Which of the following should NOT be included in the computation of other comprehensive income?

Which of the following assets must be tested at least annually for impairment?

What is the initial measurement of an intangible asset acquired through a government grant?

Which of the following is classified as nonmonetary?

Which of the following is NOT a component of employee benefits expense?

Under PFRS for SMEs, basic debt instruments are subsequently measured at:

Which of the following DOES NOT result in a deferred tax asset?

1. Which of the following temporary differences ordinarily creates a deferred tax asset?

1. Which of the following adjusting entries CANNOT be subject to reversing entries?

Chen Company owns several herds of cow. Where shouod Chen report the changes in the fair value of a heard of cow according to Philippine Accounting Standards (PAS) 41?

Which of the following is TRUE about the fair value model in accounting for small and medium entities’ investment in associate?

1. A bank statement provides information about the following, EXCEPT:

Which of the following expenses is subject to immediate recognition on the income statement?

Which of the following is NOT considered as cash for financial reporting purposes?

Which of the following sections of the cash flow statement would show the proceeds from the sale of investments in ordinary shares accounted for by the equity method?

When should the compensation expense be recorded for the share options granted by the entity to its employees?

1. Under Philippine Financial Reporting Standard (PFRS) for SMEs, if an entity is unable to determine the useful life of an intangible asset, the entity shall:

1. Which of the following accounting theory justifies using the historical cost method in the preparation of financial statements?

Which of the following would increase the reported cash flows from operating activities using the direct method?

Which of the following is CORRECT regarding earnings per share (EPS)?

1. When it is difficult to distinguish between a change in estimate and accounting policy, an entity should:

Huening Company (HC) implemented a defined benefit plan for its employees on January 1, 20x0. During 20x0 and 20x1, HC's contributions fully funded the plan. The following data are provided for 20x2 and 20x3:

Projected benefit obligation, Dec. 31

20x3 P11,250,000

20x2 P10,500,000

Fair value of plan assets, Dec. 31

20x3 10,950,000

20x2 10,050,000

HC recognized benefit expense of P1,350,000, actual return, which is also the interest income of P502,500, benefits paid of P250,000, and actuarial gain on its benefit obligation during 20x3.

1. What is the discount rate HC applied for 20x3?

Huening Company (HC) implemented a defined benefit plan for its employees on January 1, 20x0. During 20x0 and 20x1, HC's contributions fully funded the plan. The following data are provided for 20x2 and 20x3:

Projected benefit obligation, Dec. 31

20x3 P11,250,000

20x2 P10,500,000

Fair value of plan assets, Dec. 31

20x3 10,950,000

20x2 10,050,000

HC recognized benefit expense of P1,350,000, actual return, which is also the interest income of P502,500, benefits paid of P250,000, and actuarial gain on its benefit obligation during 20x3.

1. What amount should HC contribute to report an accrued benefit cost of P300,000 in its December 31, 20x3 statement of financial position?

Huening Company (HC) implemented a defined benefit plan for its employees on January 1, 20x0. During 20x0 and 20x1, HC's contributions fully funded the plan. The following data are provided for 20x2 and 20x3:

Projected benefit obligation, Dec. 31

20x3 P11,250,000

20x2 P10,500,000

Fair value of plan assets, Dec. 31

20x3 10,950,000

20x2 10,050,000

HC recognized benefit expense of P1,350,000, actual return, which is also the interest income of P502,500, benefits paid of P250,000, and actuarial gain on its benefit obligation during 20x3.

1. What is the actuarial gain on the projected benefit obligation for 20x3?

Karina Company’s income statement is given for the end of the current year.

Sales

3,800,000

COGS

(2,250,000)

Gross Profit

1,550,000

Operating Expenses

(850,000)

Income before taxes

700,000

Income Taxes

(210,000)

Net income

490,000

How much is the cash collected by Karina Company from its customers?

Karina Company’s income statement is given for the end of the current year.

Sales

3,800,000

COGS

(2,250,000)

Gross Profit

1,550,000

Operating Expenses

(850,000)

Income before taxes

700,000

Income Taxes

(210,000)

Net income

490,000

How much is the net cash flow provided for operating activities to be reported by Karina Company?

Karina Company’s income statement is given for the end of the current year.

