1.

On January 1, 2013, Abigail Company issued a 5-year 10% bonds with

P5,000,000 face value and interest are payable semi-annually starting June
30. The effective rate before bond issue cost is 12% and effective rate after
bond issue cost is 13%. Abigail Company elects to use the effective interest
of amortization for the bonds. On December 31, 2014, what is the
unamortized portion of the bond issue cost? (use 4 decimal places of present
value factors)
a. P323,580
b. P102,795
c. P363,250
d. P117,575
2. Bianca Company received a government grant related to a depreciable asset
on January 1, 2008 in the amount of P750,000. This grant was deducted from
the capital cost of the asset purchased at a total amount of P4,500,000
acquired on the same date with a useful life of 10 years and no residual
value. On January 1, 2013, the entire P1,000,000 became payable due to
breach of contract by Bianca Company. What is the depreciation expense to
that should be recognized for December 31, 2013?
a. P1,200,000
b. P1,125,000
c. P825,000
d. P450,000
3. Cashmere Company and its subsidiaries own the following properties that are
accounted for in accordance with PAS 40:
Land held for undetermined use
P5,000,000
A vacant land to be leased out under finance lease
3,000,000
Property held by real estate subsidiary in the ordinary course
2,000,000
of business
Property held for use in production
4,000,000
Building owned by subsidiary of which security and
1,500,000
maintenance is provided to lessees
Land leased to subsidiary under operating lease
2,500,000
Property under construction for use as investment property
6,000,000
Land held for future factory site
3,500,000
Machinery leased out under operating lease
1,000,000
What is the total investment property that should be reported in the
consolidated statement of financial position of Cashmere Company?
a. P15,500,000
b. P12,000,000
c. P10,500,000
d. P9,500,000
4. Diane Company incurred the following expenses relating to an intangible
asset being produced:
Equipment acquired solely for the intangible asset
P975,000
Depreciation of the equipment
135,000
Material used
200,000
Compensation cost of personnel
500,000
Outside consulting fees
150,000
Indirect cost allocated
250,000
Legal cost to file intangible asset produced
100,000
What total research and development cost should be recognized as expense
for the current year?
a. P2,175,000
b. P2,075,000
c. P1,235,000
d. P1,085,000
5. On January 1, 2013, Eini Company granted its 10 employees 5,000 share
appreciation rights for each employee for past services. The rights are
exercisable immediately and expire on December 31, 2014. The employees
exercised all the rights on December 31, 2014 and are entitled to receive
cash in excess of market price on grant date over market price on exercise

6.

7.

8.

9.

date. The market price of the was P100 on January 1, 2013 ,P115 on
December 31, 2013 and December 31, 2014 P110. What amount should be
recognized as salaries expense for December 31, 2014?
a. P0
b. P250,000
c. P500,000
d. P750,000
Due to adverse economic circumstances and poor management, Faith
Company has negotiated a restructuring of its 9% P6,000,000 note payable to
Ammie Bank due on January 1, 2013. There is no accrued interest on the
note. The bank has reduced the principal amount to P5,000,000 and extends
the maturity to the end of 3 years. However, the new interest rate is 13%
payable annually every December 31. What is the gain on extinguishment of
debt to be recognized for 2013?
a. P1,000,000
b. P505,500
c. P350,000
d. P0
In computing for its net income for tax purposes, the following data were
provided by Gerlyn Company:
Carrying amount
Tax base
Accounts receivable
P1,500,000
P1,750,000
Equipment
1,650,000
1,250,000
Provision for warranty
120,000
0
Deposit
received
in
150,000
0
advance
The depreciation rates for accounting and taxation are 15% and 25%
respectively. The deposits are taxable only when received and warranty costs
are deductible when paid. An allowance for doubtful debts of P250,000 has
been raised against accounts receivable for accounting purposes but such
debts are only deductible when proven worthless. What amount should
Gerlyn Company report as deferred tax asset on December 31, 2013,
assuming that the tax rate is 30%?
a. P156,000
b. P120,000
c. P81,000
d. P36,000
Honey Company purchased a life insurance policy for the life of its president
with its family as the beneficiary of the policy. The policy is dated January 1,
2010 with a policy value of P2,000,000 and the annual premium for the policy
is P80,000. The cash surrender value for 2012 and 2013 are P15,000 and
P19,000 respectively. The entity follows a calendar year as accounting period.
The president died on October 1,2013 and the policy is settled on December
31, 2013. What amount should Honey Company report as gain on life
insurance settlement in its 2013 income statement?
a. P2,000,000
b. P1,982,000
c. P1,962,000
d. P0
Ira Company discloses supplemental operating segment information. The
following information is available for the current year:
Segment
Sales
Traceable expenses
Super
P5,000,000
P3,000,000
Ultra
4,000,000
2,500,000
Mega
3,000,000
1,500,000
Additional expenses, not included above, are as follows:
Indirect expenses
P2,000,000
General corporate expenses
1,000,000
Interest expense
500,000
Income tax expense
400,000

