1.
Lawrence Company ordered parts costing FC 100,000 from a foreign supplier
on May 12 when the spot rate was P.20 per FC. A one-month forward contract
was signed on that date to purchase FC 100,000 at a forward rate P0.21. The
forward contract is properly designated as a fair value hedge of the FC
100,000 firm commitment. On June 12, when the company receives the parts,
the spot rate is P0.23. at what amount should Lawrence Company carry the
parts inventory on its books assuming that the firm commitment account be
considered as an adjustment to net income account (or profit or loss
account)?
A. P20,000 C. P22,000
B. P21,000 D. P23,000
2. The capital balances for Messalina is P210,000 and for Romulus is P140,000.
These two partners share profits and losses 60 percent (Messalina) and 40
percent (Romulus). Claudius invests P100,000 in cash in the partnership for
a 20 percent ownership. The bonus method will be used. What are the capital
balances for Messalina, Romulus, and Claudius after this investment is
recorded?
A. P216,000, P144,000, P90,000 C. P222,000, P148,000, P80,000
B. P218,000, P142,000, P88,000 D. P240,000, P160,000, P100,000
3. A hospital has the following account balances:
Revenue from newsstand P 50,000
Amount charged to patients 800,000
Interest income 30,000
Salary expense – nurses 100,000
Bad debts 10,000
Undesignated gifts 80,000
Contractual adjustments 110,000
What is the hospital’s net patient service revenue?
A. P880,000 C. P690,000
B. P800,000 D. P680,000
4. Property was purchased on December 31, 2007 for 20 million baht. The
general price index in the country was 60.1 on that date. On December 31,
2010, the general price index had risen to 240.4. If the entity operates in
a hyperinflationary economy, what would be the carrying amount in the
financial statements of the property after restatement?
A. 20 million baht C. 80 million baht
B. 1,200.2 million baht D. 4.808 million baht
5. In 2010, Santo Tomas University Hospital received an unrestricted bequest
of common stock with a fair value of P50,000. The testator paid P20,000 for
the stock in 2002. Santo Tomas University Hospital should record the
bequest to:
A. Increase temporary restricted net assets by P50,000.
B. Increase temporary restricted net assets by P20,000.
C. Increase unrestricted net assets by P50,000.
D. Increase unrestricted net assets by P20,000.
6. An organization of high school seniors performs a volunteer services for
patients at a nearby nursing home. The nursing home would not otherwise
provide these services, such as wheeling patients in the park and reading
to them. At the minimum wage rate, these services would amount to P21,320,
but their actual value is estimated to be P27,400. In the nursing home’s
statement of revenues and expenses, what amount should be reported in
public support?
A. P27,400 C. P 6,080
B. P21,320 D. P 0
7. A partnership has gone through liquidation and now reports the following
account balances:
Cash P 16,000
Loan from Jones 3,000
Wayman, capital ( 2,000) deficit
Jones, capital ( 5,000) deficit
Fuller, capital 13,000
Rogers, capital 7,000
Profits and losses are allocated on the following basis: Wayman, 30
percent; Jones, 20 percent; Fuller, 30 percent; and Rogers, 20 percent.
Which of the following events should occur now?
A. Jones should receive P3,000 cash because of the loan balance.
B. Fuller should receive P11,800 and Rogers, P4,200.
C. Fuller should receive P10,600, and Rogers, P5,400.
D. Jones should receive P3,000, Fuller, P8,800, and Rogers, P4,200.
8. On June 1, 2011, Cline Company paid P800,000 cash for all of the issued and
outstanding common stock Renn Corp. The carrying values for Renn’s assets
and liabilities on June 1, 2011 follow:
Cash…………………………………………………………………………………………………… P150,000
Accounts receivable…………………………………………………………… 180,000
Capitalized software costs………………………………………… 320,000
Goodwill………………………………………………………………………………………… 100,000
Liabilities…………………………………………………………………………………( 130,000)
Net assets……………………………………………………………………………………P 620,000
On June 1, 2011, Renn’s accounts receivable had a fair value of P140,000.
Additionally, Renn’s in-process and development costs was estimated to
have a fair value of P200,000. All other items were stated at their fair
values. On Cline’s June 1 balance sheet. How much is reported for
goodwill?
A. P320,000 C. P 80,000
B. P120,000 D. P 20,000
9. Prior to being united in a business combination, Atkins, Inc. and Waterson
Corporation had the following stockholders’ equity figures:
Atkins Waterson
Common stock, P1 par value P180,000 P 45,000
Additional paid-in capital 90,000 20,000
Retained earnings 300,000 110,000
Atkins issues 51,000 new shares of its common stock valued at P3 per
share for all of the outstanding stock of Waterson. Assume that Atkins
acquires Waterson. Immediately afterward, what are consolidated
Additional Paid-In Capital and Retained Earnings, respectively?
A. P104,000 and P300,000 C. P192,000 and P300,000
B. P110,000 and P410,000 D. P212,000 and P410,000
10. Baning, Inc. buys 60% of the outstanding stock of Gra, Inc. in an
acquisition that resulted in the acquisition of goodwill. Gra owns a
piece of land that cost P200,000 but was worth P500,000 at the
acquisition date. What value should be attributed to this land in a
consolidated balance sheet at the date of takeover?
A. P120,000 C. P380,000
B. P300,000 D. P500,000
11. Post, Inc. had a receivable from a foreign customer that is payable in the
customer’s local currency. On December 31, 2010, Post correctly included
this receivable for 200,000 local currency units (LCU) in its balance sheet
at P110,000. When Post collected the receivable on February 15, 2011, the
Philippine peso equivalent was P95,000. In Post’s 2011 consolidated income
statement, how much should it report as a foreign exchange loss?
A. P -0- C. P15,000
B. P10,000 D. P25,000
12. Grete had the following foreign currency transactions during 2010:
Purchased merchandise from a foreign supplier on January 20, 2010, for
the Philippine peso equivalent of P60,000 and paid the invoice on April
20, 2010, at the Philippine peso equivalent of P68,000.
On September 1, 2010, borrowed the Philippine peso equivalent of
P300,000 evidenced by a note that is payable in the lender’s local
currency on September 1, 2011. On December 31, 2010, the Philippine peso
equivalent of the principal amount was P320,000.
In Grete’s 2010 income statement, what amount should be included as a
foreign exchange loss?
A. P 4,000 C. P22,000
B. P20,000 D. P28,000
