CHAPTER 3
THE STATEMENT OF FINANCIAL POSITION
AND NOTES TO THE FINANCIAL STATEMENTS
Discussion Question 15
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
C
C
B
E
A
B
E
A
D
E
11
12.
13
14
15
16.
17.
18.
19.
20
C
B
A
Reported in SCE
B
B
E
A
B
F
21.
22.
23.
24.
25.
26.
27.
E
B
E
A
F
B
D
Problems
3-1.
(GARNET COMPANY)
Garnet Company
Statement of Financial Position
December 31, 2015
Assets
Current assets
Note
Cash and cash equivalents
P
Financial assets at FVPL
86,250
61,000
Trade and other receivables
(5)
Inventory
107,000
322,000
P 576,250
Non-current assets
Property, plant and equipment
(6)
Investment property
P1,433,000
1,000,000
Investments in associates
250,000
Intangibles
(7)
141,000
TOTAL ASSETS
2,824,000
P3,400,250
Liabilities and Shareholders’ Equity
Current liabilities
Trade and other payables
(8)
Income tax payable
Noncurrent liabilities
Bonds payable
(9)
Deferred tax liability
Shareholders’ equity
Share capital
(10)
Additional paid in capital
(11)
Retained earnings
(12)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
8
P 307,250
150,000
P 457,250
731,000
50,000
781,000
P 1,534,000
321,000
307,000
2,162,000
P3,400,250
Chapter 3 – The Statement of Financial Position
9 and Notes to the Financial Statements
Note 5 – Trade and other receivables
Accounts receivable
Less allowance for bad debts
Net trade and other receivables
P115,000
8,000
P107,000
Note 6 – Property, plant and equipment
Land
Buildings
Less accumulated depreciation
Equipment
Less accumulated depreciation
Total property, plant and equipment
Note 7 – Intangibles
Patents
Less accumulated amortization
Trademarks
Less accumulated amortization
Total
P 250,000
P1,440,000
530,000
P 624,000
351,000
P120,000
22,000
P 60,000
17,000
910,000
273,000
P1,433,000
P 98,000
43,000
P141,000
Note 8 – Trade and other payables
Accounts payable
Salaries payable
SSS premium payable
Withholding taxes payable
Total
P236,000
20,000
21,250
30,000
P307,250
Note 9 – Bonds payable
Bonds payable (due 2017)
Less discount on bonds payable
Total
P 800,000
69,000
P731,000
Note 10 – Share capital
Preference share capital, P100 par
Ordinary share capital, P10 par
Share dividends distributable
Total
P 210,000
1,300,000
24,000
P1,534,000
Note 11 – Additional paid-in capital
Share premium -preference
Share premium -ordinary
Total
P 81,000
240,000
P321,000
Note 12 – Retained earnings
Appropriated
Unappropriated
Total retained earnings
P 45,000
262,000
P307,000
9
Chapter 3 – The Statement of Financial Position
10 and Notes to the Financial Statements
3-2.
(RUBY CORPORATION)
Ruby Corporation
Statement of Financial Position
December 31, 2015
Assets
Current assets
Cash and cash equivalents
Financial assets through profit or loss (Note 5)
Trade and other receivables (Note 6)
Inventories (Note 7)
Prepaid expenses
Non-current assets held for sale (Note 8)
Non-current assets
Property, plant and equipment (Note 9)
Other financial assets (Note 10)
Intangible assets (Note 11)
TOTAL ASSETS
P 116,000
160,000
308,000
985,000
31,000
210,000
P3,248,000
339,000
182,000
P1,810,000
3,769,000
P5,579,000
Liabilities and Shareholders’ Equity
Current liabilities
Trade and other payables
Income tax payable
Unearned revenues
Provision for product warranty
Noncurrent liabilities
Bonds payable (Note 12)
P 580,000
247,000
62,000
73,000
P 962,000
848,000
Shareholders’ equity
Share capital (Note 13)
Additional paid in capital (Note 14)
Retained earnings
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
P2,028,000
537,000
1,204,000
3,769,000
P5,579,000
Note 5 – Financial assets through profit or loss
Financial assets through profit or loss, costing P150,000, are reported at market values.
