NAME:
Professor:
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INTERMEDIATE ACCOUNTING 3
SECOND GRADING EXAMINATION
1. The objective of PAS 1 Presentation of Financial Statements is to prescribe the
basis for presentation of general purpose financial statements, to ensure
a. intra-comparability
c. faithful representation
b. inter-comparability
d. a and b
2. General purpose financial statements cater to what type of needs of users?
a. common needs
c. a and b
b. specific needs
d. loving and caring needs
3. The ledger of COPIOUS RICH Co. as of December 31, 20x1 includes the following:
15% Note payable
16% Bonds payable
18% Serial bonds
Interest payable
50,0
00
100,0
00
200,0
00
-
Additional information:
COPIOUS Co.’s financial statements were authorized for issue on April 15, 20x2.
- The 15% note payable was issued on January 1, 20x1 and is due on January 1, 20x5.
The note pays annual interest every year-end. The agreement with the lender
provides that COPIOUS Co. shall maintain an average current ratio of 2:1. If at any
time the current ratio falls below the agreement, the note payable will become due on
demand. As of the 3rd quarter in 20x1, COPIOUS’s average current ratio is 0.50:1.
Immediately, COPIOUS informed the lender of the breach of the agreement. On
December 31, 20x1, the lender gave COPIOUS a grace period ending on December
31, 20x2 to rectify the deficiency in the current ratio. COPIOUS promised the creditor
to liquidate some of its long-term investments in 20x2 to increase its current ratio.
- The 16% bonds are 10-year bonds issued on December 31, 1992. The bonds pay
annual interest every year-end.
- The 18% serial bonds are issued at face amount and are due in semi-annual
installments of ₱20,000 every April 1 and September 30. Interests on the bonds are
also due semi-annually. The last installment on the bonds is due on September 30,
20x7.
How much is the total current liabilities?
a. 9,000
b. 100,000
c. 109,000
d. 120,000
4. Entity B has the following information:
Inventory, beg.
120,000
Inventory, end.
Purchases
Freight-in
Purchase returns
Purchase discounts
192,000
480,000
24,000
12,000
16,800
How much is Entity B’s the cost of sales?
a. 402,300
b. 416,300
c. 420,300
d. 422,300
Use the following information for the next four questions:
The nominal accounts of Hazel Lee Co. on December 31, 20x1 have the following
balances:
Accounts
Sales
Interest income
Gains
Inventory, beg.
Purchases
Freight-in
Purchase returns
Purchase discounts
Freight-out
Sales commission
Advertising expense
Salaries expense
Rent expense
Depreciation expense
Utilities expense
Supplies expense
Transportation and travel
expense
Insurance expense
Taxes and licenses
Interest expense
Miscellaneous expense
Loss on the sale of equipment
Dr.
₱80,000
300,000
30,000
25,000
60,000
35,000
350,000
60,000
80,000
40,000
30,000
Cr.
₱1,045,000
80,000
30,000
15,000
27,000
25,000
10,000
50,000
5,000
2,000
15,000
Additional information:
a. Ending inventory is ₱100,000.
b. Three-fourths of the salaries, rent, and depreciation expenses pertain to the sales
department. The sales department does not share in the other expenses.
5. In a statement of comprehensive income prepared using the single-step approach
(nature of expense method), how much is presented as ‘change in inventory’?
(increase)/decrease
a. (288,000)
b. 288,000
c. (20,000)
d. 20,000
6. In a statement of comprehensive income prepared using the single-step approach
(nature of expense method), how much is presented as total expenses?
a. 1,055,000
b. 1,075,000
c. 787,000
d. 772,000
7. In a statement of comprehensive income prepared using the multi-step approach
(function of expense method), how much is presented as distribution costs?
a. 398,500
b. 487,500
c. 467,500
d. 512,500
8. In a statement of comprehensive income prepared using the multi-step approach
(function of expense method), how much is presented as administrative expenses?
a. 297,500
b. 302,500
c. 287,500
d. 279,500
Use the following information for the next two questions:
DEMOTIC POPULAR Co. acquires through foreclosure a property comprising land and
buildings that it intends to sell. The fair value of the land and buildings is ₱6,000,000
and costs to sell are ₱200,000. The related defaulted receivables have a carrying
amount of ₱5,000,000.
