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Valix Finacc vol 1 Problem 1-19

Financial Accounting Volume 1 2008 Valix-Peralta


Chapter 1 Problem 1-19

Problem 1-19

1. Accrual
2. Going concern
3. Accounting entity
4. Monetary unit
5. Time period
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Valix Finacc vol 1 Problem 1-18
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-18

1. The cost of the asset should be the amount of cash paid. No income should be recognized when an
asset is purchased at an amount less than its market value. Revenue arises from the act of selling and
not from the act of buying.

2. The entry should be reversed because the pending lawsuit is a mere contingency. The contingent
loss is simply disclosed. To be recognized in accordance with conservatism, the contingent loss must be
both probable and measurable.

3. The new car should be charged against the president and debited to receivable from officer,
because the car is for personal use.

4. The entry is incorrect because no revenue shall be recognized until a sale has taken place.

5. Purchased goodwill should be recorded as an asset. Under the new standard, goodwill is not
amortized anymore but on each balance sheet date it should be assessed for impairment.
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Friday, May 28, 2010
Valix Finacc vol 1 Problem 1-17
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-17

1. Monetary unit assumption
2. Cost principle
3. Materiality
4. Time period
5. Matching principle
6. Substance over form
7. Income recognition principle
8. Comparability or consistency
9. Conservatism or prudence
10. Adequate disclosure or completeness


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Thursday, May 27, 2010
Valix Finacc vol 1 Problem 1-16
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-16

1. Accrual assumption
2. Going concern assumption
3. Asset recognition principle
4. Cost principle
5. Liability recognition principle
6. Income recognition principle
7. Expense recognition principle
8. Cause and effect association principle
9. Systematic and rational allocation princple
10. Immediate recognition principle


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Friday, May 21, 2010
Valix Finacc vol 1 Problem 1-15
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-15

1. The cost of leasehold improvement should not be recorded as outright expense, but should be
amortized as expense over the life of the improvement or life of the lease, whichever is shorter. This is
in conformity with the systematic and rational allocation principle of expense recognition.

2. The fact that the customer has not been seen for a year is not a controlling factor to write off the
account. If the account is doubtful of collection, an allowance should be set up. It is only when there is
proof of uncollectibility that the account should be written off.

3. Advertising cost should be treated as outright expense, by reason of the uncertainty of the benefit
that may be derived therefrom in the future, in conformity with immediate recognition principle.

4. The balance of the cash surrender value should not be charged to loss. In reality, this is conceived
as a prospective receivable if and when the policy is canceled because of excessive premium in the early
stage of policy. The CSV should be classified as noncurrent investment.

5. The cost of obsolete merchandise should not be included as part of inventory but charged to
expense, as a conservative approach.

6. The excess payment represents goodwill which should not be amortized but subject to
impairment. Conservatism dictates that goodwill should be recognized when paid for.

7. The depreciation is not dependent on the amount of profit generated during the year.
Depreciation is an allocation of cost and therefore should be provided regardless of the level of
earnings.

8. An entry should be made to recognize the inventory fire loss, and such loss should be treated as
component of income.

9. Revenues and expenses of the canteen should be separated from the revenues and cost of regular
business operations in order to present fairly the financial position and performance of the regular
operations.

10. The increase in value of land and building should not be taken up in the accounts. The use of
revalued amount is permitted only when the revaluation is made by independent and expert appraiser.
The expected sales price of P5,000,000 is not necessarily the revalued amount of the land and
building. Moreover, increase in value is not an income until the asset is sold.
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Labels: Finacc Volume 1 Chap 1, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol Problem 1-14
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-14

1. Materiality
2. Going concern
3. Income recognition principle
4. Accounting entity
5. Standard of adequate disclosure
6. Comparability
7. Matching principle
8. Cost principle
9. Reliability
10. Time period
Posted by Louie Lansang at 3:07 AM No comments:
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Valix Finacc vol 1 Problem 1-13
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-13

1. Systematic and rational allocation as a matching process
2. Comparability or consistency
3. Monetary unit
4. Income recognition principle
5. Time Period
6. Going concern and cost principle
7. Accounting entity
8. Materiality
9. Completeness or standard of adequate disclosure
10. Conservatism or prudence


Posted by Louie Lansang at 2:32 AM No comments:
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Valix Finacc vol Problem 1-12
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-12

1. E
2. D
3. B
4. C
5. G
6. H
7. I
8. F
9. J
10. A
Posted by Louie Lansang at 2:29 AM No comments:
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Valix Finacc vol 1 Problem 1-11
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-11

1. C
2. B
3. D
4. A
5. F
6. E
7. J
8. G
9. H
10. I


Posted by Louie Lansang at 2:28 AM No comments:
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Valix Finacc vol 1 Problem 1-10
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-10

1. A
2. B
3. D
4. B
5. A
6. D
7. C
8. A
9. D
10. A


Posted by Louie Lansang at 2:25 AM No comments:
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Valix Finacc vol 1 problem 1-9
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-9

1. D
2. D
3. C
4. B
5. C


Posted by Louie Lansang at 2:24 AM No comments:
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Valix Finacc vol 1 Problem 1-8
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-8

1. B
2. B
3. C
4. C
5. A
6. B
7. D
8. D
9. A
10. B


Posted by Louie Lansang at 2:23 AM No comments:
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Valix Finacc vol 1 Problem 1-7
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-7

1. D
2. D
3. C
4. A
5. A
6. C
7. D
8. D
9. B
10. D


Posted by Louie Lansang at 2:22 AM No comments:
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Valix Finacc vol 1 Problem 1-6
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-6

1. A
2. A
3. C
4. A
5. A
6. A
7. B
8. C
9. A
10. B
Posted by Louie Lansang at 1:43 AM No comments:
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Valix Finacc vol 1 Problem 1-5
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-5

1. A
2. A
3. A
4. D
5. D
6. D
7. B
8. D
9. C
10. D


Posted by Louie Lansang at 1:43 AM No comments:
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Valix Finacc vol 1 Problem 1-4
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-4

1. A
2. C
3. A
4. A
5. D
6. A
7. D
8. B
9. D
10. D
Posted by Louie Lansang at 1:41 AM No comments:
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Valix Finacc vol 1 Problem 1-3
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 1-3

1. C
2. D
3. D
4. A
5. D
Posted by Louie Lansang at 12:53 AM No comments:
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Valix Finacc vol 1 Problem 1-2
Financial Accounting Volume 1 Valix
Problem 1-2

1. A
2. A
3. D
4. B
5. D
6. B
7. D
8. C
9. C
10. D
Posted by Louie Lansang at 12:41 AM No comments:
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Tuesday, May 18, 2010
Valix Finacc vol 1 Problem 1-1
Valix Peralta Financial Accounting Volume 1 2008
Problem 1-1
1. D
2. C
3. D
4. D
5. C
6. C
7. B
8. C
9. D
10. A
Valix Finacc vol 1 Problem 2-11
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 2-11



Reliable Company
Statement of Retained Earnings
Year Ended December 31, 2008

Retained earnings January 1 200,000
Prior period error overdepreciation in 2007 100,000
Change in accounting policy from FIFO to weighted average
method credit adjustment 150,000
Corrected beginning balance 450,000
Net income 1,300,000
Decrease in appropriation for treasury share 200,000
Total 1,950,000
Cash dividends paid to shareholders ( 500,000)
Current appropriation for contingencies ( 100,000)
Retained earnings December 31 1,350,000


Problem 2-12

Net income 3,000,000
Loss from fire ( 50,000)
Goodwill impairment ( 250,000)
Loss on sale of equipment ( 200,000)
Gain on retirement of bonds payable 100,000
Gain on life insurance settlement 450,000
Adjusted net income 3,050,000


Gondola Company
Statement of Retained Earnings
Year ended December 31, 2008


Balance January 1 2,600,000
Compensation of prior period not accrued ( 500,000)
Correction of prior period error credit 400,000
Adjusted beginning balance 2,500,000
Net income adjusted 3,050,000
Stock dividend ( 700,000)
Loss on retirement of preference share ( 350,000)
Appropriated for treasury share (1,000,000)
Balance December 31 3,500,000
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Valix Finacc vol 1 Problem 2-10
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 2-10

Problem 2-10

Ronald Company
Statement of Cost of Goods Manufactured
Year Ended December 31, 2008

Materials January 1 1,120,000
Purchases 1,600,000
Freight on purchases 220,000
Purchase discounts ( 20,000) 1,800,000
Materials available for use 2,920,000
Less: Materials December 31 1,560,000
Materials used 1,360,000
Direct labor 2,000,000
Factory overhead:
Heat, light and power 600,000
Repairs and maintenance 100,000
Indirect labor 360,000
Other factory overhead 340,000
Factory supplies used (300,000 + 660,000 540,000) 420,000
Depreciation factory building 280,000 2,100,000
Total manufacturing cost 5,460,000
Goods in process January 1 360,000
Total cost of goods in process 5,820,000
Less: Goods in process December 31 320,000
Cost of goods manufactured 5,500,000







24



Ronald Company
Income Statement
Year Ended December 31, 2008

Note

Net sales revenue (1) 6,980,000
Cost of goods sold (2) (5,400,000)
Gross
income 1,580,000

Other income (3) 160,000
Total
income 1,740,000

Expenses:
Selling
expenses 200,000
Administrative
expenses 340,000 540,000

Income before tax 1,200,000
Income tax expense ( 200,000)
Net
income 1,000,000




Note 1 Net sales revenue

Sales 7,120,000

Sales returns and
allowances ( 140,000)
Net sales
revenue 6,980,000



Note 2 Cost of goods sold

Finished goods January
1 420,000
Cost of goods
manufactured 5,500,000
Goods available for
sale 5,920,000
Finished goods December
31 ( 520,000)
Cost of goods
sold 5,400,000



Note 3 Other income

Interest revenue 160,000
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Valix Finacc vol 1 Problem 2-9
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 2-9

Christian Company
Statement of Cost of Goods Manufactured
Year Ended December 31, 2008

Purchases 1,600,000
Freight in 80,000
Total 1,680,000
Increase in raw materials ( 100,000)
Raw materials used 1,580,000
Direct labor 1,480,000
Factory overhead:
Indirect labor 600,000
Depreciation machinery 50,000
Factory taxes 130,000
Factory supplies expense 120,000
Factory superintendence 480,000
Factory maintenance 150,000
Factory heat, light and power 220,000 1,750,000
Total manufacturing cost 4,810,000
Decrease in goods in process 90,000
Cost of goods manufactured 4,900,000


Christian Company
Income Statement
Year Ended December 31, 2008

Note
Sales revenue 8,000,000
Cost of goods sold (1) (5,100,000)
Gross income 2,900,000
Expenses:
Selling expenses (2) 800,000
Administrative expenses (3) 930,000 1,730,000
Income before tax 1,170,000
Income tax expense ( 170,000)
Net income 1,000,000


Note 1 Cost of goods sold

Cost of goods manufactured 4,900,000
Decrease in finished goods 200,000
Cost of goods sold 5,100,000




23



Note 2 Selling expenses

Sales salaries 520,000
Advertising 120,000
Delivery expense 160,000
Total 800,000

Note 3 Administrative expenses

Office supplies expense 30,000
Office salaries 800,000
Doubtful accounts 100,000
Total 930,000
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Valix Finacc vol 1 Problem 2-8
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 2-8


Youth Company
Income Statement
Year ended December 31, 2008

Note
Net sales revenue (1) 8,870,000
Cost of goods sold (2) (5,900,000)
Gross income 2,970,000
Expenses:
Selling expenses (3) 690,000
Administrative expenses (4) 580,000
Other expense (5) 340,000 1,610,000
Income before tax 1,360,000
Income tax expense ( 360,000)
Net income 1,000,000
21

Note 1 Net sales revenue

Sales 9,070,000
Sales returns and allowances ( 200,000)
Net sales revenue 8,870,000


Note 2 Cost of goods sold

Beginning inventory 1,500,000
Purchases 5,750,000
Transportation in 150,000
Purchase discounts ( 100,000) 5,800,000
Goods available for sale 7,300,000
Ending inventory (1,400,000)
Cost of goods sold 5,900,000


Note 3 Selling expenses

Depreciation store equipment 110,000
Store supplies 80,000
Sales salaries 500,000
Total 690,000


Note 4 Administrative expenses

Officers salaries 400,000
Depreciation building 120,000
Office supplies 60,000
Total 580,000


Note 5 Other expense

Uninsured flood loss 340,000
Valix Finacc vol 1 Problem 3-13 to 28



Problem 3-13 Answer B Problem 3-14 Answer C

Problem 3-15 Answer A Problem 3-16 Answer A

Petty cash fund 50,000 Payroll account 2,500,000
Undeposited collections 1,100,000 Value added tax account 1,000,000
Cash in bank 2,500,000 Travelers check 300,000
Total 3,650,000 Money order 700,000
Petty cash fund 40,000
Total 4,540,000

Problem 3-17 Answer C

Checking account #101 1,750,000
Checking account #201 ( 100,000)
Time deposit account 250,000
90-day Treasury bill 500,000
Total cash and cash equivalent 2,400,000

Problem 3-18 Answer B

Cash in First Bank 5,000,000
Change fund 50,000
Petty cash fund 15,000
Total 5,065,000

Problem 3-19 Answer B

Cash balance per book 6,000,000
Credit adjustment (1,600,000)
Adjusted cash balance 4,400,000

33

Note receivable 1,000,000
Accounts receivable (400,000 + 200,000) 600,000
Cash 1,600,000

Problem 3-20 Answer A

Checkbook balance 8,000,000
Postdated customer check (2,000,000)
NSF check ( 500,000)
Undelivered company check 1,500,000
Adjusted balance 7,000,000

Problem 3-21 Answer A

Cash on hand 2,400,000
Cash in bank 3,500,000
Petty cash 40,000
Saving deposit 2,000,000
Total deposit 7,940,000

Problem 3-22 Answer B Problem 3-23 Answer A Problem 3-24 Answer A
Problem 3-25 Answer A

Cash on hand and in bank 5,000,000
Time deposit 6,000,000
Saving deposit 1,000,000
Total 12,000,000

Problem 3-26 Answer B

Currencies 4,000
Coins 1,000
Accommodation check 6,000
Total 11,000
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 3-28


Problem 3-27 Answer C

Coins and currency 2,000
Replenishment check 4,000
Total 6,000


Problem 3-28 Answer C

Total petty cash 10,000
Currency and coins ( 3,000)
Amount of replenishment 7,000
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Valix Finacc vol 1 Problem 3-12
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 3-12

Requirement 1
2008
Dec. 1 Petty cash fund 10,000
Cash in bank 10,000

20 Selling expenses 5,000
Miscellaneous expenses 2,000
Equipment 2,000
Cash in bank 9,000

31 Receivable from employee 2,000
Selling expenses 1,500
Transportation 500
Petty cash fund 4,000
2009
Jan. 1 Petty cash fund 4,000
Receivable from employee 2,000
Selling expenses 1,500
Transportation 500


32
2009
Jan. 15 No entry

31 Selling expenses 2,000
Administrative expenses 2,000
Transportation 1,500
Purchases 1,200
Cash in bank 6,700

Requirement 2

Petty cash 10,000
Less: Petty cash expenses from December 21, 2008 to January 31, 2009:
Selling expenses (1,500 + 500) 2,000
Administrative expenses 2,000
Transportation (500 + 1,000) 1,500
Purchases 1,200 6,700
Petty cash before replenishment 3,300
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Valix Finacc vol 1 Problem 3-11
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 3-11

2008
Nov. 2 Petty cash fund 10,000
Cash in bank 10,000

30 Postage 2,000
Supplies 5,000
Petty cash fund 10,000
Cash in bank 17,000

Dec. 31 Postage 3,000
Supplies 4,000
Special deposit 2,000
Petty cash fund 9,000

2009
Jan. 1 Petty cash fund 9,000
Postage 3,000
Supplies 4,000
Special deposit 2,000

2 No entry

31 Postage 5,000
Supplies 6,000
Accounts payable 7,000
Cash short or over 1,000
Cash in bank 19,000
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Valix Finacc vol 1 Problem 3-10
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 3-10

Fluctuating Fund System Imprest Fund System

May 2 Petty cash fund 10,000 May 2 Petty cash fund 10,000
Cash in bank 10,000 Cash in bank 10,000

29 Postage 1,000 29 Postage 1,000
Supplies 3,000 Supplies 3,000
Transportation 2,500 Transportation 2,500
Miscellaneous expense 1,500 Miscellaneous expense 1,500
Petty cash fund 8,000 Petty cash fund 8,000

Petty cash fund 8,000
Cash in bank 8,000

June 30 Supplies 2,000 June 30 Supplies 2,000
Accounts payable 1,000 Accounts payable 1,000
Transportation 1,000 Transportation 1,000
Petty cash fund 4,000 Petty cash fund 4,000

July 1 Petty cash fund 4,000
Supplies 2,000
Postage 1,000
Transportation 1,000

To reverse the adjustment made
on June 30.