Sales

3,800,000

COGS

(2,250,000)

Gross Profit

1,550,000

Operating Expenses

(850,000)

Income before taxes

700,000

Income Taxes

(210,000)

Net income

490,000

How much is the cash paid by Karina Company to its supplier?

Joseph Company assigned an accounts receivable to a bank in the amount of P1,000,000 on October 1, 20x1, as security for a loan of P800,000. The bank charged a 3% commission on the accounts. The interest rate on the note is 12%. Joseph collected P300,000 on assigned accounts after deducting P50,000 of discounts during the month.

Moreover, Joseph wrote off a P53,000 assigned account. Joseph paid to the bank the amount collected plus one (1) month's interest on the note. On October 31, 20x1, Joseph estimated that 8% of the assigned accounts were doubtful in collection.

1. How much is the doubtful expense to be recognized by Joseph Company for the above transaction?

Joseph Company assigned an accounts receivable to a bank in the amount of P1,000,000 on October 1, 20x1, as security for a loan of P800,000. The bank charged a 3% commission on the accounts. The interest rate on the note is 12%. Joseph collected P300,000 on assigned accounts after deducting P50,000 of discounts during the month.

Moreover, Joseph wrote off a P53,000 assigned account. Joseph paid to the bank the amount collected plus one (1) month's interest on the note. On October 31, 20x1, Joseph estimated that 8% of the assigned accounts were doubtful in collection.

1. What is Joseph Company’s accounts receivable balance on October 31, 20x1?

On December 20, 20x1, Jolly Company purchased merchandise on credit for P3,000,000 with terms 2/10, n/30. 80% of the gross liability was paid within the discount period. The remainder was paid on January 15, 2021. On December 31, 20x1, 90% of the merchandise had been sold, and 10% remained in inventory. Jolly uses the net method. What is the amount of cost of goods sold Jolly should recognize on December 31, 20x1?

How much is the net cash provided by operating activities?

How much is the net cash provided by investing activities?

How much is the net cash provided by financing activities?

Kryzelle Corporation (KC) provided you with the following transactions of its newly acquired property, plant, and equipment for the year 20x1.

• On January 1, 20x1, KC purchased several office machineries that will be used to produce goods at a purchase price of P1,000,000. KC paid import duties of P10,000 and non-refundable purchase taxes of P5,000. KC also incurred a P30,000 installation cost. The company expects to incur a dismantling cost amounting to P132,275 at the end of its 5-year useful life. The prevailing market interest rate during the transaction date was 12%. The present value factor of P1 at 12% for five (5) periods is 0.567, while the present value factor of the ordinary annuity at 12% for five (5) periods is 3.605.

• On May 1, KC issued 300,000 shares for factory machinery with a fair value of P5,000,000 on the date of acquisition. The par value per share is P10, and the fair value per share on December 31, 20x1 is P15.

• KC owns a tract of land which it purchased three (3) years ago. The land is held as a plant site and has a fair market value of P1,500,000 on July 1, 20x1. On this date, KC exchanged its land for new land and paid P500,000 cash. The expected cash flows from the asset received differ from the cash flows expected from the asset transferred, and the difference is significant relative to the fair value of the land given up.

How much is the initial cost of the furniture and fixtures?

Kryzelle Corporation (KC) provided you with the following transactions of its newly acquired property, plant, and equipment for the year 20x1.

• On January 1, 20x1, KC purchased several office machineries that will be used to produce goods at a purchase price of P1,000,000. KC paid import duties of P10,000 and non-refundable purchase taxes of P5,000. KC also incurred a P30,000 installation cost. The company expects to incur a dismantling cost amounting to P132,275 at the end of its 5-year useful life. The prevailing market interest rate during the transaction date was 12%. The present value factor of P1 at 12% for five (5) periods is 0.567, while the present value factor of the ordinary annuity at 12% for five (5) periods is 3.605.

• On May 1, KC issued 300,000 shares for factory machinery with a fair value of P5,000,000 on the date of acquisition. The par value per share is P10, and the fair value per share on December 31, 20x1 is P15.

• KC owns a tract of land which it purchased three (3) years ago. The land is held as a plant site and has a fair market value of P1,500,000 on July 1, 20x1. On this date, KC exchanged its land for new land and paid P500,000 cash. The expected cash flows from the asset received differ from the cash flows expected from the asset transferred, and the difference is significant relative to the fair value of the land given up.

