INTERIM REPORTING

Problem A
Blueberry Companys P190,000 net income for the quarter ended September 30, 2014, included the
following after-tax items:
A P120,000 gain on disposal of equipment, realized on April 30, 2014 was allocated equally to the
2nd, 3rd and 4th quarters.
A P32,000 cumulative effect loss resulting from a change in inventory valuation method was
recognized on August 4, 2014.
In addition, Blueberry paid P96,000 on February 1, 2014, for 2014 calendar year property taxes, of this
amount, P24,000 was allocated to the 3 rd quarter of 2014. For the quarter ended September 30, 2014,
how much should Blueberry report as net income? __________182,000
190,000 40,000 (gain on disposal) +32,000 = 182,000
Note: 32,000 is not reported in income statement but to statement of changes in equity.
Problem B
On March 15, 2014, Labuyo Company paid property taxes of P180,000 on its factory building for calendar
year 2014. On April 1, 2014, Labuyo made P300,000 in unanticipated repairs to its plant equipment. The
repairs will benefit operations for the remainder of the calendar year.
How much should be the total expenses to be included in Labuyos quarterly income statement for the
three months ended June 30, 2014? __________
45,000: (180,000/4) + 100,000: (300,000/3) = 145,000
Problem C
During the second quarter of 2014, Nile Company sold a piece of equipment at a P12,000 gain. What
portion of the gain should Nile Company report in its income statement for the 2 nd quarter of 2014?
__________12,000 in the period when it is realized.
Problem D
On July 1, 2014, Chicago Company incurred a loss of P300,000 on the disposal of an investment. The
operating income for full year ending December 31, 2014 was expected to be P500,000. In the income
statement for the quarter ended September 30, 2014, how much of this loss should be disclosed
separately? __________ 300,000 should not be allocated and reported in the interim period where it was
incurred.
Problem E
An inventory loss from a permanent market decline of P360,000 occurred in May, 2014. Blizzard
Company appropriately recorded the loss in May, 2014 after its March 31, 2014 quarterly report was
issued.
What amount of inventory loss should be reported in the quarterly income statement for the three months
ended June 30, 2014? __________360,000 reported in the interim period where the decline occurred.
Problem F
Blackhole Company operates in the travel industry and incurs costs unevenly through the financial year.
Advertising costs of P5,000,000 were incurred in February 1, 2014, and staff bonuses are paid at yearend based on sales. Staff bonuses are expected to be around P50,000,000 for the year; of that sum,
P7,000,000 would relate to the period ending March 31, 2014.
What costs should be included in Blackhole Companys quarterly financial report on March 31, 2014?
__________ and __________ Advertising costs of P5,000,000 and staff bonuses of P7,000,000
Problem G
An inventory loss from market decline of P900,000 occurred in April 2017. Oz Company recorded this
loss in April 2017 after its March 31, 2017 quarterly report was issued. P200,000 of this loss was
recovered by the end of the year. How should this loss and subsequent gain be reflected in the quarterly
statements of Oz Company? __________
900,000 loss included in the interim period ending on June 30 while the gain of P200,000 is included in
the interim period ending December 31.
Problem H
If the enterprise publishes interim financial reports quarterly on June 30, 2015, and the financial year ends
December 31, 2015, which is an incorrect interim reporting?
a.
Balance sheet as of the end of the current interim period and a comparative balance sheet as of
the end of the immediately preceding fiscal year.

b.
c.
d.

Income statement for the current interim period and cumulatively for the current financial year to
date, with comparative income statement for the immediately preceding year.
Cash flow statement cumulatively for the current financial year to date with comparative financial
statement for the comparative year-to-date period of the immediately preceding year.
Statement of changes in equity cumulatively for the current financial year to date with comparable
statement for the comparable year to date period of the immediately preceding year.
Answer is B. Answer should be: with comparative income statements for comparable interim
periods (current and year to date) of the immediately preceding financial year.

Problem I
An entity is preparing interim financial statements for six months ended June 30, 2017. In the interim
financial statements for the six months ended June 30, 2017, a statement of financial position and a
statement of comprehensive income for the six months ended June 30, 2017 shall be presented. In
addition, all of the following shall be presented except:
a.
a statement of financial position on June 30, 2016.
b.
a statement of financial position on December 31, 2016.
c.
a statement of comprehensive income for the half year ended June 30, 2016.
d.
a statement of cash flows for the half year ended June 30, 2016
Problem J
In considering interim financial reporting, how does the profession conclude that such reporting should be
viewed?
D
a.
As a "special" type of reporting that need not follow generally accepted accounting principles.
b.
As useful only if activity is evenly spread throughout the year so that estimates are unnecessary.
c.
As reporting for a basic accounting period.
d.
As reporting for an integral part of an annual period.
Problem K
In January 2011, Post, Inc. estimated that its year-end bonus to executives would be $720,000 for 2011.
The actual amount paid for the year-end bonus for 2010 was $660,000. The estimate for 2011 is subject
to year-end adjustment. What amount, if any, of expense should be reflected in Post's quarterly income
statement for the three months ended March 31, 2011? __________ 720,000/4 = 180,000