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    Advanced Accounting - Answers and Solutions: Problem 1. D

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    Daniel Hunks
    This document contains 20 problems related to advanced accounting concepts. The problems cover topics such as bankruptcy, foreign currency translation, business combinations, and construction accounting. For each problem, the relevant accounting information and calculations are shown to arrive at the solution.

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    Advanced Accounting - Answers and Solutions: Problem 1. D

    Uploaded by

    Daniel Hunks
    308 views4 pages
    This document contains 20 problems related to advanced accounting concepts. The problems cover topics such as bankruptcy, foreign currency translation, business combinations, and construction accounting. For each problem, the relevant accounting information and calculations are shown to arrive at the solution.

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    This document contains 20 problems related to advanced accounting concepts. The problems cover topics such as bankruptcy, foreign currency translation, business combinations, and construction accounting. For each problem, the relevant accounting information and calculations are shown to arrive at the solution.

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    © All Rights Reserved
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    308 views4 pages

    Advanced Accounting - Answers and Solutions: Problem 1. D

    Uploaded by

    Daniel Hunks
    This document contains 20 problems related to advanced accounting concepts. The problems cover topics such as bankruptcy, foreign currency translation, business combinations, and construction accounting. For each problem, the relevant accounting information and calculations are shown to arrive at the solution.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 4

    ADVANCED ACCOUNTING - ANSWERS AND SOLUTIONS:

    Problem 1. D

    Fully secured Partially Unsecured


    secured
    Cash P124,200 P222,000 P 59,640 P 360
    Inventory 53,000 375,000 79,000
    Receivable 13,000
    Less:
    Unsecured
    with priority
    Trustees (9,500) 58,500
    salary
    Salaries (50,000) 80,000
    payable
    Taxes (4,000)
    Net free assets 126,700
    Total 217,860
    unsecured
    without priority

    Recovery percentage: 126,700/217,860 = 58%

    Partially secured: 434,640 + 79,360(58%) = P480,669

    Problem 2. B

    Recovery percentage = 25%


    A: P124,000 + 9,920 = 133,920; 133,920 115,000 = 18,920; 18,920 * 25% =
    4,730 TOTAL PAYMENT = P119,730
    B: P136,000 + 13,600 = 149,600; 149,600 * 25% = P37,400
    C: P137,500 + 7,452 = 144,952
    D: P12,220

    A = partially secured; B = unsecured w/o priority; C = fully secured; D = unsecured


    with priority

    Problem 3. C

    Problem 4. A

    Exchange Peso
    rate
    Net assets, 1/1/12 115,000 45 P5,175,0
    00
    Net income, 2012 90,000 43.75
    3,937,50
    0
    Div. declared, 9/1/12 40
    (15,000) (600,000
    )
    Net income, 2013 22,500 45
    1,012,50
    0

    9,525,00
    0
    Net assets translated using the rate at the end 212,500 47.50 10,093,7
    of the year 50
    Exchange difference (Translation adjustment)
    56,8750

    Problem 5. B
    Oct. 31, 2013 Dec. 31, 2013 Jan. 31, 2014
    Intrinsic Value 7,250 14,500 29,000
    Time Value 1,000 2,500 -

    12/31/11 Time value = 1,500 gain


    1/31/12 Intrinsic value = 14,500 gain

    Page 2

    Problem 6. D

    May 1 May 31 June 30


    Intrinsic value 0 12,500 37,500
    Time Value 14,000 5,000 1,500

    Equity 37,500 gain


    Earnings (5000 1500) 3,500 loss

    Problem 7. D

    125,000 * (92.20 91.90) = 37,500 loss

    Problem 8. A

    Hedged item:
    2,750 (48 43) 13,750 gain
    Hedging instrument:
    2,750 (43 49) 16,500 loss
    Net forex loss 2,750

    Problem 9. C

    Cost of You Corp.


    investment
    MV of stocks issued 875,000 Net assets at FV 660,000
    Contingent 15,000
    consideration
    Total 890,000 660,000
    Goodwill 230,000

    Assets:
    Loves assets at BV 900,000
    Add: Goodwill 230,000
    Less: Cash payments (53,000)
    Yous assets at FV 695,000
    Total assets 1,772,000

    Problem 10. B

    Ayiziel Vianney
    FV of net assets 2,990,000 903,000

    Common stocks issued, at 2,843,750 789,250


    par
    Related APIC 406,250 112,750
    Cost of investment 3,250,000 902,000

    Goodwill/(income fr. acq.) 260,000 (1,000)


    Retained earnings:
    Acquirers RE + income from acquisition related costs stock issuance costs in
    excess of related APIC
    4300000 + 1000 118500 69750 = P4,112,750

    Problem 11. B

    Page 3

    Problem 12. C

    Direct Cost P75,000


    Set-up (25*7500) 187,500
    Utilities (7.60*15000) 114,000
    No. of parts (20*550) 11,000
    Total Cost 387,500
    Cost per Unit (387500/25000) P15.50

    Problem 13. D

    Direct materials P42,500


    Direct labor 65,250
    FOH 78,300
    Direct materials rework 13,550
    Direct labor rework 15,250
    FOH rework 18,300
    Total cost 233,150
    Cost per unit (233150/450) P518.11

    Problem 14. C

    Direct materials P450,000


    Direct labor 520,000
    OH (5.50*120000) 660,000
    Less: Disposal value (24,000)
    Total cost of good units 1,606,000

    Problem 15. B

    (Final selling price Selling price at split-off) Additional processing cost =


    Incremental profit
    (3 1.50) 2.50 = (1)

    Problem 16. D

    Let x = Fixed Overhead rate per machine hour

    40,000x = 42,000x 28,500 14.25/60% = 23.75 total OH rate per


    machine hour
    28,500 = 2,000x 23.75 * 40% = 9.50 Variable overhead
    rate per MH
    x = 14.25 per machine hour

    Problem 17. B
    GP rates: Repossessed merchandise 3,400
    2011 = 35% Deferred gross profit 3,000
    2012 = 40% Loss on repossession 1,100
    2013 = 35% Installment AR 2012(3,000/40%) 7,500

    Realized gross profit:


    2011: 90,000*35% = 33,250
    2012: (167,500-7,500)*40% = 64,000
    2013 = (600,000 490,000)*35% = 38,500
    TOTAL RGP 135,750

    Page 4

    Problem 18. D

    2011: Anticipated total loss 50,000


    2012: 28/35 = 80% Percentage of completion
    Construction price 33,600,000
    Estimated total cost 31,900,000
    Gross profit 1,700,000
    Percentage of completion 80%
    RGP to date 1,360,000
    Less: RGP, 2010 (50,000)
    RGP, 2011 1,410,000

    Problem 19. A

    Deferred revenue:
    500,000 * 3.60478 = 1,802,390

    Problem 20. B

    Branch Current Manila Home Office Current


    Unadjusted balance 522,110 461,490
    a. - 14,500
    b. - 36,000
    c. (10,120) -
    d. 52,920 52,920
    Adjusted balance 564,910 564,910

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