1.

Kimberly Company purchased from a friend on June 29, 2014 a 10% 5-year
investment in term bonds with P5,000,000 face value with interest every June 30
and December 31 of every year. The bond was issued on January 2, 2014 and the
company plans to hold it to maturity. The effective rate at the date of issuance was
12% and 8% at the time of purchase before direct cost and 7% after direct cost.
How much is the cash used on the date of purchase?
1. P5,820,577
2. P5,621,577
3. P5,570,577
4. P5,321,577
2. Charlene Company purchased a customer list and an ongoing research project for a
total of P400,000. Charlene Company uses the expected cash flow approach for
estimating the fair value of these two intangibles. The appropriate interest rate is
7%. The potential future cash flows from the two intangibles, and their associated
probabilities, are as follows:
Customer List
Outcome 1 20% probability of cash flows of P50,000 at the end of each year for 5
years
Outcome 2 30% probability of cash flows of P30,000 at the end of each year for 4
years
Outcome 3 50% probability of cash flows of P10,000 at the end of each year for 3
years
Ongoing Research Project
Outcome 1 10% probability of cash flows of P500,000 at the end of each year for
10 years
Outcome 2 10% probability of cash flows of P10,000 at the end of each year for 4
years
Outcome 3 80% probability of cash flows of P100 at the end of each year for 3
years
How much should be recognized as customer list?
1. P400,000
2. P322,975
3. P84,609
4. P77,025
3. Charmagne Corporation was organized on April 1, 2010 and is under the 30% tax
rate. The corporation also follows a fiscal year accounting. After 4 years of unstable
operation, the equity section of Charmagne Company on March 31, 2014 is
presented below:
Contributed Capital
Share
Capital,
P10
par,
1,000,000
P5,000,000
authorized, 500,000 issued and outstanding
Share premium
2,500,000
Retained earnings
3,000,000
On April 15 2014, Charmagne Company acquired 50,000 treasury shares at a cost of
P20 per share. On May 1, 2014, the entity issued 20% stock dividend and market
value of the share was P20. On October 1, 2014, the company declared a P2 cash
dividends payable on August 1, 2014. On March 31, 2015 all treasury shares were
sold at P12 per share. The entity reported operating income of P1,000,000. What
amount should be reported as unappropriated retained earnings?
1. P4,180,000

2. P4,200,000
3. P3,880,000
4. P3,900,000
4. On January 1, 2014, Nicole Company issued a 5-year 10% bonds with P5,000,000
face value and interest are payable semi-annually starting June 30. The effective
rate before bond issue cost is 12% and effective rate after bond issue cost is 13%.
Nicole Company elects to use the effective interest of amortization for the bonds.
On December 31, 2015, what is the unamortized portion of the bond issue cost?
(use 4 decimal places of present value factors)
1. P323,580
2. P102,795
3. P363,250
4. P117,575
5. Queen Company incurred the following costs during the current year 2014:
Option fee for land acquired
P10,000
Option fee for land not acquired
10,000
Taxes in arrears on building on land
50,000
Payment for land
1,000,000
Demolition of old building, including of salvage value of
110,000
P10,000
Architect fee
230,000
Payment to city hall for approval of building construction
120,000
Contract price for factory building
5,000,000
Safety fence around the construction area
35,000
Safety inspection on building
30,000
Removal of safety fence after completion of building
20,000
New fence surrounding the factory
80,000
Driveways and parking bays
550,000
What is the cost of land and building for the year 2014?
Land
Building
1. P1,060,000 P5,435,000
2. P1,150,000 P5,515,000
3. P1,160,00 P5,435,00
0
0
4. P1,170,000 P5,515,000
6. Paola Company has the following investments for 2014:
Investments
Cost
Fair value
Fair value
Fair value
2014
2015
2016
Trading
1,000,00
1,200,000
500,000
600,000
securities
0
Not held for
2,000,00
1,800,000
1,500,000
1,200,000
trading
0
All fair values are for the end of each year.
The following information relates to trading securities:
The cost is net of direct cost of P100,000 in relation to purchasing the
investment.
Sold 1/4 of the trading securities at the beginning of 2015 for P300,000.
Purchased additional trading securities for P100,000 at the beginning of
2016.
Sold 1/2 of the trading securities at the beginning of 2017 for P500,000.
The following information relates to not held for trading:

The cost is net of direct cost of P200,000 in relation to purchasing the

investment.
Sold 1/5 of the securities for P500,000 at the beginning of 2015.
Sold 1/2 of the securities for P1,000,000 at the beginning of 2017.
How much is the net effect on equity of the transactions for 2015?
1. P200,000 decrease
2. P340,000 decrease
3. P260,000 decrease
4. P140,000 increase
7. Using the preceding number, how much is the net effect on equity of the
transactions for 2017?
1. P600,000 increase
2. P600,000 decrease
3. P560,000 increase
4. P560,000 decrease
8. Marren Company received a government grant related to a depreciable asset on
January 1, 2009 in the amount of P750,000. This grant was deducted from the
capital cost of the asset purchased at a total amount of P4,500,000 acquired on the
same date with a useful life of 10 years and no residual value. On January 1, 2014,
the entire P1,000,000 became payable due to breach of contract by Marren
Company. What is the depreciation expense to that should be recognized for
December 31, 2014?
1. P1,200,000
2. P1,125,000
3. P825,000
4. P450,000
9. Ivy Companys inventories were totally destroyed by fire on December 31, 2014.
There were no purchases from the time of fire until December 31, 2014.
January 1
December 1
Raw materials
450,000
0
Manufacturing Supplies
30,000
25,000
Goods in process
925,000
1,050,000
Finished goods
1,100,000
1,125,000
The following are the data for the current year:
Sales
P6,000,000
Purchases of raw materials
2,000,000
Purchases of factory supplies
150,000
Freight of raw materials
75,000
Direct labor
1,100,000
Manufacturing overhead is 75% of direct labor and gross profit rate is 35% of sales.
What is the cost of the raw materials destroyed by fire?
1. P555,000
2. P400,000
3. P375,000
4. P325,000
10.On January 1, 2014, Eimeren Company purchased 50,000 units of goods at P20 per
unit. During the year, the entity sold 40,000 units at P36 per unit. The entity paid
P140,000 for operating expenses. The current replacement cost of the inventory on
December 31, 2014 is P30 per unit. On December 31, 2014, what amount of net
income under current cost accounting should be reported?
1. P500,000
2. P600,000
3. P640,000

4. P740,000
11.Jolina Company has an oil platform in the sea. Jolina Company has to decommission
the platform at the end of its useful life, and a provision was set up at the
commencement of production. The carrying amount of the provision is P8 million.
Jolina Company has received an offer of P20 million (selling costs P 1 million) for the
rights to the oil platform, which reflects the fact that the owners have to
decommission it at the end of its useful life. The value in use of the oil platform is
P26 million ignoring decommissioning costs. The current carrying amount of the oil
platform is P28 million. How much should be recognized as impairment loss?
1. P10,000,000
2. P2,000,000
3. P1,000,000
4. P0
12.In January 1, 2014, Maica Company purchased property with natural resources for
P28,000,000. The property had a residual value of P5,000,000. However, the entity
is required to restore the property to its original condition at an amount of
P2,000,000. In 2014, the entity spent P5,000,000 for the construction of a road,
exploration cost of P250,000 and, improvements and other development cost for
the wasting asset of P750,000. In 2015, the entity constructed a building at a cost
of P2,000,000 with residual value of P200,000 and useful life of 5 years. In January
1, 2016, the entity spent P500,000 and P1,000,000 for the improvements and other
development cost for the building and wasting asset respectively. In December 31,
2016, the fair value less cost to sell of the wasting asset was P15,000,000 and
P500,000 for the building with no residual value for both. How much is the depletion
expense for 2016?
1. P6,670,000
2. P5,165,000
3. P5,420,000
4. P4,585,000
13.Using the preceding number, how much is the depreciation expense of the building
for 2016?
1. P535,000
2. P485,000
3. P360,000
4. P125,000
14.During 2014, Joan Company is defending a patent infringement case filed against it
by Anna Company. The legal counsel of the entity believes that the court will
dismiss the case is 20% chance and Joan Company will not pay any damages.
However, if the ruling of the court is against the company, the legal counsel Joan
Company will pay damages of P50,000,000 with 30% chance and P70% chance of
paying P100,000,000 worth of damages to Failure Company. The court will render a
decision in late December 2013 and Anna Company has no means of settling it out
of court. A 10% risk adjustment factor to the probability-weighted expected cash
flows is considered appropriate to reflect the uncertainties in the cash flow
estimates. An appropriate discount rate of 12% per year was considered. What is
the amount of the provision for the lawsuit?
1. P75,000,000
2. P68,000,000
3. P66,572,000
4. P60,520,000
15.Colin Company wanted to establish a leasing company by starting to purchase a
specialized packing equipment at a cost of P1,840,000 to packing companies. The

