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PRTC AFAR Final PB
BSA (Batangas State University)
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ADVANCED FINANCIAL ACCOUNTING AND REPORTING
FINAL PRE-BOARD EXAMINATION
DE LEON/DE LEON/ALENTON
April 26, 2022
Multiple Choice. Select the letter that corresponds to the best answer. This examination consists of
70 items only. (Please ignore the extra answer options in the answer sheet after number 70.) The exam
is good for three (3) hours. Good luck!
1. A partnership's income-sharing ratio
a. applies to partnership income after salaries and interest are deducted
b. applies to partnership income before salaries are deducted.
c. applies partnership income after salaries are deducted but before interest is deducted.
d. applies to partnership income before both salaries and interest are deducted.
2. When can the bonus method be applied?
a. When a partnership is formed
b. When a new partner is added to the partnership
c. When an existing partner retires from the partnership
d. The bonus method can be applied in all three of the above circumstances
3. In what manner do the remaining partners share in the bonus paid toa withdrawing partner?
a. In proportion to, their residual profit and loss ratios
b. Equally
c. In proportion to their capital account balances
d. The partner with the greatest capital account is assigned the bonus
The following condensed balance sheet is presented for the partnership of Art and Bea, who share profits and
losses in the ratio of 60:40, respectively:
Cash
P
45,000
Accounts payable
P
120,000
Other assets
625,000
Art, capital
348,000
Bea, loan
30,000
Bea, capital
232,000
Total
P
700,000
Total
P
700,000
The assets and liabilities are fairly valued on the balance sheet. Art and Bea decide to admit Ces as a new
partner with 20% interest.
4. What amount should Ces contribute in cash or other assets?
a. P110,000
c. P140,000
b. P116,000
d. P145,000
5. Instead of admitting a new partner, Art and Bea decide to liquidate the partnership. If other assets are sold
for P500,000, what amount of the available cash should be distributed to Art?
a. P255,000
c. P327,000
b. P273,000
d. P348,000
On December 31, 1998, the partners of MNP Partnership decided to liquidate their business. Immediately
before liquidation, the following condensed balance sheet was prepared:
Cash
P 50,000
Noncash assets 900,000
Total
____
P 950,000
Liabilities
P 375,000
Nieva, loan
80,000
Perez, loan
25,000
Munoz, capital (50%) 312,500
Nieva, capital (30%)
107,500
Perez, capital (20%)
50,000
Total
P 950,000
6. The noncash assets were sold for P400,000. Assuming Perez is the only solvent partner, what amount of
additional cash will be invested by Perez? (rounded to the nearest peso)
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a. P 37,143
b. 25,000
c.
5,250
d.
0
The partners of the R & E Partnership started liquidating their business on July 1, 2022, at which time the
partners were sharing profits and losses 40% to R and 60% to E. The balance sheet of the partnership
appeared as follows:
R & E Partnership
Balance Sheet – July 1, 2022
Assets
Cash…………………….
P 8,800
Receivable………………
22,400
Inventory…………...…..
39,400
Equipment…. P65, 200
Accumulated
depreciation 30, 800 34, 400
Total……………………
P105, 000
Liabilities & Capital
Accounts payable…………
P32, 400
R, capital………………… P31, 000
R, drawing…………
5,400
25, 600
E, capital………………… .P33, 200
E, drawing……………………. 200
33, 000
E, loan……………………………………
14, 000
Total……………………………… P105, 000
During the month of July, the partners collected P600 of the receivables with no loss. The partners also sold
during the month the entire inventory on which they realized a total of P32,400.
7. How much of the cash was paid to R’s capital on July 31, 2022?
a. P -0c. P5, 400
b. 25, 600
d.
320
8. It refers to the implementation of a business plan to restructure or rehabilitate a corporation with the hopes
of increasing company value. In most cases, it involves changing the entity’s capital structure.
a. transformation
c. reorganization
b. mutation
d. translation
9. The total unsecured liabilities without priority can be computed as
a. Unsecured creditors without priority plus deficiency of assets pledged to partially secured creditors
b. Unsecured creditors without priority less estimated realizable value of assets pledged to partially secured
creditors
c. Sum of administrative expenses, unpaid employee salaries and benefits, and taxes and assessments.
d. Total liabilities less priority claims.
