4
CAMPUS / BRANCH (Please choose properly) *
PUP Sta. Mesa
PUP Sta. Maria, Bulacan
PUP San Juan
PUP Taguig
PUP Maragondon, Cavite
PUP Bataan
PUP San Pedro, Laguna
PUP Sta. Rosa, Laguna
PUP Binan, Laguna
PUP Alfonso, Cavite
PUP Lopez, Quezon Province
PUP Sto. Tomas, Batangas
5
Victory Corporation issued a promissory note denominated in foreign currency
for the purchase made from a supplier in England on December 1, for a 60-day,
18% promissory note for 150,000 pounds, at a selling rate of 1FC to P74.50. On
December 31, the selling spot rate is 1FC to P74.95. On January 30, the selling
spot rate is 1FC to P75.65.
On the settlement date, how much is the foreign exchange gain/loss? *
(2 Points)
P105,000 loss
6
The following are the acquisition related costs that is not considered as
expenses in the period in which they are incurred, except *
(1 Point)
Listing Fees in issuing new shares
Cost to issue debt securities
Cost of Stock Certificates
Audit Fee for SEC Registration
7
Hyperinflation is indicated by characteristics of the economic environment of a
country, which of the following is NOT an indication that a particular economy
is “hyperinflationary”? *
(1 Point)
Interest rates, wages and prices are linked to a price index.
Sales and purchases on credit take place at prices that compensate for the expected loss of
purchasing power during the credit period, even if the period is short.
The general population prefers to keep its wealth in monetary assets or in a time bank deposit.
The cumulative inflation rate over three years is approaching, or exceeds, 100%.
8
On January 01, 2021, Parent Corp. acquired 75% of the outstanding stock of
Subsidiary Co. for P1,380,000 cash. The book value of Subsidiary Co.’s net assets
was P1,200,000. Parent Corp. determined that the inventory and plant assets
(remaining life of 5 years) of Subsidiary Co. were understated by P100,000 and
P300,000, respectively. Subsidiary Co.’s net income for the year ended
December 31, 2021 was P500,000. During the year 2021, Parent Corp. received
P240,000 cash dividends from Subsidiary Co. The fair value of NCI was
determined at P445,000. Loss on impairment of goodwill was P25,000. Net
income of P Corp. under the cost method amounted to P1,000,000. P Corp. is
using the fair value method in measuring NCI.
How much is the Investment Balance on December 31, 2021 on the books
of Parent Corp. under the equity method? *
(2 Points)
P1,380,000
P1,395,000
P1,375,000
P1,615,000
9
Sofia Inc., an SME, has completed the assessment of the fair value of the net
assets of First Company to amount to P19,560,000. The consideration payable
for the acquisition equals P19,000,000. Additional general transaction costs
amount to P1,100,000. What must be recognized and recorded? *
(1 Point)
Sofia will book a gain of P560,000 through profit or loss and expense transaction costs.
Sofia will book a gain P560,000 through OCI and expense transaction costs.
Sofia will book a goodwill of P540,000.
Sofia will book a negative goodwill of P560,000 as a liability and expense the transaction costs.
10
How much is the Non-Controlling Interest at December 31, 2021? *
(2 Points)
P840,280
P821,720
P805,625
P822,280
11
Juancho Company, a manufacturing company based in Laguna, Philippines,
purchased raw materials from a foreign company denominated in foreign
currency. Which of the following is correct? *
(1 Point)
If the foreign currency appreciates, Juancho will recognize foreign exchange loss.
If the foreign currency appreciates, Juancho will recognize foreign exchange gain.
If the foreign currency depreciates, Juancho will recognize foreign exchange loss.
Any gain or loss will be deferred until the date of settlement.
No gain nor loss will be recognized in the financial statement.
