Untitled
Untitled
Untitled
MANILA
Numbers 1 and 2
LMN entered into a long-term construction contract to construct an underpass for an initial contract
price of P75,000,000. During 2023, the contract price decreased due to the change in the project
design.
Numbers 3 and 4
On January 1, 2022, Vast Company accepted a long-term construction project for a fixed contract price
of P14,000,000 to be completed on November 30, 2024. The entity provided the following data
concerning the direct costs related to the said project for 2022 and 2023:
2022 2023
Costs incurred 4,200,000 6,300,000
Estimated remaining costs to complete at year-end 16,800,000 2,625,000
3. Under IFRS 15, compute the amount Vast Company should report as realized gross profit or
(loss) for the year ended December 31, 2023
A. 700,000
B. 875,000
C. 7,700,000
D. (6,300,000)
4. Under IFRS 15, compute the amount Vast Company should report as construction in
progress balance on December 31, 2023
A. 10,500,000
B. 11,200,000
C. 15,400,000
D. 18,200,000
Page 2
Numbers 5, 6 and 7
On January 1, 2022 Flex Inc. entered into a long-term construction contract to build an underpass for a
local government. The P15,000,000 construction project is expected to be completed in the last quarter
of 2026. Relevant excerpts from the contract are extracted:
● The contract price is subject to a bonus of P1,000,000 if the project is completed before
October 1, 2026.
● The contract price shall be reduced by a penalty of P1,500,000 if the project is completed after
December 31, 2026.
In year one, Flex Inc estimates that it is 40% likely to complete the project in August 2026, and 25%
likely that the project will be completed in February 2027. This estimate remained unchanged for the
following year. The estimate was readjusted to 50% chance for early completion and 20% chance for
delayed completion starting in the third year and onwards. Other relevant information were as follows:
6. Compute the construction cost of Flex Inc. presented in the Statement of Comprehensive
Income for the year ended December 31, 2025
A. 3,450,000
B. 3,300,000
C. 4,200,000
D. 5,820,000
7. Compute the gross profit of Flex Inc. realized in the Statement of Comprehensive Income for
the year ended December 31, 2026
A. 700,000
B. 500,000
C. (260,000)
D. (560,000)
Number 8
Statement 1: Under IFRS 15, revenue cannot be recognized unless the franchise agreement has an
observable stand-alone price.
Statement 2: There can only be exactly one performance obligation per franchise contract.
A. Both statements are true
B. Both statements are false
C. Statement 1 is true, statement 2 is false
D. Statement 1 is false, statement 2 is true
Page 3
Number 9
Fern Inc. signed a contract on October 1, 2022 worth P1,600,000 with the following performance
obligations stipulated:
● Provision of right to access the intellectual property for 5 years upon contract signing.
● Construction and renovation of the premises of the franchisee
● Delivery of 400,000 units of products
By the end of the year, construction and renovation of the premises were 70% incomplete and a total of
312,000 units were undelivered. The standalone selling prices for the rights to access the license,
renovation of the premises, and delivery of the goods are P700,000, P875,000, and P175,000
respectively.
Compute the revenue earned by Fern Inc. from this contract for the year ended December 31,
2022
A. 307,200
B. 716,800
C. 627,200
D. 396,800
XYZ consigned 10 items to his agent ABC and the items had a cost of P108,000 each. The freight was
prepaid from the principal to consignee amounting to P72,000. The sales price of each item was
P180,000. They also agreed that the consignee shall have a 15% commission based on the sales. The
following costs were paid by the consignee on behalf of the consignor: Selling expense P90,000;
cartage cost upon receipt of the consigned goods P9,000. At the end of the year, the consignee sold 6
items to customers.
11. Compute the cost of inventory still out on consignment in the books of ABC
A. 464,400
B. 432,000
C. 460,800
D. 0
Number 13
On January 1, 2022, Sharp Company granted a franchise to a franchisee. The franchise agreement
required the franchisee to pay a nonrefundable upfront fee in the amount of P750,000 and on-going
payment of royalties equivalent to 10% of the sales of the franchisee. The franchisee paid the
nonrefundable upfront fee on January 1, 2022.