9. The entity does not intend to transfer the property to a buyer until after it
completes renovations to increase the property’s sales value. How should
DEMOTIC Co. classify the land and buildings?
a. Included under property, plant and equipment at ₱5,000,000.
b. Included under investment property at ₱5,000,000.
c. Included under investment property at ₱5,800,000.
d. Classified as held for sale at ₱5,800,000
10. After the renovations are completed and the property is classified as held for sale
but before a firm purchase commitment is obtained, the entity becomes aware of
environmental damage requiring remediation. The entity still intends to sell the
property. However, the entity does not have the ability to transfer the property to a
buyer until after the remediation is completed. The costs of renovations made
totaled ₱200,000. The estimated costs of remediation are ₱100,000. How should
DEMOTIC Co. classify the land and buildings?
a. Included under property, plant and equipment at ₱5,700,000.
b. Included under investment property at ₱6,000,000.
c. Included under investment property at ₱5,700,000.
d. Classified as held for sale at ₱5,700,000
11. An entity is committed to a plan to sell a manufacturing facility in its present
condition and classifies the facility as held for sale at that date. After a firm
purchase commitment is obtained, the buyer’s inspection of the property identifies
environmental damage not previously known to exist. The entity is required by the
buyer to make good the damage, which will extend the period required to complete
the sale beyond one year. However, the entity has initiated actions to make good
the damage, and satisfactory rectification of the damage is highly probable. The
manufacturing facility has a carrying amount of ₱10,000,000 and fair value less
costs to sell of ₱10,600,000. How should the entity classify the manufacturing
facility?
a. Held for sale, ₱10.6M
c. PPE, ₱10M
b. Held for sale, ₱10M
d. PPE, ₱10.6M
12. Under the indirect method, the cash flow from operating activities is determined by
adjusting the reported profit by (choose the incorrect statement)
a. adding back non-cash expenses
b. adding back decreases in operating assets
c. deducting decreases in operating liabilities
d. adding back increases in operating assets
13. Under the indirect method, the cash flow from operating activities is determined by
adjusting the reported profit by (choose the incorrect statement)
a. deducting non-cash income
b. deducting increases in operating assets
c. deducting decreases in nonoperating liabilities
d. deducting gains on sale of nonoperating assets
14. When preparing a statement of cash flows using the direct method, amortization of
patent is
a. shown as an increase in cash flows from operating activities.
b. shown as a reduction in cash flows from operating activities.
c. included with supplemental disclosures of noncash transactions.
d. not reported in the statement of cash flows or related disclosures.
15. Which of the following statements regarding cash equivalents is correct?
a. A one-year Treasury note could not qualify as a cash equivalent.
b. All investments meeting the PFRS 9 Financial Instruments criteria must be
reported as cash equivalents.
c. The date a security is purchased determines its "original maturity" for cash
equivalent classification purposes.
d. Once established, management's policy for classifying items as cash equivalents
cannot be changed.
16. Using the indirect method, cash flows from operating activities would be increased
by which of the following?
a. Gain on sale of investments
b. Increase in prepaid expenses
c. Decrease in accounts payable
d. Decrease in accounts receivable
Use the following information for the next three questions:
The movements in the cash account of DEADLOCK STANDSTILL Co. during 20x2 are
shown below.
beg.
Sales
Interest income
Rent income
Dividend income
Sale of held for trading
Cash
400
12,0 7,60
00
0
2,40
40
0
540
60
80 140
1,60 200
Purchases
Operating expenses
Interest expense
Income taxes
Investment in FVOCI
securities
Sale of old building
Collection of non-trade note
Proceeds from loan with a
bank
Issuance of shares
0
1,04
0
120
3,20
0
1,94
0
2,20
0
260
480
400
180
7,04
0
Purchase of equipment
Loan granted to
employee
Payment of loan
borrowed
Reacquisition of shares
Dividends
end.