15 Petty cash fund 5,000 July 15 Supplies 1,500
Supplies 3,500 Postage 500
Postage 1,500 Transportation 500
Transportation 1,500 Miscellaneous expense 500
Miscellaneous expense 500 Petty cash fund 3,000
Cash in bank 12,000
Petty cash fund 12,000
Cash in bank 12,000
Valix Finacc vol 1 Problem 4-22 to 38
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 4-22 to 38


Problem 4-22 Answer A

Balance per book 4,000,000
Bank charges ( 10,000)
Customer note collected by bank 1,500,000
Interest on customer note 60,000
NSF customer check ( 250,000)
Depositors note charged to account (1,000,000)
Adjusted book balance 4,300,000

Problem 4-23 Answer B

Balance per bank 2,000,000
Add: Deposit in transit 200,000
Total 2,200,000
Less: Outstanding checks 400,000
Erroneous bank credit 300,000 700,000
Adjusted bank balance 1,500,000
The adjusted cash in bank can also be computed by starting with the balance per book.

Balance per book 850,000
Add: Proceeds of note collected 750,000
Total 1,600,000
Less: NSF checks (150,000 50,000) 100,000
Adjusted book balance 1,500,000

Problem 4-24 Answer C

Balance per book 8,500,000
Note collected by bank 950,000
Book error (200,000 20,000) ( 180,000)
NSF check ( 250,000)
Bank service charge ( 20,000)
Adjusted book balance 9,000,000

Problem 4-25 Answer A

Problem 4-26 Answer B

Problem 4-27 Answer B

Problem 4-28 Answer D

Balance per ledger 3,750,000
Service charges ( 50,000)
Collection of note 1,500,000
Book error ( 100,000)
Unrecorded check for traveling expenses ( 500,000)
Adjusted book balance 4,600,000

Balance per bank 6,200,000
Deposit in transit 1,400,000
Total 7,600,000
Outstanding checks (squeeze) 3,000,000
Adjusted bank balance 4,600,000


Problem 4-29 Answer B

Problem 4-30 Answer A

Problem 4-31 Answer C

Outstanding checks May 31 3,000,000
Checks issued by depositor in June:
Total credits to cash in June 9,000,000
Service charge in May recorded in June ( 100,000) 8,900,000
Total 11,900,000
Checks paid by bank in June:
Checks and charges by bank in June 8,000,000
Service charge in June ( 50,000)
NSF check in June (1,000,000) 6,950,000
Outstanding checks June 30 4,950,000

Problem 4-32 Answer A

Balance per book June 30 2,100,000
Service charges ( 50,000)
Collection by bank 550,000
NSF check ( 100,000)
Adjusted book balance 2,500,000

Balance per bank June 30 2,400,000
Deposits outstanding June 30 500,000
Checks outstanding June 30 ( 400,000)
Adjusted bank balance 2,500,000
Outstanding checks May 31 100,000
Checks recorded by book in June 2,500,000
Total 2,600,000
Less: Checks recorded by bank in June 2,200,000
Outstanding checks June 30 400,000

Deposits outstanding May 31 300,000
Deposits recorded by book in June 1,800,000
Total 2,100,000
Less: Deposits recorded by bank in June 1,600,000
Deposits outstanding June 30 500,000

Problem 4-33 Answer A

Note collected 1,936,000
Book error (1,930,000 1,390,000) ( 540,000)
NSF check ( 840,000)
Service charge ( 47,000)
Net debt to
cash 509,000


Problem 4-34 Answer A

Problem 4-35 Answer A

Problem 4-36 Answer D

Balance per bank November 30 3,600,000
December deposits 5,500,000
Total 9,100,000
December disbursements (4,400,000)
Balance per bank December 31 4,700,000
Deposit in transit December 700,000
Outstanding checks December ( 500,000)
Adjusted bank balance December 31 4,900,000

Balance per book December 31 (squeeze) 4,300,000
Note collected by bank 1,000,000
NSF check ( 350,000)
Service charge ( 50,000)
Adjusted book balance 4,900,000

Problem 4-37 Answer A

Bank disbursements for July 9,000,000
Outstanding checks June 30 (1,400,000) Outstanding
checks July 31 1,000,000
Book disbursements for July 8,600,000

Problem 4-38 Answer B

Bank receipts for April 6,000,000
Deposits in transit March 31 (1,000,000)
Deposits in transit April 30 1,500,000
Book receipts for April 6,500,000


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Valix Finacc vol 1 Problem 4-21
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 4-21

May 31 Receipts Disbursements June 30

Balance per book 2,500,000 5,300,000 5,400,000 2,400,000
Bank service charge:
May 31 ( 20,000) ( 20,000)
June 30 25,000 ( 25,000)
NSF check:
June 30 200,000 ( 200,000)
Interest collected:
June 30 75,000 75,000
Book error:
June 30 _________ ( 300,000) 300,000
Adjusted balance 2,480,000 5,375,000 5,305,000 2,550,000


Balance per bank 2,700,000 5,500,000 5,600,000 2,600,000
Deposit in transit
May 31 625,000 ( 625,000)
June 30 500,000 500,000
Outstanding checks
May 31 ( 845,000) ( 845,000)
June 30 550,000 ( 550,000)
Adjusted balance 2,480,000 5,375,000 5,305,000 2,550,000

Adjusting entries on June 30:

1. Cash in bank 375,000
Interest income 75,000
Equipment 300,000

2. Bank service charge 25,000
Accounts receivable 200,000
Cash in bank 225,000
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Valix Finacc vol 1 Problem 4- 20
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 4-20

Sept. 30 Receipts Disbursements Oct. 31

Book balance 1,900,000 1,400,000 2,400,000 900,000
NSF check:
September 30 ( 60,000) ( 60,000)
October 31 40,000 ( 40,000)
Collection of accounts receivable
September 30 30,000 ( 30,000)
October 31 50,000 50,000
Overstatement of check
September 30 90,000 ( 90,000)
October 31 ________ ( 120,000) 120,000
Adjusted balance 1,960,000 1,330,000 2,260,000 1,030,000


Bank balance 2,100,000 1,200,000 2,500,000 800,000
Deposit in transit
September 30 130,000 ( 130,000)
October 31 260,000 260,000
Outstanding checks
September 30 ( 270,000) ( 270,000)
October 31 30,000 ( 30,000)
Adjusted balance 1,960,000 1,330,000 2,260,000 1,030,000



Adjusting entries on October 31

1. Accounts receivable 40,000
Cash in bank 40,000

2. Cash in bank 170,000
Accounts receivable 50,000
Salaries 120,000
Valix Finacc vol 1 Problem 5-30 to 44
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-30 to 44

Problem 5-30 Answer B

Accounts receivable-January 1 1,300,000
Credit sales 5,500,000
Collections from customers (5,000,000)
Sales return ( 150,000)
Accounts written off ( 100,000)
Accounts receivable-December 31 1,550,000
Allowance for doubtful accounts ( 250,000)
Allowance for sales return ( 50,000)
Net realizable value 1,250,000

Problem 5-31 Answer A

Trade accounts receivable 2,000,000
Allowance for doubtful accounts ( 100,000)
Claim receivable 300,000
Total trade and other receivables 2,200,000
Problem 5-32 Answer C

Accounts receivable (squeeze) 6,700,000
Allowance for doubtful accounts (900,000 200,000) ( 700,000)
Net realizable value 6,000,000

Problem 5-33 Answer B

Allowance January 1 300,000
Doubtful accounts expense 650,000
Recovery of accounts written off 100,000
Total 1,050,000
Accounts written off 450,000
Allowance December 31 600,000




70
Problem 5-34 Answer D

Allowance January 1 280,000
Uncollectible accounts expense (squeeze) 100,000
Recovery of accounts written off 50,000
Total 430,000
Accounts written off (230,000)
Allowance December 31 (2,700,000 2,500,000) 200,000

Problem 5-35 Answer A

Allowance December 2007 180,000
Doubtful accounts expense 50,000
Total 230,000
Accounts written off (squeeze) 30,000
Allowance December 2008 200,000

Problem 5-36 Answer B

0 60 days (1,200,000 x 1%) 12,000
61 120 days (900,000 x 2%) 18,000
Over 120 days (1,000,000 x 6%) 60,000
Allowance December 31, 2008 90,000

Allowance December 31, 2007 60,000
Uncollectible accounts expense (squeeze) 80,000
Recovery 20,000
Total 160,000
Accounts written off ( 70,000)
Allowance December 31, 2008 90,000

Problem 5-37 Answer D

Allowance for sales discount (5,000,000 x 2% x 50%) 50,000

Problem 5-38 Answer A

Problem 5-39 Answer B

Doubtful accounts expense (3% x 3,000,000 + 10,000) 100,000

Problem 5-40 Answer A

Doubtful accounts expense (2% x 7,000,000) 140,000






71

Problem 5-41 Answer A

Allowance January 1 40,000
Doubtful accounts expense (4% x 5,000,000) 200,000
Collection of accounts written off 10,000
Total 250,000
Accounts written off 30,000
Allowance December 31 220,000

Problem 5-42 Answer D

Allowance January 1 250,000
Doubtful accounts expense (squeeze) 175,000
Total 425,000
Accounts written off 205,000
Allowance December 31 220,000

Problem 5-43 Answer A

Problem 5-44 Answer A
Posted by Louie Lansang at 6:33 AM 2 comments:
Labels: Finacc Volume 1 Chap 5, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 5-29
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-29

12/31/2008 Impairment loss 338,500
Allowance for loan impairment 338,500

The remaining term of the loan is 4 years. Accordingly, the present value
factor for 4 periods is used.



Present value of principal (500,000 x .735) 367,500
Present value of interest (80,000 x 5 = 400,000 x .735) 294,000
Total present value of loan 661,500

Loan receivable 1,000,000
Present value of loan 661,500
Loan impairment loss 338,500

12/31/2009 Allowance for loan impairment 52,920
Interest income (8% x 661,500) 52,920
Posted by Louie Lansang at 6:32 AM No comments:
Labels: Finacc Volume 1 Chap 5, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 5-29
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-29

12/31/2008 Impairment loss 338,500
Allowance for loan impairment 338,500

The remaining term of the loan is 4 years. Accordingly, the present value
factor for 4 periods is used.



Present value of principal (500,000 x .735) 367,500
Present value of interest (80,000 x 5 = 400,000 x .735) 294,000
Total present value of loan 661,500

Loan receivable 1,000,000
Present value of loan 661,500
Loan impairment loss 338,500

12/31/2009 Allowance for loan impairment 52,920
Interest income (8% x 661,500) 52,920
Posted by Louie Lansang at 6:31 AM No comments:
Labels: Finacc Volume 1 Chap 5, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 5-28
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-28

December 31, 2011 ( 360,000 x .772) 277,920 Face value of loan 4,000,000
December 31, 2012 ( 360,000 x .708) 254,880 Present value of loan 3,365,360
December 31, 2013 ( 360,000 x .650) 234,000 Impairment loss 634,640
December 31, 2014 (4,360,000 x .596) 2,598,560
Total present value of loan 3,365,360

2008 Cash 360,000
Interest income 360,000

Impairment loss 634,640
Allowance for loan impairment 634,640

2009 Allowance for loan impairment 302,882
Interest income (9% x 3,365,360) 302,882

2010 Allowance for loan impairment 331,758
Interest income (634,640 302,882) 331,758

2011 Cash 360,000
Interest income 360,000

2012 Cash 360,000
Interest income 360,000

2013 Cash 360,000
Interest income 360,000

2014 Cash 4,360,000
Interest income 360,000
Loan receivable 4,000,000
Posted by Louie Lansang at 6:30 AM No comments:
Labels: Finacc Volume 1 Chap 5, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 5-27
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-27

Requirement 1

December 31, 2009 ( 500,000 x .89) 445,000
December 31, 2010 (1,000,000 x .80) 800,000
December 31, 2011 (2,000,000 x .71) 1,420,000
December 31, 2012 (4,000,000 x .64) 2,560,000
Total present value of loan 5,225,000

Requirement 2

Loan receivable 7,500,000
Accrued interest receivable (12% x 7,500,000) 900,000
Total carrying value 8,400,000
Present value of loan 5,225,000
Impairment loss 3,175,000

Requirement 3

2008 Impairment loss 3,175,000
Accrued interest receivable 900,000
Allowance for loan impairment 2,275,000

2009 Cash 500,000
Loan receivable 500,000

Allowance for loan impairment 627,000
Interest income (12& x 5,225,000) 627,000

2010 Cash 1,000,000
Loan receivable 1,000,000

Allowance for loan impairment 642,240
Interest income 642,240


Loan receivable 12/31/2009 7,000,000
Allowance for loan impairment (2,275,000 627,000) (1,648,000)
Carrying value 12/31/2009 5,352,000

Interest income for 2010 (12% x 5,352,000) 642,240
Valix Finacc vol 1 Problem 5-30 to 44
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-30 to 44

Problem 5-30 Answer B

Accounts receivable-January 1 1,300,000
Credit sales 5,500,000
Collections from customers (5,000,000)
Sales return ( 150,000)
Accounts written off ( 100,000)
Accounts receivable-December 31 1,550,000
Allowance for doubtful accounts ( 250,000)
Allowance for sales return ( 50,000)
Net realizable value 1,250,000

Problem 5-31 Answer A

Trade accounts receivable 2,000,000
Allowance for doubtful accounts ( 100,000)
Claim receivable 300,000
Total trade and other receivables 2,200,000
Problem 5-32 Answer C

Accounts receivable (squeeze) 6,700,000
Allowance for doubtful accounts (900,000 200,000) ( 700,000)
Net realizable value 6,000,000

Problem 5-33 Answer B

Allowance January 1 300,000
Doubtful accounts expense 650,000
Recovery of accounts written off 100,000
Total 1,050,000
Accounts written off 450,000
Allowance December 31 600,000




70
Problem 5-34 Answer D

Allowance January 1 280,000
Uncollectible accounts expense (squeeze) 100,000
Recovery of accounts written off 50,000
Total 430,000
Accounts written off (230,000)
Allowance December 31 (2,700,000 2,500,000) 200,000

Problem 5-35 Answer A

Allowance December 2007 180,000
Doubtful accounts expense 50,000
Total 230,000
Accounts written off (squeeze) 30,000
Allowance December 2008 200,000

Problem 5-36 Answer B

0 60 days (1,200,000 x 1%) 12,000
61 120 days (900,000 x 2%) 18,000
Over 120 days (1,000,000 x 6%) 60,000
Allowance December 31, 2008 90,000

Allowance December 31, 2007 60,000
Uncollectible accounts expense (squeeze) 80,000
Recovery 20,000
Total 160,000
Accounts written off ( 70,000)
Allowance December 31, 2008 90,000

Problem 5-37 Answer D

Allowance for sales discount (5,000,000 x 2% x 50%) 50,000

Problem 5-38 Answer A

Problem 5-39 Answer B

Doubtful accounts expense (3% x 3,000,000 + 10,000) 100,000

Problem 5-40 Answer A

Doubtful accounts expense (2% x 7,000,000) 140,000






71

Problem 5-41 Answer A

Allowance January 1 40,000
Doubtful accounts expense (4% x 5,000,000) 200,000
Collection of accounts written off 10,000
Total 250,000
Accounts written off 30,000
Allowance December 31 220,000

Problem 5-42 Answer D

Allowance January 1 250,000
Doubtful accounts expense (squeeze) 175,000
Total 425,000
Accounts written off 205,000
Allowance December 31 220,000

Problem 5-43 Answer A

Problem 5-44 Answer A
Posted by Louie Lansang at 6:33 AM 2 comments:
Labels: Finacc Volume 1 Chap 5, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 5-29
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-29

12/31/2008 Impairment loss 338,500
Allowance for loan impairment 338,500

The remaining term of the loan is 4 years. Accordingly, the present value
factor for 4 periods is used.



Present value of principal (500,000 x .735) 367,500
Present value of interest (80,000 x 5 = 400,000 x .735) 294,000
Total present value of loan 661,500

Loan receivable 1,000,000
Present value of loan 661,500
Loan impairment loss 338,500

12/31/2009 Allowance for loan impairment 52,920
Interest income (8% x 661,500) 52,920
Posted by Louie Lansang at 6:32 AM No comments:
Labels: Finacc Volume 1 Chap 5, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 5-29
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-29

12/31/2008 Impairment loss 338,500
Allowance for loan impairment 338,500

The remaining term of the loan is 4 years. Accordingly, the present value
factor for 4 periods is used.