In relation to the nonrefundable upfront fee, the franchise agreement required the entity to render the
following performance obligations which were separate and distinct from each other:
● To deliver 20,000 units of raw materials to the franchisee with stand-alone selling price of
P500,000.
● To allow the franchisee to access the entity's tradename for a period of 5 years starting January 1,
2022. The stand-alone selling price of the use of the trade name was P100,000.
On June 30, 2022, the entity completed the construction of the franchisee’s stall. On December 31,
2022, the entity was able to deliver 15,000 units of raw materials to the franchisee. For the year ended
December 31, 2022, the franchisee reported sales revenue amounting to P1,000,000.
14. Under IFRS 15, compute the amount Sharp Company should recognize as revenue from
initial franchise fee on the December 31, 2022 Statement of Comprehensive Income
A. 596,250
B. 0
C. 696,250
D. 750,000
15. Under IFRS 15, compute the amount Sharp Company should recognize as unearned revenue
in relation to the construction of the franchisee's stall on January 1, 2022
A. 300,000
B. 400,000
C. 750,000
D. 0
16. Under IFRS 15, compute the amount of franchise fee presented in the Statement of Financial
Position of Sharp Company on December 31, 2022
A. 0
B. 750,000
C. 696,250
D. 153,750
Number 17
Numbers 18 and 19
LMN Inc. purchased 100,000 units costing P3,500,000, and paid P35,000 freight for its shipment.
After a day, the company consigned these goods to QRS Inc. stating that the consignee is entitled to
10% of the revenue from all sold units. The shipment from the consignor to the consignee amounted to
P17,500 with payment terms Freight collect. With a standard retail price of P66.50, the consignee
remitted a total of P4,571,000. Other notable expenses paid by the consignee on the consignor’s behalf
were P42,000 advertising expense, P10,500 delivery charges to customers, P27,300 installation fee on
the customer’s premises.
Number 20
The franchise contract has 2 performance obligations, and payment will not occur until both
performance obligations are satisfied. Upon completion of one of the performance obligations: (1) the
franchisor will credit sales revenue; (2) the franchisor will debit accounts receivable.
A. Statement 1 is true; statement 2 is false
B. Statement 1 is false; statement 2 is true
C. Both statements are true
D. Both statements are false
Number 21
Statement 1: Both the consignor and consignee acts as co-agent of one another for the purpose of
selling merchandise to outside customers.
Statement 2: Expenses paid by the consignee on behalf of the consignor affects the computation of
both the net remittance to the consignor and net income of the consignor.
A. Both statements are true
B. Both statements are false
C. Statement 1 is true, statement 2 is false
D. Statement 1 is false, statement 2 is true
Number 22
Statement 1: The consignee may credit sales revenue only upon transfer of control relating to
merchandise held on consignment in some circumstances.
Statement 2: Freight-in and cartage cost related to returned goods previously held on consignment
affects the computation of net income of the consignor.
A. Both statements are true
B. Both statements are false
C. Statement 1 is true, statement 2 is false
D. Statement 1 is false, statement 2 is true
Page 6
Number 23
Statement 1: Construction in Progress and Progress Billings must equal the construction cost and
contract price respectively, upon completion of the project.
Statement 2: Construction cost presented in the Statement of Comprehensive Income is always the
actual cost incurred for the year.
A. Both statements are true
B. Both statements are false
C. Statement 1 is true, statement 2 is false
D. Statement 1 is false, statement 2 is true
Number 24
Statement 1: The percentage of completion method recognizes revenues, costs and gross profit as a
company makes progress toward completion on a long-term contract.
Statement 2: In long-term construction contracts, a company recognizes revenue at a point in time if it
can reasonably estimate its progress toward satisfaction of the performance obligations.
