3rd-quiz-intermediate-accounting-ii.docx

PHINMA EDUCATION NETWORK – PANGASINAN COLLEGE OF MANAGEMENT AND ACCOUNTANCY

Bachelor of Science in Accountancy

NAME:______________________________PROFESSOR:_________________________ SECTION:___________________________SCORE :____________________________ 3rd Quiz - ACC 107 - Intermediate Accounting II GENERAL INSTRUCTIONS: STRICTLY NO ERASURES – Any form of erasure will invalidate your answer(s). STRICTLY NO CHEATING – Cheating of whatever kind is not allowed. All cheaters will be sent to the Dean’s Office. Use BLACK / BLUE PEN ONLY. SPECIFIC INSTRUCTIONS: Write your answers before each number. For problem solving, write your solutions at the back of your paper. NO SOLUTION(S) - WRONG. Further, Each question is worth 2 points. Lastly, this examination is only good for 75 minutes. I - THEORY 1. Which a. The b. The the c. The

of the following is not dealt with by PAS 41? accounting for biological assets. initial measurement of agricultural produce harvested from entity’s biological assets. processing of agricultural produce after harvest.

2. Securities classified as financial asset measured at amortized cost are reported at a. acquisition cost. b. acquisition cost plus amortization of a discount. c. acquisition cost plus amortization of a premium. d. fair value. 3. According to PAS 20, financial statements using a. a gross presentation. b. a net presentation.

government

grants

are

presented

in

the

c. a or b d. a functional presentation.

4. Where there is a long aging or maturation process after harvest, the accounting for such products should be dealt with by a. PAS 41. b. PAS 2, Inventories. c. PAS 16, Property, Plant, and Equipment. d. PAS 40, Investment Property. 5. Generally speaking, biological assets relating to activity should be measured using a. Historical cost. b. Historical cost less depreciation less impairment. c. A fair value approach. d. Net realizable value.

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agricultural

PHINMA EDUCATION NETWORK – PANGASINAN COLLEGE OF MANAGEMENT AND ACCOUNTANCY

Bachelor of Science in Accountancy

6. According to PFRS 9 Financial Instruments, investments in debt securities that are classified at amortized cost are initially measured at a. cost including accrued interest. b. maturity value. c. cost including brokerage and other fees. d. fair value plus brokerage and other fees. 7. Entity A had a plantation forest that is likely to be harvested and sold in 30 years. The income should be accounted for in the following way: a. No income should be reported until first harvest and sale in 30 years. b. Income should be measured annually and reported using a fair value approach that recognizes and measures biological growth. c. The eventual sale proceeds should be estimated and matched to the profit and loss account over the 30-year period. d. The plantation forest should be valued every 5 years and the increase in value should be shown in the statement of recognized gains and losses. 8. Pippen Co. purchased ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. One step in calculating the issue price of the bonds is to multiply the principal by the table value for a. 10 periods and 10% from the present value of 1 table. b. 10 periods and 8% from the present value of 1 table. c. 20 periods and 5% from the present value of 1 table. d. 20 periods and 4% from the present value of 1 table. 9. Under PAS 41, Which of the following costs are not included in costs to sell? a. Commissions to brokers and dealers. b. Levies by regulatory agencies. c. Transfer taxes and duties. d. Transport and other costs necessary to get the assets to a market. 10. In accounting for investments in debt classified as held for trading securities, a. a discount is reported separately. b. a premium is reported separately. c. any discount or premium is not amortized. d. none of these.