Present value of principal (500,000 x .735) 367,500
Present value of interest (80,000 x 5 = 400,000 x .735) 294,000
Total present value of loan 661,500

Loan receivable 1,000,000
Present value of loan 661,500
Loan impairment loss 338,500

12/31/2009 Allowance for loan impairment 52,920
Interest income (8% x 661,500) 52,920
Posted by Louie Lansang at 6:31 AM No comments:
Labels: Finacc Volume 1 Chap 5, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 5-28
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-28

December 31, 2011 ( 360,000 x .772) 277,920 Face value of loan 4,000,000
December 31, 2012 ( 360,000 x .708) 254,880 Present value of loan 3,365,360
December 31, 2013 ( 360,000 x .650) 234,000 Impairment loss 634,640
December 31, 2014 (4,360,000 x .596) 2,598,560
Total present value of loan 3,365,360

2008 Cash 360,000
Interest income 360,000

Impairment loss 634,640
Allowance for loan impairment 634,640

2009 Allowance for loan impairment 302,882
Interest income (9% x 3,365,360) 302,882

2010 Allowance for loan impairment 331,758
Interest income (634,640 302,882) 331,758

2011 Cash 360,000
Interest income 360,000

2012 Cash 360,000
Interest income 360,000

2013 Cash 360,000
Interest income 360,000

2014 Cash 4,360,000
Interest income 360,000
Loan receivable 4,000,000
Posted by Louie Lansang at 6:30 AM No comments:
Labels: Finacc Volume 1 Chap 5, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 5-27
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-27

Requirement 1

December 31, 2009 ( 500,000 x .89) 445,000
December 31, 2010 (1,000,000 x .80) 800,000
December 31, 2011 (2,000,000 x .71) 1,420,000
December 31, 2012 (4,000,000 x .64) 2,560,000
Total present value of loan 5,225,000

Requirement 2

Loan receivable 7,500,000
Accrued interest receivable (12% x 7,500,000) 900,000
Total carrying value 8,400,000
Present value of loan 5,225,000
Impairment loss 3,175,000

Requirement 3

2008 Impairment loss 3,175,000
Accrued interest receivable 900,000
Allowance for loan impairment 2,275,000

2009 Cash 500,000
Loan receivable 500,000

Allowance for loan impairment 627,000
Interest income (12& x 5,225,000) 627,000

2010 Cash 1,000,000
Loan receivable 1,000,000

Allowance for loan impairment 642,240
Interest income 642,240


Loan receivable 12/31/2009 7,000,000
Allowance for loan impairment (2,275,000 627,000) (1,648,000)
Carrying value 12/31/2009 5,352,000

Interest income for 2010 (12% x 5,352,000) 642,240
Valix Finacc vol 1 Problem 7-61 to 70
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 7-61 to 70 (Multiple Choice)

Problem 7-61 Answer B

Units Unit cost Total cost
January 1 40,000 5 200,000
January 17 (35,000) 5 (175,000)
Balance 5,000 5 25,000
January 28 20,000 8 160,000
Balance 25,000 7.40 185,000

Problem 7-62 Answer D
Units Total cost
January 1 200 300,000
April 3 300 525,000
October 1 500 1,000,000
Total 1,000 1,825,000
Less: Sales (400 + 400) 800
Ending inventory 200

Average unit cost (1,825,000/1,000) 1,825

Cost of inventory (200 x 1,825) 365,000

106
Problem 7-63 Answer C
Units Unit cost Total cost
January 1 8,000 200 1,600,000
8 ( 4,000) 200 ( 800,000)
4,000 200 800,000
20 12,000 240 2,880,000
(3,680,000/16,000 = 230) 16,000 230 3,680,000

Problem 7-64 Answer C

Problem 7-
65 Answer B

Estimated selling price 4,050,000
Cost of disposal ( 200,000)
Net realizable value (lower than cost) 3,850,000

Problem 7-66 Answer B

Estimated sales price 4,000,000
Cost to complete (1,200,000)
Net realizable value 2,800,000

FIFO cost (lower than NRV) 2,600,000

Problem 7-67 Answer B

Inventory January 1 700,000
Purchases 3,300,000
Goods available for sale 4,000,000
Less: Inventory December 31 600,000
Cost of goods sold before inventory writedown 3,400,000
Loss on inventory writedown 100,000
Cost of goods sold after inventory writedown 3,500,000

Problem 7-68 Answer C

Sales price Fraction Allocated cost
A (100 x 240,000) 24,000,000 24/60 6,000,000
B (100 x 160,000) 16,000,000 16/60 4,000,000
C (200 x 100,000) 20,000,000 20/60 5,000,000
60,000,000 15,000,000

Problem 7-69 Answer B

Problem 7-70 Answer B
Posted by Louie Lansang at 8:45 PM No comments:
Labels: Finacc Volume 1 Chap 7, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 7-51 to 60
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 7-51 to 60 (Multiple Choice)

Problem 7-51 Answer B

List price 1,000,000
Trade discounts 20% x 1,000,000 ( 200,000)
800,000
10% x 800,000 ( 80,000)
Invoice price 720,000
Cash discount (5% x 720,000) ( 36,000)
Net amount 684,000
Freight charge 50,000
Total remittance 734,000

Problem 7-52 Answer A

Problem 7-53 Answer B

Purchases of IBM compatibles 1,700,000
Purchases of commercial software packages 1,200,000
Total 2,900,000
Less: Purchase return ( 50,000)
Net purchases 2,850,000

Discounts available on purchases (2% x 2,850,000) 57,000
Less: Purchase discount taken 17,000
Purchase discount lost 40,000

Problem 7-54 Answer D

Accounts payable per book 2,000,000
Goods lost in transit, FOB shipping point 100,000
Purchase return ( 50,000)
Adjusted balance 2,050,000

Problem 7-55 Answer D

Accounts payable per book 900,000
Undelivered checks 400,000
Unrecorded purchases on December 28 (150,000 x 98%) 147,000
Purchase on December 20 (200,000 x 95%) 190,000
1,637,000
Problem 7-56 Answer A

Net sales per book 5,000,000
Sales return ( 50,000)
Goods shipped on December 31, 2008 300,000
Goods shipped on January 3, 2009 recorded on December 30, 2008 ( 200,000)
Adjusted balance 5,050,000


105
Problem 7-57 Answer A

Gross sales 4,000,000
Estimated sales return (10% x 4,000,000) ( 400,000)
Net sales 3,600,000

Problem 7-58 Answer A

Units Unit cost Total cost
January 18 15,000 23 345,000
28 10,000 24 240,000
Total FIFO cost 25,000 585,000

Problem 7-59 Answer A

(4,500 x 73.50) 330,750

Problem 7-60 Answer A

Units Unit cost Total cost
January 10 2,000 100 200,000
February 8 3,000 110 330,000
5,000 530,000

Weighted average unit cost (530,000/5,000) 106

Cost of inventory (3,000 x 106) 318,000
Posted by Louie Lansang at 8:43 PM No comments:
Labels: Finacc Volume 1 Chap 7, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 7-41 to 50
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 7-41 to 50 (Multiple Choice)

Problem 7-41 Answer C

Physical count 1,500,000

Problem 7-42 Answer D

Physical count 2,500,000
Merchandise shipped FOB shipping point on December 30, 2008
from a vendor 100,000
Goods shipped FOB shipping point to a customer on January 4, 2009 400,000
Correct inventory 3,000,000

103

Problem 7-43 Answer D


Problem 7-44 Answer D

Markup (40% x 500,000) 200,000
Goods received on consignment 400,000
Total reduction 600,000

Problem 7-45 Answer B

Inventory shipped on consignment 600,000
Freight paid 50,000
Consigned inventory 650,000

Problem 7-46 Answer A

Reported inventory 2,000,000
Goods sold in transit, FOB destination 200,000
Goods purchased in transit, FOB shipping point 300,000
Correct amount of inventory 2,500,000

Problem 7-47 Answer A


Problem 7-48 Answer A

Consignment sales revenue (40 x P10,000) 400,000


Problem 7-49 Answer B

Sales (900 x 1,000) 900,000
Commission (10% x 900,000) ( 90,000)
Payable to consignor 810,000


Problem 7-50 Answer C

List price 900,000
Trade discounts 20% x 900,000 (180,000)
720,000
10% x 720,000 ( 72,000)
Invoice price 648,000
Freight 50,000
Cost of purchase 698,000
Valix Finacc vol 1 Problem 8-37
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-37


Cost Retail
Inventory, January 1, 2008 420,000 600,000
Purchases adjusted for markup and markdown 72% 5,011,200 6,960,000
Goods available for sale 5,431,200 7,560,000

Sales 2008 (6,839,000)
Inventory, December 31, 2008 721,000

FIFO cost (721,000 x 72%) 519,120


Inventory, January 1, 2009 519,120 721,000
Purchases adjusted 70% 4,970,000 7,100,000
Goods available for sale 5,489,120 7,821,000

Sales 2009 (7,033,000)
Inventory, December 31, 2009 788,000

FIFO cost (788,800 x 70%) 551,600
Posted by Louie Lansang at 11:22 PM 1 comment:
Labels: Finacc Volume 1 Chap 8, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 8-36
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-36

Cost Retail
Inventory January 1, 2008 556,800 928,000
Purchases 4,576,000 7,028,000
Net markup 42,000
Net markdown ________ ( 30,000)
Net purchases (65%) 4,576,000 7,040,000
Goods available for sale 5,132,800 7,968,000

Sales (6,840,000)
Inventory December 31, 2008 1,128,000

FIFO inventory (65% x 1,128,000) 733,200 1,128,000

119

Cost Retail
Inventory January 1, 2009 733,200 1,128,000
Purchases 4,760,000 6,812,000
Net markup 56,000
Net markdown ________ ( 68,000)
Net purchases (70%) 4,760,000 6,800,000
Goods available for sale 5,493,200 7,928,000

Sales (6,928,000)
Inventory December 31, 2009 1,000,000

FIFO inventory (70% x 1,000,000) 700,000 1,000,000
Posted by Louie Lansang at 11:15 PM No comments:
Labels: Finacc Volume 1 Chap 8, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 8-35
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-35


Cost Retail
Finished goods January 1 144,000 240,000
Cost of goods manufactured (squeeze 1,200,000 2,000,000
Goods available for sale 1,344,000 2,240,000
Less: Finished goods December 31 504,000 840,000
Cost of goods sold 840,000 1,400,000

The amount of goods manufactured at retail is determined by simply working back.

Goods manufactured at cost
Cost ratio = -------------------------------------------------
Goods manufactured at retail

= 1,200,000/2,000,000
= 60%

Finished goods:

January 1 - 240,000 x 60% 144,000 December 31 - 840,000 x 60% 504,000
Posted by Louie Lansang at 11:13 PM No comments:
Labels: Finacc Volume 1 Chap 8, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 8-34
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-34


Cost Retail
Inventory, January 1 560,000 1,000,000
Purchases 4,000,000 6,200,000
Markup (5,000 x 100) 500,000
Markup cancelation (1,000 x 100) _________ ( 100,000)
Goods available for sale conservative (60%) 4,560,000 7,600,000
Markdown _________ ( 475,000)
Goods available for sale average (64%) 4,560,000 7,125,000

Net sales (5,200,000)
Inventory, December 31 1,925,000

Conservative cost (1,925,000 x 60%) 1,155,000
Average cost (1,925,000 x 64%) 1,232,000
Posted by Louie Lansang at 10:55 PM No comments:
Labels: Finacc Volume 1 Chap 8, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 8-33
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-33

cost retail
1. Opening inventory 1,650,000 2,200,000
Purchases 3,700,000 4,950,000
Freight in 200,000
Purchase allowances ( 100,000)
Departmental transfer credit ( 200,000) ( 300,000)
Additional markup 180,000
Markup cancellation ________ ( 30,000)
Goods available for sale conventional 5,250,000 7,000,000
Cost ratio (5,250/7,000) 75%
Markdown (500,000 400,000) ________ ( 100,000)
Goods available for sale average 5,250,000 6,900,000

Less: Sales 4,000,000
Inventory shortage 100,000 4,100,000
Ending inventory at sales price 2,800,000

Ending inventory at cost (2,800,000 x 75%) 2,100,000

2. Goods available for sale 5,250,000
Less: Ending inventory 2,100,000
Cost of sales 3,150,000
Posted by Louie Lansang at 10:54 PM No comments:
Labels: Finacc Volume 1 Chap 8, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 8-32
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-32


Cost Retail
Beginning inventory 168,000 400,000
Purchases 2,806,000 3,100,000
Freight in 42,000
Markup 300,000
Markup cancellation _______ ( 30,000)
Goods available for sale conservative 3,016,000 3,770,000
Cost ratio (3,016/3,770) 80%
Markdown ( 150,000)
Markdown cancellation _________ 40,000
Goods available for sale average 3,016,000 3,660,000

Less: Sales 3,000,000
Shrinkage (4% x 3,000,000) 120,000 3,120,000
Ending inventory 540,000

Conservative cost (540,000 x 80%) 432,000
Physical inventory (500,000 x 80%) 400,000
Shortage 32,000

Inventory, December 31 400,000
Inventory shortage 32,000
Income summary 432,000
Posted by Louie Lansang at 7:59 AM No comments:
Labels: Finacc Volume 1 Chap 8, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 8-31
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-31


Cost Retail
Beginning inventory 340,000 640,000
Purchases 4,500,000 7,300,000
Freight in 100,000
Purchase returns ( 150,000) ( 250,000)
Purchase allowances ( 90,000)
Departmental transfer in 100,000 160,000
Markup ________ 150,000
Goods available for sale conventional 4,800,000 8,000,000
Cost ratio (4,800/8,000) 60%
Markdown ________ ( 500,000)
Goods available for sale average 4,800,000 7,500,000

Cost ratio (4,800/7,500) 64%
Less: Sales 6,600,000
Employee discount 100,000
Spoilage and breakage 200,000 6,900,000
Ending inventory 600,000

Conservative cost (600,000 x 60%) 360,000
Average cost (600,000 x 64%) 384,000
Posted by Louie Lansang at 7:58 AM No comments:
Labels: Finacc Volume 1 Chap 8, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 8-21 to 30
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-21 to 30


Problem 8-21 Answer A

Raw materials January 1 300,000
Purchases 1,000,000
Freight in 100,000 1,100,000
Raw materials available for use 1,400,000
Less: Raw Materials December 31 600,000
Raw materials used 800,000
Direct labor 800,000
Manufacturing overhead (50% x 800,000) 400,000
Total manufacturing cost 2,000,000
Add: Goods in process January 1 1,000,000
Total goods in process 3,000,000
Less: Goods in process December 31 (squeeze) 1,300,000
Cost of goods manufactured 1,700,000
Add: Finished goods January 1 1,400,000
Goods available for sale 3,100,000
Less: Finished goods _ December 31 1,000,000
Cost of sales (70% x 3,000,000) 2,100,000

The amount of goods in process on December 31is computed as simply working back.

Problem 8-22
Requirement a

Physical inventory Purchases up to Purchases up to
May 31, 2008 May 31, 2008 June 30, 2008
Balances 950,000 6,750,000 8,000,000
1 - 75,000 -
2 - ( 10,000) ( 15,000)
3 - ( 20,000) ( 20,000)
4 ( 55,000) ( 55,000) -_ __
Adjusted 895,000 6,740,000 7,965,000

Inventory July 1, 2007 875,000
Purchases up to May 31, 2008 6,740,000
Goods available for sale 7,615,000
Less: Inventory May 31, 2008 895,000
Cost of sales 6,720,000

Sales up to May 31, 2008 8,400,000
Cost of sales 6,720,000
Gross profit 1,680,000

Rate (1,680,000/8,400,000) 20%

Requirement b

Sales for year ended June 30, 2008 9,600,000
Less: Sales for 11 months ended May 31, 2008 8,400,000
Sales for June 1,200,000
113


Cost of goods sold with profit (1,100,000 x 80%) 880,000
Cost of goods sold without profit 100,000
Cost of goods sold during June 2008 980,000


Requirement c

Inventory, July 1, 2007 875,000
Purchases for year ended June 30, 2008 (as adjusted) 7,965,000
Goods available for sale 8,840,000
Less: Cost of goods sold
Sales with profit (9,500,000 x 80%) 7,600,000
Sales without profit 100,000 7,700,000
Inventory, June 30, 2008 1,140,000


Problem 8-23

1. Accounts receivable April 30 1,040,000
Writeoff 60,000
Collections (440,000 20,000) 420,000
Total 1,520,000
Less: Accounts receivable March 31 920,000
Sales for April 600,000
Sales up to March 31 3,600,000
Total sales 4,200,000

2. Accounts payable April 30 for April shipments 340,000
Payment for April merchandise shipments 80,000
Purchases of April 420,000
Purchases up to March 31 1,680,000
Total purchases 2,100,000

3. Inventory January 1 1,880,000
Purchases 2,100,000
Less: Purchases return 20,000 2,080,000
Goods available for sale 3,960,000
Less: Cost of sales (4,200,000 x 60%) 2,520,000
Inventory April 30 1,440,000
Less: Goods in transit 100,000
Salvage value 140,000 240,000
Fire loss 1,200,000







114
Problem 8-24 Answer B

Cost Retail
Inventory January 1 280,000 700,000
Purchases 2,480,000 5,160,000
Freight in 75,000
Markup 500,000
Markup cancellation __ __ __ _ ( 60,000)
GAS 2,835,000 6,300,000

Cost ratio (2,835/6,300) 45%

Markdown ( 250,000)
Markdown cancellation _ __ _ 50,000
GAS Average 2,835,000 6,100,000

Sales (5,000,000)
Shrinkage (2% x 5,000,000) ( 100,000)
Inventory December 31 1,000,000

Conservative cost (1,000,000 x 45%) 450,000

The approximate lower of average cost or market retail is the same as the conservative or
conventional retail.