A. Both statements are true
B. Both statements are false
C. Statement 1 is true, statement 2 is false
D. Statement 1 is false, statement 2 is true
Jupiter Company applies overhead for Job #1 at 140% of direct labor cost and at 150% of direct labor
cost for Jobs #2 and #3. The total cost of Jobs #1 and #2 is the same.
26. What is the total amount of direct materials for Job #2?
A. 44,400
B. 90,000
C. 18,000
D. 23,400
27. Assume that Jobs #1 and #3 are not completed as of November. What is the balance in Work
in Process Inventory at the end of November?
A. 271,440
B. 347,040
C. 361,440
D. 227,040
Page 7
Bacolod Corp. uses job order costing system to produce its products. Its uses a single factory overhead
rate that is based on machine hours. Its manager believes that the company would be better if it will
use two overhead rates, one based on material costs and the other one is based machine hours. The
following data is for year 2023:
Budgeted FOH
Actual factory overhead related to materials was P318,400 and actual factory overhead related to
machine hours was P846,400.
28. Assuming Bacolod Corp uses predetermine factory overhead based on machine hours. What
is the predetermine rate of factory overhead?
A. 9.00
B. 6.50
C. 6.00
D. 8.90
29. Assuming Bacolod Corp uses predetermine factory overhead based on machine hours. What
is the factory overhead applied to job # 1?
A. 320,400
B. 605,200
C. 442,000
D. 50,400
30. Assuming Bacolod Corp uses the two overhead rates suggested by the manager to determine
factory overhead rates. What is the total cost of job #3?
A. 662,480
B. 901,200
C. 1,190,800
D. 700,400
Page 8
Numbers 31 and 32
Lexus Corp. manufactures surgical instruments to the exacting specification of customers. During
August 2023, Job 168 for the production of 40,500 units were completed at the following costs per
unit:
Direct Materials P120
Direct Labor 40
Factory Overhead applied 160
Final inspection of Job 168 disclosed 900 defective units and 450 spoiled units. The defective units
were reworked at a total cost of P108,000, and the spoiled units were sold for P27,000.
31. What is the unit cost of the good units produced on Job 168?
A. 320.00
B. 326.29
C. 325.62
D. 322.67
32. If the cost associated with rework and spoiled are considered as normal to production. What
is the amount of cost transferred to finished goods of Job 168?
A. 12,816,000
B. 12,960,000
C. 12,924,000
D. 12,996,000
Number 33
The LMN Corporation manufactures electrical meters. For October, there were no beginning
inventories of materials. LMN uses a Just in Time system and backflush costing with three trigger
points for making entries to record their manufacturing process. LMN’s October costs per meter are
direct materials, P150 and applied conversion costs, P120. The following data pertains to October
operations:
What are the balances of MIP inventory and Finished Goods inventory accounts at the end of
October?
A. 825,000 and 67,500, respectively
B. 825,000 and 1,417,500, respectively
C. 37,500 and 67,500, respectively
D. 37,500 and 1,417,500, respectively
Number 34
Which of the following is not a liability that has priority in corporate liquidation?
A. Administrative expenses incurred in the liquidation
B. Payroll taxes due to the government
C. Advertising expense incurred before the company became insolvent
D. Salaries payable
Page 9
Number 35
Which of the following costs shall be considered as both prime costs and conversion costs?
A. Supervisory salaries for a manufacturing plant
B. Property taxes on a manufacturing plant
C. Costs of direct materials used in the production.
D. Employee benefits earned by machine operators in producing the firm’s product
Number 36
XYZ Corp had provided the following information for transactions that occurred during September.
The company uses JIT costing system:
Numbers 37 and 38
The company has two main products, Alpha and Beta. Charlie on the other hand was a by-product of
Beta. Alpha and Beta came from the same raw material. Charlie was manufactured from the residue of
the process from creating product Beta. The cost before separation was P375,000. The company opted
to use the NRV (approximated) in accounting its joint costs and the NRV of product Charlie was a
reduction from the cost where it came from. The following data were ascertained during the year:
All material is added at the start of the process and all finished products are transferred out.