Note 6 – Trade and other receivables
Accounts receivable
Less Allowance for bad debts
Net trade receivables
P323,000
15,000
P308,000
Note 7 – Inventories (at lower of cost and NRV)
Finished goods
Goods in process
Raw materials
Total
P416,000
347,000
222,000
P985,000
10
Chapter 3 – The Statement of Financial Position
11 and Notes to the Financial Statements
Note 8 – Non-current assets held for sale
This classification represents a unit of machinery with carrying amount of P240,000
and fair value less cost to sell of P210,000. The sale is expected to be consummated in
May 2015.
Note 9 – Property, plant and equipment
Land
Land held for future use*
Buildings
Less accumulated depreciation
Machinery
Less accumulated depreciation
Equipment
Less accumulated depreciation
Total

P1,320,000
195,000
P1,824,000
622,000
P 319,000
106,000
P 530,000
212,000
1,202,000
213,000
318,000
P3,248,000
Land held for future use, which conventionally was classified as long-term investment,
is not qualified to be reported as Investment Property under par. 9 of IAS 40. Thus,
property held for future development and subsequent use as owner-occupied property is
part of property, plant and equipment.
Note 10 – Other financial assets
Debt investments at amortized cost
Cash surrender value of life insurance
Total
P250,000
89,000
P339,000
Note 11 – Intangible assets
Patents
Less Accumulated amortization
Total
P200,000
18,000
P182,000
Note 12 – Bonds payable
Bonds payable
Add Premium on bonds payable
Total
P800,000
48,000
P848,000
Note 13 – Share Capital
Preference share capital
Ordinary share capital
Total
P 400,000
1,628,000
P2,028,000
Note 14 – Additional paid in capital
Share premium - preference
Share premium - ordinary
Total
P234,000
303,000
P537,000
Retained earnings is adjusted by a decrease of P30,000 representing loss from
measurement to fair value less cost to sell of asset held for sale, thus retained earnings
balance is P1,204,000.
3-3.
(DIAMOND COMPANY)
Diamond Company
Statement of Financial Position
December 31, 2015
Assets
Current assets
Cash
Financial assets at fair value through profit or loss
Trade and other receivables (Note 5)
Inventory
Prepaid expenses (Note 6)
11
P 230,000
320,000
510,000
600,000
130,000
P1,790,000
Chapter 3 – The Statement of Financial Position
12 and Notes to the Financial Statements
Noncurrent assets
Property, plant and equipment (Note 7)
Financial assets at fair value through OCI
Intangible assets
Deferred tax asset
TOTAL ASSETS
P3,450,000
1,030,000
470,000
70,000
5,020,000
P6,810,000
Liabilities and Shareholders’ Equity
Current liabilities
Trade and other payables (Note 8)
Unearned rent
Noncurrent liabilities
Bonds payable (Note 9)
P1,390,000
90,000
P1,480,000
1,000,000
Shareholders’ equity
Ordinary share capital, P10 par
Share Premium
Retained earnings
Total
Treasury shares, at cost
Accumulated holding gains (losses) – investments
through other comprehensive income
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
P1,200,000
1,040,000
2,300,000
4,540,000
(330,000)
120,000
P6,810,000
Note 5 – Trade receivables
Accounts receivable
Less Allowance for uncollectible accounts
Net trade receivables
P590,000
80,000
P510,000
Note 6 – Prepaid expenses
Office supplies
Prepaid insurance
Total
P 80,000
50,000
P130,000
Note 7 – Property, plant and equipment
Land
Buildings and equipment
Less accumulated depreciation
Total
P 810,000
P3,560,000
920,000
2,640,000
P3,450,000
Note 8 – Trade and other payables
Accounts payable
Salaries payable
Taxes payable
Total
P 990,000
150,000
250,000
P1,390,000
Note 9 – Bonds payable
Bonds payable (due 2017)
Less discount on bonds payable
Net
P1,100,000
100,000
P1,000,000
12
Chapter 3 – The Statement of Financial Position
13 and Notes to the Financial Statements
3-4.