12
Which of the following statements is/are TRUE in reference to PFRS#10:
Consolidated Financial Statements?
i. An investor must be exposed, or have rights, to variable returns from its
involvement with an investee to control the investee. Such returns must have
the potential to vary as a result of the investee's performance and can be
positive, negative, or both.
ii. An investor that holds only protective rights cannot have power over an
investee and so cannot control an investee.
iii. Power arises from rights. Such rights can be complex (e.g. through voting
rights) or be straight forward (e.g. embedded in contractual arrangements).
iv. A parent must not only have power over an investee and exposure or
rights to variable returns from its involvement with the investee, a parent must
also have the ability to use its power over the investee to affect its returns from
its involvement with the investee. *
(1 Point)
i, ii, iii, and iv
i and iv
i, ii, and iv
i, ii, and iii
13
A business combination occurs when a company acquires an equity interest in
another entity and has *
(1 Point)
At least 20% ownership in the entity.
More than 50% ownership in the entity.
100% ownership in the entity.
Control over the entity, irrespective of the percentage owned.
14
In 2020, P Company sold inventory costing P50,000 to S Company (90%-owned)
for P100,000. By the end of the year, S sold 80% of the inventory. The
elimination entries in 2021 would include: *
(1 Point)
Debit to Cost of Sales, P10,000
Credit to Inventory, P10,000.
Debit to Retained Earnings, P10,000.
Credit to Cost of Sales, P100,000.
15
The fair value of Subsidiary Company’s equipment is P153,000. Assuming Parent
Company acquired 70% of the outstanding common stock of Subsidiary
Company for P105,000 and Non-controlling interest is measured at fair value of
P61,000.
How much is the goodwill (gain on acquisition)?
*
(2 Points)
P13,000
16
Two entities entered into a contractual arrangement to exercise joint control of
a property, each taking a share of the rents received and bearing a share of the
expenses. The entities are the registered joint owners of the property. The two
entities have: *
(1 Point)
A jointly controlled operation
The fair value model
A jointly controlled asset
A joint venture
17
The cumulative inflation rate is determined at 133.33% - hyperinflationary. How
much is the CPI for the year ended December 31, 2022? *
(2 Points)
150
180
210
140
18
Statement 1: A controlling interest in a company implies that the parent
company has acquired all of the subsidiary’s shares of stock.
Statement 2: When the fair value of acquiree’s inventory is higher than its book
value on the date of acquisition, the elimination entry at the end of the period
will have a decreasing effect in the reported profit of the parent. *
(1 Point)
Only statement 1 is true
Both statements are incorrect
Only statement 2 is true
Both statements are correct
19
How much is the Consolidated Cost of Sales in 2021? *
(2 Points)
P3,745,833
P3,810,000
P4,812,500
P4,810,000
20
On January 1, 2021, Parent Company acquired 100% of Subsidiary Company for
a consideration transferred of P85 million. On this date, the carrying amount of
Subsidiary’s net assets was P75 million. During the acquisition, a provisional fair
value of P95 million was attributed to the net assets. An additional valuation
received on December 31, 2021 increased this provisional fair value to P100
million and on January 30, 2022 this fair value was finalized at P105 million.
What amount should Parent Company present as goodwill in its statement
of financial position on December 31, 2022, according to PFRS 3 – Business
Combinations? *
(2 Points)
P110,000,000
21
Goodwill arising from business combination is *
(1 Point)
Amortized over 10 years or its useful life, whichever is shorter
Never amortized
Amortized over 10 years or its useful life, whichever is longer
Charged to retained earnings after the acquisition is completed
22
How much is the Consolidated Inventory at December 31, 2021? *
(2 Points)
P587,500
P560,000
P600,000
P590,000
23
A corporation received a promissory note denominated in Singapore Dollar
(SG$) for an export transaction made to a Singaporean customer. The following
were the related transactions: On December 1, sold merchandise for SG$64,000,
at a buying spot rate of SG$1 to PHP34.40. On December 31, the buying spot
rate is SG$1 = PHP34.95. On January 30 (settlement date), the buying spot rate
is SG$1 = PHP34.05.
How much is the total receivable recorded in December 31 financial statement?