How much is the initial cost of the new land?

Kryzelle Corporation (KC) provided you with the following transactions of its newly acquired property, plant, and equipment for the year 20x1.

• On January 1, 20x1, KC purchased several office machineries that will be used to produce goods at a purchase price of P1,000,000. KC paid import duties of P10,000 and non-refundable purchase taxes of P5,000. KC also incurred a P30,000 installation cost. The company expects to incur a dismantling cost amounting to P132,275 at the end of its 5-year useful life. The prevailing market interest rate during the transaction date was 12%. The present value factor of P1 at 12% for five (5) periods is 0.567, while the present value factor of the ordinary annuity at 12% for five (5) periods is 3.605.

• On May 1, KC issued 300,000 shares for factory machinery with a fair value of P5,000,000 on the date of acquisition. The par value per share is P10, and the fair value per share on December 31, 20x1 is P15.

• KC owns a tract of land which it purchased three (3) years ago. The land is held as a plant site and has a fair market value of P1,500,000 on July 1, 20x1. On this date, KC exchanged its land for new land and paid P500,000 cash. The expected cash flows from the asset received differ from the cash flows expected from the asset transferred, and the difference is significant relative to the fair value of the land given up.

How much is the initial cost of machineries?

Kryzelle Corporation (KC) provided you with the following transactions of its newly acquired property, plant, and equipment for the year 20x1.

• On January 1, 20x1, KC purchased several office machineries that will be used to produce goods at a purchase price of P1,000,000. KC paid import duties of P10,000 and non-refundable purchase taxes of P5,000. KC also incurred a P30,000 installation cost. The company expects to incur a dismantling cost amounting to P132,275 at the end of its 5-year useful life. The prevailing market interest rate during the transaction date was 12%. The present value factor of P1 at 12% for five (5) periods is 0.567, while the present value factor of the ordinary annuity at 12% for five (5) periods is 3.605.

• On May 1, KC issued 300,000 shares for factory machinery with a fair value of P5,000,000 on the date of acquisition. The par value per share is P10, and the fair value per share on December 31, 20x1 is P15.

• KC owns a tract of land which it purchased three (3) years ago. The land is held as a plant site and has a fair market value of P1,500,000 on July 1, 20x1. On this date, KC exchanged its land for new land and paid P500,000 cash. The expected cash flows from the asset received differ from the cash flows expected from the asset transferred, and the difference is significant relative to the fair value of the land given up.

How much is the initial cost of the self-constructed building?

On December 25, 20x1, an employee filed a P3,000,000 lawsuit against Dispatch Company for damages suffered when one of its equipment malfunctioned in August 20x1. The company's legal counsel believes that it is probable that Dispatch will pay the damages ranging between P500,000 to P1,000,000. Each point within the range is as likely as any other. On March 1, 20x2, the employee offered to settle the lawsuit out of court for P900,000. The company accepted the offer and settled the amount. The financial statements were authorized to be issued on March 31, 20x2. How much is the provision that should be recognized as of December 31, 20x1?

How much is the petty cash shortage on December 31, 20x1?

How much is the correct amount of Cash and Cash Equivalents that must be shown in the Statement of Financial Position on December 31, 20x1?

1. On December 31, 20x1, Sana Company reported P6,000,000 inventory based on the physical count. Additional pieces of information are as follows:

• Excluded from the physical count were goods billed to a customer, FOB Destination, on December 31, 20x1. The goods had a cost of P300,000 and had been billed at P450,000. The shipment is ready for pick-up by the delivery contractor on January 5, 20x2.

• Goods were in transit from a vendor. The invoice cost was P400,000, and the goods were shipped FOB seller on December 31, 20x1.

• Goods sold in transit, costing P250,000, were included in the count. The customer should pay the freight cost of P50,000.

• Goods out on consignment amounted to P1,000,000, excluding shipping costs of P50,000.

What is the amount of inventory Sana Company should report on December 31, 20x1?

An entity had one (1) class of ordinary share capital outstanding and no other securities that are potentially convertible into ordinary shares. The net income for 20x1 was P6,000,000, and the net income for 20x0 was P3,600,000. During 20x0, 120,000 shares were outstanding. In 20x1, the following distributions of additional shares occurred:

April 1

40,000 treasury shares were sold

July 1

A 2 for 1 share split was issued

What amount should be reported as basic earnings per share for 20x0 in the comparative income statement for 20x1?

