Professional Documents
Culture Documents
SUPPORTING CC'''IUTAAIONS
5. D
Normal income Lax P100,000
Less : Unexpired etcess MCIT
2016 i',t5,0o0 - 5o, o00) 25,000
201r (100,000 - 60,000) 40,000 65, 000
Tax payable P 35, 000
17. D
value oi the frj.nge benefir P340,000
Monetary value of the fr:inge benefit (5Ot x 340,00C) P1-/0,000
lF:inge irenefit tax {110,000/63i x 32-ri P 80,000
25. C
Plofessionaf tas P300
GraveL and sand tari 20,000
U.5.A income tax for 2017 5C0,000
Road r.rser':r tax on hls delivery vans 50,000
l-ocai annuaL fixed Ea\ for his de_Iiwery vans 10,000
Tota I P 5308300
Basic personai exemption P50,000
Addit-ional enemption (any of the fcllowing dependents:
Czarina, Dianne, Eaith. Grace and Isaiah) (4 x 25,o00) 100, 000
Tc taI P150,000
51. B
Basic persorraf ex tion P 50,000
Additionaf exemption (Faith, and Isaiah) (3 x 25,OOO) 75,000
P1.25, 000
6)- A
Se Lling price P2,000,000
LeEs: Val"ue i.n the hands of the donor ( 100,000)
capital. gain P1,900.000
63. C
Domestic purcha-ses of goods (50O,O O x 5/6) Tp 50,000
rmpcltaEion.a T-
(700,000 x:12* = 84,000 x 5/6) 10,000
Paynent for services for a11 transactions
(450,000 x 129 = 54.000 x s/6) 45,000
Total P165,000
64 - C
Output tax on domestic sales (5,000,000 x 129) P600,000
Less: Input i:axes (see no. 50) 165,000
VAT payabfe 435,000
Less: vAT pajd for the firs! trro (2) months 300,000
lax payab-Le P135,000
55- A
Discount to senior citizens :1,0OO,OOO x 2Og) P200. 000
Service expenses 450,000
Salaries of senlor citizens 7AO , a0A
sFecrar oeoucElon ror salarles oI senlor crtlzens (15* x 15,000
1C0,000)
Assistance given under Adopt-a-School progia^ , r00, 000
special" deducijion lllaer aOopt-a- sCnool-l S Ot x -ftOlilo 50, u00
Other operatlng expenses (50C,000 - lOO,OOO) 400,000
Input tax on services allocated to vAT-exempE Gf,TEl-lJ7El 9,0a0
54,00J)
Total deductjble expenses P1,324,00J
66. B
Gross sales (5,000,000 + 1,000,000) P6,000,000
Less: cost of sal es
Beginning inventory 300,000
Add: Purchases (500,000 + 10,000* t,224,000
+ ?00,000 + 14, t00* )
TotaI 1, 524, 000
Less: tindfng rnventory 200,000 1,324 , AAA
4,676,AAA
I,ess: Deducui5le expenses tsee no. 52) 1,324 , AAA
Taxabte net i.come P3,352,00C
*Ioput tax on donestiq purchases allocated to VAT-exempt
l1/'6 x 60,000) P10, 000
*Input tax on importation of goods alfocated to VAT-
exemp: (1./6 x 34,000) P14. 000
END OE E:XI}'TINATIO}T
TAXATIOII - FINAL PRE-BOARD EXA}IINATION (BATCH 34)
ReSA
The Review School of Accountancrt
R. Papa cor. 5. H. Loyola S&,. fumpatoc, Manila
J Tel 6, 234-i9-A9 & 735-9A-oz
Advancd Financial Ac@urrb:Dg & Rep.tiog 9lu6on to
Final Prc- board Examina tion-34th
1.D ,
201a
10l17l20t9: Originat torward rate (90 days)..... ..............p 1.36
12131/2018i Current (remaining) forward rate (15 days)........................................ 1.43
Forex gain per unit....... ............._...................._._.................p .0.?
Multiplied by: Number of foreign curreocies....... ............. 10.000
Foreign exchange girin due to forward contract.. ..,..........g -lO0 (D)
20ag
12131/2018: Cunent (remaining) forward rate (15 days)........................................p 1.43
1/15/2019: Spot rate.... ............... 1.40
Forex loss per !nit........ .....F
....._.. . .03
Multjplied by: Number of foreign currencies-_._...................--_...._..............._.._......... 10.000
Foreign exchange loss due to foMard contract.. ......... ....e__:OOfOl
me forwatd rate b the rate quotd for the exchange of two cuffendes at d spetifrd future date. It
ditreE fom the spot ,ate beoause of the drrerenc in inteten rates io the tntemaibnal
financial
markets.
