The document contains sample questions from an exam on accounting and finance topics such as partnerships, business combinations, and consolidated financial statements. The questions range from easy to difficult and cover calculating percentages, recording partnership transactions, recognizing revenue, preparing consolidated financial statements, and eliminating intercompany transactions.
The document contains sample questions from an exam on accounting and finance topics such as partnerships, business combinations, and consolidated financial statements. The questions range from easy to difficult and cover calculating percentages, recording partnership transactions, recognizing revenue, preparing consolidated financial statements, and eliminating intercompany transactions.
The document contains sample questions from an exam on accounting and finance topics such as partnerships, business combinations, and consolidated financial statements. The questions range from easy to difficult and cover calculating percentages, recording partnership transactions, recognizing revenue, preparing consolidated financial statements, and eliminating intercompany transactions.
The document contains sample questions from an exam on accounting and finance topics such as partnerships, business combinations, and consolidated financial statements. The questions range from easy to difficult and cover calculating percentages, recording partnership transactions, recognizing revenue, preparing consolidated financial statements, and eliminating intercompany transactions.
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AFAR
Easy Questions
1. When the Insolvent Company filed for bankruptcy, it prepared the following balance sheet: Current assets (net realizable value P500,000) P800,000 Land and building (fair market value of P2,400,000) 2,000,000 Goodwill 400,000 3,200,000
Accounts payable (unsecured) P1,600,000
Mortgage payable (secured by land and building) 2,000,000 Common stock 1,000,000 Retained earnings (1,400,000) 3,200,000 What percentage of their claims will the unsecured creditors likely to get? (C) a. 43.75% b. 50% c. 56.25% d. 100%
2. On July 1, 2013, Monuz and Pardo form a partnership, agreeing to share profits and losses in the ration of 4:6 respectively. Monuz contributed a parcel of land that cost him P25,000. Pardo contributed P50,000 cash. The land was sold for P50,000 on July 1, 2013 four hours after formation of the partnership. How much should be recorded in Monuz capital account on formation of the partnership? (D) a. P10,000 b. P20,000 c. P25,000 d. P50,000
3. Red, White and Blue form a partnership on May 1, 2013. They agree that Red will contribute office equipment with a total fair value of P40,000; White will contribute delivery equipment with a fair value of P80,000; and Blue will contribute cash. If Blue wants a one thirdinterest in the capital and profits, he should contribute cash of: (C) a. P40,000 b. P120,000 c. P60,000 d. P180,000
4. On October 1, 2018, Hay Realty Co. sold to Mae a property for P500,000 which it carried in its books for P250,000. The company received P100,000 on the date of the sale and a mortgage note for P400,000 payable in twenty (20) semiannual installments of P20,000 plus interest on the unpaid principal at 16% per annum. The realized profit to be recognized by Hay Realty Co. in 2013 if the gross profit is recognized periodically in proportion to collections would be (A) a. P50,000 b. P100,000 c. P60,000 d. P250,000
5. White Corporation paid P100,000 cash for the net assets of Oro Company, which consisted of the following: Book Value Fair Value Current assets P20,000 P28,000 Property and Equipment 80,000 110,000 Liabilities assumed 20,000 18,000 The property and equipment acquired in the business combination should be recorded at: (A)
a. P110,000 b. 100,000 c. 91,666 d. P90,000
Average Questions
1. Quincy Enterprises uses the installment method of accounting and has the following data at year-end: Gross margin on cost 66 2/3% Unrealized gross profit P192,000 Cash collections including down payments 360,000
What was the total amount of sale on installment basis? (840,000)
2. Which of the following would be included in an entry to record the remittances of income taxes to the Bureau of Treasury (BTR) collected by the Bureau of Internal Revenue (BIR)? The BIR has no authority to use the collections. (C) a. Debit to Cash-Collecting Officer b. Debit to Cash- NT- MDS c. Credit to Cash – Collecting Officer d. Credit to Cash – NT – MDS
3. Albert University, a private nonprofit university, had the following cash inflows during the year ended December 31, 2018: I. P500,000 from students for tuition II. P300,000 from a donor who stipulated that the money be invested indefinitely III. P100,000 from a donor who stipulated that the money be spent in accordance to the wishes of Albert’s Board of Directors
On Albert University’s statement of cash flows for the year ended December 31, 2018, what amount of these cash flows should be reported as operating activities? (P600,000) 4. KC Food Corp. granted a franchise to Tony. Tony was to pay P1,000,000 payable in five equal annual installments starting with the payment upon signing of the franchise agreement. The franchisee was to pay monthly 5% of gross sales of the preceding month. Should the operation of the outlet prove to be unprofitable, the franchise may be cancelled with whatever obligation owing KC, in connection with the P1,000,000 franchise fee, waived.
The first year of operations generated gross sales of P500,000. For the first year, KC Food Corp. should report revenue from franchise fee of: (P225,000)
5. Arthuro Perez, a partner in the AP Partnership, has a 30% participation in partnership profits and losses. Perez’s capital account has a net decrease of P60,000 during the calendar year 2018. During 2018, Perez withdrew P130,000(charged against his capital account) and contributed property valued at P25,000 to the partnership. What was the net income of the AP Partnership for 2018? (150,000)
Difficult Question
1. On January 1, 2018, Peru Company paid P900,000 for an 80% interest in Syria Company at a price of P30,000 less than the underlying book value. The excess was allocated to overvalued equipment with a three-year remaining useful life.
The net income of Peru and Syria from their own operations for 2018 are P400,000 and P100,000 respectively. What is the consolidated comprehensive income on December 31, 2018? (510,000)
2. Pal Inc. owns 80% of Spirit Company’s stock. During October 2018, Spirit sold merchandise to Pal for P100,000. On December 31, 2018, one-half of the merchandise remained in Pal’s inventory. For 2018, the gross profit percentages were 30% for Pal and 40% Spirit. What amount of unrealized intercompany profit in ending inventory at December 31, 2013 should be eliminated in consolidation? (20,000)
3. Agency X have an obligation for equipment per purchase order amounting to P800,000. Subsequently, the agency liquidates the equipment acquired in full. The entry to record this transaction would be (ignore tax implication) (A)
a. Memorandum entry in RAOCO
b. Accounts payable 800,000 Cash-National Treasury-MDS 800,000 c. Subsidy income from National Government 800,000 Cash-National Treasury-MDS 800,000 d. Obligation Liquidated 800,000 Cash-National Treasury-MDS 800,000
