ACC107

P1 EXAMINATION
Name: ___________________________________ Score:__________________
Section: _________________________________ Date: ___________________

1. Which of the following would result to a decrease in accounts receivable in the books of the seller and
a decrease in accounts payable in the books of the buyer in a sales transaction on account?
a. FOB Destination, freight prepaid
b. FOB Shipping point, freight prepaid
c. FOB Destination, freight collect
d. FOB Shipping point, freight collect
2. LCNRV shall be made on/an
a. Item-by-item Basis
b. Geographical Basis
c. Retail Store Basis
d. Price Segment Basis
3. When using the moving average method of inventory valuation, the average cost changes after each
a. Sales on account
b. Purchase of inventory.
c. Purchase and Sale of inventory
d. Cash Sale
4. Which of the following cost formulas will report the highest net income in periods of inflation?
a. Fist-in first-out
b. Weighted average
c. Moving Average
d. Last in First Out
5. The account title “Inventories” as shown on an entities financial statements include
a. Goods sold with a buyback arrangement
b. Unused supplies for administrative purposes
c. Goods held on consignment
d. Goods in transit, purchased FOB buyer
6. The inventories on hand at December 31, 2023 of Surreal Company were valued at cost amounting to
P700,000. Mark-up on sales is 25%. Consigned goods were still 50% unsold as of December 31, 2023.
The following items were excluded from these inventories:
I. Purchased goods in transit, shipped FOB Shipping point. Invoice price was P30,000. Freight
costs P3,000.
II. Goods sold to Dream Company shipped FOB destination, Sales price was P40,000. Freight
costs P4,000. The goods were received by Dream Company on December 31.
III. Goods out on consignment to Vivid Company, Sales price was P50,000.
IV. Goods purchased costing P30,000, in transit “Free Along Side the Vessel” on December 31
and arrived in Surreal Company’s premises on January 2. Cost to transfer goods from seller to
the vessel, P1,000. Freight cost, P2,000.
V. Goods costing P15,000 from a supplier on Dec. 26, shipped “Cost, Insurance and Freight” on
Dec. 28, but had not been received by the end of December. Costs of insurance and freight
were at P3,000.
How much is the correct cost of inventories to be reported in Surreal Company’s SFP as of December
31?
a. 774,750
b. 798,750
c. 793,750
d. 796,750

Unadjusted Balance 700,000

Purchased goods FOB SP 33,000
Goods on Consignment
50,000 *25% = 12,500Mark up based on sales
50,000 - 12,500 = 37,500 @cost
37,500 * 50% unsold 18,750
FAS 32,000
CIF 15,000
Inventory as of December 31 798,750
8-10 Professor Retailing wholesales bicycle, it uses perpetual inventory system. The company’s reporting
date is December 31. At December 1, 2023, inventory on hand consisted of 400 bicycles at P830 each
and 45 bicycles at P850 each. During the month ended December 31, 2023, the following inventory
transactions took place (all purchases and sales transactions are on credit):
i. Dec. 02 Sold 350 bicycles for P1,200 each.
ii. 07 Purchased 60 bicycles at P910 each.
iii. 11 Purchased 78 bicycles at P960 each.
iv. 17 Sold 90 bicycles for P1,250 each. 24 Sold 65 bicycles for P1,280 each.
v. 27 Purchased 80 bicycles at P980 each.
vi. 30 Two bicycles, sold on December 24 were returned by a customer.

The bicycles were badly damaged, so it was decided to write them off. They originally cost at P910 each.
7. How much is the amount of ending inventory if Professor Retailing uses FIFO – Periodic cost flow
method?
a. P156,920
b. P153,280
c. P148,206
d. P137,774

8. How much is the amount of ending inventory if Professor Retailing uses Weighted Average Cost Flow
Method?
a. P156,920
b. P153,280
c. P148,206
d. P137,774

*TGAS 370,000 + 54,600 + 74,880 + 78,400 = 578,130

TGAS in units 445 + 60 + 78 + 80 = 663

9. How much is the amount of ending inventory if Professor Retailing uses FIFO - Perpetual Average Cost
Flow method?
 a. P156,920
b. P153,280
c. P148,206
d. P137,774

10. USTERE Co. owns 20% of SEVERE, Inc.’s ordinary shares. SEVERE also has outstanding cumulative
6% preference shares of ₱8,000,000, none of which is held by AUSTERE. Dividends are in arrears for
three years as of year-end. SEVERE reported year-end profit of ₱4,000,000 and declared no dividends.
How much is AUSTERE Co.’s share in the profit of the associate?