39. Assume that weighted average process costing is used. What is the cost per equivalent unit
for material?
A. 0.99
B. 1.18
C. 1.64
D. 1.73
40. Assume that FIFO process costing is used. What is the cost per equivalent unit for
conversion?
A. 3.05
B. 3.87
C. 4.25
D. 6.40
Number 41
Which of the following will increase the cost of goods sold of a manufacturing concern during the
year?
A. Adjusting entry for insignificant over-application of factory overhead
B. Decrease in the salary of the factory workers during the year
C. Increase in the work in process inventory during the year
D. Decrease in the finished goods inventory during the year
Number 42
In accounting for corporate liquidation, which of the following statements is incorrect?
A. Fully secured creditors no longer share in the remaining free assets after payment of unsecured
liabilities without priority.
B. Assets used as security for partially secured liabilities are offsetted to their secured debts and can
no longer be used to pay unsecured liabilities.
C. Unsecured credits with priority such as liabilities to employees and taxes due to government can
always be fully recovered by the said creditors in every corporate liquidation.
D. The unsecured portion of the liabilities to partially secured creditors are added to unsecured credits
without priority in the computation of recovery percentage of the unsecured creditors without
priority.
Page 11
Number 43
During corporate liquidation, which of the following types of creditors will always receive full
settlements of his claims?
A. Unsecured creditors with priority
B. Unsecured creditors with priority
C. Partially secured creditors
D. Fully secured creditors
Numbers 44 and 45
Andi Corporation is undergoing liquidation. On January 1, 2023 its Statement of Financial Position
showed the following accounts:
The mortgage payable is secured by the Building having a realizable value of P400,000. Accounts
Payable amounting to P75,000 is secured by receivables amounting to P90,600 (P9,900 of which is
uncollectible). The balance of receivables which has a realizable value of P 187,500 is used to secure
the loan payable. Inventory has a realizable value of P 41,200. In addition to recorded liabilities are:
accrued interest on mortgage payable amounting to P 4,280, liquidation expenses amounting P 11,300
and taxes amounting to P 5,600.
(NOTE: Use 2 decimal places for estimated recovery percentage ex. 88.89%)
Number 46
An actual cost system differs from a normal cost system in that an actual cost system
A. Assigns overhead as it occurs during the manufacturing cycle
B. Assigns overhead at the end of the manufacturing cycle
C. Does not assign overhead at all
D. Does not use an overhead control account
Page 12
Number 47
The following data were taken from the statement of realization and liquidation of DEF Corporation
for the month of September:
The ending balances of capital stock and retained earnings (gain/loss not yet closed) are P37,500 and
P36,000, respectively.
Numbers 48 and 49
Partners Charlie, Juliet, Mike, and Oscar have decided to liquidate their partnership. The liquidation
process will commence on January 1, 2024. Their statement of financial position as of December 31,
2023 shows the following balances:
Partners share the profits and the losses of the partnership equally. During 2024, trade receivables of
P300,000 were collected and the rest were deemed uncollectible. Inventories were sold for a total gross
profit of P13,000. Equipment was first refurbished for a cost of P8,000 cash before ultimately being
sold to a buyer for P740,000. Creditors of trade payable amounting to P7,000 condoned the amount
owed to them. Long-term debt incurred interests amounting to P1,000.
48. Assume that all partners are insolvent, how much cash will Charlie receive?
A. 177,667
B. 272,750
C. 550,000
D. 835,250
49. Assume that all partners are solvent, how much cash will Mike receive?
A. 0
B. 232,750
C. 272,750
D. 137,667
Page 13
Number 50
The partnership of Motobi, XSR, and Rebel is currently undergoing liquidation. The capital balances
of Motobi, XSR, and Rebel immediately before liquidation amounts to P120,000, P162,000, and
P389,000, respectively. At the end of the first month of liquidation, Motobi received cash of P20,000.
