Acctg. Quizzesuntitled

Intermediate Accounting: Investments (Problems)
132 Questions
Test your knowledge. You have unlimited time to answer all the problems. Time yourself before
you begin to see how fast you can solve all the problems. This quiz only serves as a reviewer for
the entire chapter of investments in practical accounting 1. This is strictly for 2BSA only. The
questions are arranged randomly. Good luck!
Questions and Answers
1.
On December 31, 2009, Otter Company had investments in trading securities as follows:
COST MARKET VALUE Man Company 1,000,000
1,300,000 Kemo Company 900,000 1,100,000 Fenn
Company 1,100,000 900,000
3,000,000 3,300,000Otter's December 31, 2009 balance sheet should report the
following trading securities at:
A.
3,000,000
B.
2,900,000
C.
3,300,000
D.
2,800,000
2.
On January 1, 2009, Fredo Company purchased marketable equity securities to be held as

"trading" for P4,000,000. The company also paid commission to the stockbroker in the amount
of P100,000. No securities were sold during 2009. The market value of the equity securities on
December 31, 2009 is P4,500,000.What amount of unrealized gain on these securities should be
reported in the 2009 income statement?
A.
B.
300,000
C.
400,000
D.
500,000
3.
On January 1, 2009, Trix Company purchased marketable equity securities for P5,000,000 to be
held as "available for sale". The company also paid P200,000 in the form of transaction costs.
The equity securities had a market value of P4,600,000 on December 31, 2009. No securities
were sold during 2009.What amount of unrealized loss on these securities should be reported
in the 2009 statement of changes in equity?
A.
200,000
B.
400,000
C.
600,000
D.
4.
Rose Company was organized on January 1, 2009. At December 31, 2009, Rose had the
following investment portfolio of marketable equity securities:
TRADING AVAILABLE FOR SALE Aggregate Cost 3,000,000
4,500,000 Aggregate Market Value 2,400,000 3,700,000 Net
Unrealized Loss 600,000 800,000All of the declines are judged to
be temporary. What amount of unrealized loss should be shown as component of income and
shareholders' equity?
A.
Income: 600,000 Shareholder's equity: 800,000
B.
Income: 800,000 Shareholder's equity: 600,000
C.
Income: 1,400,000 Shareholder's equity: 0
D.
Income: 0 Shareholder's equity: 1,400,000
5.
During 2009, Scotch Company purchased marketable equity securities to be held as "available
for sale". Pertinent data follow: SECURITY COST MARKET VALUE
at 12/31/09 D 360,000 400,000 E
800,000 600,000 F 1,800,000
1,860,000 2,960,000 2,860,000Scotch appropriately
carries these securities at market value. The amount of unrealized loss on these securities in
Scotch's 2009 income statement should be:
A.
200,000
B.
140,000
C.
100,000
D.
6.
On its December 31, 2008 balance sheet, Fry Company appropriately reported a P100,000
unrealized loss. There was no change during 2009 in the composition of Fry's portfolio of
marketable equity securities held as "available for sale". Pertinent data are as follows:
SECURITY COST MARKET VALUE at 12/31/09 A
1,200,000 1,300,000 B 900,000
500,000 C 1,600,000 1,500,000
3,700,000 3,300,000What amount of loss on these securities should be
included in Fry's statement of shareholders' equity for the year ended December 31, 2009?
A.
B.
100,000
C.
300,000
D.
400,000
7.
During 2008 Carr Company purchased marketable equity securities as a trading investment. For
the year ended December 31, 2008, the company recognized an unrealized loss of P230,000.
There were no security transactions during 2009. Pertinent information at December 31, 2009
is as follows: SECURITY COST MARKET VALUE A
2,450,000 2,300,000 B 1,800,000
1,820,000 4,250,000 4,120,000In its 2009 income
statement, Carr should report
A.
Unrealized loss of P100,000
B.
Unrealized loss of P130,000
C.
Unrealized gain of P100,000
D.
Unrealized gain of P130,000
8.
The following information was extracted from December 31, 2009 balance sheet of Phil
Company:Noncurrent assets: Available for sale securities (carried at market)
3,700,000Shareholders' equity: Unrealized loss on available for sale securities
( 300,000)Historical cost of the long-term investment in available for sale securities was
A.
3,700,000
B.
3,400,000
C.
4,300,000
D.
4,000,000
9.
La Goon Company purchased the following securities during 2009:

CLASSIFICATION COST MARKET VALUE 12/31/09Security A Trading
900,000 1,000,000Security B Trading 1,000,000
1,600,000On July 31, 2010, the company sold all of the shares of security B for a total of
P1,100,000. As of December 31, 2010, the shares of security A had a market value of P600,000.
No other activity occurred during 2008 in relation to the trading security portfolio. What is the
gain or loss on the sale of security B on July 31, 2010?
A.
500,000 gain
B.
100,000 gain
C.
500,000 loss
D.
100,000 loss
10.
During 2009, Lava Company purchased trading equity securities as a short-term investment.
The cost and market value at December 31, 2009 were as follows: SECURITY COST
MARKET VALUEA - 1,000 shares 200,000 300,000B - 10,000 shares
1,700,000 1,600,000C - 20,000 shares 3,100,000
2,900,000 5,000,000 4,800,000Lava sold 10,000 shares of
Company B stock on January 15, 2010, for P130 per share, incurring P50,000 in brokerage
commission and taxes. On the sale, Lava should report a loss of
A.
300,000
B.
350,000
C.
400,000
D.
450,000
11.
On January 1, 2009 Libya Company purchased equity securities to be held as "available for sale".
On December 31, 2009, the cost and market value were: COST
MARKETSecurity X 2,000,000 2,400,000Security Y
3,000,000 3,500,000Security Z 5,000,000
4,900,000On July 1, 2010, Libya Company sold Security X for P2,500,000. What amount of gain
on sale of AFS securities should be reported in the 2010 income statement?
A.
B.
100,000
C.
400,000
D.
500,000
12.
On January 1, 2009, Cage Company purchased equity securities to be held as "available for sale".
The cost and market value of the securities were: COST MARKET VALUE
12/31/09 MARKET VALUE 12/31/10Security R 3,000,000 3,200,000
--------Security S 4,000,000 3,500,000 3,700,000Security T
5,000,000 4,600,000 4,700,000On January 31, 2010, Cage
Company sold Security R for P3,500,000.What is the gain or loss on the sale of Security R on
January 31, 2010?
A.
300,000 gain
B.
500,000 gain
C.
300,000 loss
D.
500,000 loss
13.
On January 1, 2009, Cage Company purchased equity securities to be held as "available for sale".
The cost and market value of the securities were: COST MARKET VALUE
12/31/09 MARKET VALUE 12/31/10 Security R 3,000,000 3,200,000
-------- Security S 4,000,000 3,500,000 3,700,000 Security T
5,000,000 4,600,000 4,700,000 On January 31, 2010, Cage
Company sold Security R for P3,500,000.What amount unrealized loss on these securities
should be reported in the 2010 statement of changes in equity?
A.
B.
600,000
C.
300,000
D.
200,000
14.
During 2009, Giant Company purchased trading securities as a short-term investment. The cost
of the securities and their market value on December 31, 2009 follow:SECURITY
COST MARKET VALUE A 650,000 750,000
B 1,000,000 540,000 C 2,200,000
2,260,000At the beginning of 2009, Giant had a zero balance in the market adjustment for
trading securities account. Before any adjustment related to these trading securities, Giant had
net income of P3,000,000. What is the net income after making any necessary trading security
adjustment?
A.
2,540,000
B.
2,700,000
C.
3,000,000
D.
3,300,000
15.
On January 1, 2009, Hemingway Company acquired 200,000 ordinary shares of Universe

Company for P9,000,000. At the time of purchase, Universe Company had outstanding 800,000
shares with a book value of P36,000,000. On December 31, 2009, the following events took
place: * Universe Company reported net income of P1,800,000 for the calendar year 2009. *
Hemingway Company received from Universe Company a dividend of P0.75 per ordinary share.
* The market value of Universe Company share had temporarily declined to P40.The
investment in Universe Company is classified as available for sale. What is the carrying value of
the investment on December 31, 2009?
A.
8,000,000
B.
9,000,000
C.
9,300,000
D.
9,450,000
16.
Letterman Company reported the following selected balances on its financial statements for
each of the three years 2009 - 2011: 2009 2010
2011Market adjustment - Trading securities 5,500,000 3,750,000
(1,200,000)Market adjustment - Available for sale securities (1,300,000) 900,000
1,350,000How much net unrealized loss should be shown in the 2011 income statement?
A.
1,200,000
B.
3,600,000
C.
4,500,000
D.
4,950,000
17.
Neil Company held the following marketable securities as trading investments at December 31,
2009: COST MARKET VALUE100,000 shares
of Company A nonredeemable preference share capital, par value P75 775,000
825,0007,000 shares of Company B preference share capital, par value P100, subject to
mandatory redemption by the issuer at par on December 31, 2010 690,000
625,000 1,465,000 1,450,000In the
December 31, 2009 balance sheet, trading securities should be reported at:
A.
1,400,000
B.
1,450,000
C.
1,465,000
D.
1,475,000
18.
Data regarding Bondoc Company's trading securities follow:

COST MARKETDecember 31, 2008 5,000,000
4,600,000December 31, 2009 5,000,000 5,800,000Differences
between cost and market value are considered temporary. The income statement for 2009
should report unrealized gain on these securities at
A.
B.
400,000
C.
800,000
D.
1,200,000
19.
Data regarding Baggy Company's available for sale securities follow:

3,500,000December 31, 2009 4,000,000 3,200,000Differences
between cost and market value are considered temporary. The shareholders' equity section of
the December 31, 2009 balance should report unrealized loss on these securities at:
A.
B.
300,000
C.
500,000
D.
800,000
20.
Data regarding Maggy Company's available for sale securities follow:

5,200,000December 31, 2009 5,000,000 5,900,000Difference
between cost and market value are considered temporary. The December 31, 2009 statement
of shareholders' equity should report unrealized gain on these securities at
A.
B.
200,000
C.
700,000
D.
900,000
21.
The following data pertain to the equity investments held by Doritos Company classified as
"available for sale":Cost 3,000,000Market value: December 31,
2008 2,400,000 December 31, 2009 3,200,000What amount
should be reported as unrealized gain in December 31, 2009 shareholders' equity?
A.
B.
200,000
C.
800,000
D.
1,900,000
22.
Banquet Company began operations on January 1, 2009. The following information pertains to
the company's December 31, 2009 portfolio of equity securities:
TRADING AVAILABLE FOR SALEAggregate cost 4,000,000
6,000,000Aggregate market value 3,700,000 5,500,000Aggregate
lower of cost or market value applied to each security 3,500,000
5,300,000The market declines are judged to be "other than temporary". What amount should
Banquet report as total loss on these securities in its 2009 income statement?
A.
B.
300,000
C.
500,000
D.
800,000
23.
Information regarding Trinity Company's portfolio of available for sale securities is as

follows:Aggregate cost - December 31, 2009 1,700,000Unrealized gains
- December 31, 2009 40,000Unrealized losses - December 31, 2009
260,000Net realized gains during 2009 300,000On January 1,
2007 Trinity Company reported an unrealized loss of P15,000 as a component of shareholders'
equity. In its December 31, 2009 shareholders' equity section of the balance sheet, Trinity
Company should report what amount of unrealized loss on these securities?
A.
B.
205,000
C.
220,000
D.
260,000
24.
Quezon Company acquired investments in available for sale equity securities for P5,000,000 on
January 1, 2008. On December 31, 2009, Quezon decided to reclassify the available for sale
securities as nonmarketable equity securities. On such date, a reliable measure of fair value of
the securities is no longer available. The market value of the securities was P4,500,000 on
December 31, 2008. In its 2009 statement of changes in equity, Quezon should report
unrealized loss on these securities at:
A.
B.
200,000
C.
250,000
D.
500,000
25.
Leviathan Company had investments in bonds with face value of P8,000,000. The bonds were
acquired at face value on January 1, 2008 and classified as "available for sale". The bond
investment had the following market value: December 31, 2008
7,500,000 December 31, 2009 7,200,000On December 31, 2009,
Leviathan decided to reclassify the bong investment as "held to maturity" as a result of a
change in intention and ability. What amount should be reported as unrealized loss on these
securities in the 2009 statement of changes in equity?
A.
B.
300,000
C.
500,000
D.
800,000
26.
Sumo Company had investments in marketable debt securities which were acquired at the face
value of P6,500,000 and classified as available for sale. On June 30, 2009, Sumo decided to hold
the investments to maturity and accordingly reclassified them from the available for sale
category on that date. The investments' market value was P5,750,000 at December 31, 2008,
P5,300,000 at June 30, 2009, and P4,900,000 at December 31, 2009.What amount of loss from
investments should Sumo report in its 2009 income statement?
A.
B.
450,000
C.
850,000
D.
1,200,000
27.
Sumo Company had investments in marketable debt securities which were acquired at the face
value of P6,500,000 and classified as available for sale. On June 30, 2009, Sumo decided to hold
the investments to maturity and accordingly reclassified them from the available for sale
category on that date. The investments' market value was P5,750,000 at December 31, 2008,
P5,300,000 at June 30, 2009, and P4,900,000 at December 31, 2009.What amount should Sumo
report as unrealized loss on these securities in its June 30, 2007 statement of shareholders'
equity?
A.
400,000
B.
450,000
C.
1,200,000
D.
1,600,000
28.
On January 1, 2008, Broker Company purchased "held to maturity" bonds with face value of
P5,000,000 for P4,562,000. The bonds are purchased to yield 10% interest. The stated interest
rate on the bonds is 8%, payable annually on December 31. On December 31, 2009, Broker
Company decided to reclassify the bonds as "available for sale". On such date, the carrying
value of the bonds is P4,680,000 after amortization of discount using the effective interest
method. The market value of the bonds on December 31, 2009 is P5,200,000.What amount of
unrealized gain on these securities should be reported in the 2007 statement of changes in
equity?
A.
B.
200,000
C.
520,000
D.
638,000
29.
The following investments are classified as trading unless otherwise stated and held by Peter
Company as of December 31, 2009, its first year of operation.
COST MARKETMarketable equity securities: Wicker Company
2,000,000 1,900,000 London Company 1,000,000
880,000 Peter Company 1,500,000 2,400,000 Eden
Company 2,500,000 2,300,000 Dixie Company
2,500,000 2,700,000 Kangaroo Company (redeemable preference share)
1,500,000 1,250,000Investment in stock rights Judy Company
500,000 400,000Marketable debt securities: Emu Company (convertible
bonds) 3,000,000 3,700,000 Moore Company
4,500,000 4,200,000Investment in Dixie Company represents 30% of outstanding
preference share capital. Total income reported by Dixie for 2009 amounted to
P10,000,000.Peter Company intends to hold its investment in Moore Company bonds to
maturity.How much income related to the investments should be reported in Peter Company's
income statement for 2009?
A.
130,000
B.
730,000
C.
2,870,000
D.
3,000,000
30.
On July 1, 2009, Salt Company exchanged a truck for 25,000 ordinary shares of Alas Company.
On that date, the truck's carrying amount was P2,500,000 and its fair value was P3,000,000.
Also, the book value of Alas' share was P60. On December 31, 2009, Alas had 250,000 ordinary
shares outstanding and its book value per share was P50. What amount should report in its
December 31, 2009 balance sheet as investment in Alas?
A.
1,250,000
B.
1,500,000
C.
2,500,000
D.
3,000,000
31.
On January 1, 2009, XYZ Company purchased 40,000 shares of TUV at P100 per share.
Brokerage fees amounted to P120,000. A P5 dividend per share of TUV had been declared on
December 15, 2008, to be paid on March 31, 2009 to shareholders of record on January 31,
2009. No other transactions occurred in 2009 affecting the investment in TUV shares. The cost
of the investment is:
A.
3,800,000
B.
3,920,000
C.
4,000,000
D.
4,120,000
32.
On January 1, 2008, Eve Company purchased as a long-term investment on 100,000 ordinary

shares of Miles Company for P40 a share. On December 31, 2008, the market price of Miles'
share was P35, reflecting a temporary decline in market price. On December 28, 2009 Eve sold
80,000 shares of Miles Company for P30 a share. For the year ended December 31, 2009, Adam
should report a loss on disposal of long-term investment of:
A.
400,000
B.
800,000
C.
900,000
D.
1,000,000
33.
Corn Company purchased 10,000 shares representing 2% ownership of Row Company on

