EXAM 4
A company that receives an interest bearing note receivable will
Answer: debit Notes Receivable for the face value of the note
Question 2
A note is dishonored when it is not fully paid at maturity
Answer: True
Question 3
A note receivable is a negotiable instrument which
Answer: can be transferred to another party by endorsement
Question 4
Accounting is a service activity and its function is to provide
quantitative information, primarily financial in nature, about economic
entities, that is intended to be useful in making economic decision.
This definition is given by
Answer: Accounting Standards Council
Question 5
Accounts Receivable should normally be reported at
Answer: Expected amount to be received
Question 6
An amount from a loan granted by a debtor to a creditor.
Answer: Loan receivable
Question 7
An entity granted a loan to a borrower. After considering the
origination fees charged against the borrower and the direct
origination cost incurred, it was found that the initial carrying amount
was greater than the principal amount. What does this suggest?
Answer: Origination fees charged was less than the direct
origination cost
Question 8
An estimation of the present value as a result of an organizations
unexpected recovery.
Answer: Credit losses
Question 9
Are claims supported by formal promises to pay usually in the form of
notes
Answer: Notes receivables
Question 10
As contemplated in accounting, cash includes
Answer: money and any negotiable instrument that is payable in
money and acceptable by the bank for deposit and immediate
credit
Question 11
As maturity date approaches, the carrying value of a loan
approaches to the same amount as:
Answer: Face value
Question 12
At maturity date, the carrying amount of a loan must equal to
Answer: Fair value
Question 13
Comprehensive income includes
Answer: Both profit or loss and other comprehensive income
Question 14
In an amortization schedule, the difference of the total interest
income and the total interest received is the
Answer: Transaction cost
Question 15
Initial measurement of loans receivable
Answer: fair value plus transaction cost
Question 16
It is the change in equity during a period resulting from transactions
and other events, other than changes resulting from transactions with
owners in their capacity as owners.
Answer: Comprehensive income
Question 17
It refers to claims arising from a sale of merchandise or services in
the ordinary course of business.
Answer: Trade Receivables
Question 18
Primary responsibility for the preparation of financial statements in
accordance with generally accepted accounting principles rests with
Answer: Management
The entry to record the dishonor of a note receivable assuming the
payee expects eventual collection includes a debit to
Answer: Accounts Receivable
Question 20
The face value of a note refers to the amount
Answer:
Question 21
The fees charged by the bank against the borrower for the creation of
the loan
Answer: Origination fees
Question 22
The most important information about an entity generally shall be
disclosed in
Answer:
Question 23
The realizable amount of notes receivable is considered
Answer: current asset
Question 24
To be reported as cash and cash equivalent, the cash and cash
equivalent must be
Answer: Unrestricted in use for current operations
Question 25
To compute for the annual interest payments of a loan, the principal
amount is multiplied by:
Answer: Nominal rate
Question 26
When a promissory note matures and is not paid, it is said to be a
Answer: dishonored note
Question 27
Which accounting process is the recognition or non recognition of
business activities as accountable events.
Answer: Identifying
Question 28
Which of the following statements concerning receivables is incorrect
Answer: Notes receivable are often listed last under receivables
Question 29
On March 1, 2018, Megumi Company borrowed P4,000,000 from
bank on a six month note carrying an interest of 12% per annum.
Accounts of P6000,000 are pledged to secure the loan. How much is
received by Megumi Company from its borrowing transaction?
Answer: 4,000,000
Question 30
When the due date of a note is stated in months, the time factor in
computing interest is the number of months divided by 360 days
Answer: False
Question 31
A 3,300,000 loan was granted to a borrower by Norayma Bank with a
nominal interest rate of 12% which is paid every year end. The loan
matures in 4 years on December 31, 2023. After considering the
direct origination cost and origination fees, the market rate on the
loan is 8%. 1,124,000 was earned as interest income for the whole
term of the loan.
If the origination fee was 100,000, determine the initial carrying cost
of the loan.
