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1. On July 1, 2009, P Company borrowed P160,000 to purchase 80% of the outstanding common stock of S Company. This loan, carrying a 12% annual rate, is payable in 10 annual instalments beginning July 1, 2010. Summarized portions of P and S balance sheet as of June 30, 2009 are as follows: P 800,000 250,000 550,000 S 300,000 155,000 145,000

Total assets Total Liabilities Total Stockholders’ equity

The book values of S assets and liabilities approximated market values except for accounts payable, which had affair value that was that was P5,000 more than the book values. Any remaining difference is attributable to goodwill. The amounts to be recorded on the consolidated balance sheet at July 1, 2009, for total assets and total liabilities, respectively are: a. 1,025,000 and 586,750 b. 1,100,000 and 565,000 c. 1,151,000 and 408,750 d. 1,160,000 and 570,000

2. On January 2, 2010, the P Corp. purchased the net assets of S Corp. by issuing of stocks at P1,500,000 fair market value. Book value and fair value balance sheet data on January 1, 2010, are as follows: P Book Value Cash Accounts Receivable Inventory Building Goodwill Total Assets 2,300,000 500,000 750,000 900,000 Fai Value 2,300,0 00 500,00 0 650,00 0 730,00 0 4,180,0 00 500,00 0 Book Value 150,000 490,000 355,000 760,000 45,000 1,800,00 0 S Fai Value 150,000 490,000 300,000 532,000 40,000 1,512,0 00


Liabilities Capital Stock Additional paid in capital Retained Earnings Total Liab. And SHE

500,000 800,000 450000 2,700,000 4,450,000

285,000 300,000 480,000 735,000 1,800,00 0


P Corp incurred and paid legal and brokerage fees of P45,000 for business combination; and P15,000 indirect acquisition cost. Contingency fee of P20,000

for additional legal services would be paid within the year. Immediately after the business combination: The combine total assets is: a. 6,195,000 c. 4,740,000 b. 6,240,000 d. 6,300,000
3. Hachiko, a franchisor, charges franchisees a “franchise fee of P1,500,000. Of amount, a non refundable P600,000 is paid upon signing of the contract with balance payable in three equal instalments after each year thereafter. Hachiko assist in locating a suitable business site, conduc a market study, oversee construction of facilities, and provide initial training for employees. this the will the

On December 1, 2010, Hachiko signed a franchising agreement for Gere Inc. . By the end of 2010, it was determined that the substantial performance of the initial services had cost Hachiko’s a total of P150,000 and that collection of the balance of the franchise fee has been reasonably assured. In its 2010 income statement, Hachiko should report net income of: a. 1,500,000 b. 1,350,000 c. 450,000 d. 0

4. On December 31, 2005 a foreign subsidiary in Hongkong submitted the following balance sheet stated in foreign currency:
Total assets $500,000 Total Liabilities 100,000 Common stock 250,000 Retained Earnings 150,000 THE exchange rate are: Current rate P 3.40 Historical rate 3.10 Weighted average 3.00 Assuming the functional currency of the subsidiary is the not the currency of the hyperinflationary economy was used and the retained earnings of the subsidiary on December 31, 2005 translated to Peso is P 460,000. What amount of Cumulative translation adjustment is to be reported in the consolidated balance sheet on December 31, 2005? a. 25,000 b. 10,000 c. 50,000 d. 125,000

5. On November 1, 2010, P corp. enters into a 90 day forward contract with International Exchange bank to sell 3,600 yen when the forward rate for 90 day is P39. The spot rate for the yen on November 2 is P41. Exchange rates at December 31, 2010 and January 31, 2011 were as follows: 12/31/20 00 30 day forward rate Spot rate 42 43 1/31/20 11 44 45

How much is the forex gain or loss on the forward contract on January 31, 2011? a. 10,800 gain c. 7,200 loss

b. 10,800 loss

d. 7,200 gain

6. On November 2, 2010, P Corp entered into a firm commitment with Japanese firm to acquire equipment, delivery and passage of title on March 31, 2011, at a price of 4,375 yen. On the same date, to hedge against unfavorable changes in the exchange rate of the yen, P Corp. entered into a 150 day forward contract with BPI for 4,357 yen. The relevant exchange rate were as follows: 11/2/20 10 37 40 12/31/20 10 38 33 3/31/20 11 35 35

