1 pts

Horse Co. manufactures products A and B from a joint process. During October, sales
values at the point of “split-off” were P50,000 for 4,000 units of product A and P100,000
for 12,000 units of product B. Selling prices per unit are P25.00 and P12.50,
respectively, for product A and for product B.
Assume that the joint cost allocated to product A by using the market value method was
P40,000. The production cost of product B would be reported at __________.
P80,000
P90,000
P130,000
P140,000

1 pts
Magna Co. produces three products, A, B and C. A and C are joint products while B is a
by-product of A. No joint cost is allocated to the by-product. The production data for the
year 2017 were as follows:
In Department I, 220,000 kilos of raw materials are processed at a total cost of
P240,000. After processing, 60% of the units are transferred to Department II while 40%
of the units (now C) are transferred to Department III.

In Department II, the materials are processed further at total additional cost of P76,000.
On completion of the process, 70% of the units (now A) are transferred to Department
IV while the other 30% emerge as B, the by-product, which is sold at P1.20 per kilo. The
selling expenses related to B amounted to P16,200.

In Department III, C is processed further at total additional cost of P330,000. In this

department, a normal loss units of C occurs during processing, which is equal to 10% of
the good output. The good output of C is sold at P12 per kilo.
In Department IV, A is processed further at total additional cost of P47,320 after which it
is ready for sale at P5 per kilo.

Market value method is used in allocating joint costs and treating the NRV of by-product
as an addition to product A sales.
Determine how much of the total joint cost of P240,000 is allocated to product A.
P101,564
P91,210
P95,267
P88,880

1 pts
Magna Co. produces three products, A, B and C. A and C are joint products while B is a
by-product of A. No joint cost is allocated to the by-product. The production data for the
year 2017 were as follows:
In Department I, 220,000 kilos of raw materials are processed at a total cost of
P240,000. After processing, 60% of the units are transferred to Department II while 40%
of the units (now C) are transferred to Department III.

In Department II, the materials are processed further at total additional cost of P76,000.
On completion of the process, 70% of the units (now A) are transferred to Department
IV while the other 30% emerge as B, the by-product, which is sold at P1.20 per kilo. The
selling expenses related to B amounted to P16,200.

In Department III, C is processed further at total additional cost of P330,000. In this

department, a normal loss units of C occurs during processing, which is equal to 10% of
the good output. The good output of C is sold at P12 per kilo.
In Department IV, A is processed further at total additional cost of P47,320 after which it
is ready for sale at P5 per kilo.

Market value method is used in allocating joint costs and treating the NRV of by-product
as an addition to product A sales.

Determine how much of the total joint cost of P240,000 is allocated to product C.
P138,436
P148,790
P144,733
P151,200

1 pts
Silver Company’s operations for the month just ended originally set up a 60,000 direct
labor hour level, with budgeted direct labor of P960,000 and budgeted variable
overhead of P240,000. The actual results revealed that direct labor incurred amounted
to P1,148,000 and that the unfavorable variable overhead variance was P40,000. Labor
trouble caused an unfavorable labor efficiency variance of P120,000, and new
employees hired at higher rates resulted in an actual average wage rate which was
higher by P0.40 than the standard average wage rate per hour.

The total number of standard direct labor hours allowed for the actual units produced is
__________.
P52,500
P60,000
P62,500
P70,000

1 pts
Use the information presented below:
Budgeted fixed overhead P10,000
Standard variable overhead (2 DLH @ P2 per DLH) 4 per unit
Actual fixed overhead P10,300
Actual variable overhead P19,500
Budgeted volume (5,000 units x 2 DLH) 10,000 DLH
Actual DLH 9,500
Units produced 4,500

Calculate the total overhead spending variance.

P500 unfavorable
P800 unfavorable
P1,000 unfavorable
P1,300 unfavorable

1 pts
Union Company uses a standard cost accounting system. The following overhead costs
and production data are available for August:
Standard fixed overhead rate per DLH P1
Standard variable overhead rate per DLH P4
Budgeted monthly DLH 40,000
Actual DLH worked 39,500
Standard DLH allowed for actual production 39,000
Overall overhead variance, favorable P2,000

The applied factory overhead for August should be ____________.

P195,000
P197,000
P197,500
P199,500

1 pts
Information on Ripley Company’s overhead costs for the January production activity is
as follows:
Budgeted fixed overhead P75,000
Standard fixed overhead rate per DLH P3
Standard variable overhead rate per DLH P6
Standard DLH allowed for actual production 24,000
Actual total overhead incurred P220,000

Ripley has a standard absorption and flexible budgeting system, and uses two-variance
method (two-way analysis) for overhead variances.
The volume (denominator) variance for January is ________.
P3,000 unfavorable
P3,000 favorable
P4,000 unfavorable
P4,000 favorable

1 pts
Woodman Company applies factory overhead on the basis of direct labor. Budget and
actual data for direct labor and overhead for the year are as follows:
Budget Actual
Direct labor P600,000 P550,000
Factory overhead costs P720,000 P680,000

The factory overhead for Woodman for the year is ___________.

Over applied by P20,000.
Over applied by P40,000.
Under applied by P20,000.
Under applied by P40,000.

1 pts
Schneider, Inc. had the following information relating 2017.
Budgeted factory overhead P74,800
Actual factory overhead P78,300
Applied factory overhead P76,500
Estimated labor hours 44,000 hours

If Schneider decides to use the actual results from 2017 to determine the 2018
overhead rate, what will the 2018 overhead rate be?
P1.650
P1.700
P1.738
P1.740

1 pts
Warley Company has under applied overhead of P45,000 for the year. Before
disposition of the under applied overhead, selected yearend balances from Warley’s
accounting records were:
Sales P1,200
Cost of goods sold P720,000
Direct materials inventory P36,000
Work-in-process P54,000
Finished goods P90,000

Under Warley’s cost accounting system, over or under applied overhead is allocated to
appropriate inventories and CGS based on year-end balances in its year-end income
statement. Warley should report CGS of __________.
P682,500
P684,000
P756,000
P757,500

1 pts
Some units of output failed to pass final inspection at the end of the manufacturing
process. The production and inspection supervisors determined that the incremental
revenue from reworking the units exceeded the cost of rework. The rework of the
defective units was authorized, and the following costs were incurred in reworking the
units:
Materials requisitioned from stores:
Direct materials P5,000
Miscellaneous supplies 300
Direct labor 14,000

The manufacturing overhead budget includes an allowance for rework. The

predetermined manufacturing overhead rate is 150% of direct labor cost.