*
(2 Points)
P2,236,800
24
In the year after an 85% owned subsidiary sells equipment to its parent
company at a loss, the non-controlling interest in the net income is computed
by multiplying the non-controlling interest percentage to the subsidiary’s net
income after: *
(1 Point)
Adding the unrealized loss on sale of equipment
Deducting the unrealized loss on sale of equipment
Adding the loss on sale of equipment realized on the current year
Deducting the loss on sale of equipment realized on the current year
25
A jointly controlled entity is: *
(1 Point)
An entity over which the investor has significant influence or joint control and that is not a
subsidiary
An entity over which the investor has significant influence
An entity over which the investor has significant influence and that is neither a subsidiary nor
an interest in a joint venture
An entity over which the investor has joint control
26
On January 07, 2022, Flash Co., acquired 35% interest in Point Co., for
P4,300,000. Flash already held a 20% interest which had been acquired for
P1,600,000 which was valued at P1,800,000 at January 07, 2022. The fair value of
the identifiable net assets of Point Co., was P8,400,000.
How much is the goodwill to be recognized as a result of the business
combination assuming that NCI is measured at fair value?
*
(2 Points)
P1,550,000
P2,300,000
P1,750,000
P0
27
On August 1, 2019 Binibining Marikit Corp issued 100,000 P 35.50 par value
shares for the entire net assets of Ganda, Inc. The market value of the issued
shares on that date was P 36 per share. Binibining Marikit paid a fee of P
160,000 to the consultant who arranged this acquisition. Costs of registering
and issuing the equity securities amounted to P 60,000, one-fifth of which
amount were legal fees and the balance paid to SEC. Ganda’s net assets on
August 1, had a book value of P 3,256,000, which is appraised to be 12%
understated in terms of its fair value.
The net increase (decrease) to Binibining Marikit Corp.’s accumulated
profits arising from the above combination assuming Binibining Marikit
Corp. is an SME. *
(2 Points)
P13,280
28
Minor Corporation (SME) reports net assets of P300,000 at book value. These
assets have an estimated market value of P350,000. If Major Corporation buys
80 percent ownership of Minor for P275,000. Minor opted to use the most
appropriate method in measuring NCI for the said acquisition.
Goodwill will be reported in the consolidated balance sheet in the amount
of: *
(2 Points)
P0
29
The resulting goodwill in the reverse acquisition assuming 100% of Big
Company’s shares were exchanged for Small Company’s share is: *
(2 Points)
P0
30
Statement 1: A parent shall prepare consolidated financial statements using
uniform accounting policies for new transactions and other events in similar
circumstances.
Statement 2: Consolidation of an investee shall begin from the date the
investor obtains control of the investee and cease when the investor loses
equity interests of the investee.
*
(1 Point)
False, False
True, True
True, False
False, True
31
On January 31, 2020, Peculiar Inc. issued 100,000 shares of its P100 par value
ordinary shares for the net assets of Shipwrecked, Inc. The market value of
Peculiar's ordinary shares on January 31 was P116 per share. Peculiar paid a fee
of P80,000 to the consultant who arranged this acquisition. Costs of registering
and issuing the equity securities amounted to P40,000. No goodwill was
involved in the purchase. The business combination is between two (2) SMEs.
The charged to business combination expenses is: *
(2 Points)
P120,000
None
P80,000
P40,000
32
Statement 1: A joint operation is a joint arrangement whereby the parties that
have joint control of the arrangement have rights over the assets, and
obligations for the liabilities, relating to the arrangement.
Statement 2: A joint venture is not a joint arrangement. *
(1 Point)
Only statement 1 is correct
Only statement 2 is correct
Both statements are correct.
Both statements are incorrect.
33
Which of the following is CORRECT regarding the application of Section 15 of
IFRS for SMEs? *
(1 Point)
Under the cost model, dividend is recognize in the profit or loss.
Under the equity model, year-end fair value adjustment is recognize in the profit or loss.
