PRINMA - University of Pangasinan Financial Accounting and Reporting Series of 2024 NAME: ‘YEARIBLOCK: STUDENT NUMBER: DATE: PRE-FINAL MOCK BOARD EXAN Direction: Choose the letter corresponding to the best answer for each of the questions provided below. This assessment consists of 70 items and the exan is good for chres (3) Wnich of the following 1g incorrect about the Financial Reporting Standards Counci? (FRSC)? \ a. It is the standard setting body created by the Professional Regulation Conmission upon recommendation of the Board of Accountancy. b. Its main function is to establish and improve accounting standards that will be generally accepted in the Philippines. c. The Chairman and menbers of the FRSC shall have a term of S years renewable for another term. @. Currently, the FRSC is composed of\16 members, including the Chairman. Which of the following is incorrect about IFRIC Interpretations? a. They are considered authoritative. b. They are not part of IFRS. c. They cover newly identified financial reporting issues not specifically addressed. . They cover issues with conflicting interpretations. A certificate of registration shall be issued to CPAs in public practice if auch registrant has acquired a minimum of how many years of meaningful experience in any area of public practice? a2. bl 3 e. 4 as ‘The Continuing Professional Development is required for Renewal of CPA license Accreditation to practice the accountancy profession Both a and b Neither a nor b pores Which of the following relates to both relevance and faithful representation? a. Comparability b. Feedback value c. Neutrality d. Free from error current value include: a. Fair value only b. Fair value, value in use, fulfillment value and current cost c. Fair value and current cost d. Fair value, current cost and historical cost What is the last step in the accounting cycle considering the following? a. Journalize and post adjusting entries b. Prepare a postclosing trial balance €. Journalize and post closing entries d. Prepare financial statements Highly Liquid investments are cash equivalents if the maturity is 90 days or leas a. From the beginning of the reporting period b, From the date of issue of financial statements €. From the end of the reporting period d. From the date the investments are acquired9. Mint Company provided the following information on December 41, : scember 31, 2023: Accounts payable and accrued expenses Cash dividend payable on January 15, 2024 4,609,000 8% bonds payable 1,400, 000, Discount on the bonds 10,000, 000 Pretax financial income 1,200,000 Tavable snceme - 17,000,000, n@ the oneity seeved the bonds on{ July, 2023 for 78,000,000 to ylaid 10%. the tons (#0) The gOSSY Jone 30, "2030 and. Pay interest annually ‘every dune’ 30. the’ aivterence eterno" einiaciat Ancoad tnd. tomtble. Ingt ia dan’ te SeQacdour obo perseeeet Uhgrerence and a 3,000,000 taxable temporary difference which is expected to reverse” Steere ao hcane tan vate is 254 and the eneity nade entsnated tax pammonts of 3a Masao tncing 2023. whet total amount. should be Feported as cvrrent Liabilities on December 31), 20252 wey 00, 006 $4180, 000~ 2 2) 400,000 1 #1150, 000 10.Youth Company provided the following adjusted trial balance on December 31, 2023; Sales Rh Oe 9,750,000 Share of profit of associate HD 150,000 Other income ae 300,000 Decrease in inventory of finished goods | 250,000 Total manufecturing cost sy0 | 500,000 Decrease in inventory of goods in process © 1,000,000 Distribution cost Cue) 1,500,000 Translation gain on foreign operations Wee 300,000 General and administrative cost c 1,250,000 Finance cost is6 800,000 Income, tex expense cay a3, 300/000 Unrealized gain in forward contract designated as cash fiow hedge 200,000, Which of the following is false? a. Cost of goods sold is P3,750,000- b. Net income is P2,500,000 > 2 ©. Comprehensive income is P2,500,000 d. Income before tax is P2,900, 000 Li.atbay Company xeported net income of 25,000,000 for the current year. Depreciation Gxpense was F2, 900,000. The following working capital accounts changed: Accounts receivable 1,100,000 increase ‘trading equity investment 41,600,000 increase Inventory 730,000 decrease Nontxade note payable 1,500,000 increase Accounts payable 1,220,000 increase What amount should be reported ae net cash flows provided by operating activities? a. 7,750,000 b. 4,690,000 . 