10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Integrated Review 1 Standalone assignment Quiz 1.01 Financial Statements to Interim Reporting Submissions Here are your latest answers: Question 1 Marriott Corp. reports operating expenses in the income statement by function. The adjusted trial balance at December 31, 200A included the following expense and loss accounts: Accounting and legal fees 120,000Loss on sale of long-term investments Advertising 150,000Officers’ salaries 30,000 225,000 Freight-out 80,000Rent for office space 220,000 Interest 70,000Sales salaries and commissions 140,000 One half of the rented premises is occupied by the sales department. Marriott’s total selling expenses for 200A is Response: 480,000 Feedback: Advertising 150,000 Freight-out 80,000 Rent for office space (220,000 x 1/2) 110,000 Sales salaries and commissions 140,000 Selling expenses for 200A 480,000 Correct answer: 480,000 Score: 1 out of 1 Yes Question 2 Willem Company reported the following liabilities on December 31, 200A Accounts payable 2,000,000 Short-term borrowings 1,500,000 Bonds payable due December 31, 200C 3,000,000 Premium on bonds payable 500,000 Mortgage payable, current portion P500,000 3,500,000 Bank loan, due June 30, 200B 1,000,000 The P1,000,000 bank loan was refinanced with a 5-year loan on December 31,200A. The financial statements were issued March 1, 200B. What total amount should be reported as current liabilities on December 31, 200A? Response: 7,500,000 Feedback: jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 1/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Correct answer: 4,000,000 Score: 0 out of 1 No Question 3 America Company provided the following data for the current year: Sales P 25,000,000 Cost of goods sold 16,000,000 Interest revenue 70,000 Selling and administrative expenses 4,700,000 Impairment loss on goodwill 820,000 Income tax for the year 905,000 Gain on sale of investments 110,000 Loss due to storm surge 390,000 Loss on the disposition of the wholesale division 615,000 Loss on operation of the wholesale division 200,000 Income tax benefit from discontinued wholesale division 285,000 Dividends declared on ordinary shares 250,000 What is the loss from discontinued operations? Response: 530,000 Feedback: Loss on the disposition P Loss on operation 200,000 Income tax benefit Loss on discontinued operation 615,000 (285,000) P 530,000 Correct answer: 530,000 Score: 1 out of 1 Yes Question 4 Melody Company provided the following information for the current year: Increase in goods in process invtry P Increase in raw materials inventory 500,000 150,000 Decrease in finished goods inventory 350,000 Raw materials purchased 4,300,000 Direct Labor payroll 2,000,000 Factory overhead 3,000,000 Freight out 450,000 What is the cost of goods sold for the current year? Response: 9,000,000 Feedback: Raw materials purchased P 4,300,000 Direct Labor payroll 2,000,000 Factory overhead 3,000,000 jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 2/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Increase in raw materials invtry (150,000) Manufacturing Cost 9,150,000 Increase in goods in process invtry (500,000) Decrease in finished goods inventory Cost of goods sold 350,000 P 9,000,000 Correct answer: 9,000,000 Score: 1 out of 1 Yes Question 5 On March 15, 200A, Rex Company paid property taxes of P180,000 on the factory building for the calendar year 200A. On April 1, 200A, the entity made P300,000 in unanticipated ordinary repairs to plant equipment. What total amount of these expenses should be included in the quarterly income statement ending June 30, 200A? Response: 345,000 Feedback: Unanticipated ordinary repairs to plant equipment Property taxes (180,000/4) Total expenses 300,000 45,000 345,000 Correct answer: 345,000 Score: 1 out of 1 Yes Question 6 Taylor Company, a publicly owned entity, assesses performance and makes operating decisions using the following information for the reportable segments: Total segment revenue Total segment profit 7,700,000 500,000 The total segment profit included intersegment profit of P50,000. In addition, the entity has P10,000 of common costs for the reportable segments that are not allocated in reports reviewed by the chief operating decision maker. What amount should be reported as segment profit? Response: 500,000 Feedback: Correct answer: 510,000 Score: 0 out of 1 No Question 7 America Company provided the following data for the current year: Sales Cost of goods sold Interest revenue Selling and administrative expenses P 25,000,000 16,000,000 70,000 4,700,000 Impairment loss on goodwill 820,000 Income tax for the year 905,000 Gain on sale of investments 110,000 Loss due to storm surge 390,000 jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 3/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Loss on the disposition of the wholesale division Loss on operation of the wholesale division 615,000 200,000 Income tax benefit from discontinued wholesale division 285,000 Dividends declared on ordinary shares 250,000 What is the income from continuing operations? Response: 2,365,000 Feedback: Sales P 25,000,000 Cost of goods sold (16,000,000) Interest revenue 70,000 Selling and administrative expenses (4,700,000) Impairment loss on goodwill (820,000) Income