10. It is a financial report which shows information on the progress of the liquidation process of a corporation.
a. statement of affairs
c. statement of realization and liquidation
b. statement of liquidating affairs
d. statement of changes in net assets
The following was taken from the Statement of Affairs of Paradigm Company at August 30, 2022:
Assets pledged with fully secured creditors
Assets pledged with partially-secured creditors
Free assets
Liabilities with priority
Fully - secured liabilities
Partially-secured liabilities
Liabilities without priority
P 71,000
12,500
11,000
3,000
69,000
20,000
18,000
11. The estimated deficiency to unsecured amounts is
a.
P 15,500
c. P10,550
b.
P 15,150
d. P10,050
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12.
The estimated amount payable to partially-secured liabilities is
a.
P14,450
c. P15,441
b.
P 14,045
d. P14,540
13.
The estimated amount payable to liabilities without priority is
a.
P7,059
c. P9,750
b.
P 5,790
d. P9,570
The following data were taken from the statement of realization and liquidation of Mendoza Corp. for the
quarter ended September 30, 2031
Liabilities to be liquidated 285,000
Supplementary charges
169,100
Liabilities not liquidated
210,000
Supplementary credits
192,500
Assets acquired
136,000
Liabilities liquidated 158,000
Assets to be realized 107,500
Assets realized
175,000
Liabilities assumed
83,000
The beginning capital balances of ordinary shares and retained earnings are P102,000 and P29,600,
respectively. A net income of P87,400 for the period.
14. How much is the beginning balance of cash?
a. P293,000
b. 209,100
c. 241,600
d. 309,100
15. Statement 1 (S1): The balance of the Allowance for Overvaluation of Inventories: Branch ledger account is
deducted from the balance of the Investment in Branch account in the separate balance sheet of the home
office.
Statement 2 (S2]: If the home office bills shipments of merchandise to the branch ai 25% above home office
cost and the adjusted balance of the Allowance for Overvaluation of Inventories: Branch ledger account is
P20,400, the amount of branch inventories at billed prices is P81,600.
a. S1 - True; S2 - True
b. S1 - True; S2 - False
c. S1 - False: S2 - True
d. S1 - False: S2 - False
Home office bills its branch for merchandise shipments at 30% above cost.
The following are some of the account balances on the books of home office and its branch as of December 31,
20X0:
Home Office Books
Branch Books
Inventory, January 1
35,000
101,500
Shipments from Home Office
263,900
Purchases
1,575,000
350,000
Shipments to Branch
253,750
Branch Inventory Allowance
91,875
Sales
2,100,000
1,260,000
Operating Expenses
507,500
192,500
Per physical count, the ending inventory of the branch is P73,500 including goods from outside purchases
of P48,475; the ending inventory of the home office is P210,000.
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16. What is cost of goods available for sale of the branch?
a. P715,400
b. P781,375
c. P689,500
d. P638,750
17. What is the total ending inventory to be shown on the combined financial statements?
a. P118,475
b. P277,725
c. P328,475
d. P280,000
.
18. What is the combined net income for the year?
a. P957,950
b. P871,850
c. P891,975
d. P942,725
PAPSY CORPORATION purchases all the outstanding shares of MAMSHIE COMPANY on January 2, 2021 for
P385,000 cash. On this date the stockholders equity of MAMSHIE is as follows:
Share capital, P10 par
Paid-in capital in excess of par
Retained earnings
P175,000
87,500
175,000
Any excess of the fair value of net assets over the fair value of the investment is attributable to MAMSHIE’s
building which is currently overstated in its books. All other net asset items of the acquired company are fairly
valued at the acquisition date. The building has an estimated life of 10 years from January 2, 2021 without
salvage value.