a. 704,000
b. 800,000
c. 512,000
d. 770,000
Solution : 4,000,000 - (8,000,000 * 6%) = 3,520,000
3,520,000 * 20% = 704,000

11. On October 1, 20x1, the warehouse of ABC Co. and all the inventories contained therein were damaged
by flood. Off-site back up of data base shows the following information:

Inventory, Jan. 1 10,000

Accounts payable, Jan. 1 3,000
Accounts payable, Sept. 30 2,000
Payments to suppliers 50,000
Freight-in 500
Purchase returns 500
Sales from Jan. to Sept. 80,000
Sales returns 5,000
Sales discounts 2,000
Gross profit rate based on sales 30%

Additional information:
Goods in transit as of October 1, 20x1, purchased FOB shipping point, amounted to ₱1,000, cost of
goods out on consignment is ₱1,200, and materials damaged by flood can be sold at a salvage value of
₱1,800. How much is the inventory loss due to the flood?

a. 3,000 b. 2,500 c. 4,400 d. 4,900

12. On October 1, 20x1, the warehouse of ABC Co. and all the inventories contained therein were razed by
fire. Off-site back up of data base shows the following information:

Inventory, Jan. 1 20,000

 Net purchases 190,000
Net sales from Jan. to Sept. 240,000
Gross profit rate based on cost 25%

Twenty percent of the inventory contained in the warehouse has been salvaged from the fire, while half
is partially damaged and can be sold as scrap at thirty percent of its cost. How much is the inventory
loss due to the fire?

a. 18,000 b. 5,400 c. 9,000 d. 11,700

13. The work in process inventories of ABC Manufacturing, Inc. were completely destroyed by fire on June
1, 20x1. Amounts for the following accounts have been established.

January 1, 20x1 June 1, 20x1

Accounts payable 117,000 135,000
Raw materials 15,000 18,000
Work in process 60,000 ?
Finished goods 69,000 87,000

The following additional information was determined:

● Payments to suppliers for purchases on account, ₱60,000.
● Freight on purchases, ₱3,000.
● Purchase returns, ₱7,500.
● Direct labor, ₱48,000.
● Production overhead, ₱18,000.
● Sales from January 1 to May 31, ₱225,000.
● Sales returns, ₱45,000.
● Sales discounts, ₱15,000.
● Gross profit rate based on sales, 25%.

How much is the work in process destroyed by fire?

a. 48,000 b. 49,500 c. 58,500 d. 51,000

Use the following information for the next two questions:

Presented below is information pertaining to ABC Co.:
Cost Retail
Inventory, January 1 21,750 35,000
 Purchases 138,250 200,750
Freight-In 5,000 -
Purchase discounts 1,250 -
Purchase returns 13,000 21,500
Departmental Transfers-In (Debit) 2,500 3,750
Departmental Transfers-Out (Credit) 2,000 3,000
Markups 15,000
Markup cancellations 5,000
Markdowns 30,000
Markdown cancellations 7,500
Abnormal spoilage (theft and casualty loss) 12,500 17,500
Sales 109,500
Sales returns 6,250
Sales discounts 2,500
Employee discounts 1,250
Normal spoilage (shrinkage and breakages) 500

14. How much is the ending inventory under the Average cost method?

a. 60,750 b. 60,000 c. 61,050 d. 62,400

15. How much is the ending inventory using the FIFO cost method?

a. 60,750 b. 60,000 c. 61,050 d. 62,400

Use the following information for the next two questions:

During 2004, Elway Corporation transferred inventory to Howell Corporation and agreed to repurchase the
merchandise early in 2005. Howell then used the inventory as collateral to borrow from Norwalk Bank,
remitting the proceeds to Elway. In 2005 when Elway repurchased the inventory, Howell used the proceeds to
repay its bank loan.

16. This transaction is known as a(n)

a. consignment.
b. installment sale.
c. assignment for the benefit of creditors.
 d. product financing arrangement.

17. On whose books should the cost of the inventory appear at the December 31, 2004 balance sheet date?
a. Elway Corporation
b. Howell Corporation
c. Norwalk Bank
d. Howell Corporation, with Elway making appropriate note disclosure of the transaction

18. Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in physical
inventory but did not record the transaction. The effect of this on its financial statements for January 31
would be
a. net income or profit, current assets, and retained earnings were overstated.
b. net income or profit was correct and current assets were understated.
c. net income or profit and current assets were overstated and current liabilities were understated.
d. net income or profit, current assets, and retained earnings were understated.

