Answer Key

1A
Note 14,160,000.00
A/P 1,947,000.00
Senior bonds 35,400,000.00
Accrued expenses 1,239,000.00
52,746,000.00
2A
1,000 x 140 140,000.00

3D
Cost of patent 51,000.00
life 10.00
Annual amortization 5,100.00
July 1- dec 31 2,550.00

Patent, net 48,450.00

4 A percentage ownership
2000/20000 10%
Dividend
480000 x 10% 48,000.00

5 C Cash per book 258,500.00

Bank service charge (1,000.00)
error 4,000.00
Cash adjusted 261,500.00

6 D Mineral right 5,280,000.00

Development cost 720,000.00
Restoration cost 360,000.00
Total capitalizable cost 6,360,000.00
estimates ores 200,000.00
Residual value 600,000.00
Depletable cost 5,760,000.00
Depletion per ore 28.80
Depletion (28.8 x 60000) 288,000.00

7 A The out of court settlement was not accepted, hence not to be used as basis.

8 D Lease liability at December 2009 8,862,000.00

1st Payment December 2009 (1,400,000.00)
7,462,000.00
Interest accretion 746,200.00
2nd payment (Principal) 653,800.00
Lease liability December 2010 6,808,200.00

9 C Cash per book 1,652,600.00

Bank service charge 600.00
Adjusted 1,652,000.00
10 B Cost 738,400.00
Interest Income 73,840.00
Interest received 64,000.00
Amortization per year 9,840.00
prorated 6 months 4,920.00
Bonds at Dec 2010 743,320.00

11 B Allowance beginning Squeezed 1,400,000.00

write off -600000
Allowance end 800000

12 D Net Income 90,000,000.00

Depreciation 54,000,000.00
Decrease in AP 5,400,000.00
Loss on bonds retired 23,400,000.00
162,000,000.00
13 A
Sales 6,000,000.00
direct expenses 3,800,000.00
Allocated indurect -(1000T *25%) 250,000.00
1,950,000.00

14 B replacement cost may be considered as market value

15 A Unadjusted balance 3,735,000.00

credit error (21,000.00)
DIT 103,000.00
Oustanding (302,000.00)
3,515,000.00
16 C
Beginning allowance 24,000.00
Provision 120,000.00
Write off 96,000.00
Adjustemnt (squeezed) 52,000.00
Should be allowance 100,000.00

Total expense 172,000.00

17 B Value received 2,840,000.00

BV of building 2,200,000.00
Gain 640,000.00

18 A
Accounts payable 510,000.00
Accrued 60,000.00
credit balance 54,000.00
coupons 240,000.00

864,000.00
19 B
Accounts Receivable. Beg 670,000.00
Sales 7,980,000.00
Accounts Receivable, end (910,000.00)
Collection 7,740,000.00

Cost of GS 5,830,000.00
Inventory, end 780,000.00
Inventory, beg (860,000.00)
Purchases 5,750,000.00

A/P , beg 530,000.00

purhcases 5,750,000.00
A/P. end (480,000.00)
Payment 5,800,000.00

Collection less payment 1,940,000.00

Other cash expenses 1,070,000.00
870,000.00
Cash, beg 620,000.00
total cash 1,490,000.00

20 B
Income before income tax 9,000,000.00
interest income (700,000.00)
depreciation tax (1,300,000.00)
Warranty 600,000.00
Actual warranty (300,000.00)
7,300,000.00
Tax rate 35%
Tax liability current 2,555,000.00

21 B
Inventory, beg 500,000.00
purchases 400,000.00
Cost of goods sold (700,000.00)
Inventory, end 200,000.00
Per count 80,000.00
shortage 120,000.00
22 C
Cost of Goods Sold 7,800,000.00
FG, end 2,250,000.00
FG, beg (2,200,000.00)
Cost of Goods Manufactured 7,850,000.00
Goods in Process, end 2,100,000.00
Goods in Process, beg (1,850,000.00)
Goods placed in process 8,100,000.00
Direct labor (2,200,000.00)
Manufacturing OH (1,650,000.00)
Raw Materials Used 4,250,000.00

