LYCEUM OF THE PHILIPPINES UNIVERSITY – Manila

College of Business Administration

Department of Accountancy and Management Accounting
De Jesus/Valientes/Chan/Gallardo
NAME: 17 d. A deduction from shareholders’ equity
SECTION: 18 4. Debt instruments held to maturity are reported at
19 a. Amortized cost
THEORY (1.00) 20 b. Fair value
1 6 c. The lower of amortized cost and fair value
2 7 d. Net realizable value
3 8 Raw Score Equivalent TOTAL 5. Equity investments irrevocably accounted for at fair value through
4 9 THEORY X 1.00 other comprehensive income are
5 10 PROBLEM X 1.50 a. Non-trading investments of less than 20%
NUMERICAL RESPONSE X 2.00 b. Trading investments of less than 20%
PROBLEM (1.50) c. Investments of between 20% and 50%
1 11 d. Investment of more than 50%
2 12 6. when an investor uses the equity method to account for investment
3 13 in ordinary shares, the investment account will be increased when
the investor recognizes
4 14
a. a proportionate interest in the net income of the
5 15 PERCENTAGE investee
6 16 EQUIVALENT b. a cash dividend received from the investee
7 17 c. periodic amortization of the goodwill
8 18 d. a share dividend received from the investee
9 19 7. subsequent to initial recognition, the investment property shall be
10 20 measured using
THEORY (1.00) a. fair value model or revaluation model
NUMERICAL RESPONSE (2.00) b. fair value through profit or loss model
1. It is an entity over which the investor has significant influence
1 c. cost model or fair value model
a. Associate
2 d. cost model or revaluation model
b. Investee
3 8. if the entity uses the fair value model for the investment property
c. Venture capital organization
4 changes in fair value are
d. Mutual fund
5 2. Under the equity method of accounting for investments an investor a. recognized in profit or loss
6 recognizes its share of the earnings in the period which the b. recognized in retained earnings
7 a. Investor sells the investment c. recognized in other comprehensive income
8 b. Investee declares a dividend d. not recognized
9 c. Investee pays dividend 9. an investment property is derecognized when
10 d. Earnings are reported by the investee a. it is disposed to a third party
11 3. When an investor uses the equity method to account for b. it is permanently withdrawn from use
12 investment in ordinary shares, cash dividends received by the c. no future economic benefits are expected from the
13 investor from the investee are recorded as disposal
14 a. Dividend income d. in all of these cases
15 b. A deduction from the investment income 10. under IFRS, assets classified as investment property are
16 c. A deduction from the investment account a. held for rental income
b. to be sold for a quick profit
1|Departmental Quiz 4 – Intermediate Accounting P -1
 LYCEUM OF THE PHILIPPINES UNIVERSITY – Manila
College of Business Administration
Department of Accountancy and Management Accounting
De Jesus/Valientes/Chan/Gallardo
c. held for rental income or to be sold for a quick profit d. 300,000 a. 1,207,900
d. held for sale in the ordinary course of business e. 0 b. 1,198,000
5. On January 1, 2019, Forensic Company acquired a 10% interest c. 1,195,920
PROBLEM (1.50) in an investee for P3,000,000. The investment was accounted for d. 1,193,050
1. at the beginning of current year, Sam Company purchased 20% using the cost method. e. None of the above
of another entity’s ordinary shares outstanding for P6,000,000. 9. What is the interest income for the year?