How much did Rebel receive at the end of the first month if Motobi has a 22% share in the
profits and losses, XSR has 33%, and Rebel has 45%?
A. 16,364
B. 30,000
C. 161,545
D. 184,455
Number 51
Immediately before the distribution of cash to partners YYZ and YDY at the end of the first month of
liquidation, unpaid liabilities amounted to P300,000, unrealized non-cash assets amounted to
P900,000, and anticipated expenses amounted to P210,000. Also during this time, the interests of YYZ
and YDY amounted to P732,000 and P865,000, respectively. At the end of the first month of
liquidation, YYZ received cash amounting to P487,000.
Which among the choices is possibly the profit and loss ratio of the partners [YYZ:YDY]?
A. 8:2
B. 4:6
C. 1:9
D. 1:1
Number 52
Zimetone Incorporated’s books currently show an investment in branch account amounting to
P492,000. Meanwhile, the branch concurrently has a home office current account amounting to
P489,000. The net loss of the branch for the period amounting to P3,000 has already been closed in its
books.
Number 53
Which of the following is true?
A. A partner with a debit balance in their capital at the end of the month will no longer be eligible to
receive cash in any type of liquidation
B. A partner who contributed an asset should always be credited the fair value of that asset in their
capital balance
C. Liabilities owed to partners should be settled simultaneously with liabilities owed to third party
creditors
D. The profits of the partnership may be shared by the partners in a ratio that is different from how
they share their losses
Page 14
Number 54
The reciprocal account of the home office is greater than the reciprocal account of the branch. Which
of the following is most likely the reason?
A. Net income of the branch is yet to be reflected in the books of the home office
B. Home office shipped goods to branch which the branch has already received and recorded
C. The branch failed to record a home office credit memo
D. The home office purchased equipment for the use of the branch
Numbers 55 and 56
PAENAC Corporation ships its goods to its branch at a mark-up of 25% above cost consistently every
year. During the year, they had the following transactions for consideration in the reconciliation of
their reciprocal account differences:
The home office shipped goods costing P132,000. The goods remained in transit as of the end
of the accounting period.
The branch returned goods to the home office which it carried at P20,000. The goods remained
in transit as of the end of the accounting period.
The home office collected P50,000 from branch customers, and the branch is yet to record the
credit memo sent by the home office for this.
The home office paid P48,000 of the branch’s accounts payable and the home office is yet to
make an entry for this and has not yet sent out the accompanying debit memo to the branch.
The branch recorded a debit memo it received amounting to P69,000 as a debit to the home
office current account amounting to P96,000
55. How much is the difference of the unadjusted reciprocal accounts of the home office and the
branch?
A. Investment in branch is higher by P300,000
B. Investment in branch is higher by P348,000
C. Home office current is higher by P133,000
D. Home office current is higher by P183,000
56. Assume that the correct balance of the reciprocal account should be P631,000, how much is
the investment in branch account before any adjustments?
A. 303,000
B. 468,000
C. 603,000
D. 651,000
Number 57
Number 58
In Home office and branch accounting, which of the following accounts is presented in the combined
financial statements?
A. Home Office Account
B. Shipments from Home Office
C. Allowance for Mark-up
D. None of the choices
Page 15
On January 1, 2023, Harley, Oscar, Penny and Emman decided to enter into a partnership agreement
and named it as HOPE Partnership. The partners agreed to contribute their personal assets and divide
the capital interest equally.
On December 31, 2023, HOPE Partnership had a net income of P120,000. The partners agreed to
allocate the net income with the following terms:
59. How much is the capital credit of the partners Harley, Oscar, Penny and Emman in the
formation of the partnership?
A. 157,500 each partner
B. 153,750 each partner
C. 184,500; 123,000; 123,000; 184,500, respectively
D. 150,000; 75,000; 125,000; 280,000, respectively
60. How much is the share of partner Emman in the net income allocation on December 31,
2023?
