WorksheetsACCTG 26_SEMIFINAL EXAM
Total questions: 60
Worksheet time: 40mins
Which of the following is not a category of financial assets?
Financial Assets at fair value through profit or loss
Financial Assets at fair value through other comprehensive income
Financial Assets at amortized cost
Financial Assets Held for Sale
All of the following financial assets shall be measured at fair value through profit or loss, except
Financial assets held for trading
Financial Assets designated on initial recognition as at fair value through profit or loss
Investments in quoted equity instruments
Financial Assets at amortized costs
As a rule, transaction costs that are directly attributable to the acquisition of a financial asset shall be
Capitalized as cost of the financial asset
Expensed when incurred
charged to retained earnings
included as a component of other comprehensive income
Depending on the business model for managing financial assets, an entity shall classify financial assets subsequent to initial recognition at
Fair value
Amortized cost
Either fair value or amortized cost
Neither fair value nor amortized cost
Unrealized gains and losses on financial assets measured at amortized cost shall be included as a component of other comprehensive income
TRUE
FALSE
When an entity reclassifies a financial asset at amortized cost to the financial asset at fair value, the fair value is determined at the reclassification date, and the difference between the previous carrying amount and fair value
is included in profit or loss
is included in other comprehensive income
is included in retained earnings
is not recognized
What is the " reclassification date" for purposes of reclassifying financial assets?
end of the current reporting period
First day of the next reporting period following the change in business model
Dat when management decided to change the business model for managing financial assets
no definition of reclassification date as this would depend on the judgment of management
An entity purchased equity shares in another entity with the intention of holding this investment over the long term. what is the most appropriate classification of this equity investment?
At fair value through profit or loss
held for trading
at fair value through other comprehensive income
amortized cost
The entity purchased government bonds. The entity's business model in managing financial assets is to collect contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. Which of the following is the most appropriate classification for the investment in bonds?
held for trading
at fair value through profit or loss
at amortized cost
at fair value through other comprehensive income
An impairment loss is a difference between the carrying amount of the investment and the
expected cash flows
present value of the expected cash flows
contractual cash flows
present value of the contractual cash flows
It is the date on which the stock and transfer book of the entity is closed for registration. Only those shareholders registered as of this date are entitled to received dividends.
Date of declaration
Date of record
date of payment
date of mailing and the dividend check
Property dividend are recorded
as dividend income at carrying amount of the property
as dividend income at fair value of the property
as a return of investment and therefore credited to the investment account
by means of memorandum only
Liquidating dividends are credited to
Income
Retained Earnings
Investment account
Share capital
What is the effect of a stock dividend of the same class?
Increase in the investment account and increase in cost per share
Decrease in the investment account and decrease in cost per share
No effect on investment account but a decrease in cost per share
No effect on investment account but increase in cost per share
Shares received in lieu of cash dividend are recorded as
income at fair value of the shares received
income at par value of the shares received
income at the cash dividend that would have been received
stock dividends
Cash received in lieu of stock dividends is accounted for as
dividend income
return of investment
partly dividend income and partly return of investment
if the stock dividends are received and subsequently sold at the cash received and gain or loss is recognized
What is the effect of a share split?
increase in the number of shares and increase in cost per share
decrease in the number of shares and decrease in cost per share
decrease in the number of shares and increase in cost per share
increase in the number of shares and decrease in cost per share
It is an entity over which the investor has significant influence
associate
investee
venture capital organization
mutual fund
Which of the following statements best describes the term "significant influence"
The holding of a significant proportion of the share capital in another entity
The contractually agreed sharing of control over an economic entity
The power to participate in the financial and operating policy decisions of an entity
The mutual sharing in the risks and benefits of a combined entity
When the investor discontinues the use of the equity method because significant influence is lost, the investment in associate retained by the investor shall be measure at
fair value
carrying amount
amortized cost
original cost
Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the
the investor sells the investment
investee declares a dividend
investee pays dividend
earnings are reported by the investee in its financial statements
An investor uses the equity method to account for investment in ordinary shares. The purchase price implies a fair value of the investee's depreciable assets in excess of the investee's net asset carrying amount. The Investor's amortization of the excess
decreases the investment account
decreases the goodwill account
increases the investment revenue account
does not affect the investment account
The contractual agreement between an investor and the bond issuer is contained in a formal document known as
contract of debt
bond indenture
bond certificate
bond agreement
If a 5-year bond matures on October 1, 2020, and interest is payable semiannually, the interest dates are
April 1 and October 1
January 1 and July 1
May 1 and November 1
Not determinable
The effective interest method of amortizing bond discount provides for
increasing discount amortization and increasing interest income
increasing discount amortization and decreasing interest income
decreasing discount amortization and increasing interest income
decreasing discount amortization and decreasing interest income
Investment property includes all of the following, except
land held for long-term capital appreciation
land held for currently undetermined use
building owned by the reporting entity or held by a finance lessee leased out under one or more operating leases
Property held for sale in the ordinary course of business or in the process of construction of such sale
Directly attributable expenditures related to investment property include
professional fees for legal services, property transfer taxes, and other transaction costs
start-up costs
initial operating losses incurred before the investment property achieves the planned level of occupancy
abnormal amounts of wasted material, labor and other resources incurred in constructing or developing the property
When the entity uses the cost model, transfer between investment property, owner-occupied property and inventory shall be accounted for at
fair value
carrying amount
cost
assessed value
Subsequent to initial recognition, the investment property shall be measured at
fair value
cost less any accumulated depreciation and any accumulated impairment losses
revalued amount
either fair value or cost less any accumulated depreciation and any accumulated impairment losses.