7,650,000 d. 6,250,000 12.Aster the date of acquisition, the investment account using the equity method would a. Not be affected the share of the profit and losses of the investee. b. Be affected by the share of the profit of the investee only. c. Be affected by both share of profit and losses of the investee. d. Be affected by the share of the losses of the investee only.13.Norway Company is completing the preparation of the draft financial atatenents for eee ain 20sd, on January 1, 2024, a dividend of 6,000,000 vas declared. and a Mach a pratit share payment of P2,000,000 was ‘ade, ‘both based on the profit. tor contract Monied Decenber 31, 2023. On February 15, 2024, a custoner ‘went into eer ae eecrae tne eneity.£1,000,000 for the past © sonthe. No allowance ned diguidacton Jlinet this debt in the draft financial statenents. On March 1, 2024, a buen ade agningt Shoe Sceetroved ‘by five cowviting ita lose ot 75,000,000, Hae nenufacturit’ should be disclosed in the notes to financial statements as ronadjusting ‘3, 12,000,000 bi. 24,000, 000 , 12,000, 000 @. 13,090, 000 el ay ee 1é.gudy Company has 90,000 ordinary shares outstanding and 10,000 preference shares suey Ong fen Janvary 1, 2023, ‘the preference shares are convertible intoc 20,000 seers gates. During 2023, the entity paid dividends of P10-per ordinary share and Sit per’ prefefince share. Net incone for the year 2023 WEG P2,850,000. Which of the following is erie? , = forts basic EPS 1s P29.00 and the diluted EPS is P28.50 Np 29 agspae ito b, The basic EPS is P19.00 and the diluted EPS is P17.73 c, The basic EPS is P29.00 and the diluted EPS is P25.91 . Both basic and diluted EPS are ?29.00. $00 per cumulative noxconvertible preference shares outstanding and share options putetanding to buy 50,000-oFdinary shares at P40 per share. The market price of 37 Stutnary share averaged P50 during 2023 and no share options were exercised curing Sbaa, on March 1, 2023, the entity purchased 24,000 treasury ordinary shares and cold #7000 treasury ofdinary shares on October 1, 2023. On September 1, 2023, the entity iueved P2,000,000, 6% bonds at face amount. The bondsare_convertible- into 9,000 S8§isary shares and none of the bonds had been converted during 2023. The net incone ere tte ans PS, 400,000 and the incone tax rate is 25¥. What amount shovid be reported a5 diluted earnings per share? 15.0n January 1, 2023, mecrmens 200,000 ordinary shazes outstanding, 100,000, 7¥ 24.2 CUgr on ae 7 a. 24.26 wot : ; b. 24.48, Gun »%6 wes Mer ae Ib ©. 27.98 Fano a. 23.83 Ware 16.0n December 31, 2023, Beloney Company had the following cash balance: current account 2,280,000 ~ 73> Petty cash fund - all funds were reimbursed at year - end ~ 62,500 ‘time deposit - due February 1, 2024 312,500 Saving deposit in bank closed by BSP 1,250,000 * tthe current account included P750,000 of compensating balance against short-term borrowing azrangenent. The compensating balance is legally restricted as to pothdawal. What total amount should be reported as cash~and cash equivalents on Decenber 31, 20237 a, 1,875,000 b. 3,125,000 ce. 1,562,500 6. 2,625, 000 Liomch of the foloviog 1s sot capitalised inte the cost of property, plant and Gost of excess materials from a purchasing error Cost of testing whether the asset. works correctly Initial delivery and handling cost Cost of preparing the site for installation :parte S00 tate podtomen ae: Tiassctay scktion es meenage casey eate tate we investment portfolio revealed the following on December 31, 2023: ee SE the cost. Market fv ordinary share 2,000,000 2,400,000 Gay ordinary share 5,000,000 4,000,000 AJS preference shere 1,000, 000 400,000, on duly 1) 2024, the CMV share was sold for 4,200,000. On December 31, 2024, the CTV occ nd AdS share have market values of P2,000,000 and P300,000 respectively. spare eeeece in unrealized loss in other conprehensive income for the yess 20247 2. 