Team PRTC Nationwide Open Online Final Pre-Board Examination

October 2021 Licensure Examination for Certified Public Accountants (LECPA)

September 26 to 28, 2021

Suggested Answers and Solutions

MANAGEMENT ADVISORY SERVICES (MAS)

1 C 16 A 31 D 46 C 61 A
2 C 17 D 32 C 47 B 62 B
3 B 18 D 33 D 48 D 63 D
4 D 19 D 34 C 49 B 64 D
5 B 20 C 35 A 50 B 65 B
6 B 21 C 36 A 51 C 66 A
7 C 22 B 37 C 52 A 67 C
8 D 23 B 38 B 53 D 68 B
9 D 24 C 39 A 54 D 69 B
10 B 25 B 40 B 55 D 70 C
11 D 26 D 41 B 56 A
12 D 27 B 42 A 57 A
13 B 28 C 43 C 58 C
14 A 29 D 44 C 59 B
15 C 30 D 45 A 60 D

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 AUDITING (AUD)

1 D 16 A 31 D 46 C 61 B
2 B 17 C 32 D 47 A 62 A
3 B 18 C 33 C 48 D 63 D
4 D 19 D 34 B 49 A 64 B
5 B 20 D 35 D 50 B 65 A
6 C 21 B 36 B 51 D 66 A
7 C 22 A 37 B 52 A 67 D
8 B 23 D 38 A 53 B 68 B
9 C 24 B 39 A 54 C 69 A
10 B 25 C 40 C 55 D 70 A
11 D 26 C 41 A 56 A
12 C 27 C 42 B 57 D
13 D 28 A 43 A 58 A
14 A 29 D 44 C 59 B
15 B 30 C 45 D 60 C

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Solution to Computational Problems

PROBLEM NO. 1 - Happy Corporation

Question No. 36 - B
Adjusting journal entry:
Accounts payable 100,000
Inventory 100,000

Question No. 37 - B
Adjusting journal entry:
Inventory 180,000
Accounts payable 180,000

Question No. 38 - A
Adjusting journal entry:
Sales 420,000
Inventory 210,000
Accounts receivable 420,000
Cost of sales 210,000

Question No. 39 - A
Effect on
inventory
Over (Under)
Note 1 100,000
Note 2 (180,000)
Note 3 (210,000)
Note 4 (150,000)
Note 5 -
Net misstatement (440,000)

Question No. 40 - C

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 PROBLEM NO. 2 - Cheerful Corporation

Question No. 41 - A
Question No. 42 - B
Question No. 43 - A
Profit
over
(under)
2018:
Unrecorded loss on trade-in of Truck 3:
Trade-in value (P340,000 - P150,000) 190,000
Carrying amount,7/1/18 (P300,000 x 3.5/5) 210,000 20,000
Overstatement of depreciation expense:
Truck No. 1 (P180,000/5) 36,000
Truck No. 2 (P220,000/5) 44,000
Truck No. 3 (P300,000/5 x 6/12) 30,000
Truck No. 4 (P240,000/5) 48,000
Truck No. 5 (P340,000/5 x 6/12) 34,000
Should be depreciation expense 192,000
Depreciation expense per books 203,000 (11,000) 9,000 (41)
2019:
Unrecorded loss on sale of Truck 1:
Sales proceeds 35,000
Carrying amount, 1/1/19 (P180,000 x 1/5) 36,000 1,000
Overstatement of depreciation expense:
Truck No. 2 (P220,000/5) 44,000
Truck No. 4 (P240,000/5) 48,000
Truck No. 5 (P340,000/5) 68,000
Should be depreciation expense 160,000

Depreciation expense per books 211,000 (51,000) (50,000) (42)

2020:
Unrecorded loss on disposal of Truck 4:
Sales proceeds 7,000
Insurance proceeds 25,000
Total 32,000
Carrying amount, 7/1/20 (P240,000 x 2/5) 96,000 64,000
Erroneous credit to Miscellaneous Income 7,000
Overstatement of depreciation expense:
Truck No. 2 (P220,000/5 x 6/12) 22,000
Truck No. 4 (P240,000/5 x 6/12) 24,000
Truck No. 5 (P340,000/5) 68,000
Truck No. 6 (P360,000/5 x 6/12) 36,000
Should be depreciation expense 150,000

Depreciation expense per books 244,500 (94,500) (23,500) (43)

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 CA,
Question No. 44 - C Cost Acc. Dep. 12/31/21
Truck No. 1 (sold, 1/1/18) - - -
Truck No. 2 (acquired, 7/1/15) 220,000 220,000 -
Truck No. 3 (traded-in, 7/1/19) - - -
Truck No. 4 (damaged and sold, 7/1/20) - - -
Truck No. 5 (acquired, 7/1/18) 340,000 238,000 102,000
Truck No. 6 (acquired, 7/1/20) 360,000 108,000 252,000
920,000 566,000 354,000
Question No. 45 - D

PROBLEM NO. 3 - Merry Company

July
6/30 Receipts Disb 7/31

Unadjusted bank balances 66,405 76,800 77,395 65,810

Outstanding checks
June (4,742) (4,742)
July 5,857 (5,857)
Deposits in transit
June 3,156 (3,156)
July 2,238 2,238
NSF check redeposited - July (472) (472)
Withdrawal error - July (386) 386

Adjusted bank balances 64,819 75,410 77,652 62,577

(46-C) (47-A) (48-D) (49-A)

Unadjusted book balances 62,150 75,304 77,150 60,304

Bank service charges
June (165) (165)
July 175 (175)
Interest earned
June 3,054 (3,054)
July 3,160 3,160
Direct deposits
June 675 (675)
July 675 675
Book errors
June (895) (895)
July 492 (492)

Adjusted book balances 64,819 75,410 77,652 62,577

Question No. 50 - B

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 PROBLEM NO. 4 - Joyful, Inc.