Raw Materials
Freight in 150,000.00
Raw Materials, beg 900,000.00
Purchases 4,000,000.00 800,000.00 RM, end (squeezed)

Raw Materials Used 4,250,000.00

23 D No dividend income

24 C Land Building
Cost 800,000.00
Legal and registration 9,000.00
Demolition 10,000.00
Proceeds (3,000.00)
Construction 1000000
architect 20000
816,000.00 1020000

25 D Machinery
Cost 1,000,000.00

% of depreciation per year 25%

Double declining 0.50

Accumulated depreciatioon year 1 500,000.00

Accum dep year 2 250,000.00
Total 750,000.00
26 A Cash price equivalent

27 B Replacement 750,000.00
Major improvements 350,000.00
1,100,000.00
28 C
Sales price 2,000,000.00
Book Value
Cost 2,800,000.00
RV 300,000.00
Depreciation per year 250,000.00
Time elapsed 3 3/4
A/ Depreciation 937,500.00 1,862,500.00
Gain from sale 137,500.00

29 C Sales price 2,400,000.00

Cost 2,000,000.00
Gain 400,000.00

30 A All are expensed

31 D Trade A/P 1,200,000.00

Accrued taxes 125,000.00
Bank overdraft 55,000.00
Accrued utilities 60,000.00
Customer's deposit 100,000.00
1,540,000.00

32 A redeemable 150000/20 7,500.00

redeemed 4,500.00
unredeemed 3,000.00
Cost (360000/8000) 45.00
total liability 135,000.00
33 C shares issued 500,000.00
shares exchanged 600,000.00
Common shares subscribed 1,500,000.00
Preferred shares subscribed 175,000.00
2,775,000.00

34 B
Issued shares 2,400,000.00
Treasury shares (390,000.00)
Net income 1,500,000.00
3,510,000.00
35 B
Share in net income from July 1 to Dec 31
1200000 x 6/12 x 30% 180000

Interest acquired
30,000/100,000 30%

36 A
Beg 2,120,000.00
PY adjustments (215,000.00)
Appropriation (300,000.00)
Net Income 760,000.00
Stock dividend (500,000.00)
Fire loss (175,000.00)
1,690,000.00

37 A SHE. Before reorg 3,700,000.00

Write off 1,200,000.00
2,500,000.00
38 C Net income 5,000,000.00
Rent (250,000.00)
Deprectaion (300,000.00)
Premuim 450,000.00
4,900,000.00
Tax rate 35%
Income Tax expense 1,715,000.00

39 D Income will start on 2011

40 D Rent per year

41 C Service Cost 1,500,000.00

Expected return (400,000.00)
Interest 820,000.00
Amortization of actuarial lsos 150,000.00
Amortization of unrecognized PSc 350,000.00
2,420,000.00

42 A Depreciation 85,000.00 Net increase

Inventory 50,000.00 Increase
Increase 135,000.00

43 B Raw Materials, beg 350,000.00

Purchases 4,200,000.00
Purchase returns and allowances (120,000.00)
Freight In 80,000.00
Raw Materials, end (380,000.00)
Raw Materials Used 4,130,000.00

44 A Consolidated Revenue 12,000,000.00

Intersegment sales 1,800,000.00
Intersegment transfers 600,000.00
Total sales of all segments 14,400,000.00
Threshold 10% 1,440,000.00

45 D Segment B
Sales 500,000.00
Traceable cost (225,000.00)
Indirect expense
Total 240,000.00
Ratio from segment's total sales 0.33 (80,000.00)
Segment Profit 195,000.00
46 D Inventory, beg 1,200,000.00
Purhcases 2,000,000.00
Inventory, end (1,100,000.00)
Cost of Goods Sold 2,100,000.00

Cost of Goods Sold 2,100,000.00

Gross Profit 900,000.00
Total Sales 3,000,000.00
Cash Sales 500,000.00
Credit Sales 2,500,000.00