February 15, 2009. Corn received a stock dividend of 2,000 shares on March 31, 2009, when the
carrying amount per share on Row's books was P350 and the market value per share was P400.
Row paid a cash dividend of P15 per share on September 15, 2009. In Corn's income statement
for the year ended October 31, 2009, what amount should Corn report as dividend income?
A.
150,000
B.
180,000
C.
880,000
D.
980,000
34.
Duff Company acquired 20,000 ordinary shares of Post Company on October 1, 2008, at a cost
of P4,400,000. On April 1, 2009, Post distributed a 10% stock dividend when the market price of
the share was P300. On December 30, 2009, Duff sold 2,000 shares for P640,000. For the year
ended December 31, 2007, how much should Duff report as gain on sale?
A.
40,000
B.
240,000
C.
400,000
D.
640,000
35.
During 2008, Lawin Company bought the shares of Burnwood Company as follows:June 1
20,000 shares @ P100 2,000,000December 1 30,000 shares @
P120 3,600,000
5,600,000The transactions for 2009 are:January 10 - Received cash dividend at P10 per
share.January 20 - Received 20% stock dividend.December 10 - Sold 30,000 shares at P125 per
share.The gain on sale of the shares assuming FIFO approach is:
A.
150,000
B.
550,000
C.
950,000
D.
1,150,000
36.
Woody Company owns 20,000 shares of Buzz Company's 200,000 shares of P100 par, 6%
cumulative, nonparticipating preference share capital and 10,000 shares representing 2%
ownership of Buzz's ordinary share capital. During 2009, Buzz declared and paid preference
dividends of P2,400,000. No dividends had been declared or paid during 2008. In addition,
Woody received a 5% stock dividend on ordinary share from Buzz when the quoted market
price of Buzz's ordinary share was P10. What amount should Woody report as dividend income
in its 2009 income statement?
A.
120,000
B.
125,000
C.
240,000
D.
245,000
37.
Knight Company received dividends from its share investments during the year ended
December 31, 2009 as follows: * A stock dividend of 4,000 shares from Parrot Company on
July 31, 2009 when the market price of Parrot's share was P20. Knight owns less than 1% of
Parrot's share capital. * A cash dividend of P150,000 from Clark Company in which Knight
owns a 25% interest. A majority of Clark's directors are also directors of Knight.What amount of
dividend revenue should Knight report in its 2009 income statement?
A.
B.
80,000
C.
150,000
D.
230,000
38.
Information pertaining to dividends from Rex Company's share investments for the year ended
December 31, 2009, follows: * On September 1, Rex received a P500,000 cash dividend
from Silo Company in which Rex owns a 30% interest. A majority of Rex's directors are also
directors of Silo. * On October 1, Rex received a P60,000 liquidating dividend from
Caveman Company. Rex owns a 5% interest in Caveman Company. * Rex owns a 2%
interest in Spear Company, which declared a P2,000,000 cash dividend on November 15, 2009,
to shareholders of record on December 15, 2009, payable on January 15, 2010.What amount
should Rex report as dividend income in its income statement for the year ended December 31,
2009?
A.
40,000
B.
100,000
C.
560,000
D.
600,000
39.
In 2009, Neil Company held the following ordinary share investments: * 30,000 shares of
Ash Company's 100,000 outstanding shares. Neil's level of ownership gives it the ability to
exercise significant influence over the financial and operating policies of Ash. * 6,000
shares of Pikachu Company's 300,000 outstanding shares.During 2009, Neil received the
following distributions from its investments:November 15 - P300,000 cash dividend from
Ash.November 30 - P15,000 cash dividend from Pikachu.December 31 - 3% stock dividend from
Pikachu. The closing price of the share on a national exchange was P150.What amount of
dividend revenue should Neil report for 2009?
A.
15,000
B.
42,000
C.
315,000
D.
342,000
40.
On March 1, 2009, Evan Company purchased 10,000 ordinary shares of Bruce at P80 per share.
On September 30, 2009, Evan received 10,000 stock rights to purchase an additional 10,000
shares at P90 per share. The stock rights had an expiration date of February 1, 2010. On
September 30, 2009, Bruce's share had a market value ex-right of P95 and the stock right had a
market value of P5. What amount should Evan report in its September 30, 2009 balance sheet
for investment in stock rights?
A.
40,000
B.
50,000
C.
100,000
D.
150,000
41.
Sushi Company owns 30,000 ordinary shares of Sashimi Company acquired on July 31, 2009, at
a total cost of P1,100,000. On December 1, 2009, Sushi received 30,000 stock rights from
Sashimi. Each right entitles the holder to acquire one share at P45. The market price of
Sashimi's share on this date, ex-right, was P50 and the market price of each right was P5. Sushi
sold its rights the same date at P5 a right less a P10,000 commission. The gain from the sale of
the rights should be reported by Sushi at:
A.
40,000
B.
50,000
C.
140,000
D.
150,000
42.
On January 1, 2009, Fork Company purchased 50,000 ordinary shares of Ovaltine Company for
P3,600,000. On December 31, 2009, Fork received 50,000 stock rights from Ovaltine. Each right
entitles the holder to acquire on share for P85. The market price of Ovaltine's share was P100
immediately before the rights were issued, and P90 a share immediately after the rights were
issued. Fork sold its rights on December 31, 2009 for P10 a right. Fork's gain from the sale of the
rights is:
A.
B.
100,000
C.
140,000
D.
500,000
43.
Eve Company owns 50,000 ordinary shares of Blend Company, which has several hundred
thousand shares publicly traded. These 50,000 shares were purchased by Eve in 2007 for P100
per share. On August 30, 2009, Blend distributed 50,000 stock rights to Eve. Eve was entitled to
buy one new share of Blend Company for P90 cash and two of these rights. On August 30, 2009,
each share had a market value of P 132 ex-right, and each right had a market value of P18.
What cost should be recorded for each new share that Eve acquired by exercising the rights?
A.
90
B.
114
C.
126
D.
132
44.
On February 15, 2009, Bart Company purchased 20,000 shares of Homer Company's newly
issued 6% cumulative P75 par preference share capital for P1,520,000. Each share carried one
detachable share warrant entitling the holder to acquire at P10, one ordinary share of Homer
Company. On February 15, 2009, the market price of the preference share ex-warrant was P72
and the market price of the share warrant was P8. On December 31, 2009, Bart sold all the
share warrants for P205,000. The gain on the sale of the share warrants was:
A.
B.
5,000
C.
45,000
D.
53,000
45.
Three Kings Company invested in shares of Eastern Company acquired as follows:

NUMBER OF SHARES COST2007 22,500
1,800,0002008 37,500 3,300,000In 2009, Three
Kings Company received 60,000 rights to purchase Eastern share at P80. Five rights are required
to purchase one share. At issue date, rights has a market value of P4 each and share was selling
ex-right at P96. Three Kings Company used rights to purchase 9,000 additional shares of Eastern
Company and allowed the rights not exercised to lapse. In determining the stock rights
exercised, assume the use of the first-in, first-out method. The amount to be debited to
investment account for the purchase of the 9,000 additional shares is:
A.
720,000
B.
824,000
C.
871,200
D.
873,000
46.
On January 1, 2009, Kent Company purchased 20% of Luther Company's ordinary shares
outstanding for P6,000,000. During 2009, Luther reported net income of P7,000,000 and paid
cash dividend of P4,000,000. The balance in Kent's investment in Luther Company account at
December 31, 2009 should be:
A.
5,200,000
B.
6,000,000
C.
6,600,000
D.
7,400,000
47.
On January, 1 2008, Wayne Company bought 15% of Parrot Company's ordinary shares
outstanding for P6,000,000. Wayne appropriately accounts for this investment by the cost
method. The following data concerning Parrot are available for the years ended December 31,
2008 and 2009: 2008 2009Net
income 3,000,000 9,000,000Cash dividend paid
None 10,000,000In its income statement for the year ended December 31, 2009, how
much should Wayne report as income from this investment?
A.
450,000
B.
1,350,000
C.
1,500,000
D.
1,800,000
48.
On January 1, 2008, Tough Company acquired 10% of Complex Company's ordinary shares
outstanding for P6,000,000. Tough appropriately accounts for this investment by the cost
method. Complex Company reported the following for the years ended December 31, 2008 and
2007: NET INCOME CASH DIVIDEND2008
400,000 02009 1,200,000
1,800,000In its income statement for the year ended December 31, 2009, Easy Company should
report dividend income at:
A.
0
B.
120,000
C.
160,000
D.
180,000
49.
In January 2009, Fatty Company acquired 20% of the outstanding ordinary shares of David
Company for P8,000,000. This investment gave Fatty the ability to exercise significant influence
over David. The book value of the acquired shares was P6,000,000. The excess of cost over
book value was attributed to a depreciable asset which was undervalued on David's balance
sheet and which had a remaining useful life of ten years.For the year ended December 31, 2009,
David reported net income of P1,800,000 and paid cash dividends of P400,000 and thereafter
issued 5% stock dividend. What is the proper carrying value of Fatty's investment in David at
December 31, 2009?
A.
7,720,000
B.
7,800,000
C.
8,000,000
D.
8,080,000
50.
On January 1, 2009, Bell Company paid P18,000,000 for 50,000 ordinary shares of Base
Company which represent a 25% interest in the net assets of Base. The acquisition cost is equal
to the book value of the net assets acquired. Bell has the ability to exercise significant influence
over Base. Bell received a dividend of P35 per share from Base in 2009. Base reported net
income of P9,600,000 for the year ended December 31, 2009. In its December 31, 2009 balance
sheet, Bell should report the investment in Base Company at:
A.
18,000,000
B.
18,650,000
C.
20,400,000
D.
22,150,000
51.
On January 1, 2009, Weller Company purchased 10% of Pea Company's outstanding ordinary
shares for P4,000,000. Weller is the largest single shareholder in Pea and Weller's officers are a
majority of Pea's board of directors. Pea reported net income of P5,000,000 for 2009 and paid
dividends of P1,500,000. In its December 31, 2009 balance sheet, what amount should Weller
report as investment in Pea?
A.
3,850,000
B.
4,000,000
C.
4,350,000
D.
4,500,000
52.
On January 1, 2009, Dryer Company acquired as a long-term investment a 20% ordinary share
interest in Epson Company. Dryer paid P7,000,000 for this investment when the fair value of
Epson's net assets was P35,000,000. Dryer can exercise significant influence over Epson's
operating and financial policies. For the year ended December 31, 2009, Epson reported net
income of P4,000,000 and declared and paid cash dividends of P1,600,000. How much revenue
from this investment should Dryer report for 2009?
A.
320,000
B.
480,000
C.
800,000
D.
1,120,000
53.
On July 1, 2009, Dino Company purchased 30,000 shares of Mammoth Company's 100,000
outstanding ordinary shares for P200 per share. On December 15, 2009, Mammoth paid
P400,000 in dividends to its ordinary shareholders. Mammoth's net income for the year ended
December 31, 2009 was P1,200,000, earned evenly throughout the year. In its 2009 income
statement, what amount of income from this investment should Dino report?
A.
60,000
B.
120,000
C.
180,000
D.
360,000
54.
On April 1, 2009, Zen Company purchased 40% of the outstanding ordinary shares of Ying
Company for P10,000,000. On that date, Ying's net assets were P20,000,000 and Zen cannot
attribute the excess of the cost of its investment in Ying over its equity in Ying's net assets to
any particular factor.Ying's 2009 net income is P5,000,000. Zen plans to retain its investment in
Ying indefinitely. Zen accounts for its investment in Ying by the equity method. The maximum
amount which could be included in Zen's 2009 income before tax to reflect Zen's "equity in net
income of Ying" is:
A.
1,400,000
B.
1,500,000
C.
1,850,000
D.
2,000,000
55.
On January 1, 2009, Ron Company purchased 40% of the outstanding ordinary shares of Kim
Company, paying P6,400,000 when the book value of the net assets of Kim Company equaled
P12,500,000. The difference was attributed to equipment which had a book value of
P3,000,000 and a fair market value of P5,000,000 and to building which had a book value of
P2,500,000 and a fair value of P4,000,000. The remaining useful life of the equipment and
building was 4 years and 12 years, respectively. During 2009, Kim Company reported net
income of P5,000,000 and paid dividends of P2,500,000. Ron Company shall report investment
income for 2009 at:
A.
1,000,000
B.
1,750,000
C.
1,800,000
D.
2,000,000
56.
On January 1, 2009, Ken Company purchased 30% interest in Barbie Company for P2,500,000.
On this date Barbie's shareholders' equity was P5,000,000. The carrying amounts of Barbie's
identifiable net assets approximated their fair values, except for land whose fair value exceeded
its carrying amount by P2,000,000. Barbie reported net income of P1,000,000 for 2009 and paid
no dividends. Ken accounts for this investment using the equity method. In its December 31,
2009 balance sheet, what amount should Ken report as investment in associate?
A.
2,100,000
B.
2,200,000
C.
2,760,000
D.
2,800,000
57.
Seed Company bought 40% of Adam Company's outstanding ordinary shares on January 1, 2009,
for P4,000,000. The carrying amount of Adam's net assets at the purchase date totaled
P9,000,000. Fair values and carrying amounts were the same for all items except for plant and
inventory, for which fair values exceeded their carrying amounts by P900,000 and P100,000,
respectively. The plant has an 18-year life. All inventory was sold during 2009. During 2009,
Adam reported net income of P1,200,000 and paid a P200,000 cash dividend. What amount
should Seed report in its income statement from its investment in Adam for the year ended
December 31, 2009?
A.
320,000
B.
360,000
C.
420,000
D.
480,000
58.
On January 1, 2009, Annie Company purchased 20% of the outstanding ordinary shares of Duke
Company for P4,000,000 of which P1,000,000 was paid in cash and P3,000,000 is payable with
12% annual interest on December 31, 2010. Annie also paid P500,000 to a business broker who
helped find a suitable business and negotiated the purchase.At the time of acquisition, the fair
value of Duke's identifiable assets and liabilities were equal to their carrying values except for
an office building which had a fair value in excess of book value of P2,000,000 and an estimated
life of 10 years. Duke's shareholders' equity on January 1, 2009 was P 13,000,0000.During 2009,
Duke reported net income of P5,000,000 and paid dividend of P2,000,000. What amount of
income should Annie Company report for 2009 as a result of the investment?
A.
620,000
B.
810,000
C.
885,000
D.
960,000
59.
On January 1, 2009, Southern Company purchased 40% of the outstanding ordinary shares of
Northern Company for P3,500,000 when the net assets of Northern amounted to P7,000,000.
At acquisition date, the carrying amounts of the identifiable assets and liabilities of Northern
were equal to their fair value, except for equipment for which the fair value was P1,500,000
greater than its carrying amount and inventory whose fair value was P500,000 greater than its
cost. The equipment has a remaining life of 4 years and the inventory was all sold during 2009.
Northern Company reported net income of P4,000,000 for 2009 and paid no dividends during
2009. The maximum amount which could be included in Southern's 2009 income before tax to
reflect Southern's "equity in earnings of Northern Company" should be:
A.
1,250,000
B.
1,350,000
C.
1,600,000
D.
1,700,000
60.
On January 1, 2009, Beijing Company purchased 30,000 shares of Lake Company's 200,000
outstanding ordinary shares for P6,000,000. On that date, the carrying amount of the acquired
shares on Lake's books was P4,000,000. Beijing attributed the excess of cost over carrying
amount to patent. The patent has a remaining useful life of 10 years.During 2009, Beijing's
officers gained a majority on Lake's board of directors. Lake reported earnings of P5,000,000 for
the year ended December 31, 2009, and declared and paid dividend of P3,000,000 during 2009.
On December 31, 2009, Lake's ordinary share was trading over-the-counter at P15.What is the
carrying value of the investment in Lake's Company on December 31, 2009?
A.
6,000,000
B.
6,100,000
C.
6,300,000
D.
6,750,000
61.
On July 1, 2009, Miles Company purchased 25% of Wally Company's outstanding ordinary
shares and no goodwill resulted from the purchase. Miles appropriately carries this investment
at equity and the balance in Miles' investment account was P1,900,000 at December 31, 2009.
Wally reported net income of P1,200,000 for the year ended December 31, 2009, and paid
dividend totaling P480,000 during 2009. How much did Miles pay for its 25% interest in Wally?
A.
1,720,000
B.
1,870,000
C.
2,020,000
D.
2,170,000
62.
Blue Company owns 30% of the outstanding ordinary shares and 100% of the outstanding
noncumulative nonvoting preference shares of Pink Company. In 2009, Pink declared dividend
of P1,000,000 on its ordinary share capital and P600,000 on its preference share capital. What
amount of dividend revenue should Blue report in its income statement for the year ended
December 31, 2009?
A.
B.
300,000
C.
600,000
D.
900,000
63.
On January 1, 2009, Autobot Company bought 30% of the outstanding ordinary shares of
Decepticon Company for P5,000,000 cash. Autobot Company accounts for this investment by
the equity method. At the date of acquisition, Decepticon Company's net assets had a carrying
value of P12,000,000. Assets with an average remaining life of five years have a current market
value that is P2,500,000 in excess of their carrying value. The remaining difference between the
purchase price and the value of the underlying equity cannot be attributed to any identifiable
tangible or intangible asset. Accordingly, the remaining difference is allocated to goodwill. At
the end of 2009, Decepticon Company reported net income of P4,000,000. During 2009,
Decepticon Company declared and paid cash dividends of P1,000,000. What is the balance of
Autobot Company's investment in Decepticon Company on December 31, 2009?
A.
5,000,000
B.
5,400,000
C.
5,750,000
D.
5,900,000
64.
Tom Company purchased 35% of Jerry Company on January 1, 2009 for P11,200,000 when
Jerry's book value was P32,400,000. On that day, the market value of the net assets of Jerry
Company equaled their book value with the following exceptions:
BOOK MARKETEquipment 7,000,000
5,600,000Building 1,600,000 2,600,000The
equipment has a remaining useful life of 5 years, and the building has a remaining useful life of
10 years. Jerry reported net income of P3,200,000 and cash dividends of P1,000,000 for 2009.
What is the investment income that will be reported in Tom Company for the year 2009?
A.
987,000
B.
1,120,000
C.
1,183,000
D.
1,260,000
65.
On January 1, 2009, Beige Company purchased 25,000 shares of the 100,000 outstanding
shares of Falls Company for a total of P1,000,000. At the time of the purchase, the book value
of Falls Company's equity was P3,000,000. Falls Company assets having a market value greater
than book value at the time of the acquisition were as follows: BOOK
VALUE MARKET VALUE REMAINING LIFEInventory 400,000
500,000 Less than 1 yearEquipment 2,000,000 2,500,000
5 yearsGoodwill 0 400,000 IndefiniteFalls
Company's net income in 2009 was P700,000. Dividends per share paid by Falls Company
amounted to P3 in 2009. What is the balance of Beige Company's investment in Falls Company
on December 31, 2009?
A.
1,000,000
B.
1,050,000
C.
1,075,000
D.
1,100,000
66.
Uno Company acquired 20,000 shares of Dos Company on January 1, 2009 at P120 per share.
Dos Company had 80,000 shares outstanding with a book value of P8,000,000. The difference
between the book value and fair value of Dos Company on January 1, 2009 is attributable to a
broadcast license intangible asset. Dos Company recorded earnings of P3,600,000 and