The condensed trial balances of the affiliated companies on December 31, 2021 appear as follows:
PAPSY
P 420,000
210,000
1,050,000
385,000
(708,750)
(525,000)
(315,000)
(446,250)
(367,500)
210,000
78,750
8,750
--
Current assets
Land
Building (net)
Investment in MAMSHIE
Current liabilities
Ordinary shares, P3 par
Share capital, P10 par
Paid-in capital in excess of par
Retained earnings, Jan. 2, 2021
Sales
Cost of goods sold
Operating expenses
Dividends declared
Totals
19. Compute the consolidated net income for 2021.
a.
P75,520
c. P72,550
b.
P70,525
d. P75,250
20. Compute the consolidated Retained Earnings at December 31, 2021.
a.
P517,250
c. P515,270
b.
P525,170
d. P512,750
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MAMSHIE
P 302,750
210,000
283,500
(367,500)
(175,000)
( 87,500)
(175,000)
( 70,000)
61,250
17,500
--
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21. Working paper eliminations are entered in
a.
Both the parent company’s and the subsidiary’s accounting records
b.
The parent company’s accounting records only
c.
Neither the parent company’s nor the subsidiary’s accounting records
d.
The subsidiary’s accounting records only
22. What date should be used as the acquisition date for a business combination?
a.
The date when the acquirer signs the contract to purchase the business
b.
The date when the acquirer obtains control of the acquiree
c.
The date when all the contingencies related to the transaction are resolved
d.
The date when the acquirer purchased more than 20% of the stock of the acquiree
On January 1, 2021, GININTUANG PUSO CORPORATION acquired 80% of the outstanding shares of BAGAL
SULONG COMPANY for P743,750. At this date, the stockholders’ equity of BAGAL SULONG follows:
Ordinary shares, P5 par
APIC
Retained earnings
P 350,000
175,000
175,000
P 700,000
The net assets of BAGAL SULONG on January 1, 2021 were fairly valued. GININTUANG PUSO assigned the full
fair value to the non-controlling interest at the date of acquisition in analyzing the fair value of its investment.
Selected information over the first two (2) years of affiliated operations follows:
•
Intercompany merchandise sales are summarized as follows:
Date
Transaction
Sales Amount
GPR
In 2021
Downstream
Upstream
Downstream
Upstream
P 61,250
35,000
56,000
52,500
30%
25%
30%
25%
In 2022
•
Purchaser’s
Remaining Ending
Inventory
P 15,750
6,125
10,500
5,250
Condensed trial balances of the two (2) companies on December 31, 2018 follow:
GININTUANG
BAGAL SULONG
PUSO CORP.
COMPANY
Current assets
P 1,428,000
P 387,275
Investment in BAGAL SULONG
743,750
--Equipment, net
1,891,750
262,500
Buildings, net
1,592,500
332,500
Goodwill
105,000
--Liabilities
(1,123,500)
(186,025)
Common Stocks, P1 par
( 437,500)
--Ordinary shares, P5 par
(350,000)
APIC
(2,187,500)
(175,000)
Retained earnings, January 1, 2022
(1,933,750)
(245,000)
Sales
(1,540,000)
(1,102,500)
Dividend income
( 42,000)
--Cost of goods sold
1,232,000
882,000
Other expenses
227,500
141,750
Dividends declared
43,750
52,500
Totals
P
0
P
0
23. Compute the consolidated net income for 2022.
a.
P 195,125
c. P215,915
b.
P 251,195
d. P161,043
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24. Compute the amount of the consolidated net income for 2018 attributable to the parent’s shareholders.
a.
P 175,500.50
c. P195,030
b.
P 145,249
d. P143,482.50
25. Compute the amount of consolidated net income attributable to the non-controlling interest
a.
P 19,624.50
c. P 20,885
b.
P 15,794
d. P 15,732.50
On January 1, 2020, West Corporation purchased 80% of the common stocks of Fast Company. Separate balance
sheets for the companies at acquisition date are as follows:
West Corp
Fast Co.