19. Dawn Co. purchased goods with invoice price of ₱3,000 on account on December 27, 20x1. The related
shipping costs amounted to ₱50. The seller shipped the goods on December 31, 20x1. Dawn Co.
received the goods on January 2, 20x2 and settled the account on January 5, 20x2. How much is the net
cash payment to the supplier if the terms of the shipment are FOB destination, freight collect?

a. 3,050 b. 3,000 c. 2,950 d. 0

20. When using the periodic inventory system, which of the following generally would not be separately
accounted for in the computation of cost of goods sold?
a. Cash (purchase) discounts taken during the period
b. Purchase returns and allowances of merchandise during the period
c. Trade discounts applicable to purchases during the period
d. Cost of transportation-in for merchandise purchased during the period
21. Goods out on consignment are
a. included in the consignee's inventory.
b. recorded in a Consignment In account which is an inventory account.
c. recorded in a Consignment Out account which is an inventory account.
d. all of these
22. Which of the following is not a common disclosure for inventories?
a. Inventory composition.
b. Inventory financing arrangements.
c. Inventory costing methods employed.
d. Inventory location.

23. What will be the effect if the current year’s ending inventory amount is understated?
a. Cost of Goods Sold will be understated
b. Gross profit will be understated
c. Net Income will be overstated
d. Retained earnings will be overstated.

24. Which of the following statements are correct:

I. Financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.
II. A contractual right to exchange financial instruments with another entity under conditions that
are potentially unfavorable is a financial asset.
III. A financial liability is a contractual obligation to deliver cash or another financial asset to another
entity.
IV. Debt instrument is any contract that evidences residual interest in the assets of an entity after
deducting all the liabilities.
a. Statements I, II, and III are correct
b. Statements I and III are correct
c. Only Statement I is correct
d. Statements I and II are correct

25. Financial assets are initially recognized and subsequently measured on the basis of
a. the entity’s business model for managing the financial assets
b. the contractual cash flow characteristics of the financial assets
 c. a or b
d. a and b

26. According to PFRS 9, a financial instrument is recognized

a. When the instrument has probable economic benefits that can be measured reliably.
b. Only when the entity becomes party to the contractual provisions of the instrument.
c. When the entity enters to a binding contract to deliver a variable number of its own equity
instruments
d. Only when the instrument requires receipt of another financial instrument under conditions which
are potentially favorable.

27. If the entity’s business model’s objectives is to hold assets in order to collect contractual cash flows
and cash flows are solely payments of principal and interest on the principal amount outstanding, the
financial assets is classified
a. according to management’s intention of holding the securities
b. as financial asset measured at amortized cost
c. as financial asset measured at fair value
d. any of these

Use the information for the questions 6-10:

On December 31, 20X1, data for MAGIGING CPA A Co. includes the following:
1FA Cash and cash equivalents 70,000
2FA Accounts Receivable 100,000
3FA Allowance for bad debts 10,000
4NFA Intangible assets 30,000
5FA Interest receivable 21,000
7FA Investment in equity instruments 125,000
8FA Investment in associate 45,000
9FA Investment in subsidiary 70,000
10FA Investment in bonds 170,000
11FL Finance lease liability 45,000
12FA Sinking fund 40,000
13NFA Merchandise Inventories 133,000
14NFA Biological assets 120,000
15NFA Building 500,000
16NFA Accumulated Depreciation 50,000
17FA Notes receivable 150,000
18NFA Prepaid rent 20,000
19EQ Treasury shares 23,000
20NFA Claims for tax refund 45,000
21NFA Deferred tax assets 60,000
22FL Accounts payable 150,000
23FL Utilities payable 250,000
24FL Accrued interest expense 18,000
25FL Cash dividends payable 27,000
26FA Cash surrender value 60,000
27FL Bonds payable 120,000
28FL Discount on bonds payable 15,000
29FL Security deposit 30,000
30NFL Advances from customers 16,000
31NFL Unearned rent 8,000
32NFL Warranty obligations 13,000
33NFL Unearned interest on receivables 5,000
34NFL Income taxes payable 9,000
35NFL SSS contributions payable 5,000
36NFL Philhealth contributions payable 6,000
37EQ Share premium 35,000
38EQ Accumulated profits-appropriated 500,000
39EQ Accumulates profits-unappropriated 3,200,000
40FL Issued redeemable preference share (with mandatory redemption) 100,000
41EQ Issued preference share capital 350,000
Determine the following:
28. Financial assets
a. P310,000 b. P476,000 c. P841,000 d. 1,616,000
29. Nonfinancial assets
a. P100,000 b. P703,000 c. P858,000 d. P958,000
30. Financial liabilities
a. P270,000 b. P610,000 c. P655,000 d. 725,000
31. Non-financial liabilities
a. P42,000 b. P51,000 c. P56,000 d. P62,000
32. Shareholder’s equity
a. P4,085,000 b. P4,108,000 c. P4,062,000 P4,206,000
33. Which of the following statements is correct concerning the subsequent measurement of financial asset
at fair value?
I. The financial asset shall be measured at fair value if the business model is not to collect
contractual cash flows on specified dates and the contractual cash flows are not solely
payments of interest and principal.
II. An entity may designate a financial asset as measured at fair value through profit of loss even if
the financial asset satisfies the amortized cost measurement.
a. I only b. II only c. Both I and II d. Neither I nor II
34. Subsequent changes in fair values of a financial asset classified as fair value through other
comprehensive income are recognized in
a. Recognized in profit or loss
b. Recognized in other comprehensive income
c. Recognized in other comprehensive income and accumulated in equity
d. Recognized in other comprehensive income and accumulated in retained earnings.