Question No. 51 - D
Customer Invoice Date Amount
Cheap Inc. 20-Dec 550,000
1-Dec 1,200,000
11-Oct 950,000
4-Aug 420,000

Cruddy Co 20-Nov 2,000,000

4-Sep 900,000
2-Aug 500,000
4-Dec

Grubby Inc. 10-Dec 1,750,000

4-Oct 600,000
5-Jul 500,000

Paltry Corp. 9-Sep 2,600,000

10-Jul 1,250,000
5-Mar 900,000

Nasty Co. 1-Dec (500,000)

Total per SL 13,620,000

Balance per GL 13,650,000
Unreconciled difference 30,000

Question No. 52 - A
Balance per SL 13,620,000
Account with credit balance (Nasty) 500,000
Adjusted accounts receivable 14,120,000

Question No. 53 - B

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 1-60 days 61-120 days >120 days
Customer Invoice Date Amount Adjustment Current PD PD PD
Cheap Inc. 20-Dec 550,000 550,000
1-Dec 1,200,000 1,200,000
11-Oct 950,000 950,000
4-Aug 420,000 420,000

Cruddy Co 20-Nov 2,000,000 2,000,000

4-Sep 900,000 900,000
2-Aug 500,000 500,000
4-Dec 600,000 600,000

Grubby Inc. 10-Dec 1,750,000 1,750,000

4-Oct 600,000 (600,000)
5-Jul 500,000 500,000

Paltry Corp. 9-Sep 2,600,000 2,600,000

10-Jul 1,250,000 1,250,000
5-Mar 900,000 900,000

Nasty Co. 1-Dec (500,000) 500,000

Total per SL 13,620,000 6,100,000 4,450,000 2,670,000 900,000

Amount Rate Allowance

Current 6,100,000 2% 122,000
1-60 days PD 4,450,000 5% 222,500
61-120 days PD 2,670,000 20% 534,000
>120 days PD 900,000 50% 450,000
14,120,000 1,328,500

Adjusted allowance for doubtful accounts, 12/31 1,328,500

Unadjusted allowance for doubtful accounts, 12/31 950,000
Doubtful accounts expense 378,500

Question No. 54 - C
Adjusted accounts receivable, 12/31 14,120,000
Adjusted allowance for doubtful accounts, 12/31 (1,328,500)
NRV 12,791,500

Question No. 55 - D

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 PROBLEM NO. 5 - Gleeful Corp.

Templar Company (Sept. 5 lot) Shares Cost/share Total

Purchase, Sept. 5 20,000 47.50 950,000

Sale, Oct. 5 (use FIFO) (20,000) 47.50 (950,000)

Balance, Dec. 31 - -

Cash paid 1,000,000

Less Purchased dividend 50,000
Correct acquisition cost 950,000

Question No. 56 - A
Sales proceeds (20,000 shares x P65) 1,300,000
Less Cost of investment sold 950,000
Gain on sale 350,000

Question No. 57 - D
Cash received 3,300,000
Less dividends sold (20,000 shares x P5) 100,000
Net sales proceeds 3,200,000
Less Cost of investment sold 1,040,000
Gain on sale 2,160,000

Question No. 58 - A
Fair value, 12/31 (30,000 x P60) 1,800,000
Less carrying amount before FV adjustment 1,560,000
Unrealized gain 240,000

Templar Company (Oct. 1 lot) Shares Cost/share Total

Purchase, Oct. 1 50,000 52.00 2,600,000

Sale, Nov. 30 (20,000) 52.00 (1,040,000)

Balance, Dec. 31 30,000 52.00 1,560,000

Question No. 59 - B
Acquisition cost 1,170,000
Share of profit (P800,000 x 19.5%) 156,000
Dividends received (P200,000 x 19.5%) (39,000)
Investment balance, 12/31 1,287,000

* Use equity method since there is a significant influence, i.e. Gleeful's President
is represented in the board of directors.
Question No. 60 - C

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 PROBLEM NO. 6 - Delighted Corporation

Question No. 61 - B
Issue price 4,000,000
Less liability component:
PV of principal (P4,000,000 x
0.3427) 0.3427 1,370,800
PV of interest [(P4,000,000 x 5%) x
11.9504] 11.9504 2,390,080
3,760,880
Equity component 239,120

Question No. 62 - A
PV of principal (P4,000,000 x 0.5854) 0.5854 2,341,600
PV of interest [(P4,000,000 x 5%) x
7.5376] 7.5376 1,507,520
Carrying amount, 12/31/20 3,849,120