17. How much is the cash flows from operating activities?
a. 4,600
b. 4,840
c. 5,040
d. 4,060
18. How much is the cash flows from investing activities?
a. (1,500)
b. 1,500
c. 1,240
d. (1,240)
19. How much is the cash flows from financing activities?
a. 4,800
b. (4,800)
c. 4,240
d. 4,080
Use the following information for the next four questions:
BLITHE JOYFUL Co. had the following information during 20x2:
Accounts receivable, January 1, 20x2
2,400
Accounts receivable, December 31, 20x2
1,600
Sales on account and cash sales
32,000
Bad debts expense
800
Accounts payable, January 1, 20x2
1,400
Accounts payable, December 31, 20x2
800
Cost of sales
16,000
Increase in inventory
3,600
Operating expenses on accrual basis
4,880
Increase in accrued payables for operating expenses
1,640
Decrease in prepaid operating expenses
1,560
Property, plant, and equipment, January 1, 20x2
Property, plant, and equipment, December 31, 20x2
7,200
10,800
Additional information:
 There were no write-offs of accounts receivable during the year.
 Equipment with an accumulated depreciation of ₱800 was sold during the year for
₱480 resulting to a gain on sale of ₱60.
20. How much is the cash receipts from customers?
a. 38,200
b. 37,400
c. 35,400
d. 32,800
21. How much is the cash payments to suppliers?
a. 19,000
b. 20,200
c. 22,000
d. 23,400
22. How much is the cash payments for operating expenses?
a. 1,680
b. 4,800
c. 4,960
d. 8,080
23. How much is the cash payments for acquisition of property, plant, and equipment?
a. 3,600
b. 4,820
c. 4,080
d. 4,940
24. ABC Co. has the following information as of December 31, 20x1:
Jan. 1
Dec. 31
Accounts receivable
100,000
250,000
Allowance for bad
15,000
debts
20,000
Net credit sales
850,000
Bad debt expense
60,000
Recoveries
20,000
How much is the total cash receipts from customers during the period?
a. 970,000
b. 879,000
c. 907,000
d. 897,000
25. BLUFF DECEIVE Co. has the following information as of December 31, 20x2:
Accounts receivable
Allowance for bad debts
Prepaid rent
Accounts payable
Jan. 1
16,000
(400)
3,840
6,800
Dec. 31
20,000
(1,000)
3,200
8,800
BLUFF reported profit of ₱8,800 for the year, after depreciation expense of ₱200, gain
on sale of equipment of ₱240, and restructuring and other provisions of ₱400. None of
the provisions recognized during the period affected cash.
How much is the cash flows from operating activities?
a. 4,800
b. 5,600
c. 8,800
d. 8,400
Use the following information for the next two questions:
INORDINATE EXCESSIVE Co. had the following information for 20x2:
 Acquired 3-month treasury bills for ₱200,000.
 Acquired equipment with a purchase price of ₱4,000,000 by paying 20% in cash
and issuing a note payable for the balance. There were no payments made on the
note during the year.
 Acquired land with fair value of ₱3,200,000 by issuing shares with aggregate par
value of ₱2,400,000. The excess is credited to share premium.
 Extended a ₱1,600,000 loan to a director.
 Borrowed ₱1,280,000 from a bank. Used the cash proceeds as follows: ₱800,000
for additional working capital and ₱480,000 to settle scrip dividends declared in
20x1.
 Settled an outstanding note payable by issuing shares with aggregate par value of
₱800,000. Share premium resulted from the transaction amounted to ₱280,000.
26. How much is the net cash flows from (used in) investing activities?
a. (2,400,000)
b. 2,400,000
c. 800,000
d. (800,000)
27. How much is the net cash flows from (used in) financing activities?
a. (800,000)
b. 800,000
c. (2,400,000)
d. 2,400,000
Use the following information for the next three questions:
Information on LA-DI-DA SHOWY Co.'s financial position and performance as of
December 31, 20x2 and 20x1 are presented below.