Under the fair value model, the proportionate share in the reported profit of the investee is
recognize in the profit or loss.
Transactions costs are capital, regardless of the model employed by the entity.
34
A joint venture is: *
(1 Point)
A contractual arrangement whereby two or more parties undertake an economic activity
A contractual arrangement whereby two or more parties undertake an economic activity that is
subject to joint control
An entity whose equity is owned in equal shares (i.e. 20 percent) by five investors
An entity whose equity is owned in equal shares (i.e. 25 percent) by four investors
35
How much is the Net Income Attributable to Parent? *
(2 Points)
P762,245
P834,245
P763,130
P778,900
36
The consolidated net income of the parent and subsidiary using the equity
method compare to the cost method will be: *
(1 Point)
Lower
Higher
Either higher or lower, depending on the results of operations
The same
37
On January 1, 2020, PEARLS Corporation acquired the identifiable net assets of
START UP Company. On this date, the identifiable assets acquired and liabilities
assumed have fair values of P6.4M and P3.6M, respectively. PEARLS incurred the
following acquisition-related costs: legal fees – 40,000; due diligence costs –
400,000 and general admin costs – 80,000. As consideration, PEARLS issued
8,000 shares with par value and fair value per share of P400 and P500
respectively. Costs of registering and listing the shares amounted to P160,000.
How much is the goodwill (gain on bargain purchase) on the business
combination, assuming both companies qualified as SME? *
(2 Points)
P1,320,000
P1,720,000
P1,880,000
P1,200,000
38
In an acquisition where there is an exchange of assets for assets, how does the
ownership structure of the acquirer change? *
(1 Point)
The acquirer stockholders become acquiree stockholders
The acquirer and acquiree stockholders share ownership of the acquire
There is no change in the acquirer ownership structure
It is not possible to determine if there is a change in the acquire ownership structure
39
Statement I: Intercompany transfer of inventory at cost need not be eliminated
in consolidation.
Statement II. Downstream intercompany transfer of inventory to a 100%owned subsidiary need not be eliminated in consolidation. *
(1 Point)
Statement I is false; Statement II is true.
Both statements are false.
Statement I is true; Statement II is false.
Both statements are true.
40
On December 31,2019, entity Alpha acquired 30 percent of the ordinary shares
that carry voting rights of Entity Bravo for P100,000. In acquiring those shares,
entity Alpha incurred transaction costs of P1,000. Entity Alpha has entered into
a contractual arrangement with another party (entity Charlie) that owns 25
percent of the ordinary shares of entity Bravo, hereby entities Alpha and Charlie
jointly control entity Bravo. Entity Alpha uses the cost model to account for its
investment in jointly controlled entities. A published price quotation does not
exist for entity Bravo.
In January 2020,entity Bravo declared and paid a dividend of P20,000 out of
profits earned in 2019. No further dividends were paid in 2020,2021 or 2022. At
Dec 31,2019,2020 and 2021 in accordance with Section 27 Impairment of Assets
, management assessed the fair values of its investment in entity Bravo as
P102,000,P110,000 and P90,000 respectively. Costs to sell estimated at P4,000
throughout.
The facts are the same in the immediately preceding question. However, in
this scenario, a published price quotation exists for entity Bravo and entity
Alpha uses the fair value model. Entity Alpha measures its investment in
entity Bravo on Dec 31,2019,2020 and 2021 respectively at: *
(2 Points)
P98,000,P106,000,P86,000
P102,000,P110,000,P90,000
P98,000,P101,000,P86,000
P95,000,P95,000,P86,000
41
How much is the consolidated shareholders’ equity to be reported in the
consolidated statement of financial position on December 31, 2021? *
(2 Points)
P10,651,800
P13,500,000
P11,781,000
P7,035,000
42
Lester and Jaime formed a joint venture to acquire and sell a special type of
merchandise. Lester is to manage the venture and to furnish the capital. The
participants are to share equally any gain or loss on the joint venture. On April
1, 2022, Jaime sent Lester P10,000 cash, which was all used to purchase
merchandise. On April 27, one half of the merchandise was sold for P7,200 cash.