The account(s) to be charged and the appropriate charges for the rework would be:
WIP inventory control for P19,000.
WIP inventory control for P5,000 and factory overhead for P35,300.
Factory overhead control for P19,300
Factory overhead control for P40,300.

1 pts
Gumamela Mfg. Co. started 150 units in process on job order #13. The prime costs
placed in process consisted of P30,000 and P18,000 for materials and direct labor,
respectively, and a pre-determined rate was used to charge factory overhead to
production at 133-1/3% of the direct labor cost. Upon completion of the job order, units
equal to 20% of the good output were rejected for failing to meet strict quality control
requirements.

The Company sells rejected units as scrap at only 1/3 of production cost and bills
customers at 150% of production cost.

If the rejected units were ascribed to Company failure, the billing price of job order #13
would be ___________.
P86,400
P90,000
P102,000
P108,000

1 pts
Gumamela Mfg. Co. started 150 units in process on job order #13. The prime costs
placed in process consisted of P30,000 and P18,000 for materials and direct labor,
respectively, and a pre-determined rate was used to charge factory overhead to
production at 133-1/3% of the direct labor cost. Upon completion of the job order, units
equal to 20% of the good output were rejected for failing to meet strict quality control
requirements.

The Company sells rejected units as scrap at only 1/3 of production cost and bills
customers at 150% of production cost.

If the rejected units were ascribed to customer action, the billing price of job order #13
would be ____________.
P86,400
P90,000
P102,000
P108,000

1 pts
AJD Company has two service departments (A and B) and two producing departments
(X and Y). Data provided are as follows:
Service Departments Operating Departments
A B X Y
Direct costs P150 P300 P5,000 P6,000
Services performed by
Dept A 0% 40% 40% 20%
Services performed by
Dept B 20% 0% 70% 10%

If step-down is used to allocate service department costs and Department A costs are
allocated first. The service department cost allocated to Department X is _______.
P5,374.00
P5,075.00
P5,087.50
P5,270.00

1 pts
AJD Company has two service departments (A and B) and two producing departments
(X and Y). Data provided are as follows:
Service Departments Operating Departments
A B X Y
Direct costs P150 P300 P5,000 P6,000
Services performed by
Dept A 0% 40% 40% 20%
Services performed by
Dept B 20% 0% 70% 10%

If reciprocal method is used to allocate service department costs. The service

department cost allocated to Department X is _______.
P5,295.83
P5,087.50
P5,375.00
P5,085.00

1 pts
Ablan Co. produces a special find of insecticides. Materials are added at the end of
production of Mixing Department. For the month of March, the following data were
gathered:
WIP March 1, 40% complete
as to conversion costs 40,000 units
Started during the month 100,000 units
Transferred to the Molding Department 85,000 units
Lost units in processing 10,000 units
WIP March 31, 60% complete
as to conversion costs 45,000 units

The costs corresponding to the lost units were absorbed by the remaining units.
What are the equivalent units (FIFO)for the materials unit cost calculation?
130,000
85,000
140,000
85,000

1 pts
Ablan Co. produces a special find of insecticides. Materials are added at the end of
production of Mixing Department. For the month of March, the following data were
gathered:
WIP March 1, 40% complete
as to conversion costs 40,000 units
Started during the month 100,000 units
Transferred to the Molding Department 85,000 units
Lost units in processing 10,000 units
WIP March 31, 60% complete
as to conversion costs 45,000 units

The costs corresponding to the lost units were absorbed by the remaining units.
What are the equivalent units (FIFO)for the conversion cost calculation?
96,000
90,000
112,000
106,000

1 pts
Ablan Co. produces a special find of insecticides. Materials are added at the end of
production of Mixing Department. For the month of March, the following data were
gathered:
WIP March 1, 40% complete
as to conversion costs 40,000 units
Started during the month 100,000 units
Transferred to the Molding Department 85,000 units
Lost units in processing 10,000 units
WIP March 31, 60% complete
as to conversion costs 45,000 units

The costs corresponding to the lost units were absorbed by the remaining units.
What are the equivalent units (AVERAGE) )for the conversion cost calculation?
112,000
96,000
90,000
122,000

1 pts
Dex, Co. had the following production for the month of June.
WIP June 1, 40% complete 10,000 units
Started during the month 40,000 units
Transferred to Finished Goods 33,000 units
Abnormal spoilage incurred 2,000 units
WIP June 30, 60% 15,000 units
Materials are added at the beginning of the process. As to conversion costs, the
beginning WIP was 70% completed and the ending WIP was 60% completed. Spoilage
is detected at the end of the process.
The equivalent units (FIFO) for June, with respect to conversion costs, __________.
44,000
35,000
40,000
37,000.

1 pts
Dex, Co. had the following production for the month of June.
WIP June 1, 40% complete 10,000 units
Started during the month 40,000 units
Transferred to Finished Goods 33,000 units
Abnormal spoilage incurred 2,000 units
WIP June 30, 60% 15,000 units

Materials are added at the beginning of the process. As to conversion costs, the
beginning WIP was 70% completed and the ending WIP was 60% completed. Spoilage
is detected at the end of the process.
The equivalent units (AVERAGE) for June, with respect to conversion costs, ______.
44,000
42,000
37,000
40,000

1 pts
Given for a certain process:
Beginning WIP, 2/5 completed 500 units
Transferred in 2,000 units
Normal spoilage 200 units
Abnormal spoilage 300 units
Goods completed and transferred out 1,700 units
Ending WIP, 1/3 completed 300 units
Conversion costs in beginning inventory P610
Current period conversion costs P3,990

All spoilage occur at the end of the process.

The conversion cost (FIFO) per equivalent unit amounted to ____________.
P1.90
P2.19
P2.00
P1.90

1 pts
Given for a certain process:
Beginning WIP, 2/5 completed 500 units
Transferred in 2,000 units
Normal spoilage 200 units
Abnormal spoilage 300 units
Goods completed and transferred out 1,700 units
Ending WIP, 1/3 completed 300 units
Conversion costs in beginning inventory P610
Current period conversion costs P3,990

All spoilage occur at the end of the process.