The interest expense and income tax expense are regularly reviewed by the
chief operating decision maker as a measure of profit or loss. Appropriate
common expenses are allocated to segments based on the ratio of a
segments sales to total sales. What is Segment Megas profit for the current
year?
a. P900,000
b. P875,000
c. P775,000
d. P525,000
10.Jenny Company started doing business on January 1, 2013. During the current
year ended December 31, 2013, the business paid trade creditors P2,000,000
in cash and suffered net loss of P350,000. The ledger preclosing balances on
December 31, 2013 included the following:
Accounts receivable
600,000
Accounts payable
750,000
Capital (total investment in cash)
2,000,000
Expenses (paid in cash)
100,000
Merchandise (unadjusted debit balance)
700,000
There were no withdrawals. All sales and purchases were on credit. The
merchandise account is debited for purchases and credited for sales. What is
the amount of sales for the year 2013?
a. P2,750,000
b. P2,650,000
c. P2,050,000
d. P700,000
11.Karen Companys books are kept on an accrual basis. The following data are
provided for the current year:
Sales
P10,000,000
Cost of goods sold
5,300,000
Operating expenses
3,800,000
January 1
December 31
Prepaid
operating
700,000
1,000,000
expenses
Accounts payable
1,200,000
1,350,000
Inventory
2,100,000
2,500,000
Accounts receivable
1,375,000
1,400,000
Under the cash basis, what amount should be reported as purchases for the
current year?
a. P5,150,000
b. P5,550,000
c. P5,700,000
d. P5,850,000
12.Lianne Company purchased four convenience store building on January 1,
2007 for a total amount of P25,000,000. The buildings have been depreciated
using the straight line method with a 20-year useful life and 10% residual
value. On January 1, 2013, the entity has converted the building into a hotel
and restaurant. Because of the change in the use of the buildings, the entity
is evaluating the buildings for possible impairment.
The entity estimated that the buildings have a remaining useful life of 10
years, that their residual value will be zero, that net cash inflow from the
building will total P2,000,000 per year, and that the fair value of the four
buildings totals P10,000,000. The appropriate discount rate is 8%. What is the
impairment loss that should be recognized for 2013?
a. P0
b. P4,830,000
c. P5,000,000
d. P8,250,000
13.During 2013, Mandy Company constructed a building facility at a cost of
P30,000,000. The expenditure for this building, which was finished late in

