AFAR Quiz 3

Battle of the Blocks

 A.

This is a business combination when two separate constituent

corporations combine resulting to a dissolution of one and
survival of another?
a. Merger
b. Consolidation
c. Confusion
d. Cooperative
 A.

When the consideration transferred by the acquirer is greater

than the fair value of the net asset of the acquiree, the result of
combination is?
a. Goodwill
b. Bargain Purchase
c. Gain on Sale
d. Bonus
In SMB’s December 31, 2023 balance sheet, the branch inventory
balance of 240,000 LCU should be translated to United State
dollars at (Closing Rate Method under PAS 21)
a. P40,000
b. P48,000
A.
c. P60,000
d. P84,000
 D.

This is a business combination when two separate constituent

corporations combine resulting to a new corporation?
a. Confusion
b. Merger
c. Cooperative
d. Consolidation
 C.

Which of the following is correct regarding fair value non-

controlling interest?
a. It shall always be valued at proportionate share basis
b. It shall be valued at lower of proportionate share basis and
assessed fair value
c. It shall be valued at higher of proportionate share basis and
assessed fair value
d. It shall be valued at higher between Assessed Fair Value or
implied fair value
What total Peso amount should be included in Trump’s 2023 consolidated income statement
to reflect these expenses? (Current Rate Method under PAS 21) C.
a. P160,000 c. P176,000
b. P168,000 d. P183,200
 A.

The rate used in computing for the foreign currency gain or

loss in an importing transaction is?
a. selling spot rate
b. buying spot rate
c. selling forward rate
d. buying forward rate
Based on the information given above, what amount of sales will
be reported in the 2024 consolidated income statement?
a. P123,000
b. P100,000 B.
c. P90,000
d. P67,000
 C.

The rate used in computing for the foreign currency gain or

loss in a speculation to sell foreign currency is?
a. selling spot rate
b. buying spot rate
c. selling forward rate
d. closing rate
The subsidiary’s operations were an extension of the parent company’s operations, thus, the
functional currency is US P. What total dollar amount should be included in Clinton’s
income statement to reflect the above expenses for the year ended December 31, 2023?
(Temporal Method) D.
a. P40,000 c. P44,000
b. P42,000 d. P45,200
How much is the ForEx gain or (loss) on December 31, 2023?
a. (3,000)
b. (4,000)
C.
c. 3,000
d. 4,000
 B.

What is the rate used to translate depreciation expense under

current rate method and temporal approach, respectively?
a. closing rate and historical rate
b. average rate ad historical rate
c. historical rate and average rate
d. average rate and closing rate
 What is the
Gross Profit
rate?
a. P3,500
b. P4,500
c. P5,300
d. P5,800

The ordinary shares were issue four years ago when the exchange rate was P0.35. The C.
weighted average exchange rate for 2023 was P0.53. The spot rate for the yen was P0.48 on
January 1, 2023 and P0.58 on December 31, 2023. The translated amount of retained earnings,
beginning was P22,500.
Based on the information given above, what amount of consolidated
net income will be assigned to the controlling shareholders for 2023?
a. P58,000
b. P52,200 C.
c. P47,600
d. P45,200
 C.
What is the effect if after translation, the total asset is greater
than the total translated liability and equity?
a. There is positive translation adjustment which shall be
reported in the P/L
b. There is negative translation adjustment which shall be
reported in the P/L
c. There is positive translation adjustment which shall be
reported in OCI
d. There is negative translation adjustment which shall be
reported in OCI
How much is the ForEx gain or (loss) on December 31, 2023?
D.
a. P37,500 c. P32,500
b. P35,000 d. P30,000
 C.

Which of the following is considered as perfect hedge?

a. Forward Contract to hedge an exposed liability position
b. Forward Contract to hedge an exposed asset position
c. Forward Contract to hedge a firm commitment
d. Option Contract
 A.

What is the effect of increase in the forward rate if the entity

entered into a speculation to buy a foreign currency?
a. There is Forex gain
b. There is Forex loss
c. There is positive translation adjustment
d. There is negative translation adjustment
 D.

How much is the

Goodwill or (Income
from Acquisition)
a. P25,000
b. P50,000
c. (P25,000)
d. (P50,000)
 C.

How much is the

amount of Goodwill
(Income from
Acquisition) to be
presented in the 2023
consolidated financial
statement?
a. P40,000
b. P50,000
c. (P60,000)
d. (P80,000)
 A.