Aprehiun exisb on an foreign exchange forward when a @fty buys or setls forward at more than the
s@t aE. A dii@unt dis6 on ao foreign exchange foruard wheo a patty buys or sets foDerd
at less
than the spot raE
fur t@rding purpoes, prct iurns of dit@ung have no bearing at all meanlng there is no ned
Howevq for option @Dtract wherein the iriter assutw the responsibittty of
.y-^::!l alrr!:ryyl!
ncumnq toss, the wrner chages a fe alld a pEmium, Thus, dte pemlum-is the prie
@tendat
pid b aquirc the option.
fotward ,ata gehenttt, dilbrr lrom the spot ,ate, but aS ooe noves ctosg to
rye
dab (or tetderneht dab) the dtfetence tEh,,ren ti? ,pot ,t iriii-A*"rAthe expiration
runaiokg pedcd of the contact beames snallet, and smaller
mE for the
bnyatd Bte will have conyergd wid, dre spot ate.
s that at dte cxpiatbn date, the
Purchases 52,000
Shipments From home ofEce 108.000
Cost oF goods available for sale P 160,000
Less: Inventory, 12131/20x4 60.000 100.000
Gross profit P 92,000
Less: Exoenss (P76,000 + P24,000) 100.000
Net income, unadjusbed P( 8,000)
Add: O/eNaluation of CGS 10-000
Adjusted branch net income LZO00
4.8
Adunl l&orilole Eoui. Prod.- Mat.
IP- beoinoino 4,000
StarlEd in Process 48.000
5L000
FandT 30,000 1000/o 30,000
IP- erd 22.0m 1m% ?2,000
52-000 s, {m
Materials Cost per equivalent unit: (P2,000+P23,480)/52,000...............P .49
IP, end (CC): 22,000 x P.49 per unit............................-.....,.....................P-]OZ80
5.C
6.C
Amourt paid................. .........P 121,000
Rey*....................
Less: Book value of interest - ....... 115,000
Eonus b retiring partner--..,-............................... -......P 6-000
* Dom: P83,000 + (P408,000 - P360,0000) x 25olol + P20,000.............P 115,000
Joe: P77,000 + (P48,000 x 2so,6) = P89,000 - (P6,000 x 25l75)..........P 87,000
Rey: P180,000 + [(P48,000 x 50o/o) = P204,000 - (P6,000 x s0/75)]..P 200,000 (C)
7. B
Contiact oric p 4-ooo o00
Costs inornd each \ear fP2.000.000 + P1.000.000) P 1.rn0.000
Md: Co6t incuned in orio. years
Co6ts incuned to date P3,000_mo
Add: Estlmated co$ to comDlete 2_0{Y}-mo
Total estimated costs P5.000.000
Estrnated Gross Profit (h6s) P( 1.000.000)
Mu[idv bv: % of comDletion 1000/o
Recoonized Gross Proft (Lossl to date P(1.000.000 )
Less: Gmss Profit fLo6s) in Drior vear {-
Recoqnlzed Gross Profit (Loss) in current year P(1.000.000)
8.8
9.8
10. A
Contr{t Drice P 71 000 rYY)
CnsE indrrred each vear fP5.000.0O0 + P2.000.00O + P2-o00-0o0) P 9,000,000
Acld: Cost inorred in Drior veaB
Cosls incund to date P 9,000,000
Add: Estjmated cost to comDlete q_fi'x)_(no
Tobl eatirnated costs P 18.ffJ0-0m
Estirnated Gross Frofit (loss) P 3.000.000
MultiDlv bv: Yo of cornDlelon 9/18
Recoonized Gross Prorlt (Loss) to date -. P 1,500,000
Less: Gross Profit (Loss) in orior year {)
Rermnized Gross Profit (Loss) in current vear P1.500.000
11. B
P41,500-[(P3,000+6,000)+P14,000+(P3.50x3,600)]...........................P1,900
12. A
Mual Factory Overhead / Manufdcturing Overhead Control:
P2,300+P3,700+P19,400+P5,400.......................................................p30,800
Applled Manufacturing Overhead: P3.50 x 8,500........... .. ... . . .. . ............ 29,750
Underapplied Factory Overhead.......................................................................P1-05!
Adv.nd F rarrcial A@ut ting & Reportirrg hlution to FiDal Prebard 4? BaM, - prge j
13. A
'fftnslation fnb Fut ctiottal Currcnqt (lemq.al/Reffeasurement Method)
Philippine Peso:
- Functional Currency is the
15. A the total mantenance cost is deEnnine<1 by adding orchead @sB incufied in tle Maintenance
kpatunent p/us any share in the Utilitbs k@dment Muse of serr'ices provided to the Utlines
Depaftment
Notei Service provided tD (not'by').
