AnimoSpace Support

ACYFAR4 Quiz 2 T2 AY 2024-2025

Due Mar 28 at 11am
Points 44
Questions 36
Available Mar 28 at 9am - Mar 28 at 11am 2 hours
Time Limit 105 Minutes

Instructions
PARTS

I. True or False (10 items, 1 point each = 10 points)

II. Multiple Choice Theories (10 items, 1 point each = 10 points)

III. Problem Solving (16 items, 1.5 points each = 24 points) Solutions should be complete and submitted at the end of the exam to obtain
the remaining 8 points (0.5 points each)

Highest Possible Score = 52/50

INSTRUCTIONS
The quiz (examination) is good for 1.5 hours (90 minutes).

For problem solving, final amount should be:

without peso sign.

with or without commas
for questions asking for profit or loss, put a "-" negative sign to indicate loss.
for computations with present value, do not round off present value factors while computing.

REMINDERS
1. This is a CLOSED-NOTES quiz. ONE ATTEMPT ONLY.
2. Other than your main Canvas quiz page, you are NOT allowed to open any tabs nor open any applications during the quiz time. Activity
Course Chat 
log in Canvas will strictly
AnimoSpace Supportbe monitored during the quiz. 

3. Use your calculator for calculations. You are not allowed to use Microsoft Excel, Numbers, Google Sheets, and other similar
spreadsheet applications.
4. Do not put your PC/laptop/iPad/gadget on "sleep mode on". Canvas activity log might detect this as change tabs.
5. Be reminded of the provisions of Section 5.3.1.1 of the SH that states that “Cheating in any form during an examination, test, or written
reports including reaction papers, case analysis, experiments or assignments required is a MAJOR OFFENSE”.

This quiz was locked Mar 28 at 11am.

Attempt History
Attempt Time Score
LATEST Attempt 1 101 minutes 27 out of 44

Score for this quiz: 27 out of 44

Submitted Mar 28 at 10:55am
This attempt took 101 minutes.
 

Question 1
Send
1 / 1 pts
The exercise of Share Appreciation Rights does not affect the total contributed capital.
 
Correct!
True
False

Question 2
1 / 1 pts
PFRS 2 requires that share options are measured at fair value. The intrinsic value will be never be applied.
True
Correct!
False

Question 3
AnimoSpace Support

1 / 1 pts
The amount of compensation expense shall be based on the fair value at the date of grant. Therefore, journal entries shall be made on
such date to recognize the granting of share-based payments and compensation expense.
True
Correct!
False

Question 4
1 / 1 pts
In order to arrive at the equity component of a compound financial instrument, the equity component is deducted from the total value of the
compound financial instrument at the date of grant.
True
Correct!
False