equipment has a residual value of P340,000 and useful life of 7 years. Colin
company provides to packers the following terms:
The packing equipment is to be leased for 6 years, after which it transfers to
the lessee.
Annual payment starts immediately on the first day.
Implicit interest rate of 12% is used by Anguish Company.
On January 2, 2014 Colin Company entered into a lease agreement with Lit
Company. Lit Company started using the equipment on April 1, 2014.
What is the annual lease payment required to yield the desired return? (Closest
answer)
1. P400,000
2. P326,000
3. P447,600
4. P364,900
16.On December 31, 2014, Zwitsel Company had capitalized costs for a new computer
software product with an economic life of 5 years. Sales for 2015 were 30% of
expected total sales of the software, which can be determined reliably.
At
December 31, 2014, the software had a net realizable value equal to 90% of the
capitalized cost. What percentage of the original capitalized cost should be
reported as the net amount on Zwitsel Companys December 31, 2014 statement of
financial position?
1. 70%
2. 72%
3. 80%
4. 90%
17.Karen Company and its subsidiaries own the following properties that are accounted
for in accordance with PAS 40:
Land held for undetermined use
P5,000,000
A vacant land to be leased out under finance lease
3,000,000
Property held by real estate subsidiary in the ordinary course
2,000,000
of business
Property held for use in production
4,000,000
Building owned by subsidiary of which security and
1,500,000
maintenance is provided to lessees
Land leased to subsidiary under operating lease
2,500,000
Property under construction for use as investment property
6,000,000
Land held for future factory site
3,500,000
Machinery leased out under operating lease
1,000,000
What is the total investment property that should be reported in the consolidated
statement of financial position of Karen Company?
a. P15,500,000
b. P12,000,000
c. P10,500,000
d. P9,500,000
18.Hazel Company provided the following information on January 1, 2014 related to its
property, plant and equipment:
Life
Cost
Land
300,000
Building
20 years
3,000,000
Acc. Dep. Bldg.
(375,000)
Machinery
10 years
4,000,000
Acc. Dep. Machinery
(1,000,000)

Carrying amount
5,925,000
There were no additions or disposals during 2014. On June 30, 2014, the
replacement cost of land, building and machinery were P400,000, 5,000,000, and
6,500,000 respectively. On December 31, 2016, the replacement cost of land,
building and machinery were P300,000, P3,000,000, and P4,000,000 respectively.
How much is the revaluation surplus on December 31, 2014?
1. P4,275,000
2. P3,550,000
3. P3,375,000
4. P2,825,000
19.On December 31, 2014 and 2015, Jubelle Company had 50,000 issued and
outstanding preference shares with P100 par value and 10% cumulative. There were
no dividends in arrears on December 31, 2013 and Jubelle Company did not declare
dividends during 2014. For the year 2015, the entity paid cash dividends in the
amount of P250,000 on its preference shares. How will the dividends in arrears for
the preference shares be reported for 2015?
1. Accrued liability of P750,000
2. Disclosure of P750,000
3. Accrued liability of P500,000
4. Disclosure of P500,000
20.The following are taken from the December 31, 2014 trial balance of Cialyn
Company:
Sales
P8,100,000
Share in profit of associate
135,000
Increase in inventory of finished goods
225,000
Raw materials used
3,150,000
Other income
45,000
Interest income
180,000
Employee benefit expense
1,350,000
Translation loss of foreign operation
270,000
Finance cost
315,000
Impairment
720,000
Other expense
405,000
Depreciation
405,000
Income tax expense
675,000
What is the operating income for the year ended 2014?
1. 2,340,000
2. 2,025,000
3. 1,665,000
4. 1,395,000
21.Alexa Company started to manufacture in 2014 copy machines that are sold on the
installment basis. Alexa Company recognizes revenue when equipment is sold for
financial reporting purposes, and when installment payments are received for tax
purposes. In 2014, Alexa Company recognized gross profit of P6,000,000 for
financial reporting purposes, and P1,500,000 for tax purposes. The amounts of
gross profit expected to be recognized for tax purposes in 2015 and 2016 are
P2,500,000 and P2,000,000, respectively. Alexa Company guarantees the copy
machines for two years. Warranty costs are recognized on accrual basis for
financial accounting purposes and when paid for tax purposes. Warranty expense
accrued in 2014 is P2,500,000, but only P500,000 of warranty cost is paid in 2014.
It is expected that in 2015 and 2016, P1,000,000 and P1,000,000, respectively, of
warranty costs will be paid. In addition during 2014, P500,000 interest, net of 20%
final income tax, was received and earned, and P200,000 insurance premium on life