(EMERALD COMPANY)
Emerald Company
Statement of Financial Position
December 31, 2015
Assets
Current assets
Cash
Equity securities through profit or loss
Trade and other receivables
Inventories
Prepaid expenses
Non-current asset held for sale
Noncurrent assets
Property, plant and equipment
Investment property
Other financial assets
Intangibles
TOTAL ASSETS
Note
(7)
P 380,000
485,000
2,780,000
450,000
290,000
1,200,000
(8)
(9)
(10)
(11)
P 5,600,000
2,900,000
1,600,000
960,000
(5)
(6)
P 5,585,000
11,060,000
P16,645,000
Liabilities and Shareholders’ Equity
Current liabilities
Trade and other payables
Income taxes payable
Provision for warranties
Mortgage Payable Current Portion
Noncurrent liabilities
Notes payable
Bonds payable
Mortgage payable, (P2,000,000)
Total Liabilities
(12)
(15)
P 1,350,000
720,000
200,000
400,000
(13)
(14)
(15)
P 1,000,000
P 4,430,000
1,600,000
Shareholders’ equity
Share capital
(16)
Share premium
Retained earnings
Total
Treasury shares, at cost
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
P 1,700,000
1,820,000
3,605,000
P 7,125,000
(180,000)
Retained earnings before adjustment
Unrealized gain on equity securities through profit or loss
Retained earnings after recognition of gain
P2,670,000
7,030,000
P 9,700,000
6,945,000
P16,645,000
P3,580,000
25,000
P3,605,000
Note 5 – Equity securities through profit or loss
The equity securities are intended for immediate trading in the future. The
securities cost P460,000 and are reported at market value.
Note 6 – Trade and other receivables
Accounts receivable
Notes receivable (due July 1, 2016)
Allowance for uncollectible accounts
Net trade and other receivables
P1,850,000
1,000,000
(70,000)
P2,780,000
Note 7 – Noncurrent asset held for sale
The non-current asset held for sale represents land that is available for immediate sale
and its carrying amount will be recovered through a sale transaction.
The sale is
13
Chapter 3 – The Statement of Financial Position
14 and Notes to the Financial Statements
highly probable as the plan for its sale has already been completed at yearend. Its fair
value less cost to sell at December 31, 2014 was P1,400,000.
Note 8 – Property, plant and equipment
Land
Buildings
Less accumulated depreciation
Equipment
Less accumulated depreciation
Total
Note 9 – Investment property
Land
Building
Accumulated depreciation
Total
P1,400,000
P4,340,000
1,800,000
P2,960,000
1,300,000
2,540,000
1,660,000
P5,600,000
P1,200,000
P2,000,000
(300,000)
Note 10 – Other financial assets
Investment in Day Corporation bonds (market, P906,000)
Sinking fund for bond retirement
Total
Note 11 – Intangibles
Patents
Less accumulated amortization
Trademarks
Less accumulated amortization
Total
P 900,000
700,000
P1,600,000
P820,000
230,000
P520,000
150,000
Note 12 – Trade and other payables
Accounts payable
Wages payable
TOTAL
1,700,000
P2,900,000
P 590,000
370,000
P 960,000
P 940,000
410,000
P1,350,000
Current portion of mortgage payable
Total
P400,000
Note 13 – Notes payable
The notes payable was issued on June 30, 2014 and matures on June 30, 2016. As
of December 31, 2014, the company has negotiated with the lender to extend the
maturity date to June 30, 2017.
Note 14 – Bonds payable
Bonds payable
Add premium on bonds payable
Total
P4,000,000
430,000
P4,430,000
Note 15 – Mortgage Payable
Mortgage payable, P2,000,000 which is due in five
equal annual payments of P400,000 starting
December 31, 2016. Current portion is P400,000 and
the non-current portion is P1,600,000.
Note 16 – Share capital
Preference share capital
Ordinary share capital
Total
3-5.
