processed further at total additional cost of P47,320 after which it is ready for sale at P5 per kilo. Market value method is used in allocating joint costs and treating the NRV of by-product as an addition to product A sales. Determine how much of the total joint cost of P240,000 is allocated to product C. P138,436 P148,790 P144,733 P151,200

1 pts Silver Company’s operations for the month just ended originally set up a 60,000 direct labor hour level, with budgeted direct labor of P960,000 and budgeted variable overhead of P240,000. The actual results revealed that direct labor incurred amounted to P1,148,000 and that the unfavorable variable overhead variance was P40,000. Labor trouble caused an unfavorable labor efficiency variance of P120,000, and new employees hired at higher rates resulted in an actual average wage rate which was higher by P0.40 than the standard average wage rate per hour.

The total number of standard direct labor hours allowed for the actual units produced is  __________. P52,500 P60,000 P62,500 P70,000

1 pts Use the information presented below: Budgeted fixed overhead Standard variable overhead (2 DLH @ P2 per DLH)

P10,000 4 per unit

 Actual fixed overhead  Actual variable overhead Budgeted volume (5,000 units x 2 DLH)  Actual DLH Units produced

P10,300 P19,500 10,000 DLH 9,500 4,500

Calculate the total overhead spending variance. P500 unfavorable P800 unfavorable P1,000 unfavorable P1,300 unfavorable

1 pts Union Company uses a standard cost accounting system. The following overhead costs and production data are available for August: Standard fixed overhead rate per DLH Standard variable overhead rate per DLH Budgeted monthly DLH  Actual DLH worked Standard DLH allowed for actual production Overall overhead variance, favorable

P1 P4 40,000 39,500 39,000 P2,000

The applied factory overhead for August should be ____________. P195,000 P197,000 P197,500 P199,500

1 pts Information on Ripley Company’s overhead costs for the January production activity is as follows:

Budgeted fixed overhead Standard fixed overhead rate per DLH Standard variable overhead rate per DLH Standard DLH allowed for actual production  Actual total overhead incurred

P75,000 P3 P6 24,000 P220,000

Ripley has a standard absorption and flexible budgeting system, and uses two-variance method (two-way analysis) for overhead variances. The volume (denominator) variance for January is ________.

P3,000 unfavorable P3,000 favorable P4,000 unfavorable P4,000 favorable

1 pts Woodman Company applies factory overhead on the basis of direct labor. Budget and actual data for direct labor and overhead for the year are as follows: Direct labor  Factory overhead costs

Budget P600,000 P720,000

 Actual P550,000 P680,000

The factory overhead for Woodman for the year is ___________. Over applied by P20,000. Over applied by P40,000. Under applied by P20,000. Under applied by P40,000.

1 pts Schneider, Inc. had the following information relating 2017. Budgeted factory overhead  Actual factory overhead  Applied factory overhead Estimated labor hours

P74,800 P78,300 P76,500 44,000 hours

If Schneider decides to use the actual results from 2017 to determine the 2018 overhead rate, what will the 2018 overhead rate be? P1.650 P1.700 P1.738 P1.740

1 pts Warley Company has under applied overhead of P45,000 for the year. Before disposition of the under applied overhead, selected yearend balances from Warley’s accounting records were:

Sales Cost of goods sold Direct materials inventory Work-in-process

P1,200 P720,000 P36,000 P54,000

Finished goods

P90,000

Under Warley’s cost accounting system, over or under applied overhead is allocated to appropriate inventories and CGS based on year-end balances in its year-end income statement. Warley should report CGS of __________.

P682,500 P684,000 P756,000 P757,500

1 pts Some units of output failed to pass final inspection at the end of the manufacturing process. The production and inspection supervisors determined that the incremental revenue from reworking the units exceeded the cost of rework. The rework of the defective units was authorized, and the following costs were incurred in reworking the units: Materials requisitioned from stores: Direct materials Miscellaneous supplies Direct labor 

P5,000 300 14,000

The manufacturing overhead budget includes an allowance for rework. The predetermined manufacturing overhead rate is 150% of direct labor cost. The account(s) to be charged and the appropriate charges for the rework would be: WIP inventory control for P19,000. WIP inventory control for P5,000 and factory overhead for P35,300. Factory overhead control for P19,300 Factory overhead control for P40,300.

1 pts Gumamela Mfg. Co. started 150 units in process on job order #13. The prime costs placed in process consisted of P30,000 and P18,000 for materials and direct labor, respectively, and a pre-determined rate was used to charge factory overhead to production at 133-1/3% of the direct labor cost. Upon completion of the job order, units equal to 20% of the good output were rejected for failing to meet strict quality control requirements. The Company sells rejected units as scrap at only 1/3 of production cost and bills customers at 150% of production cost. If the rejected units were ascribed to Company failure, the billing price of job order #13 would be ___________.

P86,400 P90,000 P102,000 P108,000

1 pts Gumamela Mfg. Co. started 150 units in process on job order #13. The prime costs placed in process consisted of P30,000 and P18,000 for materials and direct labor, respectively, and a pre-determined rate was used to charge factory overhead to production at 133-1/3% of the direct labor cost. Upon completion of the job order, units equal to 20% of the good output were rejected for failing to meet strict quality control requirements. The Company sells rejected units as scrap at only 1/3 of production cost and bills customers at 150% of production cost. If the rejected units were ascribed to customer action, the billing price of job order #13 would be ____________. P86,400 P90,000 P102,000 P108,000

1 pts  AJD Company has two service departments (A and B) and two producing departments (X and Y). Data provided are as follows:

Direct costs Services performed by Dept A Services performed by Dept B

Service Departments  A B P150 P300

Operating Departments X Y P5,000 P6,000

0%

40%

40%

20%

20%

0%

70%

10%

If step-down is used to allocate service department costs and Department A costs are allocated first. The service department cost allocated to Department X is _______. P5,374.00 P5,075.00 P5,087.50 P5,270.00