tax for the year (905,000) Gain on sale of investments 110,000 Loss due to storm surge (390,000) Income from continuing operations P 2,365,000 Correct answer: 2,365,000 Score: 1 out of 1 Yes Question 8 Bangladesh Company provided the following information for the current year: Sales P 50,000,000 Cost of goods sold 30,000,000 Distribution costs 5,000,000 General and administrative expenses 4,000,000 Interest expense 2,000,000 Gain on early extinguishment of long-term debt 500,000 Correction of inventory error, net of income tax - credit 1,000,000 Investment income - equity method 3,000,000 Gain on expropriation 2,000,000 Income tax expense 5,000,000 Dividends declared 2,500,000 What is the income from continuing operations? Response: 9,500,000 Feedback: Sales 50,000,000 Cost of goods sold (30,000,000) Gross income 20,000,000 Gain on expropriation 2,000,000 Investment income 3,000,000 Total income 25,000,000 Expenses: Distribution costs 5,000,000 General and administrative 4,000,000 jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 4/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Finance cost* 1,500,000 10,500,000 Income before tax 14,500,000 Income tax expense (5,000,000) Net income 9,500,000 Interest expense 2,000,000 Gain on early extinguishment (500,000) Finance cost* 1,500,000 Correct answer: 9,500,000 Score: 1 out of 1 Yes Question 9 Following are the changes in all the account balances of Sozekemi Corporation during the current year except for retained earnings: Increase/(Decrease) Cash Accounts receivable, net P 948,000 540,000 Inventory 1,524,000 Investments (564,000) Accounts payable (612,000) Bonds payable 980,000 Ordinary shares 1,500,000 Share premium 160,000 The company declared and paid dividends of P230,000 in the current year. Using the net assets approach, Sozekemi’s net income for the year is Response: 650,000 Feedback: Increase in cash 948,000 Increase in accounts receivable, net 540,000 Increase in inventory 1,524,000 Decrease in investments (564,000) Decrease in accounts payable 612,000 Increase in bonds payable (980,000) Increase in net assets 2,080,000 Increase in ordinary shares (1,500,000) Increase in share premium (160,000) Dividends declared and paid 230,000 Net income for the year 650,000 Correct answer: 650,000 Score: 1 out of 1 Yes Question 10 On January 1, 200A, Brazilia Company purchased for P4,800,000 machine with a useful life of ten years and a residual value of P200,000. The machine was depreciated by the double declining balance and the carrying amount of the machine was P3,072,000 on December 31, 200B. jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 5/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN The entity changed to the straight line method on January 1, 200C. The residual value did not change. What is the depreciation expense on this machine for 200C? Response: 359,000 Feedback: Depreciation for 200C (2,872,000/8 years remaining) 359,000 Carrying amoung-January 1, 200C 3,072,000 Residual value (200,000) Depreciable amount 2,872,000 Straight line rate (100% /10) 10% Double declising rate (10% x 2) 20% Acquisition cost-January 1, 200A 4,800,000 Accumulated depreciation-January 1, 200C 200A (20% x 4,800,000) 960,000 200B (20% x 3,840,000) 768,000 (1,728,000) Carrying amount January 1, 200C 3,072,000 Correct answer: 359,000 Score: 1 out of 1 Yes Question 11 Harper Company incurred an inventory loss from market decline of P840,000 on June 30, 200A. What amount of the inventory loss should be recognized in the quarterly income statement for the three months ended June 30, 200A? Response: 840,000 Feedback: Inventories shall be measured at the lower of cost and net realizable value even for interim purposes. Accordingly, if the net realizable value is lower than cost, a loss on inventory writedown shall be recognized regardless of whether the writedown is temporary or nontemporary. Correct answer: 840,000 Score: 1 out of 1 Yes Question 12 On January 1, 200A, Flair Company purchased a machine for P2,640,000 and depreciated it by the straight line using an estimated life of 8 years with no residual value. On January 1, 200D, the entity determined that the machine had a useful life of 6 years from the date of acquisition with a residual value of P240,000. What is the accumulated depreciation on December 31, 200D? Response: 1,460,000 Feedback: Acquisition cost P 2,640,000 Divide: Estimated life ÷ Annual depreciation Years elapsed Accumulated Depn (200C) 8 330,000 x 3 990,000 Annual depreciation (200D) [(P2.64-P0.99-P0.24)÷3] Accumulated depreciation jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 470,000 P 1,460,000 6/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Correct answer: 1,460,000 Score: 1 out of 1 Yes Question 13 On December 31, 200A, Condor Company committed to a plan to sell a manufacturing facility in its present condition and classifies the facility as held for sale at this date. After a firm purchase commitment is obtained, the buyer’s inspection of the property identifies environmental damage not previously known to exist. Condor Company 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. On December 31, 200A, the carrying value of the facility is P4,000,000 and its fair market value is P3,600,000. In its December 31, 200A statement