LA-DI-DA SHOWY Company
Statement of financial position
As of December 31, 20x2
ASSETS
20x2
20x1
Current assets
1,000,000
Cash and cash equivalents
600,000
Held for trading securities
480,000
1,520,000 1,240,000
Accounts receivable – net
Rent receivable
100,000
40,000
2,000,000 3,600,000
Inventory
Prepaid insurance
200,000
160,000
5,300,000 5,640,000
Total current assets
Noncurrent assets
360,000
Investment in bonds
340,000
10,000,00
0 4,000,000
Buildings
Accumulated depreciation
(800,000)
(800,000)
360,000
Goodwill
400,000
Total noncurrent assets
9,920,000 3,940,000
15,220,00
TOTAL ASSETS
0 9,580,000
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
480,000
320,000
Unearned rent
Insurance payable
Dividends payable
Income tax payable
Short-term loan payable
Total current liabilities
Noncurrent liabilities
Bonds payable
Discount on bonds
Deferred tax liability
Total noncurrent liabilities
TOTAL LIABILITIES
Equity
Share capital
Retained earnings
TOTAL EQUITY
TOTAL LIABILITIES AND
EQUITY
80,000
240,000
920,000
60,000
1,780,000
120,000
180,000
480,000
140,000
200,000
1,440,000
4,000,000
(380,000)
60,000
3,680,000
5,460,000
4,000,000
(400,000)
40,000
3,640,000
5,080,000
8,000,000
1,760,000
9,760,000
15,220,00
0
4,000,000
500,000
4,500,000
9,580,000
LA-DI-DA SHOWY Company
Statement of profit or loss
For the year ended December 31, 20x2
Sales
20,000,000
Cost of sales
(12,000,000)
Gross income
8,000,000
Rent income
1,800,000
Interest income
80,000
Insurance expense
(400,000)
Bad debts expense
(60,000)
Interest expense
(400,000)
Loss on sale of building
(160,000)
Unrealized gain on investment
80,000
Other expenses
(4,800,000)
Profit before tax
4,140,000
Income tax expense
(1,200,000)
Profit for the year
2,940,000
Additional information:
 During 20x2, LA-DI-DA purchased held for trading securities for ₱400,000. The fair
value of the shares on December 31, 20x2 is ₱480,000.
 The allowance for doubtful accounts has balances of ₱80,000 and ₱40,000 as of
December 31, 20x2 and 20x1, respectively.
 During 20x2, LA-DI-DA sold an old building with historical cost of ₱3,200,000 for
₱1,040,000.
 LA-DI-DA inadvertently included depreciation expense in the “Other expenses” line
item.
 There were no acquisitions or disposals of investment in bonds during the period.
 During 20x2, LA-DI-DA issued shares with an aggregate par value of ₱4,000,000 for
₱4,000,000 cash.
28. How much is the net cash flows from (used in) operating activities?
a. (6,000,000)
b. 6,000,000
c. 6,600,000
d. (7,600,000)
29. How much is the net cash flows from (used in) investing activities?
a. (8,160,000)
b. 8,460,000
c. (9,200,000)
d. 8,160,000
30. How much is the net cash flows from (used in) financing activities?
a. (2,560,000)
b. 2,560,000
c. (2,960,000)
d. 2,960,000
31. REMNANT REMAINDER Co.’s cash balances as of December 31, 20x2 and 20x1
were ₱7,040,000 and ₱400,000 respectively. REMNANT’s December 31, 20x2
statement of cash flows reported net cash used in investing activities of ₱1,500,000
and net cash from financing activities of ₱4,080,000.