1 pts

 AJD Company has two service departments (A and B) and two produ cing departments (X and Y). Data provided are as follows:

Direct costs Services performed by Dept A Services performed by Dept B

Service Departments  A B P150 P300

Operating Departments X Y P5,000 P6,000

0%

40%

40%

20%

20%

0%

70%

10%

If reciprocal method is used to allocate service department costs. The service department cost allocated to Department X is _______. P5,295.83 P5,087.50 P5,375.00 P5,085.00

1 pts  Ablan Co. produces a special find of insecticides. Materials are added at the end of production of Mixing Department. For the month of March, the following data were gathered: WIP March 1, 40% complete as to conversion costs Started during the month Transferred to the Molding Department Lost units in processing WIP March 31, 60% complete as to conversion costs

40,000 units 100,000 units 85,000 units 10,000 units 45,000 units

The costs corresponding to the lost units were absorbed by the remaining units. What are the equivalent units (FIFO)for the materials unit cost calculation? 130,000 85,000 140,000 85,000

1 pts  Ablan Co. produces a special find of insecticides. Materials are added at the end of production of Mixing Department. For the month of March, the following data were gathered:

WIP March 1, 40% complete as to conversion costs Started during the month Transferred to the Molding Department Lost units in processing WIP March 31, 60% complete as to conversion costs

40,000 units 100,000 units 85,000 units 10,000 units 45,000 units

The costs corresponding to the lost units were absorbed by the remaining units. What are the equivalent units (FIFO)for the conversion cost calculation? 96,000 90,000 112,000 106,000

1 pts  Ablan Co. produces a special find of insecticides. Materials are added at the end of production of Mixing Department. For the month of March, the following data were gathered: WIP March 1, 40% complete as to conversion costs Started during the month Transferred to the Molding Department Lost units in processing WIP March 31, 60% complete as to conversion costs

40,000 units 100,000 units 85,000 units 10,000 units 45,000 units

The costs corresponding to the lost units were absorbed by the remaining units. What are the equivalent units (AVERAGE) )for the conversion cost calculation? 112,000 96,000 90,000 122,000

1 pts Dex, Co. had the following production for the month of June. WIP June 1, 40% complete Started during the month Transferred to Finished Goods  Abnormal spoilage incurred WIP June 30, 60%

10,000 units 40,000 units 33,000 units 2,000 units 15,000 units

Materials are added at the beginning of the process. As to conversion costs, the beginning WIP was 70% completed and the ending WIP was 60% completed. Spoilage is detected at the end of the process. The equivalent units (FIFO) for June, with respect to conversion costs, __________. 44,000 35,000 40,000 37,000.

1 pts Dex, Co. had the following production for the month of June. WIP June 1, 40% complete Started during the month Transferred to Finished Goods  Abnormal spoilage incurred WIP June 30, 60%

10,000 units 40,000 units 33,000 units 2,000 units 15,000 units

Materials are added at the beginning of the process. As to conversion costs, the beginning WIP was 70% completed and the ending WIP was 60% completed. Spoilage is detected at the end of the process. The equivalent units (AVERAGE) for June, with respect to conversion costs, ______. 44,000 42,000 37,000 40,000

1 pts Given for a certain process: Beginning WIP, 2/5 completed Transferred in Normal spoilage  Abnormal spoilage Goods completed and transferred out Ending WIP, 1/3 completed Conversion costs in beginning inventory Current period conversion costs

500 units 2,000 units 200 units 300 units 1,700 units 300 units P610 P3,990

 All spoilage occur at the end of the process. The conversion cost (FIFO) per equivalent unit amounted to ____________.

P1.90 P2.19 P2.00 P1.90

1 pts Given for a certain process: Beginning WIP, 2/5 completed Transferred in Normal spoilage  Abnormal spoilage Goods completed and transferred out Ending WIP, 1/3 completed Conversion costs in beginning inventory Current period conversion costs

500 units 2,000 units 200 units 300 units 1,700 units 300 units P610 P3,990

 All spoilage occur at the end of the process. The conversion cost (AVERAGE) per equivalent unit amounted to ____________. P1.73 P2.00 P1.90 P1.80

1 pts On September 1, 2017, Ramus Company purchased machine parts from Jackie Chan Company for 6 million Hong Kong dollars to be paid on January 1, 2018. The exchange rate on September 1 is HK$7.7 = P1. On the same date, Ramus enters into a forward contract and agrees to purchase HK$6 million on January 1, 2018, at the rate of HK$7.7 = P1. On December 31, 2017 and on January 1, 2018, the exchange rate is HK$8.0 = P1. What is the fair value of the forward contract on December 31, 2017? P0 P29,221 P750,000 P779,221

1 pts On September 1, 2017, Ramus Company purchased machine parts from Jackie Chan Company for 6 million Hong Kong dollars to be paid on January 1, 2018. The exchange rate on September 1 is HK$7.7 = P1. On the same date, Ramus enters into a forward contract and agrees to purchase HK$6 million on January 1, 2018, at the rate of HK$7.7 = P1. On December 31, 2017 and on January 1, 2018, the exchange rate is HK$8.0 =

P1. The nominal value of the forward contract on December 31, 2017? P0 P29,221 P750,000 P779,221

1 pts Stark, Inc. placed an order for inventory costing 500,000 foreign currency (FC) with a foreign vendor on April 15 when the spot rate was 1FC = P0.683. Stark received the goods on May 1 when the spot rate was 1FC = P0.687. Also on May 1, Stark entered into a 90-day forward contract to purchase 500,000 FC at a forward rate of 1FC = P0.693. Payment was made to the foreign vendor on August 1 when the spot rate was 1FC = P0.696. Stark has a June 30 yearend. In that date, the spot rate was 1FC = P0.691, and the forward rate on the contract was value of the changes in the forward rates over time. The relevant discount rate was 6%.1FC = P0.695. Changes in the current value of the forward contract are measured as the present The foreign exchange gain or loss on hedging instrument (forward contract) on June 30 amounted to _____________. P2,000 P1,000 P995 P0