of financial position, Candor Company should properly report this manufacturing facility as: Response: Should be reported separately as non-current asset held for sale and valued at P3,600,000. Feedback: Correct answer: Should be reported separately as non-current asset held for sale and valued at P3,600,000. Score: 1 out of 1 Yes Question 14 Clara Company purchased equipment for P5,000,000 on January 1, 200A with a useful life of 10 years and no residual value. On December 31, 200B, the entity classified the asset as held for sale. The fair value of the equipment on December 31, 200B is P3,300,000 and the cost of disposal is P100,000. On December 31, 200C, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 200C, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it. What amount should be recognized as impairment loss as a result of the asset classification as held for sale in 200B? Response: 800,000 Feedback: Acquisition cost P Depreciation (P5.0 ÷ 10 x 2) 5,000,000 (1,000,000) Carrying amount on December 200B P 4,000,000 Carrying amount on December 200B P 4,000,000 Recoverable amount on December 200B Impairment loss Correct answer: (3,200,000) P 800,000 800,000 Score: 1 out of 1 Yes Question 15 Arlene Company accounts for noncurrent assets using the cost model. On October 30, 200A, the entity classified a noncurrent asset as held for sale. At that date, the carryining amount was P1,500,000, the fair value was estimated at P1,100,000 and the cost of disposal at P150,000. On November 20, 200A, the asset was sold for net proceeds of P800,000. What amount should be included as loss on disposal in the statement of comprehensive income for the year ended December 31, 200A? Response: 150,000 Feedback: Carrying amount 1,500,000 Fair value less cost of disposal (1,100,000 - 150,000) 950,000 Impairment loss 550,000 Sale price 800,000 Carrying amount on November 20, 200A, date of sale (950,000) Loss on disposal (150,000) jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 7/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Correct answer: 150,000 Score: 1 out of 1 Yes Question 16 Xavier Company has three segments, A, B and C. Segment C, the closing division, is deemed inconsistent with the long-term direction of the entity. Management has decided to dispose of Segment C. On November 15, 200A, the board of directors of Xavier Company voted to approve the disposal and an announcement was made. On that date the carrying amount of Segment C's net assets was P90,000,000 and the fair value less cost of disposal was P70,000,000. Segment C's revenue and expenses for 200A, respectively, were P50,000,000 and P45,000,000, including an interest of P5,000,000 attributable to Segment C. There was no further impairment of assets between November 15 and December 31, 200A. The income tax rate is 30%. What amount of loss from discontinued operation should be reported for 200A? Response: 10,500,000 Feedback: Revenue 50,000,000 Expenses (45,000,000) Impairment loss (20,000,000) Loss from discontinued operation (15,000,000) Loss after tax (15,000,000 x 70%) 10,500,000 Carrying amount 90,000,000 Fair value less cost of disposal (70,000,000) Impairment loss 20,000,000 Correct answer: 10,500,000 Score: 1 out of 1 Yes Question 17 Folk Campany changed from the average cost method to the FIFO method to aceount for the inventory. Ending inventory for each method was a follows: 200A 200B Average cost 500,000 900,000 FIFO cost 700,000 1,400,000 The income statement information caleulated by the average cost method was as follows: 200A Sales 200B 10,000,000 13,000,000 Cost of goods sold 7,000,000 9,000,000 Operating expense 1,500,000 2,000,000 Tax expense - 30% 450,000 600,000 What amount of net income should be reported in 200B after the change to the FIFO inventory method? Response: 1,750,000 Feedback: Correct answer: 1,890,000 jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 8/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Score: 0 out of 1 No Question 18 Acute Company was organized on January 1, 200A. In preparing the financial statements for the year ended December 31 200C, the entity used the following original cost and useful life for property, plant and equipment. Original cost Useful life Building 15,000,000 15 years Machinery 10,500,000 10 years 3,500,000 7 years Furniture On January 1, 200D, the entity decided to review the useful life of the property, plant and equipment. On such date, the remaining useful life is 10 years for the building. 7 years for the machinery and 5 years for the furniture. The entity used the straight line method of depreciation with no residual value. What is the total depreciation for 200D? Response: 2,650,000 Feedback: Carrying amount of Building (15.0M x 12/15) 12,000,000 Remaining useful life ÷ Carrying amount of Machinery (10.5M x 7/10) 7,350,000 Remaining useful life Carrying amount of Furniture (3.5M x 4/7) Remaining useful life Depreciation for 200D ÷ 10 7 1,200,000 1,050,000 2,000,000 ÷ 5 400,000 2,650,000 Correct answer: 2,650,000 Score: 1 out of 1 Yes Question 19 Aria Company and its divisions provided the following information for the current year: Sales to unaffiliated customers Intersegment sales of products similar to those sold to unaffiliated customers 20,000,000 6,000,000 Interest earned on