16. C
17, D
18. D
fhe lonratd rdte generally diffeB fiom tlre tpot nE, but aS one moves (Joser to the expira bn
date (or setdemeot date) the difrence betwen the s@t ate and the bttuad BE for the rcnainioq
penM of the conttact b@rrret srrrallet arrd srnallct so that at the expiration date the forayard rate
wi haye converged with dr6 spt ate.
Ptot&ting agai|St an adverse change i4 the exchange aE betwen the order date (@rn nibnent date)
and the Eansdion daE is hdging a fim beign-curcDcyienominaed @mnituE tt
Cash Flow Hedge - Not applicable.
20. A
Fair value hedge - tri.ome Statement
10/02/2018: Origlnal fo^/ard rate (180 days)...........,..........,...............p .53
12131/2018: Current (remainlng) forward rate (90 days).................... .58
.05
Multiplied by: Number of foreign currencies...._...........:........................._ 1.000.000
Foreign exchange gain diie to foMard contrad - vs.......................... P:r51u000 (A)
Advdhd Finahcial Adounting & Reprting hlubbn to Fidal Prcboard -34 Batch - page 4
21. B
Work In Process
DL 5,750 100%
OH 4,600 / 80o/o
:
FIFO
-5,500
Received. F and l_ 1000/o 5.500
IP. end 400 50% 200
600 E% 150
6.500 5.850
FIFO
IP. beoinnino.F and T 6,000 700k 4,200
Received, F and T 8,000 100o/o 8-000
IP, end 3,000 50% 1,500
1,500 75% 1.125
Normal lost 1,000 0ry6 0
1q.000 14 pS
84,000 (84,000)
31- A
B c Total
5 lnterest on bo. aaDital 2.500 1,250 1,250 1.000 6,000
Salaries 5.000 3.000 8-00{'
Balance (remainder) 5.000 5.000 3,334 16,667
Mdition?l profit
1,663 1,663
12.500 6,000 32333
34- B
Contract Price....,...........,.........
,,,,,,,, ', ,,,,,,', ,,,..P 800,000
x: GPo,6 (14.560/52.000)..
520/r
Estimated Gmss Profrt.. .
Adarrd Fiaandrl A@ant.ng & Reportirrgt Solution to Etttl fu.da? bH, - pagc 6
35. B
35. I
I
5ince, tuth antrfiuibtts cao fu utt/ized (purpse can be lufil@) within the currcnt year (before the cut
otr date 12/31,/2019). thea both of them should also be Eclassified as unrcstictd Net Assets.
38. A i
Current Rate Method Temporal t.{ethod
LCU peso
is Functional Currency is Functional Currenc/
p15,000
P15,000 = Preadjusted foreign = Preadjusted foreign
exchange loss exchange lo55
5,000 = Foreign currency 6,000 = Foreign currency
transaction loss transaction loss
(P100,000 - P106,000) 20.000 = Remeasurement qaln
e?,L@ = Foreiqn exchange e!!pQ! = Net roreign
toss exdEnge loss
Notei The term "restatement" used by foreign subsidiary is an indication that the temporal
remeasurement method is usd.
44, c
Invest nent.l/1/20x4 P105,000
Add: Share an net income - 20x4 (P45,000 x 80o/o) 36,000
L6s: Dividefids tcd-'ivd 12.000
lnvestrnent, 12! 31/2Cx4 P129,000
Add: Share in net income - 20x5 (P60,000 x 80%) 48,000
Less: DiMdends/celvad $n0!
Investmenl 12131/20x5 el59.00!
41. C
42. C
43. C
44. C
The tnvesEnent in Dover as of December 31 is as follows:
Acquisitjon cost, January 1, 20xs P 600,000
Add (deduct):
Sh3re in net incorne (P32O000 x 25%) 80,000
Share in dividends (P80,000 x 25%1 (20,000)
Amotiration of allocated excess (P250,000 x 25%) /10 years ( 6.250)
lnvesEnent balance on December 31, 12131/20x5 Pisl,zu
45. A
Park current asse8 P 70,000
Strand current assets.. 20,000
Excess inventory fair value 15,000
Consolidated current assets P!q5,o@
46. C - .since the only auat:lzblo answet is urrder ftrll goodwil melhod, dren ignoE dre term
proptdonrto beeis wharein tha at stvct ,tould be PgZ@o (PBq@O + Pl3,ooo)
Park stockholders' eouity P80,000
NCI(full):
8V of SHE - S .............. .............................n50,000
Adjustments to reflect fair value (lnventory)...................................:15-0!0
FV of SHE - S................ ..................,-........P65,000
x: Multiplied by: NCIo/..,.............,.......... ,.. 2oo/o
NG (partial).................. ...... ....................P13,000
Add: Ncl on full{oodw (P10.,000 - P8,000)................................. 2.00!