1 pts Stark, Inc. placed an order for inventory costing 500,000 foreign currency (FC) with a foreign vendor on April 15 when the spot rate was 1FC = P0.683. Stark received the goods on May 1 when the spot rate was 1FC = P0.687. Also on May 1, Stark entered into a 90-day forward contract to purchase 500,000 FC at a forward rate of 1FC = P0.693. Payment was made to the foreign vendor on August 1 when the spot rate was 1FC = P0.696. Stark has a June 30 yearend. In that date, the spot rate was 1FC = P0.691, and the forward rate on the contract was value of the changes in the for ward rates over time. The relevant discount rate was 6%.1FC = P0.695. Changes in the current value of the forward contract are measured as the present The nominal value of the forward contract on June 30 amounted to ___________. P2,000 P1,000 P995 P0

1 pts

Stark, Inc. placed an order for inventory costing 500,000 foreign currency (FC) with a foreign vendor on April 15 when the spot rate was 1FC = P0.683. Stark received the goods on May 1 when the spot rate was 1FC = P0.687. Also on May 1, Stark entered into a 90-day forward contract to purchase 500,000 FC at a forward rate of 1FC = P0.693. Payment was made to the foreign vendor on August 1 when the spot rate was 1FC = P0.696. Stark has a June 30 yearend. In that date, the spot rate was 1FC = P0.691, and the forward rate on the contract was value of the changes in the forward rates over time. The relevant discount rate was 6%.1FC = P0.695. Changes in the current value of the forward contract are measured as the present The fair value of the forward contract on June 30 amounted to ___________. P2,000 P1,000 P995 P0

1 pts On November 1, 2017, Creamline Dairy Corp. concluded that the Thailand baht would weaken during the next six months because of the coup that transpired recently. In hopes of reporting a gain, Creamline entered into a foreign exchange forward for speculation on November 1, 2017, to sell 1,000,000 baht on April 30, 2018 at the forward rate. Spot rate Forward rate

11/1/2017 P1.190 P1.199

12/31/2017 P1.180 P1.187

4/30/2018 P1.210 P1.210

The December 31, 2017 profit and loss statement, foreign exchange gain or loss on forward contract amounted to _________. P10,000 gain P10,000 loss P12,000 gain P12,000 loss

1 pts On January 1, 2017, George Fatima, Inc. paid P16,000 cash to acquire a put foreign exchange option for 1,000,000 Thailand baht, with an expiration date of December 31, 2017. The option hedges 2017’s forecasted exporting sales of 1,000,000 baht. George Fatima’s fiscal year ends June 30. Include the time valu e of money in assessing hedge effectiveness or nonsplit accounting is used.

1/1/17 Spot rate (market price) Strike price (exercise price)

P1.20 P1.19

6/30/17 P1.12 P1.19

12/31/17 P1.15 P1.19

Fair value of put option at 6/30/17

P181,000

What is the intrinsic value (IV) on January 1, 2017? P16,000 P0 P10,000 P6,000

1 pts On January 1, 2017, George Fatima, Inc. paid P16,000 cash to acquire a put foreign exchange option for 1,000,000 Thailand baht, with an expiration date of December 31, 2017. The option hedges 2017’s forecasted exporting sales of 1,000,000 baht. George Fatima’s fiscal year ends June 30. Include the time value of money in assessing hedge effectiveness or nonsplit accounting is used.

Spot rate (market price) Strike price (exercise price) Fair value of put option at 6/30/17

1/1/17 P1.20 P1.19

6/30/17 P1.12 P1.19

12/31/17 P1.15 P1.19

P181,000

What is the time value (TV) of option on January 1, 2017? P0 P6,000 P16,000 P10,000

1 pts On January 1, 2017, George Fatima, Inc. paid P16,000 cash to acquire a put foreign exchange option for 1,000,000 Thailand baht, with an expiration date of December 31, 2017. The option hedges 2017’s forecasted exporting sales of 1,000,000 baht. George Fatima’s fiscal year ends June 30. Include the time value of money in assessing hedge effectiveness or nonsplit accounting is used.

Spot rate (market price) Strike price (exercise price) Fair value of put option at 6/30/17

1/1/17 P1.20 P1.19

6/30/17 P1.12 P1.19

12/31/17 P1.15 P1.19

P181,000

The forex gain or loss on option contract on June 30, 2017 should be __________. P5,000 loss- current earnings

P65,000 gain-OCI P65,000 loss-OCI P0 gain-OCI

1 pts On January 1, 2017, George Fatima, Inc. paid P16,000 cash to acquire a put foreign exchange option for 1,000,000 Thailand baht, with an expiration date of December 31, 2017. The option hedges 2017’s forecasted exporting sales of 1,000,000 baht. George Fatima’s fiscal year ends June 30. Include the time value of money in assessing hedge effectiveness or nonsplit accounting is used.

Spot rate (market price) Strike price (exercise price) Fair value of put option at 6/30/17

1/1/17 P1.20 P1.19

6/30/17 P1.12 P1.19

12/31/17 P1.15 P1.19

P181,000

The June 30, 2017 forex gain or loss to be recognized in current earnings if zero export sales for 2017: P0 P26,000 P39,000 P65,000

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows:

Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The dividend income of Par Company for 2017 should be ________. P18,330 P10,000 P8,000 P8,200

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years. On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory

of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The balance of Investment in Sub Company as at December 31, 2017 should be  _______. P354,600 P351,960 P350,330 P340,000

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The NCI in net income for 2017 should be _____________. P6,280 P6,120 P5,720 P5,320

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par

Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The profit attributable to equity holders of parent/controlling interest for 2017 should be  ______________. P122,600 P118,730 P118,570 P118,330

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years. On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The consolidated net income/group net income for 2017 should be _________. P124,050 P112,600 P118,570 P118,330

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The parent’s portion of consolidated retained earnings as at December 31, 2017 should be ____________.

P700,000 P752,000 P753,600 P809,680.