loans to other operating segments 400,000 Aria Company and all of its divisions are engaged solely in manufacturing operations. What is the minimum amount of segment revenue in order that a division can be considered a reportable segment? Response: 2,600,000 Feedback: Sales to unaffiliated customers 20,000,000 Intersegment sales 6,000,000 Combined revenue 26,000,000 Test of reportable segment (10% of 26,000,000) 2,600,000 Under PFRS 8, paragraph 13, segment revenue includes sales to extermal customers and intersegment sales of operating segments engaged solely in manufacturing. Correct answer: 2,600,000 Score: 1 out of 1 Yes jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 9/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Question 20 During 200A, Marian Company was sued by a competitor for P5,000,000 for infringement of a patent. Based on the advice of the legal counsel, the entity accrued the sum of P3,000,000 as a provision on December 31, 200A. Subsequently, on April 15, 200B, the Supreme Court decided in favor of the party alleging infringement of the patent and ordered the defendant to pay the aggrieved party a sum of P3,500,000. The financial statements were prepared by management on February 15, 200B and approved by the board of directors on March 31, 200B. What armount should be adjusted on December 31, 200A in relation to this event? Response: 500,000 Feedback: Correct answer: 0 Score: 0 out of 1 No Question 21 Eagle Company operates in several different industries. Total sales for Eagle Company totaled P14,000,000, and total common costs amounted to P6,500,000 for the current year. For internal reporting purposes, Eagle Company allocated common costs based on the ratio of a segment's sales to total sales. Segment A contributed 25% to the total sales and incurred specific costs of P1,100,000. What is the profit of Segment A? Response: 775,000 Feedback: Sales- Segment A (25% x14,000,000) 3,500,000 Specific costs (1,100,000) Allocated common costs (25% x 6,500,000) (1,625,000) Segment profit 775,000 Correct answer: 775,000 Score: 1 out of 1 Yes Question 22 Harper Company incurred an inventory loss from market decline of P840,000 on June 30, 200A. What amount of the inventory loss should be recognized in the quarterly income statement for the three months ended June 30, 200A? Response: 840,000 Feedback: Inventories shall be measured at the lower of cost and net realizable value even for interim purposes. Accordingly, if the net realizable value is lower than cost, a loss on inventory writedown shall be recognized regardless of whether the writedown is temporary or nontemporary. Correct answer: 840,000 Score: 1 out of 1 Yes Question 23 Folk Campany changed from the average cost method to the FIFO method to aceount for the inventory. Ending inventory for each method was a follows: 200A 200B Average cost 500,000 900,000 FIFO cost 700,000 1,400,000 The income statement information caleulated by the average cost method was as follows: 200A jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 200B 10/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Sales 10,000,000 13,000,000 Cost of goods sold 7,000,000 9,000,000 Operating expense 1,500,000 2,000,000 Tax expense - 30% 450,000 600,000 What amount of net income should be reported in 200A after the change to the FIFO inventory method? Response: 1,190,000 Feedback: Sales 10,000,000 Cost of goods sold (7,000,000) Operating expense (1,500,000) Tax expense -30% (450,000) Reported net income under average cost 1,050,000 Net of tax increase due to change to FIFO method [(700,000 - 300,000) x 70%] Net income under FIFO cost 140,000 1,190,000 The change from average cost to FIFO cost resulted to an understatement to the ending balance. Thus, cost of goods should be reduced increasing the net income. Correct answer: 1,190,000 Score: 1 out of 1 Yes Question 24 During 200A, Marian Company was sued by a competitor for P5,000,000 for infringement of a patent. Based on the advice of the legal counsel, the entity accrued the sum of P3,000,000 as a provision on December 31, 200A. Subsequently, on March 15, 200B, the Supreme Court decided in favor of the party alleging infringement of the patent and ordered the defendant to pay the aggrieved party a sum of P3,500,000. The financial statements were prepared by management on February 15, 200B and approved by the board of directors on March 31, 200B. What amount should be recognized as accrued liability on December 31, 200A? Response: 3,500,000 Feedback: Correct answer: 3,000,000 Score: 0 out of 1 No Question 25 Vim Company has estimated that total depreciation expense for the year ended December 31, 200A will amount to P500,000, and that 200A year-end bonuses to employees will total P1,200,000. In the interim income statement for the six month ended June 30, 200A, what total amount of these expense should be reported? Response: 850,000 Feedback: Allocation of depreciation (P500,000÷2) Allocation of year end bonuses (P1,200,000÷2) Reportable expenses for the semester P 250,000 600,000 P 850,000 Correct answer: 850,000 Score: 1 out of 1 Yes Question 26 jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 11/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Kay Company provided the following information for the current year: Increase in goods in process invtry P Increase in raw materials inventory 500,000 150,000 Decrease in finished goods inventory 350,000 Raw materials purchased 4,300,000 Direct Labor payroll 2,000,000 Factory overhead 3,000,000 Freight out 450,000 What is the manufacturing cost for the current year? Response: 9,150,000 Feedback: Raw materials purchased P 4,300,000 Direct Labor payroll 2,000,000 Factory overhead 3,000,000 Increase in raw materials invtry (150,000) Manufacturing Cost P 9,150,000 Correct answer: 9,150,000 Score: 1 out of 1 Yes Question 27 Blues Corporation's trial balance included the following account balances at December 31, 200A: Accounts Payable Bonds Payable, due 200B Discount on Bonds Payable, due 200B P45,000 75,000 9,000 Dividends Payable January 31, 200B 24,000 Notes Payable, due January 31, 200E 60,000 What amount should be included in the current liability section of Blues' December 31, 200A, balance sheet? Response: [none] Correct answer: 135,000 Score: 0 out of 1 No Question 28 Mite Company provided the following data for the year ended December 31, 200A: Finished goods inventory, January 1 1,000,000 Finished goods inventory, December 31 1,200,000 Cost of goods manufactured 5,000,000 Loss on sale of plant equipment 100,000 What is the cost of goods sold for the current year? Response: 3,800,000 Feedback: jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 12/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Correct answer: 4,800,000 Score: 0 out of 1 No Question 29 Clay Company has three lines of business, each of which was detemined to be reportable segment. The entity sales aggregated P7,500,000 in the current year, of which Segment No. 1 contributed 40%. Traceable costs were P1,750,000 for Segment No. 1 out of a total of P5,000,000 for the entity as a whole. For external reporting, the entity allocated common costs of P1,500,000 based on the ratio of a segment's income before common costs to the total income before common costs. In the financial statements for the current year, what amount should be reported as profit for Segment No. 1? Response: 500,000 Feedback: Segment 1 Sales (40% x 7,500,000) Total 3,000,000 7,500,000 (1,750,000) (5,000,000) Segment profit before common cost 1,250,000 2,500,000 Common cost (1,250,000/2,500,000 x 1,500,000) Segment profit (750,000) 500,000 (1,500,000) 1,000,000 Traceable costs Correct answer: 500,000 Score: 1 out of 1 Yes Question 30 The end of reporting period of Gallant Company is December 31, 200A and the financial statements for 200A are authorized for issue on March 15, 200B. •On December 31, 200A, Gallant Company had a receivable of P400,000 from a customer that is due 60 days after end of reporting period. On January 15, 200B, a receiver was appointed for the said customer. The receiver informed Gallant that the P400,000 would be paid in full by June 30, 200B. •Gallant Company had investment in listed shares held for trading. On December 31, 200A, these investments were recorded at the market value of P5,000,000. During the period up to February 15, 200B, there was a steady decline in the market value of all the shares in the portfolio, and on February 15, 200B, the market value had fallen to P2,000,000. •Gallant Company had reported a contingent liability on December 31, 200A related to a court case in which Gallant Company was the defendant. The case was not heard until the first week of February 200B. On February 11, 200B, the judge handed down a decision against Gallant Company. The judge determined that Gallant Company was liable to pay damages and costs totaling P3,000,000. •On December 31, 200A, Gallant Company had a receivable from a large customer in the amount of P3,500,000. On March 31, 200B, Gallant Company was advised in writing by the liquidator of the said customer that the customer was insolvent and that only 10% of the receivable will be paid on April 30, 200B. What total amount should be reported as “adjusting events” on December 31, 200A? Response: 9,550,000 Feedback: Correct answer: 3,000,000 Score: 0 out of 1 No Question 31 Clara Company purchased equipment for P5,000,000 on January 1, 200A with a useful life of 10 years and no residual value. On December 31, 200B, the entity classified the asset as held for sale. The fair value of the equipment on December 31, 200B is P3,300,000 and the cost of disposal is P100,000. On December 31, 200C, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 200C, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it. What is the measurement of the equipment that ceases to be held for sale on December 31, 200B? Response: 3,500,000 Feedback: Correct answer: 3,200,000 Score: 0 out of 1 No Question 32 jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 13/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN On January 1, 200F, Canyon Company decided to decrease the estimated useful life of an existing patent from 10 years to 8 years. The patent was purchased on January 1, 200A for P3,000,000, The estimated residual value is zero. The entity decided on January 1, 200F to change the depreciation method from an accelerated method to the straight line method. On January 1, 200F, the cost of an equipment is P8,000,000 and the accumulated depreciation is P3,400,000. The remaining useful life of the