2013, were incurred evenly during the year. The entity had the following
loans outstanding at December 31, 2013:
10% note to finance specifically for the construction of the new
building facility, dated January 1, 2013, P10,000,000. While still
unused, the amount of the loan was invested and earned P100,000
income. Remains unpaid as of December 31, 2013.
12% 20-year bonds issued at face value on April 30, 2012,
P30,000,000.
8% 5-year note payable, dated March 1, 2012, P10,000,000.
What amount of interest should be capitalized as cost of the new building for
the year 2013?
a. P1,550,000
b. P1,500,000
c. P1,450,000
d. P1,400,000
14.Norlianne Company has a herd of 100 2-year old animals on January 1, 2013.
10 animals aged 2.5-year were purchased on July 1, 2013 for P10,800 each
and 10 animals were born on July 1, 2013. No animals were sold or disposed
of during the year. The fair values less cost to sell per unit were:
2-year old animal on January 1,
10,000
2.5-year old animal on July 1
10,800
New born animal on July 1
7,000
2-year old animal on December 31
10,500
2.5-year old animal on December 31
11,100
Newborn animal on December 31
7,200
3-year old animal on December 31
12,000
0.5-year old animal on December 31
8,000
What is the gain from change in fair value that should be reported for 2013?
a. P0
b. P55,000
c. P237,000
d. P292,000
15.Orrianie Company uses retail inventory method to approximate its ending
inventory. The following information about its inventory are provided below:
Cost
Retail
Inventory, Beg.
P650,000
P1,200,000
Purchases
9,000,000
14,700,000
Freight in
200,000
Purchase returns
300,000
500,000
Purchase allowances
150,000
Departmental transfers
200,000
300,000
Net markups
300,000
Net markdowns
1,000,000
Sales
9,500,000
Sales discount
100,000
Employee discounts
500,000
Estimated normal shoplifting losses
600,000
Estimated normal shrinkage
400,000
What is the estimated cost of ending inventory using the average cost
approach under the retail method of inventory valuation?
a. P2,560,000
b. P2,624,000
c. P2,880,000
d. P3,264,000
16.Patricia Company reported P5,000,000 of inventory on December 31, 2013,
based on physical count. The following are additional information concerning
inventories of Patricia Company:
Goods sold to a customer on December 31, 2013 which are being held
for the customer to call at the customers convenience with a cost of
P150,000 and is included in the count.

Excluded from the physical count were goods billed to a customer, FOB
shipping point, on December 31, 2013. The goods had a cost of
P200,000 and had been billed at P350,000. The shipment is ready for
pick-up by the delivery contractor on January 15, 2014.
Goods were in transit from a vendor. The invoice cost was P300,000
and goods were shipped FOB seller on December 31, 2013.
Work in process costing P400,000 was sent to an outside processor for
finishing on December 31, 2013.
Goods out on consignment with sales price of P1,000,000 and mark up
of 25% on cost. Shipping costs amounts to P50,000.
What is the correct amount of inventory on December 31, 2013?
a. P6,900,000
b. P6,850,000
c. P6,750,000
d. P6,600,000
17.Queenie Bank loaned P7,500,000 to a borrower on January 1, 2011. The
terms of the loan were payment in full on January 1, 2016, plus annual
interest payment at 12%. The interest payment was made as scheduled on
January 1, 2012. However due to the effect of global financial crisis, the
borrower was not able to make its 2013 interest payment. Queenie bank
considers the loan impaired and projects the cash flows from the loan on
December 31, 2013. The bank has accrued the interest on December 31,
2012, but did not continue to accrue interest for 2013 due to the impairment
of the loan. The projected cash flows for December 31, 2013 are as follows:
Date of cash flows
Amounts of projected cash flows
December 31, 2014
P500,000
December 31, 2015
1,000,000
December 31, 2016
2,000,000
December 31, 2017
4,000,000
What is the impairment loss to be recognized on December 31, 2013?
a. P5,225,000
b. P3,175,000
c. P2,275,000
d. P2,175,000
18.Rachel Company assigned on a nonnotification basis accounts receivable of
P5,000,000 to a bank in consideration for a loan of 80% of the accounts less a
5% service fee on the accounts assigned. The entity signed a note for the
bank loan on December 1, 2013. On December 31, 2013, the company
collected assigned accounts of P2,000,000 less discount of P200,000. Rachel
Company remitted the collection to the bank in partial payment for the loan.
The bank applied first the collection to the interest and the balance to the
principal at an agreed interest of 1% per month on the loan balance. What is
the carrying amount of the note payable on December 31, 2013?
a. P2,040,000
b. P2,240,000
c. P2,250,000
d. P3,250,000
19.The checkbook of Sophia Company on December 31, 2013 was P400,000. A
customer check amounting to P20,000 dated January 2, 2013 was included in
the checkbook balance. Another customer check for P50,000 deposited on
December 22, 2013 was included in the checkbook balance but was mark
DAIF (Drawn Against Insufficient Fund) by the drawing bank. This check was
redeposited on December 26, 2013 and cleared after 2 days. A P40,000
check payable to a supplier dated and recorded on December 30, 2013 was
mailed on January 16, 2013. A petty cash fun of P5,000 had the following
summary on December 31, 2013: coins and currencies, P500; petty cash
vouchers, P4,300; return value of 20 soft drink cases P200; check of drawn on
December 31, 2013 payable to petty cashier. What amount should be
reported as cash on December 31, 2013?
a. P374,800
b. P420,000