FMV
Cash
P 12,000
P 119,000
Accounts receivable
72,000
13,000
Inventory
66,000
19,000
29,000
Plant assets, net
230,000
120,000
140,000 (remaining life – 5 years)
Investment in Fast
196,000
_________
Total assets
P 615,000
P 271,000
Accounts payable
P103,000
P 71,000
Capital stock
400,000
150,000
Retained earnings
112,000
50,000
Total equities
P 615,000
P 271,000
26. Goodwill (income) to be recorded by West Corp.
a. P 45,000
c. P 0
b. (P 26,000)
d. (P 34,000)
27. Total assets on the consolidated balance sheet
a. P 735,000
c. P 720,000
b. P 931,000
d. P 705,000
28. Non-controlling interest in net assets as of January 1, 2020
a. P 39,200
c. P 46,000
b. P 40,000
d. P 49,000
CORPORATION will present consolidated financial statements in its Philippine peso functional currency.
In this connection, selected items from the Thailand subsidiary’s financial statements translated / re-measured
in Philippine peso are as follows:
Historical
Closing
Average
Accounts receivable
Pp 12,000
Pp 12,500
Pp12,250
Inventories
15,000
17,500
16,250
Furniture and equipment, net
22,500
23,000
22,750
Patents
75,000
78,000
76,500
Marketable securities, at
market
5,000
5,500
5,250
Prepaid rent
10,000
12,500
11,750
Revenues
850,000
820,000
Cost of sales
500,000
525,000
Various expenses
250,000
212,500
Depreciation expense
2,000
2,200
2,100
29. Compute the amount of total assets that must be reflected in the consolidated balance sheet.
a.
P149,000
c. P140,500
b.
P140,000
d. P194,500
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30. Compute the net income that must be reflected in the consolidated income statement.
a.
P 84,000
c. P 80,500
b.
P 80,400
d. P 85,000
31. The currency of the primary economic environment in which the entity operates is called
a.
Functional currency
b.
Presentation currency
c.
Foreign currency
d.
Local currency
32.
a.
b.
c.
d.
Which of these considerations would not be relevant in determining the entity's functional currency?
The currency that influences the costs of the entity
The currency in which finance is generated
The currency in which receipts from operating activities are retained
The currency that is the most internationally acceptable for trading
The TAGALOG CORPORATION purchases merchandise from a foreign exporter on November 15, 2017 for FC
100,000, payable in that currency on January 15, 2018. TAGALOG predicts the Philippine peso might probably
weaken against the foreign currency over the 60-day period and entered into a hedge of the exposed foreign
currency amount against the risk of exchange losses. The hedging relationship was designed in a way that it
would be fully effective thru the entire hedge period, and selected a forward contract for that purpose.
The following are relevant spot and forward rates at selected dates.
Spot rates
Forward rates
11/15/17
P0.4295
P0.4325
12/31/17 01/15/18
P0.4245 P0.4345
P0.4300 P0.4345
33. How much should TAGALOG CORPORATION report as transaction gain or (loss) on its Accounts payable
(in FC) at December 31, 2017 (its current year-end)?
a.
P500
c. P(300)
b.
P250
d. P(250)
34. How much amount was Due from the Broker as at December 31, 2017?
a.
P43,000
c. P42,450
b.
P43,250
d. P43,450
35. How much transaction gain or (loss) should TAGALOG CORPORATION report when the Accounts
payable (in FC) was settled in 2018?
a.
P500
c. P (500)
b.
P1,000
d. P(1,000)
36. How much was the transaction gain or (loss) recognized on the forward contract at December 31, 2017?
a.
P500
c. P(300)
b.
P250
d. P(250)
37. How much was the over-all transaction gain or (loss) over the hedging relationship.
a.
P500
c. P(300)
b.
P250
d. P(250)
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The SAN AGUSTIN BUILDERS started work on three job sites during the current year. Any costs incurred are
expected to be recoverable. Data relating to the three jobs are given below:
Estimated
Collection from
Contract
Actual Cost
Cost to
Billings on
Customers
Site
Price
Complete
Contract
Cebu
P 500,000
P 375,000
P 500,000
P 500,000
Bohol
600,000
254,167
P 381,250
180,000
100,000
Davao
250,000
100,000
100,000
150,000
100,000
38. Calculate the net amount to be reported on the balance sheet for the above projects under the
percentage of completion method:
a.