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The consolidated retained earnings as at December 31, 2017 should be ___________. P700,000 P752,000 P753,600 P809,680

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows:

Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The stockholders’ equity of subsidiary as at December 31, 2017 should be _________.

P450,000 P470,000 P481,600 P484.000

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years. On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows: Parent

Subsidiary

Dividend paid Net Income from own operations Dividend income Net Income

P60,000 P100,000 8,000 P108,000

P10,000 P30,000 0 P30,000

The NCI using proportionate basis (partial goodwill method) as at December 31, 2017 should be _____________. P97,120 P96,920 P96,320 P73,520

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid

Parent P60,000

Subsidiary P10,000

Net Income from own operations Dividend income Net Income

P100,000 8,000 P108,000

P30,000 0 P30,000

The NCI using full goodwill method as at December 31, 2017 should be ___________. P101,320 P96,920 P96,320 P73,520

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income

Parent P60,000 P100,000 8,000

Subsidiary P10,000 P30,000 0

Net Income

P108,000

P30,000

The consolidated stockholders’ equity using proportionate basis (partial goodwill method) as at December 31, 2017 should be __________.

P1,911,000 P1906,000 P1905,920 P1740,000

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The consolidated stockholders’ equity using full goodwill method as at   31, 2017 should be _____________.

December

P1,911,000 P1,906,000 P1,905,920 P1,740,000

1 pts Income information for 2016 taken from the separate company financial statements of Peras Corporation and its 75% owned subsidiary, Sky Corporation is presented as follows: Sales Gain on sale of building Dividend income Cost of goods sold Depreciation expense Other expenses Net Income

PERAS P1,000,000 20,000 75,000 (500,000) (100,000) (200,000) 295,000

SKY P460,000

(260,000) (60,000) (40,000) 100,000

Peras gain on sale of building relates to a building with a book value of P40,000 and a 10-year remaining useful life that was sold to Sky for P60,000 on January 1, 2016.  At what amount will the gain on sale of building appear on the consolidated/group income statement of Peras and Sky for the year 2016 should be _______. P0 P5,000 P15,000 P20,000

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn,

purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The consolidated/group depreciation for 2016 should be __________. P158,000 P160,000 P162,000 P180,000

1 pts On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000, the Sub Company’s common stock and retained earnings on this date amounting to P150,000 and P230,000, respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years. On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year, Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made of the following gross profit rates: Sales made by Parent

Company Sales made by subsidiary

25% based on cost 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate. The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub Company reported a profit of P1,000. While the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par Company at 35% mark-up. Using cost method, the following selected results of operations for 2017 were as follows: Dividend paid Net Income from own operations Dividend income Net Income

Parent P60,000 P100,000 8,000 P108,000

Subsidiary P10,000 P30,000 0 P30,000

The profit attributable to equity holders of parent for 2016 should be ___________. P295,000 P277,000 P275,000 P220,000

1 pts The Lampara Company acquired a 70% interest in the Oak Company for P1,960,000 when the fair value of Oak’s identifiable assets and liabilities was P700,000 and elected to measure the non-controlling interest at its share of the identifiable net assets. Annual impairment reviews of goodwill have not resulted in any impairment losses being recognized. Oak’s current statement of financial position shows share capital of P100,000, a revaluation reserve of P300,000 and retained earnings of P1,400,000.

Under PFRS 3 Business combinations, what figure in respect of goodwill should now be carried in Lampara’s consolidated statement of financial position? P1,470,000 P1,260,000 P700,000 P160,000

1 pts Chapel Hill Company had common stock of P350,000 and retained earnings of P490,000. Blue Town Inc. had common stock of P700,000 and retained earnings of P980,000. On January 1, 2016, Blue Town issued 34,000 shares of common stock with a P12 par value and a P35 fair value for all of Chapel Hill Company’s  outstanding common stock. The combination was accounted for as an acquisition. Immediately after the combination, what was the consolidated net asset? P2,870,000 P2,520,000 P1,680,000 P1,190,000

1 pts On January 1, 2016, Post Company acquired an 80% investment in Stake Company. The acquisition cost was equal to Post’s equity in Stake’s net assets at that date. On January 1, 2016, Post and Stake had retained earnings of P500,000 and P100,000, respectively. During 2016, Post had net income of P200,000, which included its equity in Stake earnings, and declared dividends of P50,000. Stake’s net income and dividends for 2016 amounted to P40,000 and P20,000, respectively. There were no other intercompany transactions.

On December 31, 2016, what should the consolidated retained earnings be? P650,000 P666,000 P766,000 P770,000

1 pts  At the end of 2016, Paper Company’s stockholders’ equity includes common stock of P500,000 and additional paid-in capital of P300,000. Paper purchased a 70% interest in Slick Company on January 1, 2016, when the non-controlling interest in Slick had a fair value of P90,000. No differential arose from the business combination. During 2016, Slick reports net income of P20,000 and declares dividend of P5,000. The 2016 consolidated balance sheet includes retained earnings of P630,000 (controlling interest portion).

Determine the consolidated equity on December 31, 2016: P1,430,000 P1,457,000 P1,524,000 P1,526,000

1 pts On January 1, 2016, Gold Rush Company acquires 80% ownership in California Corporation for P200,000. The fair value of the non-controlling interest that time is determined to be P50,000. It reports net assets with a book value of P200,000 and fair value of P230,000. Gold Rush Company reports net assets with a book value of P600,000 and a fair value of P650,000 at that time, excluding investment in California. What will be the amount of goodwill that would be reported immediately after the combination under current accounting practice of the option of full goodwill method is used? P50,000 P40,000 P30,000 P20,000