How much is the net cash flows from (used in) operating activities?
a. (4,060,000)
b. 4,060,000
c. 4,600,000
d. (4,600,000)
32. During 20x1, ALBEIT ALTHOUGH Company decided to change from the Average
cost formula for inventory valuation to the FIFO cost formula. Inventory balances
under each method were as follows:
Average
FIFO
January 1
4,000,000
4,800,000
December 31
8,000,000
8,400,000
Income tax rate is 30%. What is the net cumulative effect of the accounting change in
ALBEIT’s opening retained earnings balance?
a. 400,000 increase
c. 280,000 increase
b. 560,000 decrease
d. 560,000 increase
33. On January 1, 20x1, PRISTINE UNCORRUPTED Co. acquired an equipment for
₱4,000,000. The equipment will be depreciated using the straight-line method over
20 years. The estimated residual value is ₱400,000.
In 20x6, following a reassessment of the realization of the expected economic benefits
from the equipment, PRISTINE Co. changed its depreciation method to sum-of-theyears digits (SYD). The remaining useful life of the asset is estimated to be 4 years and
the residual value is changed to ₱200,000. How much is the depreciation expense in
20x6?
a. 1,160,000 b. 1,140,000 c. 1,233,560 d. 1,110,669
Use the following information for the next two questions:
On January 10, 20x2, prior to the authorization of LIBERTINE IMMORAL Co.’s
December 31, 20x1 financial statements for issue, the accountant of LIBERTINE Co.
received a bill for an advertisement made in the month of December 20x1 amounting
to ₱1,600,000. This expense was not accrued as of December 31, 20x1.
34. The correcting entry, if the books are still open, includes
a. a debit to advertising expense for ₱1,600,000
b. a credit to advertising income for ₱1,600,000
c. a debit to retained earnings for ₱1,600,000
d. a credit to retained earnings for ₱1,600,000
35. The correcting entry, if the books are already closed, includes
a. a debit to advertising expense for ₱1,600,000
b. a credit to advertising income for ₱1,600,000
c. a debit to retained earnings for ₱1,600,000
d. a credit to retained earnings for ₱1,600,000
36. On January 15, 20x3 while finalizing its 20x2 financial statements, DIAPHANOUS
TRANSPARENT Co. discovered that depreciation expense recognized in 20x1 is
overstated by ₱1,600,000. Ignoring income tax, the entry to correct the prior period
error includes
a. a debit to depreciation expense for ₱1,600,000
b. a debit to retained earnings for ₱1,600,000
c. a credit to depreciation expense for ₱1,600,000
d. a debit to accumulated depreciation for ₱1,600,000
Use the following information for the next four questions:
GULOSITY GREEDINESS Co. reported profits of ₱4,000,000 and ₱8,000,000 in 20x1
and 20x2, respectively. In 20x3, the following prior period errors were discovered:
 The inventory on December 31, 20x1 was understated by ₱200,000.
 An equipment with an acquisition cost of ₱1,200,000 was erroneously charged as
expense in 20x1. The equipment has an estimated useful life of 5 years with no
residual value. GULOSITY Co. provides full year depreciation in the year of
acquisition.
The unadjusted balances of retained earnings are ₱8,800,000 and ₱16,800,000 as of
December 31, 20x1 and 20x2, respectively.
37. How much is the correct profit in 20x1?
a. 7,560,000
b. 5,610,000
c. 4,760,000
d. 5,160,000
38. How much is the correct profit in 20x2?
a. 7,560,000
b. 5,160,000
c. 5,720,000
d. 5,610,000
39. How much is the correct retained earnings in 20x1?
a. 9,960,000
b. 17,520,000
c. 9,860,000 d. 18,420,000
40. How much is the correct retained earnings in 20x2?
a. 9,960,000
b. 17,520,000
c. 9,860,000 d. 18,420,000
Use the following information for the next four questions:
HELICAL SPIRAL Co. reported profits of ₱1,600,000 and ₱2,400,000 in 20x1 and 20x2,
respectively. In 20x3, the following prior period errors were discovered:
 Prepaid supplies in 20x1 were overstated by ₱80,000.
 Accrued salaries payable in 20x1 were understated by ₱160,000.

Repairs and maintenance expenses in 20x1 amounting to ₱400,000 were
erroneously capitalized and being depreciated over a period of 4 years.
The unadjusted balances of retained earnings are ₱6,400,000 and ₱8,800,000 as of
December 31, 20x1 and 20x2, respectively.