Non-controlling interest at farr value (20olo x P75,000).................:. 15,000
Total stockholders' equaty e95@
47, A
48, C - since, the donor put no restriction on the donation, therefore, it is classified as Unrestricted Net Assets.
49. 0
CoEt (remains to be the same regardless ol upstream or downstream sates)............. .E2J@&0
Accumulated deoreciation, 12131/2018r
Accumulate{, depreciation, V112018.
Add: 2018 deore{lation - P2,000,000/20 yea6, original |ife...................: 100.000 P--g&J)00
Advand FinaDci.l A@unb@ & R.ponirrg gtutioo b fi,ral tuetuatd -54 *ad, - pge Z
s0. c
5r. B
Consolidated Cost of Sales:
Cost of sales betbre consolidation:
..............-.-...
Parcon..... ..P 800,000
5he11v................ . ....
--..-....-.-.-.......-.... .--.- --...---....-... olo.ooo
Combined Cost of Sales ......... .....,P1,440,000
Less: Interclmpany Cost of Sales (or Purch) to be eliminated..-........,..................... 400,000
Eliminatingentryforl00%RPBIofP**(EIof2017)........................ 20,000
Add: Eliminating entry for 10090 UPEI of P*'r (EI of 2018).......... . ............... ........, 25,000
Consolidated Cost of 9les.........-....-..-................ ........ ......&1950!a
53. B
Common stock - Mustano Commnv P 100.000
Retained eaminos - Mustano Comoanv 50.000
Book value of stockholdery eouity - Musbno Commny P 150,000
Adjushents to refbct fair \.dlue (over/ undervaluauon
of assets and liaulities) - P10.000 x 70% 7.000
Fair value of stockholders esuN of subsidiary P 157-000
Multiplied by: Non-conuollinq lnterEt Dercentaqe 20%
Non-controllino interest rDartlal) P 31,400
Add: NG on fullroodwill (P58.000 - P54,4O0) 3.600
Nonontrollinq interest - tull oood\,rillt
, tdtu vith ahc .DNot gi@ pcr FobLrn, tiDc, it is highs
L l5,m0
than thc ttCI of
fv-srtE ofsulBidrb,y
54. B
Fre Lssets:
. A5sets pledged to fully secured liabilities (P150,000 - P60,000)..................P 90,000
Free4ssels................... ...... 80.000
Total FreeAsseb.......... . .. .............P170,000
Less: Unsecured liabilities with priority...:............... ........ ............ 14.000
Net Free Assets...... ...... .. ... .. .. .. ..P156,000
Divided by: Unsecured Liabilities wathout priority:
Partjally secured laabilities (P120,000 - P104,000)........ ... ... . ..P 16,000
Add: thscured liabllities without priority..................................... 224.000 240.000
Expected Recovery % of Unsecured Liabilities: Pl56,000/P240,000.......,................. 65%
Estimaed payment tD Partially secud Creditors: P104,000 + 65% (P16,000)...-...P11!EE0
55. B
Actual
IP. beqinnino 20,000
Slarted in Process 1m.000
r28_000
56. A- IYPPV: (P25,200/6,000 = P4.20 - P4 = P.20 uno x 6,000 units = P1,200 unfavorable
57. B - MPUV: P.20 unl X 7,100 units. ...-.............P 1,420 unfavorable
58. O - Since there as a parent subsidiary relatiorEhip that exists and subsidiaries are included in the CFS, any
intercompany balances should be eliminated in full,
59. A
lob 102:
Direct rnaterials............. P 12,000
Directlabor................... -.-.-....,.....-.........-.-..-. 2.000
Overhead:
Machine Stup: P20,000/200 = P100 x 2.....................,...................P 200
Inspection: P130,000/6,500 = P20 x 10............ 200
l"laterial Moves: P80,000/8,000 = P10 x 10....... 100
Engineering: P5O000/1,000 = P50 x 50.......................,.................. 2.500 3.000
Prcduction/Manufacturing Costs...... .. P 17,000
Divided by: Units comp|eted............................ 50
Cost per unit under ABC E:tla
60. I
Franchisee frequently purciases all of the equipment, producB, and supplies from the fmnchisor
The frandrsor would account for these sales as if, it would be a product sales. Sometimes,
however, the franchise agreement granE U|e frdnchisee the right to make bargain purchases of
equipment or supplies after the initjal frdnchise fee is paid. If the barqain Orice as lower that the
normal selling price of the same prcduct or it dos not provide the franchisor the reasonabte profit.