Question 5
1 / 1 pts
When the share-based payments vest based on service conditions, the amount of compensation expense shall be spread over the
required service period.
Correct!
True
False
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Question 6
1 / 1 pts
PFRS 2 requires using intrinsic value accounting for employee stock options.
True
Correct!
 FalseAnimoSpace Support
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Question 7
0 / 1 pts
If previous experience indicates that a material number of stock options will be forfeited before they vest, the fair value estimate of the
options on the grant date should be adjusted to reflect that expectation.
Correct Answer
True
You Answered
False
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Question 8
0 / 1 pts
Accumulated other Comprehensive Income is part of total shareholders’ equity separate from the retained earnings.
Correct Answer
True
You Answered
False
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Question 9
1 / 1 pts
Paid-in capital must consist solely of amounts invested by shareholders.
True
Correct!
False
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Question 10
1 / 1 pts
FinanceAnimoSpace
leases areSupport
agreements that are formulated outwardly as leases, but which in reality are essentially similar to installment
purchases.
Correct!
True
False
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Question 11
1 / 1 pts
Regardless of the form of share-based compensation, the accounting objective is to record compensation expense as the:
book value of the compensation expensed at the date of grant.
book value of the compensation expensed over the vesting period.
Correct!
fair value of the compensation expensed over the vesting period.
fair value of the compensation expensed at the date of grant.
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Question 12
1 / 1 pts
If share-based payment transaction provides that the employees have the right to choose the settlement whether in cash or shares, the
entity is deemed to have issued
Either an equity instrument or a liability instrument
A liability instrument
An equity instrument
Correct!
A compound financial instrument
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Question 13
1 / 1 pts
These are transactions in which the entity receives goods or services as consideration for equity instruments of the entity, including shares
and share options.
Correct!AnimoSpace Support
Equity settled share-based payment transactions
Equity payment transactions
Cash payment transactions
Cash settled share-based payment transactions
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Question 14
1 / 1 pts
When should the compensation expense be recorded as a result of share options granted by the enterprise to its employees?
During the year of grant
During the year when the option first becomes exercisable.
During the year that the options ultimately vest
Correct!
During the years when services are required to be rendered by the employees.
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Question 15
1 / 1 pts
In what circumstances is compensation expense immediately recognized under a share option plan?
In circumstances when the options are exercisable within two years for services rendered over the next two years.
Correct!
In circumstances when the options are granted for prior service and the options are immediately exercisable.
In no circumstances is compensation expense immediately recognized.
In all circumstances
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Question 16
0 / 1 pts
Which of the following statements is true regarding share appreciation rights (SAR) payable in cash?
None of these answer choices are correct.
Correct Answer
 AnimoSpace
The total Support
amount of compensation is not known for certain until the date the SAR is exercised.
Any change in estimated total compensation is recorded as a prior adjustment.
You Answered
The liability is adjusted to reflect each additional year of service.
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Question 17
0 / 1 pts
The compensation associated with share option plans is:
The book value of a share of the company's shares times the number of options.
Recorded as compensation expense on the date of grant.
Correct Answer
The estimated fair value of the options.
You Answered
Allocated to expense over the number of years until expiration.
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Question 18
1 / 1 pts
Treasury shares are most often reported as a(n):
Correct!
reduction of total shareholders' equity.
expense in the income statement.
reduction of retained earnings.
reduction of total paid-in capital.
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Question 19
1 / 1 pts
The lessee normally measures the lease liability to be recorded as the:
Future value of the lease payments.
Book value of the leased asset.
Correct!AnimoSpace Support
Present value of the lease payments.
Sum of the cash payments over the term of the lease.
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Question 20
0 / 1 pts
Which of the following do not decrease retained earnings?
Cash dividends
You Answered
Retirement of shares with a retirement price higher than the original fair value.
Correct Answer
Retirement of shares with a retirement price lower than the original fair value.
Property dividends
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Question 21
1.5 / 1.5 pts

As a result of a great performance last year, Liverpool Corp granted its key officers their much-deserved share options. All key officers are
granted a total of 200,000 share options. With each option, an officer is entitled to purchase one, P15 par ordinary stock for an amount of
P35 per share. These share-based payments vest immediately upon grant. At the date of grant of March 31, 2025, all key officers
exercised their share options. The fair value of the share options at the same day is P22.

What is the amount of compensation expense for the year 2025?

Correct!

4400000

4,400,000 (with margin: 0)

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Question 22
0 / 1.5 pts
 AnimoSpace Support
On January 1, 2022, SBINI19 Corporation granted a total of 260,000 share options to it’s three key officers. Fair value of these options
was determined to be P6 per share. The following details about the officers are given below.

Name Position/Rank Share Options Granted

Stellvester Cullen President and CEO 100,000

Jhoanna Sevilleja First Vice President 90,000

Maria Nicolette Ricalde Controller and Senior Vice President 70,000

The share options entitle each officer to purchase one, P5 par ordinary share for P8. The options shall vest on January 1, 2025 and will
expire on December 31, 2025. Mr. Cullen and Ms. Ricalde were able to exercise all of their options. Ms. Sevilleja however, was only able
to exercise 50% of her share options and decided to let it expire.

What is the balance of share options outstanding as of December 31, 2023?

You Answered

260000

1,040,000 (with margin: 0)

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Question 23
1.5 / 1.5 pts

On January 1, 2022, SBINI19 Corporation granted a total of 260,000 share options to it’s three key officers. Fair value of these options
was determined to be P6 per share. The following details about the officers are given below.
 AnimoSpace Support
Name Position/Rank Share Options Granted

Stellvester Cullen President and CEO 100,000

Jhoanna Sevilleja First Vice President 90,000

Maria Nicolette Ricalde Controller and Senior Vice President 70,000

The share options entitle each officer to purchase one, P5 par ordinary share for P8. The options shall vest on January 1, 2025 and will
expire on December 31, 2025. Mr. Cullen and Ms. Ricalde were able to exercise all of their options. Ms. Sevilleja however, was only able
to exercise 50% of her share options and decided to let it expire.

