FINAL PREBOARD

AFAR SOLUTION- SET A SET B Starts no. 31

1. B 17. A
RE (Parent) 120,000 COS: Beg 38,400
100% share of the NI (60,000-50,000) 10,000 Shipments 99,840
Consolidated RE 130,000 End (30,720)
COS at BP 107,520
2. C Divide by 1.2
Total FV (2M/ 80% ) 2,500,000 COS at Cost 89,600
FV of NA 2,200,000 Multiply by 0.2
Goodwill 300,000 AFOVBI (COS) 17,920

P Assets (BV) 5,000,000

S Assets (FV)- (2.2M + 500,000) 2,700,000 18. A
Goodwill 300,000 Br: Sales 134,400
TOTA ASSETS 8,000,000
Less: COS at Cost 89,600
3. A GP 44,800
1,500,000 + 500,000 2,000,000 Less:OPEX 23,040
Net Income 21,760
4. C
CS (beginning) 2,500,000
Shares Issued to Selda 2,000,000
19. C
RE 1,000,000
HO: Sales 384,000
NCI (2M/ 80% * 20%) 500,000
Consolidated SHE 6,000,000 Less: COS
Beg 76,800
5. D Purchases 320,000
Cost 2,000,000 Shipments (83,200)
NCI (2.2M x 20%) 440,000 End (62,720) 250,880
Total 2,440,000 GP 133,120
FV of NA 2,200,000 Less:OPEX 46,080
Goodwill 240,000 HONI 87,040
Br True Net Income 21,760
6. A CNI 108,800
DS Transactions 2016 2017
SP 80,000 125,000 20. A
Cost 64,000 100,000 Sales (Purch 100,000 + Expenses 13,000 + Cr Bal + 80,000) 193,000
GP 16,000 25,000 COS: Beg 100,000
x50% x40% End ( 1,200 + 1,500) (2,700) 97,300
RGP 8,000 Gross Profit 95,700
DGP 10,000 Expenses (6,000+7,000) 13,000
Net Income 82,700
SALES REVENUE= 600,000 +300,000 – 125,000 = P 775,000
MAYA RIAN
7. B Investment 50,000 50,000
COGS: 480,000 + 250,000 -125,000 -8,000 +10,000 = 607,000
Share in NI (82,700/2) 41,350 41,350
Unsold Merch (1,200) (1,500)
8. A
Cash Due 90,150 89,850
9. C
10. B
COH
Temporal Method:
Sales (50,000+ 6,000+ 42,000) 98,000
AR CR 850,000
(50,000 + 7,000+38,000) 95,000
Inventories HR 575,000
Expenses (6,000) (7,000)
Plant Assets HR 900,000
92,000 88,000
TOTAL ASSETS 2,325,000
Cash Settlement
11. D
(90,150- 92,000) (1,850)
All items at Current Rates: TOTAL 2,650,000
(89,850- 88,000) 1,850
12. D
21. D
13. C
22. D
14. B The JA is a Joint Venture (Corporation), therefore the assets
Item: AR 1M * ( 0.32- 0.33) 10,000
transferred by the venturers is considered as an investment in
Instmnt: AP 1M (.305-.316)= 11,000
each venturers’ separate books.
11,000* .980296 (10,783)