equipment on January 1, 200F is 10 years and the residual value is P200,000. What is the total charge against income for 200F as a result of the accounting changes? Response: 940,000 Feedback: Patent- January 1, 200A 3,000,000 Accumulated amortization (3,000,000/10 x 5) (1,500,000) Carrying amount- January 1, 200F 1,500,000 Amortization of patent for 200F (1,500,000/3) 500,000 Depreciation for 200F (4,600,000- 200,000/10) 440,000 Total charge against income for 200F 940,000 Revised estimated life of patent 8 Years expired (5) Remaining revised life of patent 3 Correct answer: 940,000 Score: 1 out of 1 Yes Question 33 The financial statements of Cresent Corporation for 200A and 200B contained the following errors: 200A 200B Ending Inventory 14,000 overstated 20,000 understated Rent Expense 4,800 understated 6,600 overstated Assuming that none of the errors were detected or corrected, by what amount will 200A operating income be overstated or understated? Response: 18,800 understated Feedback: Correct answer: 18,800 overstated Score: 0 out of 1 No Question 34 After the issuance of the 200A financial statements, Narra Company discovered a computational error of P150,000 in the calculation of the December 31, 200A inventory. The error resulted in a P150,000 overstatement in the cost of goods sold for the year ended December 31, 200A. In October 200B, the entity paid the amount of P500,000 in settlement of litigation instituted against it during 200B. In the 200B financial statements, what is the adjustment to retained earnings on January 1, 200B? Response: 150,000 credit Feedback: Correct answer: 105,000 debit Score: 0 out of 1 No jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 14/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Question 35 Elaine Company prepared a draft FS that showed a profit before tax for the year ended December 31, 200A at P9,000,000. The board of directors authorized the FS for issue on March 20, 200B. A fire occurred at one of Elaine's sites on January 15, 200B with resulting damage amounting to P7,000,000, only P4,000,000 of which is covered by insurance. The repairs will take place and be paid for April 200B. The P4,000,000 claim from the insurance entity will however be received on February 14, 200B. What amount should be reported as profit before income tax in the FS? Response: 6,000,000 Feedback: Correct answer: 9,000,000 Score: 0 out of 1 No Question 36 Remy Company had the following events discovered during 200C: • Depreciation for 200B was found to be understated by P300,000. • A litigation settlement resulted in a loss of P250,000. • The inventory on December 31, 200A was overstated by P400,000. • The entity disposed of the recreational division at a loss of P500,000. • The income tax rate is 30%. What is the net effect of these events on the income from continuing operations for 200C? Response: 175,000 Feedback: Litigation settlement (250,000 x 70%) 175,000 Error on depreciation affects only the year when the error is committed. Error on inventory balance will impact 200A and 200B, but not 200C. Disposal loss of the recreational division belongs to discontinued operations. Correct answer: 175,000 Score: 1 out of 1 Yes Question 37 The December 31, 200A, balance sheet of Madden Inc., reported total assets of P1,050,000 and total liabilities of P680,000. The following information relates to the year 200B: • Madden Inc. issued an additional 5,000 shares of common stock at P25 per share on July 1, 200B. • Madden Inc. paid dividends totaling P80,000. • Net income for 200B was P110,000. • No other changes occurred in shareholders' equity during 200B. The shareholders' equity section of the December 31, 200B, balance sheet would report a balance of Response: 685,000 Feedback: Correct answer: 525,000 Score: 0 out of 1 No Question 38 Clara Company purchased equipment for P5,000,000 on January 1, 200A with a useful life of 10 years and no residual value. On December 31, 200B, the entity classified the asset as held for sale. The fair value of the equipment on December 31, 200B is P3,300,000 and the cost of disposal is P100,000. On December 31, 200C, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 200C, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it. What is the gain or loss on reclassification on December 31, 200C? jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 15/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Response: 300,000 Gain Feedback: Acquisition cost P Depreciation (P5.0 ÷ 10 x 3) 5,000,000 (1,500,000) Carrying amount had the asset not been classified as held for sale P 3,500,000 FV on December 200C P 3,800,000 Cost of disposal on 200C Recoverable amount (200,000) P 3,600,000 P 3,500,000 (3,200,000) Measurement based on lower between “could be” carrying amount and recoverable amount Carrying amount of asset held for sale Gain on reclassification P 300,000 Correct answer: 300,000 Gain Score: 1 out of 1 Yes Question 39 Manchester Company provided the following information on Decembe 31, 200A: Employee income taxes withheld 900,000 Cash balance at First State Bank 2,500,000 Cash overdraft at Harbor Bank 1,300,000 Accounts receivable with credit balance 750,000 Estimated expenses of meeting warranties 500,000 Estimated damages as a result of unsatisfactory performance on a contract Accounts payable 1,500,000 3,000,000 Deferred serial bonds, issued at par and bearing interest at 12%, payable in semiannual installments of P500,000 due April 1 and October 1 of each year, the last bond to be paid on October 1, 200G. Interest is also paid semiannually. 