1.

In January 2018, Mariz Company acquired 25% of the outstanding common stock of Ruby Company for
P25,000,000. The book value of the acquired shares was P 21,000,000. The excess of cost over book value was
attributable to an identifiable intangible asset which was undervalued on Rubys balance sheet and which had
an indefinite life. For the year ended December 31, 2018, Ruby reported net income of P20,000,000 and paid
cash dividends of of P6,000,000 on its common stock and thereafter issued 10% stock dividend. What is the
proper carrying value of investment in associate at December 31, 2018?
Answer: _____________________
2. Rose company operates two major lines of business namely, candle manufacturing and clothing retailing. On
December 31, 2015, in response to an unsolicited offer, Rose company disposed of its candle-making operation
for P 1,000,000 when the carrying amount of the operations asset were factory building P 400,000; P 300,000
and trademark P 200, 000. The candle making operation has no other assets and has no liabilities, but as a result
of the disposal the company has an income tax payable of P 20,000 related to the gain on disposal. The candle-
making has a profit after tax of P 150,000 for the year ended December 31, 2015. In the statement of
comprehensive income, what single amount should Rose Company disclose related to the discontinued
operation?
Answer: _______________________
3. One centavo, P 0.05, P 0.10, and P 0.25 centavo coins are legal tender up to:
a. P 100.00 b. P 500.00 c. P 1,000.00 d. Any amount
4. Which of the following payments is not valid?
a. Payment to a third person who acquires the creditors right after the payment.
b. Payment which, although made to a third person, was ratified by the creditor.
c. Payment to a third person who does not have the authority to receive the payment but the creditor, by his
conduct, has led the debtor to believe that the third person had authority to received the payment.
d. Payment made in good faith to a person in possession of the instrument but not the credit.
5. If a company raises its target peso profit, its
a. Break-even point rises
b. Fixed costs increase
c. Required total contribution margin increases
d. Selling price rises.