Lester paid the cost of delivering merchandise to customers which amounted to
P260. No further transactions occurred until the end of the month.
The profit (loss) of the venture for the month of April: *
(2 Points)
P12,460
43
In the years subsequent to the year of sale a 90% owned subsidiary sells
equipment to its parent company at a gain, the non-controlling interest in
consolidated income is computed by multiplying the non-controlling interest
percentage by the subsidiary’s reported income: *
(1 Point)
Plus intercompany gain considered realized in the current period.
Plus the net amount of unrealized gain on the intercompany sale.
Minus the net amount of unrealized gain on the intercompany sale.
Minus intercompany gain considered realized in the current period.
44
When a company determine its functional currency: *
(1 Point)
It is permanent and cannot be change.
The functional currency is not change unless there is a change in the underlying transactions,
events, and conditions.
It is changing every other year, depending on the functional currency the entity desires to use.
It is changing every year, as a matter of company’s policy.
45
On December 31,2019, entity Alpha acquired 30 percent of the ordinary shares
that carry voting rights of Entity Bravo for P100,000. In acquiring those shares,
entity Alpha incurred transaction costs of P1,000. Entity Alpha has entered into
a contractual arrangement with another party (entity Charlie) that owns 25
percent of the ordinary shares of entity Bravo, hereby entities Alpha and Charlie
jointly control entity Bravo. Entity Alpha uses the cost model to account for its
investment in jointly controlled entities. A published price quotation does not
exist for entity Bravo.
In January 2020,entity Bravo declared and paid a dividend of P20,000 out of
profits earned in 2019. No further dividends were paid in 2020,2021 or 2022. At
Dec 31,2019,2020 and 2021 in accordance with Section 27 Impairment of Assets
, management assessed the fair values of its investment in entity Bravo as
P102,000,P110,000 and P90,000 respectively. Costs to sell estimated at P4,000
throughout.
Entity Alpha measures its investment in entity Bravo on Dec 31,2019,2020
and 2021, respectively at: *
(2 Points)
P102,000,P110,000,P90,000
P98,000,P106,000,P86,000
P98,000,P101,000,P86,000
P95,000,P95,000,P86,000
46
What is the cumulative inflation rate in 2023 to be used in determining if there
is hyperinflation? *
(2 Points)
120%
90.68%
190.68%
150%
47
What is the amount of expense to be recognized in the statement of
comprehensive income for the year ended December 31, 2022? *
(2 Points)
P412,500
P307,400
P517,200
P257,200
48
Which of the following would be considered a vertical integration? *
(1 Point)
The merger of Walt Disney Company and Pixar
The acquisition of Faceshift (a Star Wars motion-capture company) by Apple
The acquisition of Instagram by Facebook (now Meta)
The merger of Exxon and Mobil
49
How much is the Net Income Attributable to NCI? *
(2 Points)
P58,550
P62,500
P55,600
P60,000
50
On January 01, 2021, Parent Corp. acquired 75% of the outstanding stock of
Subsidiary Co. for P1,380,000 cash. The book value of Subsidiary Co.’s net assets
was P1,200,000. Parent Corp. determined that the inventory and plant assets
(remaining life of 5 years) of Subsidiary Co. were understated by P100,000 and
P300,000, respectively. Subsidiary Co.’s net income for the year ended
December 31, 2021 was P500,000. During the year 2021, Parent Corp. received
P240,000 cash dividends from Subsidiary Co. The fair value of NCI was
determined at P445,000. Loss on impairment of goodwill was P25,000. Net
income of P Corp. under the cost method amounted to P1,000,000. P Corp. is
using the fair value method in measuring NCI.
How much is the consolidated net income attributable to parent in 2021?