insurance policies that covered the life of Alexa Companys president was paid.
Alexa Company is the beneficiary for this policy.
The tax rate is 35%. Pretax accounting income in 2014 was P2,000,000. Assuming
any 2014 net loss will be carried to 2015, how much is the deferred tax asset to be
recognized as of December 31, 2014?
1. P700,000
2. P770,000
3. P980,000
4. P1,575,000
22.On January 1, 2014, Elizabeth Company granted its 10 employees 5,000 share
appreciation rights for each employee for past services. The rights are exercisable
immediately and expire on December 31, 2015. The employees exercised all the
rights on December 31, 2015 and are entitled to receive cash in excess of market
price on grant date over market price on exercise date. The market price of the was
P100 on January 1, 2014 ,P115 on December 31, 2014 and December 31, 2015
P110. What amount should be recognized as salaries expense for December 31,
2015?
1. P0
2. P250,000
3. P500,000
4. P750,000
23.Lichelle Company had the following outstanding liabilities during 2013 and 2014:
Amount
Interest Rate
Construction Loan
10,000,000
10%
Bonds Payable
5,000,000
12%
Notes Payable
4,000,000
8%
Additional information:
The liabilities are all dated January 2, 2013.
The company was granted a government grant of P5,000,000 on January 1,
2013 to finance the construction the building and treated as a deduction to
the cost of the building.
The building is estimated to have 25 years useful life with 5,000,000 residual
value and depreciated using Sum of the Years Digit.
The construction of the building began on March 31, 2013 and was completed
on October 1, 2014 with the following expenditures:
April 2, 2013
P1,500,000
July 7, 2013
3,000,000
October 19, 2013
3,000,000
December 29, 2013
1,000,000
April 8, 2014
4,500,000
June 27, 2014
1,800,000
How much is the cost of the building on October 1, 2014?
1. P11,518,500
2. P11,591,270
3. P11,837,944
4. P16,591,270
24.Using the preceding number, how much is the depreciation expense for 2014?
1. P222,909
2. P131,499

3. P126,755
4. P125,356
25.Using the preceding number, how much is the government grant balance for
December 31, 2014?
1. P4,903,846
2. P4,800,000
3. P4,615,384
4. P0
26.On January 1, 2014, Lady Company classified one of its noncurrent asset as held for
sale which was purchased on January 3, 2010 at a cost of P5,000,000 with useful life
of 10 years. Fair value of the equipment on January 1, 2014 is P3,200,000 excluding
cost to sell of P200,000. On December 31, 2014, fair value of the equipment is
P3,500,000 including cost to sell of P500,000 and on the date the equipment was
removed from being held for sale. What should be the value of the equipment after
ceasing to be held for sale on December 31, 2014?
1. P2,500,000
2. P3,000,000
3. P3,500,000
4. P4,000,000
27.Louise Company provided the following balances for 2014:
Wasting asset at cost
60,000,000,000
Accumulated depletion
15,000,000,000
Capital liquidated
11,250,000,000
Retained earnings
7,500,000,000
Depletion based on 100,000,000 units at P37.5
3,750,000,000
Inventory of resources deposit (20,000,000 units)
20,000,0000
What is the maximum dividend that can be declared at the end of 2014?
1. P33,750,000,000
2. P22,500,000,000
3. P18,750,000,000
4. P10,500,000,000
28.Arlene Company had the following capital during 2013 and 2014:
Preference share capital, P100 par, 10% cumulative,
100,000 shares
Ordinary share capital, P100 par, 400,000 shares