c. P420,500
d. P424,800
20.Trishia Company borrowed P5,000,000 from a bank at a variable rate of
interest for 4 years on January 1, 2013. Interest is payable annually to the
bank every December 31 and the principal is due on December 31, 2016.
Under the agreement, the market rate of interest every January 1 will be the
variable rate for the period and the amount of interest to be paid on
December 31. In connection with the loan, Trishia Company entered into a
receive variable pay fix interest swap agreement with a bank speculator.
The interest rates were as follows:
January 1, 2013
10%
January 1, 2014
14%
January 1, 2015
12%
January 1, 2016
11%
For December 31, 2013, what amount should be reported as derivative asset
or liability?
a. P169,000 asset
b. P169,000 liability
c. P200,000 asset
d. P200,000 liability
21.Ulrish Company had the following date for its accounts receivable account for
2013:
Accounts receivable, Jan. 1
P950,000
Allowance for doubtful accounts
100,000
Total sales (cash and credit)
5,900,000
Collections:
Customers who took advantage of 4 / 10, n / 30 terms
3,024,000
Customers who did not took the credit term (includes
450,000
P25,000 recovery of accounts receivable previously written
off)
Cash customers
2,100,000
Accounts written off for the year
50,000
sales return issued with credit memo
250,000
Sales return with cash refund
20,000
Ulrish Company estimated that 5% of accounts receivable will be a
reasonable estimate for allowance of doubtful accounts for 2013. What is the
net realizable value of accounts receivable on December 31, 2013?
a. P875,000
b. P850,000
c. P831,250
d. P807,500
22.Vanessa Company has one class of ordinary share capital outstanding and no
other securities that are potentially convertible into ordinary shares. During
2013, 200,000 shares were outstanding. In 2014, two distributions of
additional ordinary shares incurred: On April 1, 50,000 shares of treasury
were sold and on July 1, a 2 for 1 share split was issued. Net income was
P5,225,000 in 2014 and P4,500,000 in 2013. What amount should be
reported as basic earnings per share in the comparative income statement?
2013 2014
a.
11.2 10.4
5
5
b.
22.5 10.4
0
5
c.
11.2 11.0
5
0
d.
22.5 11.0
0
0
23.On January 1, 2010, Winnie Company was granted 2 patents, apparently
patent A and patent B. Related legal cost for patent A was P500,000 and for
patent B was P300,000. Also incurred P50,000 consultation fee for both