P3,900,000 for 2009 and 2010, respectively, and paid per-share dividend of P16 in 2009 and
P20 in 2010. Uno Company has a 20-year straight-line amortization policy for the broadcast
license. What is the balance of Uno Company's investment in Dos Company on December 31,
2010?
A.
2,400,000
B.
3,515,000
C.
3,555,000
D.
4,275,000
67.
Seko Company has 100,000 ordinary shares outstanding. Kobe Company acquired 30,000
shares of Seko for P120 per share in 2007. The securities are being held as long-term
investment. Changes in retained earnings for Seko for 2009 and 2010 are as follows:Retained
earnings (deficit), January 1, 2009 (500,000)Net income for 2009
700,000Retained earnings, December 31, 2009 200,000Net income
for 2010 800,000Cash dividend paid on December
31, 2010 (400,000)Retained earnings, December 31, 2010
600,000What is the balance of Kobe Company's investment in Seko Company on December 31,
2010?
A.
3,600,000
B.
3,780,000
C.
3,930,000
D.
4,080,000
68.
On January 1, 2009 Mary Company purchased 40% of the outstanding ordinary shares of Letter
Company paying P2,560,000 when the book value of the net assets of Letter equaled
P5,000,000. The difference was attributed to equipment which had a book value of P1,200,000
and a fair value of P2,000,000, and to building with a book value of P1,000,000 and a fair value
of P1,600,000. The remaining useful life of the equipment and building was 4 years and 12
years, respectively. During 2009, Letter reported net income of P1,600,000 and paid dividends
of P1,000,000. What is the carrying amount of the investment in Letter Company on December
31, 2009?
A.
2,550,000
B.
2,700,000
C.
2,800,000
D.
3,050,000
69.
Chalk Company acquired a 40% interest in Film Company for P1,700,000 on January 1, 2009.
The shareholder's equity of Film Company on January 1 and December 31, 2009 is presented
below. JANUARY 1 DECEMBER 31Share capit al
3,000,000 3,000,000Revaluation surplus
1,300,000Retained earnings 1,000,000 1,500,000On January
1, 2009, all the identifiable assets and liabilities of Film Company were recorded at fair value.
Film Company reported profit of P650,000, after income tax expense of P350,000 and paid
dividend of P150,000 to shareholders during the current year.The revaluation surplus is the
result of the revaluation of land recognized by Film Company on December 31, 2009.
Additionally, depreciation is provided by Film Company on the diminishing balance method
whereas Chalk Company uses the straight line. Had Film Company used the straight line, the
accumulated depreciation would be increased by P200,000. The tax rate is 35%What is the
carrying value of Chalk Company's investment in Film Company on December 31, 2009?
A.
1,700,000
B.
1,900,000
C.
2,320,000
D.
2,420,000
70.
Mass Company owns 20% of Dub Company's preference share capital and 80% of its ordinary
share capital. Dub's square capital outstanding at December 31, 2009 is as follows:10%
cumulative preference share capital 5,000,000Ordinary share capital
7,000,000Dub reported net income P3,000,000 for the year ended December 31, 2009. What
amount should Mass record as equity in earnings of Dub for the year ended December 31, 2009.
A.
2,000,000
B.
2,100,000
C.
2,300,000
D.
2,400,000
71.
Dude Company purchased 10% of Pal Company's 100,000 outstanding ordinary shares on
January 1, 2009 for P500,000. On December 31, 2009, Dude purchased an additional 20,000
shares of Pal for P1,500,000. The was no goodwill as a result of either acquisition, and Pal had
not issued any additional shares during 2009. Pal reported earnings of P3,000,000 for 2009.
What amount should Dude report in its December 31, 2009 balance sheet as investment in Pal?
A.
1,700,000
B.
2,000,000
C.
2,300,000
D.
2,900,000
72.
On January 1, 2008, Massive Company acquired 10% of the outstanding ordinary shares of
Quarter Company. On January 1, 2009, Massive gained the ability to exercise significant
influence over financial and operating control of Quarter by acquiring an additional 20% of
Quarter's outstanding ordinary shares. The two purchases were made at prices proportionate
to the value assigned to Penny's net assets, which equaled their carrying amounts. For the years
ended December 31, 2008 and 2009, Quarter reported the following:
2008 2009Dividend paid 2,000,000
3,000,000Net income 6,000,000 6,500,000In 2009,
what amounts should Massive report as current year investment income and as an adjustment,
before income tax, to 2008 investment income?
A.
2009 investment income 1,950,000 Adjustment to 2008 investment income 1,600,000
B.
2009 investment income 1,950,000 Adjustment to 2008 investment income 1,000,000
C.
2009 investment income 1,950,000 Adjustment to 2008 investment income 400,000
D.
2009 investment income 1,050,000 Adjustment to 2008 investment income 400,000
73.
Granny Company acquired 30% of Seahorse Company's voting share capital for P2,000,000 on
January 1, 2009. Granny's 30% interest in Seahorse gave Granny the ability to exercise
significant influence over Seahorse's operating and financial policies. During 2009, Seahorse
earned P800,000 and paid dividend of P500,000. Seahorse reported earnings of P1,000,000 for
the 6 months ended June 30, 2010, and P2,000,000 for the year ended December 31, 2010. On
July 1, 2010, Granny sold half of its stock in Seahorse for P1,500,000 cash. Seahorse paid
dividend of P600,000 on October 1, 2010.Before income tax, what amount should Granny
include in its 2009 income statement as a result of the investment?
A.
150,000
B.
240,000
C.
500,000
D.
800,000
74.
Granny Company acquired 30% of Seahorse Company's voting share capital for P2,000,000 on
January 1, 2009. Granny's 30% interest in Seahorse gave Granny the ability to exercise
significant influence over Seahorse's operating and financial policies. During 2009, Seahorse
earned P800,000 and paid dividend of P500,000. Seahorse reported earnings of P1,000,000 for
the 6 months ended June 30, 2010, and P2,000,000 for the year ended December 31, 2010. On
July 1, 2010, Granny sold half of its stock in Seahorse for P1,500,000 cash. Seahorse paid
dividend of P600,000 on October 1, 2010.In Granny's December 31, 2009 balance sheet, what
should be the carrying amount of this investment?
A.
2,000,000
B.
2,090,000
C.
2,240,000
D.
2,300,000
75.
On January 1, 2006, Bert Company acquired as a long term investment for P7,000,000, a 40%
interest in Hallway Company when the fair value of Hallway's net assests was P17,500,000.
Hallway Company reported the following net losses: 2006
5,000,000 2007 7,000,000 2008
8,000,000 2009 4,000,000On January 1, 2008, Bert
Company made cash advances of P 2,000,000 to Hallway Company. On December 31, 2009, it is
not expected that Bert Company will provide further financial support for Hallway Company.
Bert Company should report in 2009 a loss from investment of:
A.
600,000
B.
1,000,000
C.
1,600,000
D.
4,000,000
76.
On January 1, 2009, Wind Company purchased as trading investment a P2,000,000 face value
Kerby Company 8% bond for P1,850,000 plus accrued interest to yield 10%. The bonds mature
on January 1, 2014, and pay interest annually on December 31. On December 31, 2009, the
bonds had a market value of P1,890,000. On February 15, 2010, Wind sold the bonds for
P1,900,000. In its December 31, 2009 balance sheet, what amount should Wind report for
investments in trading securities?
A.
1,850,000
B.
1,875,000
C.
1,890,000
D.
1,900,000
77.
On July 1, 2009, Palau Company purchased as trading investment a P1,000,000 face value 8%
bond for 800,000 plus accrued interest and transaction costs of P50,000. The bond pays interest
annually on January 1. On December 31, 2009, the bond investment had a market value of
P700,000. On February 15, 2010, Palau Company sold the bond investment for P810,000. In its
2009 income statement, what amount should Palau report as unrealized loss?
A.
0
B.
100,000
C.
140,000
D.
150,000
78.
On January 1, 2009, Paloma Company purchased bonds with face value of P2,000,000 for
P1,900,500 including transaction costs of P100,500 to be held as "available for sale". The bonds
mature on December 31, 2011 and pay interest of P8% annually every December 31 with a 10%
effective yield. On December 31, 2009, the bonds are quoted at P105. What amount of
unrealized gain on these bonds should be reported on the 2009 statement of changes in equity?
A.
169,450
B.
179,500
C.
199,500
D.
300,000
79.
On January 1, 2009, Anahaw Company purchased bonds with face value of P5,000,000 to be
held as "available for sale". The company paid P5,100,000 plus transaction costs of P148,000.
The bonds mature on December 31, 2011 and pay 12% interest annually on December 31 of
each year with a 10% effective yield. The bonds are quoted at 98 on December 31, 2009 and at
94 on December 31, 2010. what amount of unrealized loss on these bonds should be reported
in the 2008 statement of changes in equity?
A.
117,280
B.
211,000
C.
272,800
D.
390,080
80.
On January 1, 2009, Augustine Company purchased bonds with face value of P5,000,000 to be
held as "available for sale". The company paid P4,600,000 plus transaction costs of P142,000.
The bonds mature on December 31, 2011 and pay 6% interest annually on December 31 of each
year with 8% effective yield. The bonds are quoted at 105 on December 31, 2009. The bonds
are sold at 110 on December 31, 2010. What amount of gain on sale on these bonds should be
reported in the 2010 income statement?
A.
250,000
B.
500,000
C.
592,931
D.
758,000
81.
On October 1, 2009, York Company purchased 4,000 of the P1,000 face value, 10% bonds of
Dell Company for P4,400,00 which includes accrued interest of P100,000. The bonds, which
mature on January 1, 2016, pay interest semiannually on January 1 and July 1. York uses the
straight-line method of amortization and appropriately recorded the bonds as a long-term
investment. The bonds should be shown on York's December 31, 2009 balance sheet at:
A.
4,284,000
B.
4,288,000
C.
4,300,000
D.
4,400,000
82.
On October 1, 2008, Pentel Company purchased 6,000 of the P1,000 face value, 10% bonds of
Ophra Company for P6,600,000 including accrued interest of P150,000. The bonds , which
mature on January 1, 2015, pay interest semiannually on January 1 and July 1. Pentel used the
straight line method of amortization and appropriately recorded the bonds as a long-term
investment. On Pentel’s December 31, 2009 balance sheet, the bonds should be reported at:
A.
6,450,000
B.
6,432,000
C.
6,426,000
D.
6,360,000
83.
On April 1, 2009, Sailor Company purchased P2,000,000 face value, 9%, Treasury Notes for
P1,985,000, including accrued interest of P45,000. The notes mature on July 1, 2010, and pay
interest semiannually on January 1 and July 1. Sailor uses the straight line method of
amortization. In its October 31, 2009 balance sheet, the carrying amount of this investment
should be:
A.
1,940,000
B.
1,968,000
C.
1,972,000
D.
1,990,000
84.
On July 1, 2009 Hillary Company purchased as a long-term investment in Esau Company's ten-
year 12% bonds, with a face value of P5,000,000 for P4,760,000. Interest is payable semi-
annually on January 1 and July 1. The bonds mature on July 1, 2013. Hillary uses the straight line
method of amortization. What is the amount of interest income that Hillary should report in its
income statement for the year ended December 31, 2009?
A.
270,000
B.
300,000
C.
330,000
D.
360,000
85.
On July 1, 2009, Geizer Company purchased Durian Company 10-year, 12% bonds with a face
value of P2,000,000, for P2,180,000, which included P30,000 of accrued interest. The bonds,
which mature on March 1, 2016, pay interest semi-annually on March 1 and September 1.
Geizer uses the straight-line method of amortization. The amount of income Geizer should
report for the calendar year 2009 as a result of the long-term investment would be:
A.
112,500
B.
120,000
C.
127,500
D.
225,000
86.
Comma Company acquired long term 12% bonds. P2,000,000 face value for P2,192,000
including accrued interest and brokerage of P92,000 on January 1, 2009. The bonds pay
semiannual interest and mature May 1, 2015. On December 31, 2009, Comma sold all bonds for
P2,300,000 excluding accrued interest. What is the gain on sale of bonds?
A.
108,000
B.
148,000
C.
172,000
D.
300,000
87.
Jacob Company purchased bonds at a discount of P100,000. Subsequently, Jacob sold these
bonds at a premium of P140,000. During the period that Jacob held this investment,
amortization of the discount amounted to P20,000. What amount should Jacob report as gain
on the sale of the bonds?
A.
120,000
B.
220,000
C.
240,000
D.
260,000
88.
On July 1, 2009, Cola Company paid P1,198,000 of 10%, 20-year bonds with a face amount of
P1,000,000. Interest is paid on December 31 and June 30. The bonds were purchased to yield
8%. Cola uses the effective interest method to recognize interest income from this investment.
What should be reported as the carrying amount of the bonds in December 31, 2009 balance
sheet?
A.
1,207,900
B.
1,198,000
C.
1,195,920
D.
1,193,050
89.
On January 1, 2008, Pearl Company purchased as a long-term investment P5,000,000 face value
of Show Company's 8% bonds for P4,562,000. The bonds were purchased to yield 10% interest
annually on January 1. Pearl uses the interest method of amortization. What amount (rounded
to nearest P100) should Pearl report on its December 31, 2009 balance sheet for this long-term
investment?
A.
4,562,000
B.
4,618,000
C.
4,662,000
D.
4,680,000
90.
On July 1, 2009, Yolk Company purchased as a long-term investment P1,000,000 of Pack