Answer:
3,760,000
Question 32
Mika Company secured a one-year bank loan of P8,000,000 on
October 1, 2010. The loan is discounted at 10%. The entity signed a
note for the loan and pledged P10,000,000 of its accounts receivable
as collateral for the same. The accounting period of the entity ends
on December 31. How much is received by Mika Company on its
loan transaction?
Answer:
7,200,000
Question 33
On February 1, Maris Company received a 9,000, 10%, four-month
note receivable. The cash to be received by Maris Company when
the note becomes due is
Answer:
9,300
Question 34
On January 1, 2020, Hamid Company sold goods to Khaled
Company. Khaled signed a noninterest-bearing note requiring
payment of P600, 000 annually for seven years. The first payment
was made on January 1, 2020.
The prevailing rate of interest for this type of note at date of issuance
was 10%
PV of an ordinary annuity of I at 10% for 6 periods
4.36
PV of an ordinary annuity of I at 10% for7 periods
4.87
What amount should be recorded as sales revenue in January 2020?
FORMAT: 1,000,000
Answer:
3,216,000
Question 35
On January 1, 2020, Sukuna Bank loaned 4,000,000 to Satori
Company. The interest of the loan is 7% payable at every year-end
within the next 2 years. The effective rate on the loan is 9%. Data
related to the loan:
Direct Origination cost
Origination fees
450,000
(275,000)
Determine the initial carrying amount of the loan.
Answer:
4,175,000
Question 36
Ray Company’s trial balance at Dec. 31, 2018 included the following
accounts:
Debit
Allowance for D/A
Sales
Credit
5,000
7,200,000
Sales return
200,000
Ray estimates its uncollectible accounts receivable at 2% of net
sales. For 2018, Ray should report doubtful accounts expense of
Answer:
140,000
Question 37
The cash account in the ledger of Tristan company shows a balance
of 1,652,000 at Sept. 30. The bank statement, however shows a
balance of 2,090,000 at the same date. The only reconciling items
consist of a bank service charge of 2,000, a large number of
outstanding checks totaling 590,000 and a deposit in transit. What is
the deposit in transit in the Sept. 30 bank reconciliation?
Answer:
150,000
Question 38
The cash in bank of Loveleen Company on December 31, 2018 has
a balance of 1,000,000. Included among the checks drawn by
Loveleen against its current account and recorded in December 2018
are:
*Check written and dated December 23, 2018 and delivered to payee
on January 6, 2019, P50,000.
*Check written December 27, 2018 and dated January 31, 2019
delivered to payee on December 27, 2018, P75, 000.
What amount of cash will be shown on December 31, 2018?
Answer:
1,125,000
Question 39
The following information pertains to Rose Company at Dec. 31,
2018:
Bank statement balance
1,000,000
Checkbook balance
Deposit in transit
Outstanding checks
1,400,000
500,000
100,000
In Rose’s Dec. 31, 2018 balance sheet, cash should be reported at
Answer:
1,400,000
Question 40
The maturity value of a 90,000, 10%, 60-day note receivable dated
July 3 is
FORMAT: 1,000,000
Answer:
91,500
5th Exam
Question 1
After being held for 40 days, a 120 day 12% interest
bearing note receivable was discounted at a bank at 15%.
The proceeds received from the bank equal
Answer: Maturity value less the discount at 15%
Question 2
Cost of goods sold is the same under a periodic system as
perpetual system when an entity uses
Answer: FIFO
Question 3
If a note receivable is discounted with recourse
Answer: Note receivable discounted is credited.
Question 4
If accounts receivable are pledged against borrowings, the
amount of accounts receivable pledged shall be
Answer: Included in total receivables with disclosure
Question 5
In a periodic inventory system, the beginning inventory is
Answer: Total goods available for sale minus net
purchases.
Question 6
Razel Company used a perpetual inventory system. At the
end of 2019, the balance in the inventory account was P720,
000 and P60,000 of those goods included in ending
inventory were purchased FOB shipping point and did not
arrive until 2020. Purchases in 2020 were P6, 000,000.