41. How much is the correct profit in 20x1?
a. 1,006,000
b. 1,610,000
c. 1,720,000
d. 1,060,000
42. How much is the correct profit in 20x2?
a. 2,704,000
b. 2,160,000
c. 2,740,000
d. 2,610,000
43. How much is the correct retained earnings in 20x1?
a. 5,806,000
b. 5,520,000
c. 5,860,000
d. 5,420,000
44. How much is the correct retained earnings in 20x2?
a. 8,960,000
b. 8,600,000
c. 8,860,000
d. 8,420,000
Use the following information for the next fifteen questions:
THRALL SLAVE Company made the following errors:
a. December 31, 20x1 inventory was understated by ₱100,000.
b. December 31, 20x2 inventory was overstated by ₱160,000.
c. Purchases on account in 20x1 were understated by ₱400,000 (not included in
physical count).
d. Advances to suppliers in 20x2 totaling ₱520,000 were inappropriately charged as
purchases.
e. December 31, 20x1 prepaid insurance was overstated by ₱20,000.
f. December 31, 20x1 unearned rent income was overstated by ₱104,000.
g. December 31, 20x2 interest receivable was understated by ₱68,000.
h. December 31, 20x2 accrued salaries payable was understated by ₱120,000.
i. Advances from customers in 20x2 totaling ₱240,000 were inappropriately
recognized as sales but the goods were delivered in 20x3.
j. Depreciation expense in 20x1 was overstated by ₱28,800
k. In 20x2, the acquisition cost of a delivery truck amounting to ₱360,000 was
inappropriately charged as expense. The delivery truck has a useful life of five
years. THRALL’s policy is to provide a full year’s straight line depreciation in the
year of acquisition and none in the year of disposal.
l. A fully depreciated equipment with no residual value was sold in 20x3 for ₱200,000
but the sale was recorded in the following year.
Profits before correction of errors were ₱492,000, ₱624,000, and ₱840,000 in 20x1,
20x2, and 20x3, respectively.
Retained earnings before correction of errors were ₱4,492,000, ₱5,116,000 and
₱5,956,000 in 20x1, 20x2, and 20x3, respectively.
45. What is the net effect of the errors on the 20x1 profit? (over) understatement
a. (187,200)
b. 187,200
c. (164,200)
d. 164,200
46. What is the net effect of the errors on the 20x2 profit? (over) understatement
a. (572,000)
b. 572,000
c. 563,400
d. (563,400)
47. What is the net effect of the errors on the 20x3 profit? (over) understatement
a. (78,000)
b. 78,000
c. (60,000)
d. 60,000
48. How much is the correct profit (loss) in 20x1?
a. (348,000)
b. 348,000
c. 324,800
d. 304,800
49. How much is the correct profit (loss) in 20x2?
a. 1,196,000
b. 1,296,000
c. 1,684,800
d. 1,286,000
50. How much is the correct profit (loss) in 20x3?
a. 900,000
b. 926,000
c. 968,400
d. 986,000
51. What is the net effect of the errors on the 20x1 retained earnings? (over)
understatement
a. (182,700)
b. 182,700
c. (165,200)
d. (187,200)
52. What is the net effect of the errors on the 20x2 retained earnings? (over)
understatement
a. 348,800
b. (348,800)
c. (384,800)
d. 384,800
53. What is the net effect of the errors on the 20x3 retained earnings? (over)
understatement
a. 444,800
b. (444,800)
c. 524,800
d. (524,800)
54. How much is the correct retained earnings in 20x1?
a. 4,304,800
b. 4,404,800
c. 4,524,400
d. 4,340,800
55. How much is the correct retained earnings in 20x2?
a. 5,500,800
b. 5,756,800
c. 5,246,400
d. 5,340,400
56. How much is the correct retained earnings in 20x3?
a. 6,340,800
b. 6,400,800
c. 6,479,800
d. 7,004,400
57. What is the net effect of the errors on the 20x1 working capital? (over)
understatement
a. (216,000)
b. 216,000
c. 80,000
d. (80,000)
58. What is the net effect of the errors on the 20x2 working capital? (over)
understatement
a. 228,000
b. (228,000)
c. (68,000)
d. 68,000
59. What is the net effect of the errors on the 20x3 working capital? (over)
understatement
a. No effect
b. 132,000
c. 200,000
d. (200,000)
60. TRIBULATION GREAT DISTRESS Co.’s current reporting period ends on December
31, 20x1. The following transactions occurred after the end of reporting period:
 On January 5, 20x2, TRIBULATION declared ₱8,000,000 dividends.