Problem 8-25 Answer C

Cost Retail
Inventory January 1 720,000 1,000,000
Purchases 4,080,000 6,300,000
Markup 700,000
Markdown __ _____ ( 500,000)
GAS 4,800,000 7,500,000

Cost ratio (4,800/7,500) 64%

Sales (5,900,000)
Shoplifting losses ( 100,000)
Inventory 1,500,000

Average cost (1,500,000 x 64%) 960,000







115
Problem 8-26 Answer D Problem 8-27 Answer A

Cost Retail Cost Retail
Beginning inventory Beginning inventory 600,000 1,500,000
and purchases 6,000,000 9,200,000 Purchases 3,000,000 5,500,000
Net markup ________ 400,000 Net markups 500,000
GAS 6,000,000 9,600,000 Net markdown __ _____ (1,000,000)
Net purchases 3,000,000 5,000,000
Cost ratio
(6,000/9,600) = 62.5% Cost ratio
(3,000/5,000) = 60%
Sales (7,800,000)
Net markdown ( 600,000) GAS 3,600,000 6,500,000
Ending inventory 1,200,000 Sales (4,500,000)
Ending inventory 2,000,000
Conservative cost
(1,200,000 x 62.5%) 750,000 FIFO cost
(2,000,000 x 60%) 1,200,000
Goods available for sale 6,000,000
Less: Ending inventory 750,000
Cost of sales 5,250,000

Problem 8-28 Answer A
Cost Retail

Inventory January 1 1,200,000 1,800,000
Purchases 5,600,000 7,200,000
Freight in 400,000
Net markup 1,400,000
Net markdown ________ ( 600,000)
Net purchases (6,000/8,000) 75% 6,000,000 8,000,000
Goods available for sale 7,200,000 9,800,000
Sales (7,600,000)
Inventory December 31 2,200,000

FIFO cost (2,200,000 x
75%) 1,650,000

Goods available for sale 7,200,000
Less: Inventory December 31 1,650,000
Cost of goods sold 5,550,000

Problem 8-29 Answer C
Cost Retail
Available for sale 4,900,000 7,000,000
Markdown ( 100,000)
Sales (5,500,000)
Inventory, December 31 1,400,000

Average cost (1,400,000 x 71%) 994,000

Cost ratio (4,900,000 / 6,900,000) 71%
116
Problem 8-30

Cost Retail
Inventory, January 1 500,000 770,000
Purchases 3,070,000 4,300,000
Transportation in 70,000
Purchases return ( 25,000) ( 40,000)
Purchase discount ( 45,000)
Markup 100,000
Cancelation of markup ________ ( 30,000)
Goods available for sale conservative 3,570,000 5,100,000
Cost ratio conservative (357/510) 70%
Markdown ( 350,000)
Cancelation of markdown ________ 10,000
Goods available for sale average cost 3,570,000 4,760,000

Cost ratio average cost (357/476) 75%
Less: Sales 4,000,000
Sales return ( 80,000) 3,920,000
Inventory, December 31 at selling price 840,000

Conservative cost (840,000 x 70%) 588,000
Average cost (840,000 x 75%) 630,000
Valix Finacc vol 1 Problem 9-21 to 27
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 9-21 to 27


Problem 9-21

Question 1 Answer B

Market value December 31, 2008 1,550,000
Market value December 31, 2007 1,000,000
Unrealized gain trading 550,000


127


Question 2 Answer A

Market value December 31, 2008 1,300,000
Market value December 31, 2007 1,200,000
Unrealized gain in 2008 100,000
Unrealized loss December 31, 2007 (1,500,000 1,200,000) ( 300,000)
Net unrealized loss December 31, 2008 ( 200,000)

Problem 9-22 Answer A

The unrealized loss of P40,000 on trading securities is shown in the income statement.

However, the unrealized loss of P100,000 on available for sale securities is recognized in
equity.

Problem 9-23 Answer B

Unrealized losses 260,000
Unrealized gains 40,000
Net unrealized loss December 31, 2008 220,000

Problem 9-24 Answer B

Net sales price 1,450,000
Unrealized loss related to B ( 150,000)
Net amount 1,300,000
Carrying amount of B (1,550,000)
Loss on sale ( 250,000)

Net sales price (1,500,000 50,000) 1,450,000
Less: Cost of B 1,700,000
Loss on sale ( 250,000)

Problem 9-25 Answer C

Market value December 31, 2008 850,000
Market value December 31, 2007 800,000
Unrealized gain in 2008 50,000
Unrealized loss December 31, 2007 (200,000)
Net unrealized loss December 31, 2008 (150,000)

Problem 9-26 Answer C

Available for sale equity securities, at cost 2,200,000
Unrealized loss ( 200,000)
Market value 2,000,000


128

Problem 9-27 Answer C

12/31/2007 Unrealized loss - AFS 200,000
Available for sale
securities 200,000 (2,000,000 1,800,000)

12/31/2008 Available for sale securities 50,000
Unrealized loss AFS (1,850,000 1,800,000) 50,000
Posted by Louie Lansang at 3:17 AM No comments:
Labels: Finacc Volume 1 Chap 9, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 9-16 to 20
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 9-16 to 20 Multiple Choice


Problem 9-16 Answer A
Cost Market A common
1,000,000 800,000
B common 1,500,000 1,800,000
C preferred 2,000,000 1,700,000
D preferred 2,500,000 2,600,000
Total 7,000,000 6,900,000

Problem 9-17 Answer A
Cost Market

Man 1,000,000 900,000

Kemo 900,000 1,100,000
Penn 1,100,000 800,000
Total 3,000,000 2,800,000

Unrealized loss (3,000,000 2,800,000) 200,000

Problem 9-18 Answer A

Total market value December 31, 2008 2,000,000
Total market value December 31, 2007 1,650,000
Unrealized gain 350,000

Problem 9-19 Answer A

Total market value December 31, 2008 4,500,000
Total market value December 31, 2007 4,800,000
Unrealized loss in 2008 ( 300,000)
Unrealized loss December 31, 2007 ( 200,000)
Total unrealized loss December 31, 2008 ( 500,000)

Problem 9-20 Answer C

Market value December 31, 2008 1,600,000
Market value December 31, 2007 1,300,000
Unrealized gain in 2008 300,000
Unrealized loss December 31, 2007 ( 200,000)
Net unrealized gain December 31, 2008 100,000
Posted by Louie Lansang at 3:16 AM No comments:
Labels: Finacc Volume 1 Chap 9, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 9-15
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 9-15

01/01/2008 Available for sale securities 6,500,000
Cash 6,500,000

12/31/2008 Unrealized loss AFS 750,000
Available for sale securities 750,000
(6,500,000 5,750,000)

06/30/2009 Unrealized loss AFS 450,000
Available for sale securities 450,000
(5,750,000 5,300,000)

06/30/2009 Held to maturity securities 5,300,000
Available for sale securities 5,300,000

12/31/2009 No entry is required to recognize the decrease
in value of P400,000 (P5,300,000 P4,900,000).

The total unrealized loss of P1,200,000 on the reclassification of AFS securities will continue to be
reported as part of equity as a deduction. However, it is amortized through interest income over the
remaining life of the debt security starting June 30, 2009.
Posted by Louie Lansang at 3:15 AM No comments:
Labels: Finacc Volume 1 Chap 9, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 9-14
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 9-14

2008
Jan. 1 Held to maturity securities 3,649,600
Cash 3,649,600

Dec. 31 Cash (8% x 4,000,000) 320,000
Interest income 320,000

31 Held to maturity securities 44,960
Interest income 44,960

Interest income (10% x 3,649,600) 364,960
Interest
received 320,000 Amortization
44,960


2009
Dec. 31 Cash 320,000
Interest income 320,000

31 Held to maturity securities 49,456
Interest income 49,456

Interest income (10% x 3,694,560) 369,456
Interest
received 320,000 Amortization
49,456

31 Available for sale securities 3,744,016
Held to maturity securities 3,744,016

31 Available for sale securities 455,984
Unrealized gain AFS 455,984

Market value (4,000,000 x 105) 4,200,000
Book value 3,744,016
Unrealized
gain 455,984

Posted by Louie Lansang at 3:15 AM No comments:
Labels: Finacc Volume 1 Chap 9, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 9-13
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 9-13

2008 Available for sale securities 6,000,000
Cash 6,000,000

Unrealized loss AFS 300,000
Available for sale securities (6,000,000 5,700,000) 300,000

2009 Unrealized loss AFS 500,000
Available for sale securities (5,700,000 5,200,000) 500,000

Held to maturity securities 5,200,000
Available for sale securities 5,200,000

The total unrealized loss of P800,000 (300,000 + 500,000) will still be reported in equity but it will be
subsequently amortized through interest income over the remaining term of the debt securities.
Posted by Louie Lansang at 3:13 AM No comments:
Labels: Finacc Volume 1 Chap 9, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 9-12
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 9-12

01/01/2008 Trading securities 2,000,000
AFS securities 4,000,000
Cash 6,000,000

12/31/2008 Trading securities 500,000
Unrealized gain TS 500,000



12/31/2008 Unrealized loss AFS 700,000
AFS securities 700,000

12/31/2009 Trading securities 200,000
Unrealized gain - TS 200,000

Impairment loss AFS 700,000
Unrealized loss AFS 700,000

12/31/2010 Unrealized loss TS 600,000
Trading securities 600,000

AFS securities 900,000
Unrealized gain AFS (4,200,000 3,300,000) 900,000
Valix Finacc vol 1 Problem 10-26 to 28
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 10-26 to 28

Problem 10-26 Answer B

Sales price (50,000 x 10) 500,000
Cost of rights sold (10/100 x 3,600,000) 360,000
Gain on sale of rights 140,000



138

Problem 10-27 Answer B

Cost of rights (18/150 x 500,000) 60,000
Cost paid for new shares (2,500 shares x 90) 225,000
Total cost of new investment 285,000

Cost per share (285,000 / 2,500 shares) 114

Problem 10-28 Answer B

Cost of 2006 rights (4/100 x 180,000) 7,200
Cost of 2007 rights (4/100 x 330,000) 13,200
Total cost of rights 20,400

900 shares x 5 rights 4,500 rights

Cash paid (900 x 80) 72,000
Cost of rights exercised
2006 2,250 rights 7,200
2007 2,250 rights (2,250/3,750 x 13,200) 7,920
Total cost of 900 shares 87,120
Posted by Louie Lansang at 3:39 AM No comments:
Labels: Finacc Volume 1 Chap 10, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 10-21 to 25
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 10-21 to 25

Problem 10-21 Answer D

Cash dividend (10% x 500,000) 50,000

Problem 10-22 Answer A

Dividend income (2,000 x 60) 120,000

Problem 10-23 Answer C

Sales price (80,000 x 30) 2,400,000
Less: Cost of shares sold (80,000 x 40) 3,200,000
Loss on disposal ( 800,000)

Problem 10-24 Answer A
June 1 December 1
Original shares 20,000 30,000
Stock dividend 20% 4,000 6,000
Total shares 24,000 36,000

Sales price (30,000 x 125) 3,750,000
Cost of shares sold:
From June 1 24,000 shares 2,000,000
From December 1 6,000 shares (6,000 / 36,000 x 3,600,000) 600,000 2,600,000
Gain on
sale 1,150,000
Problem 10-25 Answer B

Cost of rights (5/100 x 8,000,000) 400,000
Posted by Louie Lansang at 3:39 AM No comments:
Labels: Finacc Volume 1 Chap 10, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 10-15 to 20
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 10-15 to 20

Problem 10-15 Answer A

Purchase price (4,000 x P100) 400,000
Brokerage 12,000
Total 412,000
Less: Dividend purchased (4,000 x 5) 20,000
Acquisition cost 392,000

Problem 10-16 Answer D

Fair value of asset given (land) 3,000,000

Problem 10-17 Answer D

Original shares acquired January 15 50,000
Stock dividend on March 31 (20% x 50,000) 10,000
Total shares 60,000

Dividend income cash dividend on December 15 (60,000 x 5) 300,000

Problem 10-18 Answer C

Dividend income cash dividend on July 1 100,000

Original shares on March 1 20,000
Stock dividend on December 1 (10% x 20,000) 2,000
Total shares 22,000

Problem 10-19 Answer B

Original shares on October 1, 2007 40,000
Stock dividend on November 30, 2008 (10%) 4,000
Total shares 44,000
Shares sold on December 31, 2008 ( 4,000)
Balance 40,000






Sales price 1,000,000
Cost of shares sold (4,000/44,000 x 6,600,000) ( 600,000)
Gain on sale 400,000

Problem 10-20 Answer B

Shares received as property dividend (5,000/5) 1,000

Dividend income (1,000 x 100) 100,000
Posted by Louie Lansang at 3:37 AM No comments:
Labels: Finacc Volume 1 Chap 10, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 10-14
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 10-14

Jan. 2 Investment in King Corporation 700,000
Cash 700,000

Mar. 1 Investment in Plastic Company 660,000
Cash 660,000

Apr. 1 Cash (10,000 x 5) 50,000
Dividend income 50,000

July 1 Received 2,000 shares as 20% stock dividend on
10,000 Plastic Company shares originally held.
Shares now held, 12,000.

Aug. 1 Investment in Makati Corporation 500,000
Cash 500,000

Oct. 1 Received 60,000 new shares of Plastic Company
as a result of a 5 for 1 split of 12,000 original shares.

1 Cash (10,000 x 5) 50,000
Dividend income 50,000

31 Stock rights (3/33 x 660,000) 60,000
Investment in Plastic Company 60,000

Nov. 15 Investment in Plastic Company 180,000
Cash (6,000 shares x 20) 120,000
Stock rights 60,000

Dec. 1 Cash (66,000 shares x 5) 330,000
Dividend income 330,000

15 Cash (10,000 shares x 30) 300,000
Investment in Plastic Company 100,000
(10,000/60,000 x 600,000)
Gain on sale of investment 200,000





Summary of investments Shares Cost
King Corporation common 10,000 700,000
Plastic Company common
Block 1 50,000 500,000
Block 2 6,000 180,000
Makati Corporation common 10,000 500,000
76,000 1,880,000

Of course, the investments will simply be described as investments in equity
securities in the balance sheet.
Posted by Louie Lansang at 3:36 AM No comments:
Labels: Finacc Volume 1 Chap 10, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 10-13
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 10-13

2008
Aug. 1 Investment in equity securities 60,000
Cash 60,000

Oct. 1 Investment in equity securities 560,000
Cash 560,000
2009
July 1 Investment in equity securities 480,000
Cash 480,000

Aug. 1 Cash 500,000
Investment in equity securities 340,000
Gain on sale of investment 160,000

Lot 1 (1,000 shares) 60,000
Lot 2 (4,000/8,000 x 560,000) 280,000
Cost of investment sold 340,000

2010
Feb. 1 Received 5,000 shares representing 50% stock dividend on
10,000 remaining shares held. Shares now held, 15,000.

