STATEMENT OF FINANCIAL POSITION (Balance Sheet)

I. Theories
1) Which of these classifications are needed for a liability to be considered under current liability?
I. expected to be settled beyond the entity's normal operating cycle
II. Held for purpose of trading
III. Due to be settled after 12 months
IV. For which the entity does not have an unconditional right to defer settlement beyond
12 months (settlement by the issue of equity instruments does not impact
classification).
A. I and II only C. II and IV only
B. I and III only D. I, II and III only

2) The following are considered as identifiable intangible assets in the balance sheet except
A. Computer software C. Good will
B. Franchise D. Trademark

3) These are often attached to the borrowing agreement which represents undertaking by the
borrower.
A. Agreements C. Acknowledgement of Borrowing
B. Promissory Note D. Covenants

4) Under PAS 1, paragraph 7, the holders of instruments classified as equity are simply known
as
A. Owners C. Proprietors
B. Entity D. Shareholders

5) Animals involved in recreational activities shall be classifies as

A. Property, Plant and Equipment C. Investments
B. Inventory D. Biological Asset

Answer Key
1) C. II and IV only (CFAS 2019, pg. 146)
2) C. Goodwill (CFAS 2019, pg. 148)
3) D. Covenants (CFAS 2019, pg. 151)
4) A. Owners (CFAS 2019, pg. 152)
5) A. Property, Plant and Equipment (CFAS 2019, pg. 488)

LADRINGAN, Justine Jane R.

BSA 2-1
PUP Taguig
 STATEMENT OF FINANCIAL POSITION (Balance Sheet)
II. Problems
1) Using the data provided by Lucky One Company for December 31, 2019, determine the
company’s total current assets?
Accounts receivable Php 1,200,000
Financial asset at fair value through profit or loss 400,000
Financial asset at amortized cost 1,000,000
Cash 8,800,000
Inventory 600,000
Equipment and furniture 2,100,000
Accumulated depreciation 600,000
Patent 99,000
Prepaid expenses 700,000
Equipment classified as held for sale 10,000,000
A. Php 11,700,000
B. Php 21,400,000
C. Php 21,700,000
D. Php 22,700,000
Answer: C.
Accounts receivable Php 1,200,000
Financial asset at fair value through profit or loss 400,000
Cash 8,800,000
Inventory 600,000
Prepaid expenses 700,000
Equipment classified as held for sale 10,000,000
Total current assets Php 21,700,000
“Financial asset at amortized cost” is treated as a noncurrent asset, unlike the “financial
asset through profit or loss” that is a meant for trade, thus a current asset.

2) Monster Incorporated provided the following data on December 31, 2019:

Accounts payable Php 562,165
Accrued taxes 72,365
Dividends – ordinary share 2,000,000
Dividends – preference share 1,000,000
Income summary – credit balance 821,585
Mortgage payable (Php 500,000 due in 6 months) 5,500,000
Note payable, January 2021 457,645
Ordinary share capital 5,000,000
Preference share capital 3,500,000
Premium on notes payable 718,945
Retained earnings, December 31, 2018 545,425
Share premium 500,000
Unamortized issue cost on notes payable 85,465
Unearned rent income 354,815
What is the amount of noncurrent asset for 2019?
A. Php 6,091,125
B. Php 6,163,490
LADRINGAN, Justine Jane R.
BSA 2-1
PUP Taguig
 C. Php 6,334,420
D. Php 6,689,235
Answer: A.
Mortgage payable (Php 5,500,000 – Php 500,000) Php 5,000,000
Note payable, January 2021 457,645
Less: unamortized issue cost (85,465)
Premium on notes payable 718,945
Total noncurrent liabilities Php 6,091,125
PFRS 9 treats unamortized issue cost as a deduction from the related financial liability.

3) The following balance of Cloud 9 Corp. on December 31, 2019 has been adjusted except
for income tax
Cash 79,800
Accounts receivable (net) 282,100
Inventory 218,500
Property, plant and equipment (net) 1,029,150
Accounts payable 105,000
Accrued liabilities 75,000
Income tax payable 159,300
Deferred tax liability 87,600
Share capital 250,000
Share premium 300,000
Retained earnings, January 1, 2019 335,000
Net sales and other revenues 1,512,300
Costs and expenses 1,000,000
Income tax expense 214,650
2,824,200 2,824,200
During this year, estimated tax payment of Php 27,500 was charged to income tax expense.
The income tax rate is 30% on all types of income. On December 31, 2019, the retained
earnings will be reported with an amount of:
A. Php 297,650
B. Php 484,800
C. Php 592,900
D. Php 693,610
Answer: D.
Net sales and other revenues Php 1,512,300
Costs and expenses 1,000,000
Income before income tax Php 512,300
Less: 30% income tax (153,960)
Net income Php 358,610
Retained earnings, January 1, 2019 335,000
Retained earnings, December 31, 2019 Php 693,610

4) Heaven Finances carried a provision of Php 2,470,000 in its overdraft financial statement on
December 31, 2019 in relation to an unresolved court case. On January 31, 2020, when the
financial statement on December 31, 2019 had not yet been authorized for issue, the case
was settled and the court decided the final total damages payable by Heaven Finances to
LADRINGAN, Justine Jane R.
BSA 2-1
PUP Taguig
 be Php 3,650,000. What amount should be adjusted on December 31, 2019 in relation to
this event?
A. 0
B. Php 118,000
C. Php 2,470,000
D. Php 3,650,000
Answer: B.
Damages payable (actual liability) Php 3,650,000
Less: Provision recognized prior to case settlement 2,470,000
Retained earnings, December 31, 2019 Php 118,000

5) One and Only Services was incorporated on June 9,2019, with Php 3,250,000 from the
issuance of share capital and borrowed funds of Php 1,500,000. During its first year of
operation, the entity recorded a net income of Php 984,871. On December 15, 2019, the
company has paid Php 212,500 cash dividends. No additional activities affected the
shareholder’s equity for 2019. At the end of the year, the liabilities had increased to Php
516,973. On December 31, 2019, what amount should be reported as total assets?
A. Php 1,289,344
B. Php 1,501,844
C. Php 4,539,344
D. Php 4,964,344
Answer: C.
Liabilities Php 516,973
Share capital 3,250,000
Retained earnings
(net income of Php 984,871 less cash dividends
of Php 212,500) 772,371
Total liabilities and shareholders’ equity Php 4,539,344
Assets = Liabilities + Shareholder’s Equity

LADRINGAN, Justine Jane R.

BSA 2-1
PUP Taguig