 On January 15, 20x2, TRIBULATION issued 1,000 shares with par value per share
of ₱400 for ₱2,400 per share.
 On January 20, 20x2, TRIBULATION installed an oil rig. Current legislation
requires that the oil rig be uninstalled at the end of its useful life and the site where
it was installed be restored. TRIBULATION estimates the present value of the
decommissioning and restoration cost at ₱4,000,000.
 On February 1, 20x2, a building with a carrying amount as of December 31, 20x1 of
₱2,000,000 was totally razed by fire.


On February 10, 20x2, TRIBULATION received notice of a litigation in relation to an
accident that happened on December 31, 20x1. TRIBULATION estimates a probable
loss of ₱800,000.
On March 5, 20x2, TRIBULATION purchased a subsidiary for ₱40,000,000 in a
business combination accounted for using the acquisition method. Goodwill of
₱10,000,000 was recognized on the business combination.
The financial statements were authorized for issue on March 1, 20x2.
What is the total amount of the adjusting events?
a. 6,800,000
b. 800,000
c. 4,800,000
d. 30,000,000
61. UNCORK RELEASE Co.’s current reporting period ends on December 31, 20x1. The
following transactions occurred after the end of reporting period:
 On January 20, 20x2, a pending litigation was resolved requiring a settlement
amount of ₱400,000. The 20x1 year-end financial statements included a provision
for loss on litigation of ₱480,000.
 Inventories costing ₱4,000,000 were recognized at their net realizable value of
₱3,600,000 in the 20x1 year-end financial statements. During January 20x2, the
inventories were sold for ₱3,520,000. Actual selling costs amounted to ₱120,000.
 The year-end accounts receivable include a ₱400,000 receivable from
RELINQUISH, Inc. No allowance for doubtful accounts was recognized on this
receivable as of December 31, 20x1. On February 3, 20x2, RELINQUISH filed for
bankruptcy. It was estimated that the receivable will not be collected.
 The fair value of financial assets measured at fair value through profit or loss
significantly declined to ₱320,000 on February 28, 20x2. The financial assets are
recognized in the 20x1 year-end financial statements at ₱1,200,000 which is their
fair value as of December 31, 20x1.
 On March 5, 20x2, a case was resolved requiring a settlement amount of ₱800,000.
The 20x1 year-end financial statements included a provision for loss on litigation of
₱600,000.
UNCORK Co.’s profit for the year ended December 31, 20x1 before consideration of
the above transactions is ₱8,800,000. The financial statements were authorized for
issue on March 1, 20x2.
How much is the adjusted profit?
a. 8,820,000
b. 9,020,000
c. 10,820,000
d. 8,280,000
Use the following information for the next two questions:
The following relates to the transactions of GRIMACE FROWN Co. during 20x1:
Directors' and officers' remuneration
8,000,000
Post-employment benefits of officers
800,000
Fringe benefits in the form of housing assistance to
directors and officers
20,000,000
Share options granted to officers
1,200,000
Officers' expenses on travels, representation and
entertainment subject to liquidation and
reimbursement
400,000
Loans to directors and officers
12,000,000
Sales to related entities
40,000,000
62. How much is the amount of related party disclosures on GRIMACE’s separate
financial statements?
a. 30,000,000
b. 52,000,000
c. 82,000,000
d. 42,000,000
63. How much is the amount of related party disclosures on GRIMACE’s
financial statements?