patent. During 2013, the company paid P1,000,000 in legal cost for
successfully defending patent A and P1,200,000 of legal cost for patent B for
which was unsuccessfully defended. On April 1, 2013 the entity paid
P800,000, of which 75% was for a trademark and 25% was for the entity
agreement with a competitor not to compete for 5 year period in line with the
trademark. What amount of expense should be recognized for the year 2013?
a. P2,735,000
b. P2,615,000
c. P2,575,000
d. P2,495,000
24.Xarielle Company bought 20% of X Corporation on January 1, 2013. The
carrying amount of the investees net assets at purchase date totaled
P16,000,000. Fair value and carrying amount were the same for all items
except for land with carrying amount of P4,000,000 and inventory with
carrying amount of P500,000. Land exceeds carrying amount to P7,000,000
and inventory exceeds carrying amount by P1,000,000. Half of the inventory
were sold during 2013. During 2013, the investee reported net income of
P4,000,000 and paid a P1,500,000 cash dividend. The investment has a
recorded amount of P5,400,000 on December 31, 2013. What is the purchase
price of the investment in associate on January 1, 2013?
a. P5,100,000
b. P5,000,000
c. P4,900,000
d. P4,600,000
25.Yuri Company is a diversified entity with nationwide interests in commercial
real estate development, banking, mining and foods industry. The mining
division was deemed to be inconsistent with the long-term direction of the
entity. On October 1, 2013, the board of directors voted to approve the
disposal of this division. The sale is expected to occur in august 2013. The
mining division had the following revenue and expense in 2013:
January 1 to September 30
Revenue
P35,000,000
Expenses
25,000,000
October 1 to December 31
Revenue
10,000,000
Expenses
12,000,000
The carrying amount of mining divisions assets on December 31, 2013 was
P50,000,000 and the recoverable amount was estimated to be P55,000,000.
The sale contract requires the entity to terminate certain employees incurring
and expected termination cost of P1,000,000 to be paid on December 15,
2013. Income tax rate is 30%. What amount should be reported as income
from discontinued operation for 2013?
a. P9,100,000
b. P8,400,000
c. P5,600,000
d. P4,900,000
26.Zhara Company prepares quarterly interim financial statements and the
entity sells goods of which 5% of the customers claim their warranty. The
provision in the first quarter was calculated as 5% of sales to date. However,
in the second quarter, a design fault was found and warranty claims were
expected to be 10% for the whole year. Sales for the first quarter was
P10,000,000 and P15,000,000 for the second quarter. What would be the
provision charged in the second quarters interim financial statements?
a. P750,000
b. P1,250,000
c. P1,500,000
d. P2,000,000
27.The financial Statements of Andrei Company were authorized for issue on
March 31, 2014 and the end of the reporting period is December 31, 2013.
The following transactions incurred after the end of the reporting period.

On December 31, 2013, the entity had an account receivable of

P1,000,000 from a customer and on February 1, 2014, the receiver
appointed for the customer informed the entity that the P1,000,000
would be paid in full on December 31, 2014.
On December 31, 2013, the entity had an account receivable of
P3,000,000 from a customer and on March 1, 2014, the liquidator of
the customer advised the entity in writing that the customer was
insolvent and that only 50% of the account would be collected on
December 31, 2014.
The entity reported a contingent liability on December 31, 2013 related
to a court case. On march 15, 2014, the judge rendered a decision
against the entity for damages amounting to P2,000,000.
What amount should be reported as adjusting events on for the year 2013?
a. P6,000,000
b. P4,500,000
c. P4,000,000
d. P3,500,000
28.On January 1, 2013, Bardy Company classified one of its noncurrent asset as
held for sale which was purchased on January 3, 2009 at a cost of P5,000,000
with useful life of 10 years. Fair value of the equipment on January 1, 2013 is
P3,200,000 excluding cost to sell of P200,000. On December 31, 2013, fair
value of the equipment is P3,500,000 including cost to sell of P500,000 and
on the date the equipment was removed from being held for sale. What
should be the value of the equipment after ceasing to be held for sale on
December 31, 2013?
a. P2,500,000
b. P3,000,000
c. P3,500,000
d. P4,000,000
29.On January 1, 2013, Claude Company purchased 50,000 units of goods at P20
per unit. During the year, the entity sold 40,000 units at P36 per unit. The
entity paid P140,000 for operating expenses. The current replacement cost of
the inventory on December 31, 2013 is P30 per unit. On December 31, 2013,
what amount of net income under current cost accounting should be
reported?
a. P500,000
b. P600,000
c. P640,000
d. P740,000
30.The following are taken from the December 31, 2013 trial balance of Dan
Company:
Sales
P8,100,000
Share in profit of associate
135,000
Increase in inventory of finished goods
225,000
Raw materials used
3,150,000
Other income
45,000
Interest income
180,000
Employee benefit expense
1,350,000
Translation loss of foreign operation
270,000
Finance cost
315,000
Impairment
720,000
Other expense
405,000
Depreciation
405,000
Income tax expense
675,000
What is the operating income for the year ended 2013?
a. 2,340,000
b. 2,025,000
c. 1,665,000
d. 1,395,000
31.Eric Company wanted to establish a leasing company by starting to purchase
a specialized packing equipment at a cost of P1,840,000 to packing