35. On December 31, 2022, PAPASA A Co. acquired investment for P1,000,000 plus a purchase
commission of P20,000. The investment is designated at fair value through other comprehensive
income. On December 31, 2023, the market price of the investment is P1,000,000. If the investment
were sold, a commission of P30,0000 would be paid. On December 31, 2023, the investment should be
carried at
a. P1,020,000 b. P1,000,000 c. P990,000 d. P970,000

36. On January 2, 2022, PAPASA A Co. bought 15 percent of WAG KA SUSUKO Co. capital stock for
P120,000 and classified it as financial asset at fair value through other comprehensive income. WAG
KA SUSUKO Co. net incomes for the years ended December 31, 2022 and 2023, were P20,000 and
P100,000, respectively. During 2023, WAG KA SUSUKO Co. declared dividend of P280,000. No
dividends were declared in 2022. On December 31, 2023 the fair value of WAG KA SUSUKO Co. stock
owned by PAPASA A Co. had increased to P180,000. How much should PAPASA A Co. show on its
2023 income statement as income from this investment?
a. P102,000 b. P60,000 c. P42,000 d. P6,300
Dividend income in Income Statement - 280,000 * 15% = 42,000
a. When a financial asset at fair value through other comprehensive income is derecognized, any
37. On February 2, 2022, I AM DETERMINED Co. purchased 10,000 shares of CPA Co. at P56 plus
broker’s commission of P4 per share. The investment is classified as financial asset at fair value
through other comprehensive income. During 2022 and 2023, the following events occurred regarding
the investment.
12/15/22 CPA Co. declares and pays a P2.20 dividend per share
12/31/22 The market price of CPA Co. stock is P52 per share at year-end.
12/01/23 CPA Co. declares and pays a dividend of P2 per share.
12/31/23 The market price of CPA Co. stock is P55 per share at year end.
The unrealized gain (loss) on Investment in Marketable securities on 12/31/23 recorded as part of
equity is
a. P30,000 b. (P50,000) c. P50,000 d. (P80,000)
10,000 * (56+4) = 600,000
10,000 * 55 = 550,000
 Loss in change in FV = (50,000)

Use the following information for questions 19-20:

On January 1, 2019, PAPASA A Co. purchased 1,600 ordinary shares of another entity for P2,000,000.
At December 31, 2019, the investee’s shares were selling for P1,400 per share. PAPASA A Co.
irrevocably designated to classify equity investment at FVOCI. On October 1, 2020, PAPASA A Co,
sold half of its shares at P1,800 per share. At December 31, 2020, the shares were selling at P1,900
per share.
38. What amount is recognized in retained earnings as a result of the disposal in 2020?
a. P440,000
b. P320,000
c. P216,000
d. Nil
2,000,000 - (1,800 * 1,600 shs) = 880,000

880,000 * 50% sold = 440,000 transferred from Cumulative OCI to Retained Earnings