*
(2 Points)
P995,000
51
What is the amount of goodwill to be recognized in the statement of
financial position as of December 31, 2022? *
(2 Points)
P308,500
P295,450
P326,550
P314,550
52
Which of the following income items shall affect both Consolidated Net Income
attributable to Parent and Non-Controlling Interest Net Income? *
(1 Point)
Gain on bargain purchase arising from business combination
Unrealized/realized income/expense arising from transactions between two subsidiaries owned
by the same parent.
Unrealized/realized income/expense arising from downstream transactions.
Impairment loss of goodwill from business combination initially measured using proportionate
share of fair value of net asset acquired.
53
In reference to the downstream or upstream sale of depreciable assets, which of
the following statements is correct? *
(1 Point)
Gains, but not losses, appear in the parent company accounts in the year of sale and must be
eliminated by the parent in determining its investment income under the equity method of
accounting.
Upstream sales always result in unrealized gains or losses.
The initial effect of unrealized gains and losses from the downstream sales is different from the
sale of non-depreciable assets.
Gains and losses appear in the parent company accounts in the year of sale and must be
eliminated by the parent in determining its investment income under the equity method of
accounting.
54
If the foreign operation reports in a currency of a non-hyperinflationary
economy, income and expenses, for practical reason, shall be translated at: *
(1 Point)
Exchange rate on date of transaction
Closing rate
Average rate for the period
Forward rate
55
Kind Company, an SME, issued 120,000 shares of P25 par value ordinary shares
for all the outstanding stock of Clever Company in business combination
consummated on July 1, 2020. Kind Company's ordinary shares were selling at
P40 per share at the time of consummation of the combination. The book value
of Clever’s net assets was P3.8M.
Out of pocket costs of combination were as follows: legal fees for the business
combination, P12,000; printing cost for stock certification, P9,400; finder's fee,
P27,000 and CPA audit fees for business combination, P19,000. A contingent
consideration which is probable and can be reasonably estimated amounted to
P18,200.
The total amount capitalized as cost of investment in Kind Company is:
*
(2 Points)
P4,876,200
P4,818,200
P4,858,000
P4,800,000
56
How much is the Consolidated Net Income? *
(2 Points)
P716,500
P750,000
P725,000
P727,500
57
On February 28, 2022, P Corp. purchased 80% of S Co.’s P10 par ordinary shares
for P986,000. On this date, the carrying amount of S’s net assets was
P1,000,000. The fair values of S Co.’s identifiable assets and liabilities were the
same as their carrying amounts except for inventory which is overvalued by
P15,000 and plant assets (net), which were P120,000 in excess of the carrying
amount. The estimated remaining life of the asset is 5 years. For the year
ended December 31, 2022, S had net income of P354,000 and paid cash
dividends to P Corp. of P112,000 (all coming from post-acquisition Retained
Earnings). Loss on impairment of goodwill in 2022 amounted to P20,000. P
Corp. uses the fair value method in measuring non-controlling interest.
Revenues were earned evenly throughout the year
Determine the non-controlling interest in net asset of subsidiary on December
31, 2022. *
(2 Points)
P272,500
58
Under PFRS for SMEs: *
(1 Point)
Both direct and indirect costs are to be expensed.
Both direct and indirect costs are to be capitalized
Direct costs are to be capitalized and indirect costs are to be expensed.
Indirect costs are to be capitalized and direct costs are to be expensed
59
Ernest Company acquired 80% interest of Nikki Company in a business
combination accounted as an acquisition. Ernest issued 10,000 shares of its
ordinary shares at par (12 per share) and paid cash of P50,000. Ernest incurred
the following cost in relation to the acquisition: finder’s fee – P5,000; share issue
cost – P3,000; indirect business combination expenses – P2,000. Ernest
Company always issue its shares of stocks at par.
Which of the following statements is CORRECT?