then, a portjon of the initial franchise fee should be defend. The defened portion would be
acc(!.rnted for as adjusunent Of the selling price when the franchisee subsequenfly purchases the
eguipment or Supplies. Therefore, the amount of revenue would be t30,234 computed as follows:
6r. A
52. B
2019
12131/2018: Cur.ent (remaining) forward rate (120 days).....................,.P 1.187
4/30/2019: Spot rate.... ........,.-............................ 1.210
Forex loss per unit........ .................-......,.............P .023
Multiplied by: Number of foreign cunencies................-....................-........ 1-000 000
Foreign exchange loss due to speculation......... .PJ,@ (B)
ture0o eGhange lbtu/atds uN in spulations aE valud at dE drarrge in thc forward nb lor the
remaini1g life ofaE @ntract
63. D
s,300
14,000
Applied fdctory overhead (150% x P14,000)..... .. . . .. 21.000
E--30100
Since, the allowance for rework was irrcluded in the manufucturing overhead budget,
therefore, the rework cost should be charqed to factory overhead control.
64- C
20,000
493,000 a98,txlo ---------+a98,lxx)
15,000
65. B
Inci4entalty, the enty to r%otd the la1sactions relad to by-ptoduct t ou/d be as hlbw,
ShaE in ioint CosB (@rr6@ndi/M tdEtion in CEo. nain rydtct as sbd in the ombbml
work in Process - Soloc (by-product)................... .. ..-.................................... 75,000
work in Process - Coco (main product)......--.-.... 75,000
MV of by-product (P3 x 45,000)...................P 135,000
Less: FPC of by-product
(P30,000 + P22,500 + P7,500)...... 60.000
Npt aFvpnrp rprtrtinn ln arrn'(.o<t( P 75 nno
Advanad FaarchtA@urrfi ry & Rcponiog $fa6on b Finat Prebard.s{ BrH, - pge 70
Funher Pt@sslno Costs: i
Tlansfend to l aehousc/Stnbfrm:
By-product Inventory - So1oc..............--.....-.--... ,.--.....135(x)0
Work in Process - Soloc. 13s,000
56. C
Actual FOH......-----.....,--- P700,000\ conuollable
BASH: 38,000 units x 2 hours/unit = 76,000 hours > P a.000 uftt.
Fixed as b'rdgeEd (P3lhr. x 80,0m DL}|)........-P240,000 /
Variable; (P5lhr. x 76,000 DLH)............, ............ 456.000 696,000 \ Volume
\ P12.ooo unf.
Std. FOtl / Applied FOH: [76,000 hrs. x (P6 + P3)]....... 684,0A0 /
67. C - reler to No 66 for further computations.
68. C
The P5,000 000 are considered temporary restricted since it has a purpose which have not yet been
tulfilled.
The P2,000,000 prlncipal which had to be retalned (meaning to be held ln perpetuity - prmanent) is
ddsified as permanenw restrlcted, wlrlle the dMdends is dassified as tempordry restricted because of
purpose rcsulctlon, but t0 no avail, amount is not glven.
69. C
MV of By-product Zest. ..............................P 5
expense..........,
Less: Selling and adminlstrative 2
OpeGting protiL........... .-.......-............ I
Share in Joint aost per unit.................................. .............................P ,
* Units produced......... ..... 1.000
Share in Jolnt cost-....... .............-..................8_2J]gQ
70. A
Hvo. MV lt. Costs
Pep: 5,000 x (P50-P10)= P 200,000 x 50% = P100,000
Vim: 4,000 x (P40-P 5) = 1a0.000
LZA@o P170.000*
loint C0s6.........,........-- ..... . .......................P172,000
Less: loint costs allocated to 8y-product................ .................-........ 2.000
.loint costs to joint produd5............................... ...................,.......-.eg).@
i ReSA
The Review School of Accounbn.Y
R. Papa con S. H, Loyola SE Sampaloq Manila
j fel fl6, 73'r-394!, & 735-98-oz
-
2Ax4: 1P84.0@ x 8A%1 = P67 ,2A0 lPi ,440 x 30% x 80%) = P66.854.40
20x5: (P102.000 x80%) + (P I ,440 x 30% x 80%) - (P4,800 x 30% x 80%l = P80,793.60
20xd: lPll2.800x80%) + [P4,800 x 30% x 80%) - (P3,600 x 3070 x 80%) = P90,258.00
30. b - {P]4,400 + P432 - P],440 = Pl3.3t2)
Anolysis: Eliminoling enkiet
Upslrcom Solcsi l
So|es........................ ............................-. 14.400
lcost of Soles lor Purchoses).................,.,.. 14,400
I 00% RPBI of P: lP L 440 x 30% =
P a32l
Retoined Eornings - P, beginning (Cost Model)/
Investrnenl in S Compony (Equily Methodl.. ...... 345.60
NCt ......................... ..........................-_... 86.,t0
'Cost oi Soles
{Eeginning lnveniory in lncome Stotement).. 432-@
100% UPEI of P: (P4.800 x 30% = P1,440)
Cost olSoes (Ending lnvenlory in lncome Slotemeni)................. 1,440
lnventory {Ending lnvenlory in Bolonce Sheei).................. 1,440
3r. o - lhere ore no intercompony profit in 20x3 (pdor yeod, so need to odjusl reloined eomings.