500,000 b. 700,000 ce. 4,500,000 4. 200,000 23.0n Janvery 1, 2023, Feasible Company sold an equipment costing ?5,000/000 and with cecomuiated depreciation of P1,500,000 for 21,250,000 cash and a P4,000,000 noninterest Recring note due on January 1, 2026. There was no established exchange price for the equipment. and the note had no ready market. The prevailing rate of interest for this type of note on January 1, 2023 is at 12¥¢ The present value of 1 at 12% for three periods is 0.7118, What is the carrying amount of the note receivable on Deceaber 31, 20242 2+ 4,000,000 b. 2,847,200, ec. 3,571,528 J. 3,188, 864 26.0n Janvary 1, 2023, Pell Company purchased PS,000,000 face amount, @% bonds tor 74,962,000, The business model of the entity in managing the financial asset is to Coliect contractual cash flows composed of interest and principal. The bonds mature on Sanuary 1, 2029 and pay interest annually every December 31. The amortization for the year 2023 amounted to PS6,200, What is the interest income for 2023? 2. 400,000 b. 500,000 c. 343,800 a. 456,200 25. prepaid expense can be best described as an amount ‘2. Paid and currently matched with earnings b. Paid and not currently matched with earnings c. Not paid and currently matched with eaznings d. Not paid and not currently matched with earnings 26.¥aritone Company reported the inventory at 5,000,000 on Decenber 31, 2022. t erchandive shipped by a vendor FOB Destination on Decenher 26, 2023 was received x on vanvery 2, 202 The invoice cost of P600,000 is jreludaa in the prelininazy batance. «On Decenber 31, 2023, the entity held P500,000 of merchandise on consignment. fron Shother entity, This merchandise 2 included in the preliminary balance + On Decunber 25, 2023, mezchandise costing P200,000 was shipped FOR shipping point Gnd eerived at’ the evstorer location on Janvary 3, 2024, The mezchandise is not inetided in the preliminary balance. ‘nat! anount should be reported as inventory on Decenber 31, 2023? 2. 3,900,000 ! 4,400,000 c. 4,500,000 a. 2,500,000a 6 p7.pizerre Conpeny provided the following data for the current year: cost Retait Beginning inventory 1,200, 00 1,500, 000 a _ quad 2, Net purchase 4,200,00 a a ° 1p Not markups eet 200,000 Net markdowns 100,000 e109 mw) ean ee Net sales the entity used the IS Sdtcrmined that the average UNa‘‘the "rire retail, the cos eported as net sles? ant average retail inventory method to estimate ending inventory. ‘cot of ending inventory wag Pl, 440,000. If the entity tt ratio would have been \70¥. What amount should be 1a. 6,000,000 sey b. 5,900,000 woo . §,500, 000 d. 3,960,000 ‘28.puring 2023, Showtine Company made the following expenditures relating to the plant continuing and frequent repairs — 400,000 Repainting the plant building = 160,000 Major improvenents to the electrical wiring system 300,000 150,000 Partial replacement of roof tiles that total amount should be charged to repair and maintenan 20232 ce expense for the yes a. 950,000 b. 800,000 e+ 650,000 4. 550,000 ag ding for P10,500,000. The 29.0n January 1, 2023, Mumbai Company acquired a new buil of P500,000. Doitding nad ‘an estimated useful life of 50 years and residual valve Desrecistion wes computed on a stzaight- Line basis. On January 1, 2025, the entity peerecce the old roof with a pemaneat tile roof costing 73,000,000. The cost, of the see eet, “was 2,500,000. The new roof did not change the residval value but was oie ined’ a betterment. What amount should be reported as depreciation-tor.2028? + 300,000 [9(0d 281,250" 212,500 218,750 aoge 40.0n January 1, 2020, Zee Company purchased 2 machine for P26, 000/000. The machine has a Ceara! lite of @ years and is depreciated using the straight-line method. During 