The perpetual inventory records showed an ending
inventory of P840, 000 for 2020. A physical count of the
goods on hand at the end of 2020 showed an inventory of
P760, 000. Inventory shortages are included in cost of
goods sold. What amount should be reported for cost of
goods sold in 2020?
Answer:
Question 7
Moss Company has determined its December 31,2019
inventory on a FIFO basis to be P4,000,000. Information
pertaining to that inventory follows:
Estimated selling price
4,080,000
Estimated cost of disposal
200,000
Normal profit margin
600,000
Current replacement cost
3,600,000
Most records losses that result from applying the lower of
cost or market rule. At December 31, 2019, what should be
the net carrying value of Moss’ inventory?
Answer: 3,880,000
Question 8
Krysna Company had 15,000 units of product A on hand at
January 1 costing 4.2 each. Purchases of product A during
the month of January were as follows:
Units
Unit cost
January 10
20,000
4.4
January 18
25,000
4.6
January 28
10,000
4.8
A physical count on January 31, shows 25,000 units of
product A on hand.
What is the cost of the inventory on January 31 under the
FIFO method?
Answer: 117,000
Question 9
Dream keeper Company has two products with cost and
selling price as follows:
Product G
Selling Price
600,000
Product
F
400,000
Estimated selling cost
120,000
140,000
Materials and conversion cost
300,000
360,000
General administration cost
160,000
60,000
At year-end, the manufacture of inventory has been
completed but no selling cost has yet been incurred. The
inventory shall be measured at what amount?
Answer: 640,000
Question 10
Faye Company provided the following transactions:
January 1
The entity sold merchandise for 500,000
accepting a note of 500,000 for six months with interest to
be paid at maturity at 12%.
March 1
The entity discounted the note without
recourse at the local bank at 15%.
July 1
The customer paid the bank in full.
The amount of cash received on discounting the
note amounted to:
Answer: 503,500
Question 11
Tender Company accepted from a customer a P8, 000,000,
90-day, 12% note dated August 31, 2019. On September 30,
2019, the entity discounted without recourse the note at
15%. However, the proceeds were not received until
October 1, 2019. In the income statement for the year
ended September 30, 2019, what amount should be
reported as loss on note receivable discounting?
Answer: 46,000
Question 12
Brian Company factored 8,000,000 of accounts receivable
to a finance entity at the beginning of the current year.
Control was surrendered by Brian Company. The factor
assessed a fee of 5% and retained a hold back equal to 10%
of the accounts receivable. In addition, the factor charged
15% interest computed on a weighted average time to
maturity of the accounts receivable of 30 days.
Assuming all accounts receivable are collected, what is the
cost of factoring?
Answer: 498,630
Question 13
Jewel Company assigned P1, 600,000 of accounts
receivable in consideration for a loan. A cash advance of
80% less service charge of P40, 000 was made by the
latter. It was agreed that interest of 2% per month is to be
made and that the assignor continues to make the
collections. Jewel Company signed a promissory note for
the loan. Collections of P1 , 000,000 of the assigned
accounts were made less 2% discount. What amount of
cash is received by Jewel upon entering into the assignment
contract?
Answer: 1,240,000
Question 14
Inventories are usually written down to net realizable value
Answer: Item by item
Question 15
Inventories encompass all of the following, except
Answer:
Question 16
Inventories shall be measured at
Answer: Lower of cost and net realizable value
Question 17
It is a financing arrangement that is usually done on a
without recourse, notification basis.
Answer: Factoring
Question 18
It is a financing arrangement whereby one party formally
transfers its rights to accounts receivable to another party
in consideration for a loan.
Answer: Assignment
Question 19
It is a predetermined amount withheld by a factor as a
protection against customers returns, allowances and other
special adjustments.
Answer: Factors holdback
Question 20
Licht Company factored its receivables without recourse
with Tetia Bank. Licht received cash as a result of this
transaction which is best described as a
Answer: Sale of Lichts accounts receivable to Tetia,
with the risk of uncollectible accounts transferred to
Tetia.