The conversion cost (AVERAGE) per equivalent unit amounted to ____________.
P1.73
P2.00
P1.90
P1.80

1 pts
On September 1, 2017, Ramus Company purchased machine parts from Jackie Chan
Company for 6 million Hong Kong dollars to be paid on January 1, 2018. The exchange
rate on September 1 is HK$7.7 = P1. On the same date, Ramus enters into a forward
contract and agrees to purchase HK$6 million on January 1, 2018, at the rate of HK$7.7
= P1. On December 31, 2017 and on January 1, 2018, the exchange rate is HK$8.0 =
P1.
What is the fair value of the forward contract on December 31, 2017?
P0
P29,221
P750,000
P779,221

1 pts
On September 1, 2017, Ramus Company purchased machine parts from Jackie Chan
Company for 6 million Hong Kong dollars to be paid on January 1, 2018. The exchange
rate on September 1 is HK$7.7 = P1. On the same date, Ramus enters into a forward
contract and agrees to purchase HK$6 million on January 1, 2018, at the rate of HK$7.7
= P1. On December 31, 2017 and on January 1, 2018, the exchange rate is HK$8.0 =
P1.
The nominal value of the forward contract on December 31, 2017?
P0
P29,221
P750,000
P779,221

1 pts
Stark, Inc. placed an order for inventory costing 500,000 foreign currency (FC) with a
foreign vendor on April 15 when the spot rate was 1FC = P0.683. Stark received the
goods on May 1 when the spot rate was 1FC = P0.687. Also on May 1, Stark entered
into a 90-day forward contract to purchase 500,000 FC at a forward rate of 1FC =
P0.693. Payment was made to the foreign vendor on August 1 when the spot rate was
1FC = P0.696. Stark has a June 30 yearend. In that date, the spot rate was 1FC =
P0.691, and the forward rate on the contract was value of the changes in the forward
rates over time. The relevant discount rate was 6%.1FC = P0.695. Changes in the
current value of the forward contract are measured as the present

The foreign exchange gain or loss on hedging instrument (forward contract) on June 30
amounted to _____________.
P2,000
P1,000
P995
P0

1 pts
Stark, Inc. placed an order for inventory costing 500,000 foreign currency (FC) with a
foreign vendor on April 15 when the spot rate was 1FC = P0.683. Stark received the
goods on May 1 when the spot rate was 1FC = P0.687. Also on May 1, Stark entered
into a 90-day forward contract to purchase 500,000 FC at a forward rate of 1FC =
P0.693. Payment was made to the foreign vendor on August 1 when the spot rate was
1FC = P0.696. Stark has a June 30 yearend. In that date, the spot rate was 1FC =
P0.691, and the forward rate on the contract was value of the changes in the forward
rates over time. The relevant discount rate was 6%.1FC = P0.695. Changes in the
current value of the forward contract are measured as the present

The nominal value of the forward contract on June 30 amounted to ___________.

P2,000
P1,000
P995
P0

1 pts
Stark, Inc. placed an order for inventory costing 500,000 foreign currency (FC) with a
foreign vendor on April 15 when the spot rate was 1FC = P0.683. Stark received the
goods on May 1 when the spot rate was 1FC = P0.687. Also on May 1, Stark entered
into a 90-day forward contract to purchase 500,000 FC at a forward rate of 1FC =
P0.693. Payment was made to the foreign vendor on August 1 when the spot rate was
1FC = P0.696. Stark has a June 30 yearend. In that date, the spot rate was 1FC =
P0.691, and the forward rate on the contract was value of the changes in the forward
rates over time. The relevant discount rate was 6%.1FC = P0.695. Changes in the
current value of the forward contract are measured as the present

The fair value of the forward contract on June 30 amounted to ___________.

P2,000
P1,000
P995
P0

1 pts
On November 1, 2017, Creamline Dairy Corp. concluded that the Thailand baht would
weaken during the next six months because of the coup that transpired recently. In
hopes of reporting a gain, Creamline entered into a foreign exchange forward
for speculation on November 1, 2017, to sell 1,000,000 baht on April 30, 2018 at the
forward rate.
11/1/2017 12/31/2017 4/30/2018
Spot rate P1.190 P1.180 P1.210
Forward rate P1.199 P1.187 P1.210

The December 31, 2017 profit and loss statement, foreign exchange gain or loss on
forward contract amounted to _________.
P10,000 gain
P10,000 loss
P12,000 gain
P12,000 loss

1 pts
On January 1, 2017, George Fatima, Inc. paid P16,000 cash to acquire a put foreign
exchange option for 1,000,000 Thailand baht, with an expiration date of December 31,
2017. The option hedges 2017’s forecasted exporting sales of 1,000,000 baht. George
Fatima’s fiscal year ends June 30. Include the time value of money in assessing hedge
effectiveness or nonsplit accounting is used.
1/1/17 6/30/17 12/31/17
Spot rate (market price) P1.20 P1.12 P1.15
Strike price (exercise price) P1.19 P1.19 P1.19
Fair value of put option at
6/30/17 P181,000

What is the intrinsic value (IV) on January 1, 2017?

P16,000
P0
P10,000
P6,000

1 pts
On January 1, 2017, George Fatima, Inc. paid P16,000 cash to acquire a put foreign
exchange option for 1,000,000 Thailand baht, with an expiration date of December 31,
2017. The option hedges 2017’s forecasted exporting sales of 1,000,000 baht. George
Fatima’s fiscal year ends June 30. Include the time value of money in assessing hedge
effectiveness or nonsplit accounting is used.
1/1/17 6/30/17 12/31/17
Spot rate (market price) P1.20 P1.12 P1.15
Strike price (exercise price) P1.19 P1.19 P1.19
Fair value of put option at
6/30/17 P181,000

What is the time value (TV) of option on January 1, 2017?

P0
P6,000
P16,000
P10,000

1 pts
On January 1, 2017, George Fatima, Inc. paid P16,000 cash to acquire a put foreign
exchange option for 1,000,000 Thailand baht, with an expiration date of December 31,
2017. The option hedges 2017’s forecasted exporting sales of 1,000,000 baht. George
Fatima’s fiscal year ends June 30. Include the time value of money in assessing hedge
effectiveness or nonsplit accounting is used.
1/1/17 6/30/17 12/31/17
Spot rate (market price) P1.20 P1.12 P1.15
Strike price (exercise price) P1.19 P1.19 P1.19
Fair value of put option at
6/30/17 P181,000

The forex gain or loss on option contract on June 30, 2017 should be __________.
P5,000 loss- current earnings
P65,000 gain-OCI
P65,000 loss-OCI
P0 gain-OCI

1 pts
On January 1, 2017, George Fatima, Inc. paid P16,000 cash to acquire a put foreign
exchange option for 1,000,000 Thailand baht, with an expiration date of December 31,
2017. The option hedges 2017’s forecasted exporting sales of 1,000,000 baht. George
Fatima’s fiscal year ends June 30. Include the time value of money in assessing hedge
effectiveness or nonsplit accounting is used.
1/1/17 6/30/17 12/31/17
Spot rate (market price) P1.20 P1.12 P1.15
Strike price (exercise price) P1.19 P1.19 P1.19
Fair value of put option at
6/30/17 P181,000

The June 30, 2017 forex gain or loss to be recognized in current earnings if zero export
sales for 2017:
P0
P26,000
P39,000
P65,000

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales
On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:

Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The dividend income of Par Company for 2017 should be ________.