P10,000,000
40,000,000

Arlene Company reported profit of P8,000,000 for the year ended December 31, 2014.
Arlene Company paid no preference share dividends during 20013 and paid P1,500,000
preference share dividends during 2014. On January 31, 2015, prior to the date that
the financial statements are authorized, Arlene Company distributed 10% ordinary
share dividend. In its 2014 income statement, what amount should Arlene Company
report as basic earnings per share?
1. P17.50
2. P16.25
3. P15.91
4. P14.77
29.Due to adverse economic circumstances and poor management, Marie Company
has negotiated a restructuring of its 9% P6,000,000 note payable to Paola Bank due
on January 1, 2014. There is no accrued interest on the note. The bank has reduced
the principal amount to P5,000,000 and extends the maturity to the end of 3 years.

However, the new interest rate is 13% payable annually every December 31. What
is the gain on extinguishment of debt to be recognized for 2014?
1. P1,000,000
2. P505,500
3. P350,000
4. P0
30.Klaudine Company purchased an equipment on January 1, 2014 with the following
expenditures.
Purchase price (20% down payment, balance payable in 8
P10,000,000
installment after 4 years, FOB Destination.)
Implied interest
10%
Input tax
1,200,000
Insurance during freight
100,000
Freight
200,000
Installation cost
250,000
Assembly cost
150,000
Testing cost
300,000
Cost of training of employees for equipment
500,000
Insurance after it receiving
350,000
Repairs and Maintenance
50,000
How much is the cost of the equipment on January 1, 2014?
1. P10,700,000
2. P9,460,000
3. P9,960,000
4. P9,160,000
31.Nikki Company discovered the following error on December, 31, 2014, the end of
the companys reporting period.
The following were omitted by Nikki company for the following years:
2012
2013
2014
Inventory, end
30,000
20,000
50,000
Prepaid rent
13,000
12,000
14,000
Accrued interest income
2,000
5,000
7,000
Unearned commission income
4,000
3,000
2,000
Accrued interest expense
1,000
2,000
3,000
Depreciation expense
7,000
6,000
5,000
Warranty expense
2,000
4,000
1,000
Additional information:
P20,000 worth of maintenance expense was erroneously capitalized on
October 1, 2014 for an equipment with 1 year useful life.
Prepaid insurance of P50,000 which is good for 5 years was immediately
expense upon payment on March 31, 2012.
Bad debts expense was erroneously computed for 2012, 2013 and 2014 at
7% of sales instead of 2% of sales. Sales for 2011, 2013 and 2014 was
P1,500,000, P2,200,000 and P1,900,000 respectively.
Net income for 2012, 2013 and 2014 was P500,000, P700,000 and P650,000
respectively.
How much is the corrected net income for 2012?
1. P624,500
2. P648,500
3. P650,500

4. P656,000
32.Ronica Company prepares quarterly interim financial statement for the year 2014.
For the first quarter ending March 31, 2014, the expenses totaled P5,000,000 of
which is 20% is variable. The fixed expenses includes commercial advertising
expenses of P2,000,000 that will be televised for the whole year and P900,000 of
depreciation expense per year for an equipment acquired on January 31, 2014.
What amount should be reported as expenses for the first quarter March 31, 2014?
1. P2,750,000
2. P2,825,000
3. P4,250,000
4. P4,325,000
33.On January 1, 2014, Monica Company purchased 50,000 units of goods at P20 per
unit. During the year, the entity sold 40,000 units at P36 per unit. The entity paid
P140,000 for operating expenses. The current replacement cost of the inventory on
December 31, 2014 is P30 per unit. On December 31, 2014, what amount of net
income under current cost accounting should be reported?
1. P500,000
2. P600,000
3. P640,000
4. P740,000
34.Jessa Company has an investment in an equity instrument classified as Financial
Asset at Fair value through OCI. The cost of the investment on July 1, 2014 was
P3,000,000. On September 1, 2014, the company entered into a derivative forward
contract to hedge the fair value of the investment. All the conditions for hedged
accounting are met, and the hedge qualifies as a hedge as a fair value hedge
because it is a hedge of an exposure to changes in the fair value of a recognized
asset. On December 31, 2014, the fair value of the investment was P2,900,000.
What is the effectiveness range for these associated transactions?
1. 90%-100%
2. 90%-103%
3. 90%-111%
4. 97%-103%
35.In computing for its net income for tax purposes, the following data were provided
by Camille Company:
Carrying amount
Tax base
Accounts receivable
P1,500,000
P1,750,000
Equipment
1,650,000
1,250,000
Provision for warranty
120,000
0
Deposit
received
in
150,000
0
advance
The depreciation rates for accounting and taxation are 15% and 25% respectively.
The deposits are taxable only when received and warranty costs are deductible
when paid. An allowance for doubtful debts of P250,000 has been raised against
accounts receivable for accounting purposes but such debts are only deductible
when proven worthless. What amount should Camille Company report as deferred
tax asset on December 31, 2014, assuming that the tax rate is 30%?
1. P156,000
2. P120,000
3. P81,000
4. P36,000
36.The following accounts were presented by Nadyn Company.
Beginning
Ending
Accounts Receivable
500,000
600,000