Spot Rate Forward Rate

How much is the amount debited to the equipment account on the date of? a. 200,000; 11/2/2010 c. 185,000; 11/2/2010 b. 200,000; 3/31/2011 d. 175,000; 3/31/2011 7. R, S and T formed a joint venture on May 1, 2008, R was designated as the manager and was to record the joint venture’s transactions in his own books. As manager, R was to be allowed a salary of P54,000; the remaining profit and loss was to be divided equally. The following balances appeared at the end of 2008 before adjustment for venture inventory and profit: Debit 216,000 4,500 121,500 Credit 67,500

Joint venture cash Joint venture S, capital T, capital

Unsold merchandise amount to P47,250 which was taken by T. In the final settlement to venture, how much did T received? a. 141,750 c. 121,500 b. 94,500 d. 47,250 8. M and R agreed on a joint venture to purchase and sell car accessories. They agreed to contribute P 25,000 each to be used in purchasing the merchandise, share equally in any gain or loss, and record their venture transactions in their individual books. After one year, they decided to terminate the venture, and data from their records were: Joint venture account credit balances: in books of M P 18,000; in books of R P 20,200, cost of car accessories taken: by M P 1,000; by R P 1,800, expenses paid by M P 1,850 and by R P 2,600. How much was the joint venture sales? a. 83,750 b. 86,550 c. 91,000 9. How much is the joint ventures gain? a. 38,200 b. 41,000 c. 42,750 d. 92,650 d. 45,550

Paul Corp. had the following production for the month of June: Units 10,00 work in process at June 1 0 40,00 Started during June 0 Completed and transferred to finished goods during 33,00 June 0 2,00 Abnormal spoilage incurred 0 15,00 Work in process at June 30 0 Materials are added at the beginning of the process. As to conversion cost, the beginning work in process was 70% completed, and the ending work in process was 60% completed. Spoilage is detected at the end of the process. Using the weighted average method, the equivalent units for June, with respect to conversion costs, were: a. 42,000 c. 45,000 b. 44,000 d. 50,000 11. TOMATO Company adds material at the start to its production process and has the following information available for March: Beginning Work in Process Inventory (40% complete as to conversion) Started this period Ending Work in Process Inventory (25% complete as to conversion) Transferred out


unit s 32,000 unit s
7,000 2,500 ?

unit s

The following statement are false, which is true? a. The units started and completed in March is 29,000 b. The equivalent units of production for materials using FIFO is 32,000. c. The equivalent units of production for materials using average is 32,000. d. The equivalent units of production for conversion cost using average is 34,325. 12. Payne Company developed the following data for the current year: Beginning work in process inventory P 34,000 Direct materials used 52,000 Actual overhead 44,000 Overhead applied 46,000 Cost of goods manufactured 225,000 Total manufacturing costs 214,000

How much is Payne Company's direct labor cost for the year? a. P127,000 b. P150,000 c. P116,000 d. P82,000 13. Cal, Inc. showed the following amounts in its manufacturing overhead account at the end of 2006:
Manufacturing Overhead 20,000 16,000 55,000 22,000

Based on this information, which statement is true? a. No manufacturing overhead has been applied. b. Manufacturing overhead expense will be reported in the operating section of the income statement in the amount of P3,000. c. Manufacturing overhead has been overapplied. d. Manufacturing overhead has been underapplied. 14. Tool Time Inc. uses job order costing for its brand new line of homework machines. The cost incurred for production during 2009 totaled P6,000 of materials, P3,000 of direct labor costs, and P2,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled P5,000, and the ending balance is P3,000. During the year, the company completed 40 machines. How much is the cost per machine? a. P225 b. P325 c. P275 d. P400 15. LMN Company uses a FIFO process costing system. The company had 5,000 units that were 60% incomplete as to conversion cost at the beginning of the month. The company started 22,000 units this period and had 7,000 units in ending Work in Process Inventory that were 30% incomplete as to conversion cost. What are the equivalent units for conversion cost? a. 19,100 c. 20,100 b. 22,900 d. 27,000

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