P18,330
P10,000
P8,000
P8,200

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The balance of Investment in Sub Company as at December 31, 2017 should be

_______.
P354,600
P351,960
P350,330
P340,000

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.
The beginning inventory of Par Company includes P2,500 worth of merchandise
acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The NCI in net income for 2017 should be _____________.

P6,280
P6,120
P5,720
P5,320

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The profit attributable to equity holders of parent/controlling interest for 2017 should be
______________.
P122,600
P118,730
P118,570
P118,330

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.
Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The consolidated net income/group net income for 2017 should be _________.
P124,050
P112,600
P118,570
P118,330

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.
Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The parent’s portion of consolidated retained earnings as at December 31, 2017 should
be ____________.
P700,000
P752,000
P753,600
P809,680.

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.
Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The consolidated retained earnings as at December 31, 2017 should be ___________.

P700,000
P752,000
P753,600
P809,680

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
 Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The stockholders’ equity of subsidiary as at December 31, 2017 should be _________.

P450,000
P470,000
P481,600
P484.000

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The NCI using proportionate basis (partial goodwill method) as at December 31, 2017
should be _____________.
P97,120
P96,920
P96,320
P73,520

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The NCI using full goodwill method as at December 31, 2017 should be ___________.
P101,320
P96,920
P96,320
P73,520

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise
During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
acquired from Par Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The consolidated stockholders’ equity using proportionate basis (partial goodwill

method) as at December 31, 2017 should be __________.
P1,911,000
P1906,000
P1905,920
P1740,000

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise
During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
acquired from Par Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000
The consolidated stockholders’ equity using full goodwill method as at December
31, 2017 should be _____________.
P1,911,000
P1,906,000
P1,905,920
P1,740,000

1 pts
Income information for 2016 taken from the separate company financial statements of
Peras Corporation and its 75% owned subsidiary, Sky Corporation is presented as
follows:
PERAS SKY
Sales P1,000,000 P460,000
Gain on sale of building 20,000
Dividend income 75,000
Cost of goods sold (500,000) (260,000)
Depreciation expense (100,000) (60,000)
Other expenses (200,000) (40,000)
Net Income 295,000 100,000

Peras gain on sale of building relates to a building with a book value of P40,000 and
a 10-year remaining useful life that was sold to Sky for P60,000 on January 1, 2016.

At what amount will the gain on sale of building appear on the consolidated/group
income statement of Peras and Sky for the year 2016 should be _______.
P0
P5,000
P15,000
P20,000

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The consolidated/group depreciation for 2016 should be __________.

P158,000
P160,000
P162,000
P180,000

1 pts
On January 1, 2015, Par Company purchased 80% of the outstanding shares of Sub
Company by paying P340,000, the Sub Company’s common stock and retained
earnings on this date amounting to P150,000 and P230,000, respectively. Also on this
date, an equipment is undervalued by P20,000 with a remaining life of 10 years.

On January 1, 2017, Sub Company had P150,000 of capital stock and P300,000 of
retained earnings. Also on the same date, Par Company had P1,000,000 of capital
stock and P700,000 of retained earnings.

During the year, Par Company sold merchandise to Sub for P60,000 and in turn,
purchased P40,000 from Sub Company. Inter-company sales of merchandise were
made of the following gross profit rates:
Sales made by Parent
Company 25% based on cost
Sales made by subsidiary 25% based on sales

On December 31, 2017, 30% of all inter-company sales remain in the ending inventory
of the purchasing affiliate.

The beginning inventory of Par Company includes P2,500 worth of merchandise

acquired from Sub Company on which Sub Company reported a profit of P1,000. While
the beginning inventory of Sub also includes P3,000 of merchandise acquired from Par
Company at 35% mark-up.

Using cost method, the following selected results of operations for 2017 were as
follows:
Parent Subsidiary
Dividend paid P60,000 P10,000
Net Income from own operations P100,000 P30,000
Dividend income 8,000 0
Net Income P108,000 P30,000

The profit attributable to equity holders of parent for 2016 should be ___________.
P295,000
P277,000
P275,000
P220,000

1 pts
The Lampara Company acquired a 70% interest in the Oak Company for P1,960,000
when the fair value of Oak’s identifiable assets and liabilities was P700,000 and elected
to measure the non-controlling interest at its share of the identifiable net assets. Annual
impairment reviews of goodwill have not resulted in any impairment losses being
recognized. Oak’s current statement of financial position shows share capital of
P100,000, a revaluation reserve of P300,000 and retained earnings of P1,400,000.

Under PFRS 3 Business combinations, what figure in respect of goodwill should now be
carried in Lampara’s consolidated statement of financial position?
P1,470,000
P1,260,000
P700,000
P160,000
1 pts
Chapel Hill Company had common stock of P350,000 and retained earnings of
P490,000. Blue Town Inc. had common stock of P700,000 and retained earnings of
P980,000. On January 1, 2016, Blue Town issued 34,000 shares of common stock with
a P12 par value and a P35 fair value for all of Chapel Hill Company’s outstanding
common stock. The combination was accounted for as an acquisition.

Immediately after the combination, what was the consolidated net asset?
P2,870,000
P2,520,000
P1,680,000
P1,190,000

1 pts
On January 1, 2016, Post Company acquired an 80% investment in Stake Company.
The acquisition cost was equal to Post’s equity in Stake’s net assets at that date. On
January 1, 2016, Post and Stake had retained earnings of P500,000 and P100,000,
respectively. During 2016, Post had net income of P200,000, which included its equity
in Stake earnings, and declared dividends of P50,000. Stake’s net income and
dividends for 2016 amounted to P40,000 and P20,000, respectively. There were no
other intercompany transactions.