Contract Liability
P (11,250)
b.
Contract Liability
P (13,750)
c.
Contract Asset
P 13,750
d.
Contract Asset
P 11,250
39.
a.
b.
c.
d.
Calculate the net amount to be reported on the balance sheet for the above projects under the zero
profit method.
Contract Liability
P (11,250)
Contract Liability
P (13,750)
Contract Asset
P 13,750
Contract Asset
P 11,250
CONCRETE CONSTRUCTION COMPANY began construction work in 2021 for a project with a contract price of
P8,000,000. CONCRETE uses the cost-to-cost percentage of completion method. The financial for 2021 relating
to the contract shows the following:
Accounts receivable
Construction in Progress
Progress billings to date
Gross profit earned in 2021
P 500,000
1,600,000
1,500,000
200,000
40. Calculate the following items for the year 2021.
Cash Collections
Cost incurred to date
a.
P 1,000,000
P 1,400,000
b.
P 7,500,000
P 1,400,000
c.
P 1,000,000
P 1,600,000
a.
P 1,400,000
P 1,600,000
41. The percentage of completion of a construction contract is based on all of the following, except
a.
The proportion that contract costs incurred for work performed to date bear to the estimated total
contract costs.
b.
Survey of work performed.
c.
Completion of a physical proportion of the contract work.
d.
Progress payments and advances received from customers.
42. Financial statements of nonprofit organization (NPO) includes all of the following, EXCEPT
a.
Statement of changes in equity
b.
Statement of financial position
c.
Statement of activities
d.
Statement of cash flows
43. Net assets that are restricted by the governing board of a non-government, not-for-profit organization are
reported part of:
a.
Unrestricted net assets
b.
Any of these, depending on the terms
c.
Permanently restricted net asset
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d.
Temporarily restricted net assets
44. The Commission on Audit (COA) is responsible for
a. the formulation and implementation of the national budget with the goal of attaining the nation’s socioeconomic objectives.
b. receiving and keeping national funds and managing and controlling the disbursements thereof.
c. directly implementing the projects of the government.
d. promulgating accounting and auditing rules and regulations.
45. Entity A, a government entity, receives authorization to disburse funds not to exceed ₱1B in a specified
period. This event can be described as
a. Notice of Cash Allocation
b. Allotment
c. Appropriation
d. Adontknowcation
46. Entity A, a government entity, receives notice that out of its ₱10B approved budget for the year, Entity A can
incur obligations up to ₱4B in the first quarter. This event can be described as
a. Notice of Cash Allocation
b. Allotment
c. Appropriation
d. Amnotsurecation
47. Entity A, a government entity, receives notice that for the current year, the maximum amount it can spend
on maintenance and other operating expenses is ₱10B. This event can be described as
a. Notice of Cash Allocation
b. Allotment
c. Appropriation
d. Budgetication
BIGAY HILIG CORPORATION uses process costing in its operations and adopts the weighted average method in
costing its production. The Finishing department is the second and last stage before the product is transferred
to finished goods storage. Materials are added following inspection, which occurs at the end of the process.
Normal spoilage is expected to be 2% of good output (those that have passed quality control test).
The following data are available in relation to the production activities for the Finishing department for March,
2021.
In- Process, March 1 (75% converted)
Cost from the preceding department
Cost from this department
Materials
Labor and overhead
Received from the preceding department during March
Completed and transferred to finished goods
In-Process, March 31 (50% converted)
Lost units
Cost added in this department this month
Materials
Labor and overhead
Units
10,000
Pesos
P 38,000
40,000
38,000
11 ,000
1,000
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21,200
81,300
140,000
P 70,000
292,500
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Use the following analysis of actual units and equivalent units (EUP) for materials and conversion (determined
from the above data)
Equivalent Units of Production
Materials
Conversion
Actual Units
Completed and transferred
38,000
11,000
1,000
50,000
In-Process, March 31
Total spoilage
Total
38,000
----38,000
38,000
5,500
1,000
44,500
30. Compute the total cost of completed units transferred to Finished goods.
a.