32. o - P720.000 = P500.000 + P100,000 - P200,000 +P 20,0ff)
33- d
Corl method: P60,000 x 80% = P48,000
Equily Melhod:
Equity ln Subsidiory lncome/lnvestment lncome
26,00!
' P200,000 x % = P I00,000 x 20% = P20,000 x I00% {downnreorn) = p20,000
3.1. d - Downskeom siluotion
I S Componv's nei income trom own/sepoaole operolions
NCI%
^:
35o
Combined buildino omounh P650,000
Less: lntercompony goin 30.000
Consolidoted buildings Pd20-000
37. c
Solet p{ice P 45.000
Lesa: Book volue
Cosl Pr 00.000
Iess: Accumuloted depreciolion _8!"0@ 20.000
Unreolized qqin on sole P 25.000
Less: Reolized gqin - depreciolion (P25,000 / 5 yeors) x 2 yeors 10.000
Net unreolized gdin, l2l31/20x7 LIJ-000
AOVArr& nt ancial,ll@arrting & Rcpfting brutbn to QaE 2 -3? hdt - page 4
38_ b
Eliriinoting entries:
l2y3l /20x7: .ubsequenl lo dote of ocquisilion
neolized Golh lotlon
Accumuloied depreciolion 5.000
Depreciolion expense 5,m0
lP,a5,00O - leloo,0oo P8O,00o) = P25.o0O / 5yeoro'P4.o@-Pr.00O=Pto@
1,0@ 9.000
39. b
Monoge qn cxposed polilion:
Volue lhe lorword exchonge conhoct (FEC) ol ih foir volue, meosured by chonges in lhe
forword exchonge rote (FER). Note thol ihe question osks only for lhe eftecl on income irorn
ihe forword cont,'ocl tonsoction; lhus, ony eflect on income f.om the Ioreign cunency
denominoled occount poyoL' e is nol included in the onswer.
EER. l2/12/ra P.90
FER, l2l31/xil P.r3
AJE:
Forword Contoc I Receivoble 3.000
Foreign Exchonge G(,in 3,000
Revolue forword controcl:
P3,000 = I00,000 FCU x 1P.93 - P.to) chonge in forword roles
Foreign Exchonge Loss r 0.000
Account Poyoble r0.000
' Revolue toreign cuffency poyoble:
P10,000 = 100,C00 FCU x 1P.98- P.88: chonge in spol roles
40. b
Hedge ot o Firrr Commiiment
Volue FEC bosed on chqnges in lorword aoie.
A.'E:
:orword Conlrocl Receivoble 3,000
Fore.qn Exchchge Gdin 3.000
Revolue lorwo'd conkocl. rrsing ihb lorword roter.
For6ign Exchonge Loss 3,000
Flnn Commilmenl 3.000
Recognize lost on fkm commitmenl.
Agoin. nole lhol the queslion o.ks only oboul lhe etfect on income from ihe lorword
controct, nol the undedying firm commitmenl portion of the lrdnsoclion
41. b
Speculslion:
Voluc torwoid exchongc conhocl ol loL volue bo.ed on chonges ilr lhe torl^,ord rote
AJE:
Forlvord Conlrocl Receivoble 3.000
Forcign Exchdnge Goin 3.000
42. o
The peso is lhe funclionol curency, ro o remeosuremenl ior lemporol method] is
oppropdole. Cosh ond occounh receivoble ore monelory orsels remeosured oi cunenl
exchonge rote of P47,500 ond P95.000, respectlvely. lnvenlory is o nonmonelory ossel
(cd,fied ol mdrkel vd,ue) ore remeosured ol the currenl exchonge rote of P76,000. Lond
ond equlpmeni, bolh nonmonelory ossels {conied ol cosf) ore remeosured ot lhe
hisrodcoi exchonge roie or P54.000 ond Pl35.O0O. respeclively.