P 600,000
1,100,000
P1,700,000
(SAPPHIRE COMPANY)
Current assets consist of
14
Chapter 3 – The Statement of Financial Position
15 and Notes to the Financial Statements
Cash (1,240,000 – 500,000)
Securities held for trading
900,000 + 500,000+ (500,000 x 4.8% x 105/360)
Trade accounts receivable (net of P60,000 allowance for bad debts)
1,220,000 + 50,000 – 60,000
Notes receivable
Creditor’s account with debit balance
Merchandise inventory
Total current assets
Current liabilities consist of
Trade accounts payable (750,000 + 150,000 + 100,000)
Customer deposit
Notes payable (1,500,000 – 300,000)
Current portion of bonds payable
Accrued interest on bonds payable (2.5M x .10 x 6/12)
Income taxes payable
Employees income tax withheld
Total current liabilities
3-6.
P 740,000
1,407,000
1,210,000
920,000
100,000
1,360,000
P 5,737,000
1,000,000
50,000
1,200,000
500,000
125,000
280,000
40,000
P 3,195,000
(TURQUOISE COMPANY)
Current liabilities consist of
Accounts payable
Mortgage notes payable
Bank notes payable
Interest payable
VAT payable (2,688,000/1.12) x .12
Withholding tax payable
Income taxes payable (186,500 – 70,000)
Provision for damages
Total current liabilities
P 270,000
1,300,000
100,000
7,500
288,000
120,000
116,500
650,000
P2,852,000
Note: The entire amount of mortgage notes payable is classified as current liabilities
because as of December 31, 2014, the company has no discretion yet to refinance the
obligation on a long-term basis. The refinancing of the mortgage payable in 2015 is nonadjusting event that requires disclosure in the notes to the financial statements.
3-7.
(OPAL COMPANY)
Current assets consists of
Cash (400,000 + 20,000 - 30,000 + 25,000 + 540,000)
Accounts receivable (net) 800,000 + 30,000 – 150,000
Inventories (1,200,000 – 40,000)
Prepaid insurance (250,000 – 50,000)
Total current assets at December 31, 2015
OR
Reported total current assets
Bank overdraft
Cash for purchase of plant site
Unreplenished petty cash expenses
Goods held on consignment
Cash surrender value of life insurance
Total current assets at December 31, 2015
3-8.
(AQUAMARINE COMPANY)
15
P 955,000
680,000
1,160,000
200,000
P2,995,000
P4,580,000
20,000
(1,500,000)
(15,000)
(40,000)
(50,000)
P2,995,000
Chapter 3 – The Statement of Financial Position
16 and Notes to the Financial Statements
Reported totals
(a) Sinking fund cash
(b) Treasury shares
(b) NCA held for sale
(c) Cash fund for taxes
(d) Advances and
commissions payable
(e) Provision for damages
Correct totals
3-9.
Current
assets
P3,500,000
3,000,000
140,000
P6,850,000
P4,880,000
(PERIDOT COMPANY)
Cash
P536,000
80,000
FA
at FVPL
P500,000
210,000
(12,000)
P2,738,000
Accounts
receivable
P3,285,000
(180,000)
P616,000
P550,000
P3,105,000
P3,080,000
Inventory
P3,500,000
120,000
135,000
P3,755,000
(ZIRCON COMPANY)
1.
2.
3.
4.
C
A
C
A
5.
6.
7.
8.
P136,000
98,000
217,500
3,500
P455,000
P124,000
16,000
150,000
17,000
60,000
B
C
A
A
9.
10.
MULTIPLE CHOICE QUESTIONS
Theory
MC1
MC2
MC3
MC4
MC5
MC6
MC7
MC8
Non-current
liabilities
P2,700,000
380,000
50,000
Current assets:
Accounts receivable (net)148,000 – 12,000
Citibank current account
Inventories
Office supplies
Total current assets
Current liabilities:
Accounts payable
Income tax payable
Advances from customers
Accrued interest on bonds payable
Provision for warranties
Working capital
3-11.