1 pts On November 1, 2016, the Western Appliance Center ships five (5) of its appliances to the ABC store on consignment. Each unit is to be sold at P25,000 payable P5,000 in the month of purchase and P1,000 per month thereafter. The consignee is to be entitled to 20% of all amounts collected on consignment sales. ABC Store sells three (3) appliances on November and one (1) on December. Regular monthly collections are made by the consignee, and appropriate cash remittances are made to the consignor at the end of the month. The cost of the appliances shipped by the consignor was P15,500 per unit. The consignor paid shipping costs to the consignee totaling P5,000. The cost of inventory on consignment on December 31, 2016 is ____________. P15,500 P16,500 P19,600 P24,500

1 pts On November 1, 2016, the Western Appliance Center ships five (5) of its appliances to the ABC store on consignment. Each unit is to be sold at P25,000 payable P5,000 in the month of purchase and P1,000 per month thereafter. The consignee is to be entitled to 20% of all amounts collected on consignment sales. ABC Store sells three (3) appliances on November and one (1) on December. Regular monthly collections are made by the consignee, and appropriate cash remittances are made to the consignor at the end of the month. The cost of the appliances shipped by the consignor was P15,500 per unit. The consignor paid shipping costs to the consignee totaling P5,000. The total amount remitted to consignor for the year 2016 is __________. P23,000

P18,400 P12,000 P6,400

1 pts On July 15, 2016, James Last Sales Company received a shipment of merchandise with a selling price of P150,000 from James Bond Company. The consigned goods cost James Bond Company P100,000 and freight charges of P1,200 has been paid to ship the goods to James Last Company. The consignment agreement provided for a sale of merchandise on credit with terms of 2/10, n/30. The 15% commission is to be based on the accounts receivable collected by the consignee. Cash discounts taken by customers, expenses applicable to goods on consignment and any cash advanced to the consignor are deductible from the remittance by the consignee. James Last Company advanced to James Bond Company upon receipt of the shipment. Expenses of P8,000 was paid by James Last. By August 2016, 70% of the shipment had been sold, and 80% of the resulting accounts receivable had been collected, all within the discount period. Remittance of the amount due was made on August 30, 2016. The cash remitted by James Last Company is ________. P1,720 P22,300 P23,400 P61,720

1 pts On July 15, 2016, James Last Sales Company received a shipment of merchandise with a selling price of P150,000 from James Bond Company. The consigned goods cost James Bond Company P100,000 and freight charges of P1,200 has been paid to ship the goods to James Last Company. The consignment agreement provided for a sale of merchandise on credit with terms of 2/10, n/30. The 15% commission is to be based on the accounts receivable collected by the consignee. Cash discounts taken by customers, expenses applicable to goods on consignment and any cash advanced to the consignor are deductible from the remittance by the consignee. James Last Company advanced to James Bond Company upon receipt of the shipment. Expenses of P8,000 was paid by James Last. By August 2016, 70% of the shipment had been sold, and 80% of the resulting accounts receivable had been collected, all within the discount period. Remittance of the amount due was made on August 30,

2016. The net income (loss) on consignment is ___________. P14,280 P13,560 P11,880 P8,730

1 pts On July 15, 2016, James Last Sales Company received a shipment of merchandise with a selling price of P150,000 from James Bond Company. The consigned goods cost James Bond Company P100,000 and freight charges of P1,200 has been paid to ship the goods to James Last Company. The consignment agreement provided for a sale of merchandise on credit with terms of 2/10, n/30. The 15% commission is to be based on the accounts receivable collected by the consignee. Cash discounts taken by customers, expenses applicable to goods on consignment and any cash advanced to the consignor are deductible from the remittance by the consignee. James Last Company advanced to James Bond Company upon receipt of the shipment. Expenses of P8,000 was paid by James Last. By August 2016, 70% of the shipment had been sold, and 80% of the resulting accounts receivable had been collected, all within the discount period. Remittance of the amount due was made on August 30, 2016. The cost of unsold units in the hands (merchandise on consignment) of James Last is  _________. P15,000 P30,360 P30,840 P31,860

1 pts Shake’s, Inc., franchisor, enters into a franchising agreement with Sha, franchisee on June 30, 2016. The agreement calls for a total franchise fee of P1 million of which P100,000 is payable upon signing the contract and the balance in four equal semiannual installments. It is agreed that the down payment is nonrefundable notwithstanding lack of substantial performance of services by the franchisor. When Shake’s, Inc. prepares it s financial statements as of June 30, 2016, the unearned franchise fee to be recorded is _________.

P0 P100,000

P900,000 P1,000,000

1 pts PJD Enterprises, a franchisor, charges franchisees a “franchise fee” of P500,000. Of this amount, a nonrefundable P200,000 is paid upon the signing of the contract with the balance payable in three equal installments after each year thereafter starting 2017. PJD will assist in locating a suitable business site conduct market study, oversee the construction facilities, and provide initial training for employees.

On October 1, 2016, PJD entered into a franchising agreement to cover an entirely new and untested area. By December 31, 2016, PJD had substantially completed and rendered appropriate services at a total cost of P150,000 but, somehow has raised some doubts on the collectability of the balance of the franchise fee. In its 2016 income statement, PJD Enterprises should recognize profit of ________. P50,000 P140,000 P200,000 P350,000

1 pts Ferragamo’s entered i nto a franchise agreement with Rusty. As per agreement on July 1, 2016, Rusty is to pay Ferragamo an up-front franchise fee of P1,000,000 and subsequent annual franchise fees of P50,000 over the next four years. Cost of initial franchise services rendered by Ferragamo’s during the year is P250,000 which is substantial, and it estimates the cost of subsequent annual services to be P10,000. Rusty paid that annual franchises fee for 2017, and Ferragamo’s rendered the services for the year.