companies. The equipment has a residual value of P340,000 and useful life of
7 years. Eric company provides to packers the following terms:
The packing equipment is to be leased for 6 years, after which it
transfers to the lessee.
Annual payment starts immediately on the first day.
Implicit interest rate of 12% is used by Anguish Company.
On January 2, 2013 Eric Company entered into a lease agreement with E
Company. E Company started using the equipment on April 1, 2013.
What is the annual lease payment required to yield the desired return?
(Closest answer)
a. P400,000
b. P326,000
c. P447,600
d. P364,900
32.Frank Companys inventories were totally destroyed by fire on December 31,
2013. There were no purchases from the time of fire until December 31,
2013.
January 1
December 1
Raw materials
450,000
0
Manufacturing Supplies
30,000
25,000
Goods in process
925,000
1,050,000
Finished goods
1,100,000
1,125,000
The following are the data for the current year:
Sales
P6,000,000
Purchases of raw materials
2,000,000
Purchases of factory supplies
150,000
Freight of raw materials
75,000
Direct labor
1,100,000
Manufacturing overhead is 75% of direct labor and gross profit rate is 35% of
sales. What is the cost of the raw materials destroyed by fire?
a. P555,000
b. P400,000
c. P375,000
d. P325,000
33.George Corporation was organized on April 1, 2009 and is under the 30% tax
rate. The corporation also follows a fiscal year accounting. After 4 years of
unstable operation, the equity section of George Company on March 31, 2013
is presented below:
Contributed Capital
Share
Capital,
P10
par,
1,000,000
P5,000,000
authorized, 500,000 issued and outstanding
Share premium
2,500,000
Retained earnings
3,000,000
On April 15 2013, George Company acquired 50,000 treasury shares at a cost
of P20 per share. On May 1, 2013, the entity issued 20% stock dividend and
market value of the share was P20. On October 1, 2013, the company
declared a P2 cash dividends payable on August 1, 2013. On March 31, 2014
all treasury shares were sold at P12 per share. The entity reported operating
income of P1,000,000. What amount should be reported as unappropriated
retained earnings?
a. P4,180,000
b. P4,200,000
c. P3,880,000
d. P3,900,000
34.Harry Company includes one coupon in each package of goods it sells. A mug
is offered as premium to customer who redeems remitting 10 coupons back
to the company. The following information pertains for the year 2013 and
2014 relating to the promotion:
2013
2014
Packages of goods sold
500,000
800,000
Number of mugs purchased (P50 each mug)
50,000
75,000