2023, the entity concluded that the machine suffered permanent impairment of the operational ssc The reasonable estimate of the amount expected to be recovered through the vse UE the machine for the period January 1, 2023 through Decenber 31, 2027 is P4,000,000. Mhat should be xeported as carrying amount of the machine on December 31, 2023? a. 8,000,000 b. 3,200,000 c. 4,000, 000 a ° 31.Whaet is the relationship between present value and Liability? a. Present value is used to measure certain liabilities. bl Present value is not used to measure liabilities. c. Present value is used to measure ali liabilities 4. Present value is used to measure current liabilities.ructed condoniniva at a total cost of 25,000,000. The property was completed and pet inte service on January 1, 2023, The condoninium haz a useful lite St 28 yeare and a 72,500,000 vestdual velue. The entity would hold the property for fhe purpose Of earning rentals. The fair values of the property are P27,300¢000, £26, $00,000 and 230,000,000 on Decenber 31, 2023, Decenber 31, 2024 and Decesber 9: 2628 respectively. Which of the following 13 false? e 32.Wee Company con ‘the property is classified as investment property. “ ected to use the cost model, the carrying amount on December 31, 2024 te b. if Wee 23,200,000 Ef Wee elected to use the fair value model, a gain in profit or loss of P3,300,000 Ls recognized in 2024 Ef the entity elected to use the fair value model, a lose in 1,000,000 is recognized in 2024 profit or loss of 33.0n Janvary 1, 2023, Cityscape Company acquired property consisting of ten identical houses each with separate legal title-including the land on which its is build-for 100,000,000, "206 of which {g attributable to the land. The units have a useful lite mM : 1 40 years. The entity used"one of the ten units to acconmodate administration and sil maincenance Staff. The other ‘ning)units are rented out to independent parties under an Operating lease. Refundable “deposits received from lessees totaled P150,000 on 2023. December 31, 2023. The fair value of each unit is P15,000,000 on December 31, The entity elected to use the fair value model to measure all investment properties. What amount of gain from change in fair value should be reported in 2023? a. 44,850,000 b. 45,000,000 €. 36,000,000 d. 35,850,000 34.At the beginning of the current year, Lava Company acquired a patent costing 3,000,000. Tt has a remaining useful life of 6 years and 2 remaining legal life of 15 years. At the middle of the year, the entity successfully defended the patent. Legal feos Of 450,000 were incurred in this action. What total amount of expense should the entity report at the end of the current year? 950,000 650, 000 582,000 230,000 35.Royal Company was granted a patent on January 1, 2020 and appropriately capitalized 900,000 of related costs. ‘The entity was amortizing the patent over the useful life of 15 years. During 2023, the entity paid 300,000 in legal costs in successfully defending an attenpted infringement of the patent. After the legal action vas completed, the entity sold the patent to the plaintiff for 1,500,000. The policy is to take no amortization in the year of disposal. What amount of gain on disposal should be reported 1n 20237 a. 300,000 9) bb. 480,000 fe. 540,000 4. 780,000 36.Foreter Company provided the following information: 12,000, 000 Value of biological asset at acquisition cost on December 31, 2023 1,000, 000 Fair valuation surplus on initial recognition at fair value on December 31, 2023 Increase in fair value in 2024 due to growth and price fluctuation 1,800, 000 200,000 Decrease in fair value due to harvest in 2024 What is the carrying amount of the biological asset on December 31, 2024? a. 14,800,000 b. 14, 600, 000 “ c. 15,000,000 4. 13,00, 0000the entity harvested grapes with a fair value less cost of disposal of P1,000,000. on 2. 625,000 : b. 1,375,000 we cc. 1,125,000 ed 4. 