Nov. 1 Stock rights 95,000
Investment in equity securities 95,000

Lot 2 6,000 rights (10/80 x 280,000) 35,000
Lot 3 9,000 rights (10/80 x 480,000) 60,000
Cost of rights received 95,000


135
2010
Dec. 1 Cash (15,000 x 10) 150,000
Stock rights 95,000
Gain on sale of stock rights 55,000

Summary of investments Shares Cost
Lot 2 (280,000 35,000) 6,000 245,000
Lot 3 (480,000 60,000) 9,000 420,000
Total 15,000 665,000
Valix Finacc vol 1 Problem 11-31 to 35
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 11-31 to 35

Problem 11-31 Answer A

Acquisition cost 5,160,000
Net assets acquired (30% x 11,800,000) 3,540,000
Excess of cost 1,620,000
Attributable to depreciable assets (30% x 2,600,000) 780,000
Attributable to goodwill 840,000

Acquisition cost 5,160,000
Share in net income (30% x 3,600,000) 1,080,000
Share in dividends (30% x 400,000) ( 120,000)
Amortization (780,000/4) ( 195,000)
Investment balance December 31 5,925,000
Problem 11-32 Answer B

Acquisition cost 2,560,000
Net assets acquired (40% x 5,000,000) 2,000,000
Excess of cost 560,000



150
Attributable to equipment (40% x 800,000) 320,000
Attributable to building (40% x 600,000) 240,000
560,000

Acquisition cost 2,560,000
Net income (40% x 1,600,000) 640,000
Cash dividend (40% x 1,000,000) ( 400,000)
Amortization of excess:
Equipment (320,000 / 4) ( 80,000)
Building (240,000 / 12) ( 20,000)
Carrying value of investment 12/31/2008 2,700,000


Problem 11-33 Answer A

Net income 5,000,000
Less: Preference dividend (10% x 2,000,000) 200,000
Net income to ordinary shares 4,800,000
Investment income (50% x 4,800,000) 2,400,000


Problem 11-34

Question 1 Answer B

Share in 2008 net income (30% x 800,000) 240,000

Question 2 Answer B

Acquisition cost 2,000,000
Share in net income 2008 240,000
Cash dividends 2008 (30% x 500,000) ( 150,000)
Book value December 31, 2008 2,090,000

Question 3 Answer B

Book value December 31, 2008 2,090,000
Share in net income up to June 30, 2009 (30% x 1,000,000) 300,000
Book value June 30, 2009 2,390,000

Sales price 1,500,000
Book value sold (2,390,000 x ) 1,195,000
Gain on sale 305,000




151

Problem 11-35 Answer C

Acquisition cost (30,000 x 120) 3,600,000
Deficit on January 1, 2008 (30% x 500,000) ( 150,000)
Carrying value of investment 1/1/2008 3,450,000
Net income for 2008 (30% x 700,000) 210,000
Net income for 2009 (30% x 800,000) 240,000
Cash dividend on 12/31/2009 (30% x 400,000) ( 120,000)
Carrying value of investment 12/31/2009 3,780,000
Another approach

Acquisition cost 3,600,000
Share in retained earnings 12/31/2009 (30% x 600,000) 180,000
Carrying value of investment 12/31/2009 3,780,000
Posted by Louie Lansang at 3:58 AM No comments:
Labels: Finacc Volume 1 Chap 11, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 11-26 to 30
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 11-26 to 30

Problem 11-26 Answer A

Acquisition cost 4,000,000
Share in net income (10% x 5,000,000) 500,000
Share in cash dividend (10% x 1,500,000) ( 150,000)
Carrying value 4,350,000

Problem 11-27 Answer D

Acquisition cost (squeeze) 1,720,000
Share in net income (25% x 1,200,000) 300,000
Share in cash dividend (25% x 480,000) ( 120,000)
Carrying value December 31 1,900,000

Problem 11-28 Answer D

Acquisition cost 2,500,000
Less: Book value of net assets acquired (30% x 5,000,000) 1,500,000
Excess of cost over book value 1,000,000
Less: Amount attributable to undervaluation of land (30% x 2,000,000) 600,000
Goodwill 400,000

149

Acquisition cost 2,500,000
Add: Share in net income (30% x 1,000,000) 300,000
Balance, December 31 2,800,000

The excess of cost attributable to the land is not amortized because the land is
nondepreciable. The goodwill is not amortized.

Problem 11-29 Answer B

Acquisition cost January 1 1,000,000
Acquisition cost December 31 3,000,000
Total cost 4,000,000
Share in net income (10% x 8,000,000) 800,000
Carrying value 4,800,000

Problem 11-30 Answer C

Investment income in 2008 (30% x 6,500,000) 1,950,000

Investment income in 2007 (10% x 6,000,000) 600,000
Less: Dividend income recorded in 2006 (10% x 2,000,000) 200,000
Understatement of income 400,000

Investment in associate 400,000
Retained earnings 400,000
Posted by Louie Lansang at 3:57 AM No comments:
Labels: Finacc Volume 1 Chap 11, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 11-21 to 25
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 11-21 to 25

Problem 11-21 Answer B

Investment income (20% x 1,600,000) 320,000


Problem 11-22 Answer A

Investment income (20% x 6,000,000) 1,200,000

Problem 11-23 Answer C

Interest (30,000/100,000) 30%

Investment income (5,000,000 x 6/12 x 30%) 750,000

Problem 11-24 Answer C

Cost 4,000,000

Less: Net assets acquired (40% x 8,000,000) 3,200,000
Excess of cost or goodwill 800,000

Share in net income from April 1 to December 31 (1,000,000 x 9/12 x 40%) 300,000

Problem 11-25 Answer B

Acquisition cost 7,000,000
Share in net income (20% x 1,800,000) 360,000
Share in cash dividend (20% x 600,000) ( 120,000)
Amortization of excess (1,000,000/10) ( 100,000)
Carrying value 7,140,000

Posted by Louie Lansang at 3:56 AM No comments:
Labels: Finacc Volume 1 Chap 11, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 11-17 to 20
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 11-17 to 20

Problem 11-17 Answer D

Problem 11-18 Answer D

Problem 11-19 Answer B

Investment in Lax Corporation 3,000,000
Problem 11-20 Answer C

Total cash dividend 3,000,000
Cumulative net income 2,500,000
Liquidating dividend 500,000

Cash (10% x 3,000,000) 300,000
Dividend income (10% x 2,500,000) 250,000
Investment in equity securities 50,000
Posted by Louie Lansang at 3:55 AM No comments:
Labels: Finacc Volume 1 Chap 11, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 11-16
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 11-16

Requirement a

1. Memo Received 500 shares as 10% stock dividend on
5,000 original Dale ordinary shares. Shares now
held, 5,500.

2. Cash (5,500 x 20) 110,000
Dividend income 110,000

3. Stock rights (15/150 x 1,600,000) 160,000
Investment in equity securities Ever 160,000

Cash 200,000
Stock rights 160,000
Gain on sale of stock rights 40,000

4. Investment in associate 5,000,000
Cash 5,000,000

1/1/2007 1/1/2008
Acquisition cost 2,000,000 5,000,000
Net assets acquired:
10% x 16,000,000 1,600,000
20% x 20,000,000 ________ 4,000,000
Goodwill 400,000 1,000,000

Income from Fox investment in 2007 (10% x 4,000,000) 400,000
Less: Dividend income recorded in 2007 cost method -___
Understatement of income 400,000

147

5. Investment in associate 2,000,000
Investment in equity securities 2,000,000
(Reclassification)

6. Investment in associate 400,000
Retained earnings 400,000

7. Investment in associate 1,800,000
Investment income (30% x 6,000,000) 1,800,000

8. Cash (75,000 x 20) 1,500,000
Investment in associate 1,500,000

Requirement b

Noncurrent assets:
Investment in equity securities (Note) 2,690,000
Investment in associate Fox Corporation 7,700,000

Note Investment in equity securities

Dale Corporation, 5,500 shares 1,250,000
Ever Corporation, 10,000 shares 1,440,000
Total cost 2,690,000
Valix Finacc vol 1 Problem 12-31 to 34
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 12-31 to 34

Problem 12-31 Answer B

Acquisition cost July 1, 2008 4,614,000
Discount amortization from July 1 to December 31, 2008:
Interest accrued (5,000,000 x 8% x 6/12) 200,000
Interest income (4,614,000 x 10% x 6/12) 230,700 30,700
Book value December 31, 2008 4,644,700

Problem 12-32 Answer D

Acquisition cost 4,766,000
Discount amortization:
Interest income (4,766,000 x 12%) 571,920
Interest received (5,000,000 x 10%) 500,000 71,920
Total 4,837,920
Annual installment on December 31, 2008 (1,000,000)
Book value December 31,
2008 3,837,920
Problem 12-33 Answer A

Annual effective (5,000,000 x 14%) 700,000
Annual nominal (5,000,000 x
12%) 600,000
Difference 100,000
Multiply by present value factor using effective rate of 14% 5.216
Discount 521,600
Face value 5,000,000
Purchase price 4,478,400

Problem 12-34 Answer A

12/31/2008 (1,250,000 + 600,000 x .9091) 1,681,835
12/31/2009 (1,250,000 + 450,000 x .8264) 1,404,880
12/31/2010 (1,250,000 + 300,000 x .7513) 1,164,515
12/31/2011 (1,250,000 + 150,000 x .6830) 956,200
5,207,430

Posted by Louie Lansang at 4:27 AM No comments:
Labels: Finacc Volume 1 Chap 12, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 12-26 to 30
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 12-26 to 30

Problem 12-26 Answer A

Bond year Bond outstanding Fraction Amortization

04/01/2007 03/31/2008 4,000,000 4/10 80,000
04/01/2008 03/31/2009 3,000,000 3/10 60,000
04/01/2009 03/31/2010 2,000,000 2/10 40,000
04/01/2010 03/31/2011 1,000,000 1/10 20,000
10,000,000 200,000

Interest for the year 2008:
From January 1 to March 31, 2008 (4,000,000 x 12% x 3/12) 120,000
From April 1 to December 31, 2008 (3,000,000 x 12% x 9/12) 270,000 390,000
Amortization of discount for year 2008:
From January 1 to March 31, 2008 (80,000 x 3/12) 20,000
From April 1 to December 31, 2008 (60,000 x 9/12) 45,000 65,000
Interest income for year 2008 455,000


Problem 12-27 Answer D

Interest income for 2008 (3,756,000 x 10%) 375,600


Problem 12-28 Answer D

Interest accrued from July 1 to December 31, 2008 (5,000,000 x 8% x 6/12) 200,000


Problem 12-29 Answer C

Interest received (1,000,000 x 10% x 6/12) 50,000
Interest income (1,198,000 x 8% x 6/12) 47,920
Premium amortization 2,080

Acquisition cost July 1, 2008 1,198,000
Premium amortization ( 2,080)
Book value December 31, 2008 1,195,920



Problem 12-30 Answer A

Interest accrued (1,000,000 x 8% x 6/12) 40,000
Interest income (906,000 x 10% x 6/12) 45,300
Discount amortization 5,300

Acquisition cost July 1, 2008 (946,000 - 40,000) 906,000
Discount amortization 5,300
Book value December 31, 2008 911,300
Posted by Louie Lansang at 4:25 AM No comments:
Labels: Finacc Volume 1 Chap 12, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 12-22 to 25
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 12-22 to 25

Problem 12-22

Question 1 Answer A

Acquisition cost (4,400,000 100,000) 4,300,000
Amortization of premium from Oct. 1, 2007 to Dec. 31, 2008 (4,000 x 15) ( 60,000)
Book value December 31, 2008 4,240,000

Monthly amortization (300,000/75 months) 4,000

Question 2 Answer B

Interest for 2008 (4,000,000 x 10%) 400,000
Amortization of premium (4,000 x 12 months) ( 48,000)
Interest income 352,000

Problem 12-23 Answer B

Interest for 2008 (2,000,000 x 12%) 240,000
Amortization of discount (100,000/5) 20,000
Interest income 260,000

Problem 12-24 Answer B

Premium on sale of bonds 140,000
Unamortized discount (100,000 20,000) 80,000
Gain on sale of bonds 220,000

Problem 12-25 Answer A

Acquisition cost 1/1/2008 3,767,000
Discount amortization for 2008:
Interest income (14% x 3,767,000) 527,380
Interest received (12% x 4,000,000) 480,000 47,380
Book value 12/31/2008 3,814,380
Posted by Louie Lansang at 4:23 AM No comments:
Labels: Finacc Volume 1 Chap 12, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 12-21
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 12-21

1. The present value of the bonds using the interest rate of 11% is as follows:

PV of principal (5,000,000 x .6587) 3,293,500
PV of interest (500,000 x 3.1024) 1,551,200
Total present value of cash flows 4,844,700

2. The present value of the bonds using the interest rate of 12% is as follows:

PV of principal (5,000,000 x .6355) 3,177,500
PV of interest (500,000 x 3.0373) 1,518,650
Total present value of cash flows 4,696,150

3. X 11%____
12% - 11%

4,700,000 4,844,700_
4,696,150 4,844,700

_144,700_ = .97
148,550

Effective rate = 11% + .97
= 11.97%

4. Interest income for 2008 (4,700,000 x 11.97%) 562,590

5. Journal entries

Held to maturity securities 4,700,000
Cash 4,700,000

Cash (10% x 5,000,000) 500,000
Interest income 500,000



Held to maturity securities 62,590
Interest income 62,590

Interest income 562,590
Interest received 500,000
Discounted amortization 62,590
Posted by Louie Lansang at 4:22 AM No comments:
Labels: Finacc Volume 1 Chap 12, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 12-20
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 12-20

1. Principal payment 1,000,000
Interest payment (3,000,000 x 12%) 360,000
Total payment on December 31, 2008 1,360,000

Principal payment 1,000,000
Interest payment (2,000,000 x 12%) 240,000
Total payment on December 31, 2009 1,240,000

Principal payment 1,000,000
Interest payment (1,000,000 x 12%) 120,000
Total payment on December 31, 2010 1,120,000

December 31, 2008 payment (1,360,000 x .91) 1,237,600
December 31, 2009 payment (1,240,000 x .83) 1,029,200
December 31, 2010 payment (1,120,000 x .75) 840,000
Total present value on January 1,
2008 3,106,800
2. Journal entries

2008
Jan. 1 Held to maturity securities 3,106,800
Cash 3,106,800

Dec. 31 Cash 360,000
Interest income 360,000

31 Interest income 49,320
Held to maturity securities 49,320


Interest received 360,000
Interest income (3,106,800 x 10%) 310,680
Premium amortization 49,320

Dec. 31 Cash 1,000,000
Held to maturity securities 1,000,000

3. Acquisition cost 1/1/2008 3,106,800
Premium amortization for 2008 ( 49,320)
Annual installment (1,000,000)
Carrying value of investment 12/31/2008 2,057,480
Posted by Louie Lansang at 4:20 AM No comments:
Labels: Finacc Volume 1 Chap 12, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 12-19
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 12-19

Semiannual nominal interest (8,000,000 x 5%) 400,000
Semiannual effective interest (8,000,000 x 4%) 320,000
Difference 80,000
Multiply by PV of annuity of 1 for 10 periods at 4% 8.11
Premium 648,800
Face value 8,000,000
Purchase price 8,648,800
The amount of P648,800 is a premium because the effective rate is lower than
nominal rate.

Another approach

PV of principal (8,000,000 x .6756) 5,404,800
PV of semiannual interest payments (400,000 x 8.11) 3,244,000
Purchase price or present value of bonds 8,648,800

Journal entries

2008
Jan. 1 Held to maturity securities 8,648,800
Cash 8,648,800

July 1 Cash 400,000
Interest income 400,000

1 Interest income 54,048
Held to maturity securities 54,048



Interest received 400,000
Interest income (8,648,800 x 8% x 6/12) 345,952
Premium amortization 54,048

Dec. 31 Accrued interest receivable 400,000
Interest income 400,000

31 Interest income 56,210
Held to maturity securities 56,210

Interest accrued 400,000
Interest income (8,594,752 x 8% x 6/12) 343,790
Premium amortization 56,210
Valix Finacc vol 1 Problem 13-21 to 23
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 13-21 to 23

Problem 13-21 Answer C

Premium paid January 1 100,000
Less: Dividend received 15,000
Increase in cash surrender value (270,000 245,000) 25,000 40,000
Life insurance expense for 2008 60,000

Problem 13-22 Answer D

Premium paid 200,000
Less: Increase in cash surrender value (540,000 435,000) 105,000
Life insurance expense 95,000
The dividend of P30,000 is not deducted anymore because it is already part of the increase in cash
surrender value.

Problem 13-23 Answer A

Sinking fund cash 500,000
Sinking fund securities 1,000,000
Accrued interest receivable 50,000
Plant expansion fund 600,000
Cash surrender value 150,000
Land held for capital appreciation 3,000,000
Advances to subsidiary 200,000
Investment in joint venture 2,000,000
7,500,000
Posted by Louie Lansang at 4:47 AM No comments:
Labels: Finacc Volume 1 Chap 13, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 13-16 to 20
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 13-16 to 20

Problem 13-16 Answer D

Annual deposit (8,000,000 /
4.78) 1,673,640

Problem 13-17 Answer B

Annual deposit (9,000,000 / 6.34) 1,419,560

Problem 13-18 Answer A

Principal amount 5,000,000
Multiply by future value of 1 for 6 periods at 10% 1.77
Future amount at maturity 8,850,000

Problem 13-19 Answer A

Future amount of maturity 7,160,000
Divide by future value of 1 for 10 periods at 6% 1.79
Initial investment 4,000,000

The annual interest of 12% is compounded semiannually for 5 years. Therefore, there are
10 interest periods at 6%.