An entity had one (1) class of ordinary share capital outstanding and no other securities that are potentially convertible into ordinary shares. The net income for 20x1 was P6,000,000, and the net income for 20x0 was P3,600,000. During 20x0, 120,000 shares were outstanding. In 20x1, the following distributions of additional shares occurred:

April 1

40,000 treasury shares were sold

July 1

A 2 for 1 share split was issued

What amount should be reported as basic earnings per share for 20x1 in the comparative income statement for 20x1?

On April 15, 20x1, a fire destroyed Sunstar Company's entire inventory. The inventory on hand as of January 1, 20x1 totaled P3,300,000. From January 1 through the time of the fire, the company made purchases of P1,366,000, incurred freight of P156,000, and had sales of P2,420,000. Inventory on hand per physical count was determined to be P1,500,000, including merchandise held on consignment of P300,000. Sunstar’s inventory is insured, and only inventory that Sunstar owns can be claimed from insurance. The gross profit rate is 30% based on sales. What amount of insurance claim can Sunstar receive?

Sangchi Company (SC) places a coupon in each box of its product. Customers may send in 10 coupons and P3, and the company will send them a romantic towel. Sufficient towels were purchased at P5.40 per piece. During 20x1, 1,260,000 boxes were sold. It was estimated that 5% of the coupons would be redeemed. In 20x1, 18,000 coupons were redeemed. How much is SC’s outstanding premium liability as of December 31, 20x1?

1. Mingyu Corporation (MC) is experiencing financial difficulties and has difficulty paying its note payable with Jikjin Bank (JB). MC negotiated with JB and agreed to restructure its note payable at the end of the current period. MC owed the bank a principal amount of P4,000,000 and accrued interest of P480,000. Based on the agreement, the bank will accept equipment with a fair value of P800,000 and a note receivable from MC’s customer with a carrying amount of P3,000,000. It was determined that the equipment had been acquired at P1,000,000 and had been 30% depreciated as of the current period.

What is the amount of gain on the extinguishment of debt MC should recognize under the Philippine Financial Reporting Standards (PFRS)?

On December 20, 20x1, Jolly Company purchased merchandise on credit for P3,000,000 with terms 2/10, n/30. 80% of the gross liability was paid within the discount period. The remainder was paid on January 15, 2021. On December 31, 20x1, 90% of the merchandise had been sold, and 10% remained in inventory. Jolly uses the net method. What is the amount of purchase discount lost Jolly should recognize on December 31, 20x1?

1. The books of Yanna Corporation (YC) disclosed a cash balance of P45,700 on June 30. The bank statement as of June 30 showed a balance of P50,300. Additional pieces of information that might be useful in reconciling the two (2) balances are as follows:

• Check payable to creditors for P3,000 was erroneously recorded on the books as P4,500.

• Outstanding checks totaled P9,800, including a certain check of P2,000 payable to the supplier on June 25 but not yet mailed as of June 30.

• Bank services charge for June of P300 is not yet recorded on the books.

• YC’s account had been charged on June 26 for a customer’s non-sufficient fund (NSF) check for P1,200. No entry has been made for the return of NSF check.

• The bank had debited YC’s account for P600. This amount should have been debited to Yeng Company’s account.

• Undeposited collections as of June 30 are P13,400, including a post-dated check of P1,300 from a customer recorded on July 1.

• A bank memo stated that a customer’s note for P7,500 had been collected on June 27 but not yet recorded on the books.

How much is the correct cash balance as of June 30?

At the beginning of the current year, Ashe Company entered into a 10-year noncancelable lease requiring year-end payments of P1,000,000. Ashe’s incremental borrowing rate is 12%, while lessor’s implicit interest rate known to Ashe is 10%. Present value factors for an ordinary annuity for 10 periods are 6.145 at 10% and 5.650 at 12%. On the same date, Ashe paid the initial direct cost of P200,000 to negotiate and secure the leasing arrangement. Ownership of the property remains with the lessor at the expiration of the lease. There is no purchase option. The leased property has an estimated economic life of 12 years. What amount should be capitalized initially as the cost of the right of use asset?