Accounts Receivable, beg 800,000.00

Credit Sales 2,500,000.00
Collection (2,600,000.00)
Accounts Receivable, end 700,000.00

47 B
Inventory, beg 2,000,000.00
Purchases 7,500,000.00
Puchase R & A (500,000.00)
Inventory, end (2,800,000.00)
Cost of Goods Sold 6,200,000.00

Cost of Goods Sold 6,200,000.00

% on net sales 20%
Net Sales 7,750,000.00
Sales Returns and Allowance 750,000.00
Gross Sales 8,500,000.00

48 D
Selling Expense 1,250,000.00
Cost of goods is six times Selling Expense 6.00
Cost of Goods Sold 7,500,000.00
 Cost of Goods Sold 7,500,000.00
Inventory, end 500,000.00
Inventory, beg (400,000.00)
Net Purchaes 7,600,000.00
Freight In (300,000.00)
Purchae Returns 900,000.00
Purchases 8,200,000.00

49 B
Rent Income 600,000.00
Accrued Rent, end (40,000.00)
Accrued Rent, Beg 30,000.00
Unearned Rent, beg (50,000.00)
Unearned Rent, end 75,000.00
615,000.00
50 D
Allowance written off 100,000.00
Increase in allowance 250,000.00
350,000.00

51 A Working capital, beg 5,000,000.00

Working capital provided by operations 850,000.00
Capital expenditures (1,500,000.00)
Long-trem borrowings 1,000,000.00
Payment of long-term borrowings (300,000.00)
Proceeds from issuance of common stock 700,000.00
Dividends paid (400,000.00)
5,350,000.00
52 A
Retained Earnings, beg 6,000,000.00
20% stock dividend (small) @ FV
200000-20000=180000 x 20% x 50 (1,800,000.00)
Cash dividend
216,000 shares x 20 (4,320,000.00)
Net Income 5,000,000.00
4,880,000.00

53 C Number of Months to be paid ( 12 x 5 ) 60.00

Free months 9.00
Actual months (paying) 51.00
monthly rent 389,000.00
Total rent 19,839,000.00
Number of years (lease) 5.00
Annual rent income 3,967,800.00

54 C Accounts receivable % uncollectibe

9,000,000.00 0.01 90,000.00
6750000 0.02 135,000.00
7500000 0.06 450,000.00
Total Allowance 675,000.00

Allowance for DA
Beg 650,000.00
Written off (525,000.00)
Recovery 50,000.00
Balance 175,000.00
Doubtful Accounts Expense 500,000.00

55 A The litigation payment is not an adjustment.

56 D Cash basis pretax income 4,500,000.00
Accounrts Payable, end (1,125,000.00)
Accounts Payable, beg 2,250,000.00
Accounts Receivable, end 3,000,000.00
Accounts Receivable, beg (1,500,000.00)
7,125,000.00

57 B SHE unadjusted 5,040,000.00

Share capital 4,000,000.00
RE 1,040,000.00
Net Income 2010 (260,000.00)
Cash dividend 400,000.00
Adjustment overstatement in 2009 70,000.00
RE, beg 1,250,000.00

58 C Administrative expense 25% of Cost of Sales

Administrative expense 15% of sales
Therefore,
15% of sales = 25 % of of cost of sales
Therefore,
Cost of sales = 15% of sales/ 25%
Cost of sales = 60% of sales

Sales (squeezed) 4,000,000.00 100%

Cost of sales 2,400,000.00 60%
Selling expense 400,000.00 10%
Admin expense 600,000.00 15%
Bad debts expense 120,000.00 3%
Net inomce 480,000.00 12%

59 C Issuance of shares (cash received) 60,000,000.00

Downpayment for land and building (10,000,000.00)
Check for computer and equipment (4,500,000.00)
Software technology (1,500,000.00)
44,000,000.00
Balance of checking account 45,000,000.00
Sales price of computer equipment 1,000,000.00
60 A Principal 7,200,000.00
First payment (2,400,000.00)
Balance 4,800,000.00
Time elapsed 9 months
Interest rate 10%
Interest payable 360,000.00