What is the compensation expense recognized in 2024?

Correct!
520000

520,000 (with margin: 0)

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Question 24
1.5 / 1.5 pts

On January 1, 2022, SBINI19 Corporation granted a total of 260,000 share options to it’s three key officers. Fair value of these options
was determined to be P6 per share. The following details about the officers are given below.

Name Position/Rank Share Options Granted

Stellvester Cullen President and CEO 100,000

 AnimoSpace Support
Jhoanna Sevilleja First Vice President 90,000

Maria Nicolette Ricalde Controller and Senior Vice President 70,000

The share options entitle each officer to purchase one, P5 par ordinary share for P8. The options shall vest on January 1, 2025 and will
expire on December 31, 2025. Mr. Cullen and Ms. Ricalde were able to exercise all of their options. Ms. Sevilleja however, was only able
to exercise 50% of her share options and decided to let it expire.

What is the total amount of cash to be collected upon exercise of share options?

Correct!
1720000

1,720,000 (with margin: 0)

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Question 25
0 / 1.5 pts

On January 1, 2022, SBINI19 Corporation granted a total of 260,000 share options to it’s three key officers. Fair value of these options
was determined to be P6 per share. The following details about the officers are given below.

Name Position/Rank Share Options Granted

Stellvester Cullen President and CEO 100,000

Jhoanna Sevilleja First Vice President 90,000

Maria Nicolette Ricalde Controller and Senior Vice President 70,000

 AnimoSpace Support

The share options entitle each officer to purchase one, P5 par ordinary share for P8. The options shall vest on January 1, 2025 and will
expire on December 31, 2025. Mr. Cullen and Ms. Ricalde were able to exercise all of their options. Ms. Sevilleja however, was only able
to exercise 50% of her share options and decided to let it expire.

Upon expiration of the remaining share options, what is the net effect in total shareholders’ equity?

You Answered
-360000

0 (with margin: 0)
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Question 26
1.5 / 1.5 pts

Cena Company issued share appreciation rights to its Chief Executive Officer on January 1, 2022. The share appreciation rights may be
exercised beginning January 1, 2025 provided that the officer is still in the employ of the company at the date of exercise. Each right
provides for a cash payment equal to the amount the share price of Cena Company exceeds P65. The equivalent number of shares for
share appreciation rights will be based on the level of sales of the company during the year 2024, as follows:

Level of Sales Equivalent shares granted

P250 million – P400 million 15,000

Above P400 million – P750 million 24,000

Above P750 million 30,000

The level of sales actually achieved by the enterprise and the share price at the end of each year are:
 AnimoSpace Support
Year Actual Sales Share price, end of year

2022 P350,000,000 P74

2023 P410,000,000 P80

2024 P760,000,000 P85

2025 P900,000,000 P90

2026 P950,000,000 P92

In 2025, the CEO exercised 60% of his rights but decided to wait until 2026 to exercise his remaining rights.

What is the compensation expense recognized in 2024?

Correct!

360000

360,000 (with margin: 0)

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Question 27
1.5 / 1.5 pts

Cena Company issued share appreciation rights to its Chief Executive Officer on January 1, 2022. The share appreciation rights may be
exercised beginning January 1, 2025 provided that the officer is still in the employ of the company at the date of exercise. Each right
provides for a cash payment equal to the amount the share price of Cena Company exceeds P65. The equivalent number of shares for
share appreciation rights will be based on the level of sales of the company during the year 2024, as follows:

Level of Sales Equivalent shares granted

 AnimoSpace Support
P250 million – P400 million 15,000

Above P400 million – P750 million 24,000

Above P750 million 30,000

The level of sales actually achieved by the enterprise and the share price at the end of each year are:

Year Actual Sales Share price, end of year

2022 P350,000,000 P74

2023 P410,000,000 P80

2024 P760,000,000 P85

2025 P900,000,000 P90

2026 P950,000,000 P92

In 2025, the CEO exercised 60% of his rights but decided to wait until 2026 to exercise his remaining rights.

What is the balance of liability on share appreciation rights as of December 31, 2023?