Problem 13-20 Answer A

Sinking fund balance January 1 4,500,000
Add: 2007 investment 900,000
Dividends on investment 150,000
Interest revenue 300,000 1,350,000
Total 5,850,000
Less: Administration costs 100,000
Sinking fund balance December 31 5,750,000
Posted by Louie Lansang at 4:46 AM No comments:
Labels: Finacc Volume 1 Chap 13, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 13-15
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 13-15

Cost model

2008 Depreciation 1,800,000
Accumulated depreciation 1,800,000


2009 Depreciation 1,800,000
Accumulated depreciation 1,800,000

2010 Depreciation 1,800,000
Accumulated depreciation 1,800,000

Fair value model

2008 Investment property 5,000,000
Accumulated depreciation 5,000,000

2009 Loss from change in fair value 2,000,000
Accumulated depreciation 2,000,000

2010 Investment property 7,000,000
Gain from change in fair value 7,000,000

Posted by Louie Lansang at 4:45 AM No comments:
Labels: Finacc Volume 1 Chap 13, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 13-14
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 13-14

1. Land held by Eragon for undetermined use 5,000,000
Vacant building 3,000,000
Building owned by a subsidiary Eragon occupied by lessees 1,500,000
Total investment property 9,500,000

2. a. The property held by a subsidiary Eragon in the ordinary course of business in included
in inventory.

b. The property held by Eragon for use in production is owner-occupied property and
therefore part of property, plant and equipment.

c. The land leased by Eragon to a subsidiary under an operating lease is owner-
occupied property for purposes of consolidated financial statements. However, from the perspective of
separate financial statements of Eragon, the land is an investment
property.

d. The property under construction for use as investment property is owner-occupied
property until the land is completed. Upon completion, the building becomes
investment property.

e. The land held for future factory site is owner-occupied property and therefore part of
property, plant and equipment.

f. The machinery leased out to an unrelated party is part of property, plant and
equipment because investment property includes only land and building, and not
movable property like machinery.
Posted by Louie Lansang at 4:44 AM 1 comment:
Labels: Finacc Volume 1 Chap 13, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 13-13
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 13-13

a. Life insurance (10,000 x 6/12) 5,000
Cash surrender value 5,000

b. Prepaid life insurance (28,000 x 1/2) 14,000
Life insurance 14,000

c. Interest expense 4,500
Accrued interest payable (50,000 x 12% x 9/12) 4,500

d. Dividend income 2,000
Dividend receivable 2,000

Current assets:
Prepaid life insurance 14,000

Investment:
Cash surrender value 85,000

Current liabilities:
Loan payable 50,000
Accrued interest payable 4,500

Posted by Louie Lansang at 4:43 AM No comments:
Labels: Finacc Volume 1 Chap 13, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 13-12
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 13-12

2008
Jan. 1 Life insurance 80,000
Cash 80,000

2009
Jan. 1 Life insurance 80,000
Cash 80,000

Dec. 31 Cash 5,000
Life insurance 5,000

31 Cash surrender value 42,000
Life insurance (42,000 x 1/3) 14,000
Retained earnings 28,000

2010
Jan. 1 Life insurance 80,000
Cash 80,000

Dec. 31 Cash 6,000
Life insurance 6,000

31 Cash surrender value 5,000
Life insurance 5,000

Balance December 31, 2010 47,000
Balance December 31, 2009 42,000
Increase in cash surrender value 5,000
Posted by Louie Lansang at 4:42 AM No comments:
Labels: Finacc Volume 1 Chap 13, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 13-11
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 13-11

2007
April 1 Life insurance 60,000
Cash 60,000

Dec. 31 Prepaid life insurance (60,000 x 3/12) 15,000
Life insurance 15,000

2008
Jan. 1 Life insurance 15,000
Prepaid life insurance 15,000

April 1 Life insurance 60,000
Cash 60,000

Dec. 31 Prepaid life insurance 15,000
Life insurance 15,000

2009
Jan. 1 Life insurance 15,000
Prepaid life insurance 15,000


April 1 Life insurance 60,000
Cash 60,000

Dec. 31 Prepaid life insurance 15,000
Life insurance 15,000

2010
Jan. 1 Life insurance 15,000
Prepaid life insurance 15,000

April 1 Cash surrender value 60,000
Life insurance 5,000
Retained earnings 55,000

April 1, 2007 December 31, 2009 (33/36 x 60,000) prior years 55,000
January 1, 2010 April 1, 2010 (3/36 x 60,000) current period 5,000
Total 60,000

1 Life insurance 60,000
Cash 60,000

Dec. 31 Prepaid life insurance 15,000
Life insurance 15,000

31 Cash surrender value 18,000
Life insurance 18,000

Balance April 1, 2011 84,000
Balance April 1, 2010 60,000
Increase from April 1, 2010 to April 1, 2011 24,000

Increase from April 1, 2010 to December 31, 2010 (24,000 x 9/12) 18,000

2011
Jan. 1 Life insurance 15,000
Prepaid life insurance 15,000

April 1 Cash surrender value (18,000 x 3/12) 6,000
Life insurance 6,000

1 Life insurance 60,000
Cash 60,000

July 1 Cash surrender value 8,000
Life insurance 8,000

Balance April 1, 2012 116,000
Balance April 1, 2011 84,000
Increase from April 1, 2011 to April 1, 2012 32,000


Increase from April 1, 2010 to July 1, 2010 (32,000 x 3/12) 8,000

July 31 Cash 2,000,000
Cash surrender value 92,000
Life insurance (60,000 x 9/12) 45,000
Gain on life insurance settlement 1,863,000
Valix Finacc vol 1 Problem 14-21 to 25
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-21 to 25


Problem 14-21

Question 1 Answer B

The notional figure is 8,000 kilos and the notional value is 8,000 kilos times the underlying
Fixed price of P1,200 per kilo or P9,600,000.


Question 2 Answer C

Market price 12/31/2008 1,500
Underlying fixed price 1,200
Derivative asset 300

Forward contract receivable (8,000 x 300) 2,400,000

Present value of derivative asset (2,400,000 x .91) 2,184,000

The present value of P2,184,000 is recognized as forward contract receivable on December 31, 2008
because the amount is collectible on January 1, 2010, one year from December 31, 2008.

Question 3 Answer B

Market price 12/31/2009 1,000
Underlying fixed price 1,200
Derivative liability 200

Forward contract payable 12/31/2009 (8,000 x 200) 1,600,000

Problem 14-22 Answer C

Fair value of call option (120 100 = 20 x 10,000) 200,000

Problem 14-23 Answer B

Exchange rate on July 31 (80,000,000 / 92) 869,565
Strike price (80,000,000 / 100) 800,000
Derivative asset 69,565
Call option payment 10,000
Saving 59,565

Problem 14-24

Question 1 Answer A

Camrys payment to Corolla (5,000,000 x 2%) 100,000

Question 2 Answer C

Fair value of interest rate swap (100,000 x .926) 92,600

Problem 14-25 Answer C

Notional amount 435,000
Exchange rate on December 31, 2008 (47,850,000 / 115) 416,087
Fair value of forward contract receivable 18,913
Posted by Louie Lansang at 5:35 AM No comments:
Labels: Finacc Volume 1 Chap 14, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 14-20
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-20

2008
Dec. 31 Forward contract receivable 50,000
Unrealized gain forward contract ($50,000 x P1) 50,000

2009
March 31 Forward contract receivable 100,000
Unrealized gain forward contract ($50,000 x P2) 100,000

31 Cash 150,000
Forward contract receivable 150,000

31 Purchases ($50,000 x P43) 2,150,000
Cash 2,150,000

31 Unrealized gain forward contract 150,000
Purchases 150,000
Posted by Louie Lansang at 5:33 AM No comments:
Labels: Finacc Volume 1 Chap 14, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 14-19
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-19

2008
Sept. 1 Equipment 2,250,000
Accounts payable 2,250,000

Dec. 31 Loss on foreign exchange 50,000
Accounts payable 50,000

Peso equivalent 12/31/2008 2,050,000
Peso equivalent 09/01/2008 2,000,000
Loss on foreign exchange 50,000

31 Forward contract receivable 50,000
Gain on forward contract 50,000
2009
March 1 Loss on foreign exchange 100,000
Accounts payable 100,000

Peso equivalent 3/1/2009 2,150,000
Peso equivalent 12/31/2008 2,050,000
Loss on foreign exchange 100,000

1 Forward contract receivable 100,000
Gain on forward contract 100,000

1 Cash 150,000
Forward contract receivable 150,000

1 Accounts payable (50,000 x 43) 2,150,000
Cash 2,150,000
Posted by Louie Lansang at 5:04 AM No comments:
Labels: Finacc Volume 1 Chap 14, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 14-18
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-18

2008
Dec. 1 Put option 100,000
Cash 100,000

2009
Feb. 1 Cash (50,000 x 180) 9,000,000
Sales 9,000,000

1 Loss on put option 100,000
Put option 100,000
With the price above the put option price, on the part of the
seller, there is no reason to exercise the option. It is better to
sell the product on the open market. Thus, the output option
is not exercised on February 1, 2009 and has no value.
Posted by Louie Lansang at 5:03 AM No comments:
Labels: Finacc Volume 1 Chap 14, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 14-17
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-17

2008
Dec. 1 Call option 20,000
Cash 20,000

Dec. 31 Call option 380,000
Unrealized gain - call option 380,000

Fair value (200,000 x 2) 400,000
Payment for call option 20,000
Increase 380,000

2009
June 1 Call option 200,000
Unrealized gain call option 200,000

Call option 6/1/2009 (200,000 x P3) 600,000
Call option 12/31/2008 400,000
Increase in derivative asset 200,000

1 Cash 600,000
Call option 600,000

1 Purchases (200,000 x P28) 5,600,000
Cash 5,600,000
1 Unrealized gain call option 600,000
Gain on call option 600,000
Posted by Louie Lansang at 5:03 AM No comments:
Labels: Finacc Volume 1 Chap 14, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 14-16
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-16

Requirement 1

2008
Dec. 31 Call option 50,000
Cash 50,000

2009
July 1 Call option 700,000
Gain on call option 700,000


Fair value of call option (150,000 x 5) 750,000
Payment for call option 50,000
Increase 700,000
2009
July 1 Cash 750,000
Call option 750,000

1 Purchases 5,250,000
Cash (150,000 x 35) 5,250,000

Requirement 2

2008
Dec. 31 Call option 50,000
Cash 50,000

2009
July 1 Purchases 4,200,000
Cash (150,000 x 28) 4,200,000

1 Loss on call option 50,000
Call option 50,000
Posted by Louie Lansang at 5:02 AM No comments:
Labels: Finacc Volume 1 Chap 14, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 14-15
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-15

2008
Dec. 31 Unrealized loss futures contract 125,000
Futures contract payable (25,000 x 5) 125,000

2009
June 1 Unrealized loss futures contract 75,000
Futures contract payable 75,000

Futures contract payable 6/1/2009 (25,000 x P8) 200,000
Futures contract payable 12/31/2008 125,000
Increase in derivative liability 75,000

1 Futures contract payable 200,000
Cash 200,000

1 Purchases (25,000 x 42) 1,050,000
Cash 1,050,000

1 Loss on futures contract 200,000
Unrealized loss futures contract 200,000
Valix Finacc vol 1 Problem 15-36 to 40
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 15 Problem 15-36 to 40

Problem 15-36 Answer A

Since the old machine has no available fair value, the new machine received in exchange is recorded at
its cash price without trade in of P900,000. The average published retail value of the old machine is not
necessarily its fair value.

Problem 15-37 Answer A
Average expenditures (20,000,000 / 2) 10,000,000
Multiply y capitalization rate 12%
Interest on average expenditures 1,200,000

The capitalizable borrowing cost is limited to the actual borrowing cost incurred. In this case, the
computed amount of P1,200,000 is more than the actual borrowing cost of P1,020,000. Accordingly, the
capitalizable interest is P1,020,000. Note that in computing the average expenditures, the amount of
P20,000,000 is simply divided by 2 because the said amount is incurred evenly during the year ended
2008.

Problem 15-38 Answer C

Since the actual interest incurred is not given, the interest on the average expenditures is determined.

Average expenditures (9,600,000 / 2) 4,800,000

Interest on average expenditures (4,800,000 x 10%) 480,000
Interest income on unexpended portion (320,000)
Capitalizable interest 160,000

Problem 15-39 Answer B

Accumulated expenditures at the end of two years 3,000,000
Average expenditures in the third year (8,000,000 / 2) 4,000,000
Total 7,000,000

Capitalizable interest (7,000,000 x 9%) 630,000
Problem 15-40 Answer B

Average accumulated expenditures 2,500,000
Specific borrowing (1,500,000)
Applicable to general borrowing 1,000,000

Specific (6% x 1,500,000) 90,000
General (9% x 1,000,000) 90,000
Capitalizable interest 180,000

Posted by Louie Lansang at 5:59 AM No comments:
Labels: Finacc Volume 1 Chap 15, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 15-31 to 35
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 15 Problem 15-31 to 35

Problem 15-31 Answer A

Invoice price 700,000
Discount (2% x 700,000) ( 14,000)
Freight and insurance 3,000
Cost of assembling and installation 5,000
Total cost 694,000

Problem 15-32 Answer A

Equipment:
Invoice price 600,000
Discount (5% x 600,000) ( 30,000) 570,000
Land (at its fair value) 1,100,000
Machinery:
Acquisition cost 275,000
Installation cost 7,000
Trial run and testing cost 18,000
Construction of base 10,000 310,000
Total 1,980,000

Problem 15-33 Answer B

Fair value of asset given 700,000
Cash payment 160,000
Total cost 860,000
Problem 15-34 Answer B

Fair value of asset given 2,100,000
Cash payment 400,000
Cost of new
inventory 2,500,000

Problem 15-35 Answer A

Fair value of asset given 1,500,000
Less: Cost of asset given 1,250,000
Gain on exchange 250,000

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Valix Finacc vol 1 Problem 15-26 to 30
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 15 Problem 15-26 to 30

Problem 15-26 Answer D

Cost of land (5,400,000 x 2/5) 2,160,000

Problem 15-27 Answer B

Cash price 950,000
Installation cost 30,000
Total cost 980,000

Problem 15-28 Answer C

Cash price 2,000,000
Installation cost 50,000
Total cost 2,050,000
Problem 15-29 Answer B

Present value of first note payable (500,000 x 5.65) 2,825,000
Present value of second note payable (3,000,000 x .80) 2,400,000
Total cost of machinery 5,225,000

Problem 15-30 Answer D

First payment on December 30, 2008 200,000
Present value of next 7 payments (200,000 x 4.712) 942,400
Total cost of machine 1,142,400

Another computation:

PV of annuity of 1 in advance for 8 periods (200,000 x 5.712) 1,142,400

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Valix Finacc vol 1 Problem 15-25
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 15 Problem 15-25

1. Cash 30,000,000
Deferred income-government grant 30,000,000

Environmental expenses 2,000,000
Cash 2,000,000

Deferred income-government grant 3,000,000
Income from government grant (2/20 x 30,000,000) 3,000,000

2. Cash 40,000,000
Deferred income-government grant 40,000,000

Building 50,000,000
Cash 50,000,000

Depreciation 2,500,000
Accumulated depreciation (50,000,000 / 20) 2,500,000

Deferred income-government grant 2,000,000
Income from government grant (40,000,000 / 20) 2,000,000


3. Land 50,000,000
Deferred income-government grant 50,000,000

Building 80,000,000
Cash 80,000,000

Depreciation 3,200,000
Accumulated depreciation (80,000,000 / 25) 3,200,000

Deferred income-government grant 2,000,000
Income from government grant (50,000,000 / 25) 2,000,000

4. Cash 10,000,000
Income from government grant 10,000,000
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Valix Finacc vol 1 Problem 15-24
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 15 Problem 15-24

Date Expenditure Months Amount
January 1, 2008 4,000,000 12 48,000,000
April 1, 2008 5,000,000 9 45,000,000
December 1, 2008 3,000,000 1 3,000,000
12,000,000 96,000,000

Average expenditures in 2008 (96,000,000 / 12) 8,000,000
Applicable to specific loan (3,000,000)
Applicable t general loan 5,000,000

Actual expenditures in 2008 12,000,000
Capitalizable interest in 2008
Specific (3,000,000 x 10%) 300,000
General (5,000,000 x 12%) 600,000
Total cost of building 12,900,000

Date Expenditure Months Amount

January 1, 2009 12,900,000 6 77,400,000
March 1, 2009 6,000,000 4 _24,000,000
18,900,000 101,400,000

Average expenditures in 2009 (101,400,000 / 6) 16,900,000
Applicable to specific loan ( 3,000,000)
Applicable to general loan 13,900,000

Note that the construction period in 2009 is only 6 months because the building
was completed on June 30, 2009. Thus, the average expenditures should be for
6 months only.

Actual expenditures in 2009 18,900,000
Capitalizable interest in 2009
Specific (3,000,000 x 10% x 6/12) 150,000
General (13,900,000 x 12% x 6/12) 834,000
Total cost of new building 6/30/2009 19,884,000

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Valix Finacc vol 1 Problem 15-23
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 15 Problem 15-23

Date Expenditure Months Amount
January 1 1,000,000 12 12,000,000
July 1 2,000,000 6 12,000,000
November 1 3,000,000 2 6,000,000
6,000,000 30,000,000

Average expenditures (30,000,000 / 12) 2,500,000

Average expenditures 2,500,000
Applicable to specific loan (1,000,000)
Applicable t general loan 1,500,000

Actual expenditures 6,000,000
Capitalizable interest:
Specific (1,000,000 x 10%) 100,000
General (1,500,000 x 12%) 180,000
Total cost of building 6,280,000
Valix Finacc vol 1 Problem 16-31 to 35
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 16 Problem 16-31 to 35


Problem 16-31 Answer A

All expenditures are capitalized.

Problem 16-32 Answer A

All costs are capitalized.