What is the rate used to translate common stock and APIC

under remeasurement approach?
a. historical rate
b. closing rate
c. revaluation rate
d. average rate
 C.

The increase in the estimated liability from contingent

consideration within the measurement period will result to?
a. profit reported in P/L not in OCI
b. loss reported in OCI not in P/L
c. debit in goodwill if the combination results to such
d. credit to goodwill if the combination results to such
Based on the information given above, what amount of sales will
be reported in the 2023 consolidated income statement?
a. P62,000
B.
b. P120,000
c. P140,000
d. P182,000
 C.

The decrease in the provisional fair value of the building

account of the acquired company within the measurement
period shall result to?
a. profit reported in the P/L
b. loss reported in the P/L
c. debit to goodwill if the combination results to such
d. credit to goodwill if the combination results to such
 D.

What is the rate used to translate sale revenue under PAS 21?
a. historical rate
b. closing rate
c. revaluation rate
d. average rate
Based on the information given above, what amount of cost of goods
sold will be reported in the 2023 consolidated income statement?
a. P62,000
b. P120,000 A.

c. P90,000
d. P58,000
 C.

What is treatment of Direct Cost incurred in business

combination of SMEs?
a. Treated as Asset
b. Treated as Expense
c. Treated as part of the consideration transferred
d. Treated as part of the Fair Value net asset of the dissolved
Based on the information given above, what amount of cost of goods
sold will be reported in the 2023 consolidated income statement?
a. P49,600
b. P58,000
A.
c. P62,000
d. P90,000
 B.

The rate used in computing for the foreign currency gain or

loss in an exporting transaction is?
a. selling spot rate
b. buying spot rate
c. selling forward rate
d. buying forward rate
Based on the information given above, what amount of sales will be
reported in the 2023 consolidated income statement?
a. P162,000
b. P100,000 B.
c. P62,000
d. P38,000
 A.

Which of the following has the negative effect in the

computation of the Non-controlling interest in the Net income
of the Subsidiary?
a. Amortization of the undervalued equipment of the
subsidiary
b. Amortization of the undervalued building of the parent
c. Amortization of the overvalued equipment of the parent
d. Amortization of the overvalued building of the subsidiary
Based on the information given above, what amount of cost of
goods sold will be reported in the 2024 consolidated income
statement?
a. P40,600
b. P46,900 B.

c. P60,900
d. P67,000
 A.

Which of the following is correct about fair value non-

controlling interest in combination of SMEs?
a. It shall always be valued at proportionate share basis
b. It shall be valued at lower of proportionate share basis and
assessed fair value
c. It shall be valued at higher of proportionate share basis and
assessed fair value
d. It shall be valued at higher between Assessed Fair Value or
implied fair value
Based on the information given above, what amount of consolidated
net income will be assigned to the controlling interest for 2024?
a. P51,490
b. P46,900 A.
c. P37,000
d. P20,100
 B.

What is the rate used to translate non-monetary asset carried at

cost under PAS 21?
a. historical rate
b. closing rate
c. revaluation rate
d. average rate
 A.

If 40 Philippine Peso can be exchanged for 1 US Dollar, what

is the direct quotation expressed in Philippine Peso?
a. 40 Peso : 1 USD
b. 1 USD : 40 Peso
c. 0.025 Peso : 1 USD
d. 0.025 USD : 1 Peso
How much is the ForEx gain or (loss) on December 31, 2023?
a. (6,250) c. (15,000) B.

b. (13,750) d. (18,750)
 How much is the
total assets
translated in
Philippine Peso?
a. P77,000
b. P105,600
c. P116,600
d. P127,600

The ordinary shares were issue four years ago when the exchange rate was P0.35. The D.
weighted average exchange rate for 2023 was P0.53. The spot rate for the yen was P0.48 on
January 1, 2023 and P0.58 on December 31, 2023. The translated amount of retained earnings,
beginning was P22,500.
 D.

Which of the following is true?

a. The investment in Subsidiary Company is reported in the
Separate Financial Statement.
b. The Non-controlling interest in the net asset of Subsidiary is
reported in the Consolidated Financial Statement.
c. The investment in subsidiary company shall be debited for
the share of the controlling interest in the profit of the
subsidiary under Equity method.
d. All of the above.
What is the ForEx Contract value-option as of December 31, 2023?
a. P42,000 c. P35,000 A.

b. P40,000 d. P3,000
THE END