1,500,000 Ge) 38.on December 31, 2023, Brandy Company classified as held for sale an equipment with a Carrying amount of P5,000,000. On this date, the equipment is expected to be sold for 4,600,000 with disposal cost ‘of P200,000. On December 31, 2024, the equipment had not been sold and management after considering its opticnsdecided to place back the Gquipeent inte operations. On Decenber 31, 2024, the equipment is expected to be sold ‘at P4,300,000 with disposal cost at P50,000, and with carrying amount of P4,000,000 if the equipment was not clageified ac held for sale. At what amount chould the equipment be measured on December 31, 20247 a. 4,300,000 b. 4,000,000 es 4,400,000 4, 4,250,000 39.Debt issue cost a. Is included in the measurenent of the financial Liability if measured at amortized cost. b. Is amortized using the interest method if the financiel liebility is measured at amortized cost c. Will effectively increase the market rete of interest. 6. All of these relate to debt issue cost. 40.00 Jenvary 1, 2023, West Company issued 9% bonds payable with face amount of 24,000,000" which matuze on January 1, 2093, The bonds were. issued fer 73,756,000 to gid ‘100, Interest de poyable ancvally on Decenber ji ané—the entity uses the Pierson navnce of anoreisitlon: mich of the Tollowips idctasee? ao the bonds were issued at a discount ‘of P244, 000. Bl Interest expense for 2023 is 2375, 600 ¢. interest expense for 2023 is P360,000 @. The cerzying anount of the bonds on Decenber 31, 2023 is 23,771,600. 41.0n January 1, 2023, Armada Company had an overdue 10% note peyable at P6,000,000 and ‘accrued interest of P600,000, As a result of the restructuring agreenent on January 1, 2023, the creditor agreed to: Guo Forgive accrued interest of ?600,000. © Reduce the principal to P4,000, 000. Reduce the interest rate to 6% and interest is payable every December 31 SNe. Extend the maturity date of the note to Decenber 31, 2025. -g3 The encity paid 7250, 000 as an arrangement. fee co the creditor, The prevailing market @Y rate of interest~for similar note is 14%. The present value of the new liability based on 10% is 3,698,000 and the present value of the new liability based on 148 is 33,237,000. that amount of gain on extinguishment or meditication should be reported for 20237 5 — a. 2,652, 000 b. 3,002,000 ce. 3,363, 000 . 3,013,000 42.0 department store received cash and issued a gift certificate redeemable in merchandise. when the gift certificate was issued + Deferred revenve account should be decreased ; Deferred revenue account should be increased . Revenue should be decreased 4. Revenue should be increased43,Provisions shall be recognized for ali of the following, except ‘2. Cleaning-up costs of contaminated land when an oil entity hae a published policy that it will undertake to clean up all contamination that it causes b. Restructuring costs after a binding sale agreement has been signed. c, Rectification costs relating to defective products sold. @) fvture refurbishment costs due to introduction of a new computer system. {4.vaker Company operates a custoner loyalty program. The entity granta loyalty points for goods purchased. ‘The loyalty points can be used by the cuatoners in exchange. for goods of the entity, The points have no expiration date. During 2023, the entity Yeeued 100,000 points and expected that 80% of these points shail be redeened. The stand-alone selling price of the points granted-is 2,000,000. In 2023, the entity fold goods t customers for a consideration of/'P14,000,000 based on stand-alone selling price. In 2023, 30,000 points are redeened. Tn 2024, 85% of the points are expected to mned and 15,900 pointe are redeened, What amount of revenue from loyalty pointe Ee re Shovld be recognised in 2024? : 2. 656,250 ra u (su B. 27/353 ran) c. 208,750 jay ee d. 420,000 ~ 45.In 2023, Carpet Company began selling notebook computers that carried 2 two-year warranty against defects. The entity projected the estimated warranty cost~as a percentage of eales: first year of warranty, 4% and second year of warranty, 108. Seles in 2023 and 2024 P2,500,000 and 24,500,000 respectively. Actual warranty repaire in 2023 and 2024 100,000 and P280,000 respectively. Sales and warrenty repairs are made evenly during the year. What ic the adjusted warranty liability on December 3120242 2. 