A. 37,537.50
B. 42,425.00
C. 42,462.50
D. 40,000.00
61. How much is the ending capital balance of Partner Oscar on December 31, 2023?
A. 182,287.50
B. 179,287.50
C. 187,212.50
D. Not in the choices
Number 62
On January 30, 2023, the partners of TRIPLE A Partnership, Allany and Anton, attended the birthday
party celebration of the other partner, Alexa. At the time that Alexa blew her birthday candles, she
intentionally put a lot of cake icing to Allany’s face. Due to Alexa’s actions, Allany felt humiliated and
decided to withdraw from the partnership the following day. The Trial balance of the partnership for
the month ended January 31, 2023 is as follows:
Dr. Cr.
Assets 265,000.00
Liabilities 125,000.00
Allany, Capital (30%) 30,000.00
Alexa, Capital (50%) 45,000.00
Anton, Capital (20%) 40,000.00
Revenues 40,000.00
Expense 15,000.00
Total 280,000.00 280,000.00
The agreement of the partners as to the allocation of net income is as follows:
a. Partners are entitled to 12% interest allowance based on their beginning capital balance.
b. Partner Anton receives P12,000 annual salary allowance.
c. Remainder divided to the partners based on their profit and loss ratio.
The partners agreed to revalue their assets pursuant to the withdrawal of Partner Allany, the balance of
Partner Anton’s capital after revaluation is P44,880. The cash settlement for Partner Allany’s capital
amounted to P36,445.
How much is the capital balance of Partner Alexa after the withdrawal of Partner Allany?
A. 53,950
B. 44,800
C. 54,025
D. 56,875
Numbers 64 and 65
The home office shipped merchandise to branch at 30% above cost. On December 31, 2023, the branch
warehouse was affected by a fire caused by fireworks from nearby residential area. The following
information was provided by the branch accountant:
December 1 - Merchandise Inventory P 100,000.00
Shipments from home office 65,000.00
Purchases from outside suppliers 30,000.00
According to the branch accountant, 60% of the December beginning inventory was from the home
office. Also, all the inventories in the warehouse at the day of fire was from the home office and the
warehouse man was able to save inventories from the home office shipment with a selling price of
P10,000.
64. How much is the cost of inventory destroyed by fire in the branch books?
A. 45,000
B. 37,500
C. 50,000
D. 27,500
65. How much is the cost of sales of the branch coming from the home office at billed price?
A. 160,000
B. 117,500
C. 80,000
D. 90,000
Page 17
Numbers 66 and 67
On October 31, 2023 the partners of TATTERS Partnership decided to file for bankruptcy. The trial
balance presented below are the balances before any adjustment and liquidation procedures:
Dr Cr
Cash P 95,000
Accounts Receivables 100,000
Equipment 200,000
Prepaid Rent 50,000
66. How much is the payment received by Partner Cheddar on November 30?
A. Nil
B. 5,000
C. 10,000
D. 45,000
67. How much is the payment received by Partner Nacho Cheese on December 31?
A. 77,000
B. 61,500
C. 55,500
D. 51,500
Page 18
Number 68
Which of the following about home office and branch accounting is incorrect?
A. The shipments to branch account is always credited at cost in the home office books.
B. The shipments from branch account is always credited at billed price in the branch books.
C. Home office shipments at billed price will always result to a branch net income lower than its
reported branch net income in the combined financial statement.
D. The working paper elimination entries are not recorded in the separate books of the home office
and the branch.
Numbers 69 and 70
The following information are from the books of SMC Corporation and its branch in Tayuman. The
balances as of December 31, 2023 are as follows:
All shipments are completed before December 31, 2023. The ending balance of the branch inventory
totaled P150,000 which includes P40,000 merchandise from outside suppliers.
70. If Tayuman Branch sells its inventory with a mark up 50% based on cost, how much is the
net income of the branch in the combined financial statement?
A. 387,500
B. 925,000
C. 515,500
D. 537,500