Problem 16-33 Answer C

Continuing and frequent repairs 400,000
Repainting of the plant building 100,000
Partial replacement of roof tiles 150,000
Repair and maintenance expense 650,000

Problem 16-34 Answer B

Problem 16-35 Answer B
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Valix Finacc vol 1 Problem 16-25 to 30
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 16 Problem 16-25 to 30


Problem 16-25 Answer A

Allocated cost of land (2,400,000 / 6,000,000 x 5,500,000) 2,200,000
Property taxes (2,400 / 6,000 x 250,000) 100,000
Cost of survey 5,000
Total cost of land 2,305,000

Incidentally, the cost of the building is:

Allocated cost (3,600 / 6,000 x 5,500,000) 3,300,000
Property taxes (3,600 / 6,000 x 250,000) 150,000
Renovation 500,000
Total cost of
building 3,950,000
Problem 16-
26 Answer A

Purchase price 4,000,000
Payments to tenants 200,000
Demolition of old building 100,000
Legal fees 50,000
Title insurance 30,000
Proceeds from sale of materials ( 10,000)
Total cost of land 4,370,000

Problem 16-27 Answer D

Land Building
Purchase price of land 600,000
Legal fees for contract 20,000
Architect fee 80,000
Demolition of old building 50,000
Construction cost _______ 3,500,000
Total cost 670,000 3,580,000

Problem 16-28 Answer D

Acquisition price 7,000,000
Option of building acquired 200,000
Repairs 500,000
Total cost 7,700,000

Problem 16-
29 Answer D
Purchase
price 250,000 Shipping
5,000
Installation 10,000
Testing 35,000
Total cost 300,000

Problem 16-30 Answer A
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Valix Finacc vol 1 Problem 16-24
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 16 Problem 16-24


1. Discount on bonds payable 500,000
Machinery 500,000

Interest expense (500,000 / 10 x 9/12) 37,500
Discount on bonds payable 37,500

Accumulated depreciation 75,000
Depreciation 75,000

Depreciation for 9 months 600,000
Depreciation for 12 months (600,000 / 9/12) 800,000
Depreciable cost (800,000 x 5 years) 4,000,000

Per book Adjusted
Cost 5,000,000 4,500,000

Less: Residual value 1,000,000 1,000,000
Depreciable cost 4,000,000 3,500,000


Correct depreciation for 9 months (3,500,000 / 5 x 9/12) 525,000
Less: Depreciation recorded 600,000
Overstatement 75,000

2. Interest expense 300,000
Machinery (3,500,000 3,200,000) 300,000

Machinery 150,000
Freight in 150,000

Accumulated depreciation 30,000
Depreciation 30,000

Depreciation per book 700,000
Correct depreciation (3,350,000 / 5) 670,000
Overstatement 30,000

3. Loss on exchange 390,000
Machinery 390,000

Cost per book 3,000,000
Correct cost
Trade in value 150,000
Add: Cash paid 2,460,000 2,610,000
Overstatement 390,000

Trade in value 150,000
Less: Book value 540,000
Loss on exchange (390,000)

4. Allowance for doubtful accounts 840,000
Loss on exchange accounts receivable 60,000
Treasury
share 900,000

Per book
Machinery 4,200,000
Accounts receivable 4,200,000

Treasury shares 4,200,000
Machinery 4,200,000

Should be
Machinery 3,300,000
Allowance for doubtful accounts (20% x 4,200,000) 840,000
Loss on accounts receivable 60,000
Accounts receivable 4,200,000


Treasury shares 3,300,000
Machinery 3,300,000

The cost of treasury shares acquired for noncash consideration is
usually measured by the recorded amount of the noncash asset
surrendered (SFAS No. 18).
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Valix Finacc vol 1 Problem 16-23
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 16 Problem 16-23


1. Depreciation (60,000 x 3/12) 15,000
Accumulated depreciation 15,000

Accumulated depreciation (480,000 + 15,000) 495,000
Loss on retirement of store equipment 105,000
Store equipment 600,000

2. Depreciation (150,000 x 4/12) 50,000
Accumulated depreciation 50,000

Cash 100,000
Accumulated depreciation (1,050,000 + 50,000) 1,100,000
Loss on sale of office equipment 300,000
Office equipment 1,500,000

3. Depreciation (600,000 x 5/12) 250,000
Accumulated depreciation 250,000

Delivery equipment new 5,000,000
Accumulated depreciation 2,650,000
Cash (5,000,000 750,000) 4,250,000
Delivery equipment old 3,000,000
Gain on exchange (750,000 350,000) 400,000

Original cost 3,000,000
Less: Accumulated depreciation to date (2,400,000 + 250,000) 2,650,000
Book value 350,000

4. Accumulated depreciation 1,200,000
Office equipment 1,200,000

5. Depreciation (900,000 x 9/12) 675,000
Accumulated depreciation 675,000

Accumulated depreciation (2,700,000 + 675,000) 3,375,000
Fire loss 1,125,000
Machinery 4,500,000
Valix Finacc vol 1 Problem 17-31 to 34
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-31 to 34


Problem 17-31 Answer B

Straight line rate (100% / 5 years) 20%
Fixed rate (20% x 2) 40%

2006 depreciation (5,000,000 x 40%) 2,000,000
2007 depreciation (3,000,000 x 40%) 1,200,000
Accumulated depreciation, December 31, 2007 3,200,000
Depreciation for 2008 straight line (5,000,000 3,200,000 / 3) 600,000
Accumulated depreciation, December 31, 2008 3,800,000

Problem 17-32 Answer A

Cost 1/1/2005 7,200,000
Accumulated depreciation 12/31/2007 (7,200,000 / 10 x 3) 2,160,000
Book value 12/31/2007 5,040,000

SYD for the remaining life of 7 years (1 + 2 + 3 + 4 + 5 + 6 + 7) 28

Depreciation for 2008 (5,040,000 x
7/28) 1,260,000
Problem 17-33 Answer B

Annual depreciation (1,536,000 / 8) 192,000

235

Problem 17-34 Answer B

Fixed rate (100% / 4 x 2) 50%

Cost 6,000,000
Depreciation for 2007 (50% x 6,000,000) 3,000,000
Book value 1/1/2008 3,000,000
Residual value ( 600,000)
Maximum depreciation in 2008 2,400,000

Fixed rate in 2008 (100% / 2 x 2) 100%

This means that the computers should be fully depreciated in 2008. Since there is a residual value of
P600,000, the maximum depreciation for 2008 is equal to the book value of P3,000,000 minus the
residual value of P600,000 or P2,400,000.
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Valix Finacc vol 1 Problem 17-26 to 30
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-26 to 30


Problem 17-26 Answer B

The first three fractions are:

2006 10/55
2007 9/55
2008 8/55

Thus, the 2008 depreciation of P240,000 is equal to 8/55.

Depreciable cost (240,000 / 8/55) 1,650,000
Salvage 50,000
Total cost 1,700,000

Problem 17-27 Answer B

April 1, 2006 to March 31, 2007 (5/15 x 3,000,000) 1,000,000
April 1, 2007 to March 31, 2008 (4/15 x 3,000,000) 800,000
Accumulated depreciation, March 31, 2008 1,800,000

Problem 17-28 Answer A

The accumulated depreciation on December 31, 2007 is recomputed following a certain method. The
same is arrived at following the SYD as follows:

SYD = 1 + 2 + 3 + 4 + 5 = 15


2005 (5/15 x 900,000) 300,000
2006 (4/15 x 900,000) 240,000
2007 (3/15 x 900,000) 180,000
Accumulated depreciation 12/31/2007 720,000

Accordingly, the SYD is followed for 2008.

2008 depreciation (2/15 x 900,000) 120,000

Problem 17-29 Answer B

Straight line rate (100% / 8 years) 12.5%
Fixed rate (12.5 x 2) 25%
2007 depreciation (1,280,000 x 25%) 320,000
2008 depreciation (1,280,000 320,000 x 25%) 240,000

Problem 17-30

1. 4,000,000 2,560,000 x 40% (Answer D) 576,000

2. 1,800,000 x 2/15 (SYD) (Answer A) 240,000

3. Sales price 1,700,000
Book value (2,800,000 1,344,000) 1,456,000
Gain (Answer A) 244,000
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Valix Finacc vol 1 Problem 17-20 to 25
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-20 to 25


Problem 17-20 Answer A

Cost of machinery (cash price) 1,100,000
Less: Residual value 50,000
Depreciable cost 1,050,000

Straight line depreciation (1,050,000 / 10) 105,000


Problem 17-21 Answer B

Sales price 2,300,000
Book value:
Cost 4,200,000
Accumulated depreciation (3,600,000 / 5 x 3) 2,160,000 2,040,000
Gain 260,000


Problem 17-22 Answer B

Accumulated depreciation 12/31/2007 3,700,000
Add: Depreciation for 2008 550,000
Total 4,250,000
Less: Accumulated depreciation on property, plant and
equipment retirements (squeeze) 250,000
Accumulated depreciation 12/31/2008 4,000,000


Problem 17-23 Answer B
Depreciable Annual
Cost Salvage cost Life depreciation
A 550,000 50,000 500,000 20 25,000
B 200,000 20,000 180,000 15 12,000
C 40,000 40,000 5 8,000
790,000 720,000 45,000

Composite life = 720,000 / 45,000 16 years
Problem 17-24 Answer D

Invoice price 4,500,000
Cash discount (2% x 4,500,000) ( 90,000)
Delivery cost 80,000
Installation and testing 310,000
Total cost 4,800,000
Salvage value 800,000
Depreciable cost 4,000,000

Rate per unit (4,000,000 / 200,000) 20

Depreciation for 2008 (30,000 x 20) 600,000

Problem 17-25 Answer B

Cost 4,000,000
Accumulated depreciation
2007 (8/36 x 3,600,000) 800,000
2008 (7/36 x 3,600,000) 700,000 1,500,000
Book value, 12/31/2008 2,500,000

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Valix Finacc vol 1 Problem 17-19
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-19


1. Old building (4,672,200 x 10%) 467,220
New building
Direct cost 2,220,000
Fixed (15,000 x 25) 375,000
Variable (15,000 x 27) 405,000
Total cost 3,000,000
3,000,000 x 10% 300,000
Total depreciation 767,220

Fixed rate (100 / 20 x 2) 10%


2. Old machinery (1,380,000 / 10) 138,000
New machinery
Invoice cost 356,000
Concrete embedding 18,000
Wall demolition 7,000
Rebuilding of wall 19,000
Total cost 400,000
400,000 / 10 x 6/12 20,000
Total depreciation 158,000
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Valix Finacc vol 1 Problem 17-18
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-18


1. Beginning balance 875,000
Acquisition (150,000 / 750,000 x 1,250,000) 250,000
Total cost of land 1,125,000

Technically, the land for undetermined use is an investment property.

2. Old (7,500,000 1,644,500 x 8%) 468,440
New (600,000/750,000 x 1,250,000 = 1,000,000 x 8%) 80,000
Depreciation building 548,440

3. 2,250,000 / 10 225,000
400,000 / 10 x 6/12 20,000
Depreciation machinery 245,000

4. Depreciation leasehold improvements (216,000 108,000 / 5 years) 21,600

5. Depreciation land improvements 192,000 / 12 x 9/12) 12,000
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Valix Finacc vol 1 Problem 17-17
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-17


1. Land (350,000 +
450,000) 800,000

Land acquired (380,000 + 25,000 + 45,000) 450,000
2. Depreciation of land improvements (180,000 / 15) 12,000
3. Depreciation of building (4,500,000 1,050,000 x
7.5%) 258,750

231
4. Depreciation of machinery and equipment
(1,160,000 60,000 / 10) 110,000
(300,000 / 10) 30,000 (60,000 / 10 x
6/12) 3,000
143,000

5. Fixed rate (100% / 3 x 1.5) 50%

(1,800,000 1,344,000 x 50%) 228,000
Valix Finacc vol 1 Problem 18-16 to 18
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 18 Problem 18-16 to 18


Problem 18-16 Answer B

Depletable
cost
33,000,000
Depletion for 2007 (33,000,000 / 4,000,000 = 8.25 x 200,000) ( 1,650,000)
Balance 1/1/2008 31,350,000

Production in 2008 225,000
New estimate 12/31/2008 5,000,000
New estimate 1/1/2008 5,225,000

Depletion for 2008 (31,350,000 / 5,225,000 = 6 x
225,000) 1,350,000

Problem 18-17

Question 1 Answer A

Purchase price 14,000,000
Less: Residual value 2,000,000
Depletable cost 12,000,000

Depletion rate (12,000,000 / 1,500,000) 8.00

Depletion for 2008 (150,000 x 8) 1,200,000

Production (25,000 x
6) 150,000

Question 2 Answer C

Production from July 1 to December 31, 2008 (25,000 x 6) 150,000 tons
Annual production (25,000 x 12) 300,000 tons
Estimated life of mine (1,500,000 / 300,000) 5 years

Since the life of the mine is shorter than the life of the equipment, the output method is used in
computing depreciation.



245
Equipment 8,000,000
Less: Residual value 500,000
Depreciable cost 7,500,000

Rate per unit (7,500,000 / 1,500,000) 5.00

Depreciation for 2008 (150,000 x 5) 750,000

Problem 18-18 Answer C

Purchase price 9,000,000
Development costs in 2007 300,000
Total cost 9,300,000
Residual value 1,200,000
Depletable cost 8,100,000

Rate in 2007 (8,100,000 / 2,000,000) 4.05

Depletion for 2007 (200,000 x 4.05) 810,000

Depletable cost 8,100,000
Depletion in 2007 ( 810,000)
Balance 7,290,000
Development costs in 2008 135,000
Depletable cost in 2008 7,425,000

Rate in 2008 (7,425,000 / 1,650,000) 4.50

Depletion for 2008 (300,000 x 4.50) 1,350,000


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Valix Finacc vol 1 Problem 18-12 to 15
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 18 Problem 18-12 to 15


Problem 18-12 Answer B

Acquisition cost 26,400,000
Development cost 3,600,000
Estimated restoration cost 1,800,000
Total cost 31,800,000
Less: Residual value 3,000,000
Depletable cost 28,800,000

Rate per unit (28,800,000 / 1,200,000) 24

Depletion for 2008 (60,000 x 24) 1,440,000


Problem 18-13 Answer C

Depletion rate per unit (9,200,000 / 4,000,000) 2.30

Problem 18-14 Answer C

Rate per unit (46,800,000 3,600,000 / 2,160,000) 20

Depletion in cost of goods sold (240,000 x 20) 4,800,000

Problem 18-15 Answer D

Acquisition cost 10,000,000
Less: Residual value 3,000,000
Depletable cost 7,000,000
Less: Accumulated depletion 12/31/2007
(7,000,000 / 10,000,000 = .70 x 4,000,000) 2,800,000
Remaining depletable cost
1/1/2008 4,200,000
New depletion rate (4,200,000 / 7,500,000) .56

Depletion for 2008 (1,500,000 x .56) 840,000
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Valix Finacc vol 1 Problem 18-11
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 18 Problem 18-11



2008 No depletion because there is no production.

2009 Purchase price 28,000,000
Estimated restoration cost 2,000,000
Development cost 2008 1,000,000
Development cost 2009 1,000,000
Total cost 32,000,000
Residual value ( 5,000,000)
Depletable cost 27,000,000

Rate in 2009 (27,000,000 / 10,000,000) 2.70

Depletion in 2009 (3,000,000 x 2.70) 8,100,000
2010 Tons extracted in 2010 3,500,000
Tons remaining in 12/31/2010 2,500,000
Total estimated output 1/1/2010 6,000,000

New rate in 2010 (27,000,000 8,100,000/6,000,000) 3.15

Depletion in 2010 (3,500,000 x 3.15) 11,025,000
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Valix Finacc vol 1 Problem 18-10
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 18 Problem 18-10



1. Purchase price 50,000
Road construction 5,000,000
Improvements and development costs 750,000
Total cost 5,800,000
Residual value ( 600,000)
Depletable cost 5,200,000

Depletion rate per unit (5,200,000 / 4,000,000) 1.30
Depletion for 2008 (500,000 x 1.30) 650,000

Depletable cost 5,200,000
Depletion in 2008 ( 650,000)
Remaining depletable cost 4,550,000
Development costs in 2009 1,300,000
Total depletable cost 1/1/2009 5,850,000

Original estimated tons 4,000,000
Additional estimate 3,000,000
Total estimated tons 7,000,000
Extracted in 2008 ( 500,000)
Remaining tons 1/1/2009 6,500,000

New depletion rate per unit (5,850,000 / 6,500,000) .90

Depletion for 2009 (1,000,000 x
.90) 900,000
2. Cost of buildings 2,000,000
Residual value ( 200,000)
Depreciable cost 1,800,000

Depreciation rate per unit (1,800,000 / 4,000,000) .45

Depreciation for 2008 (500,000 x .45) 225,000

In the absence of any statement to the contrary, the output method is used in computing depreciation
of mining equipment.