The acquisition cost is equal to the carrying amount of the net On January 1, 2020, the entity acquired a further 15% interest in a. 95,840
assets acquired. During the current year, the investee reported net the investee for P6,750,000. On such date the carrying amount of b. 119,800
income of P7,000,000 and paid cash dividend of P4,000,000. the net assets of the investee was P36,000,000 and the fair value c. 80,000
What is the carrying amount of the investment in associate at year of the 10% interest was P4,500,000. d. 100,000
end? e. None of the above
a. 5,200,000 The fair value of the net assets of the investee is equal to the 10. On January 1, 2019 Paradox Company purchased 9% bonds with
b. 6,000,000 carrying amount except for an equipment whose fair value exceed a face amount of P4,000,000 for P3,756,000 to yield 10%. The
c. 6,600,000 carrying amount by P4,000,000. The equipment has a remaining bonds are dated January 1, 2019, mature on December 31, 2028,
d. 7,400,000 life of 5 years. The investee reported net income of P8,000,000 for and pay interest annually on December 31. The bonds are
e. None of the above 2020 and paid dividend of P5,000,000 on December 31, 2020 measured at amortized cost. What amount should be reported as
2. What is the investment income at year end? interest revenue for 2019?
a. 800,000 What is the gain on remeasurement to equity to be recognized for a. 400,000
b. 2,800,000 2020? b. 344,400
c. 3,200,000 a. 1,500,000 c. 360,000
d. 2,000,000 b. 4,500,000 d. 375,600
e. None of the above c. 2,250,000 11. During 2019, Knickknack Company purchased marketable equity
3. At the beginning of current year, Disgust Company purchased d. 0 securities to be measured at fair value through other
30,000 shares of an investee’s 200,000 outstanding shares for 6. What is the goodwill arising from the acquisition on January 1, comprehensive income. On December 31, 2019, the balance in
P6,000,000. On that date, the carrying amount of the acquired 2020? the unrealized loss on these securities was P200,000. There were
shares was P4,000,000. The entity attributed the excess of cost a. 2,250,000 no security transactions during 2020. Pertinent data on December
over carrying amount to patent with remaining useful life of 10 b. 1,250,000 31, 2020 are:
years. During the year, Disgust Company’s officers gained a c. 1,350,000
majority on the investee’s board of directors. The investee d. 350,000 Security Cost Market Value
reported earnings of P5,000,000 for the year and paid dividend of 7. What is the carrying amount of the investment in associate on X 2,100,000 1,600,000
P3,000,000 at year-end. What is the carrying amount of the December 31, 2020? Y 1,850,000 2,000,000
investment at year-end? a. 11,250,000 Z 1,050,000 900,000
a. 6,100,000 b. 11,800,000
b. 6,300,000 c. 12,000,000 In the statement of changes in equity for 2020, what amount
c. 5,550,000 d. 14,300,000 should be included as cumulative unrealized loss as component
d. 6,000,000 8. On July 1, 2019, Conair Company paid P1,198,000 for 10% bonds of other comprehensive income?
e. None of the above with a face amount of P1,000,000 to be held as financial assets at a. 500,000
4. How much is Investment Income at year-end? amortized cost. Interest is paid on June 30 and December 31. The b. 300,000
a. 750,000 bonds were purchased to yield 8%. The entity used the effective c. 200,000
b. 450,000 interest method. What is the carrying amount of the bond d. 0
c. 1,200,000 investment on December 31, 2019?
2|Departmental Quiz 4 – Intermediate Accounting P -1
 LYCEUM OF THE PHILIPPINES UNIVERSITY – Manila
College of Business Administration
Department of Accountancy and Management Accounting
De Jesus/Valientes/Chan/Gallardo
12. The following data pertains to Tyne Co.s investments in 15. What is the gain or loss to be recognized for the year ended 9. What is the investment Income for December 31, 2006?
marketable securities: December 31, 2020?
a. 189,000 loss Fuzzy monkey Tehnologies, Inc. purchased as a long-term investment $80
Cost Market Value b. 150,000 loss million of 8% bonds, dated January 1, on January 1, 2006. Management has
12/31/09 12/31/08 c. 300,000 gain the positive intent and ability to hold the bonds until maturity for bonds of
Trading 150,000 155,000 100,000 d. 450,000 loss similar risk and maturity the market yield was 10%. The price paid for the
Other 150,000 130,000 120,000 e. None of the above bonds was $66 million. Interest is received semiannually on June 30 and
Comprehensive December 31.