43. b
Becouso ihe iunciionol curency i5 lhe locol currency, o tronslotion (or cufienl role
melhod) is required. Allossels occounls ore lronsloled ot cur.ent rotes.
Advaod Fina0cial A@untiDg & Repfir'ng glution to Quiz 2 -3e Badr -pge 5
44. o
LCU - it is ossumed thol hisloricol roie iJ nol proclicoble (despile lhe presence of it). lhen
PAS 2l requires the use of overoge rote [(2,600,000 - 0)/10 yeoa x I.8LCU per peso =
P144,411)
Peso - expense reloled 1o nonmonelory osset such os depreciotlon rhould be
remeosured using the hi toricol exchonge role lexchonge role when lhe equlpment wos
ocquired), i.e., :
20x2; [],700,000 LCU - 0)/10 yeors = 170.000 ICU /].5 LCU per peso..Pl 13,333
20x3: (900,000 LCU - 0)/l 0 yeor5 = 90,000 tCU /1.6 LCt per peso...... 56.250
,olol.-...................... ............................,...-.Pli9-583
45. o
LCU - lhe cunen'l rote method h used since the lerm "honsloted" wos used, o honslolion
(or curent role method) Ir required. lnvgnlory occounl is lrons,ofed ol cunenl rote
{25,000 LCU / 2 LCU per peso = P12,500)
Peso - ihe peso is lhe funclionol c\rrency, !o o remeosurement lor femporol melhod) is
oppropriole. lnventory is o nonmonelory ossel lcoded ot cosi) is remeosured qt the
historicol exchonge rote ot 2.2 LCU per peso {25.000 LCU / 2-2 LCU per peso = Pl1,364)
46. a
LCU Feso
is Functiono Curencv is Funcliondl Clrnencv
P15.000 = Preodjusled foreign P 15,000 : Preodjusted foreign
exchonge loss exchonge loss
6.000 = Foreign cunency 6,000 = Foreign cunency
ironsoclion lo55 lronsoclion loss
l$100,000-$106,000) -2q.@ =Rerneosuremenlgoin
P2I-QoQ Foreign exchonge
= Bll@
Nel roreion =
lols exchonge loss
Noie: The term 'testotement" used by forelgn subsidiory is on indicoiion thol
the temporol or remeosurement melhod is used.
The greolesi friend of hulh is lime, her greolesl enemy is Prejudice, ond
het cont anl componion is Humiw.
Unless someone con look inlo lhe core of youl heqrl. qnd rce lhe degree of youl
pqssion, or look inio ihe deplhs of your soul ond lee the extent of your will, lhen
lhey hove no business lelling you whol you con or connol ochieve.
Becouse whlle they moy know lhe odd5. lhey do not know you.
There ore only lvo things in fhe wodd lo worry ovet: lhe lhings you con coahol,
ond the things you con'l co;nhol. Fix lhe firsl, forgel lhe second.
The lnvoriobli mork of wisdom is ,o s ee lhe miroculous in the common.
D
P360,000
Grant
Net .q310,000
Less: Estimated safvage value
Depreciable anount P305,000
- Estimated usefuf life 8 vears
13. A
14_D
seI.l.i:19 price P1r200,000
Historical value
Unrealized Gain io retained earnings P 400,000
16. B
t7- D
shale in the arnount of dividerd P180,000 x 209 P 36,000
Unrealized gain iP2, {00, 000 2, 15r,000 250,000
P28r6,OOa
18. B
19. C
20. c
Cost model: f,air val're nodel:
Historical cost P580,000 40 Years Historical cost P580,000
Depn-14-17 (58,00i1) ',Unrealize loss ( 30,000)
ca!rying value L2 /3r/ 71P522, AOO Eair value P550,000
rair wafue 510,000 Fair val.ue 510,000
Impaj.rment -IcsS P 12,000 Unrealized loss P 40,000
Depxeciation/r'ear 14, 500 Depreciation,/yr 0
P 26,504 Total expense P 40,000
2a. B
22. B
Beqinninq ba-Iance P860,000
Purchased during the current year 180,000
so:d during the curlen! yea! { 80,000)
Ending bafance P960,000
Less: Accmul3ted depieciation, end of year 450,000
carrying value of depreciabfe as3et P510,000
33_ D
Purchaseprice of a prani.M P e.00
Additional cost: Mailing cost 5. 00
Renirtance
Ne! .usEs ro oe sacrrf-ce in grving anay a plenLum -11_9-_9-9r
P 3-00
X totaL est:inated nwrber of preniuns to be qiven (see sch) 330.000
Preniun expense - 2 017 P990,000
45- A
2016 (P240,c00 - P45,000) x 303 = P 58,500
20ti (P210,C00 - P?5,000) r 24t - 32,400
201e {P150, O0o - P105, 000) " 24t = 10.800
ToEal DI01,700
46. A
Fai! value of shares i.ssued (200,000 shaleE x P12) P2,400,000
Less: Par value of shares issued {200,000 x P10) 2, 000, 000
share Premium P 400,000
],ess: Ilansaction Costs 80,000
Adjustd share prenjum 9_g,!qq
41 . C
Book value of liability:
PEinci.DaI P1,998, 000
,,ess: Eai! value of property L ?o-9!q-9-S
Ga-in on settlenent P 198. 000
48. B
49- B
Plan Iiabil-ity/PBo P1,140,000
( 690,000)
Accrue.i pension P 450.000
50. B
Current service cost P300,000
Intelest on actuarial benefi! obligation 164,00O
Inte:es! income on plan asset ( 80,000)
Retj.lement benefit cost to profit or toss P384- OO0
TotaJ. (P45,000,000)
Elinlnatlon of deficj.l thru Share plendum 30,000. 000
Eliminatton of deltciE Lh.ru share cdpital 15, 0 oo, 000
1- Ac- A. 2. An.. B.