In its December 31, 2017 income statement, the amount of realized franchise fee revenue to be reported by Ferragamo’s is ____________. P25,000 P50,000 c. P250,000 P300,000

1 pts SSR Restaurant Inc., sold a fastfood restaurant franchise to Shar. The sale agreement, signed on January 2, 2016, called for a P30,000 down payment plus two P10,000 annual payments, representing the value of initial franchise service rendered by SSR Restaurant. In addition, the agreement required that franchisee to pay 5% of its gross revenue to the franchisor; this was deemed sufficient to cover the cost and provide a

reasonable profit margin on continuing franchise services to be performed by SSR Restaurant. The restaurant opened early in 2016, and its sales for the year amounted to P500,000.  Assuming a 10% interest rate is appropriate, SSR Restaurant’s 2016 total revenue will be ________. (The present value of an annuity of P1 at 10% for 2 periods in 1.7355) P30,000 P47,355 P72,355 P74,090

1 pts On September 1, 2016, Cindy Company entered into franchise agreements with two franchisees. The agreements required an initial fee payments of P700,000 plus four P300,000 payments due every four (4) months, the first payment due December 31, 2016. The market interest rate is 12%. The initial deposit is refundable until substantial performance has been completed. The following table describes each agreement:

Franchisee

Profitability of Full Collection

 A B

Likely Doubtful

Services Performed by Franchisor, Dec 31, 2016 Substantially 25%

Total Costs Incurred to Dec 31. 2016 P700,000 N/A

The present and future value tables at 4% for four (4) periods were as follows: Present value of P1 ……………………………………………….   Present value of an ordinary annuity of P1 …………………….   Future value of P1 …………………………………………………  Future value of an ordinary annuity P1 ………………………….  

0.8548 3.6299 1.1699 4.2465

What amount of net income to be reported in 2016, assuming P1,000,000 was received from each franchisee during the year: Franchisee A, P1,088,970; Franchisee B, P0 Franchisee A, P1,788,970; Franchisee B, P0 Franchisee A, P1,132,529; Franchisee B, P0 Franchisee A, P1,132,529; Franchisee B, P43,559.

1 pts On October 1, 2014, Oldies Corp. enters a contract to build a sports arena which it estimated to cost P3,120,000. Oldies bills its client at cost plus 20% and recognized

construction revenue on a percentage of completion basis. Data on this project for 2014, 2015 and 2016 are as follows: Year  2014 2015 2016

Cost Incurred P546,000 P998,400 P1,575,600

Estimated Costs to Complete P2,054,000 P1,315,600 -

Oldies Corp.’s gross profit on the project for 2016 is __________.

P146,640 P477,360 P237,160 P624,000

1 pts In 2016, AJD Construction Co. was contracted to build Village Company’s private road network for P100 million. The project was estimated to be completed in two years, and the contract provided for: 5% mobilization fee (to be deducted from the last billing) payable within 15 days after signing the contract; 10% retention provision on all billings; and Payment of progress billings within 10 days from acceptance. The Company which uses the percentage of completion method of accounting, estimated a 25% gross margin on the project. By the end of 2016, the Company had presented progress billings corresponding to 50% completion. All of the progress billings presented in 2016 were accepted, except the last one for 10% which was accepted on January 5, 2017. With the exception of one bill for 8% which was due on January 7, 2017, all of the billings accepted in 2016 were settled. Payments made by the Village Company in 2016 amounted to ________. P33,800,000 P38,500,000 P40,000,000 P45,000,000

1 pts The Kirby Construction Company has consistently used the cost recovery method (zeroprofit approach) of recognizing income. In 2016, it began a construction project to erect a building for P3,000,000. The project was completed during 2017. Under this method, the accounting records disclosed the following (any costs are expected to be recoverable):

Progress billing during the year  Costs incurred during the year  Collections on billings during the year  Estimated costs to complete the project

2016 P1,100,000 900,000

2017 P1,900,000 1,800,000

900,000

2,100,000

1,800,000

0

The Compute should recognize revenue for the year amounting to ______. 2016, P0; 2017; P3,000,000 2016, P900,000; P2,100,000 2016, P0; 2017, P0 2016, P1,000,000; 2017, P2,000,000

1 pts The Gamboa Construction Company started work on three job sites during the current year. Any costs incurred are expected to be recoverable. Data relating to the three jobs are given below: Contract price Costs incurred Estimated costs to complete Billings on contract Collections on contract

Batangas P500,000 P375,000

Laguna P700,000 P100,000

San Fernando P250,000 P100,000

0 P500,000 P500,000

P400,000 P100,000 P100,000

P100,000 P150,000 P100,000

What would be the amount of construction in progress to be reported on yearend balance sheet if the percentage of completion method or cost recovery method is used? Percentage of completion, P765,000; Cost recovery method, P700,000 Percentage of completion, P765,000; Cost recovery method, P765,000 Percentage of completion, P265,000; Cost recovery method, P265,000 Percentage of completion, P265,000; Cost recovery method, P200,000

1 pts DJ Builders Company began operations on January 1, 2016. During the year, the Company entered into a contract with Joey Company to construct a manufacturing facility. At that time, the Company estimated that it would take five years to complete the facility at a total cost of P4,800,000. The contract price for the construction of the facility is P5,800,000. During 2016, the Company incurred P1,250,000 in construction costs related to the project. Because of rising material and labor costs, the estimated cost to complete the

contract at the end of 2016 is P3,750,000. Joey Company was billed for and paid 30% of the contract price in accordance with the contract agreement. It is further agreed, that any costs incurred is expected to be recoverable. Compute the amount of construction in progress (net) - due from customers or progress billings (net) - due to customers ___________. Cost recovery method, P290,000 due to; Percentage of completion, P490,000 due fr  Cost recovery method, 0 due from; P0 due to Cost recovery method, P490,000 due to; Percentage of completion, P290,000 due to Cost recovery method, P490,000 due fr; Percentage of completion; P290,000 due to

1 pts Dudong Electronics makes all of its sales on credit and accounts for them using the installment sales method, For simplicity, assume that all sales occur on the first day of the year and that all collections are made on the last day of the year. Dudong Electronics charges 18% interest on the unpaid installment balance. Data for 2016 and 2017 are as follows: 2016 P100,000 60,000

Sales Cost of goods sold Cash collections (principal and interest ) 2016 sales 40,000 2017 sales

2017 P120,000 80,000

50,000 90,000

The interest income recognized in 2017 amounted to __________. P14,040 P21,600 P35,640 P49,700