*
(1 Point)
P7,000 and P3,000 is chargeable to Ernest Company’s Expense and Share Premium, respectively
P7,000 and P3,000 is chargeable to Nikki Company’s Expense and Share Premium, respectively
P10,000 is chargeable to Ernest Company’s Expense
P2,000 and P3,000 is chargeable to Ernest Company’s Expense and Share Premium, respectively
60
On the date of acquisition, the NCI to appear in the consolidated statement
of financial position is *
(2 Points)
P730,000
61
How much is the consolidated retained earnings at December 31, 2022? *
(2 Points)
P589,950
62
If the entity is using the equity method to account for investment in subsidiary,
the entry to recognize the proportionate share on the profit reported by the
subsidiary will: *
(1 Point)
Decrease the carrying amount of investment
Increase the carrying amount of investment
Be recognized in other comprehensive income
Not affect carrying amount of investment
Ignored
63
Section ____ of the PFRS for SMEs provides the principles in accounting for
Business Combinations and Goodwill for an SME. *
(1 Point)
Section 19
Sections 19 & 18
Section 18
Section 9
64
On January 01, 2021, Parent Corp. acquired 75% of the outstanding stock of
Subsidiary Co. for P1,380,000 cash. The book value of Subsidiary Co.’s net assets
was P1,200,000. Parent Corp. determined that the inventory and plant assets
(remaining life of 5 years) of Subsidiary Co. were understated by P100,000 and
P300,000, respectively. Subsidiary Co.’s net income for the year ended
December 31, 2021 was P500,000. During the year 2021, Parent Corp. received
P240,000 cash dividends from Subsidiary Co. The fair value of NCI was
determined at P445,000. Loss on impairment of goodwill was P25,000. Net
income of P Corp. under the cost method amounted to P1,000,000. P Corp. is
using the fair value method in measuring NCI.
How much is the Non-Controlling Interest in Net Assets of the subsidiary
on December 31, 2021? *
(2 Points)
P450,000
P445,000
P405,000
P400,000
65
The accounting for reverse acquisition applied the principle of substance of the
transaction rather than the form of transaction, accounting for acquisition is
taken from the point of view of: *
(1 Point)
Legal Acquiree
Legal Acquirer
Accounting Acquiree
Accounting Subsidiary
66
On January 1, 2023, Artemis Company purchased 80% of the outstanding share
of Diana Corporation for P1,840,000. The book value of Diana’s net assets
amounted to P2,000,000. Book values approximate the fair values at acquisition
date. Artemis chose the fair value method in estimating the value of NCI. At
acquisition date, NCI has a fair value of P440,000. On October 31, 2023, Artemis
sold 10% of the share capital to several investors for P260,000. The fair value of
the 10% share at that time is P240,000.
How much is the gain to be reported in the consolidated statement of income
for the year ended December 31, 2023 as a result of the sale of 10% ownership?
*
(2 Points)
P0
67
An investee’s only business activity is to purchase receivables and service them
on a day-to-day basis. Servicing involves collection and passing on of principal
and interest payments. Upon default, the investee automatically puts the
receivable to investor X as agreed separately in a put agreement with investor X.
Is Inventor X required to consolidate Investee in its consolidated financial
statements? *
(1 Point)
Yes but only if X owns 51% or more of voting stocks of investee.
No because there is no link of power over the investee to the exposure/right to variable returns
of investment.
Yes because X controls the investee’s relevant activity that is managing the receivables upon
default which significantly affects the investee’s returns.
No because there is no statement as regards to majority ownership of stocks.
68
How much is the Goodwill to be presented in the consolidated financial
statements at December 31, 2021? *
(2 Points)
P160,000
P195,000
P135,000
P137,500
69
How much is the Consolidated Gross Profit in 2021? *
(2 Points)
P4,555,800
P3,444,200
P4,000,000
P2,051,800
70
Under Business Combinations and Goodwill Section of the PFRS for SMEs, the
acquirer, after initial recognition, shall follow the principles in Intangible Assets
Section of the PFRS for SMEs for amortization of goodwill. If an entity is unable
to make a reliable estimate of the useful life of goodwill, the life shall be
presumed to be how many years? *
(1 Point)
10 years
not amortized but tested for impairment at least 1 year
5 years
20 years
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