Oepre.iation - SuiLlirts
6e9inninq Balancc, Cv 3,149,280
Multiply by: Oouble declining mtr 10Ya 314,92a
B!ilding Imprcvement
850,000
l'luluply by: Double declining r?te based
on AIdq s ehaininq life (16ysr) 12,5006 r06,250
Total .leprecjation .rPens.
,ttate: Tnfluqh tial aod e@r, o.e can figurc out b.ad oo thd at.rn oeo..-abg balance that fie belldinq hasrl@dy
aee^ depreciated fot 4 yea. as of oe@nher 31, 20r5. fnrs the building's rcmahing life as of )an6ry 1, 2016 is 16 yaa6.
--f=,,,rrl
Cash gnce of new automotive equipment 800,000
l6s: Cash payfrent made __rq:9p99l
Lade in allowancey'Fair value of old eqpt. 1s0,000
Ca.rying v.lu. oroB equpment
P500,000 - (500.000118/21)
Gair oh Eadein
14,000
AR (Zinc hc.) 14,000
{84'70)a(84,000/84)
b) Sales 42,000
AR (Y.nlce Co.) 42,0OO
salE with commitmedt to lnsaall is wlid oaly wha lnttatblion is @fipler.d,
t8,440
AR (Wnrie Co,) 18,840
d) SdB(250,c00/2,5oo!)'500u 5O,OOO
commislion expense (2,c00u rP100)a20vo 40.000
aR (Vi.or Corp.) 90,000
15. Anr. B-
Allorence for Bld debts, beg 52,500
Add: R6.overies 24,800
'foEI 77,300
Lessr Allow.nce for aad dbts, end (84,802)
Writc-off ol aR (14,2OO)
Addluqnal Write-of Per +dit 'ro:t-,too)
8ad D.bt Exp.ns. I (156,10211
,/A
r4 ErE .rrrt! rL lltrL. S(,LUIIOIIS GUIDE AUDITI'IG PROELEI'S;
FINAL PRE-6OARD EXAIIINATIONS BATCH 34 tREr{EOlESPENTLLA
I laaclEll:-ItsaloaL
Bank Reconciliation t2l31/2016
EANK EOOK
lJnadjuned balan<e 524,570 . 293,200
oeposit in tcnsit 54,500 250,000
Outstanding check (1sl,950) (15,600)
45,900 11,500 Boot emr (note.., undernited rceipo
22,500 Eook errcr (note b., overstated dlsb-)
Core<t aash b.l.n<. ( 15. ans. C) 577,020 581,600
____gEqqr Shortrge (17. Ans. B )
517.O2O
42. ans. c.
WaEnty expense 2014 {P4M.8Vo) 320,000
Lss; Actual@st paid rn 2014 (127,500)
Estioated wamntis payable, 2013 192,500
Wa.ranty expens! 2015 (P4.525t{.8%) 362,000
Lessi Achralcost paid in 2015 (233,750)
Estimated wardnties payabre, 201a 320,750
Wa@.ty expense 2016 (P5.275M'8%) 422,Otlo
Less: Adual @st pard ie 2016 (285.2s0)
Enimat.d wa...rtielpayable, 2016 flr-hd
Futre deductjble amounts creainq Oere.red Tax Asels
Enimated Prefrisms payable r05,000
Estimated wamnties payable, 2016
562,500
30vo
500,000
Ordinary shares 200,000
Sha.e premium _ Ordinary t0c,000
'220,OOO
4/20: Treasury shaB - Ordrnary
720,000