Mugs distributed
40,000
55,000
Mugs to be distributed next year
5,000
10,000
What amount should be reported as premium expense for 2014?
a P2,750,000
b P3,250,000
c P3,000,000
d P3,750,000
35.Ion Company has the following information relating to its employee benefit
plan for 2013:
Projected benefit obligation, January
P9,000,000
1
Fair value of plan assets, January 1
10,000,000
Projected
benefit
obligation,
10,000,000
December 31
Fair value of plan assets, December
15,000,000
31
Unrecognized net actuarial loss
1,500,000
Past service cost
P1,000,000
During the current year, the actuary determined the current service in the
amount of P2,500,000 and interest cost of 10%. The expected and actual
return on plan asset is 12%. The average remaining service period of the
covered employees is 10 years. What is the benefit expense for 2013?
a. P2,350,000
b. P2,250,000
c. P1,850,000
d. P1,750,000
36.Johnny Company incurred the following costs during the current year 2013:
Option fee for land acquired
P10,000
Option fee for land not acquired
10,000
Taxes in arrears on building on land
50,000
Payment for land
1,000,000
Demolition of old building, including of salvage value of
110,000
P10,000
Architect fee
230,000
Payment to city hall for approval of building construction
120,000
Contract price for factory building
5,000,000
Safety fence around the construction area
35,000
Safety inspection on building
30,000
Removal of safety fence after completion of building
20,000
New fence surrounding the factory
80,000
Driveways and parking bays
550,000
What is the cost of land and building for the year 2013?
Land
Building
a. P1,060,00 P5,435,00
0
0
b. P1,150,00 P5,515,00
0
0
c. P1,160,0 P5,435,0
00
00
d. P1,170,00 P5,515,00
0
0
37.On January 1, 2012, Kirk Company was established and started operating.
The financial statements for the year 2012 and 2013 contained the following
errors:
2012
2013
Ending
16,000
Understated
15,000
Overstated
inventory
Depreciation
6,000
Understated
Insurance
10,000
Overstated
10,000
Understated

expense
Prepaid
10,000
Understated
insurance
In addition, on December 31, 2013, fully depreciated machinery was sold for
P10,800 cash, but the sale was not recorded until 2014. No corrections have
been made for any of the errors. What is the effect of the errors on working
capital on December 31, 2013?
a P4,200 overstated
b P5,800 understated
c P6,000 understated
d P9,800 understated
38.Llyod Company present its comparative financial statement for December 31
of each year:
2014
2013
Cash
P5,500,000
P4,000,000
Accounts receivable
14,000,000
9,200,000
Investments, at cost
2,000,000
3,500,000
Plant asset
18,000,000
13,000,000
Accumulated depreciation
6,000,000
4,500,000
Accounts payable
9,500,000
7,500,000
Share capital
15,000,000
10,000,000
Retained earnings
9,000,000
7,700,000
The investment was sold for P2,500,000 and there was no disposal of plant
asset during the year. The net income for the year was P6,000,0000 and a
dividend of P4,700,000 was paid on December 31, 2014. What amount should
be presented as net cash provided/used by operating activities for the year
2014?
a P5,700,000
b P4,750,000
c P4,700,000
d P3,700,000
39.Using #38, what amount should be presented as net cash provided/used by
investing activities for the year 2014?
a. P2,500,000
b. P4,000,000
c. P5,000,000
d. P7,500,000
40.Using #38, what amount should be presented as net cash provided/used by
financing activities for the year 2014?
a. P300,000
b. P4,700,000
c. P5,000,000
d. P9,700,000
41.Manny Company has granted 100 share appreciation rights to each of its
1,000 employees on January 1,2013. The rights are due to vest on December
31, 2016 with payment being made on December 31, 2017. Only 80% of the
shares were vested. Share prices are for January 1, 2013 (predetermined
price) 200; December 31 2013 230; December 31, 2016 260; December
31, 2017 240. How should the settlement of the appreciation rights be
accounted for on December 31, 2017?
a. Payment of P3,200,000 and no gain.
b. Payment of P4,800,000 and no gain.
c. Payment of P3,200,000 and a gain of P1,600,000.
d. Payment of P4,800,000 and a gain of P3,200,000.
42.On June 30, 2013, the statement of financial position of Najib Company
contains the following information about its machine:
Machine at cost
P5,000,000
Accumulated depreciation
1,500,000
The equipment was measured using the cost model and depreciation on a
straight line basis over a 10-year period. On December 31, 2013, the
management decided to change the basis of measuring the equipment from