380,000 Fe ite ae % b. 557,500 00) ase Bh 7a ©. 600,000 =m 4 @. 587,500 a “ 46.¥inen shares axe iseued for property, the est evidence of fait'Value may be any of the following, exept ‘The price-6f the shares quoted on the stock exchange The fair value of the property received c. The average book value of the outstanding shares 4. The selling price of the shares in a recent trensaction 47.0n January 1, 2023 Ashe Company was incorporated with the following authorized cdpitalization: ordinary share capital, no par, P100 stated value 20,000,000 Preference share capital, 10%, P50 par 10,000, 000 During 2023, the entity issued 150,000 ordinary shares at P120 per share and 50,000 preference shares at P60 per share. On December 20, 2023, subscriptions for 20,000 prefezence shares were received at P100 per share. The subscribed shares are to be paid for on January 20, 2024. Net income for the year 2023 is P5,000,000. What amount Of total shareholder's equity should Ashe report on Decenber 31, 20237 a. 28,000,000 “ota, 'b. 23,000,000 tom c. 26,000,000 4, 21,000, 000 48.during 2023, Bolton Company issued convertible preference shares of P1600 par value at PI10 per ehare for a total consideration of P3,300,000. One preference share may be converted into three ordinary shares of P25 par value at the option of the preference shareholder. On December 31, 2023, all of the preference shares were converted into ordinary shares. On this date, the market value of the ordinary share at the conversion date is P40. What amount of share premium - ordinary shares should be credited as a result of the conversion? . a. 750,000 tee fom b. 1,050, 000 We co yoke . ©. 300,000 serv % ua a 0 me tfrr 50. s1.. 82 53. 0 On Decenber 31, 2023, Vicar Company canceled 10,000 shares of P25 par velue held treasury at an’ average cost of P130 per share. Before recordin oe the treasury shares, the entity hd the folloving belancess 7 the Cancellation of ME are capital 28 : suas pronive,~ ortginal:-iesoe se Re 1,250,000 (cr) Share premium ~ treasury shares aaa 250,000 Retained earnings we ett 150,000 vs yy00 1,800,000 Treasury shares ses99,088 Which of the following is tru a, Due to the tirement of treasury shares, total equity is reduced by Pl, 300,000. b. Due to the retirement of treasury shares, total equity is increased by P1,300,000. c. Retained earnings of P8S0,/000 is debited. 4. Share premium ~ original issue of P250,000 is debited. Panorama company reported retained earnings of P5,000,000 on Jbnyaty 1, 2023, The entity provided the following information during 2023: Income before tax 5,000,000 Prior period error ~ overstatement of 2022 depreciation before tax , 500,000 Cumvlative increase in incone from change in inventory method before (7!''¢1, 000,000 tax Dividend declared 2,000, 000 ‘the income tax rate ie 25%. What amount of retained earnings should be reported on Decenber 31, 20237 a. 7,125,000 b. 8,250,000 c+ 7,500,000 d. 7,875,000 ‘Anes Company provided the following on Decenber 31, 2023: Ordinary share capital, P20 par value! ri 4,000,000 Preference share capital, 6t, P100 par value, dufulative-and 1,000,000 einen - PAELCAPatinG as nave been in arrears for 2021 and 2022. On Decenbe: 316 202%) the entity would like to declare dividend in which the ordinary shareholders: Will receive SOL ene eS ses og dividend mist be declazed to echieve this goal? ®. 840,000 * oe a 5! 