Question 21
Net realizable value is
Answer: Estimated selling price less estimated cost to
complete and estimated cost of disposal.
Question 22
Note receivable discounted without recourse shall be
Answer: Excluded from total receivables without
disclosure of contingent liability
Question 23
Reporting inventory at the lower of cost and net realizable
value is a departure from
Answer: Historical cost
Question 24
The cost of inventory of a service provider include all of the
following, except
Answer:
Profit margin factored into the price charged
against the customer by the service provider.
Question 25
The costs of conversion of inventory include all of the
following except
Answer: Systematic allocation of administrative
overhead
Question 26
When accounts receivable are factored
Answer: Accounts receivable shall be credited
Question 27
Which of the following costs of conversion cannot be
included in cost of inventory?
Answer: Salaries of sales staff (sales department shares
the building with factory)
Question 28
Which of the following costs should be included in inventory
valuation?
Answer: Fixed production overhead
Question 29
Which of the following should not be taken into account
when determining the cost of inventories?
Answer: Recoverable purchase tax
Question 30
Which of the following would not be reported as inventory?
Answer: Machinery acquired by a manufacturing entity
for use in the production process
Question 31
A 90 day 15% interest bearing note receivable is sold to a
bank with recourse after being held for 30 days. The
proceeds are calculated using a 12% interest rate. The note
receivable has been
I. Discounted
II. Pledged
Answer: I only
Question 32
A 90 day 15% interest bearing note receivable is sold to a
bank without recourse after being held for 60 days. The
proceeds are calculated using a 12% interest rate. The
amount credited to note receivable at the date of the
discounting transaction would be
Answer: The face value of the note
6th Exam
Question 1
Lisa Company began operations in 2018. For the year ended
December 31, 2018, Lisa made available the following
information:
Total merchandise purchases for the year
7,000,000
Merchandise inventory at December 31
1,400,000
Collection from customers
4,000,000
All merchandise was marked to sell at 40% above cost. All
sales are on a credit basis and all receivables are
collectible.
What is the balance of accounts receivable on December 31,
2018?
Answer: 3,840,000
Question 2
Mimosa Company is engage in raising dairy livestock.
Information regarding its activities relating to the dairy
livestock is as follows:
CA on Jan. 1, 2018
5,000,000
Increase due to purchase
2,000,000
Gain arising from change in FV less
Cost to sell attributable to price change
400,000
Gain arising from change in FV less cost
To sell attributable to physical change
600,000
Decrease due to sales
850,000
Decrease due to harvest
200,000
What is the carrying amount of the biological asset on
December 31, 2018?
Answer: 6,950,000
Question 3
Mr. Klaus Company has a herd of 10 2-year old animals on
January 1, 2018. One animal aged 2.5 years was purchased
on July 1, 2018 for P108, and one animal was born on July 1,
2018. No animals were sold or disposed of during the year.
The fair value less cost to sell per unit as follows:
2 – year old animal on January 1
2.5 – year old animal on July 1
100
108
New born animal on July 1
2-year old animal on December 31
2.5 – year old animal on December 31
70
105
111
New born animal on December 31
72
3 – year old animal on December 31
120
0.5 – year old animal on December 31
80
What is the fair value of the biological assets on December
31, 2018?
Answer: 1,400
Question 4
Noelle Company provided the following data:
Value of biological asset at acquisition cost on December
31, 2018
600,000
Fair valuation surplus on initial recognition at FV on
December 31, 2018
700,000
Change in FV to December 31, 2019 due to growth and
price fluctuation
100,000
Decrease in FV due to
harvest
90,000
What is the carrying amount of the biological asset on
December 31, 2019?
Answer: 1,310,000
Question 5
On December 31, 2018, the following information was
available from Jennie Company’s accounting records:
Retail
Inventory, January 1
1,015,000
Purchases
5,775,000
Cost
735,000
4,165,000
Additional markups
__
210,000
______-
Available for sale
7,000,000
4,900,000
Sales for the year totaled 5,530,000. Markdowns amounted
to 70,000. Under the approximate lower of average cost or
market retail method, what is the inventory on December
31, 2018?