a. 12,000,000
b. 30,000,000
c. 82,000,000
d. 42,000,000
consolidated
64. DEMENTED INSANE Co. is preparing its year-end financial statements and has
identified the following operating segments:
Segme
Profit
nts
Revenues
(loss)
Assets
A
4,000,000
800,000
56,000,000
B
4,800,000
560,000
72,000,000
C
1,080,000
(280,000)
48,000,000
D
960,000
(2,800,000)
4,000,000
E
1,160,000
200,000
5,600,000
12,000,000
(1,520,000)
185,600,00
0
Totals
What are the reportable segments?
a. A, B and D
b. A, B, C and D
c. A and B
d. A, B, C, D and E
65. EMBOSOM CHERISH Co. engages in five diversified operations namely, operations
A, B, C, D, and E. Information on these segments are shown below:
Segme
Profit
nts
Revenues
(loss)
Assets
A
3,200
800
40,000
B
3,200
400
8,000
C
200
40
4,000
D
600
80
8,000
800
280
24,000
E
Totals
8,000
1,600
84,000
Additional information:
a. For internal reporting purposes, segments A and B are considered as one operating
segment.
b. Segment E is considered as an operating segment for internal decision making
purposes.
c. Segments C and D have similar economic characteristics and share a majority of
the aggregation criteria.
What are the reportable segments?
a. A, B, C, D and E
b. A, B and E
c. A and B as one segment and E
d. A and B as one segment, E, and C and D as one segment
66. SORDID DIRTY Co. is preparing its year-end financial statements and
the following operating segments:
InterExternal
segment
Total
Segments
revenues
revenues
revenues
Profit
A
4,800,000
2,400,000
7,200,000
2,800,000
B
1,600,000
400,000
2,000,000
1,600,000
C
1,000,000
1,000,000
400,000
D
800,000
800,000
320,000
E
600,000
600,000
280,000
F
400,000
400,000
200,000
Totals
9,200,000
2,800,000 12,000,000
5,600,000
has identified
Assets
48,000,000
28,000,000
4,000,000
3,200,000
2,800,000
2,000,000
88,000,000
Management believes that between segments C, D, E and F, segment C is most
relevant to external users of financial statements.
What are the reportable segments?
a. A and B
b. A, B, C and D
c. A, B and C
d. A, B, C, D, E and F
67. RUSTIC RURAL Co. has the following information on its operating segments.
InterExternal
segment
Total
Segments
revenues
revenues
revenues
Profit
Assets
A
4,800,000
2,400,000
7,200,000
2,800,000
48,000,000
B
1,600,000
400,000
2,000,000
1,600,000
28,000,000
C
1,000,000
1,000,000
400,000
4,000,000
D
800,000
800,000
320,000
3,200,000
E
600,000
600,000
280,000
2,800,000
F
400,000
400,000
200,000
2,000,000
Totals
9,200,000
2,800,000 12,000,000
5,600,000
88,000,000
RUSTIC Co. shall provide disclosure for major customers if revenues from transactions
with a single external customer amount to how much?
a. 920,000
b. 280,000
c. 1,200,000
d. 560,000
68. You are the accountant of Entity X. The board of directors asked you for an advice
because they feel like the company’s financial statements do not properly reflect
the company’s financial position. The board noted out that the company’s
properties (i.e., land) are absurdly stated at their historical cost. The properties
were acquired 50 years ago and the market prices of the properties have more than
tripled since then. In providing your professional advice, you will most certainly
quote the provisions of which of the following standards?
a. PAS 7
b. PAS 1
c. PAS 16
d. PAS 8
69. PFRS 8 relates to which of the following?
a. Disclosure of operating segments
b. Disclosure of related party relationships and transactions
c. Disclosure of events after the reporting period
d. Interim financial reporting
70. "Aanhin mo pa ang damo kung patay na ang kabayo.”
a. Relevance
b. Timeliness
c. Biological asset - Horse
d. PFRH – Philippine Financial Reporting Horse
e. b and c
“I press on toward the goal to win the prize for which God has called me heavenward in
Christ Jesus.” – (Philippians 3:14)
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