Correct!
240000

240,000 (with margin: 0)

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Question 28
AnimoSpace Support

0 / 1.5 pts

Cena Company issued share appreciation rights to its Chief Executive Officer on January 1, 2022. The share appreciation rights may be
exercised beginning January 1, 2025 provided that the officer is still in the employ of the company at the date of exercise. Each right
provides for a cash payment equal to the amount the share price of Cena Company exceeds P65. The equivalent number of shares for
share appreciation rights will be based on the level of sales of the company during the year 2024, as follows:

Level of Sales Equivalent shares granted

P250 million – P400 million 15,000

Above P400 million – P750 million 24,000

Above P750 million 30,000

The level of sales actually achieved by the enterprise and the share price at the end of each year are:

Year Actual Sales Share price, end of year

2022 P350,000,000 P74

2023 P410,000,000 P80

2024 P760,000,000 P85

2025 P900,000,000 P90

2026 P950,000,000 P92

In 2025,AnimoSpace
the CEO exercised
Support 60% of his rights but decided to wait until 2026 to exercise his remaining rights.

What is the amount of share appreciation rights to be paid to the CEO in 2025?

You Answered
450000

360,000 (with margin: 0)

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Question 29
0 / 1.5 pts

On January 1, 2022, Incognito Company granted each of their four officers the right to choose either:

1. 20,000 shares (equity alternative)

2. Cash payment equal to the market value of 18,000 shares (cash alternative)

The grant is conditional upon the completion of three years of service. If the employees choose the share alternative, the employee must
still be at the employ of the company.

The par value of the share is P15 and at grant date on January 1, 2022, the share price is P32. The share prices for the three-year vesting
period are P36 on December 31, 2022, P45 on December 31, 2023 and P50 on December 31, 2024.

The entity has estimated that the fair value of the share or equity alternative is P30 per share.

Upon vesting date, the following officers exercised their options/rights in 2025.

Employee Chosen Incentive

JB Vergara Share Alternative

Andres Robles Share Alternative

 AnimoSpace Support
Tomas Apuli Cash Alternative

Gab Catacutan Cash Alternative

What is the amount of the fair value of the debt component upon initial measurement?

You Answered

576000

2,304,000 (with margin: 0)

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Question 30
0 / 1.5 pts

On January 1, 2022, Incognito Company granted each of their four officers the right to choose either:

1. 20,000 shares (equity alternative)

2. Cash payment equal to the market value of 18,000 shares (cash alternative)

The grant is conditional upon the completion of three years of service. If the employees choose the share alternative, the employee must
still be at the employ of the company.

The par value of the share is P15 and at grant date on January 1, 2022, the share price is P32. The share prices for the three-year vesting
period are P36 on December 31, 2022, P45 on December 31, 2023 and P50 on December 31, 2024.

The entity has estimated that the fair value of the share or equity alternative is P30 per share.

Upon vesting date, the following officers exercised their options/rights in 2025.

Employee Chosen Incentive

 AnimoSpace Support
JB Vergara Share Alternative

Andres Robles Share Alternative

Tomas Apuli Cash Alternative

Gab Catacutan Cash Alternative

What is the compensation expense recognized in 2024?

You Answered
368000

1,472,000 (with margin: 0)


Question 31
1.5 / 1.5 pts

On January 1, 2022, Incognito Company granted each of their four officers the right to choose either:

1. 20,000 shares (equity alternative)

2. Cash payment equal to the market value of 18,000 shares (cash alternative)

The grant is conditional upon the completion of three years of service. If the employees choose the share alternative, the employee must
still be at the employ of the company.

The par value of the share is P15 and at grant date on January 1, 2022, the share price is P32. The share prices for the three-year vesting
period are P36 on December 31, 2022, P45 on December 31, 2023 and P50 on December 31, 2024.

The entity has estimated that the fair value of the share or equity alternative is P30 per share.
Upon vesting date,Support
AnimoSpace the following officers exercised their options/rights in 2025.

Employee Chosen Incentive

JB Vergara Share Alternative

Andres Robles Share Alternative

Tomas Apuli Cash Alternative

Gab Catacutan Cash Alternative

How much cash will be paid as share appreciation rights in 2025?

Correct!
1800000

1,800,000 (with margin: 0)

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Question 32
1.5 / 1.5 pts

The following were taken from the shareholders’ equity section of the statement of financial position of Hardman Company.

Ordinary Share Capital, P20 par value, 150,000 shares P3,000,000

Share premium P2,100,000

Retained earnings (deficit) P(3.600.000)

 AnimoSpace Support
Total Shareholders’ Equity P1,500,000

Adverse financial and operating circumstances warrant that Hardman Company should undergo a quasi-reorganization on December 31,
2025. The following information may be relevant in accounting for the quasi-reorganization.