300,000 ae 306. ec. 804,000 _ zip " a. 1,200,000 RO 48° fon Decenber 31, 2023, Paranoid Company issued 7,000 ordinary shares of, F100 par as Share dividend, The market value on the date ‘of declaration is \P150. The entity feported ordinary share capital at a total par value/of P2,000,000. What amount is Gebited to retained earnings ag a result of the dividend declaration? {i 300,000 wi 200,000 100,000 400, 000 r cogs hich ig not an acceptable option of reporting othe; comprehensive income? a statement of changes in equity In the notes to financial statements In a single statement of comprehensive income In a separate statenent. of comprehensive income sao cm)u s4.Adverse financhal and operating ctrcuastancs Undergo quasi~ warrant that Peach Company shovid ganization, The following date are presented below: share copitsl, P25 par value, 200,000 shares outstanding 5,000,000 Share premium 1,500,000 Retained earnings (deficit) (2,500,00 2 ro accomplish the quasi-reorganization, inventory and plant assets were redaced by 300,000 and P1,700,000 respectively, What is the reduction in share capital to Implement. the quasi-reorgani zation? as 4,700,000 b. 2,500,000 ce. 3,200,000 a. ° 55.Precise Company reported the following shareholder's equity on Decenber 31, 2023: 5% noncumvlative and participating preference share capital, par aft 2r500,000 value P10 Ordinary share capital, par value P30 3,750,000 Share premium 2,250,000, Retained earnings 4,000, 000 Preference dividends are in arrears for 2 years. If the entity was to be liquidated, the preference shareholders would receive par value plus a premium of P500,000. What is the book value per preference share? a. 57.60 b. 212100 ce. 217.00 4. 192.00 56.0n January 1, 2023, Morey Company granted to an employee the right to choose eithe: © Share alternative equal to 50,000 shares with a par value of P25 bee © Cash alternative or cash payment equal to the market value of 40,000 shares |yycp ‘The grant is conditional upon the completion of three years of service. On Jantary 1, 2023 the share price is P60. After taking inte account the effects of post-vesting restrictions, the entity has estimated the feir value of the share alvernetive at PS} per share. the share prices are 263, -72, and_P69 on December 31, 2023, December 31, 2024 and December 31, 2025 respectively. What amount of compensation expense shovid be recorded for 20247 a. 1,970,000 up b. 1,130,000 c. 1,080,000 d. 2,020,000 un 57.0n Janvary 1, 2023, Toy Company entered into a tea-yeer lease agreement with another entity for industrial equipment. Annvel lease payments of P1,000,000 are paysble every Deceaber 31 of esch year. ‘The lessor expected e 10% return on the lease, which is the Implicit rate in the lease. The equipment is expected to have an estimated useful lize df 32 years. The contract contains a purchase option that ie-ressonshly certain to be exercised. the exercise price of the purchase option is P500,000. The present value of a ordinary annuity of 1 at 108 for 10 periods ie 6.14 and the present value of < 0$-foF 10 periods is 0.39. What amount should be reported as lease liability on cenbex 347-2023? ine 335,000 2F In © clY b. 6,140,000 c. 5,754, 000 pie 94 2. 5,968, 500 58.an entity leased property for a period of 10 years. Lease payment dates coincide with the end of the reporting period. ow is the lease liability presented in the statement of financial position at the end of the second year? 2. Partly current liebility, partly noncurrent liability ‘ b. Entirely current liebility c. Entirely noncurrent lability 4, Entively noncurrent asse! y asset)2 ee ee Enety has guaranteed the residual value of the asset under the Tease to be P1,200,000~ re ee ae S027. annuel. Lense: papwente see -plv060,000 ve’ sch” December St races caisee' My 203%: She wealaing useful, iit of the soset Se. oin gaace oo Samaney Be 20D, NORD Se dae bea ange We oe an oodinasy, snaslty ed ae 140. foe 8 a5 3p 4B 2 Er" inar anouse ahocid te Tecequlzed se Det leans teceivehie on Sonceey rezone 3, $430,000 Br S¢o00;o00 or Soseca0e a. 6,200,000 ya ele 60.nt the beginning of the current year, Done Company sold ‘equipment with a remaining Useful ie of 10 years and immediately leased it back for S years. The sale price, Yair, value end carrying amount of the equipment are 5,700,000, 25,000,000 anc 4,500,000 respectively. The implicit rate in the lease is 10%. The rights retained by the seller - lessee is 23.908 of the fair value of the asset. What is the gain on the right transferred to the buyer lessor? — 2. 