Answer: 980,000
Question 6
A gain or loss arising on the initial recognition of a
biological asset and from a change in the fair value less
costs to sell of a biological asset shall be included in
Answer: The profit or loss for the period
Question 7
A major advantage of the retail inventory method is that it
Answer: Provides a method for inventory control and
facilitates determination of the periodic inventory.
Question 8
A markup of 25 percent on cost is equivalent to what
markup on selling price?
Answer: 20 percent
Question 9
An entity had a plantation forest that is likely to be
harvested and sold in 30 years. The income shall be
accounted for in which of the following?
Answer: Income shall be measured annually and
reported using a fair value approach that recognizes
and measures biological growth.
Question 10
Biological assets are measured at
Answer: Fair value less costs to sell
Question 11
It is the management by an entity of the biological
transformation and harvest of biological assets for sale or
for conversion into agricultural produce or into additional
biological asset.
Answer: Agricultural activity
Question 12
Regarding the choice of measurement basis used for
valuing biological assets, PAS 41
Answer: Sets out several ways of measuring fair value.
Question 13
The conventional retail method produces an ending
inventory that approximates
Answer: Lower of average cost or market
Question 14
The gross margin method of estimation ending inventory
may be used for all of the following, except
Answer: Internal as well as external year end reports
Question 15
The gross profit method of estimating inventory would not
be useful when
Answer: There is significant change in the mix of
products being sold.
Question 16
The gross profit method of inventory valuation is not valid
when
Answer: The gross margin percentage changes in
significantly during the year.
Question 17
The retail inventory method would include which of the
following in the calculation of the goods available for sale at
both cost and retail?
Answer: Purchase returns
Question 18
The use of gross profit method assumes
Answer: The relationship between selling price and
cost of goods sold is similar to prior years.
Question 19
This method is often used for convenience for measuring
inventories of large number of rapidly changing items with
similar margins for which it is impracticable to use other
costing methods.
Answer: Retail method
Question 20
To produce an inventory valuation which approximates the
lower of cost or market using the conventional retail
inventory method, the computation of the ration of cost to
retail should
Answer: Include markups but not markdowns
Question 21
When agricultural produce is harvested, the harvest shall
be accounted for by using PAS 2, Inventories, or another
applicable PFRS. For the purpose of that standard, cost at
the date of harvest is deemed to be
Answer: The fair value less costs to sell at the point of
harvest
Question 22
When the conventional retail inventory method is used,
markdowns are commonly ignored in the computation of
the cost to retail ration because
Answer: This tends to give a better approximation of
the lower of cost or market.
Question 23
When the fair value of the biological asset cannot be
determined reliably, the biological asset shall be measured
at
Answer: Cost less accumulated depreciation and
accumulated impairment losses
Question 24
Where there is a long aging or maturation process after
harvest, the accounting for such products shall be dealt
with by
Answer: PAS 2, Inventories
Question 25
Which of the following is unlikely to be used in fair value
measurement?
Answer: External independent valuation
Question 26
Which of the following should not be included in costs to
sell?
Answer: Finance costs and income taxes
Question 27
Which of the following would cause a decrease in the cost of
ration as used in the retail inventory method?
Answer: Higher retail prices
Question 28
With regard to the retail inventory method, which of the
following is the most accurate statement?
Answer: This method results in a lower ending
inventory cost if net markups are included but net
markdowns are excluded in computing the cost price
percentage.
Question 29
The following statements relate to agricultural produce.
Which statement is correct?
I. In all cases, an entity shall measure agricultural produce
at the point of harvest at fair value less cost to sell.
II. PAS 41 reflects the view that the fair value of
agricultural produce at the point of harvest can always be
measured reliably.
Answer: Both I and II
Question 30
On September 30, 2018, a fire at Rose Company’s only
warehouse caused severe damage to its entire inventory.