5,000,000 What amount should be reported as total current liabilities on December 31, 200A? Response: 8,100,000 Feedback: Employee income taxes withheld Cash overdraft 900,000 1,300,000 Accounts receivable with credit balance 750,000 Estimated warranty liability 500,000 Estimated damages payable 1,500,000 Accounts payable 3,000,000 Accrued interest on bonds payable from October 1 to December 31, 200A (5,000,000 x 12% x 3/12) Total current liabilities 150,000 8,100,000 The bonds will be paid over 5 years because the semiannual payment is P500,000. Since the last bond will be paid on October 1, 200G, the first bond will be paid on April 1,200C. Accordingly, there is no currently maturing bond in 2019. Correct answer: 8,100,000 jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 16/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Score: 1 out of 1 Yes Question 40 Zeno Company maintains a markup of 60% based on cost. The entity's distribution and administrative expenses average 25% of sales. Sales amounted to 9,600,000 for the current year. Corporate income tax is 30%. What is the net income for the current year? Response: 1,200,000 Feedback: Correct answer: 840,000 Score: 0 out of 1 No Question 41 Parker Company reported operating expenses as distribution and general or administrative. The adjusted trial balance at the end of the current year included the following expense accounts: Accounting and legal fees P Advertising 1,450,000 1,500,000 Freight out 750,000 Freight in 1,750,000 Interest 600,000 Loss on sale of delivery equipment 300,000 Officers' salaries 2,250,000 Property taxes and insurance 400,000 Rent for office space 1,800,000 Sales salaries and commissions 1,400,000 Doubtful accounts (credit granted by finance manager) 1,600,000 Insurance 850,000 About 40% of rental premises is occupied by the sales department. What total amount should be included in administrative expenses for the current year? Response: 9,980,000 Feedback: Correct answer: 8,230,000 Score: 0 out of 1 No Question 42 Pearl Company reported income before tax of P5,000,000 for the current year. the auditor questioned the following amounts that had been included in income before tax: Equity in earnings of Cinn Company - 40% interest Dividend received from Cinn Company P 1,600,000 320,000 Adjustment of profit of prior year for arithmetical error in depreciation Unrealized gain on equity instrument at FVOCI (1,400,000) 1,000,000 What amount should be reported as income before tax? Response: 4,680,000 Feedback: Correct answer: 5,080,000 jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 17/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Score: 0 out of 1 No Question 43 The following are the selected accounts of Cadorna Company as of December 31, 200A: Acc depreciation - Building P 750,000 Acc depreciation - Furniture 625,000 Accounts receivable 375,000 Accrued interest on notes receivable 15,000 Allowance for doubtful accounts 75,000 Building 7,500,000 Cash in bank 1,000,000 Cash on hand 250,000 Deferred tax asset 145,000 Franchise 688,000 Furniture 2,500,000 Goods in process 590,000 Inventory 480,000 Investment in bonds 1,450,000 Investment in equity 950,000 Land 1,850,000 Notes receivable 500,000 Patent 455,000 Petty cash fund Plant expansion fund Prepaid insurance 50,000 3,000,000 110,000 Unused office supplies 35,000 Unused store supplies 65,000 Depreciation - Building 187,500 Depreciation - Furniture 500,000 What is the total current assets? Response: 2,880,000 Feedback: Correct answer: 2,805,000 Score: 0 out of 1 No Question 44 The following are the selected accounts of Leynes Company as of December 31, 200A: Acc depreciation - Building P 750,000 Acc depreciation - Furniture 625,000 Accounts receivable 375,000 Accrued interest on notes receivable 15,000 Allowance for doubtful accounts 75,000 Building 7,500,000 Cash in bank 1,000,000 Cash on hand 250,000 Deferred tax asset 145,000 jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 18/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Franchise 688,000 Furniture 2,500,000 Goods in process 590,000 Inventory 480,000 Investment in bonds 1,450,000 Investment in equity 950,000 Land 1,850,000 Notes receivable 500,000 Patent 455,000 Petty cash fund 50,000 Plant expansion fund 3,000,000 Prepaid insurance 110,000 Unused office supplies 35,000 Unused store supplies 65,000 Depreciation - Building 187,500 Depreciation - Furniture 500,000 What is the total noncurrent assets? Response: 17,163,000 Feedback: Land P 1,850,000 Building 7,500,000 Furniture 2,500,000 Acc depreciation - Building (750,000) Acc depreciation - Furniture (625,000) Investment in equity 950,000 Plant expansion fund 3,000,000 Investment in bonds 1,450,000 Patent 455,000 Franchise 688,000 Deferred tax asset 145,000 Noncurrent assets P 17,163,000 P 47,100,000 Correct answer: 17,163,000 Score: 1 out of 1 Yes Question 45 The following are several accounts of the Heathrow Corporation at the end of 200A: Ordinary shares, P10 par Bonds payable (due 