1 pts Dudong Electronics makes all of its sales on credit and accounts for them using the installment sales method, For simplicity, assume that all sales occur on the first day of the year and that all collections are made on the last day of the year. Dudong Electronics charges 18% interest on the unpaid installment balance. Data for 2016 and 2017 are as follows: Sales Cost of goods sold

2016 P100,000 60,000

2017 P120,000 80,000

Cash collections (principal and interest ) 2016 sales 40,000 2017 sales

50,000 90,000

The realized gross profit in 2017 amounted to ___________. P14,384 P22,800 P37,184 P39,600

1 pts Dipolog Company sells appliances on an installment basis. Below are information for the past three years: Installment sales Cost of sales Collections on: 2017 installment sales 2016 installment sales 2015 installment sales

2017 P750,000 450,000

2016 P600,000 375,000

2015 P400,000 260,000

275,000 180,000 125,000

240,000 120,000

150,000

Repossessions on defaulted accounts included one made on a 2017 sale for which the unpaid balance amounted to P5,000. The depreciated value on the appliance repossessed was P2,500. The realized gross profit in 2017 on collections of 2017 installment sales was  _________. P108,000 P110,000 P221,250 P221,500

1 pts On January 1, 2016, Art Company sold its idle plant facility to Tony, Inc. for P1,050,000. On this date, the plant had a depreciated cost of P735,000. Tony paid P150,000 cash on January 1, 2016 and signed a P900,000 note bearing interest at 10%. The note was payable in three annual installments of P300,000 beginning January 1, 2017. Art appropriately accounted for the sale under the installment method. Tony made a timely payment of the first installment on January 1, 2017 of P390,000 which included interest

of P90,000 to date of payment.  At December 31, 2017, Art has deferred gross profit of ________. P153,000 P180,000 P225,000 P270,000

1 pts Gianne Co. sold a computer on an installment basis on October 1, 2016. The unit cost to the Company was P86,400 but the installment selling price was set at P122,400. Terms of payment included the acceptance of a used computer with a trade-in allowance of P43,200. Cash of P7,200 was paid in addition to the traded-in computer with the balance to be paid in ten monthly installments due at the end of each month commencing the month of sale. It would require P1,800 to recondition the used computer so that it could be resold for P36,000. A 15% gross profit was usual from the sale of used computer. The realized gross profit from the 2016 collections amounted to _________. P5,760 P14,100 P11,520 P48,960

1 pts The Molino Furniture Company appropriately used the installment sales method in accounting for the following installment sale. During 2016, Molino sold furniture to an individual for P3,000 at a gross profit of P1,200. On June 1, 2016, this installment account receivable had a balance of P2,200 and it was determined that no further collections would be made. Molino, therefore, repossessed the merchandise. When reacquired, the merchandise, was appraised as being worth only P1,000. In order to improve its salability, Molino incurred costs of P100 for reconditioning. Normal profit on resale is P200. What should be the loss on repossession attributable to this merchandise? P220 P620 P320 P880

1 pts

Marceliano Sales Corp. accounts for sales on the installment basis. The balances of the control accounts for Installments Contracts Receivable at the beginning and end of 2017 were: Jan. 1, 2017 Dec. 31, 2017 Installment Contracts Receivable – 2015 Installment Contracts Receivable – 2016 Installment Contracts Receivable – 2017

P24,020 344,460

67,440 410,090

During 2017, the Company repossessed a refrigerator which had been sold in 2016 for P5,400 and P3,200 had been collected prior to default. The Company sales and cost of sales figures are summarized below: Net sales Cost of sales

2015 P380,000 247,000

2016 P432,000 285,120

2017 P602,000 379,260

The Company values the repossessed goods at market value. The resale price of the repossessed merchandise amounted to P1,700. Compute the Total Realized Gross Profit on Installment Sales in 2017. P172,852.50 P71,006.70 P162,000.50 P61,000.70

1 pts Gizelle, Inc. started operation at the beginning of 2017, selling home appliances exclusively on the installment basis. Data for 2016 and 2017 follows: 2016 Installment sales P600,000 Cost of installment sales 420,000 2016 installment accounts, end 285,000 2017 installment accounts, end

2017 P750,000 450,000 22,500 300,000

On May 31, 2017, a 2016 installment account of P37,500 was defaulted and the appliance was repossessed. After reconditioning at a cost of P750, the repossessed appliance would be priced to sell for P30,000.

The gain (loss) on repossession amounted to __________. P3,000 P(9,000) P9,000 P(3,750)

1 pts  A branch store in Caloocan was established by Carlo Company on March 1. Merchandise was billed to the branch at 125% of cost. Shipments of merchandise were as follows: March 5 March 10 March 20

P120,000 (at billed price) 50,000 (at billed price) 35,000 (at billed price)

On March 22, the branch returned defective merchandise worth P3,050. On March 31, the branch reported a net loss of P6,200 and merchandise inventory of P85,000. In the home office books, the cost of merchandise sold by branch was __________. P161,560 P93,560 P116,950 P161,950

1 pts  A branch store in Caloocan was established by Carlo Company on March 1. Merchandise was billed to the branch at 125% of cost. Shipments of merchandise were as follows: March 5 March 10 March 20

P120,000 (at billed price) 50,000 (at billed price) 35,000 (at billed price)

On March 22, the branch returned defective merchandise worth P3,050. On March 31, the branch reported a net loss of P6,200 and merchandise inventory of P85,000. In the home office books, the branch’s true net income (loss) was _________.

P(6,200) P17,190 P6,200

P(17,190)

1 pts Barros Corporation’s shipments to and from its Brazil City branch are billed at 120% of cost. On December 31, Brazil branch reported the following data, at billed prices: inventory, January 1 of P33,600; shipments received from home office of P840,000; shipments returned of P48,000; and inventory, December 31 of P36,000.