On December 31, 2016, what should the consolidated retained earnings be?
P650,000
P666,000
P766,000
P770,000

1 pts
At the end of 2016, Paper Company’s stockholders’ equity includes common stock of
P500,000 and additional paid-in capital of P300,000. Paper purchased a 70% interest in
Slick Company on January 1, 2016, when the non-controlling interest in Slick had a fair
value of P90,000. No differential arose from the business combination. During 2016,
Slick reports net income of P20,000 and declares dividend of P5,000. The 2016
consolidated balance sheet includes retained earnings of P630,000 (controlling interest
portion).

Determine the consolidated equity on December 31, 2016:

P1,430,000
P1,457,000
P1,524,000
P1,526,000
1 pts
On January 1, 2016, Gold Rush Company acquires 80% ownership in California
Corporation for P200,000. The fair value of the non-controlling interest that time is
determined to be P50,000. It reports net assets with a book value of P200,000 and fair
value of P230,000. Gold Rush Company reports net assets with a book value of
P600,000 and a fair value of P650,000 at that time, excluding investment in California.

What will be the amount of goodwill that would be reported immediately after the
combination under current accounting practice of the option of full goodwill method is
used?
P50,000
P40,000
P30,000
P20,000

1 pts
On November 1, 2016, the Western Appliance Center ships five (5) of its appliances to
the ABC store on consignment. Each unit is to be sold at P25,000 payable P5,000 in the
month of purchase and P1,000 per month thereafter. The consignee is to be entitled to
20% of all amounts collected on consignment sales. ABC Store sells three (3)
appliances on November and one (1) on December. Regular monthly collections are
made by the consignee, and appropriate cash remittances are made to the consignor at
the end of the month. The cost of the appliances shipped by the consignor was P15,500
per unit. The consignor paid shipping costs to the consignee totaling P5,000.

The cost of inventory on consignment on December 31, 2016 is ____________.

P15,500
P16,500
P19,600
P24,500

1 pts
On November 1, 2016, the Western Appliance Center ships five (5) of its appliances to
the ABC store on consignment. Each unit is to be sold at P25,000 payable P5,000 in the
month of purchase and P1,000 per month thereafter. The consignee is to be entitled to
20% of all amounts collected on consignment sales. ABC Store sells three (3)
appliances on November and one (1) on December. Regular monthly collections are
made by the consignee, and appropriate cash remittances are made to the consignor at
the end of the month. The cost of the appliances shipped by the consignor was P15,500
per unit. The consignor paid shipping costs to the consignee totaling P5,000.

The total amount remitted to consignor for the year 2016 is __________.
P23,000
P18,400
P12,000
P6,400

1 pts
On July 15, 2016, James Last Sales Company received a shipment of merchandise with
a selling price of P150,000 from James Bond Company. The consigned goods cost
James Bond Company P100,000 and freight charges of P1,200 has been paid to ship
the goods to James Last Company.

The consignment agreement provided for a sale of merchandise on credit with terms of
2/10, n/30. The 15% commission is to be based on the accounts receivable collected by
the consignee. Cash discounts taken by customers, expenses applicable to goods on
consignment and any cash advanced to the consignor are deductible from the
remittance by the consignee.

James Last Company advanced to James Bond Company upon receipt of the shipment.
Expenses of P8,000 was paid by James Last. By August 2016, 70% of the shipment
had been sold, and 80% of the resulting accounts receivable had been collected, all
within the discount period. Remittance of the amount due was made on August 30,
2016.

The cash remitted by James Last Company is ________.

P1,720
P22,300
P23,400
P61,720

1 pts
On July 15, 2016, James Last Sales Company received a shipment of merchandise with
a selling price of P150,000 from James Bond Company. The consigned goods cost
James Bond Company P100,000 and freight charges of P1,200 has been paid to ship
the goods to James Last Company.

The consignment agreement provided for a sale of merchandise on credit with terms of
2/10, n/30. The 15% commission is to be based on the accounts receivable collected by
the consignee. Cash discounts taken by customers, expenses applicable to goods on
consignment and any cash advanced to the consignor are deductible from the
remittance by the consignee.

James Last Company advanced to James Bond Company upon receipt of the shipment.
Expenses of P8,000 was paid by James Last. By August 2016, 70% of the shipment
had been sold, and 80% of the resulting accounts receivable had been collected, all
within the discount period. Remittance of the amount due was made on August 30,
2016.
The net income (loss) on consignment is ___________.
P14,280
P13,560
P11,880
P8,730

1 pts
On July 15, 2016, James Last Sales Company received a shipment of merchandise with
a selling price of P150,000 from James Bond Company. The consigned goods cost
James Bond Company P100,000 and freight charges of P1,200 has been paid to ship
the goods to James Last Company.

The consignment agreement provided for a sale of merchandise on credit with terms of
2/10, n/30. The 15% commission is to be based on the accounts receivable collected by
the consignee. Cash discounts taken by customers, expenses applicable to goods on
consignment and any cash advanced to the consignor are deductible from the
remittance by the consignee.

James Last Company advanced to James Bond Company upon receipt of the shipment.
Expenses of P8,000 was paid by James Last. By August 2016, 70% of the shipment
had been sold, and 80% of the resulting accounts receivable had been collected, all
within the discount period. Remittance of the amount due was made on August 30,
2016.

The cost of unsold units in the hands (merchandise on consignment) of James Last is
_________.
P15,000
P30,360
P30,840
P31,860

1 pts
Shake’s, Inc., franchisor, enters into a franchising agreement with Sha, franchisee on
June 30, 2016. The agreement calls for a total franchise fee of P1 million of which
P100,000 is payable upon signing the contract and the balance in four equal semi-
annual installments. It is agreed that the down payment is nonrefundable
notwithstanding lack of substantial performance of services by the franchisor.

When Shake’s, Inc. prepares its financial statements as of June 30, 2016, the unearned
franchise fee to be recorded is _________.
P0
P100,000
P900,000
P1,000,000

1 pts
PJD Enterprises, a franchisor, charges franchisees a “franchise fee” of P500,000. Of
this amount, a nonrefundable P200,000 is paid upon the signing of the contract with the
balance payable in three equal installments after each year thereafter starting 2017.
PJD will assist in locating a suitable business site conduct market study, oversee the
construction facilities, and provide initial training for employees.

On October 1, 2016, PJD entered into a franchising agreement to cover an entirely new
and untested area. By December 31, 2016, PJD had substantially completed and
rendered appropriate services at a total cost of P150,000 but, somehow has raised
some doubts on the collectability of the balance of the franchise fee.