Question No. 63 - D
Carrying amount of bonds retired
(P3,849,120 x 1/2) 1,924,560
Less retirement price (fair value, 1/1/21)
PV of principal (P2,000,000 x 0.6756) 0.6756 1,351,200
PV of interest [(P2,000,000 x 5%) x
8.1109] 8.1109 811,090
2,162,290
Gain (Loss) on retirement of bonds (237,730)

Question No. 64 - B
Retirement price (P4,400,000 x 1/2) 2,200,000
Less payment applied to liability component (see no. 63) 2,162,290
Payment allocated to equity 37,710

Question No. 65 - A
Ordinary shares to issued - amended terms (P2,000,000/P20) 100,000
Ordinary shares to issued - original terms (P2,000,000/P25) 80,000
Incremental ordinary shares to be issued 20,000

Value of incremental shares to be issued (20,000 x P32) 640,000

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 PROBLEM NO. 7 - Propitious, Inc.

Question No. 66 - A
Adjusted RE, 1/1/21 (P6,470,000 + P210,000) 6,680,000

Question No. 67 - D
Adjusted RE, 1/1/21 (see no. 66) 6,680,000
Net income 4,500,000

Dividends - PS (100,000 x P50 x .09) (450,000)

Dividends - OS [(2M - 20T + 500T ) x P1] (2,480,000)

RE, 12/31/21 8,250,000

Question No. 68 - B
Share premium, 12/31/20 7,500,000
Jan. 5 - Share premium - PS [100,000 x (P54-P50)] 400,000
Apr. 30 - Share premium - OS [500,000 x (P17 - P10)] 3,500,000
Nov. 10 - Share premium - TS [10,000 x (P21 - P16)] 50,000
Share premium, 12/31/21 11,450,000

Question No. 64/44 - A

Share capital - PS (100,000 x P50) 5,000,000
Share capital - OS (2,500,000 x P10) 25,000,000
Share premium (see no. 68) 11,450,000
Retained earnings (see no. 67) 8,250,000

Treasury shares (10,000 x P16) (160,000)

Total equity, 12/31/21 49,540,000

Question No. 70 - A

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 TAXATION (TAX)

1 C 16 A 31 C 46 A 61 A
2 C 17 D 32 B 47 D 62 A
3 C 18 B 33 D 48 A 63 A
4 C 19 C 34 C 49 D 64 A
5 B 20 B 35 C 50 D 65 A
6 D 21 D 36 A 51 A 66 A
7 D 22 D 37 A 52 C 67 A
8 D 23 A 38 B 53 A 68 D
9 A 24 A 39 B 54 A 69 D
10 A 25 B 40 C 55 A 70 A
11 B 26 B 41 A 56 A
12 C 27 C 42 B 57 A
13 A 28 C 43 D 58 A
14 C 29 C 44 A 59 A
15 A 30 C 45 B 60 A

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 No. Explanation/Solution
1. RMCs are retroactive in nature and merely clarifies provisions of existing laws.
2. Statements are true.
3. Partly true only. Income tax for individual can be 8% or graduated.
4. -
5. Specific rule.
6. Estate or trust is subject to graduated tax rate.
7. -
8. Multiple employers are required to file.
9. Exemption threshold if single purchase is Php 10,000.
10. Selling price 2,000,000
Cost 1,000,000
Net capital gain 1,000,000
Rate 15%
CGT 150,000
11. Specific rule.
12. Statements are true.
13. Basic salary (100,000 x5 mos.) 500,000
Divide by 12
13th month pay 41,667

14. Basic salary (100,000 x 5 mos) 500,000

13th month pay 41,667
COVID-19 Special Risk Allowance (20,000 x 5) 100,000
Hazard pay (20,000 x 5) 100,000
Fixed allowances (20,000 x 5) 100,000
Overtime pay (20,000 x 5) 100,000
De minimis benefits (20,000 x 5) 100,000
Housing allowance (20,000 x 5) 100,000
SSS (5,000 x 5) 25,000
Philhealth (5,000 x 5) 25,000
Pagibig (5,000 x 5) 25,000
TOTAL GROSS COMPENSATION 1,216,667

15. Solution: 13th month pay 41,667

COVID-19 Special Risk Allowance (20,000 x 5) 100,000
De minimis benefits (20,000 x 5) 100,000
SSS (5,000 x 5) 25,000
Philhealth (5,000 x 5) 25,000
Pagibig (5,000 x 5) 25,000
TOTAL NON-TAXABLE 316,667

16. Specific rule.

17. Government is generally not subject to taxation.

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 No. Explanation/Solution
18. Zonal value (higher) 10,000,000
Less; Deduction 250,000
Net donation 9.750,000
Rate 6%
Donor’s tax 585,000

19. Donation of PERSONAL PROPERTY is not subject to DST. Only real property is subject to DST.
20. Deemed sale; taxable donation; donation of personal property is exempt from DST.
21. Any active income is required to be reported.
22. Output Tax (1M x 20 x 12%) 2,400,000
Input (1M x 18 x 12%) 2,160,000
Payable 240,000
Less: Tax credit (5%) 1,000,000
Overpayment (760,000)