200C) Premium on preference shares 126,500,000 39,600,000 Unappropriated accumulated profits 209,000,000 Appropriated accumulated profits 104,000,000 Premium on bonds payable Unearned rent Preference shares, P100 par jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 12,300,000 4,800,000 65,400,000 19/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN Premium on ordinary shares Unfunded accrued pension cost 53,900,000 18,400,000 Treasury shares (cost) 7,600,000 Donated capital for land from city of Wien 8,200,000 Heathrow’s statement of financial position at December 31, 200A should report total shareholders’ equity of Response: 519,600,000 Feedback: Ordinary shares P Premium on preference shares 47,100,000 39,600,000 Unappropriated accumulated profits 209,000,000 Appropriated accumulated profits 104,000,000 Preference shares 65,400,000 Premium on ordinary shares 53,900,000 Treasury shares (cost) (7,600,000) Donated capital for land from city of Wien Shareholders' Equity 8,200,000 P 519,600,000 Correct answer: 519,600,000 Score: 1 out of 1 Yes Question 46 Natasha Company reported net income of P700,000 for 200B. The entity declared and paid dividends of P150,000 in 200B and P300,000 in 200A. In the financial statements for the year ended December 31, 200A, the entity reported retained earnings of P1,100,000 on January 1, 200A. The net income for 200A was P600,000. In 200B, after the 200A financial statements were approved for issue, the entity discovered an error in the December 31, 200A financial statements. The effect of the error was a P650,000 overstatement of net income for the year ended December 31, 200A due to underdepreciation. What amount should be reported as retained earnings on December 31, 200B? Response: 1,300,000 Feedback: Retained earnings, January 1, 200A Net Income - 200A 1,100,000 600,000 Dividends - 200A (300,000) Overstatement due to underdepreciation (650,000) Retained earnings, December 31, 200A 750,000 Net Income - 200B 700,000 Dividends - 200B (150,000) Retained earnings, December 31, 200B 1,300,000 Correct answer: 1,300,000 Score: 1 out of 1 Yes Question 47 After the issuance of the 200A financial statements, Narra Company discovered a computational error of P150,000 in the calculation of the December 31, 200A inventory. The error resulted in a P150,000 overstatement in the cost of goods sold for the year ended December 31, 200A. In October 200B, the entity paid the amount of P500,000 in settlement of litigation instituted against it during 200A. No provision was recorded in 200A when the award was deemed probable at the settlement amount. jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 20/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN In the 200B financial statements, what is the pretax adjustment to retained earnings on January 1, 200B? Response: 150,000 credit Feedback: Correct answer: 350,000 debit Score: 0 out of 1 No Question 48 The following changes in Patriot Corporation's account balances occurred during 200A: Increase Assets P267,000 Liabilities 81,000 Share Capital 198,000 Patriot paid dividends of P39,000 during the year. There were no changes in Retained Earnings for 200A except dividends and net income. What was Patriot's net income for 200A? Response: 39,000 Feedback: Correct answer: 27,000 Score: 0 out of 1 No Question 49 Pink Company is completing the preparation of the draft financial statements for the year ended December 31, 200A. The financial statements are authorized for issue on March 31, 200B. On January 31, 200B, a dividend of P2,000,000 was declared and a contractual profit share payment of P200,000 was made, both based on the profit for the year ended December 31, 200A. On February 15, 200B, a customer went into liquidation having owed the entity P900,000 for the past 5 months. No allowance had been made against this debt in the draft financial statements. On March 1, 200B, a manufacturing plant was destroyed by fire resulting in a financial loss of 2,500,000. What total amount should be recognized in profit or loss for the year ended December 31, 200A to reflect adjusting events after the end of reporting period? Response: 1,100,000 Feedback: Contractual profit share payment Customer that went into liquidation Adjusting amount P 200,000 900,000 P 1,100,000 Correct answer: 1,100,000 Score: 1 out of 1 Yes Question 50 During the year ended December 31, 200B, Samar Company revealed the following events: • A counting error relating to inventory on December 31, 200A was discovered. This required a reduction in the carrying amount of inventory on that date of P280,000. • The provision for uncollectible accounts receivable on December 31, 200A was P300,000, During 200B, an amount of P50,000 was written off the December 31, 200A accounts receivable. What adjustment is required to restate retained earnings on January 1, 200B? Response: 280,000 Feedback: Overstatement of December 31, 200B ending inventory jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 280,000 21/22 10/1/2020 Submissions - Integrated Review 1 - SBCA-JBN No need to adjust the account written off to the beginning retained earnings as it is covered by a provision for bad debts. Correct answer: 280,000 Score: 1 out of 1 Yes jbnavallo.edu20.org/student_quiz_assignment/submissions/15744834 22/22