Acctng 104 Problems PDF

PROBLEMS
PRELIM
Hallway Company issued 20,000 shares of its P10 par value ordinary share and 40,000 shares of
its P10 par value convertible preference share for a total amount of P1,800,000. At this date,
Hallway's ordinary share was selling P20 per share and the convertible preference share was
selling for P30 per share.What amount of the proceeds should be allocated to the ordinary
share and convertible preference share?
Answer: 1,200,000 and 400,000
Help Company's adjusted trial balance at December 31, 2019 includes the following accounts
balances:
Ordinary Shares capital, P3

par P3,000,000 Subscription Receivable due in
2019 300,000 Share
Premium 4,000,000 Treasury
Share, at cost 250,000 Reserved for un-
insured earthquake losses 750,000 Accumulated
Profits 1,000,000 Ordinary Share
Subscribed 500,000 Reserve for Treasury
Share 250,000
What should Help Company report as total shareholder's equity in its December 31, 2019
statement of financial position?
Answer: 8,950,000
The Magic Lamp Corporation was incorporated on January 1, 2019, with following authorized
capitalization:
40,000 shares of common stock, no par value, stated value P40 per share
10,000 shares of 5% cumulative preferred stock, par value of P10 per share
During 2019, Magic Lamp issued 24,000 shares of common stock for a total of P1,200,000 and
6,000 shares of preferred stock at P16 per share. In addition, on December 19,2019,
subscriptions for 2,000 shares of preferred stock were taken at a purchase price of P17. These
subscribed shares were paid for on January 4, 2020.
What should Magic Lamp report as total contributed capital on its December 31, 2002
balance sheet?
Answer: 1,330,000
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Lincoln Company provided the following account balances on December 31, 2019.
Accounts Payable, P125,000; Accrued Taxes P 50,000; Cash Surrender Value of life Insurance,
P30,000; Ordinary Share Capital, P1,000,000; Dividends Payable Preference, P150,000;
Mortgage Payable (P200,000 due in six months), P1,200,000; Note Payable-20%, due on
January 2, 2020, P1,500,000; Shares Premium, P250,000; Preference Share Capital, P450,000;
Accumulated Profits- December 31, 2019, P550,000; Unearned Rent Income, P25,000;
Dividends Payable – Ordinary, P100,000.
How much should Lincoln Company report as Shareholder's on December 31,2019?
Answer: 2,250,000
Corridor Company issued 6,000 shares of its P100 par common stock to Max L. as compensation
for 1,000 hours of legal services performed. Max L. usually bills P500 per hour for legal
services. On this data of issuance, the stock was selling at a public trading at P150 per share.
By what amount should the additional paid in capital account of Corridor Company will
increase as a result of the issuance of those shares?
Answer: 300,000
Steam Company disclosed the following information for the year ended December 31, 2019:
Bonds Payable P 300,000
Share Premium on Ordinary Shares 50,000
Donated Capital 40,000
Treasury Share at cost 20,000
Ordinary Share Capital, par P100 500,000
Ordinary share options warrants 100,000
Investment in Available for Sale Securities 70,000
Share Premium from Treasury Shares 15,000
Accumulated Profits and Losses 135,000
What is the total shareholder's Equity of Steam Company for the year ended December,
31, 2019?
Answer: 820,000
The stockholders' equity of May Co. revealed the following on January 1, 2019:
Preference Share, P100 par value P230,000

Paid-in Capital in Excess of Par - Preference 80,500
Ordinary Share, P15 par value 525,000
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Paid-in Capital in Excess of Par – Ordinary 275,000
Subscribed Ordinary Share 5,000
Retained Earnings 190,000
Notes Payable 400,000
Subscription Receivable — Ordinary 40,000
How much is the legal capital of the company?
Answer: 760,000
Presented below is information related to Hale Corporation:

Common Stock, P5 par P 4,800,000
Paid-in Capital in Excess of Par—Common Stock 550,000
Preferred 8 1/2% Stock, P50 par 2,000,000
Paid-in Capital in Excess of Par—Preferred Stock 400,000
Retained Earnings 1,500,000
Treasury Common Stock (at cost) 150,000
The total paid-in capital (cash collected) related to the common stock is -
Answer: 5,350,000
Presented below is information related to Hale Corporation:

Common Stock, P5 par P 4,800,000
Paid-in Capital in Excess of Par—Common Stock 550,000
Paid-in Capital in Excess of Par—Preferred Stock 400,000
The total legal capital of Hale Corporation is -

Answer: 6,800,000
Zigma Corporation is authorized to issue 2,000,000 shares of P5 par value capital stock. The
corporation issued half the stock for cash at P8 per share, earned P336,000 during the first
three months of operation, and declared a cash dividend of P60,000.
The total paid-in capital of Zigma Corporation after three months of operation is:
Answer: 8,000,000
Thurman Corporation issued 450,000 shares of P25 par value common capital stock at its date
of incorporation for cash at a price of P30 per share. During the first year of operations, the
PROBLEMS
company earned P100,000 and declared a dividend of P40,000.At the end of this first year
of operations, the balance of the Common Stock account is:
Answer: 11,250,000
Century Corporation issued 400,000 shares of P20 par value common stock at the time of its
incorporation. The stock was issued for cash at a price of P25 per share. During the first year
of operations, the company sustained a net loss of P100,000.The year-end balance sheet
would show the balance of the Common Stock account to be:
Answer: 8,000,000
Berry Corporation has 50,000 shares of P10 par common stock authorized. The following
transactions took place during 2021, the first year of the corporation's existence:
Sold 10,000 shares of common stock for p18 per share.
Issued 10,000 shares of common stock in exchange for a patent valued at P200,000.
At the end of the Berry's first year, total paid-in capital amounted to -
Answer: 380,000
Gannon Company acquired 8,000 shares of its own common stock at P20 per share on
February 5, 2018, and sold 4,000 of these shares at P27 per share on August 9, 2019. The fair
value of Gannon's common stock was P24 per share at December 31, 2018, and P25 per share
at December 31, 2019. The cost method is used to record treasury stock transactions.What
account(s) should Gannon credit in 2019 to record the sale of 4,000 shares? -Treasury Stock
for 80,000 and Paid-in Capital from Treasury Stock for 28,000.
Pember Corporation started business in 2017 by issuing 200,000 shares of P20 par common
stock for P36 each.In 2018, 30,000 of these shares were purchased for P52 per share by
Pember Corporation and held as treasury stock.On June 15, 2019, these 30,000 shares were
exchanged for a piece of property that had an assessed value of P810,000. Perber's stock is
actively traded and had a market price of P60 on June 15, 2019. The cost method is used to
account for treasury stock.The amount of paid-in capital from treasury stock transactions
resulting from the above events would be
Answer: 240,000
Wheeler Company issued 5,000 shares of its P5 par value common stock having a fair value
of P25 per share and 7,500 shares of its P15 par value preferred stock having a fair value of
P20 per share for a lump sum of P260,000.The proceeds allocated to the preferred stock is
Answer: 141,818
PROBLEMS
Glavine Company issues 6,000 shares of its P5 par value common stock having a fair value of
P25 per share and 9,000 shares of its P15 par value preferred stock having a fair value of P20
per share for a lump sum of P312,000.The proceeds allocated to the common stock is
Answer: 141,818
Percy Corporation was organized on January 1, 2019, with an authorization of 1,200,000