Net Amount 783 CC: Investment in JV 600,000

Cash 600,000
15. D
15,000/3 = 5,000 * 2 months= 10,000 EE: Investment in JV 400,000
Equipment 380,000
16. B Gain on Eqpmnt 20,000
23. C AR Balance (345,600/ 37.5%) 921,600
Sales 13,125 Cash Collection 648,000
Less: COS (11,520+ 936) * 50/80 7,785 TOTAL SALES 1,569,600
Gross Profit 5,340
Less: OPEX (360+ 2,625) 2,985 34. A
Consignment Profit 2,355
Available Cash 300,000
Less: Prioritized Claims: FS 150,000
24. C
PS 75,000
Bal before Consignment Profit 2,316
US w/P (40,000 +5,000 +10,000) 55,000 280,000
Cons Profit 2,355
Cash Available for Unprioritized Claims 20,000
Adjusted Balance/ Inv End 4,671
Less: Unprioritized Claims
US Portion of PS Claim 25,000
25. C
US w/out Priority 75,000 100,000
26. C
Deficiency to Unprioritized Claims 80,000
Joint Cost (5M + 2M + 3M) 10M
Total # of Cases Produced 660,000
Recovery Rate (20,000/100,000) 20%
Rate 10M/ 660,000 15.15
35. D
36. A
DB: 240,000 * 15.15 3,636,000
PS 100,000: SP 75,000 x 100% 75,000
25,000 x 20% 5,000
27. B
Cash Paid 80,000
UP SP TOTAL SP
LB 300,000 20 6,000,000
37. C
DB 240,000 30 7,200,000
IP 120,000 15 1,800,000 Total estimated cash P 188,000
15,000,000
Less: Income taxes P 6,400
Note payable (SP) 72,000
Rate: 10M/ 15M= 2/3
LB: 6M * 2/3 = 4,000,000 Salaries payable 4,800
28. C Liquidation expenses 16,000 99,200
. ( 250,000- 200,000) 50,000 Available for non-priority claims P 88,800
Land (900,000- 800,000) 100,000 Les: Notes payable (UP) P 24,000
Total revaluation 150,000 Accounts payable 68,000
A: P 150,000 x 50% = P 75,000 Bonds payable 56,000 148,000
B: P 150,000 x 30% = P 45,000 Estimated deficiency P(59,200)
D: P 150,000 x 20% = P 30,000
Estimated recovery rate (ERR): 60%
29. D
Unadjusted Total Capital P 2,025,000 Notes payable P96,000
Revaluation of Assets 150,000 SP 72,000 x 100% P 72,000
Adjusted Capital before Admission 2,175,000 UP 24,000 x 60% 14,400
Divide by 4/5 P 86,400
Total Capital after Admission 2,718,750 38. D
Multiply by 1/5 39. B
Janice’s Investment for 1/5 Interest 543,750
40. B
41. D
30. A
Adj Bal Purchased Cap 42. C
A: P 810,000 + 75,000 = 885,000 177,000 43. A
B: P 729,000 + 45,000 = 774,000 * 20% 154,800 44. D
D: P 486,000 + 30,000 = 516,000 103,200 Unit
Prod NRV Joint Cost APC Total Cost Cost
Adj. Capital of Donna 516,000 X 31,000 21,700 5,000 26,700 33.38
Less: Purchased Capital 103,200
A 26,000 18,200 4,200 22,200 37.00
Balance of Donna after Purchase 412,800
K 27,000 18,900 4,000 21,900 54.75
Capital of B Purchased by J 154,800
84,000 58,800 10,200 70,800 -
Share in the Gain (15,000* 30%) 4,500
Cash Received by Blanche 159,300 45. B (Refer to above solution)
46. C
Loss= 450,000 -(2,175,000* 20%) = 15,000
PROD I PROD II SERV A SERVE B
31. A Budg costs P 480,000 P 520,000 P40,000 P60,000
Loss Absorption Capabilities: Alloc of A 19,630 18,518 (40,000) 1,852
B: 30,000/ 25% 120,000 Alloc of B 31,827 30,025 -- (61,852)
H: 130,000/ 25% 520,000
Totals P531,457 P 568,543 -- --
R: 150,000/ 50% 300,000

(520,000- 300,000) * 25% = 55,000 47. A (Refer to above solution)