61 B 300 @ P2000 FV bonds at 99 594,000.00

Accrued interest 15,000.00
Total cash received 609,000.00

62 D Net Income 82,500,000.00

Decrease in prepaid rent 2,310,000.00
Increase in Accounts Receivable (3,300,000.00)
Increase in Accounts Payable 1,650,000.00
Increase in Allowance for Doubtful accounts 110,000.00
83,270,000.00
63 C
Face Value of note 800,000.00
Accrued interest ( 800000 x 8%) 64,000.00
CV of note receivable 864,000.00
PV of note ( 200000 x 2.531) 506,200.00
Loss on impairment 357,800.00

64 D Allowance for bad debts, Jan. 1 10,500.00

divided by AR, jan. 1 210,000.00
% of uncollectible 0.05

AR, end (342,000/.95) 360,000.00

Collection of AR 2,520,000.00
Sales discount 14,400.00
Sales return 36,000.00
write-off 9,600.00
Total 2,940,000.00
AR, Jan 1 210000
Recovery 3600 213,600.00
Sales on account 2,726,400.00
Cash Sales 273,600.00
Total sales 3,000,000.00
Less: Sales Returns 36,000.00
Net 2,964,000.00
Cost ratio 0.68
Estimated Cost of sales 2,015,520.00
 Inventory, Jan 1 500,000.00
Purchases 2,200,000.00
Purchase returns (60,000.00)
Puchase discounts (12,000.00)
Freight In 21,600.00
Goods Available for sale 2,649,600.00
Estimated Cost of sales 2,015,520.00
Estimated Cost of ending inventory 634,080.00
Less: Salvage Value of inventory 60,000.00
574,080.00

65 B Current Year Net Income 13,000,000.00

% ownership 30%
Investment income 3,900,000.00

Prior year net income 12,000,000.00

% ownership 10%
Investment income 1,200,000.00
Dividend income recognize 400,000.00
Adjustment to 2009 income 800,000.00

66 C Beginning balance 2,000,000.00

Additional investment 500,000.00
Interest income 20,000.00
Expense in administering the fund (15,000.00)
2,505,000.00

67 D Acquisition cost 6,000,000.00

Real estate tax 150,000.00
Legal Fees 60,000.00
Title Guarantee 18,000.00
Cost of Razing Old building 75,000.00
6,303,000.00
68 D Contract Price 3,000,000.00
Plans, specification and blue print 120,000.00
Arhcitect fees 250,000.00
Borrowing cost
900,000 x 14% x 10/12 105,000.00
2,300,000 x 14% x 9/12 241,500.00
3,716,500.00
69 D
Cost
3,716,500 x 3.75% x 3/12 34,842.00

Straight line rate 100% / 40 years 2.50%

150% declining rate 2.5% x 1.5 3.75

70 A Book Value Replacement Cost Appreciation

Equipment 8,000,000.00 12,000,000.00 4,000,000.00
Accumulated Depreciation (8M x 3/8) 3,000,000.00 4,500,000.00 1,500,000.00
Book Value 5,000,000.00 7,500,000.00 2,500,000.00

71 C 2500000 x 35% 875,000.00

72 A Net income before depreciation 10,000,000.00

Depreciation per tax book 1,000,000.00
Net income before depreciation 9,000,000.00
Tax rate 35%
Current tax 3,150,000.00

73 C Revaluation surplus. Jan 1 2,500,000.00

Amortization of revaluation 500,000.00
(2,500,000 / 5 = 500,000 )
Revaluation surplus, dec 31 2,000,000.00
Tax rate 700,000.00

74 C 2011 2012 2013 Total

Future taxable 40,000.00 60,000.00 20,000.00 120,000.00
amount - depreciation
enacted tax rate 35% 30% 30%
Deferred tax liability 14,000.00 18,000.00 6,000.00 38,000.00

75 B 2,011.00
Future deductible amount - warranty 400,000.00
enacted tax rate 35%
Deferred tax asset 140,000.00
76 D Taxable inocme for 2010 1,040,000.00
Tax rate 35%
364,000.00