What is the balance of the allowance for over-valuation of branch inventory on December 31 before adjustments? P5,600 P137,600 P6,000 P145,600

1 pts The home office of Glendale Company, which uses the perpetual inventory system bills shipments of merchandise to the Montrose Branch at a markup of 25% on the billed price. On August 31, 2017, the credit balance of the home office’s Allowance for Overvaluation of Inventories - Montrose Branch ledger account was P60,000. On September 17, 2017, the home office shipped merchandise to the branch at a billed price of P400,000. The branch reported an ending inventory, at billed price, of P160,000 on September 30, 2017.

Compute the realized gross profit/allowance for overvaluation. P108,000 P20,000 P120,000 P28,000

1 pts Lobster Trading bills its Iloilo City branch for shipments of goods at 25% above cost. At the close of business on October 31, 2017, a fire gutted the branch warehouse and destroyed 60% of the merchandise stock stored therein. Thereafter, the following data were gathered: January 1 inventory, at billed price P50,000 Shipments from home office to Oct. 31 130,000 Net sales to Oct 31 225,000

If undamaged merchandise recovered are marked to sell for P30,000, the estimated cost of the merchandise destroyed by the fire was _______. P14,400 P21,600 P24,000 P27,500

1 pts The following joint operations account reflects the transactions of the arrangements of  A, B and C as recorded by each operator (participant). Investment in Joint operation (2017) Merchandise - C…P12,750 Cash sales - A…….P30,600 Merchandise - B…P10,500 Cash sales - A……...P6,300 Freight-in - A…………..525 Merchandise - B……P1,815 Purchase - A………...5,250 Selling expenses - …....600

Distributions of gains and losses are to be treated as follows: A  – 50%; B – 30% and C  – 20%. The joint operations is to close on December 31, 2017. The joint operations profit (loss) is __________. P7,275 P9,090 P25,980 P29,625

1 pts  A and B are joint operators in a joint arrangements for the acquisition of construction supplies at an auction. The two participants agreed to contribute cash of P20,000 each to be used in purchasing the supplies and to share profits and losses equally, they also agreed that each shall record his purchases, sales and expenses in his own books. Several months later, the two participants terminated the operations. The following data relate to the joint operations’ activities: Joint operations Value of inventory taken Expenses paid from JV cash

 A P16,000 Credit P600 P800

B P18,400 Credit P2,200 P1,800

The joint operations sales is __________. P77,000 P27,000 P34,400 P0

1 pts The income statement of Vita Plus Partnership for the year ended December 31, 2017 appear below: Sales Cost of goods sold Operating expenses, including salary allocation to partners of P55,000 Net income

P300,000 190,000 85,000 P25,000

 Additional Information: Melon and Dalandan began the year with capital balances of P40,800 and P112,000, respectively. On April 1, Melon invested an additional P15,000 into the partnership and on August 1, Dalandan invested an additional P20,000 into the partnership. Throughout 2007, each partner withdrew P400 per week in anticipation of partnership net income. The partners agreed that these withdrawals are not to be included in the computation of average capital balances for purposes of income distribution. Melon and Dalandan have agreed to distribute partnership net income according to the following plan: Melon Interest on average capital balances Bonus after interest on average capital balances Salaries Residual, if positive Residual , if negative

Dalandan

6%

6%

10% P25,000 70% 50%

P30,000 30% 50%

The share of Melon on the net income is _______.

P40,473 P15,473 P40,342 P40282

1 pts  AA contributed P24,000 and BB contributed P48,000 to form a partnership and they agreed to share profits in the ratio of their original capital contributions. During the first year of operations, they made a profit of P16,290; AA withdrew P5,050 and BB P8,000.  At the start of the year, they agreed to admit GG into the partnership. He was to receive a one-fourth interest in the capital and profits upon payment of P30,000 to AA and BB, whose capital accounts were to be reduced by transfers GG’s capital account of amounts sufficient to bring them back to their original capital ratio.

How should the P30,000 paid by GG be divided between AA and BB?  AA, P9,825; BB, P20,175  AA, P15,000; BB, P15,000  AA, P10,000; BB, P20,000  AA, P9,300; BB, P20,700

1 pts The partners’ capital (income-sharing ratio in parenthesis) of NN, OO, PP and QQ on May 31, 2017, were as follows:

NN (20%) OO (20%) PP (20%) QQ (40%) Total

P60,000 80,000 70,000 40,000 P250,000

On May 31, 2017, with consent of all partners: PP retired from the partnership and was paid P50,000 cash in full settlement of his interest in the partnership. RR was admitted to the partnership with a P20,000 cash investment for a 10% interest in the net assets of NN, OO and QQ. The capital account to be credited to RR is __________. P22,000 P27,000 P20,000 P25,000

1 pts Revenue from a contract with a customer _______________. is recognized when the customers receive the right to receive consideration. is recognized even if the contract is still wholly performed. can be recognized even when a contract is still pending. cannot be recognized until a contract exists.

1 pts Signing of the contract by the two parties is _____________. not recorded until one or both parties perform under the contract. recorded at the time the contract is approved by both parties. not recorded until both parties perform under the contract. recorded immediately after the contract is signed.

1 pts Multiple or departmental overhead rates are considered preferable to a single or plantwide overhead rate when ___________________. manufacturing is limited to a single product through identical department in a fixed sequence. various products are manufactured that do not pass through the same departments or use the same manufacturing techniques. individual cost drivers cannot accurately be determined with respect to cause-and-effect relationships. the single or plant-wide rate is related to several identified cost drivers.

1 pts Which of the following statements about ABC is not true?  ABC is useful for allocating marketing and distribution costs.  ABC is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. In ABC, cost drivers are what cause costs to be incurred.  ABC differs from traditional costing system if that products are not cross-subsidized.

1 pts  Agency BBB received Notice of Cash Allocation (NCA) – P45,000,000 for the year. The entry would be ________________. no entry Memorandum entry in registry of allotments Debit National Clearing account; Cedit Appropriations allotments. Debit Cash-NTMDS; Credit Sing