In its 2016 income statement, PJD Enterprises should recognize profit of ________.
P50,000
P140,000
P200,000
P350,000

1 pts
Ferragamo’s entered into a franchise agreement with Rusty. As per agreement on July
1, 2016, Rusty is to pay Ferragamo an up-front franchise fee of P1,000,000 and
subsequent annual franchise fees of P50,000 over the next four years. Cost of initial
franchise services rendered by Ferragamo’s during the year is P250,000 which is
substantial, and it estimates the cost of subsequent annual services to be P10,000.
Rusty paid that annual franchises fee for 2017, and Ferragamo’s rendered the services
for the year.

In its December 31, 2017 income statement, the amount of realized franchise fee
revenue to be reported by Ferragamo’s is ____________.
P25,000
P50,000
c. P250,000
P300,000

1 pts
SSR Restaurant Inc., sold a fastfood restaurant franchise to Shar. The sale agreement,
signed on January 2, 2016, called for a P30,000 down payment plus two P10,000
annual payments, representing the value of initial franchise service rendered by SSR
Restaurant. In addition, the agreement required that franchisee to pay 5% of its gross
revenue to the franchisor; this was deemed sufficient to cover the cost and provide a
reasonable profit margin on continuing franchise services to be performed by SSR
Restaurant. The restaurant opened early in 2016, and its sales for the year amounted to
P500,000.

Assuming a 10% interest rate is appropriate, SSR Restaurant’s 2016 total revenue will
be ________. (The present value of an annuity of P1 at 10% for 2 periods in 1.7355)
P30,000
P47,355
P72,355
P74,090

1 pts
On September 1, 2016, Cindy Company entered into franchise agreements with two
franchisees. The agreements required an initial fee payments of P700,000 plus four
P300,000 payments due every four (4) months, the first payment due December 31,
2016. The market interest rate is 12%. The initial deposit is refundable until substantial
performance has been completed. The following table describes each agreement:

Franchisee Profitability of Full Services Performed by Total Costs Incurred to

Collection Franchisor, Dec 31, Dec 31. 2016
2016
A Likely Substantially P700,000
B Doubtful 25% N/A

The present and future value tables at 4% for four (4) periods were as follows:

Present value of P1 ………………………………………………. 0.8548

Present value of an ordinary annuity of P1 ……………………. 3.6299
Future value of P1 ………………………………………………… 1.1699
Future value of an ordinary annuity P1 …………………………. 4.2465

What amount of net income to be reported in 2016, assuming P1,000,000 was received
from each franchisee during the year:
Franchisee A, P1,088,970; Franchisee B, P0
Franchisee A, P1,788,970; Franchisee B, P0
Franchisee A, P1,132,529; Franchisee B, P0
Franchisee A, P1,132,529; Franchisee B, P43,559.

1 pts
On October 1, 2014, Oldies Corp. enters a contract to build a sports arena which it
estimated to cost P3,120,000. Oldies bills its client at cost plus 20% and recognized
construction revenue on a percentage of completion basis. Data on this project for
2014, 2015 and 2016 are as follows:
Year Cost Incurred Estimated Costs to Complete
2014 P546,000 P2,054,000
2015 P998,400 P1,315,600
2016 P1,575,600 -

Oldies Corp.’s gross profit on the project for 2016 is __________.

P146,640
P477,360
P237,160
P624,000

1 pts
In 2016, AJD Construction Co. was contracted to build Village Company’s private road
network for P100 million. The project was estimated to be completed in two years, and
the contract provided for:

5% mobilization fee (to be deducted from the last billing) payable within 15 days after
signing the contract;
10% retention provision on all billings; and
Payment of progress billings within 10 days from acceptance.

The Company which uses the percentage of completion method of accounting,

estimated a 25% gross margin on the project. By the end of 2016, the Company had
presented progress billings corresponding to 50% completion. All of the progress
billings presented in 2016 were accepted, except the last one for 10% which was
accepted on January 5, 2017. With the exception of one bill for 8% which was due on
January 7, 2017, all of the billings accepted in 2016 were settled.

Payments made by the Village Company in 2016 amounted to ________.

P33,800,000
P38,500,000
P40,000,000
P45,000,000

1 pts
The Kirby Construction Company has consistently used the cost recovery method (zero-
profit approach) of recognizing income.

In 2016, it began a construction project to erect a building for P3,000,000. The project
was completed during 2017. Under this method, the accounting records disclosed the
following (any costs are expected to be recoverable):
 2016 2017
Progress billing during the year P1,100,000 P1,900,000
Costs incurred during the year 900,000 1,800,000
Collections on billings during the year
900,000 2,100,000
Estimated costs to complete the
project 1,800,000 0

The Compute should recognize revenue for the year amounting to ______.
2016, P0; 2017; P3,000,000
2016, P900,000; P2,100,000
2016, P0; 2017, P0
2016, P1,000,000; 2017, P2,000,000

1 pts
The Gamboa Construction Company started work on three job sites during the current
year. Any costs incurred are expected to be recoverable. Data relating to the three jobs
are given below:
Batangas Laguna San Fernando
Contract price P500,000 P700,000 P250,000
Costs incurred P375,000 P100,000 P100,000
Estimated costs to complete
0 P400,000 P100,000
Billings on contract P500,000 P100,000 P150,000
Collections on contract P500,000 P100,000 P100,000

What would be the amount of construction in progress to be reported on yearend

balance sheet if the percentage of completion method or cost recovery method is used?
Percentage of completion, P765,000; Cost recovery method, P700,000
Percentage of completion, P765,000; Cost recovery method, P765,000
Percentage of completion, P265,000; Cost recovery method, P265,000
Percentage of completion, P265,000; Cost recovery method, P200,000

1 pts
DJ Builders Company began operations on January 1, 2016. During the year, the
Company entered into a contract with Joey Company to construct a manufacturing
facility. At that time, the Company estimated that it would take five years to complete the
facility at a total cost of P4,800,000. The contract price for the construction of the facility
is P5,800,000.

During 2016, the Company incurred P1,250,000 in construction costs related to the
project. Because of rising material and labor costs, the estimated cost to complete the
contract at the end of 2016 is P3,750,000. Joey Company was billed for and paid 30%
of the contract price in accordance with the contract agreement. It is further agreed, that
any costs incurred is expected to be recoverable.