Depreciable cost 1,800,000
Depreciation for 2008 ( 225,000)
Remaining depreciable cost 1,575,000
Additional building in 2009 375,000
Total depreciable cost 1/1/2009 1,950,000

New depreciation rate per unit (1,950,000 / 6,500,000) .30

Depreciation for 2009 (1,000,000 x .30) 300,000
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Valix Finacc vol 1 Problem 18-9
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 18 Problem 18-9


1. Cash (50,000 x 110) 5,500,000
Share capital (50,000 x 100) 5,000,000
Share premium 500,000

2. Resource property 3,000,000
Cash 3,000,000

3. Mining equipment 800,000
Cash 800,000

4. Cash (85,000 x 50) 4,250,000
Sales 4,250,000

5. Mining and other direct cost 2,268,000
Administrative expenses 500,000
Cash 2,768,000

6. Depletion 270,000
Accumulated depletion (3,000,000 / 1,000,000 x 90,000) 270,000

7. Depreciation (90,000 x .80) 72,000
Accumulated depreciation - mining equipment 72,000

Depreciation rate (800,000 / 1,000,000) = .80

8. Inventory, December 31 (5,000 x 29) 145,000
Profit and loss 145,000

Mining labor and other direct costs 2,268,000
Depletion 270,000
Depreciation 72,000
Total production costs incurred 2,610,000
Divide by number of units extracted 90,000
Unit cost 29



Multinational Company
Income Statement
Year ended December 31, 2008

Sales 4,250,000
Cost of sales
Mining labor and other direct costs 2,268,000
Depletion 270,000
Depreciation 72,000
Total production cost 2,610,000
Less: Inventory, December 31 145,000 2,465,000
Gross income 1,785,000
Administrative expenses 500,000
Net income 1,285,000

Multinational Company
Statement of Financial Position
December 31, 2008

Assets
Current assets:
Cash 3,182,000
Inventory 145,000 3,327,000
Noncurrent assets:
Resource property 3,000,000
Less: Accumulated depletion 270,000 2,730,000
Mining equipment 800,000
Less: Accumulated depreciation 72,000 728,000 3,458,000
Total assets 6,785,000

Equity
Share capital 5,000,000
Share premium 500,000
Retained earnings 1,285,000
Total equity 6,785,000

Retained earnings 1,285,000
Add: Accumulated depletion 270,000
Total 1,555,000
Less: Unrealized depletion in ending inventory (5,000 x 3) 15,000
Maximum dividend 1,540,000



Retained earnings 1,285,000
Capital liquidated 255,000
Dividends payable 1,540,000
Valix Finacc vol 1 Problem 19-36 to 38
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 19 Problem 19-36 to 38


Problem 19-36 Answer C

Cost 12/31/2004 2,800,000
Accumulated depreciation 8/31/2008 (2,400,000 / 96 months x 44) 1,100,000
Book value 8/31/2008 1,700,000
Fair value 1,500,000Impairment
loss 200,000
259

Problem 19-37 Answer C

Carrying value 28,000,000
Decommissioning cost ( 8,000,000)
Adjusted carrying value 20,000,000
Fair value less cost to sell higher (20,000,000 less 1,000,000) 19,000,000
Impairment loss 1,000,000

Value in use 26,000,000
Decommissioning cost ( 8,000,000)
Adjusted value in use 18,000,000


Problem 19-38 Answer C

Carrying value 12/31/2007 7,000,000
Depreciation for 2008 (20%) (1,400,000)
Carrying value 12/31/2008 5,600,000
Carrying value 12/31/2008 (assuming no impairment) 7,200,000
Reversal of impairment loss 1,600,000
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Labels: Finacc Volume 1 Chap 19, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 19-30 to 35
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 19 Problem 19-30 to 35


Problem 19-30 Answer C

Cost, January 1, 2005 800,000
Accumulated depreciation, December 31, 2007 (100,000 x 3) 300,000
Book value, December 31, 2007 500,000
Recoverable value 200,000
Impairment loss 300,000

The loss is recorded as follows:

Impairment loss 300,000
Accumulated depreciation 300,000

Cost 800,000
Accumulated depreciation (300,000 + 300,000) 600,000
Recoverable value, January 1, 2008 200,000
Depreciation for 2008 (200,000 / 5) 40,000
Book value, December 31, 2008 160,000

Problem 19-31 Answer B

From August 31, 2005 to May 31, 2008 is a period of 33 months. Thus, the remaining life of the machine
is 27 months, 60 months original life minus 33.

Depreciation for the month of June 2008 (1,350,000 / 27 months) 50,000


Cost 3,200,000
Accumulated depreciation 5/31/2008 (3,200,000 500,000 x 33/60) 1,485,000
Book value 5/31/2008 1,715,000
Fair value 1,350,000
Impairment loss 365,000
Problem 19-
32 Answer B

Cost January 1, 2004 1,000,000
Accumulated depreciation, December 31, 2007 (900,000 / 10 x 4) 360,000
Book value, December 31, 2007 640,000
Depreciation for 2008 (640,000 40,000 / 4) 150,000
Book value, December 31, 2008 490,000

Problem 19-33 Answer C

Book value, 1/1/2008 2,400,000
Depreciation for 2008 (1,600,000 / 4) 400,000
Book value, 12/31/2008 2,000,000
Sales price-recoverable value 650,000Impairment
loss 1,350,000

Problem 19-34 Answer C

Depreciation for 2008 (10% x 2,000,000) 200,000

Cost 1/2/2004 2,000,000
Accumulated depreciation - 12/31/08 (200,000 x 5) 1,000,000
Book value-12/31/2008 1,000,000
Estimated cost of disposal 50,000
Impairment loss 1,050,000

Problem 19-35 Answer C

Cost 2,000,000
Accumulated depreciation 1/1/2008 (2,000,000 100,000 / 10 x 2.5) 475,000
Book value 1/1/2008 1,525,000
Fair value 600,000
Impairment loss 925,000
J G F 15,000,000 .857 12,855,000
2010 15,000,000 .794 11,910,000
2011 12,000,000 .735 8,820,000
60,000,000
Total value in use 50,325,000

2. The recoverable amount is the value in use of P50,325,000 because this is higher than the
fair value less cost to sell of
P48,000,000.

3. Impairment loss 14,675,000
Accumulated depreciation (65,000,000 50,325,000) 14,675,000

4. Depreciation 12,581,250
Accumulated depreciation (50,325,000 / 4) 12,581,250

Problem 19-20

1. Depreciation 1,000,000
Accumulated depreciation (10,000,000 / 10) 1,000,000

2. Depreciation 1,000,000
Accumulated depreciation 1,000,000

3. Impairment loss 2,000,000
Accumulated depreciation 2,000,000

4. Depreciation 750,000
Accumulated depreciation (6,000,000 / 8) 750,000

5. Accumulated depreciation 1,750,000
Gain on impairment recovery 1,750,000

Cost 1/1/2006 10,000,000
Accumulated depreciation (10,000,000 / 10 x 2) 2,000,000
Book value 12/31/2007 8,000,000
Impairment loss 2007 2,000,000
Adjusted book value 12/31/2007 6,000,000
Depreciation 2008 (6,000,000 / 8) 750,000
Book value 12/31/2008 5,250,000

Cost 1/1/2006 10,000,000
Accumulated depreciation (10,000,000 / 10 x 3) 3,000,000
Book value 12/31/2008 (assuming no impairment) 7,000,000
Recorded book value 5,250,000
Gain on reversal of impairment 1,750,000

The fair value or recoverable value of P7,500,000 cannot exceed the book value that would have been
determined assuming no impairment is recognized.
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Labels: Finacc Volume 1 Chap 19, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 19-29
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 19 Problem 19-29

The primary purpose of the building is to serve as a corporate asset supporting Litmus Companys
manufacturing operations. Therefore, the building in itself cannot be considered to generate cash
inflows that are largely independent of the cash inflows from the entity as a whole. In this case, the cash
generating unit is Litmus Company as a whole.

The building is not held for investment. Thus, it is not appropriate to determine the value in use of the
building based on the cash inflows of related rent.

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Labels: Finacc Volume 1 Chap 19, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 19-26
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 19 Problem 19-28

Case 1
1. A is separate cash generating unit because there is an active market for As products.

2. Although there is an active market for the products of B and C, cash inflows from B and
C depend on the allocation of production across two countries. It is unlikely that cash
inflows from B and C can be determined individually. Therefore, B and C, together
should be treated as a cash generating unit.


Case 2

a. A cannot be treated as a separate cash generating unit because its cash inflows depend on the
sales of the final product by B and C, since there is no active market for As product.

b. As a consequence, A, B and C, together, and therefore, Maximus Company, as a whole, should be
treated as the largest single cash generating unit.

Posted by Louie Lansang at 5:03 AM No comments:
Labels: Finacc Volume 1 Chap 19, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 19-27
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 19 Problem 19-27

It is likely that the recoverable amount of an individual magazine title can be assessed. Even though the
level of advertising income for a title is influenced to a certain extent by the other titles in the customer
segment, cash inflows from direct sales and advertising are identifiable for each title. In addition,
decisions to abandon titles are made on an individual basis.

Accordingly, the individual magazine titles generate cash inflows that are largely independentfrom one
another and therefore, each magazine title is a separate cash generating unit.
Posted by Louie Lansang at 5:02 AM No comments:
Labels: Finacc Volume 1 Chap 19, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 19-26
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 19 Problem 19-26


All Unimarts stores are in different locations and probably have different customer profile. So although
Smart is managed at the corporate level, Smart generates cash inflows that are largely
independent from those of the other Unimarts stores. Therefore, it is likely that Smart in itself is a cash
generating unit.
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Labels: Finacc Volume 1 Chap 19, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 19-25
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 19 Problem 19-25


1. Carrying amount 16,000,000
Value in use 11,000,000
Impairment loss 5,000,000

2. Allocation of impairment loss

Building (8/16 x 5,000,000) 2,500,000
Equipment (4/16 x 5,000,000) 1,250,000
Inventory (4/16 x 5,000,000) 1,250,000
5,000,000

Observe that after allocating the P2,500,000 loss to the building, the carrying amount of the building
would be P5,500,000 which is lower than its fair value of P6,500,000.

Accordingly, only P1,500,000 loss is allocated to the building and the balance of P1,000,000 is
reallocated to the equipment and inventory prorata.



Building Equipment Inventory
Allocated loss 2,500,000 1,250,000 1,250,000
Reallocated loss (1,000,000)
(4/8 x 1,000,000) 500,000
(4/8 x 1,000,000) _________ _________ 500,000
Impairment loss 1,500,000 1,750,000 1,750,000

3. Impairment loss 5,000,000
Accumulated depreciation building 1,500,000
Accumulated depreciation equipment 1,750,000
Inventory 1,750,000
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Labels: Finacc Volume 1 Chap 19, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 19-24
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 19 Problem 19-24


1. Total carrying amount 5,000,000
Value in use 3,600,000
Impairment loss 1,400,000

2. Impairment loss allocated to goodwill 500,000
Impairment loss allocated to the other assets 900,000
1,400,000

When an impairment loss is recognized for a cash generating unit, the loss is
allocated to the assets of the unit in the following order:

a. First, to the goodwill, if any.
b. Then, to all other assets of the unit prorata based on their carrying amount.

Carrying amount Fraction Loss
Building 2,000,000 20/45 400,000
Inventory 1,500,000 15/45 300,000
Trademark 1,000,000 10/45 200,000
4,500,000 900,000

3. Impairment loss 1,400,000
Goodwill 500,000
Accumulated depreciation building 400,000
Inventory 300,000
Trademark 200,000
Valix Finacc vol 1 Problem 20-46 to 50
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-46 to 50


Problem 20-46 Answer C

Depreciation of equipment 135,000
Materials used 200,000
Compensation costs of personnel 500,000 Outside
consulting fees 150,000 Indirect costs
allocated 250,000
1,235,000

Problem 20-47 Answer A

Modification to the formulation of a chemical product 135,000
Design of tools, jigs, molds and dies 170,000
Laboratory research 215,000
Total research and development expense 520,000


Problem 20-48 Answer D

All costs are charged to R and D expense.


Problem 20-49 Answer A

Trademark 3,000,000
Value in use (120,000 / 6%) 2,000,000
Impairment loss 1,000,000

Patent 2,000,000
Amortization for 2008 (2,000,000 / 5) 400,000
Book value 12/31/2008 1,600,000
Value in use (500,000 x 3.47) 1,735,000
Impairment loss -_ _

Problem 20-50 Answer B

Carrying amount of net assets 16,000,000
Value in use (8,000,000 x 1.5) 12,000,000
Impairment loss applicable to goodwill 4,000,000
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Labels: Finacc Volume 1 Chap 20, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 20-41 to 45
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-41 to 45


Problem 20-41 Answer A


Problem 20-42 Answer C

Downpayment 2,000,000
Present value of annual payment for 4 years (1,000,000 x 2.91) 2,910,000 Cost of
franchise 4,910,000

Problem 20-43 Answer A

Design costs 1,500,000
Legal fees of registering trademark 150,000
Registration fee with Patent Office 50,000
Total cost of trademark 1,700,000


Problem 20-44 Answer B

Original lease 12 years
Extension 8
Total life 20
Less: Years expired (2006 and 2007) 2
Remaining life 18 years

Life of improvement (shorter) 15 years

Leasehold improvement 540,000
Less: Depreciation for 2008 (540,000 / 15) 36,000
Book value 504,000


Problem 20-45 Answer D

Depreciation (3,600,000 / 6) 600,000
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Labels: Finacc Volume 1 Chap 20, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 20-35 to 40
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-35 to 40

Problem 20-35 Answer C

Cost 357,000
Accumulated amortization from 2005 to 2007 (357,000 / 15 x 3) 71,400
Book value 12/31/2007 285,600
Amortization for 2008 (285,600 / 7) 40,800
Book value 12/31/2008 244,800


Problem 20-36 Answer C

Cost 1/1/2003 6,000,000
Accumulated depreciation 12/31/2007 (6,000,000 / 15 x 5) 2,000,000
Book value 1/1/2008 4,000,000

Amortization for 2008 (4,000,000 / 5) 800,000


Problem 20-37 Answer C

Cumulative earnings 550,000
Less: Gain on sale 50,000
Adjusted cumulative earnings 500,000


Average earnings (500,000 / 5) 100,000
Divide by capitalization rate 10%
Net assets including goodwill 1,000,000
Less: Net assets before goodwill 750,000
Goodwill 250,000

Problem 20-38 Answer C

Net assets 1,800,000
Multiply by excess rate (16% minus 10%) 6%
Excess earnings 108,000
Multiply by present value factor 3.27
Goodwill 353,160

Problem 20-39 Answer D

Purchase price 5,000,000
Less: Goodwill 500,000
Net assets before goodwill 4,500,000

Estimated annual earnings (squeeze) 550,000
Less: Normal earnings (4,500,000 x 10%) 450,000
Excess or superior earnings 100,000
Divide by capitalization rate 20%
Goodwill 500,000

Problem 20-40 Answer C

Accounts receivable 2,000,000
Inventory 500,000
Equipment 500,000
Short-term payable (2,000,000)
Net assets at fair value 1,000,000

Acquisition cost 5,000,000
Net assets at fair value (1,000,000)
Goodwill 4,000,000
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Labels: Finacc Volume 1 Chap 20, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 20-34
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-34

1. Designing and planning 1,000,000
Code development 1,500,000
Testing __500,000
Total R and D expense in 2008 3,000,000

The cost of producing the product master of P2,500,000 is capitalized as
software cost to be subsequently amortized.

1. Cost of producing the software program in 2009 1,000,000
Amortization of software cost (2,500,000 / 4) 625,000
Total expense in 2009 1,625,000
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Labels: Finacc Volume 1 Chap 20, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 20-33
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-33


1. Product costs which are associated wit inventory items are:

Duplication of computer software and training materials 2,500,000
Packaging product 900,000
Total inventory 3,400,000

2. The costs incurred from the time of technological feasibility to the time when
product costs are incurred should be capitalized as computer software cost.


Other coding costs after establishment of technological feasibility 2,400,000
Other testing costs after establishment of technological feasibility 2,000,000
Costs of producing product masters for training materials 1,500,000
Total costs to be capitalized 5,900,000

3. Completion of detail program design 1,300,000
Cost incurred for coding and testing to establish technological feasibility 1,000,000
Total costs charged as expense 2,300,000
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Labels: Finacc Volume 1 Chap 20, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 20-32
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-32


12/31/2008 R and D expense 2,500,000
Cash 2,500,000

1/1/2009 R and D expense 1,200,000
Cash 1,200,000

7/1/2009 R and D expense 500,000
Cash 500,000

11/1/2009 Patent 350,000
Cash 350,000

11/15/2009 Patent 800,000
Cash 800,000

12/31/2009 Patent 100,000
Cash 100,000
Posted by Louie Lansang at 5:54 AM No comments:
Labels: Finacc Volume 1 Chap 20, Finacc Volume 1 Solutions, Valix Solutions
Valix Finacc vol 1 Problem 20-31
Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-31

1. Total carrying amount 5,000,000
Value in use 4,230,000
Impairment loss 770,000

2. Impairment loss 770,000
Goodwill 500,000
Accumulated depreciation building (25/45 x 270,000) 150,000
Inventory (15/45 x 270,000) 90,000
Trademark (5/45 x 270,000) 30,000