39. The unrealized gain is recognized in the statement of comprehensive income for the year ended
December 31, 2020 is
a. P240,000
b. P520,000
c. P400,000
d. P120,000
800 shs x P 1,900 = P 1,520,000 FV at Year End

800 shs x P 1,400 = P 1, 120,000 FV at beginning of Year

400,000 Gain

40. On December 1, 2022, PAPASA A Co. purchased a P5,000,000, 15% face value bonds at 98. The
bonds mature on November 30, 2032 and pay interest semi-annually every May 31 and November 30.
Transaction cost incurred in relation to the acquisition is 3% of bonds face value. PAPASA A Co.
classified this investment as trading securities. On November 30, 2025 after receiving the periodic
interest, PAPASA A Co. sold the investment at 101. The bonds were quoted in the market at
98,99,102,100 and 97 on December 31, 2022, 2023, 2024, 2025 and 2025, respectively. What is the
gain or loss on sale of investment?
a. P50,000 gain
b. P50,000 loss
c. P150,000 gain
d. P150,000 loss
Selling Price (5M x 101%) 5,050,000
Fair Value of Bonds December 31, 2024 (5M x 102%) 5,100,000
Loss on Sale of Investment (50,000)

41. On January 1, 20x2, PAPASA A Co.’s purchased P100,000 bonds at 97. The bonds mature on January
2, 20x6 and pays 12% annual interest beginning January 1, 20x3. Commission and transport cost paid
on the acquisition amounted to P10,000 and P5,000, respectively. The objective of PAPASA A Co.’s
business model is to sell investments in the near term to take advantage of fluctuations in fair
values for short-term profit taking. On December 31, 20x3, the bonds were selling at a yield rate of
11%.
What is the amount of unrealized gains or loss recognized in other comprehensive income?
a. P16,718 b. (P16,718) c. P4,710 d. Nil
42. Determine the correct statements:
I. Gains or losses on sale of investments at FVOCI are recognized in profit or loss whether debt or
equity securities.
II. The increase in the fair value of ordinary shares would cause an increase in the carrying
amount of trading equity securities and investment in associate.
III. The cumulative unrealized loss on security investment account for equity investment at fair
value through other comprehensive income should be reported as a component of income from
continuing operations.
a. Only Statement I is correct.
 b. Statements I and II are correct.
c. Statements I, II and III are correct
d. Statements I, II and III are incorrect
43. PAPASA A Co. owns 15% of the ordinary shares of KAYA MO YARN Corp. KAYA MO YARN Corp.
has 5% preference shares with total par value of P10,000,000. The Company declared P700,000
dividends and reported a profit of P3,000,000 during 2022.
How much is the Company’s share in net income in 2022?
a. P375,000 b. P275,000 c. P30,000 d. Nil
44. Which of the following computations may properly result to the correct balance of an investment in
associate BONUS

45. Which of the following computations may properly result to the correct balance of an investment in
associate account at year-end?
a. Beginning balance of investment plus share in associate’s profit minus share in dividends
declared by associate, and minus amortization of share in undervaluation of associate’s
asset
b. Beginning balance of investment plus share in associate’s profit minus share in dividends
declared by associate, and plus amortization of share in undervaluation of associate’s asset.
c. Beginning balance of investment plus share in associate’s profit plus share in dividends declared
by associate, and minus amortization of share in undervaluation of associate’s asset
d. Beginning balance of investment plus share in associate’s profit minus share in dividends
declared by associate, minus amortization of share in undervaluation of associate’s asset, and
minus separate impairment loss on goodwill included in the carrying amount of the investment

46. Investments in associates are normally classified in the statement of financial position as
a. current assets
b. noncurrent assets
c. fair value
d. equity account

On January 2, 2023, Visar Co. purchased 25,000 shares representing 30% of Visual Co for P220. Visar Co.
also paid transaction cost of P100,000. The book value of Visual Co.’s net assets was at P 15,000,000. On
the same date, a depreciable assets with remaining useful life of 10 years was understated by P 1,500,000.
During 2023, Visual Co reported the following in its Statement of Comprehensive income: P 4,500,000 net
income and a P 500,000 revaluation surplus at the end of the year. Visar Co received cash dividends of P
1,250,000 on December 31, 2023.
47. What is the carrying value of the investment on December 31, 2023?
a. P 5,805,000
b. P 5,135,000
c. P 4,925,000
d. P 4,755,000
48. How much is the investment income to be reported in the profit or loss for 2023?
a. P 1,305,000
b. P 1,205,000
c. P 1,500,000
d. P 1,400,000