23. Income of NRFC is derived from sources without the Philippines.

24. Payment is in Philippine Peso.
25. Export Sale by an PEZA-export oriented is subject to 0-rate.
26. Sale by an PEZA-export oriented to another is PEZA-export oriented enterprise is 0-rated sale.
27. Sale of roasted chicken is not subject to VAT if not offered for dine-in.
28. Collection is the basis of VAT if taxpayer is seller of service.
29. Specific rules.
30. Specific rule.
31. Specific rules.
32. DST is due on the 5th day following month of transaction.
33. Procedural rule.
34. If taxpayer replied, the BIR can issue the FLD/FAN even within the 15-day period.
35. Procedural rule.
36. Procedural rules dictate that FLD/FAN will follow after the PAN.
37. Procedural rule.
38. Procedural rule.
39. a) is wrong because second MR is not allowed; c) is wrong because MR does not toll the prescriptive
period; d) is wrong because CTA has no more jurisdiction for being the petition filed late; b is correct
because that is the effect in case of taxpayer failure to elevate the case on time.
40. Express provision of rule.
41. Express provision of rule.
42. Express provision of rule.
43. Express provision of rule.
44. DTI is the proper office which issues Certificates of Authority.
45. Express provision of rule

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 No. Explanation/Solution
46. 2,500,000 (See below)
47. 2,400,000 (See below)
48. 9,000 (See below)
Value to be Heir X Heir Y Heir Z
Used
Supposed Share:
Residential land 3,000,000 1,000,000 1,000,000 1,000,000
Commercial land 2,400,000 800,000 800,000 800,000
Agricultural land 2,100,000 700,000 700,000 700,000
Supposed Share 7,500,000 2,500,000 2,500,000 2,500,000
Value received EJS 7,500,000 3,000,000 2,400,000 2,100,000
Subject to Donor’s Tax (500,000) 100,000 400,000
Exclusions (Deduction) (250,000) (250,000)
Amount subject to DN (150,000) 150,000
Rate of Donor’s Tax 6%
Donor’s Tax 9,000
49. Gross sales – 1,500,000
Rental income 1,000,000
Total receipts 2,500,000
Less: 250,000
Taxable income 2,250,000
Rate 8%
Income tax due 180,000

50. Gross sales – 1,500,000

Rental income 1,000,000
Total receipts 2,500,000
Less: OSD 1,000,000
Taxable income 2,500,000

Income tax due 2,500,000

2,000,000 490,000
Excess 500,000 x 32% 160,000
Total Annual Income Tax Due 650,000

51. Gross receipts 4,250,000

OSD (40% of GR) 1,700,000
Taxable income 2,550,000

Tax due 666,000

Less: 2307 425,000
Overpayment 241,000

52. Donation of personal property is not subject to DST

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 No. Explanation/Solution
53. • Five apartment units Php 10,000 monthly each = 600,000 – VAT exempt
• Five residential condominium units – Php 10,000 monthly each = 600,000 VAT exempt
• Five commercial units – Php 10,000 monthly each = 600,000 x 12% = 72,000
54. Output tax – 2,400,000
Input tax – 1,920,000
Payable – 480,000
Less: paid – 600,000 (tax paid 350,000 + 5% creditable VAT 250,000)
Payable (Overpayment) – (120,000)

• Sales to regular customers – Php 15,000,000 x 12% = 1,800,000

• Sales to government – Php 5,000,000 x 12% = 600,000
• VAT-exempt sales – Php 5,000,000 = 0
• Zero-rated sales – Php 5,000,000 x 0% =
Total output tax = 2,400,000

• Purchase of capital goods – Php 1,000,000 x 12% = 120,000

• Domestic purchase of goods - Php 5,000,000 x 12% = 600,000
• Domestic purchase of services - Php 5,000,000 x 12% = 600,000
• Imported goods – Php 5,000,000 x 12% = 600,000
Total input tax = 1,920,000

55. VAT PAYABLE:

• Output tax VATable (12%) sales – Php 4,000,000 x 12% = 480,000
• Less: total allowable input – 284,000
• Payable – 196,000
• Less: 100,000
• Payable – 96,000

TOTAL AVAILABLE INPUT TAX

• Carry-over from previous period – Php 1,000,000
• Purchase of capital goods worth Php 1,000,000 X 12% = 120,000
• Domestic purchase of goods worth Php 1,000,000 X 12% = 120,000
• Domestic purchase of services worth Php 1,000,000 X 12% = 120,000
• Imported goods worth Php 1,000,000 X 12% = 120,000
TOTAL AVAILABLE = 1,480,000

TOTAL ALLOWABLE INPUT TAX

Total available input – 1,480,000
Less:
o Filed application for tax credit certificate amounting to Php 100,000
o Filed application for tax refund amounting to Php 1,000,000
o Input on exempt sale (1M/5M x 480,000) - 96,000
Total allowable input – 284,000

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 No. Explanation/Solution
56. 2020 1st and 2nd Quarters 3rd and 4th Quarters
Gross receipts 1,500,000 1,500,000
Rate 3% 1%
PT 45,000 15,000
Total Php 60,000