shares of common stock with a par value of P6 per share. During 2019, the corporation had
the following capital transactions:
January 5 issued 900,000 shares @ P10 per share
July 28 purchased 120,000 shares @ P11 per share
December 31 sold the 120,000 shares held in treasury @ P18 per share
Percy used the cost method to record the purchase and re-issuance of the treasury shares.
What is the total amount of additional paid-in capital as of December 31, 2019?
Answer: 3,600,000
LIG-ON Company provided the following account balances on December 31, 2021:Accounts
Payable, P125,00; Accrued Taxes, P50,000; Cash Surrender Value of life Insurance, P30,000;
Ordinary Share Capital, P1,000,000; Dividends Payable- preference, P150,000; Mortgage
Payable (P200,000 due in six months), P1,200,000; Notes Payable -20%, due on January 2,
2022, P1,500,000; Shares premium, P250,000; Preference Share Capital, P450,000;
Accumulated Profits-December 31, 2021, P550,000; Unearned Rent Income, P25,000;
Dividends Payable-ordinary, P100,000.How much should LIG-On Company report as
Shareholder's equity on December 31, 2021?
Answer: 2,250,000
A company reported total equity of P145,000 at the beginning of the year. The company
reported P210,000 in revenues and P165,000 in expenses for the year. Liabilities at the end of
the year totaled P92,000.What are the total assets of the company at the end of the year?
Answer: 282,000
Presented below is information related to Edis Corporation:
Common Stock, P5 par P4,300,000

Share Premium—Common Stock 550,000
Share Premium—Preferred Stock 400,000
The total cash collected related to the common stock is -
PROBLEMS
Answer: 4,850,000
Party Party Company reported total assets of P1,050,000 and total liabilities of P680,000 in its
December 31, 2020 statement of financial position. The following transactions occurred in
2021:
On August 1 - Party Party Company issued an additional 5,000 ordinary shares at P25 per
share.
The company paid dividends totaling P 80,000.
Net income during the year was P110,000.
Reacquired treasury shares of 2,000 at P30; subsequently, re-issued 1,000 for P39 per share.
No other changes occurred in Shareholder's Equity during the year.
What is the balance of Party Party's Shareholders' Equity in its December 31, 2021
Answer: 504,000
Newton Company was organized on January 1, 2019. On that date, it issued 200,000 ordinary
shares of P10 par vale at P15 per share. The entity was authorized to issue 400,000 ordinary
shares .During the period January 1, 2019 through December 31, 2019, the entity reported net
income of P750,000 and paid cash dividend of P380,000. On January 5, 2020, the entity
purchased 12,000 ordinary shares at P12 per share. On December 31, 2020, 8,000 treasury
shares were sold at P8 per share. The entity used cost method of accounting for treasury
shares.What is the total shareholders equity on December 31, 2020?
Answer: 3,290,000
Penn Company began operations on January 1, 2019 by issuing at P15 per share one-half of
the 950,000 ordinary shares at P5 par value that had been authorized for issue. In addition, the
entity had 500,000 authorized preference shares of P5 par value. During 2019, the entity had
P1,025,000 of net income and declared P230,000 of dividend. During 2020, the entity had the
following transactions;
Issued 100,000 ordinary shares for P17 per share.
Issued 150,000 preference shares for P8 per share.
Authorized the purchase of a custom-made machine to be delivered in January 2021. The
entity restricted P300,000 of retained earnings for the purchase of the machine.
Issued additional 50,000 preference shares for P9 per share.
Reported P1,215,000 of net income and declared on December 31, 2020 a dividend of
P635,000 to shareholders of record on January 15, 2021 to be paid on February 1, 2021.
What is the total stockholders equity on December 31, 2020?
PROBLEMS
Answer: 11,850,000
In 2020, Hello Company issued 50,000 shares of P10 par value for P100 per share. In 2021,
the entity reacquired 2,000 shares at P150 per share and immediately cancelled these 2,000
shares.In connection with the retirement of shares, what amount should be debited to retained
earnings?
Answer: 100,000
Hanna Company reported the following shareholders' equity on January 1, 2019:

Share Capital, P10 par, outstanding 225,000 shares 2,250,000
Share premium 900,000
Retained earnings 2,190,000
During the current year, the entity had the following share transactions:
Acquired 6,000 treasury shares for P270,000
Sold 3,000 treasury shares for P50 per share
Sold the remaining treasury shares at P41 per share
What is the total cost of share premium on December 31, 2019?
908,400
Answer:
Kaya Ba Company was incorporated on January 1, 2019 with the following authorized
capitalization:
Ordinary share capital, 200,000 shares, no par, P100 stated value P 20,000,000
Preference share capital, 200,000 shares, 10% fixed rate, P 50 par 10,000,000
During 2019, the entity issued 150,000 ordinary shares for a total of P18,000,000 and 50,000
preference shares at P60 per share. In addition, on December 15, 2019, subscriptions for
20,000 preference shares were taken at a purchase price of P100. These subscribed shares
were paid for on December 31, 2019. Net income for 2019 was P5,000,000.
What amount should be reported as total contributed capital on December 31, 2019?
Answer: 23,000,000
Presented below is information related to Edis Corporation:

Common Stock, P5 par P4,300,000
Share Premium—Common Stock 550,000
Share Premium—Preferred Stock 400,000
PROBLEMS
The total stockholders' equity of Edis Corporation is
Answer: 8,600,000
Padayon Corp. adjusted trial balance at December 31, 2021 includes the following account
balances:
Ordinary Share Capital, P5 par P 3,000,000
Subscription Receivable due 2023 300,000
Share premium 4,000,000
Treasury shares, at cost 250,000
Reserve for uninsured earthquake losses 750,000
Accumulated profits 1,000,000
Ordinary shares subscribed 500,000
Reserve for treasury share 250,000
What amount should Padayon report as total shareholders' equity in its December 31, 2021
Answer: 8,950,000
Zapper has beginning equity of P257,000, net income of P51,000, withdrawals of P40,000 and
investments by owners of P6,000. Its ending equity is:
Answer: 274,000
On June 30, 2012, when Ermler Co.'s stock was selling at P65 per share, its equity accounts
were as follows: Common stock (par value P50; 80,000 shares issued) P4,000,000 Paid-in
capital in excess of par 600,000 Retained earnings 4,200,000 If a 100% stock dividend were
declared and distributed, common stock would be - 8,000,000.
Masterson Company has 420,000 shares of P10 par value common stock outstanding. During
the year Masterson declared a 10% stock dividend when the market price of the stock was P36
per share. Three months later Masterson declared a P.60 per share cash dividend.As a result of
the dividends declared during the year, retained earnings decreased by- 1,789,200
On December 31, 2012, the stockholders' equity section of Arndt, Inc., was as
follows:Common stock, par value P10; authorized 30,000 shares; issued and outstanding
PROBLEMS
9,000 shares P90,000 Additional paid-in capital 116,000 Retained earnings 154,000 Total
stockholders' equity P360,000 On March 31, 2013, Arndt declared a 10% stock dividend, and
accordingly 900 additional shares were issued, when the fair value of the stock was P18 per
share. For the three months ended March 31, 2013, Arndt sustained a net loss of P32,000. The
balance of Arndt's retained earnings as of March 31, 2013, should be - 105,800.
Anders, Inc., has 10,000 shares of 5%, P100 par value, cumulative preferred stock and 40,000
shares of P1 par value common stock outstanding at December 31, 2013. There were no
dividends declared in 2011. The board of directors declares and pays a P90,000 dividend in
2012 and in 2013.What is the amount of dividends received by the common stockholders in
2013? - 30,000
COVID Inc. shareholders' equity account balance at December 31, 2018, were as follo
ws:
Ordinary share 800,000
Additional paid-in capital 1,600,000
The following 2019 transactions and other information relate to the shareholders' equit
y accounts:
a. Covid had 400,000 authorized shares of P5 par ordinary share, of which 160,000
shares were issued and outstanding.
b. On March 5, 2019, Covid acquired 5,000 shares of its ordinary share for P10 per share to
hold as treasury share. The shares were originally issued at P15 per
share. Covid uses the cost method to account for treasury share. Treasury share is pe
rmitted in Covid's state of incorporation.
c. On July 15, 2019, Covid declared and distributed a property dividend of