48. A (Refer to above solution)
32. D 49. C
33. B
 Job #901 2021: (2M- 1.65M) * 100%= 350,000 – 325,000 25,000
FO Applied
Set-up P 800 59. B
Inspection 440 2017 (7,000/.35) – 12,000= 8,000 * .35 2,800
Materials handling 300 2018 (26,000/ .33)- 40,000= 38,788 * .33 12,800
Engineering 1,250 2019 (95,000/.32)- 80,000= 216,875 *.32 69,400
2,790 Total RGP 85,000
50. C
51. D 60. A
52. D 8,000+ 38,788 + 216,875 263,663
DM 950,000
Conv Cost 4,050,000 61. C
TMC 5,000,000 PV 56,250 * 2.91 163,687.50
53. C Discount 163,687.50* .14 22,916.25
SIP 475,000 Revenue 56,250- 22,916.25 33,333.75
Materials Conv Cost Since there is no cost available for the computation of the
C&T 425,000 425,000 425,000 GPR (no initial services required of the franchisor), there
IP,end 50,000 50,000 25,000 will be no RGP as well. Therefore, whatever is the amount
TOTAL 475,000 475,000 450,000 of collection applied on the principal will be recognized as
revenue for as long as there is already substantial
Unit Cost: performance.
Mat (950,000/ 475,000) 2
62. A
CC (4,050,000/ 450,000) 9
IP,beg 30,000
Total U nit Cost 11
SIP 80,000
Total 110,000
C&T 425,000 * 11 4,675,000
IP,end
C&T
Mat (50,000*2) 100,000
Ip,beg 30,000 - 3,150
CC (25,000*9) 225,000 325,000
S&C 56,000 56,000 56,000
IP, end 20,000 20,000 15,000
54. A
NLU 2,580 2,580 2,580
2019
ALU 1,420 1,420 1,420
ACTD: 550,000-50,000 500,000
TOTAL 110,000 80,000 78,150
ECTC 1,100,000
Est Total Cost 1,600,000
NLU= 86,000 * 3% 2,580
%of comp= 500/1,600 31.25%
ALU= 4,000- 2,580 1,420
2020
63. D
ACTD:
2019 500,000 Mat 160,000/ 80,000 2.00
2020 (50,000+ 825,000-50,000) 800,000 1,300,000 CC 120,000/ 78,150 1.54
ECTC 300,000 TOTAL 3.54
Est Total Cost 1,600,000
%of comp= 1,300/1,600 81.25% NLU: 2,580 * 3.54 = 9,133.20
ALU: 1,420* 3.54= 5,026.80
55. C
CIP 2M * 31.25% 625,000 64. B
PB 600,000 IP, end: Mat (20,000 * 2) 40,000
Current Asset 25,000 CC (15,000 * 1.54) 23,100

56. A 65. C
2019 2M * 31.25 % 625,000
2020 2M * 81.25% 1,625,000 - 625,000 1,000,000 DP 10,000
2021 2M 8 100% 2,000,000 – 1,625,000 375,000 PV of the note (8,000*3.99271) 31,941.68
Total Deferred Revenue 41,941.68
57. B No Subst Perf on the Jan 1, therefore, no amount of
2019: 500,000 revenue shall be recognized and the entire revenue shall be
2020: 800,000 deferred first.
2021: (75,000+ 375,000- 100,000) 350,000
Under cost to cost method and gross profit situation, 66. A
whatever is the actual cost, that is also the recognized cost IFF 41,941.68
CFF (240,000* 3%) 7,200.00
58. B Interest Rev (31,941.68* 8%) 2,555.33
2019: (2M – 1.6M) * 31.25% 125,000 Franchise Cost (25,165.00)
2020: (2M- 1.6M) * 81.25%= 325,000- 125,000 200,000 Indirect Cost ( 4,500.00)
 Net Income 22,032.01

67. D
IFF 41,941.68
Cost 25,165.00
GP 16,776.68
GPR 40%

RGP 10,000 + (8,000- 2,555.33)* 40% 6,177.8

68. C
Shares ( 100,000 * 30) 3,000,000
Cash 30,000
Equipment (50,000 * 70%) 35,000
TOTAL 3,065,000

69. B
Shares ( 100,000 * 30) 3,000,000
Cash 30,000
Equipment (50,000 * 70%) 35,000
Direct cost (50,000 + 10,000 + 20,000) 80,000
TOTAL 3,145,000

70. A
105,000/84,000 125%

COS (17,800+ 105,000 -23,400) 99,400

Overstatement 99,400/1.25*.25 19,880