Compute the amount of construction in progress (net) - due from customers or progress
billings (net) - due to customers ___________.
Cost recovery method, P290,000 due to; Percentage of completion, P490,000 due fr
Cost recovery method, 0 due from; P0 due to
Cost recovery method, P490,000 due to; Percentage of completion, P290,000 due to
Cost recovery method, P490,000 due fr; Percentage of completion; P290,000 due to

1 pts
Dudong Electronics makes all of its sales on credit and accounts for them using the
installment sales method, For simplicity, assume that all sales occur on the first day of
the year and that all collections are made on the last day of the year. Dudong
Electronics charges 18% interest on the unpaid installment balance. Data for 2016 and
2017 are as follows:
2016 2017
Sales P100,000 P120,000
Cost of goods sold 60,000 80,000
Cash collections (principal and interest
)
2016 sales 40,000 50,000
2017 sales 90,000

The interest income recognized in 2017 amounted to __________.

P14,040
P21,600
P35,640
P49,700

1 pts
Dudong Electronics makes all of its sales on credit and accounts for them using the
installment sales method, For simplicity, assume that all sales occur on the first day of
the year and that all collections are made on the last day of the year. Dudong
Electronics charges 18% interest on the unpaid installment balance. Data for 2016 and
2017 are as follows:
2016 2017
Sales P100,000 P120,000
Cost of goods sold 60,000 80,000
Cash collections (principal and interest
)
2016 sales 40,000 50,000
2017 sales 90,000

The realized gross profit in 2017 amounted to ___________.

P14,384
P22,800
P37,184
P39,600

1 pts
Dipolog Company sells appliances on an installment basis. Below are information for
the past three years:
2017 2016 2015
Installment sales P750,000 P600,000 P400,000
Cost of sales 450,000 375,000 260,000
Collections on:
2017 installment sales 275,000
2016 installment sales 180,000 240,000
2015 installment sales 125,000 120,000 150,000

Repossessions on defaulted accounts included one made on a 2017 sale for which the
unpaid balance amounted to P5,000. The depreciated value on the appliance
repossessed was P2,500.

The realized gross profit in 2017 on collections of 2017 installment sales was
_________.
P108,000
P110,000
P221,250
P221,500

1 pts
On January 1, 2016, Art Company sold its idle plant facility to Tony, Inc. for P1,050,000.
On this date, the plant had a depreciated cost of P735,000. Tony paid P150,000 cash
on January 1, 2016 and signed a P900,000 note bearing interest at 10%. The note was
payable in three annual installments of P300,000 beginning January 1, 2017. Art
appropriately accounted for the sale under the installment method. Tony made a timely
payment of the first installment on January 1, 2017 of P390,000 which included interest
of P90,000 to date of payment.

At December 31, 2017, Art has deferred gross profit of ________.

P153,000
P180,000
P225,000
P270,000

1 pts
Gianne Co. sold a computer on an installment basis on October 1, 2016. The unit cost
to the Company was P86,400 but the installment selling price was set at P122,400.
Terms of payment included the acceptance of a used computer with a trade-in
allowance of P43,200. Cash of P7,200 was paid in addition to the traded-in computer
with the balance to be paid in ten monthly installments due at the end of each month
commencing the month of sale.

It would require P1,800 to recondition the used computer so that it could be resold for
P36,000. A 15% gross profit was usual from the sale of used computer.

The realized gross profit from the 2016 collections amounted to _________.
P5,760
P14,100
P11,520
P48,960

1 pts
The Molino Furniture Company appropriately used the installment sales method in
accounting for the following installment sale. During 2016, Molino sold furniture to an
individual for P3,000 at a gross profit of P1,200. On June 1, 2016, this installment
account receivable had a balance of P2,200 and it was determined that no further
collections would be made. Molino, therefore, repossessed the merchandise. When
reacquired, the merchandise, was appraised as being worth only P1,000. In order to
improve its salability, Molino incurred costs of P100 for reconditioning. Normal profit on
resale is P200.

What should be the loss on repossession attributable to this merchandise?

P220
P620
P320
P880

1 pts
Marceliano Sales Corp. accounts for sales on the installment basis. The balances of the
control accounts for Installments Contracts Receivable at the beginning and end of
2017 were:
Jan. 1, 2017 Dec. 31, 2017
Installment Contracts Receivable –
2015 P24,020
Installment Contracts Receivable –
2016 344,460 67,440
Installment Contracts Receivable –
2017 410,090

During 2017, the Company repossessed a refrigerator which had been sold in 2016 for
P5,400 and P3,200 had been collected prior to default. The Company sales and cost of
sales figures are summarized below:
2015 2016 2017
Net sales P380,000 P432,000 P602,000
Cost of sales 247,000 285,120 379,260

The Company values the repossessed goods at market value. The resale price of the
repossessed merchandise amounted to P1,700.

Compute the Total Realized Gross Profit on Installment Sales in 2017.

P172,852.50
P71,006.70
P162,000.50
P61,000.70

1 pts
Gizelle, Inc. started operation at the beginning of 2017, selling home appliances
exclusively on the installment basis. Data for 2016 and 2017 follows:
2016 2017
Installment sales P600,000 P750,000
Cost of installment sales 420,000 450,000
2016 installment accounts, end 285,000 22,500
2017 installment accounts, end 300,000

On May 31, 2017, a 2016 installment account of P37,500 was defaulted and the
appliance was repossessed. After reconditioning at a cost of P750, the repossessed
appliance would be priced to sell for P30,000.
The gain (loss) on repossession amounted to __________.
P3,000
P(9,000)
P9,000
P(3,750)

1 pts
A branch store in Caloocan was established by Carlo Company on March 1.
Merchandise was billed to the branch at 125% of cost. Shipments of merchandise were
as follows:
March 5 P120,000 (at billed price)
March 10 50,000 (at billed price)
March 20 35,000 (at billed price)

On March 22, the branch returned defective merchandise worth P3,050. On March 31,
the branch reported a net loss of P6,200 and merchandise inventory of P85,000.

In the home office books, the cost of merchandise sold by branch was __________.
P161,560
P93,560
P116,950
P161,950

1 pts
A branch store in Caloocan was established by Carlo Company on March 1.
Merchandise was billed to the branch at 125% of cost. Shipments of merchandise were
as follows:
March 5 P120,000 (at billed price)
March 10 50,000 (at billed price)
March 20 35,000 (at billed price)

On March 22, the branch returned defective merchandise worth P3,050. On March 31,
the branch reported a net loss of P6,200 and merchandise inventory of P85,000.

In the home office books, the branch’s true net income (loss) was _________.
P(6,200)
P17,190
P6,200
P(17,190)

1 pts
Barros Corporation’s shipments to and from its Brazil City branch are billed at 120% of
cost. On December 31, Brazil branch reported the following data, at billed prices:
inventory, January 1 of P33,600; shipments received from home office of P840,000;
shipments returned of P48,000; and inventory, December 31 of P36,000.