Inventory with a fair value of P2,000,000 is currently recorded in the accounts at cost of P2,400,000.
Property, Plant and Equipment with a fair value of P7,00,000 are currently recorded at P8,000,000 net of accumulated depreciation.
The par value of the ordinary share is reduced from P20 to P4.

What is the balance of Ordinary Share Capital after quasi-reorganization?

Correct!

600000

600,000 (with margin: 0)

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Question 33
1.5 / 1.5 pts

Slick Company began operations in January 1, 2023 by issuing at P15 per share one-half of the 950,000 ordinary shares of P1 par value
that had been authorized for issue. In addition, the entity had 500,000 authorized preference shares of P5 par value. During 2023, the
entity had P1,025,000 of net income and declared P230,000 of dividend.

During 2024, the entity had the following transactions:

Issued 100,000 ordinary shares for P17 per share.

Issued 150,000 preference shares for P8 per share.
Authorized the purchase of a custom-made machine to be delivered in January 2025. The entity restricted P300,000 of retained
earnings for the purchase of the machine.
Issued additional 50,000 preference shares for P9 per share.
Reported P1,215,000 of net income and declared on December 31, 2024 a dividend of P635,000 to shareholders of record on January
15, 2025 to be paid on February 1, 2025.
What isAnimoSpace
the total shareholders’
Support equity on December 31, 2023?

Correct!
7920000

7,920,000 (with margin: 0)


Question 34
0 / 1.5 pts

Slick Company began operations in January 1, 2023 by issuing at P15 per share one-half of the 950,000 ordinary shares of P1 par value
that had been authorized for issue. In addition, the entity had 500,000 authorized preference shares of P5 par value. During 2023, the
entity had P1,025,000 of net income and declared P230,000 of dividend.

During 2024, the entity had the following transactions:

Issued 100,000 ordinary shares for P17 per share.

Issued 150,000 preference shares for P8 per share.
Authorized the purchase of a custom-made machine to be delivered in January 2025. The entity restricted P300,000 of retained
earnings for the purchase of the machine.
Issued additional 50,000 preference shares for P9 per share.
Reported P1,215,000 of net income and declared on December 31, 2024 a dividend of P635,000 to shareholders of record on January
15, 2025 to be paid on February 1, 2025.

What is the total shareholders’ equity on December 31, 2024?

You Answered
12150000

11,850,000 (with margin: 0)


Question 35
0 / 1.5 pts
 AnimoSpace Support
Orosa Corporation has engaged the services of Lumibao Leasing to rent one of their office spaces for the former’s branch. Rental for the
space conveys the right of use for the office space to Orosa. On January 1, 2024, the lease contract has been agreed upon by both parties
which states that the lease payments of P1,000,000 are to be paid annually for five years starting from December 31, 2024. Furthermore,
Orosa paid P2,250,000 worth of initial direct costs which included the following:

Legal fees and other taxes related to the lease P250,000

Security deposit (to be given back to Orosa at end of lease term) P1,000,000

Advance rental which represents the final lease payment on December 31, 2029 P1,000,000

The implicit rate of the lease was 12% which is known to both parties. No transfer of ownership shall be made after the lease term but
Orosa has reasonable certainty that they will renew the lease.

What is the total amount of the right of use asset to be recognized upon initial recognition?

You Answered
5422203.05

4,287,349.35 (with margin: 2)


Question 36
0 / 1.5 pts

Orosa Corporation has engaged the services of Lumibao Leasing to rent one of their office spaces for the former’s branch. Rental for the
space conveys the right of use for the office space to Orosa. On January 1, 2024, the lease contract has been agreed upon by both parties
which states that the lease payments of P1,000,000 are to be paid annually for five years starting from December 31, 2024. Furthermore,
Orosa paid P2,250,000 worth of initial direct costs which included the following:

Legal fees and other taxes related to the lease P250,000

Security deposit (to be given back to Orosa at end of lease term) P1,000,000

Advance rental which represents the final lease payment on December 31, 2029 P1,000,000
The implicit rate ofSupport
AnimoSpace the lease was 12% which is known to both parties. No transfer of ownership shall be made after the lease term but
Orosa has reasonable certainty that they will renew the lease.

What is the amount of depreciation expense-right of use for 2024?

You Answered
1084440.61

857,469.87 (with margin: 0)

Quiz Score: 27 out of 44