Scribd Logo
Upload

Welcome to Scribd!

  • 9 views

    AFAR Quiz 2

    Uploaded by

    Philip Laroza
    1. Cagayan Company underwent bankruptcy and liquidation. Its statement of financial position before liquidation showed assets of P800,000 including inventory worth P250,000 and land worth P120,000. 2. Surigao Company also underwent bankruptcy and liquidation. Its statement of financial position before showed assets of P200,000 and accounts payable of P85,000. 3. Entity A and Entity B incorporated Entity C to manufacture microchips. Entity C's statement of financial position showed assets of P6,000,000 including inventory. Entity A and B's interests in Entity C's assets and liabilities were based on their capital interests of 60% and 40%.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    AFAR Quiz 2

    Uploaded by

    Philip Laroza
    9 views3 pages
    1. Cagayan Company underwent bankruptcy and liquidation. Its statement of financial position before liquidation showed assets of P800,000 including inventory worth P250,000 and land worth P120,000. 2. Surigao Company also underwent bankruptcy and liquidation. Its statement of financial position before showed assets of P200,000 and accounts payable of P85,000. 3. Entity A and Entity B incorporated Entity C to manufacture microchips. Entity C's statement of financial position showed assets of P6,000,000 including inventory. Entity A and B's interests in Entity C's assets and liabilities were based on their capital interests of 60% and 40%.

    Original Description:

    Original Title

    AFAR quiz 2

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    1. Cagayan Company underwent bankruptcy and liquidation. Its statement of financial position before liquidation showed assets of P800,000 including inventory worth P250,000 and land worth P120,000. 2. Surigao Company also underwent bankruptcy and liquidation. Its statement of financial position before showed assets of P200,000 and accounts payable of P85,000. 3. Entity A and Entity B incorporated Entity C to manufacture microchips. Entity C's statement of financial position showed assets of P6,000,000 including inventory. Entity A and B's interests in Entity C's assets and liabilities were based on their capital interests of 60% and 40%.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    9 views3 pages

    AFAR Quiz 2

    Uploaded by

    Philip Laroza
    1. Cagayan Company underwent bankruptcy and liquidation. Its statement of financial position before liquidation showed assets of P800,000 including inventory worth P250,000 and land worth P120,000. 2. Surigao Company also underwent bankruptcy and liquidation. Its statement of financial position before showed assets of P200,000 and accounts payable of P85,000. 3. Entity A and Entity B incorporated Entity C to manufacture microchips. Entity C's statement of financial position showed assets of P6,000,000 including inventory. Entity A and B's interests in Entity C's assets and liabilities were based on their capital interests of 60% and 40%.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Name:

    Section:

    Quiz no. 2 AFAR


    Cagayan Company is experiencing financial problems which resulted to ultimate bankruptcy. The
    statement of financial position of the entity before liquidation is presented below:

    • The note payable is secured by the inventory with net realizable value of P250,000.
    • The mortgage payable is secured by the land with fair value of P120,000.
    1. What is the amount received by the holder of the note payable at the end of corporate
    liquidation?
    a. 320,000
    b. 300,000
    c. 250,000
    d. 260,000
    2. What is the amount received by the holder of the mortgage payable at the end of corporate
    liquidation?
    a. 120,000
    b. 200,000
    c. 150,000
    d. 100,000
    3. What is the amount received by the employees at the end of corporate liquidation
    concerning their salaries?
    a. 100,000
    b. 120,000
    c. 72,000
    d. 300,000
    Surigao Company is bankrupt and has undergone corporate liquidation. Presented below is its
    statement of financial position before the start of liquidation:

    4. What is the amount received by the holder of accounts payable at the end of liquidation?
    a. 85,000
    b. 15,000
    c. 40,000
    d. 60,000
    5. What is the amount of net free assets available at the end of liquidation?
    a. 80,000
    b. 40,000
    c. 120,000
    d. 200,000
    Entity A and Entity B incorporated Entity C to manufacture a microchip to be used by the
    incorporating entities as component for their final products of cellular phones and tablets.
    The contractual agreement of the incorporating entities provided that the decisions on relevant
    activities of Entity C will require the unanimous consent of both entities.
    Entity A and Entity B have rights to the assets, and obligations for the liabilities, relating to the
    arrangement. The ordinary shares of Entity C will be owned by Entity A and Entity B in the ratio
    of 60:40. At the end of first operation of Entity C, the financial statements provided the following
    data:

    The contractual agreement of Entity A and Entity B also provided for the following concerning
    the assets and liabilities of Entity C:
    • Entity A owns the land and incurs the loan payable of Entity C.
    • Entity B owns the building and incurs the note payable of Entity C.
    • The other assets and liabilities are owned or owed by Entity A and Entity B on the basis of their
    capital interest in Entity C.
    • The sales revenue of Entity C includes sales to Entity A and Entity B in the amount of P1,000,000
    and P2,000,000, respectively. As of the end of the first year, Entity A and Entity B were able to
    resell 30% and 60% of the inventory coming from Entity C to third persons.
    6. What is the amount of total assets to be reported by Entity A concerning its interest in
    Entity C?
    a. 5,400,000
    b. 3,000,000
    c. 3,600,000
    d. 5,000,000
    7. What is the amount of total liabilities to be reported by Entity B concerning its interest in
    Entity C?
    a. 1,800,000
    b. 2,200,000
    c. 2,800,000
    d. 2,400,000
    8. What is the amount of sales revenue to be reported by Entity A concerning its interest in
    Entity C?
    a. 2,300,000
    b. 2,100,000
    c. 3,000,000
    d. 2,500,000
    On January 1, 2018, Entity A, a public entity, and Entity B, a public entity, incorporated Entity C
    which has its fiscal and operational autonomy. The contractual agreement of the incorporating
    entities provided that the decisions on relevant activities of Entity C will require the unanimous
    consent of both entities. Entity A and Entity B will have rights to the net assets of Entity C.
    Entity A and Entity B invested P1,000,000 and P1,500,000, respectively, equivalent to 40:60
    capital interest of Entity C. The financial statements of Entity C provided the following data for
    its two-year operation:

    9. What is the balance of Investment in Entity C to be reported by Entity A in its Statement


    of Financial Position on December 31, 2019?
    a. 1,080,000
    b. 1,040,000
    c. 240,000
    d. 200,000
    10. What is the balance of Investment in Entity C to be reported by Entity B in its Statement
    of Financial Position on December 31, 2019?
    a. 1,500,000
    b. 1,620,000
    c. 360,000
    d. 900,000

    You might also like