Company's 8% bonds for P946,000, including accrued interest of P40,000. The bonds were
purchased to yield 10% interest. The bonds mature on January 1, 2015, and pay interest
annually on January 1. Yolk uses the effective interest method of amortization. In its December
31, 2009 balance sheed, what amount should Yolk report as investment in bonds?
A.
911,300
B.
916,600
C.
953,300
D.
960,600
91.
On July 1, 2009, Easter Company purchased as a long-term investment P5,000,000 face amount,
8% bonds of Ranch Company for P4,615,000 to yield 10% per year. The bonds pay interest
semiannually on January 1 and July 1. In its December 31, 2009 balance sheet Eastern should
report interest receivable of:
A.
184,600
B.
200,000
C.
230,750
D.
250,000
92.
On January 1, 2009, Cart Company purchased Fae Company 9% bonds with a face amount of
P4,000,000 for P3,756,000 to yield 10%. The bonds are dated January 1, 2009, mature on
December 31, 2018, and pay interest annually on December 31. Cart uses the interest method
of amortizing bond discount. In its income statement for the year ended December 31, 2009,
what total amount should Cart report as interest revenue from the long-term bond investment?
A.
344,400
B.
360,000
C.
375,600
D.
400,000
93.
On July 1, 2009, Pellet Company purchased Grown Company ten-year, 8% bongs with a face
amount of P5,000,000 for P4,200,000. The bongs mature on June 30, 2017 and pay interest
semiannually on June 30 and December 31. Using the interest method, Pellet recorded bond
discount amortization of P18,000 for the six months ended December 31, 2009. From this long-
term investment, Pellet should report 2009 revenue of:
A.
168,000
B.
182,000
C.
200,000
D.
218,000
94.
On January 1, 2009, Port Company purchased bonds with face value of P8,000,000 for
P7,679,000. The stated rate on the bonds is 10% but the bonds are acquired to yield 12%. The
bonds mature at the rate of P2,000,000 annually every December 31 and the interest is payable
annually also every December 31. The company uses the effective interest method of
amortizing discount. Port Company should report the investment in bonds on December 31,
2009 at:
A.
5,759,250
B.
5,800,480
C.
7,759,250
D.
7,800,480
95.
On January 1, 2009, Den Company purchased ten-year bonds with a face value of P1,000,000
and a stated interest rate of 8% per year payable semiannually July 1 and January 1. The bonds
were acquired to yield 10%. Present value factors are as follows:Present value of 1 for 10
periods at 10% .386Present value of 1 for 20 periods at
5% .377Present value of an annuity of 1 for 10 periods at 10%
6.145Present value of an annuity of 1 for 20 periods at 5% 12.462The
purchase price of the bonds is:
A.
875,380
B.
1,000,000
C.
1,100,000
D.
1,124,620
96.
On January 1, 2009 Russo Company purchased 5-year bonds with face value of P8,000,000 and
stated interest of 10% per year payable semiannually January 1 and July 1. The bonds were
acquired to yield 8%. Present value factors are:Present value of an annuity of 1 for 1 periods at
5% 7.72Present value of an annuity of 1 for 10 periods at 4%
8.11Present value of 1 for 10 periods at 4% 0.6756What is the
purchase price of the bonds?
A.
7,351,200
B.
7,382,400
C.
8,617,600
D.
8,648,800
97.
On January 1, 2009, Tag Company purchased bonds with face value of P2,000,000. The bonds
are dated January 1, 2009 and mature on January 1, 2013. the interest on the bonds is 10%
payable semiannually every June 30 and December 31. The prevailing market rate of interest on
the bonds is 12%. what is the present value of the bonds on January 1, 2009? Round off present
value factor to two decimal places.
A.
1,360,000
B.
1,480,000
C.
1,881,000
D.
1,888,000
98.
On January 1, 2009, Riyadh Company purchased serial bonds with face value of P3,000,000 and
stated 12% interest payable annually every December 31. The bonds mature at an annual
installment of P1,000,000 every December 31. The rounded present value of 1 at 10% for:
One period 0.91 Two periods
0.83 Three periods 0.75What is the market price of the serial
bonds on January 1, 2009?
A.
3,060,000
B.
3,045,000
C.
3,106,800
D.
3,149,400
99.
On January 1, 2009, Cameron Company purchased bonds with face value of P5,000,000 at a
cost of P4,700,000. The stated interest is 10% payable annually every December 31. The bonds
mature in 4 years or January 1, 2011.How much interest income should be reported by
Cameron Company for the year ended December 31, 2009 using the effective interest method?
A.
470,000
B.
500,000
C.
517,000
D.
562,590
100.
In January 1, 2009, Camelot Company established a sinking fund in connection with its issue of
bonds due in 2014. A bank was appointed as independent trustee of the fund. On December 31,
2009, the trustee held P364,000 cash in the sinking fund account representing P300,000 in
annual deposits. How should the sinking fund be reported in Camelot's balance sheet at
December 31, 2009?
A.
No part of the sinking fund should appear in Cameron's balance sheet
B.
P64,000 should appear as a current asset
C.
P364,000 should appear as a current asset
D.
P364,000 should appear as a noncurrent asset
101.
The following information relates to noncurrent investments that Hall Company placed in trust
as required by the underwriter of its bonds:Bond sinking fund balance, January 1, 2009
4,500,0002009 additional investment 900,000Dividends
on investments 150,000Interest revenue
300,000Administration costs 50,000Carrying
amount of bonds payable 8,000,000What amount should Hall
report in its December 31, 2009 balance sheet related to its noncurrent investment for bond
sinking fund requirements?
A.
5,400,000
B.
5,750,000
C.
5,800,000
D.
5,850,000
102.
On January 1, 2009, Bell Company adopted a plan to accumulate funds for a new plant building
to be erected beginning July 1, 2014, at an estimated cost of P6,000,000. Bell intends to make
five equal annual deposits in a fund that will earn interest at 8% compounded annually. The
first deposit is made on July 1, 2009. Present value and future amount factors are as
follows:Present value of 1 at 8% for 5 periods 0.68Present value
of 1 at 8% for 6 periods 0.63Future amount of ordinary annuity
of 1 at 8% for 5 periods 5.87Future amount of annuity in advance of 1 at 8% for 5
periods 6.34Bell should make five annual deposits (rounded) of:
A.
756,000
B.
816,000
C.
946,400
D.
1,022,150
103.
On January 1, 2009, Man Company adopted plan to accumulate P5,000,000 by January 1, 2014.
Man plans to make 5 equal annual deposits tha will earn interest at 9% compounded annually.
Man made the first deposit on December 31, 2009. The future value of ordinary annuity of 1 at
9% for 5 periods is 6.52. What amount must be deposited annually at the compound interest to
accumulate the desired amount of P5,000,000?
A.
609,756
B.
664,894
C.
766,871
D.
836,120
104.
Cebuana Company made an investment of P5,000,000 at 10% per annum compounded