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securities

that

are

PHINMA EDUCATION NETWORK – PANGASINAN COLLEGE OF MANAGEMENT AND ACCOUNTANCY

Bachelor of Science in Accountancy

II – PROBLEM SOLVING Use the following information for the next three questions: On January 1, 20x1, Entity A received land with fair of ₱200,000 from the government conditioned on the construction of a building on the lot. Entity A started immediately the construction and it was completed on December 31, 20x1 for a total cost of ₱1,000,000. The building has an estimated useful life of 10 years and zero residual value. 1. How much is the income from government grant in 20x1 and 20x2, respectively? 20x1 20x2 a. 0 200,000 b. 200,000 0 c. 0 20,000 d. 20,000 20,000 2. How much is the carrying amount of the building on December 31, 20x2 under the following presentations? Gross presentation Net presentation a. 1,000,000 800,000 b. 900,000 720,000 c. 800,000 640,000 d. 800,000 533,333 3. How much is the depreciation expense recognized in 20x3 under the following presentations? Gross presentation Net presentation a. 100,000 80,000 b. 100,000 100,000 c. 80,000 100,000 d. 80,000 80,000 Use the following information for the next two questions: On January 1, 20x1, Kevin Co. acquired 12%, P4,000,000 bonds for P4,198,948. The principal is due on December 31, 20x3 but interest is made annually starting December 31, 20x1. The effective interest rate on the bonds is 10%. 4. How much is the interest income recognized in 20x1? a. 419,895 c. 407,273 b. 413,884 d. 480,000 5. How much is the carrying amount of the investment on December 31, 20x1? a. 4,198,948 c. 4,072,727 b. 4,138,843 d. 4,000,000

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PHINMA EDUCATION NETWORK – PANGASINAN COLLEGE OF MANAGEMENT AND ACCOUNTANCY

Bachelor of Science in Accountancy

6. On April 1, 20x1, Ronald Ryan Co. acquired 12%, P4,000,000 bonds dated January 1, 20x1 at 98 includinginterest. The bonds mature on December 31, 20x3 but pays annual interest at each year-end. How much is the initial carrying amount of the investment? a. 3,920,000 b. 3,800,000 c. 4,000,000 d. 4,120,000 Use the following information for the next three questions: On January 1, 20x1, ABC Co. acquired 10%, ₱1,000,000 bonds for ₱827,135. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs ₱80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is 14%. The bonds are to be held under a “hold to collect and sell” business model. Information on fair values is as follows: December 31, 20x1…………………………….98 December 31, 20x2……………………………102 December 31, 20x3……………………………100 7. How much is the carrying amount of the investment on December 31, 20x1? a. 935,134 b. 1,002,000 c. 980,000 d. 965,443 8. How much is the unrealized gain (loss) recognized comprehensive income on December 31, 20x1? a. 45,866 b. (45,866) c. (37,899)

in

other d. 0

9. How much is the interest income recognized in 20x2? a. 126,999 c. 135,088 b. 130,779 d. 144,388 Use the following information for the next five questions: Dwyane Company purchased 100 beef cattle at an auction for P800,000 on July 1, 2018. Transportation cost were P8,000. Dwyane Company would have to incur the same transportation cost if it had sold its cattle in the auction. In addition there would be 2% auctioneer’s fee on the market price of the cattle payable by the seller. Dwyane Company also incurred P 4,000 veterinary expenses. On December 31, 2018, the value of the cattle in the most relevant market increases to P880,000. On May 2, 2019, Dwyane Company sold 18 cattle at Auction for P160,000 and incurred transportation charges of P1,200. On June 15, 2019, the fair value of the remaining cattle was P 662,560 but on the same day, 42 cattle were slaughtered with total cost of P33,600. The fair value of the carcasses on that day was P386,400 and the estimated transportation cost to sell is P3,360. No other selling cost are expected.

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PHINMA EDUCATION NETWORK – PANGASINAN COLLEGE OF MANAGEMENT AND ACCOUNTANCY

Bachelor of Science in Accountancy

10. What amount should the biological asset be initially recognized on July 1, 2018? a. P776,000 c. P792,000 b. P784,000 d. P800,000 11. What amount should the biological asset be reported on December 31,2018? a. P854,400 c. P872,000 b. P862,400 d. P880,000 12. What amount of gain as a result in the change in value of the biological asset to be reported in the statement of comprehensive income for the year ended December 31, 2018? a. None c. P80,000 b. P78,400 d. P96,000 13. What is the net proceeds from the sale of cattle on May 2, 2019? a. P155,600 c. P158,800 b. P156,800 d. P160,000 14. What is the fair value of the inventory (carcasses) June 15, 2019? a. P358,848 c. P383,040 b. P376,992 d. P386,400 15. Share us your best pick up line(s)- 2pts.

“Failing is good unless it becomes your habit” :)

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