57. 2020 1st and 2nd Quarters 3rd Quarter only

Gross receipts 1,000,000 2,000,000
Rate 3% 1%
PT 30,000 20,000
Total Php 50,000

58. 2021 1st – 3rd Quarters

Gross receipts 3,000,000
Rate 1%
PT 30,000

59. Gross sales 10,000,000

Cost of sales 6,000,000
Gross income 4,000,000
OSD 1,600,000
Net income 2,400,000
Rate 20%
Income tax due 480,000

60. Gross sales 10,000,000

Cost of sales 6,000,000
Gross income 4,000,000
Operating Expenses 2,000,000
Net income 2,000,000
Rate 20%
RCIT 400,000
MCIT (4M x 1%) 40,000

61. Gross sales 10,000,000

Cost of sales 6,000,000
Gross income 4,000,000
Operating Expenses 5,900,000
Net income (1,500,000)
Rate 20%
RCIT 0
MCIT (4M x 1%) 40,000

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 No. Explanation/Solution
62. Gross sales 100,000,000
Cost of sales 60,000,000
Gross income 40,000,000
Operating Expenses 30,000,000
Net income 10,000,000
Rate 25%
RCIT 2,500,000
MCIT (40M x 1%) 400,000

63. None. RCIT is higher than MCIT.

Gross sales 100,000,000
Cost of sales 60,000,000
Gross income 40,000,000
Operating Expenses 30,000,000
Taxable income 10,000,000
Rate 25%
RCIT 2,500,000
MCIT (40M x 1%) 400,000

64. Gross sales 10,000,000

Cost of sales 3,000,000
Gross income 7,000,000
Operating Expenses 1,000,000
Net income 6,000,000
Rate 25%
RCIT 1,500,000
MCIT 0 (newly registered)

65. Gross sales 10,000,000

Cost of sales 8,000,000
Gross income 2,000,000
Operating Expenses 5,000,000
Net income (loss) (3,000,000)
Rate 20%
RCIT 0
MCIT 0 (newly registered)

66. Solution: Gross sales 5,000,000,000

Cost of sales 4,000,000,000
Gross income 1,000,000,000
Operating Expenses 500,000,000
Net income (loss) 500,000,000
Rate 25%
RCIT 125,000,000
MCIT 0 (newly registered)

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 No. Explanation/Solution
67. Gross sales 100,000,000
Cost of sales 60,000,000
Gross income 40,000,000
Operating Expenses 50,000,000
Net income (loss) (10,000,000)
Rate 25%
RCIT 0
MCIT (40M x 1%) 400,000

68. Net operating losses incurred in 2020 and 2021 can be carried over within 5 consecutive years.
69. If bank deposits are subject to 6% final tax, the deposits are not part of the gross estate
70. Conjugal Family Home 10,000,000
Shares in ABC Corp 1,000,000
Conjugal property (Jewelry of Inday) 2,000,000
Bank deposits 5,000,000
Gross estate 18,000,000
Less: Deductions
Losses 2,000,000
Unpaid mortgage 1,000,000 3,000,000
Net estate before special deduction 15,000,000
Less: Share of Inday 7,500,000
Net estate before special deductions 7,500,000
Less: Special deductions:
Family home 5,000,000
Standard deduction 5,000,000 10,000,000
Net estate 0

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS (RFBT)

1 D 21 C 41 A 61 D 81 B
2 B 22 D 42 D 62 D 82 A
3 C 23 E 43 B 63 C 83 D
4 B 24 E 44 B 64 D 84 B
5 D 25 B 45 B 65 D 85 D
6 C 26 B 46 C 66 D 86 C
7 C 27 C 47 C 67 D 87 B
8 B 28 C 48 A 68 D 88 B
9 C 29 C 49 C 69 D 89 B
10 C 30 D 50 C 70 B 90 D
11 D 31 D 51 B 71 C 91 C
12 A 32 E 52 D 72 A 92 B
13 D 33 A 53 D 73 D 93 A
14 B 34 A 54 D 74 A 94 A
15 A 35 D 55 C 75 C 95 C
16 D 36 A 56 A 76 A 96 B
17 D 37 A 57 C 77 C 97 B
18 C 38 D 58 B 78 D 98 C
19 A 39 D 59 B 79 D 99 D
20 C 40 B 60 A 80 D 100 A

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 FINANCIAL ACCOUNTING AND REPORTING (FAR)

1 C 16 C 31 D 46 A 61 A
2 C 17 C 32 A 47 D 62 D
3 B 18 C 33 B 48 B 63 C
4 A 19 A 34 A 49 C 64 C
5 C 20 B 35 C 50 D 65 B
6 D 21 A 36 C 51 C 66 B
7 B 22 B 37 B 52 B 67 B
8 C 23 C 38 C 53 D 68 A
9 D 24 A 39 C 54 C 69 D
10 C 25 A 40 A 55 B 70 D
11 B 26 A 41 A 56 C
12 A 27 C 42 D 57 D
13 D 28 D 43 C 58 A
14 A 29 D 44 A 59 A
15 D 30 B 45 D 60 D

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Solutions to Computational Problems

Question No. 1 - C
Question No. 2 - C
Inventory based on physical count 325,000
Add (deduct) adjustments:
Goods purchased FOB shipping point 30,000
Goods sold FOB destination 38,000
Goods out on consignment 12,000
Adjusted inventory 405,000