What is the balance of the allowance for over-valuation of branch inventory on

December 31 before adjustments?
P5,600
P137,600
P6,000
P145,600

1 pts
The home office of Glendale Company, which uses the perpetual inventory system bills
shipments of merchandise to the Montrose Branch at a markup of 25% on the billed
price. On August 31, 2017, the credit balance of the home office’s Allowance for
Overvaluation of Inventories - Montrose Branch ledger account was P60,000. On
September 17, 2017, the home office shipped merchandise to the branch at a billed
price of P400,000. The branch reported an ending inventory, at billed price, of P160,000
on September 30, 2017.

Compute the realized gross profit/allowance for overvaluation.

P108,000
P20,000
P120,000
P28,000

1 pts
Lobster Trading bills its Iloilo City branch for shipments of goods at 25% above cost. At
the close of business on October 31, 2017, a fire gutted the branch warehouse and
destroyed 60% of the merchandise stock stored therein. Thereafter, the following data
were gathered:
January 1 inventory, at billed price P50,000
Shipments from home office to Oct.
31 130,000
Net sales to Oct 31 225,000
If undamaged merchandise recovered are marked to sell for P30,000, the estimated
cost of the merchandise destroyed by the fire was _______.
P14,400
P21,600
P24,000
P27,500

1 pts
The following joint operations account reflects the transactions of the arrangements of
A, B and C as recorded by each operator (participant).
Investment in Joint operation (2017)
Merchandise - C…P12,750 Cash sales - A…….P30,600
Merchandise - B…P10,500 Cash sales - A……...P6,300
Freight-in - A…………..525 Merchandise - B……P1,815
Purchase - A………...5,250
Selling expenses - …....600

Distributions of gains and losses are to be treated as follows: A – 50%; B – 30% and C
– 20%. The joint operations is to close on December 31, 2017.

The joint operations profit (loss) is __________.

P7,275
P9,090
P25,980
P29,625

1 pts
A and B are joint operators in a joint arrangements for the acquisition of construction
supplies at an auction. The two participants agreed to contribute cash of P20,000 each
to be used in purchasing the supplies and to share profits and losses equally, they also
agreed that each shall record his purchases, sales and expenses in his own books.

Several months later, the two participants terminated the operations. The following data
relate to the joint operations’ activities:
A B
Joint operations P16,000 P18,400
Credit Credit
Value of inventory taken P600 P2,200
Expenses paid from JV cash P800 P1,800
The joint operations sales is __________.
P77,000
P27,000
P34,400
P0

1 pts
The income statement of Vita Plus Partnership for the year ended December 31, 2017
appear below:
Sales P300,000
Cost of goods sold 190,000
Operating expenses, including salary
allocation to partners of P55,000 85,000
Net income P25,000

Additional Information:

Melon and Dalandan began the year with capital balances of P40,800 and P112,000,
respectively.

On April 1, Melon invested an additional P15,000 into the partnership and on August 1,
Dalandan invested an additional P20,000 into the partnership.

Throughout 2007, each partner withdrew P400 per week in anticipation of partnership
net income. The partners agreed that these withdrawals are not to be included in the
computation of average capital balances for purposes of income distribution.

Melon and Dalandan have agreed to distribute partnership net income according to the
following plan:
Melon Dalandan
Interest on average capital 6% 6%
balances
Bonus after interest on average
capital balances 10%
Salaries P25,000 P30,000
Residual, if positive 70% 30%
Residual , if negative 50% 50%

The share of Melon on the net income is _______.

P40,473
P15,473
P40,342
P40282

1 pts
AA contributed P24,000 and BB contributed P48,000 to form a partnership and they
agreed to share profits in the ratio of their original capital contributions. During the first
year of operations, they made a profit of P16,290; AA withdrew P5,050 and BB P8,000.
At the start of the year, they agreed to admit GG into the partnership. He was to receive
a one-fourth interest in the capital and profits upon payment of P30,000 to AA and BB,
whose capital accounts were to be reduced by transfers GG’s capital account of
amounts sufficient to bring them back to their original capital ratio.

How should the P30,000 paid by GG be divided between AA and BB?

AA, P9,825; BB, P20,175
AA, P15,000; BB, P15,000
AA, P10,000; BB, P20,000
AA, P9,300; BB, P20,700

1 pts
The partners’ capital (income-sharing ratio in parenthesis) of NN, OO, PP and QQ on
May 31, 2017, were as follows:
NN (20%) P60,000
OO (20%) 80,000
PP (20%) 70,000
QQ (40%) 40,000
Total P250,000

On May 31, 2017, with consent of all partners:

PP retired from the partnership and was paid P50,000 cash in full settlement of his
interest in the partnership.

RR was admitted to the partnership with a P20,000 cash investment for a 10% interest
in the net assets of NN, OO and QQ.

The capital account to be credited to RR is __________.

P22,000
P27,000
P20,000
P25,000
1 pts
Revenue from a contract with a customer _______________.
is recognized when the customers receive the right to receive consideration.
is recognized even if the contract is still wholly performed.
can be recognized even when a contract is still pending.
cannot be recognized until a contract exists.

1 pts
Signing of the contract by the two parties is _____________.
not recorded until one or both parties perform under the contract.
recorded at the time the contract is approved by both parties.
not recorded until both parties perform under the contract.
recorded immediately after the contract is signed.

1 pts
Multiple or departmental overhead rates are considered preferable to a single or plant-
wide overhead rate when ___________________.
manufacturing is limited to a single product through identical department in a fixed
sequence.
various products are manufactured that do not pass through the same departments or
use the same manufacturing techniques.
individual cost drivers cannot accurately be determined with respect to cause-and-effect
relationships.
the single or plant-wide rate is related to several identified cost drivers.

1 pts
Which of the following statements about ABC is not true?
ABC is useful for allocating marketing and distribution costs.
ABC is more likely to result in major differences from traditional costing systems if the
firm manufactures only one product rather than multiple products.
In ABC, cost drivers are what cause costs to be incurred.
ABC differs from traditional costing system if that products are not cross-subsidized.

1 pts
Agency BBB received Notice of Cash Allocation (NCA) – P45,000,000 for the year. The
entry would be ________________.
no entry
Memorandum entry in registry of allotments
Debit National Clearing account; Cedit Appropriations allotments.
Debit Cash-NTMDS; Credit Sing