500,000 b. 380,500 —— * 4p c+ 800,000 80 4. 608, 800 7 Gi.Tglesias Company reported pretax accounting income of P8,000,000 for the current year which included the following itens of income and expens Donation to political parties - nondeductible 1,000, 000 Depreciation ~ 20% 1, 600, 000 Annual leave expense 700, 000 Rent revenue 1,200,000 the annual ‘The income tax rate is 25%. For tax purposes, the depreciation rate is 254, leave paid is P800,000 and the rent received is P1,000,000. What is the taxable incone foe the curzent year? a2, 360,000 wr B! 9,000,000 194 : ! 8,700,000 ge a fiw V 4. 8,500,000 (eo) et 50d a7 Th MY 62.Laughter Company provided the following assets end liabilities at year end: e careying amount Tax base & Accounts receivable 12,000,000 14,000,000 PTR 280 Motor vehicle 13,000,000 $10,000,000 warrenty Lebiity 4,000,000 0 om Rent received in advance 3,000,000 oon the tocene tan rate i 256. What anount should be reported as deferred cax asset at year ena? 2 730,000 by/1, 500,000 Ze. 2,500,000 d. 2,250,000 63.an entity shall disclose for each reportable segnent all of the following specified enounts included in the measure of profit or loss, except 2. Depreciation and amortization 5. the entity’ interest in the profit or loss of associate c. income tax expense ¢. General corporate expense 64.tnder SEC ruling, whet reporting framework should micro entities use to prepare financial statements? : a. Pull PRS b. PFRS for SMES c. PPRS for Small Entities or Income Tax Basis . None of the above(ee eg 3 6s.uiyaks Company provided the following information pertaining to the defined benefit fexeion plan for the year 2023: prepaid pension cost ~ January 1 : , 2,000,000 vans Service cost 7,200,000 service cost 5,000, 000 Interest expense on projected benefit obligation 3,200,000 Interest incose and actual return on plan assets 4,000,000, taployer contribution 4/000,000 iat arouse shovld be reported as accrued pension cost on Vecesber 31, 20297 312,000, 000 ne 3! ior200, 000 m : c. 8,000,060 i) é. 6,000,000 oy smd fosed 66.an entity incurred an inventory loss from market decline of P420,000 on June 30, 2023. ‘What amount of inventory loss should be recognized in the quarterly incone ctatenent for the three months ending June 30, 20237 2. 105,000 b, 140,000 c. 210,000 d. 420,000 67.Equity ~ settled share-based payment transactions of a seal entity are measured at a. Net asset value b. Fair value c. Liquidation value d. Assessed value 62.08 the beginning of the current year, SME Company scquired 30% of the ordinary shares of an investee for P5,000,000 plus transection cost of 200,000. Published price quotations exist for the investnent in associate. The dnvéstes recognized a net loss 3 P2,000,000 for the current year and paid dividends of 7500,000 during the year. The fair Valve of the investnont is P4,000,000at yeat-ehd and the disposal cost, is eetinated at 100,000. What, is the carrying anoint of the investment to oe reported at yeaz-ona? a. 4,000,000 b. 5,000, 000 c. 5,200,000 4. 3,960, 000 a 69.SME Company acquired 5,000 .nonputtable ordinary shares in a listed compeny for 500,000. The entity also facur¥ed broker fees of P10,000 in connection with the purchase. At year-end, the shares are quoted at P110 per share. What amount should be recognized as change in fair value for the current year? 2. 50,000 Rey b. 40,000 c. 25,000 a0 10.0n January 1, 2023, an entity (SHE) acquired a building for ?9,000,000. The building has @ useful life of 30 years and is to be held for rentals. The fair value of the boilding cannot be determined on an ongoing basis. What is the carrying amount of the building on December 31, 20247 9,000,000 2,700, 000 8, 400,000 9,300,000 ‘++04sEND OF EXAMINATIONS ## T am not just made to be a CPA I am born to be a Certified Public Accountant