SGV CUP ACCOUNTING

 National Federation of Junior Philippine Institute of Accountants Western We stern Mindanao Council 18th Regional Mid-Year Mid-Year Conention Conen tion SGV CUP 1 TOPICS: THEORY OF ACCOUNTS & PRACTICAL ACCOUNTING 1 EASY

1! An" gain on on a su#se$uent su#se$uent increase increase in in the fair alue alue less cost cost to sell of a noncurren noncurrentt asset classifi classified ed as held for sale should #e treated as follo%s& A! 'he gain gain shou should ld #e recogni(ed recogni(ed in full! full! )! 'he gain gain shou should ld not not #e recogn recogni(e i(ed! d! C! 'he gain should should #e recogni( recogni(ed ed #ut not in e*cess e*cess of the cu+ulati cu+ulatie e i+pair+ent i+pair+ent loss! loss! ,! 'he gain gain should should #e recogni(ed recogni(ed #ut #ut onl" in retain retained ed earnings earnings!! Ans%er& C IFR .  Non-current  Non-current Assets Held for Sale and Discontinued Discontinued Operations  paragraph /1 states that 0An entit" shall recogni(e a gain for an" su#se$uent increase increase in fair alue less costs to sell of an asset but not in excess o t!e cu"u#$ti%e i"$i'"ent #oss t!$t !$s been 'eco(nise)  either in accordance %ith this IFR or preiousl" in accordance %ith IA 23  Impairment of Assets!4 Assets !4 /! 'he follo follo%ing %ing are inclu included ded in inen inentorie tories s e*cept e*cept A! Assets Assets held for sale sale in the ordina ordinar" r" course course of #usines #usinesss )! Assets Assets in the the process process of of productio production n for such such sale sale C! Assets Assets in the for+ of +aterials +aterials or supplie suppliess to #e consu+ed consu+ed in the production production process process or in the rendering of serices ,! Assets Assets in the the for+ of office office store store suppl supplies ies Ans%er& * IA / Inventories / Inventories paragraph  paragraph 3 e*plicitl" defines inentories as assets& a5 held for sale sale in in the the ordinar" ordinar" course course of #usiness6 #usiness6  #5 in the process of production production for such sale6 or  c5 in the for+ of of +aterials +aterials or supplies supplies to #e consu+ consu+ed ed in the productio production n process process or in the rendering of serices! Assets in the for+ of office store supplies are not included! 2! In /711 /711 )righ )righton ton Co! changed changed fro+ the indi indiidu idual al ite+ approach approach to the aggreg aggregate ate approac approach h in appl" appl"ing ing the lo%er of FIF FIF cost cost or +ar9et +ar9et to inent inentori ories! es! 'he change change should should #e report reported ed in )righton4s financial financial state+ents as a A! )! C! ,!

Change Change in esti+ esti+ate ate on a prospect prospectie ie #asis #asis!! Cu+ulatie effect of of change in accounting accounting principle principle on the current "ear inco+e inco+e state+ent! Retrospec Retrospectie tie applicat application ion to the earliest earliest period period presented presented if practica#le! practica#le! Prior Prior period ad:ust+ent ad:ust+ent %ith %ith a separate separate discl disclosure osure!!

Ans%er& C A change in inentor" +ethod no longer receies cu+ulatie effect treat+ent on the inco+e state+ state+ent ent!! 'he 'he accoun accountin ting g change change is gien gien retros retrospec pecti tiee applic applicati ation on to the the earlie earliest st period period  presented if practica#le! practica#le!

;! ess ,iscount H1/37777L1/? * ;1/5K  Net Proceeds

P1/37777 .7;77 P1/7377

8! n Jul" 1 /71. one of >>Y, INC!4s delier" truc9s %as destro"ed in an accident! n that date the truc94s #oo9 alue %as P77777! n Jul" 1. /77 >>Y, INC! receied and recorded a P;/777 inoice for a ne% engine that %as installed in the truc9 in Ma" /77 and another P3777 inoice for arious repairs! What a+ount should >>Y, INC! use to deter+ine the gain or loss on disposal of the truc9@ a! P77777  #! P;/777 2

 National Federation of Junior Philippine Institute of Accountants Western Mindanao Council 18th Regional Mid-Year Conention c! P;8777 d! P23777 ANS+ER: , 'he a+ount used to deter+ine the gain or loss %ould include the #oo9 alue and the inoice for the ne% engine! 'he inoice for repairs are recorded as an e*pense and not capitali(ed as part of the truc94s cost!

! n Januar" / /711 )randon Co+pan" receied a grant of P37777 to co+pensate it for costs it incurred in planting trees oer a period of fie "ears! )randon Co+pan" %ill incur such cost in this +anner& Years Costs

-.11 P/777777

-.1P;777777

-.1/ P3777777

-.10 P8777777

-.1 P17777777

What a+ount of inco+e should )randon Co+pan" recogni(e at the end of the "ear /71.@ a! P8777777  #! P1/777777 c! P13777777 d! P/7777777 ANS+ER: * PA /7 Accounting for Government Grants and Disclosure of Government Assistance  proides that grants shall #e recogni(ed in profit or loss on a s"ste+atic #asis oer the periods in %hich the entit" recogni(es as e*penses the related costs for %hich grants are intended to co+pensate! Ye$' G'$nt R$tio Inco"e Reco(ni2e) /711 P37777777  /27  P;777777 /71/ P37777777  ;27  P8777777 /712 P37777777  327  P1/777777 /71; P37777777  827  P13777777 /71. P37777777  1727  P/7777777

17! range Co+pan"4s P17777 net inco+e for the $uarter ended epte+#er 27 /71. included the follo%ing after ta* ite+s& a!

A P1/7777 gain on the disposal of e$uip+ent reali(ed on April 27 /71. %as allocated e$uall" to the /nd 2rd and ;th $uarters!  #! A P2/777 cu+ulatie effect loss resulting fro+ a change in inentor" aluation +ethod %as recogni(ed on August ; /71.! In addition range Co+pan" paid P3777 on Fe#ruar" 1 /71. for /71. calendar "ear propert" ta*es of this a+ount P/;777 %as allocated to the 2 rd  $uarter of /71.! For the $uarter ended epte+#er 27 /71. ho% +uch should ranges report as net inco+e@ a! 18/777  #! /73777 c! ///777 d! /27777 ANS+ER: A

 Net inco+e reported Dain on disposal P1/777725 Cu+ulatie effect-loss  Net Inco+e

P17777 ;77775 2/777 P18/777

'he gain on disposal is not allocated a+ong the interi+ periods6 the full a+ount is recogni(ed on a  particular interi+ period that is the period %hen the transaction actuall" occurred! 'he cu+ulatie effect-gain or loss is not reported in the inco+e state+ent! AVERAGE 3

 National Federation of Junior Philippine Institute of Accountants Western Mindanao Council 18th Regional Mid-Year Conention 1! When an o%ner-occupied propert" #eco+es an inest+ent propert" to #e carried at fair alue the resulting increase in carr"ing a+ount is& A! treated to the e*tent that the increase reerses a preious i+pair+ent loss the increase is recogni(ed in other co+prehensie inco+e! )! treated as part of other co+prehensie inco+e or realuation surplus %ithin e$uit" if no  preious i+pair+ent has #een recorded! C! recogni(ed directl" to profit or loss! ,! None of the a#oe! Ans%er& , P$'$('$! 3- o PAS 0. In%est"ent P'oe't4 'RANFBR