Income NUMERICAL RESPONSE (2.00) 10. What is the carrying amount of the bonds on December 31, 2006?
Zippydah SE has the following data at December 31, 2020. 11. What is the Interest Income for the year ending December 31,
What amount should Tyne report as unrealized holding gain its Securities Cost Fair Value 2006?
2009 income statement, assuming Tyne does not elect to use the Trading 120,000 124,000 12. What is the Amortization of Discount for the year ending December
fair value option to report its investments? Non-trading 100,000 94,000 31, 2006?
a. 50,000 The non-trading securities are held as a long-term investment. This is the
b. 55,000 first year of the company’s operations An entity constructed a shopping mall worth $110,000,000 that is intended
c. 60,000 1. What is the Unrealized Gain (Loss) to be reported in the Income for lease. The shopping mall is has a life of 10 years and a residual value of
d. 65,000 Statement? P10,000,000. An independent valuation expert provided the following fair
13. What is the net unrealized gain or loss to be reported in the other 2. What is the Unrealized Gain (Loss) to be reported in Equity? value at each subsequent year-end:
comprehensive income of 2009? Kadiliman acquired an investment worth 9,000,000, transaction cost related December 31, 2019 120,000,000
a. 0 to the investments amounts to 100,000 December 31, 2020 125,000,000
b. 10,000 3. What is the Cost of the Investment assuming it is held for trading? December 31, 2021 115,000,000
c. 15,000 4. What is the cost of investment assuming it is treated as other The entity follows the fair value model of accounting for investment property
d. 20,000 comprehensive income? 13. What is the Gain from change in fair value for 2019?
14. Dayanara Company owned three properties which are classified Northwest Paperboard Company, a paper and allied products manufacturer, 14. What is the Gain from change in fair value for 2020?
as investment property was seeking to gain a foothold in Canada. Toward that end, the company 15. What is the Gain from change in fair value for 2021?
Initial Cost Fair Value Fair Value bought 40% of the outstanding common shares of Vancouver Timber and 16. What is the depreciation expense for 2021?
12/31/2019 12/31/2020 Milling, Inc. On January 2, 2006, for $400 million. At the date of purchase, 17. What is the accumulated depreciation for 2021?
Property 1 2,700,000 3,200,000 3,500,000 the book value of Vancouver’s net assets was $775 million. The book values An entity insured the life of the president for P2,000,000 the entity being the
Property 2 3,450,000 3,050,000 2,850,000 and fair values for all balance sheet items were the same except for beneficiary the annual premium is P30,000 and dated January 1, 2019
Property 3 3,300,000 3,850,000 3,600,000 inventory and plant facilities. The fair value exceeded book value by $ 5 End of policy year Cash surrender value
million for the inventory and by $20 million for the plant facilities. The 2019 -
Each property was acquired three years ago with a useful life of estimated useful life of the plant facilities is 16 years. All inventory acquired 2020 -
25 years. The accounting policy is to use the fauir value model for was sold during 2006. Vancouver reported net income of $140 million for the 2021 30,000
investment property. What is the gain or loss to be recognized for year ended December 31, 2006. Vancouver paid a cash dividend of $30 2022 42,000
the year eneded December 31, 2019? million 2023 58,000
a. 189,000 loss 5. How much is the Excess of Cost over Carrying amount? The president died on June 30, 2023 and the policy was collectd on July 31,
b. 150,000 loss 6. How much is the Goodwill from acquisition? 2023
c. 300,000 gain 7. How much is the amortization of Undervaluation of Assets for the 18. What is the Life Insurance Expense for 2023?
d. 450,000 loss year ending December 31, 2006? 19. What is the Gain from Settlement for 2023?
e. None of the above 8. What is the carrying amount of the investment on December 31, 20. How much is the Life Insurance Expense for 2021?
2006?
3|Departmental Quiz 4 – Intermediate Accounting P -1