Inventories include all of the following assets, except
Held for sale in the ordinary course of business
in the process of production for sale
in the form of materials or supplies to be consumed in the production process or in the rendering of services
held for use in the production or supply of goods or services
The inventory of service prodiver business may simpy be described as
work in progress
unbilled services
services inventory
billed sservices
PAS 2 Inventories encompasses all of the following, except
Mechandise purchased by a retailer
land and other propety not held for sale
finished goods produced
Materials and supplies awaiting use in the production process
The cost of inventories does not include
salaries of factory staff
storage costs necessary in the production process before a futher production stage
abnormal amounts of wasted materials and distribution costs
irrecoverable purchase taxes
Theoretically, cash discounts permitted on the purchased raw materials should be
added to other income, whether taken or not
added to other income, only if taken
deducted from inventory, whether taken or not
deducted from inventory, only if take
The use of purchase discount account implies that the recorded cost of the purchased inventory item is
invoice price
invoice price plus any purchase dicount lost
invioce price less the purchase discount allowable whether taken or not
invoice price less the purchase discount take
Which of the following is not an acceptable basis for valuation of inventory
historical cost
current replacement cost
prime cost
current selling price less cost of disposal
A consignee paid the freight cost for the goods shipped from a consignor. The freight cost is to be deducted from the consignee's payment to the consginor when the consigned goods are sold. until the consignee sells the goods, the freight cost should be included in the consignee's
cost of goods sold
freight out
distribution cost
accounts receivable
Goods on consignment shall be included in the inventory of
The consignor but not the consignee
The consignee but not the consignor
Neither the consignor the consignee
Both the consignor and the consignee
Which of the following should be included in inventory at the end of the reporting period
Goods in transit that were purchased FOB shipping point
Goods in transit that were purchased FOB destination
Goods received from another entity on consignment
Goods in transit to a customer whichwere sold to the customer FOB shipping point
Freight and other handling charges incurred in the trasfer of goods from the congsinor to consignee are
expense on the part of the consgnor
expense on the part of the consingee
inventoriable by the consignor
inventoraible by the consignee
What is the method of accumulating for inventory in which the cost of goods sold is recorded each time a sale is made?
Professional inventory system
Periodic Inventory system
Perpetual inventory system
Planned inventory system
An entry debiting inventory and crediting cost of goods sold would be made when
merchadise is sold and the periodic inventory method is used
merchandise is sold and the perpertual inventory method is used
mechandise is returned and the perpetual inventory method is used
merchandise is returned and the periodic inventory method is used
A discount given to customer for a purchasing a large volume of merchandise is typically referred to as
Trade discount
Quantity dicount
Size dicount
cash discount
When the current's year ending inventory is overstated
the current year's cost of goods sold is overstated
the current year's total asseets are understated
The current year's net income is overstated
The next year's income is overstated
Inventories shall be measured at
cost
net realizable value
lower of cost and net realizable value
higher of cost and net realizable value
Which inventory cost flow assumption would cosistently result in the highest income in a period of sustained inflation?
FIFO
LIFO
Weighted average
Specific identification
An example of an inventory accounting policy that should be discolsed is
Effect of inventory profit caused by inflation
classfication of inventory into raw materials, work in process, and finished goods
indentification of major suppliers
method used for inventory costing
Investment property are
Identifiable non-monetary assets without physical substance
Properties held to earn rentals or for capital appreciation or both
Assets held for sale in the ordinary courses of business
Tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and are expected to be used during more than one period
Which statement is incorrect regarding the use fair value model?
After initial recognition, an entity shall be measure all of its investment property at fair value
A gain or loss from a change in the fair value of investment property shall be recognized in profit or loss for the period in which it arises.
There is a rebuttable presumption that an entity can reliably measure the fair value of an investment property on a continuing basis
A change from the fair value model to the cost model likely results in a more relevant presentation
In accordance with PFRS 9, an entity may reclassify
Financial assets designated at FVTPL
Investments in equity instruments designated at FVTOCI
Derivatives
None of the above
Investment in debt securities classified as FA@FVTOCI recognizes which of the following in OCI?
Changes in fair value
Impairment gains and losses
Interest calculated using effective interest method
All of the above
(3PTS)The Conehead Company purchased an investment property on January 1, 2016 at a cost of P 220,000. The property had a useful life of 40 years and at December 31, 2018 had a fair value of P 300,000. On January 2019 the property was sold for net proceeds of P 290,000. Conehead uses the cost model to account for investment properties. What is the gain or loss to be recognized in profit or loss for the year ended December 31, 2019 regarding the disposal of the property?
P 86,500 gain
P 81, 000 gain
P 10,000 loss
P 92,000 gain
It is an entity over which the investor has significant influence?
Associate
Investee
Venture capital organization
Mutual fund
Which of the following statements best describes the term "significant influence"?
The holding of a significant proportion of the share capital in another entity
The contractually agreed sharing of control over an economic entity
The power to participate in the financial and operating policy decisions of an entity
The mutual sharing in the risks and benefits of a combined entity
When an investor uses the cost method to account for the investment in ordinary shares, cash dividends received by the investor from the investee should be recorded as
Deduction from the investment account
Dividend income
Addition to the investor's share of the investee's profit
Deduction from the investor's share of the investee's profit
An investor shall discontinue the use of equity method when
The investor ceases to have significant influence over the associate
The associate operates under severe long term restrictions
The investor ceases to have control over the associate
The business activities of the investor and associate is dissimilar
The interest income for the year would be higher if the bond was purchased at
par
face amount
a discount
a premium
