THEORIES

Audit of cash
1.
2.
3.
4.
5.

C
A
A
B
C

11.
12.
13.
14.
15.

C
B
B
A
C

21.
22.
23.
24.
25.

6.
7.
8.
9.
10.

B
A
B
B
A

16.
17.
18.
19.
20.

B
A
B
C
A

26.
27.
28.
29.
30.

Audit of receivables
1.
2.
3.
4.
5.

A
A
C
D
B

11.
12.
13.
14.
15.

C
B
A
C
A

21.
22.
23.
24.
25.

6.
7.
8.
9.
10.

D
C
D
D
D

16.
17.
18.
19.
20.

C
D
A
B
A

26.
27.
28.
29.
30.

Audit of inventories
1.
2.
3.
4.
5.

B
C
B
A
A

11.
12.
13.
14.
15.

D
A
C
D
C

6.
7.
8.
9.
10.

C
A
B
D
C

16.
17.
18.
19.
20.

C
D
B
D
B

B
D
D
D
B
E
B
A
C
C

C
A
C
A
D

31.
32.
33.
34.
35.

B
D
D
A
D

A
C
D
B
D

36.
37.
38.
39.
40.

C
B
D
A
C

Question 6 - 9
Note:

Scenario 1:

1.
2.
3.
4.
5.

Share right is measured at FAIR VALUE.

If Fair value is not given, then compute for THEORETICAL VALUE
then now you have two investments (investment in shares + share right
Single cost allocate to Investment in shares and share right using
If MV of shares is rights-on (meaning including share rights, deduct the value

MV of shares is rights-on (means including share rights)

Theoretical value =

Market value (rights-on) subsciption price

n
+
1

n = number of rights to acquire 1 share

+ 1 in denominator because the MV includes the share rights

Scenario 2:

MV of shares is ex-rights (means without share rights)

Theoretical value =

Market value (ex-rights) subsciption price

n
+
0

n = number of rights to acquire 1 share

no more + 1 in denominator because the MV does not includes share rights

answers:
6.
7.

P12 / share right

P3,900

8.
9.

MV
Shares
(1,200 x 148)
177,600
Share right(1,200 x 12)
14,400
192,000
P15 / share right
P4,459

Cost
3,900 (14,400 / 192,000)
52,000

AL VALUE of share right

ares + share right) at a single cost.
ight using relative fair value
hts, deduct the value of rights from MV to get MV of shares

udes share rights

14,400 / 192,000)