the cost model to the revaluation model. The equipment was revalued to its
fair value of P4,550,000 with remaining useful life of 5 years. What amount
should Najib Company report as revaluation surplus on December 31, 2013?
a P1,050,000
b P1,300,000
c P1,500,000
d P2,000,000
43.Oman Company sells equipment service contract that cover a 2-year period
and sales price of each contract is P500. The entitys past experience is the of
the total amount spent for repairs on service contracts, 40% is incurred
evenly during the first year and 60% evenly on the second year. Encouraged
sold 2,000 contracts evenly during 2013. In its December 31, 2014 income
statement, what amount should be reported as earned revenue from service
contracts?
a. P200,000
b. P250,000
c. P300,000
d. P400,000
44.Panfilo Company purchased an equipment on January 1, 2008 for P7,000,000
with a useful life of 10 years with no residual value. The equipment is
depreciated using the straight line method. In 2013, the management
decided to change the depreciation method from straight line method to
150% declining balance method. The estimate useful life remain unchanged
but the equipment was estimated to have a residual value of P500,000. How
much is the accumulated depreciation to be presented in the statement of
financial position of Panfilo Company for December 31, 2013?
a. P5,250,000
b. P5,062,500
c. P4,550,000
d. P4,400,000
45.Quan Company provided the following information relating to its 2013
operation:
Accounts receivable, beginning
P4,000,000
Accounts receivable collected
8,400,000
Cash sales
2,000,000
Inventory, beginning
4,800,000
Inventory, ending
4,400,000
Purchases
8,000,000
Gross margin on sales
4,200,000
What is the balance of accounts receivable on December 31, 2013?
a P8,200,000
b P6,200,000
c P4,200,000
d P2,000,000
46.Roger Company received from a customer a 1-year note with an annual
interest rate of 10% on January 1, 2013 in the amount of P1,000,000. Due to
shortage of cash being experience by Roger Company, the note was
discounted without recourse to R Bank at a discount rate of 15% on March 31,
2013. What is the loss on note receivable discounting?
a. P165,000
b. P115,312.50
c. P90,000
d. P48,750
47.The shareholders equity section of Shane Company for December 31, 2013 is
provided:
12% Preference share capital, 20,000 shares, P100 par value
P2,000,000
14% Preference share capital, 10,000 shares, P300 par value
3,000,000
Ordinary share capital, 50,000 shares, P100 par value
5,000,000
Retained earnings
2,240,000
Share premium
1,500,000

The 12% preference share is cumulative and fully participating. The 14%
preference share is noncumulative and fully participating. Dividends have not
been paid for 3 years. What is the book value per ordinary share?
a P132
b P126
c P112
d P100
48.On January 1, 2013, Terry Company purchased 100,000 shares of T Company
entity for P7,200,000. On October 1, 2013, the T Company gave Terry
Company 100,000 stock rights, which entitles the holder to acquire one share
for P50. The market price of T Company was P60 before the issuance of stock
right and P70 after issuance. Terry Company exercised all of the stock rights
on December 30, 2013. On December 31, 20,13, Terry Company sold 50,000
shares at P75 per share and the stock rights are not accounted for separately.
If the average approach is used, what is the gain on sale of investment that
should be recognized by Terry Company on December 31, 2013?
a. P700,000 gain
b. PP200,000 gain
c. P150,000 gain
d. P0
49.Information relating to the cash account of Ulrick Company for the month of
July 31, 2013:
Balance per book
P750,000
Balance per bank
1,240,000
Deposits in transit
280,000
Bank debit memo
10,000
Bank credit memo
300,000
The following are checks returned by the bank together with the bank
statement:
Check for purchases of supplies was drawn for P60,000 but recorded as
P90,000.
Check for raveling expenses of P100,000 was not recorded.
What is the amount of outstanding checks on July 31, 2013?
a P550,000
b P650,000
c P990,000
d P1,130,000
50.Vincent Company provided the following balances for 2013:
Wasting asset at cost
60,000,000,000
Accumulated depletion
15,000,000,000
Capital liquidated
11,250,000,000
Retained earnings
7,500,000,000
Depletion based on 100,000,000 units at P37.5
3,750,000,000
Inventory of resources deposit (20,000,000 units)
20,000,0000
What is the maximum dividend that can be declared at the end of 2013?
a. P33,750,000,000
b. P22,500,000,000
c. P18,750,000,000
d. P10,500,000,000