annually for 6 years. What is the amount of the investment on the date of maturity? Round off
future value factor to two decimal places.
A.
5,500,000
B.
8,050,000
C.
8,850,000
D.
9,750,000
105.
Mac Company made investment for 5 years at 12% per annum compounded semiannually to
equal P7,160,000 on the date of maturity. What amount must be deposited now at the
compound interest to provide the desired sum? Round off future value factor to two decimal
places.
A.
3,768,420
B.
4,000,000
C.
4,068,180
D.
4,236,680
106.
Bulk Company purchased a P1,000,000 ordinary life insurance policy on its president. The policy
year and Bulk's accounting year coincide. Additional data are available for the year ended
December 31, 2009:Cash surrender value, 1/1 43,500Cash
surrender value, 12/31 54,000Annual advance premium paid 1/1
20,000Dividend received 7/1 3,000Bulk Company is the
beneficiary under the life insurance policy. How much should Bulk report as life insurance
expense for 2009?
A.
6,500
B.
9,500
C.
17,000
D.
20,000
107.
Crane Company purchased a P1,000,000 life insurance policy on its president, of which Crane is
the beneficiary. Information regarding the policy for the year ended December 31, 2009,
follows:Cash surrender value, 1/1 87,000Cash surrender
value, 12/31 108,000Annual advance premium paid 1/1
40,000During 2009, dividend of P6,000 was applied to increase the cash surrender value of the
policy. What amount should Crane report as life insurance expense for 2009?
A.
13,000
B.
19,000
C.
25,000
D.
40,000
108.
Silvana Company insured the life of its president for P2,000,000, the company being the
beneficiary of an ordinary life insurance policy. The annual premium is P80,000 and the policy is
dated January 1, 2006. The cash surrender values are:December 31, 2008
15,000December 31, 2009 19,000The company follows the
calendar year as its fiscal period. The president dies on October 1, 2009 and the policy is settled
on December 31, 2009.Silvana Company should report gain on life insurance settlement in its
2009 income statement at:
A.
1,961,000
B.
1,962,000
C.
1,981,000
D.
2,000,000
109.
Gallery Company ventured into construction of a condominium in Ortigas which is rated as the
largest state-of-the-art structure. The entity's board of directors decided that instead of selling
the condominium, the entity would hold this property for purposes of earning rentals by letting
out space to business executives in the area.The construction of the condominium was
completed and the property was placed in service on January 1, 2009. The cost of the
construction was P50 million. The useful life of the condominium is 25 years and its residual
value is P5 million. An independent valuation expert provided the following fair value at each
subsequent year-end:December 31, 2009 55 millionDecember 31, 2010
53 millionDecember 31, 2011 60 millionUnder the cost model, Gallery
Company should report depreciation of investment property for 2009 at:
A.
B.
1,800,000
C.
2,000,000
D.
2,200,000
110.
Gallery Company ventured into construction of a condominium in Ortigas which is rated as the
largest state-of-the-art structure. The entity's board of directors decided that instead of selling
the condominium, the entity would hold this property for purposes of earning rentals by letting
out space to business executives in the area. The construction of the condominium was
completed and the property was placed in service on January 1, 2009. The cost of the
construction was P50 million. The useful life of the condominium is 25 years and its residual
value is P5 million. An independent valuation expert provided the following fair value at each
subsequent year-end: December 31, 2009 55 million December 31,
2010 53 million December 31, 2011 60
millionUnder the fair value model, Gallery Company should recognize gain from change in fair
value in 2009 at:
A.
B.
3,000,000
C.
5,000,000
D.
7,000,000
111.
Elven Company and its subsidiaries own the following properties that are accounted for in
accordance with international accounting standards:Land held by Elven for undetermined use
5,000,000A vacant building owned by Elven and to be leased out under an operating lease
3,000,000Property held by a subsidiary of Elven, a real estate firm, in the ordinary course of
business 2,000,000Property held by Elven for use in production
4,000,000Building owned by a subsidiary of Elven and for which the subsidiary provides
security and maintenance services to the lessees 1,500,000Land
leased by Elven to a subsidiary under an operating lease.
2,500,000Property under construction for use as an investment property
6,000,000Land held for future factory site
3,500,000Machinery leased out by Elven to an unrelated party under and operating lease
1,000,000What will be the total investment property to be shown in the consolidated balance
sheet of the parent and its subsidiaries?
A.
9,500,000
B.
10,500,000
C.
12,000,000
D.
15,500,000
112.
On January 1, 2009, Passer Company entered into a two-year P3,000,000 variable interest rate
loan at the prevailing rate of 12%. In 2010, the interest rate is equal to the prevailing interest
rate at the beginning of the year.The principal loan is payable on December 31, 2010 and the
interest is payable on December 31 of each year. On January 1 , 2009, Passer Company entered
into a "receive variable, pay fixed" interest swap agreement with a speculator bank designated
as a cash flow hedge.The prevailing interest rate on January 1, 2010 is 14% and the present
value of 1 at 14% for one period is .877. How much should be reported as " interest rate swap
receivable" on December 31, 2009?
A.
B.
30,000
C.
52,620
D.
60,000
113.
Cavite Company received a two-year variable interest rate loan of P5,000,000 on January 1,
2009. The interest on the loan is payable on December 31 of each year and the principal is to be
repaid on December 31, 2010. On January 1, 2009, Cavite Company entered into a "receive
variable, pay fixed" interest rate swap agreement with a speculator bank designated as a cash
flow hedge.The interest rate for 2009 is the prevailing interest rate of 10% and the rate in 2010
is equal to the prevailing rate on January 1, 2010. The market rate of interest on January 1,
2010 is 7% and the present value of 1 at 7% for one period is .935. How much should be
reported by Cavite Company on December 31, 2009 as "interest rate swap payable"?
A.
B.
100,000
C.
140,250
D.
150,000
114.
On January 1, 2009, Tall Company received a 5-year variable interest rate loan of P6,000,000
with interest payment at the end of each year and the principal to be repaid on December 31,
2013. The interest rate for 2009 is 8% and the rate in each succeeding year is equal to market
interest rate on January 1 of each year.On January 1, 2009, Tall Company entered into an
interest rate swap agreement with a financial institution to the effect that Tall will receive a
swap payment if the interest on January 1 is more than 8% and will make a swap payment if the
interest is less than 8%. The swap payments are made at the end of the year. This interest rate
swap agreement is designated as a cash low hedge.On January 1, 2010, the market rate of
interest is 9%. The present value of an ordinary annuity of 1 at 9% for four periods is 3.24. On
December 31, 2009, Tall Company shall report "interest rate swap receivable" at:
A.
120,000
B.
194,400
C.
240,000
D.
300,000
115.
On January 1, 2009, Tree Company borrowed P5,000,000 from a bank at a variable rate of
interest for 4 years. Interest will be paid annually to the bank on December 31 and the principal
is due on December 31, 2012. Under the agreement, the market rate of interest every January 1
resets the variable rate for that period and the amount of interest to be paid on December 31.
In conjunction with the loan, Tree Company entered into a "receive variable, pay fixed" interest
rate swap agreement with another bank speculator.The interest rate swap agreement was
designated as a cash flow hedge. The market rates of interest are:January 1, 2009
10%January 1, 2010 14%January 1, 2011
12%January 1, 2012 11%The present value of an ordinary annuity
of 1 is as follows:At 14% for three periods 2.32At 12% for two periods
1.69At 11% for one period 0.90What is the derivative asset or liability on
December 31, 2009?
A.
464,000 asset
B.
464,000 liability
C.
600,000 asset
D.
600,000 liability
116.
rate swap agreement with another bank speculator. The interest rate swap agreement was
designated as a cash flow hedge. The market rates of interest are: January 1, 2009
10% January 1, 2010 14% January 1, 2011
12% January 1, 2012 11% The present value of an ordinary annuity
of 1 is as follows: At 14% for three periods 2.32 At 12% for two periods
1.69 At 11% for one period 0.90 What is the derivative asset or liability
A.
200,000 asset
B.
200,000 liability
C.
169,000 asset
D.
169,000 liability
117.
rate swap agreement with another bank speculator. The interest rate swap agreement was
designated as a cash flow hedge. The market rates of interest are: January 1, 2009
10% January 1, 2010 14% January 1, 2011
12% January 1, 2012 11% The present value of an ordinary annuity
of 1 is as follows: At 14% for three periods 2.32 At 12% for two periods
1.69 At 11% for one period 0.90 What is the derivative asset or liability
A.
45,000 asset
B.
45,000 liability
C.
50,000 asset
D.
50,000 liability
118.
Vacation Company is a golf course developer that constructs approximately 5 courses each year.
On January 1, 2009, Vacation Company has agreed to buy 5,000 trees on January 1, 2010 to be
planted in the courses it intends to build. In recent years, the price of trees has fluctuated wildly.
On January 1, 2009, Vacation Company entered into a forward contract with a reputable bank.
The price is set at P500 per tree.The derivative forward contract provides that if the market
price on January 1, 2010 is more than P500, the difference is paid by the bank to Vacation. On
the other hand, if the market price is less than P500, Vacation will pay the difference to the
bank. This derivative forward contract was designated as a cash flow hedge. The market price
on December 31, 2009 and January 1, 2010 is P800. The appropriate discount rate is 8% and the
present value of 1 at 8% for one period is .926.On December 31, 2009, Vacation Company shall
recognize a derivative asset at:
A.
694,500
B.
750,000
C.
1,389,000
D.
1,500,000
119.
Congo Grill operates a chain of seafood restaurants. On January 1, 2009, Congo Grill
determined that it will need to purchase 100,000 kilos of tuna fish on January 1, 2010. Because
of the volatile fluctuation in the price of tuna fish, on January 1, 2009, Congo negotiated a
forward contract with a reputable financial institution for Congo Grill to purchase 100,000 kilos
of tuna fish in January 1, 2010 at a price of P8,000,000 of P80 per kilo. This forward contract
was designated as a cash flow hedge.On December 31, 2009 and January 1, 2010, the market
price of tuna fish per kilo is P75. The appropriate discount rate is 6% and the present value of 1
at 6% for one period is .943. Congo Grill uses the perpetual system.Congo Grill shall recognize a
derivative liability on December 31, 2007 at:
A.
B.
250,000
C.
471,500
D.
500,000
120.
Chocolate Company operates a seafood restaurant. On October 1, 2009, Chocolate determined

