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Frias Activity 2

This document contains multiple accounting problems related to intermediate accounting. It includes 10 multiple choice questions testing concepts from PAS 24 and IFRS, 5 problems involving companies with financial information to analyze and journal entries to record, and 3 additional multiple choice questions testing IFRS concepts. The problems cover a range of topics including doubtful accounts, contingencies, manufacturing costs, financial statements, associates, and comprehensive income.

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Lars Frias
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65 views

Frias Activity 2

This document contains multiple accounting problems related to intermediate accounting. It includes 10 multiple choice questions testing concepts from PAS 24 and IFRS, 5 problems involving companies with financial information to analyze and journal entries to record, and 3 additional multiple choice questions testing IFRS concepts. The problems cover a range of topics including doubtful accounts, contingencies, manufacturing costs, financial statements, associates, and comprehensive income.

Uploaded by

Lars Frias
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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INTERMEDIATE ACCOUNTING 3

Activity 2
PROBLEMS
Problem 4-1 Multiple choice (PAS 24)
1. D
2. B
3. D
4. D
5. D

Problem 4-2 Multiple choice (IFRS)


1. D
2. B
3. C
4. B
5. D
6. B
7. C
8. D
9. B
10. C

Problem 5-1 (IFRS)


Caroline Company

1.
Doubtful accounts 3,000,000
Allowance for doubtful
accounts 3,000,000

Loss on lawsuit 500,000


Estimated liability 500,000

Actual liability 1,500,000


Amount already recognized 1,000,000
Increased in liability 500,000
2.

On February 14, 2020, a Caroline shipping vessel carrying P5,000,000 was


completely lost at sea due to a hurricane. On March 20, 2020, the financial
statements for 2019 were authorized for release.

There is no need to disclose the factory destroyed in the fire because it occurred
on March 25, 2020, after the financial statements for 2019 were released on
March 20, 2020.

Problem 5-3 (IFRS) - Marian Company


B.

Problem 5-5 (IFRS) - Pink Company


D.

Problem 6-3 (AICPA Adapted)


a.

Berna Company
Income Statement
December 31, 2019

Sales (1,000,000/25%) 4,000,000


Cost of goods sold (45% x 4,000,000) (1,800,0000
Gross income 2,200,000
Expenses (30% x 4,000,000) (1,200,000)
Net Income 1,000,000

Cost of goods sold (150% x 30%) 45%


Net income (100% - 45% - 30%) 25%

Computation:
Purchases (1,500,000/75%) 2,000,000
Raw materials - December 31 500,000
Raw materials used (50% x 3,000,000) 1,500,000
Direct labor (30% x 3,000,000) 900,000
Factory overhead (20% x 3,000,000) 600,000
Total manufacturing costs 3,000,000
Goods in process - December 31, (1/3 x 2,250,000) 750,000
Cost of goods manufactured 2,250,000
Finished goods - December 31, (25% x 1,800,000) 450,000
Cost of goods sold 1,800,000
b.

Berna Company
Statement of Financial Position
December 31, 2019

ASSETS
Note
Current assets:
Cash 500,000
Accounts receivable (10% x 4,000,000) 400,000
Inventories (1) 1,700,000
Total current assets 2,600,000

Noncurrent assets:
Property, plant and equipment (2) 2,900,000
Total assets 5,500,000

LIABILITIES AND EQUITY


Current lliability:
Account payable (25% x 2,000,000) 500,000

Equity:
Commong stock, P100 par 2,500,000
Additional paid in capital 1,500,000
Retained earnings 1,000,000
Total equity 5,000,000
Total liabilities and equity 5,500,000

Note 1 - Inventories
Raw materials - December 31 500,000
Goods in process - December 31 (1/3 x 2,250,000) 750,000
Finished goods - December 31 (25% x 1,800,000) 450,000
Total 1,700,000

Note 2 - Property, plant and equipment


Total cost 3,000,000
Accumulated depreciation -100,000
Carrying amount 2,900,000
Problem 6-7 (IFRS)

Lotus Company
Statement of Comprehensive Income
December 31, 2019

Sales 9,750,000
Cost of sales (250,000 + 3,500,000) 3,750,000
Gross income 6,000,000
Other income 300,000
Share of profit of associate 150,000
Total income 6,450,000
Expenses: 1,500,000
Employee benefit expense 450,000
Depreciation 350,000
Finance costs 450,000
Other expenses 800,000 3,550,000
Impairment loss 2,900,000
Income before income tax 900,000
Income tax expense 2,000,000
Net income
Other comprehensive income to be reclassified
To profit or loss:
Translation gain 300,000
Unrealized gain on option 200,000 500,000
Comprehensive income 2,500,000

Problem 6-15 (IFRS) – Divina Company


1. B
2. C
3. C

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