77 A Current tax expense for 2010 364,000.00

Deferred tax expense 38,000.00
Defereed tax benefit (140,000.00)
Income tax expense 262,000.00

78 A Year Calculation Compensation expenseCumulative

79 C 1.00 P20 x 450 x 100 x 1/2 450000 450000
80 D 2.00 P20 x 423 x 100 x 2/3 114000 564000
3.00 P20 x 428 x 100 x 3/3 292000 856000

81 A 2005 120/120 100

2006 360/120 300
2007 384/120 320

82 D Only purchased goodwill is recognized as an asset.

83 C Annual rental 900,000.00

Lease bonus (500,000/5) 100,000.00
Total rent revenue 1,000,000.00

84 B Sales Price 360,000.00

Carrying Amount 330,000.00
Gain on sale 30,000.00

85 C New par ( 10 x 5 ) 50.00

86 A Service cost 1,200,000.00

interest cost ( 9% x 9,200,000) 900,000.00
Expected return (10% x 9,200,000) (920,000.00)
1,180,000.00
87 A Fair Value of pension fund -1/1 9,200,000.00
Actual return 250,000.00
Contribution 1,050,000.00
Benefits paid (1,100,000.00)
9,400,000.00
88 A
PBO 1/1 10,000,000.00
Service cost 1,200,000.00
interest cost ( 9% x 9,200,000) 900,000.00
Benefits paid (1,100,000.00)
11,000,000.00

89 B Expected return 920,000.00

Actual return (250,000.00)
670,000.00

90 C Prepaid/ accrued benefit cost 1/1 (800,000.00)

underfunding (1180000-1050000) (130,000.00)
Balance (930,000.00)

91 d P1000,000 should be charged to computer software, the 750,000 as selling expense.

92 B Duplication of Csoftware and training materials 2,500,000.00

Packaging product 900,000.00
3,400,000.00

93 C Other coding costs after feasibility 2,400,000.00

Other testing costs after feasibility 2,000,000.00
Costs of produing product masters 1,500,000.00
5,900,000.00
In the absence of any statement, the
preference share is noncumulative,
hence, the dividend is not deducted
94 D from net income

95 C Premium paid 40,000.00

Less: Increase in CSV ( 108000-87000) 21,000.00
Life insurance expense 19,000.00

The dividend is not deducted since it is already part of the increase

 96 A Taxes 50,000.00
Payment for land 1,000,000.00
Demolition 100,000.00
1,150,000.00

97 B Architect fee 230,000.00

Payment to city hall 120,000.00
Contract price 5,000,000.00
Safety fence around cosntruction site 35,000.00
Safety inspection on building 30,000.00
Removal of safetky fence 20,000.00
5,435,000.00

98 B Sales Price 2,500,000.00

Carrying Amount of Security X 1,400,000.00

The application guidance of PFRS 9, paragraph B5.12 provides that amounts recognize in
other comrpehensive income are not susequently transferred to profit or loss, but to equity - RE

99 B Shares Cost
1/1/2008 20000 x 110 20,000.00 2,200,000.00
4/1/2008 5000 x 100 5,000.00 500,000.00
12/31/2008 10% x 2,500,000 (250,000.00)
12/31/2009 10% x 2,500,000 (250,000.00)
12/31/2010 25,000 x 110 25,000.00 2,750,000.00
12/31/2011 25,000 x 92 (25,000.00) (2,300,000.00)
25,000.00 2,650,000.00
100 C
1/1/2008 20000 x 110 20,000.00 2,200,000.00
4/1/2008 5000 x 100 5,000.00 500,000.00
1/1/2010 50% x 25,000 12,500.00 -

Balance 37,500.00 2,700,000.00

1/1/2010 12500/37500 x 2,700,000 (12,500.00) (900,000.00)
Balance 25,000.00 1,800,000.00
12/31/2010 (2 for 1 split) 25,000.00 -

Balance 50,000.00 1,800,000.00

6/30/2011 1/2 x 1800000 (25,000.00) (900,000.00)
Balance 25,000.00 900,000.00