Question No. 3 - B
Journal entry, 12/16
Accounts payable [(P8,600+P7,500)x.97] 15,617
Purchase discount lost (P8,600 x .03) 258
Cash (P8,600 + (P7,500 x .97)] 15,875

Question No. 4 - B
Cost 18,000
Net realizable value
Estimated selling price (P25,000 x .8) 20,000
Cost to correct defect (6,000)
Commission (P20,000 x .1) (2,000) 12,000
Loss on write down 6,000

Question No. 5 - C
List price of the equipment 14,000
Cash discount (deduct whether taken or not) (200)
Freight 250
Installation costs 430
Testing costs 295
Cost of new equipment 14,775

Question No. 6 - D
Depreciation - 2021 (P5.4M x .75 x .75 x .25) 759,375

Question No. 7 - B
Cost 50,000
Carrying amount, 12/31/20 (P50,000 x .6 x .6) (18,000)
Accumulated depreciation, 12/31/20 32,000
Depreciation - 2021 (P18,000/3) 6,000
Accumulated depreciation, 12/31/21 38,000

Question No. 8 - C
Deemed cost of the building (Fair value, 12/31/20) 24,000,000
Depreciation - 2021 (P24M/24) (1,000,000)
Carrying amount, 12/31/21 23,000,000

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Question No. 9 - D
Depletion expense [12,500 tons x (P3.5M/1M) x 7] 306,250

Question No. 10 - C
Depreciation expense [12,500 tons x (P90,000/1M) x 7] 7,875

Question No. 11 - B
Cost 10,000,000
Accumulated depreciation, 12/31/21 (P10M x .9 x 3/5) (5,400,000)
Carrying amount, 12/31/21 4,600,000
Recoverable amount (FV less costs of disposal) 4,500,000
Impairment loss 100,000
CA after impairment (RA) 4,500,000

Question No. 12 - A
Sales proceeds, net 9,200,000
Carrying amount after classification as HFS (P11M - P1.5M) 9,500,000
Gain (loss) on disposal (300,000)

Question No. 13 - D
Income from government grant - 2021 (P1,800,000 x 5/15) 600,000

Question No. 14 - A
Currency and coins 650
Balance in checking account 2,600
Customer checks waiting to be deposited 1,200
Commercial paper, purchased on 11/2/21, mature on 1/30/22 5,000
Cash and cash equivalents 9,450

Question No. 15 - A
Balance per bank statement, 12/31 1,465,800
Outstanding checks, 12/31 (624,750)
Receipts of 12/31, deposited 1/2 95,550
Unrecorded proceeds of bank loan (195,000)
Deposit of 12/23, omitted from bank statement 53,000
Errneous bank charge 82,100
Unrecorded proceeds of note collected by bank, net (40,300)
Erroneous debit memo 100,000
Errneous bank credit (25,000)
Cash balance per books, 12/31 911,400

Question No. 16 - C
Question No. 17 - C
Carrying amount, 1/1/21 (P1,000,000 - P200,000) 800,000
Less principal repayment:
Annual installment (P800,000/5.3349) 149,956
Applicable to interest (P800,000 x .1) (80,000) 69,956
Carrying amount, 12/31/21 730,044 nearest C

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Question No. 18 - C
Computation of effective interest rate:
PVF at 6%,
Cash flows 30 periods PV, 6/1/21
12,000,000 0.1741 2,089,200
600,000 13.7648 8,258,880
10,348,080
Amortization schedule - partial
Date EI (6%) NI (5%) Disc. Amort. C.A.
6/1/21 10,348,080
11/30/21 620,885 600,000 20,885 10,368,965
5/31/22 622,138 600,000 22,138 10,391,103

Carrying amount, 11/30/21 (see schedule) 10,368,965

Discount amortization - December (P22,138 x 1/6) 3,690
Carrying amount, 12/31/21 10,372,655

Question No. 19 - A
When an entity uses settlement date accounting for an asset that is subsequently
measured at cost or amortised cost, the asset is recognized initially at its fair value
on the trade date. (PFRS 9 par. 5.1.2)

Question No. 20 - B
Question No. 21 - A
Dividend income from Jang 350,000
Share of profit of Geum (P10,000,000 x 30%) 3,000,000
Total income from investments in ordinary shares 3,350,000

Question No. 22 - B
Cost 400,000
Share of profit - 2020 (P80,000 x 30%) 24,000
Carrying amount, 12/31/20 424,000
Share of loss - 2021 (P32,000 x 30%) (9,600)
Dividend received (P10,000 x 30%) (3,000)
Carrying amount, 12/31/21 411,400

Question No. 23 - C
Interest expense - 2021 (P64,000 x 3.6048 x .12 x 6/12) 13,842

Question No. 24 - A
CA of old liability (P1M + P120,000) 1,120,000
PV of new liability (Discounted at 12%):
PV of reduced principal (P700,000 x .7118) 498,260
PV of interest (P700,000 x .08 x 2.4018) 134,501 632,761
Gain on debt extinguishment 487,239 44%
Interest expense - 2021 (P632,761 x .12) 75,931