Notes Receivable
400,000
200,000
Accounts Payable
700,000
500,000
Notes Payable
300,000
100,000
Inventory
800,000
900,000
Additional information:
Net income amounts to P250,000 which is 40% of gross profit and 10% of
cost of goods sold.
Collected P2,500,000 of accounts receivable and paid P2,000,000 of accounts
payable.
Cash discounts amounting to P150,000 and P130,000 for trade discounts
related to sales and cash discounts amounts to P150,000 and P130,000 for
trade discounts related to purchases.
Sales returns amounts to P150,000 for cash sales and P250,000 for sales on
account and Purchase returns amounts to P150,000 for cash purchases and
P250,000 for purchases on account.
Accounts written off amounts to P10,000.
Assuming accrual accounting is being used by the company, how much is sales on
account?
1. P1,840,000
2. P2,640,000
3. P2,660,000
4. P2,860,000
37.Jenny Company sold land with carrying amount of P1,500,000 in exchange for a 9month 9% note with face value of P2,000,000 on January , 1, 2014. The 10% rate is
the current market rate for the same note. On April 1, 2014, Jenny Company
discounted the note with recourse. The bank discount rate is 12% and is accounted
for as a secured borrowing. On October 1, 2014, the maker dishonored the note and
the company paid the bank the maturity value of the note with protest fee of
P10,000. On December 31, 2014, the maker paid the note plus 12% annual interest
of the total amount due. What is the amount collected by Jenny Company from the
maker on December 31, 2014?
1. P2,150,000
2. P2,160,000
3. P2,214,000
4. P2,224,000
38.The financial Statements of Coleens Company were authorized for issue on March
31, 2015 and the end of the reporting period is December 31, 2014. The following
transactions incurred after the end of the reporting period.
On December 31, 2014, the entity had an account receivable of P1,000,000
from a customer and on February 1, 2015, the receiver appointed for the
customer informed the entity that the P1,000,000 would be paid in full on
December 31, 2015.
On December 31, 2014, the entity had an account receivable of P3,000,000
from a customer and on March 1, 2015, the liquidator of the customer
advised the entity in writing that the customer was insolvent and that only
50% of the account would be collected on December 31, 2015.
The entity reported a contingent liability on December 31, 2014 related to a
court case. On march 15, 2015, the judge rendered a decision against the
entity for damages amounting to P2,000,000.
What amount should be reported as adjusting events on for the year 2014?
1. P6,000,000
2. P4,500,000

3. P4,000,000
4. P3,500,000
39.In 2010 Jenelyn Company purchased a P5,000,000 life insurance policy on its
president, of which Tee Company is the beneficiary. Information regarding the
policy for the year ended December 31, 2014 follows:
Cash surrender value, January 1, 2014
P435,000
Cash surrender value, December 31, 2014
540,000
Annual advance premium paid January 1
200,000
During 2014, dividends of P30,000 were applied to increase the cash surrender
value of the policy. What amount should Jenelyn company report as life insurance
expense for 2014?
1. P200,000
2. P125,000
3. P 65,000
4. P 95,000
40.Jowa Company has a herd of 100 2-year old animals on January 1, 2013. 10 animals
aged 2.5-year were purchased on July 1, 2014 for P10,800 each and 10 animals
were born on July 1, 2014. No animals were sold or disposed of during the year. The
fair values less cost to sell per unit were:
2-year old animal on January 1,
10,000
2.5-year old animal on July 1
10,800
New born animal on July 1
7,000
2-year old animal on December 31
10,500
2.5-year old animal on December 31
11,100
Newborn animal on December 31
7,200
3-year old animal on December 31
12,000
0.5-year old animal on December 31
8,000
What is the gain from change in fair value that should be reported for 2014?
1. P0
2. P55,000
3. P237,000
4. P292,000
41.Sharmaine Company disclosed the following information in relation to its operating
segments for the current year:
Segment
Sure
Na
Pasado
Ka
Sales