P554,670
c. P545,760
b.
P554,770
d. P557,640
31. Compute the cost of units recognized as actual overhead and charged to Factory Overhead Control.
a.
P 11,960
c. P 11,690
b.
P 2,870
d. P 8,720
32. Compute the cost of units still in-process at March 31, 2021.
a.
P85,360
c. P 83,560
b.
P86,530
d. P 83,650
33. In computing the current period’s manufacturing cost per equivalent unit, the FIFO method of process
costing considers current period costs
a. only
b. plus cost of beginning WIP
c. less cost of beginning WIP
d. plus cost of ending WIP
FOREVERMORE INDUSTRIES manufactures products X, A, and K from a joint production process at a cost of
P58,800. Additional information for the current period follows:
Products
X
A
K
Units
Produced
800
600
400
1,800
Sales Value After
Further
Processing
P 40,000
34,200
32, 000
P 106,000
Estimated Costs
to Complete
To Sell
P 5,000
4,000
3,000
P12,000
P 4,000
4,200
2,000
P10,200
Units
Sold
700
382
350
1,600
52. Compute the amount of Joint cost allocated to Product A under the NRV /market value method.
a.
P18,900
c. P19,800
b.
P21,700
d. P 18,200
53. Compute the unit cost for Product A under the NRV method of joint cost allocation.
a.
P33.38
c. P 54.75
b.
P37.00
d. P 38,33
DATING GAWI CORPORATION has two (2) service departments, namely Service A and Service B and also two
(2) production departments, namely Production I and Production II. The budgeted costs of the service
departments are allocated to the production departments on the basis of the number of employees. Shown
below are the number of employees and the budgeted amounts for each department.
Department
Service A
# of Empl.
10
Budgeted Costs
P
40,000
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Service B
Production I
Production II
Totals
25
265
250
550
60,000
480,000
520,000
P 1,100,000
The company is to use the step method in the allocation of service department costs to the producing
departments, to begin with Service A’s cost.
54.
Compute the amount of cost allocated to Service B from the allocation of Service A’s cost.
a.
P0
c. P 1,852
b.
P1,143
d. P 1,413
55.
Compute the amount of cost allocated to Service A from the allocation of Service B’s cost.
a.
P0
c. P1,852
b.
P1,143
d. P1,582
56.
Compute the total amount of service department costs allocated to Production II.
a.
P48,543
c. P51,457
b.
P48,345
d. P51,475
The following information is determined on two jobs that are expected to be completed in the ensuing year.
Job # 901
Job # 902
Direct materials
P 5,000
P 12,000
Direct labor
2,000
2,000
Units to be produced
100
50
Number of set-ups
8
10
Number of inspections
22
15
Number of material moves
30
40
Number of engineering hours
25
50
57.
Using ABC methods in assigning overhead into the cost of production, determine the total overhead cost
of Job 901
a.
P2,790
c. P 2,640
b.
P2,790
d. P 2,640
58. Activity-based costing (ABC) first assigns costs to:
a.
Departments
b.
Products
c.
Activities
d.
Overhead
During 2021, for Job #444, BILIS GAWA MANUFACTURERS incurred the following costs for a rush production
order of 400 units of Product Y for customer BOBBY TAN II:
Direct materials (P330 per unit)
P 132,000
Direct labor (P400 per unit)
160,000
Factory overhead (applied at 150% of direct labor cost)
240,000
Total
P 532,000
Upon final inspection it was discovered that 25 units were defective and needed to be reworked for an estimated
total cost of P8,218. Another 15 units were spoiled and could no longer be reworked economically to the desired
specifications. The estimated fair value of the spoiled units was P15,960.
The production inefficiencies are deemed to have been a result of changing specifications by the customer.
However, the customer was willing to accept the remaining good units.
The company WILL REWORK the defective units and the customer’s order will be credited at 80% of the fair value
of the spoiled units.
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59. Compute the unit cost of Job #444 under Option A above.
a.
P 1,411
c. P 1,359
b.
