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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 of the following is not dealt with by PAS 41?


a. The accounting for biological assets.
b. The initial measurement of agricultural produce harvested from
the entity’s biological assets.
c. The 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, government grants are presented in the


financial statements using
a. a gross presentation. c. a or b
b. a net presentation. 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 agricultural


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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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 securities that are


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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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 in other


comprehensive income on December 31, 20x1?
a. 45,866 b. (45,866) c. (37,899) 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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