10,000,000
1,700,000
12,000,000
5,000,000
External
Sales Internal
4,000,000
2,500,000
9,000,000
2,000,000
Traceable
500,000
600,000
400,000
200,000
Expense
Depreciation
500,000
200,000
400,000
300,000
Expense
Additional Expenses, not included above, are as follows:
Indirect Expense
1,800,000
General Expense
1,200,000
Interest Expense
600,000
Income Tax Expense
30%
The interest expense and income tax expense are regularly reviewed by the chief
operating decision maker as a measure of profit or loss. Gross profit of 40% based
on cost is used by the company for each segment. Appropriate common expenses

are allocated to segments based on the ratio of segments sales to total sales. How
much is total profit or loss of reportable segments?
1. 5,390,000
2. 5,262,727
3. 4,594,545
4. 4,467,272
42.Jemelyn Company borrowed P5,000,000 from a bank at a variable rate of interest
for 4 years on January 1, 2014. Interest is payable annually to the bank every
December 31 and the principal is due on December 31, 2017. Under the agreement,
the market rate of interest every January 1 will be the variable rate for the period
and the amount of interest to be paid on December 31. In connection with the loan,
Jemelyn Company entered into a receive variable pay fix interest swap agreement
with a bank speculator. The interest rates were as follows:
January 1, 2014
10%
January 1, 2015
14%
January 1, 2016
12%
January 1, 2017
11%
For December 31, 2014, what amount should be reported as derivative asset or
liability?
1. P169,000 asset
2. P169,000 liability
3. P200,000 asset
4. P200,000 liability
43.Blanche Company bought 20% of Maria Corporation on January 1, 2014. The
carrying amount of the investees net assets at purchase date totaled P16,000,000.
Fair value and carrying amount were the same for all items except for land with
carrying amount of P4,000,000 and inventory with carrying amount of P500,000.
Land exceeds carrying amount to P7,000,000 and inventory exceeds carrying
amount by P1,000,000. Half of the inventory were sold during 2014. During 2014,
the investee reported net income of P4,000,000 and paid a P1,500,000 cash
dividend. The investment has a recorded amount of P5,400,000 on December 31,
2014. What is the purchase price of the investment in associate on January 1, 2014?
1. P5,100,000
2. P5,000,000
3. P4,900,000
4. P4,600,000
44.Charice Company had 200,000 ordinary shares, 20,000 convertible preference
shares, and P1,000,000 of 10% convertible bonds outstanding during 2014. The
preference share is convertible into 20,000 ordinary shares. During 2014, Charice
paid dividends of P1.20 per share on ordinary shares and P4.00 per share on
preference shares. Each P1,000 bond is convertible into 45 ordinary shares if
converted before 2015 and 40 shares if converted after 2015. The profit for 2014
was P800,000 and the income tax rate was 35%. On January 1, 2015, prior to the
date that the financial statements are authorized, Charice Company distributed 10%
ordinary share dividend. What should be the diluted earnings per share for 2004?
1. P2.83
2. P2.96
3. P3.03
4. P3.20
45.Cedie Company uses retail inventory method to approximate its ending inventory.
The following information about its inventory are provided below:
Cost
Retail
Inventory, Beg.
P650,000
P1,200,000