inventory. The inventory had a P75,000 carrying value and a P60,000 fair market value.
d.On January 2, 2017, Covid granted share options to employees to purchase 20,000 s
hare of Covid's ordinary share at P18 per share, which was the market on that date. The
option may be exercised within a three year period beginning January 2,
2019. The measurement date is the same as the grant date. On October 1, 2019, emp
loyees exercised all 20,000 options when the market value of the share was P25 per s
hare. Covid's issued new shares to settle the transaction.
e. Covids's net income for 2019 was P240,000.
Covid's Ordinary share balance at December 31, 2019 is:
Answer: 900,000
Farmer Corp. owned 20,000 shares of Eaton Corp. purchased in 2009 for P300,000.On
December 15, 2012, Farmer declared a property dividend of all of its Eaton Corp. shares on
the basis of one share of Eaton for every 10 shares of Farmer common stock held by its
stockholders. The property dividend was distributed on January 15, 2013. On the declaration
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date, the aggregate market price of the Eaton shares held by Farmer was P500,000.The entry
to record the declaration of the dividend would include a debit to Retained Earnings of
–200,000.
Horton Co. was organized on January 2, 2012, with 500,000 authorized shares of P10 par
value common stock. During 2012, Horton had the following capital transactions:
January 5—issued 375,000 shares at P14 per share.
July 27—purchased 25,000 shares at P11 per share.
November 25—sold 20,000 shares of treasury stock at P13 per share. Horton used the cost
method to record the purchase of the treasury shares.
What would be the balance in the Paid-in Capital from Treasury Stock account at December
31, 2012? -40,000
Dayron Company had 80,000 ordinary shares and outstanding in January 1, 2015. The entity
distributed a 15% stock dividend in March and 10% stock dividend in June. After acquiring
10,000 shares of treasury in July, the entity split the share 4 for 1 in December.How many
ordinary shares are outstanding on December 31, 2015?- - 364,800
Winger Corporation owned 300,000 shares of Fegan Corporation stock. On December 31,
2012, when Winger's account "Equity Investment (Fegan Corporation") had a carrying value
of P5 per share, Winger distributed these shares to its stockholders as a dividend. Winger
originally paid P8 for each share. Fegan has 1,000,000 shares issued and outstanding, which
are traded on a national stock exchange. The quoted market price for a Fegan share was P7 on
the declaration date and P9 on the distribution date.What would be the reduction in Winger's
stockholders' equity as a result of the above transactions? - 1,500,000.
Hernandez Company has 490,000 shares of P10 par value common stock outstanding. During
the year, Hernandez declared a 10% stock dividend when the market price of the stock was
P30 per share. Four months later Hernandez declared a P.50 per share cash dividend.As a
result of the dividends declared during the year, retained earnings decreased by - 1,739,500.
An analysis of stockholders' equity of Hahn Corporation as of January 1, 2012, is as

follows: Common stock, par value P20; authorized 100,000 shares; issued and outstanding
90,000 shares 1,800,000 Paid-in capital in excess of par 700,000 Retained
earnings 760,000 Total 3,260,000 Hahn uses the cost method of accounting for treasury
stock and during 2012 entered into the following transactions: Acquired 2,500 shares of its
stock for P75,000. Sold 2,000 treasury shares at P35 per share. Sold the remaining treasury
shares at P20 per share.Assuming no other equity transactions occurred during 2012, what
should Hahn report at December 31, 2012, as total additional paid-in capital?-705,000
Gibbs Corporation owned 20,000 shares of Oliver Corporation's P5 par value common stock.
These shares were purchased in 2009 for P240,000. On September 15, 2013, Gibbs declared a
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property dividend of one share of Oliver for every ten shares of Gibbs held by a stockholder.
On that date, when the market price of Oliver was P21 per share, there were 180,000 shares of
Gibbs outstanding. What NET reduction in retained earnings would result from this property
dividend?-216,000
Mann Co. has outstanding 60,000 shares of 8% preferred stock with a P10 par value and
150,000 shares of P3 par value common stock. Dividends have been paid every year except
last year and the current year.If the preferred stock is cumulative and nonparticipating and
P300,000 is distributed, the common stockholders will receive -204,000
Melvern's Corporation has an investment in 10,000 shares of Wallace Company common