49. Which of the following statements are correct?

I. An investment that provides the investor significant influence over the investee is accounted for
using the equity method.
II. Significant influence is presumed to exist if the investor holds more than 20% of the voting power
of the investee.
III. An investors’ representation in the board of directors of the investee may provide evidence of
significant influence.
IV. Investment in associates are measured at fair value at each reporting date and changes in fair
value are recognized in profit or loss.
 a. Only one statement is correct
b. Only two statements are correct
c. Only three statements are correct
d. All of the statements are correct

On January 1, 2021, CPA2028 Co. acquired 20% interest in BSA28 Co. for P 1,600,000. On this date, the
carrying amounts of BSA28 Co.’s assets and liabilities approximate their fair values except for the following:
Carrying Amount Fair Value
Inventory P 300,000 P 400,000
Machinery 1,800,000 1,500,000
The machinery has a remaining useful of 5 years. BSA28 CO.’s total equity, at book value, was P 8,000,000
on January 1, 2021. CPA28 Co reported a profit of P 3,000,000 and declared and paid cash dividends of
P 500,000 in 2021.

50. How much is the implied goodwill (negative goodwill)?

a. P 40,000
b. P (40,000)
c. P 50,000
d. P (50,000)
51. How much is the share in the associate’s profit?
a. 750,000
b. 632,000
c. 612,000
d. 592,000
52. How much is the Carrying amount of the investment in associate on December 31, 2021?
a. 2,092,000
b. 2,132,000
c. 2,255,000
d. 2,029,000

53. When the accounting policies used by the investor and the associate do not match
a. PAS 28 requires appropriate adjustments to the associate’s financial statements to
conform them to the investor’s accounting policies for reporting like transactions and
other events in similar circumstances.
 b. PAS 28 does not require appropriate adjustments to the associate’s financial statements to
conform them to the investor’s accounting policies for reporting like transactions and other events
in similar circumstances when it was not practicable to use uniform accounting policies
c. PAS 28 requires the entity to discontinue the use of the equity method
d. In no instance should the accounting policies used by the investor and the associate be different.

54. PAS 28 generally applies when the level of ownership of another company is at what percentage?
a. Less than 20%
b. 20%-30%
c. 20%-50%
d. More than 50%

55. When an investor uses fair value accounting to account for investments in common stock, cash dividends
received by the investor from the investee should normally be recorded as
a. a deduction from the investment account.
b. dividend revenue.
c. an addition to the investor's share of the investee's profit.
d. a deduction from the investor's share of the investee's profit

56. If there is any excess of the investor's share of the net fair value of the associate's identifiable assets and
liabilities over the cost of the investment, that is, negative goodwill, how should that excess be treated?
A. It should be written off against retained earnings.
B. It should be included in the carrying amount of the investment.
C. It should be included as income in the determination of the investor's share of the associate's
profit or loss for the period.
D. It should be disclosed separately as part of the investor's equity.

57. An investor uses the equity method to account for an investment in ordinary shares. After the date of
acquisition, the investment account of the investor would
A. Be increased by its share of the earnings of the investee, and decreased by its share of the
losses of the investee
B. Be increased by its share of the earnings of the investee, but not be affected by its share of the losses
of the investee
C. Not be affected by its share of the earnings of the investee, but be decreased by its share of the losses
of the investee
D. Not be affected by its share of the earnings or losses of the investee

58. Under the equity method of accounting for investments, an investor recognizes its share of the earnings
in the period in which the
A. Investor sells the investment
B. Investee pays dividend
C. Invested declares a dividend
D. Earnings are reported by the investee in its financial statements

59. The equity method causes the balance in the investment account to approximate:
A. original cost of the investment
B. original cost of the investment plus any dividends declared and paid by the investee company
C. original cost of the investment plus a proportionate share of subsequent undistributed
earnings of the investee company
D. market value of the investment

60. Under the equity method in PAS 28, goodwill

a. reduces the investment account.
b. increases the investment account.
c. reduces both investment income and the investment account.
d. is not recorded.

“Blessed is the one who perseveres under trial because, having stood the test, that person will receive the
crown of life that the Lord has promised to those who love him.” (James 1:12)

“Wag mag-alala, buhay ay ‘di karera.” (BINI)

“Ano ba itong nadarama? Oh, shux, ako ba'y pasado na?”