Based on recent history, Rose has a gross profit of 30% on
cost. The following information is available from Brock’s
records for nine months ended September 30, 2018:
Inventory at January 1
Net purchases
Net Sales
1,100,000
6,000,000
7,280,000
A physical inventory disclosed usable damaged goods which
Rose estimates can be sold for P100,000. Using the gross
profit method, what is the estimated cost of goods sold for
the nine months ended September 30, 2018?
Answer: 5,600,000
Question 31
The following information is available for Jisoo Company for
the current year:
Net Sales
3,600,000
Freight in
90,000
Purchase discounts
Ending inventory
50,000
240,000
The gross margin is 40 percent of sales. What is the cost of
goods available for sale?
Answer: 2,400,000
Question 32
Yuno Company uses the FIFO retail method of inventory
valuation. The following information is available.
Cost
Beg. Inventory
1,500,000
Purchases
5,500,000
600,000
3,000,000
Retail
Net additional
markups
Net markdowns
1,000,000
Sales
revenue
4,500,000
What is the estimated cost of ending inventory?
Answer: 1,200,000
500,000
7th Exam
Question 1
Gera Corporation owns two financial investments in the
shares of listed companies. Details of which are as follows:
Investment 1 – Acquired on September 1, 2020, at a cost of
P50,000 with a Fair value of P60,000 at year-end for the
purpose of trading.
Investment 2 - Acquired on August 1, 2020, at a cost of
P25,000 to hold indefinitely. Its fair value at
year-end is P20,000.
What are the amounts to appear in the statement of Profit
and Loss for the year ended September 30, 2020?
Answer: 10,000 gain
Question 2
Gera Corporation owns two financial investments in the
shares of listed companies. Details of which are as follows:
Investment 1 – Acquired on September 1, 2020, at a cost
of P50,000 with a Fair value of P60,000 at year-end for the
purpose of trading.
Investment 2 - Acquired on August 1, 2020, at a cost of
P25,000 to hold indefinitely. Its fair value at
year-end is P20,000
What are the amounts to appear in the Statement of
Financial position for the year ended September 30, 2020?
Answer: 80,000
Question 3
Gera Corporation owns two financial investments in the
shares of listed companies. Details of which are as follows:
Investment 1 – Acquired on September 1, 2020, at a cost of
P50,000 with a Fair value of P60,000 at year-end for the
purpose of trading.
Investment 2 - Acquired on August 1, 2020, at a cost of
P25,000 to hold indefinitely. Its fair value at
year-end is P20,000.
What are the amounts to appear in the Statement of
Comprehensive Income for the year ended September 30,
2020?
Answer: 5,000 loss
Question 4
In 2019, Edward Company purchased equity securities as
a trading investment. For the year ended December 31,
2019, the entity recognized an unrealized holding loss of
P230,000. There were no security transactions during 2020.
Pertinent information on December 31, 2020 is as follows:
Security
Cost
Market Value
A
2,450,000
B
4,250,000
2,300,000
1,820,000
1,800,000
4,120,000
In the 2020 income statement, what amount should be
reported as unrealized holding gain or loss?
ANSWER: Unrealized holding gain 100,000
Question 5
On December 31, 2019, Belle Company appropriately
reported a P100,000 unrealized loss. There was no change
in 2020 in the composition of Belle’s portfolio of
Investments in equity securities held as financial asset at
fair value through other comprehensive income. Pertinent
data are as follows:
Security
Cost
Market value
December 31, 2020
A
1,200,000
1,300,000
B
900,000
500,000
C
1,600,000
1,500,000
3,700,000
3,300,000
What amount of loss on these securities should be included
in the statement of comprehensive income for the year
ended December 31, 2020, as component of other
comprehensive income?
ANSWER FORMAT: (1,000,000)
Answer:
(300,000)
Question 6
A financial asset can be reclassified out of the fair value
through profit or loss category when (choose the incorrect
one)
Answer:
Question 7
At which of the following dates has the shareholder
theoretically realized income from dividend?