P 1,330
d. P 1,370
60. Now assume the company was the one at fault. The defective units were reworked and the spoiled units
were sold for P12,000. Compute the unit cost of Job #444.
a.
P 1,411
c. P1,359
b. P 1,332
d. P1,330
61. DEF is the consignee for 1,000 units of product X for ABC Company. ABC should recognize the revenue from
these 1,000 units when
a.
The agreement between DEF and ABC is signed.
b.
ABC ships the goods to DEF.
c.
DEF receives the goods from ABC.
d.
DEF sells the goods and informs ABC of the sale.
A and B formed a joint operation. The following were the transactions during the year:
Total purchases
Total sales
Expenses paid
Other income
A
400
960
800
B
320
720
40
The joint operation was completed at the end of the year. Each joint operator is entitled to a 10% commission
on its purchases and a 20% commission on its sales. Any remaining profit or loss is divided equally.
62. How much is the profit (loss) of the joint operation?
a. 200,000
b. (200,000)
c. 180,000
d. (180,000)
63. On the cash settlement between the joint operators,
a. A pays B ₱368
b. B pays A ₱368
c. A pays B ₱428
d. B pays A ₱428
64. Mr. Pyromaniac obtained two fire insurances for his house. During the year, Mr. Pyromaniac’s house was
burned. The legal principle that prohibits Mr. Pyromaniac from relaxing and just watch the house burn is
a. Principle of proximate cause.
b. Principle of contribution.
c. Principle of loss minimization
.
d. Principle of indemnity.
65. SKEPTIC DOUBTFUL Co. obtained a fidelity bond for its cashier. During the year, the cashier embezzled funds
of SKEPTIC. The legal principle that prohibits SKEPTIC from claiming compensation directly from the cashier
is
a. Principle of subrogation.
b. Principle of contribution.
c. Principle of loss minimization.
d. principle of indemnity.
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On August 1, 2018, Aircon, Inc. consigned 10 2-horsepower outmoded air-conditioning units to Argy Trading, a
new consignee, at a cost of P12,000 each. Aircon also paid P4,000 freight for the shipment of the consignment
to Argy. The selling prices are: for instant cash , P16,000 each; and for a 3-month account, P17,400, with a
minimum down payment of P5,800. The account sales are to be made available only to AAA credit=type
customers. Commission to the consignee is 8% of collection. The consignee paid delivery expenses on the sold
units for P2,400.
On August 31, Argy Trading reported sales of 8 units, 5 units for cash and 3 units on account, each credit
customer paying the P5,800 minimum cash down payment.
66. How much cash was remitted by Argy Trading to Aircon, Inc on August 31, 2018?
a.
P69,808
c. P122,008
b.
P87,208
d. P128,200
67.
How much is the net profit recognized by Aircon, Inc. from the consignment sales of Argy Trading in
August, 2018?
a.
P19,208
c. P29,080
b.
P29,108
d. P 22,808
68.
How much is the cost of the consigned inventory in the possession of the consignee?
a.
P 24,800
c. P28,400
b.
P20,480
d. P28,040
69. On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial
franchise fee of ₱400,000. The non-refundable initial franchise fee was collected in full upon signing of the
contract. As of December 31, 20x1, CANOROUS has no remaining obligation or intent to refund any of the
cash received, all of the services pertaining to pre-opening activities to set-up the contract have been
performed and there are no other material conditions or obligations required of CANOROUS under the
franchise agreement.
If the promise to grant the franchise right is distinct and that the performance obligation is satisfied at a
point in time, how much revenue shall CANOROUS recognize in December 20x1?
a. 400,000
c. 0
b. 80,000
d. None of these
70. If the promise to grant the franchise right is distinct and that the grant of franchise provides the customer
the right to access the entity’s intellectual property, how much revenue shall CANOROUS recognize in
December 20x1?
a. 400,000
c. 0
b. 80,000
d. 6,667
End of Examination
(Pleases ignore the extra answer options in the answer sheet after number 70)
Thank you for participating in
Team PRTC Nationwide Online Open Final Pre-Board Examination for May 2022 LECPA!
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