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Question No. 25 - A
Carrying amount, 12/31/20 10,300,000
Premium amortization, 1/1 - 9/1/21 (P12,000 x 8) (96,000)
Carrying amount, 9/1/21 10,204,000
Retirement price ##########
Gain on bond retirement 204,000

CA, 12/1/18 (P10,800,000 - P200,000) 10,600,000

CA, 12/31/20 ##########
Premium amortization, 12/1/18 to 12/31/20 300,000
/ Number of months, 12/1/18 to 12/31/20 25
Monthly premium amortization 12,000

Question No. 26 - A
Question No. 27 - C
Lease payments (P2,000,000 x 10) 20,000,000
Unguaranteed residual value 1,000,000
Gross investment in the lease (P2,000,000 x 10) 21,000,000
Less net investment
PV of lease payments 13,518,000
PV of unguaranteed residual value 386,000 13,904,000
Total finance income over the lease term 7,096,000

Question No. 28 - D
Accrued pension liablity, 1/1 (P10M - P9M) 1,000,000
Defined benefit expense, net
Current service cost 3,000,000
Gain on settlement (500,000)
Interest on DBO (P10M x .06) 600,000
Interest on PA (P9M x .06) (540,000)
Remeasurement loss on DBO 800,000
Remeasurement gain on PA (P630,000 - P540,000) (90,000) 3,270,000
Accrued pension liablity, 12/31 (500,000)
Required contribution 3,770,000

Question No. 29 - D
Cumulative expense, year 3 {167 x 100 x [(P21 x 3/3) + (P3 x 2/2)]} 400,800
Cumulative expense, year 2 {165 x 100 x [(P21 x 2/3) +(P3 x 1/2)]} (255,750)
Expense - year 3 145,050

Question No. 30 - B
Question No. 31 - D
A deferred tax liability shall be recognized for all taxable temporary differences, except to the
extent that the deferred tax liability arises from the initial recognition of an asset or liability
in a transaction which is not a business combination and at the time of the transaction,
affects neither accounting profit nor taxable profit. (PAS 12 par. 15(b)(ii) )

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Question No. 32 - A
Carrying
amount Tax base Difference Remarks
Property 10,000,000 7,000,000 3,000,000 TTD
Plant and equipment 5,000,000 4,000,000 1,000,000 TTD
Inventory 4,000,000 6,000,000 2,000,000 DTD
Trade receivables 3,000,000 4,000,000 1,000,000 DTD

Increase in deferred tax liability (P4M x .25) 1,000,000

Increase in deferred tax asset (P3M x .25) (750,000)
Deferred tax expense (benefit) 250,000
Question No. 33 - B
Total proceeds 10,000,000
Fair value of bonds (2,500,000)
Allocated to equity components 7,500,000

Fair value of PS (20,000 x P150) 3,000,000

Fair value of OS (60,000 x P100) 6,000,000
Total 9,000,000

Allocated to PS (P7.5M x 3/9) 2,500,000

Question No. 34 - A
Share warrants (100,000 x P2) 200,000
Option to buy the entity's own shares (60,000)
Forward to buy the entity's own shares (P120,000 x .9091) (109,092)
Net increase in equity 30,908

Question No. 35 - C
PS OS Total
Basic 15,000 10,000 25,000
Participation 45,000 30,000 75,000
Total 60,000 40,000 100,000

Question No. 36 - C
Market value of assets 298,000
Liabilities (70,000)
Preference shares liquidation value (20,000 x P2.20) (44,000)
Preference shares dividend (20,000 x P.10) (2,000)
Amount available to ordinary (common) shareholders 182,000
Divide by ordinary shares outstanding 30,000
Amount per share to be received by ordinary shareholder 6.07

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Question No. 37 - B
Profit 10,000,000
PS dividends (100,000 x P15) (1,500,000)
Profit to OS 8,500,000
/WA outstanding OS 1,000,000
Basic EPS 8.50

Profit to OS WA O/S OS EPS

Basic 8,500,000 1,000,000 8.50
Conversion of bonds 1,950,000 300,000
10,450,000 1,300,000 8.04
Conversion of PS 1,500,000 150,000
11,950,000 1,450,000 8.24

Question No. 38 - C
Question No. 39 - C

Question No. 40 - A
Effect on
profit
Inc (Dec)
Dec. 31, 2019 inventory -
Dec. 31, 2020 inventory (150,000)
Dec. 31, 2021 inventory 200,000
50,000

Question No. 41 - A
Question No. 42 - D
Question No. 43 - C
Question No. 44 - A

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 CA CL Others
Accounts payable 66,000
Accounts receivable 40,000
NCA
Accumulated depreciation 44,000
deduction
Advances to sales persons 10,000
Advertising Expense 72,000 Expense
Allowance for Bad Debts (10,000)
Bonds payable 80,000 NCL
Cash 22,000
Certificates of deposit 16,000
Share capital, (par) 100,000 Equity
Deferred income tax liability 46,000 NCL
Equipment 215,500 NCA
Inventory 55,000
Investment in X Co. shares 76,500 NCA
Investment in Y Co. shares 21,000
Share premium 42,500 Equity
Premium on Bonds Payable 6,000 NCL addition
Prepaid Insurance 6,000
Rent revenue 37,000 Income
Rent revenue received in advance (4 months) 12,000
Retained earnings 97,500 Equity
Taxes payable 10,000
Tools 52,000 NCA
160,000 88,000