Answer: The date the dividend is declared
Question 8
Cash received in lieu of stock dividends is accounted for as
Answer: If the stock dividends are received and
subsequently sold at cash received and gain or loss is
recognized.
Question 9
Financial liabilities like Financial Assets they are initially
measured and recognized at
Answer: Fair value
Question 10
How does PFRS 9 distinguish between the measurement
methods to be used in the standard?
Answer: By reviewing the business model of each entity
and the contractual cash flow characteristics of the
instrument.
Question 11
It happens when the business model for the financial asset
changes but not for financial liabilities
Answer: Reclassification
Question 12
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 receive dividends.
Answer: Date of record
Question 13
Liquidating dividends are credited to
Answer: Investment account
Question 14
PFRS 9 uses mixed model approach to measurement. Which
of the following measurement methods are acceptable
under PFRS 9
Answer: Amortized Cost and Fair value
Question 15
PFRS 9, Financial Instruments deals with the measurement
and classification of which of the following items?
Answer: Financial Assets
Question 16
Property dividends are recorded as
Answer: Dividend income at fair value of the property
Question 17
Shares received in lieu of cash dividend are recorded as
Answer: Income at fair value of the shares received
Question 18
These are incremental costs that are directly attributable to
the acquisition of financial assets and issue of financial
liabilities.
Answer: Transaction costs
Question 19
Transaction Costs directly related to the issuance or
acquisition are added to the fair value basis unless financial
asset or liability are subsequently measured in FVPL. In
that case, the transaction cost are
Answer: Expense immediately
Question 20
Under what circumstances under PFRS 9 can an entity
classify financial assets that meet the amortized cost
criteria as at FVTPL?
Answer:
Question 21
Under which circumstances can the profit or loss on an
equity instrument carried at Fair Value be dealt with the
Other Comprehensive Income?
Answer:
Question 22
What are the two categories a financial liabilities can fall
into
Answer:
Question 23
What is the effect of stock dividend of the same class?
Answer: No effect on investment account but
decrease in cost per share
Question 24
When an entity transfers a financial asset, it shall evaluate
the extent to which it retains the financial asset.
Answer: The risks and rewards of ownership of
Question 25
When stock dividends of different class are received
Answer: A new investment account is debited and the
original investment account is credited.
Question 26
Which of the following are exception for PFRS-9 application
Answer: Contracts that were entered into and
continue to be held for the purpose of the receipt or
delivery of a non-financial item in accordance with the
entities expected purchase, sale or usage requirement.
Question 27
Which of the following loan commitments are within the
scope of PFRS 9
Answer: All of the above
Question 28
When an entity continues to recognize an asset to the
extent of its continuing involvement, the entity shall not
recognize an associated liability.
Answer: False
Question 29
Which of the following is not classed as financial
instrument?
Answer: Inventory
Question 30
On January 1, 2018, Norayma Company purchase
marketable equity securities to be held as “trading” for
P5,000,000. The entity also paid commission, taxes and
other transaction costs amounting to P200,000. The
securities had a market value of P5,500,000 on December
31, 2018 and the transaction costs that would be incurred
on sale are estimated at P100,000. No securities were sold
during 2018.
What amount of unrealized gain or loss on these securities
should be reported in the 2018 income statement?
Answer:
500,000
Question 31
On January 1, 2020, Alice Company purchased 40,000
shares of Jasper at P100 per share. The investment is
measured at fair value through other comprehensive
income. Brokerage fees amounted to P120,000. A P5
dividend per share of Jasper had been declared on
December 15, 2019, to be paid on March 31, 2020 to
shareholders of record on January 31, 2020. No other
transactions occurred in 2020 affecting the investment in
Jasper's share.
What is the initial measurement of the investment?
Answer: 3,920,000
Question 32
On January 1, 2020, Andy issued 100,000 3% debentures at
a 3% discount on the par value of P100. The debentures are
redeemable at a premium of 5% in three years' time. The
effective rate of interest on the debentures is 5.71%.
Calculate the finance cost to be shown in the Statement of
Profit or loss for the year ended December 31, 2020.
Answer: 553,870