Purchases
9,000,000
14,700,000
Freight in
200,000
Purchase returns
300,000
500,000
Purchase allowances
150,000
Departmental transfers
200,000
300,000
Net markups
300,000
Net markdowns
1,000,000
Sales
9,500,000
Sales discount
100,000
Employee discounts
500,000
Estimated normal shoplifting losses
600,000
Estimated normal shrinkage
400,000
What is the estimated cost of ending inventory using the average cost approach
under the retail method of inventory valuation?
1. P2,560,000
2. P2,624,000
3. P2,880,000
4. P3,264,000
46.Michaella Company provided the following information for 2012 and 2013
2013
2014
2014
Cash and cash equivalents
300,00 425,00 Sales
800,00
0
0
0
Inventory
220,00 300,00 Purchases
520,00
0
0
0
Equipment
200,00 200,00 Administrative
100,00
0
0 expense
0
Accumulated Depreciation
50,000 60,000 Distribution
70,000
Equipment
expense
Land
450,00 450,00 Depreciation
10,000
0
0 expense
Accounts Payable
150,00 200,00 Income tax
50,000
0
0
Bonds Payable
600,00 650,00 Cash dividends
35,000
0
0
Share capital
300,00 300,00
0
0
Retained Earnings
70,000 165,00
0
Additional information:
The pertinent index numbers are:
January 1, 2012
100 January 1, 2013
100
December 31,
120 December 31,
200
2013
2014
The land and equipment were acquired on January 1, 2012.
The entity was organized on January 1, 2012.
The cash dividend was paid at the beginning of 2014.
How much is the gain/loss on purchasing power?
1. P250,000 gain
2. P250,000 loss
3. P285,000 gain
4. P308,333 gain

47.Jannella Company leased a building to Anne Company under a 4-year operating

lease on January 1, 2014. The monthly rental for 2014 is P75,000; 2015 P112,500;
2016 150,000; 2017 187,500. Rentals are payable at the end of each month and
all rental payments within the year are made when due. What amount should be
reported as rent receivable in its statement of financial position as of December 31,
2015?
1. P900,000
2. P750,000
3. P675,000
4. P450,000
48.On January 1, 2011, Jamie Company was granted 2 patents, apparently patent A
and patent B. Related legal cost for patent A was P500,000 and for patent B was
P300,000. Also incurred P50,000 consultation fee for both patent. During 2014, the
company paid P1,000,000 in legal cost for successfully defending patent A and
P1,200,000 of legal cost for patent B for which was unsuccessfully defended. On
April 1, 2014 the entity paid P800,000, of which 75% was for a trademark and 25%
was for the entity agreement with a competitor not to compete for 5 year period in
line with the trademark. What amount of expense should be recognized for the year
2014?
1. P2,735,000
2. P2,615,000
3. P2,575,000
4. P2,495,000
49.Nelissa Company reported P5,000,000 of inventory on December 31, 2014, based
on physical count. The following are additional information concerning inventories of
Nelissa Company:
Goods sold to a customer on December 31, 2014 which are being held for the
customer to call at the customers convenience with a cost of P150,000 and
is included in the count.
Excluded from the physical count were goods billed to a customer, FOB
shipping point, on December 31, 2014. The goods had a cost of P200,000 and
had been billed at P350,000. The shipment is ready for pick-up by the
delivery contractor on January 15, 2015.
Goods were in transit from a vendor. The invoice cost was P300,000 and
goods were shipped FOB seller on December 31, 2014.
Work in process costing P400,000 was sent to an outside processor for
finishing on December 31, 2014.
Goods out on consignment with sales price of P1,000,000 and mark up of
25% on cost. Shipping costs amounts to P50,000.
What is the correct amount of inventory on December 31, 2014?
1. P6,900,000
2. P6,850,000
3. P6,750,000
4. P6,600,000
50.Rupha Company has various cash generating units. On December 31, 2014, on cash
generating unit has the following carrying amount of assets:
Cash
600,000
Accounts Receivable
6,000,000
Allowance for bad debts
1,500,000
Inventory
2,500,000
Machinery
3,000,000
Acc. Dep. Machinery
1,000,000

Equipment
Acc. Dep. Equipment
Building
Acc. Dep. Building
Goodwill
Accounts Payable
Bonds Payable
Share capital
Retained Earnings

2,000,000
500,000
4,000,000
1,500,000
4,000,000
2,000,000
5,000,000
10,000,000
9,600,000

Value in use of CGU on December 31, 2014 is P10,600,000. Fair value less cost to
sell for inventory was P2,000,000 and for accounts receivable P4,000,000. What is
the impairment loss for building?
1. P833,333
2. P1,346,154
3. P480,769
4. P576,923