Working capital (P160,000 - P88,000) 72,000

Question No. 45 - D
Question No. 46 - A
Question No. 47 - D
Question No. 48 - B
Sales 20,000,000
Cost of goods sold (12,000,000)
Selling expenses (1,200,000)
General and administrative expenses (1,800,000)
Interest expense (1,500,000)
Gain on early extinguishment of long-term debt 500,000
Investment income – equity method 600,000
Gain on sale of investment 2,000,000
Income tax expense (2,100,000)
Income from continuing operations 4,500,000

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Question No. 49 - C
Sales revenue 975,000
Interest income 20,000
Share of profit of associates 15,000
Other income 8,000
Decrease in inventories of finished goods (25,000)
Raw materials and consumables used (350,000)
Employee benefit expenses (150,000)
Depreciation of property and equipment (45,000)
Impairment of property (80,000)
Finance costs (35,000)
Other expenses (45,000)
Income tax expense (75,000)
Profit 213,000

Question No. 50 - D
Question No. 51 - C
Net cash inflows from operating activities 720,000
Decrease in trade payables 23,000
Decrease in inventory (11,500)
Increase in trade receivables 24,600
Loss on sale of plant (P25,000 - P14,000) (11,000)
Increase in allowance for doubtful debts (1,000)
Profit for the period 744,100

Question No. 52 - B
Net income 360,000
Amortization 20,000
Depreciation 60,000
Increase in accounts receivable (140,000)
Increase in inventory (48,000)
Decrease in accounts payable (76,000)
Increase in salaries payable 28,000
Cash provided by operating activities 204,000

Question No. 53 - D
Question No. 54 - C
Question No. 55 - B
Question No. 56 - C
Question No. 57 - D
Question No. 58 - A
Question No. 59 - A
Question No. 60 - D
nominal peso conversion factor constant peso
Net monetary items, 1/1 1,600,000 133.1/110 1,936,000
Sales 6,000,000 133.1/121 6,600,000
Purchases (2,400,000) 133.1/121 (2,640,000)
Operating expenses (1,800,000) 133.1/121 (1,980,000)
Income tax expense (1,200,000) 133.1/121 (1,320,000)
Cash dividends declared, 9/1 (400,000) 133.1/131 (406,412)
Net monetary items, 12/31 1,800,000 2,189,588
Purchasing power loss 389,588

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Question No. 61 - A
Question No. 62 - D
Advertising expense 100,000
Bonus to executives (P480,000/4) 120,000
Total expense for the quarter ended, 4/30/21 220,000

Question No. 63 - C
Question No. 64 - C
Increase in equity (1,000 x P110 x 50%) 55,000

If the entity receives the cash or other resources before the equity instruments are issued,
and the entity cannot be required to repay the cash or other resources received,
the entity shall recognise the corresponding increase in equity to the extent of consideration
received. (PFRS for SMEs par. 22.7(c) )

Question No. 65 - B
Investments in shares shall be carried at cost less impairment, unless the investment in shares
are traded in an active market, which shall be measured at the lower of cost or fair value.
(PFRS for SEs par. 103 b) )

Question No. 66 - B
See no. 65

Question No. 67 - B
Royalty remittances paid 300,000
Prepaid royalties, 12/31/20 55,000
Prepaid royalties, 12/31/21 (45,000)
Royalties payable, 12/31/20 (80,000)
Royalties payable, 12/31/21 75,000
Royalty expense - 2021 305,000

Question No. 68 - A
Total increase in equity 32,000
Contributions from owners (65,000)
Dividends declared (balancing figure, work back from net income) 73,000 ?
Net income (P500,000 - P460,000) 40,000

Question No. 69 - D
Debit/Credit difference
Omission of Inventory 1,350
Prepaid insurance listed as credit (P450 x 2) 900
Salaries expense listed as Utilities expense -
2,250

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Question No. 70 - D
Capital before closing entries 12,500
Net income (loss):
Revenue 22,000
Purchases (19,200)
Rent (5,400)
Bank interest (825)
Heat and light (4,475) (7,900)
Drawings (4,100)
Capital, 5/1/21 500

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 ADVANCED FINANCIAL ACCOUNTING AND REPORTING (AFAR)

1 B 16 B 31 D 46 A 61 D
2 B 17 D 32 B 47 D 62 D
3 D 18 A 33 A 48 C 63 B
4 C 19 B 34 B 49 D 64 B
5 B 20 B 35 B 50 C 65 A
6 A 21 D 36 A 51 D 66 A
7 D 22 C 37 C 52 B 67 D
8 D 23 A 38 A 53 D 68 B
9 C 24 C 39 A 54 B 69 C
10 D 25 A 40 D 55 A 70 A
11 B 26 C 41 B 56 D
12 C 27 D 42 C 57 B
13 C 28 D 43 D 58 A
14 D 29 D 44 D 59 D
15 A 30 B 45 A 60 D

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 Solution to Computational Problems

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch
 END

Team PRTC Nationwide Open Online Final Pre-Board Examination October 2021 Batch