Current
liabilities
P2,400,000
140,000
210,000
Reported amounts
(a) Post dated check recorded
(b) Increase in market value
(c) Goods shipped FOB
destination
(d) Goods out on consignment
Correct balances, Dec. 31, 2015
3-10.
Non-current
assets
P8,000,000
380,000
(500,000)
(3,000,000
D
A
A
A
A
C
D
D
MC9
MC10
MC11
MC12
MC13
MC14
MC15
MC16
C
C
B
D
C
D
B
C
MC17
MC18
MC19
MC20
MC21
MC22
MC23
MC24
16
D
A
C
C
D
C
C
A
367,000
P 88,000
A
B
Chapter 3 – The Statement of Financial Position
17 and Notes to the Financial Statements
MC25
B
Problems
MC29
MC30
MC31
MC32
MC33
MC34
MC35
MC36
MC37
MC38
MC39
MC40
MC41
MC42
A
B
B
D
C
B
C
B
A
A
A
C
D
A
MC43
MC44
MC45
MC46
MC47
MC48
MC49
MC50
MC51
MC52
MC53
MC54
MC55
MC56
A
D
A
C
B
C
B
B
C
B
A
C
B
B
(200,000-50,000) + 120,000 + 79,000 + (280,000– 60,000) =569,000
3,740,000 + 50,000 – 4,000 + 100,000 – 180,000 + 50,000 = 3,756,000
2,680,000 + 50,000 + 100,000 +50,000 – 1,000,000 = 1,880,000
4,014,000 – 9,000 - 150,000 = 3,855,000
137,000+90,000+92,000+(122,000+7,000–6,000)+136,000+12,000=590,000
13,000+ 102,000+ 7,000 + 120,000 +4,000+50,000+28,000 = 324,000
376,000 + (2,000,000+100,000 – 8,000) = 2,468,000
(1,125,000+65,000) + 136,000 + 96,000 + 150,000 + (750,000/5)=1,722,000
360,000 + 480,000 – 30,000 – 12,000 + 90,000 + 120,000 = 1,008,000
450,000 + 750,000 – 90,000 + 240,000 = 1,350,000
2,160,000 – 250,000 + 224,000 + 830,000 + 970,000 = 3,934,000
980,000 + 108,000 + 720,000 = 1,808,000
160,000 + 50,000 + 110,000 + 300,000 + 10,000 = 630,000
(490,000 – 25,000) + (380,000 – 200,000) + (1,250,000 – 500,000) + 100,000 +
900,000 + 80,000 = 2,475,000
25,000 + 500,000 + 200,000 + 3,750,000 = 4,475,000
675,000 + (2,695,000 – 500,000) + 2,185,000 = 5,055,000
1,801,000 + (654,000 – 475,000) = 1,980,000
13,360,000–11,180,000–654,000=1,526,000; 1,526,000+3,350,000=4,876,000
(1,200,000 – 200,000) + 1,500,000 + 25,000 = 2,525,000
500,000 + 550,000 – 250,000 = 800,000 + 1,000,000 + 250,000 + 450,000 = 2.5M
150,000 + (2,100,000 – 500,000 – 80,000) + (1,600,000 – 200,000)=3,070,000
(550,000 – 95,000) + 800,000 + (800,000 X 12% X 7/12) + 6,500 = 1,317,500
8,700,000 – (4,000,000 – 2,000,000 + 5,000,000 – 1,000,000) =2,700,000
175,000 + 136,000 + 820,000 + 153,000 + 366,000 = 1,650,000
250,000 + 140,000 + 228,000 + 248,000 = 866,000
525,000 – 400,000 + 300,000 + 1,020,000 + 1,200,000 + 450,000=3,095,000
(950,000 x 2.50) + 2.5M + (10M x 12% x 3/12) + (12M + 30M – 25M) = 22,175,000
AR: 247,000 – 40,000 + (58,000 x 1.25) = 179,500
Invy: 220,000 + (40,000 x 75%) + 22,000 = 272,000
PPE: 3,200,000 – 1,200,000 = 2,000,000
17