that it will need to purchase 50,000 kilos of deluxe fish on March 1, 2010. Because of the
volatile fluctuation in the price of deluxe fish, on October 1, 2009, Chocolate negotiated a
forward contract with a reputable bank for Chocolate to purchase 50,000 kilos of deluxe fish on
March 1, 2010 at a price of P50 per kilo or P2,500,000. This forward contract was designated as
a cash flow hedge.The derivative forward contract provides that if the market price of deluxe
fish on March 1, 2010 is more than P50, the difference is paid by the bank to Chocolate. On the
other hand, if the market price on March 1, 2010 is less than P50, Chocolate will pay the
difference to the bank.On December 31, 2009, the market price per kilo P60 and on March 1,
2010, the market price is .93.What is the fair value of the derivative asset or liability on
December 31, 2009?
A.
500,000 asset
B.
500,000 liability
C.
465,000 asset
D.
465,000 liability
121.
Chocolate Company operates a seafood restaurant. On October 1, 2009, Chocolate determined

that it will need to purchase 50,000 kilos of deluxe fish on March 1, 2010. Because of the
volatile fluctuation in the price of deluxe fish, on October 1, 2009, Chocolate negotiated a
forward contract with a reputable bank for Chocolate to purchase 50,000 kilos of deluxe fish
onMarch 1, 2010 at a price of P50 per kilo or P2,500,000. This forward contract was designated
as a cash flow hedge. The derivative forward contract provides that if the market price of
deluxe fish on March 1, 2010 is more than P50, the difference is paid by the bank to Chocolate.
On the other hand, if the market price on March 1, 2010 is less than P50, Chocolate will pay the
difference to the bank. On December 31, 2009, the market price per kilo P60 and on March 1,
2010, the market price is .93. What is the fair value of the derivative asset or liability on
December 31, 2010?
A.
400,000 asset
B.
400,000 liability
C.
372,000 asset
D.
372,000 liability
122.
Seaman Company operates a five-star hotel. The company makes very detailed long-term
planning. On October 1, 2009, Seaman Company determined that they would need to purchase
8,000 kilos of Australian lobster on January 1, 2011. Because of the fluctuation in the price of
Australian lobster, on October 1, 2009 the company negotiated a special forward contract with
a bank for Seaman to purchase 8,000 kilos of Australian lobster on January 1, 2011 at price of
P9,600,000. The price of Australian lobster was P1,200 per kilo on October 1. This forward
contract was designated as a cash flow hedge.The bank has a staff of financial analysts who
specialize in forecasting lobster prices. These analysts are predicting a drop in worldwide
lobster prices between October 1, 2009 and January 1, 2011.On December 31, 2009, the price
of a kilo of Australian lobster is P1,500. On December 31, 2010 and January 1, 2011, the price of
a kilo of Australia lobster is P1,000. The appropriate discount rate throughout this period is 10%.
The present value of 1 at 10% for one period is .91. The periodic system is used.What is the
notional value of the forward contract?
A.
4,800,000
B.
7,200,000
C.
9,600,000
D.
12,000,000
123.
contract was designated as a cash flow hedge. The bank has a staff of financial analysts who
lobster prices between October 1, 2009 and January 1, 2011. On December 31, 2009, the price
The present value of 1 at 10% for one period is .91. The periodic system is used.What is the
derivative asset or liability on December 31, 2009?
A.
2,400,000 asset
B.
2,400,000 liability
C.
2,184,000 asset
D.
2,184,000 liability
124.
contract was designated as a cash flow hedge. The bank has a staff of financial analysts who
lobster prices between October 1, 2009 and January 1, 2011. On December 31, 2009, the price
The present value of 1 at 10% for one period is .91. The periodic system is used. What is the
derivative asset or liability on December 31, 2010?
A.
1,600,000 asset
B.
1,600,000 liability
C.
800,000 asset
D.
800,000 liability
125.
Indian Company requires 40,000 kilos of soy beans each month in its operations. To eliminated
the price risk associated with the purchase of soy beans, on December 1, 2009, Indian entered
into a futures contract as a cash flow hedge to buy 40,000 kilos of soy beans at P150 per kilo on
January 1, 2010. The market price on December 31, 2009 and January 1, 2010 is P160 per kilo.
The appropriate discount rate is 9% and the present value of 1 at 9% for one period is .917. The
periodic system is used.Indian Company shall recognize on December 31, 2009 a derivative
asset at:
A.
183,400
B.
200,000
C.
366,800
D.
400,000
126.
Nata Company produces bottled grape juice. Grape juice concentrate is typically bought and
sold by the pound. Nata uses 50,000 pounds of grape juice concentrate each month.On
November 1, 2009, Nata entered into a grape juice concentrate futures contract as a cash flow
hedge to buy 50,000 pounds of concentrate on January 1, 2010 at a price of P50 per pound. The
market price on December 31, 2009 and January 1, 2010 of the grape juice is P38 per pound.
The appropriate discount rate is 11%. The periodic system is used.Nata Company shall
recognize on December 31, 2009 a derivative liability at:
A.
270,300
B.
300,000
C.
540,600
D.
600,000
127.
Tall Company requires 25,000 pounds of copper each month in its operations. To eliminate the
price risk associated with copper purchases, on December 1, 2009, Tall entered into a futures
contract as a cash flow hedge to buy 25,000 pounds of copper on June 1, 2010. The futures
price is P50 per pound.The futures contract is managed through an exchange, so Tall does not
know the other party on the other side of the contract. As with most derivative contracts, this
futures contract is settled by an exchange of cash on June 1, 2010 based on the price of copper
on that date.The market price per pound is P45 on December 31, 2009 and P42 on June 1, 2010.
What is the fair value of the derivative asset or liability on December 31, 2009?
A.
125,000 asset
B.
125,000 liability
C.
200,000 asset
D.
200,000 liability
128.
Legacy Company produces colorful 100% cotton T-shirts that are very popular among the youth.
The company uses 150,000 kilos of cotton each month in its production process. In accordance
with the company's long-term planning, the company normally procures one month supply of
cotton to be used in its production process.On December 31, 2009, Legacy Company purchased
a call option as a cash flow hedge to buy 150,000 kilos of cotton on July 1, 2010. The call option
price is P30 per kilo. The company paid P50,000 for the call option. The market price of cotton
on July 1, 2010 is P 35 per kilo.Legacy Company shall recognize gain on call option 2010 at:
A.
350,000
B.
375,000
C.
700,000
D.
750,000
129.
Book Company uses approximately 200,000 units of raw material in its manufacturing
operations. On December 31, 2009, Book Company purchased a call option to buy 200,000
units of the raw material on July 1, 2010 at a price of P25 per unit. The company paid P20,000
for the call option. Book designated the call option as a cash flow hedge against price
fluctuation for its July purchase. The market price of the raw material on July 1, 2010 is P22 per
unit.Book Company shall recognize loss on call option in 2010 at:
A.
20,000
B.
550,000
C.
600,000
D.
650,000
130.
Socks Company uses approximately 300,000 units of raw material in its manufacturing
operations. On December 1, 2009, Socks Company purchased a call option to buy 300,000 units
of the raw material on March 1, 2010 at a price of P25 per unit. Socks paid P50,000 for the call
option and designated the call option as a cash flow hedge against price fluctuation for its
March purchase.On December 31, 2009, the market price of the raw material is P27 per unit
and on March 1, 2010, the market price is P28.What is the fair value of the call option or
derivative asset on December 31, 2009?
A.
550,000
B.
600,000
C.
850,000
D.
900,000
131.
On September 1, 2009, Denver Company purchased equipment from USA for $50,000 to be
paid on March 1, 2010. The exchange rate on September 1, 2009 is P45 to $1. On the same date,
Denver entered into a foreign currency forward contract and agreed to pay P2,250,000 at the
rate of P45 to $1. This forward contract is designated as a fair value hedge of the payable that is
denominated in foreign currency.The peso exchange rate to the dollar is P46 on December 31,
2009 and P49 on March 1, 2010.What is the gain on foreign currency forward contract that will
be recognized in the 2010 income statement?
A.
B.
50,000
C.
150,000
D.
200,000
132.
Oregon Company has the Philippine peso as its functional currency. The company expects to
purchase goods from USA for $50,000 on March 31, 2010. Accordingly, the company is exposed
to a foreign currency risk. If the dollar increases before the purchase takes place, the company
will have to pay more pesos to obtain the $50,000 that it will have to pay for the goods.On
October 1, 2009, Oregon Company entered into a foreign currency forward contract with a
bank speculator purchase $50,000 in six months for a fixed amount of P2,300,000 or P46 to $1.
This forward contract is designated as cash flow hedge of the company's exposrue to increase
in dollar exchange rate. On December 31, 2009, the exchange rate is P47 to $1 and on March 31,
2010, the exchange rate is P49 to $1.What is the fair value of the derivative asset or liability on
December 31, 2009?
A.
150,000 asset
B.
150,000 liability
C.
50,000 asset
D.
50,000 liability
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Intermediate Accounting: Investments (Problems)

Questions and Answers

On January 1, 2009, Fredo Company purchased marketable equity securities to be held as

Income: 600,000 Shareholder's equity: 800,000

Income: 800,000 Shareholder's equity: 600,000

Income: 1,400,000 Shareholder's equity: 0

Income: 0 Shareholder's equity: 1,400,000

Unrealized loss of P100,000

Unrealized loss of P130,000

Unrealized gain of P100,000

Unrealized gain of P130,000

La Goon Company purchased the following securities during 2009:

On January 1, 2009, Hemingway Company acquired 200,000 ordinary shares of Universe

Data regarding Bondoc Company's trading securities follow:

Data regarding Baggy Company's available for sale securities follow:

Data regarding Maggy Company's available for sale securities follow:

Information regarding Trinity Company's portfolio of available for sale securities is as

On January 1, 2008, Eve Company purchased as a long-term investment on 100,000 ordinary

Corn Company purchased 10,000 shares representing 2% ownership of Row Company on

Three Kings Company invested in shares of Eastern Company acquired as follows:

2009 investment income 1,950,000 Adjustment to 2008 investment income 1,600,000

2009 investment income 1,950,000 Adjustment to 2008 investment income 1,000,000

2009 investment income 1,950,000 Adjustment to 2008 investment income 400,000

2009 investment income 1,050,000 Adjustment to 2008 investment income 400,000

On July 1, 2009, Yolk Company purchased as a long-term investment P1,000,000 of Pack

No part of the sinking fund should appear in Cameron's balance sheet

P64,000 should appear as a current asset

P364,000 should appear as a current asset

P364,000 should appear as a noncurrent asset

Cebuana Company made an investment of P5,000,000 at 10% per annum compounded

Chocolate Company operates a seafood restaurant. On October 1, 2009, Chocolate determined

Chocolate Company operates a seafood restaurant. On October 1, 2009, Chocolate determined

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