stock with a cost of P436,000. These shares are used in a property dividend to stockholders of
Melvern's. The property dividend is declared on May 25 and scheduled to be distributed on
July 31 to stockholders of record on June 15. The fair value per share of Wallace stock is P63
on May 25, P66 on June 15, and $68 on July 31.The net effect of this property dividend on
retained earnings is a reduction of-436,000
Yoder, Inc. has 100,000 shares of P10 par value common stock and 50,000 shares of P10 par
value, 6%, cumulative, participating preferred stock outstanding. Dividends on the preferred
stock are one year in arrears.Assuming that Yoder wishes to distribute P270,000 as dividends,
the common stockholders will receive- 160,000
Pember Corporation started business in 2007 by issuing 200,000 shares of P20 par common
stock for P36 each.In 2012, 30,000 of these shares were purchased for P52 per share by
Pember Corporation and held as treasury stock.On June 15, 2013, these 30,000 shares were
exchanged for a piece of property that had an assessed value of P810,000. Perber's stock is
actively traded and had a market price of P60 on June 15, 2013. The cost method is used to
account for treasury stock.The amount of paid-in capital from treasury stock transactions
resulting from the above events would be-240,000
Written, Inc. has outstanding 500,000 shares of P2 par common stock and 100,000 shares of
no par 8% preferred stock with a stated value of P5. The preferred stock is cumulative and
nonparticipating. Dividends have been paid in every year except the past two years and the
current year.Assuming that P250,000 will be distributed as a dividend in the current year, how
much will the common stockholders receive?-130,000
ws:

y accounts:
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Covid's Treasury Share balance at December 31, 2019 is:
Answer: 50,000
Stinson Corporation owned 30,000 shares of Matile Corporation. These shares were
purchased in 2009 for 270,000. On November 15, 2013, Stinson declared a property dividend
of one share of Matile for every ten shares of Stinson held by a stockholder. On that date,
when the market price of Matile was P21 per share, there were 270,000 shares of Stinson
outstanding.What unrealized gain and net reduction in retained earnings would result from
this property dividend?
Unrealized Net Reduction in Gain Retained Earnings
- 324,000 243,000
current year.Assuming that P305,000 will be distributed, and the preferred stock is also
participating, how much will the common stockholders receive? -150,000
On July 1, 2012, Nall Co. issued 2,500 shares of its P10 par common stock and 5,000 shares
of its P10 par convertible preferred stock for a lump sum of P140,000. At this date Nall's
common stock was selling for P24 per share and the convertible preferred stock for P18 per
share.The amount of the proceeds allocated to Nall's preferred stock should be -84,000
ws:
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y accounts:
Covid's Shareholders' Equity balance at December 31, 2019 is:
Answer: 4,720,000
The shareholders of Dorr Company approved a two-for-one split of the entity's share capital,
and an increase in authorized share from 100,000 shares with P20 par value to 200,000 shares
with a par P10 par value. The shareholders' equity accounts immediately before the split share
were share capital P1,000,000, share premium P150,000 and retained earnings
P1,350,000.What should be the balances in the share premium and retained earnings,
respectively after the split is effected? -150,000 and 1,350,000
Nest Company issued 100,000 shares. Of these, 5,000 shares were held as treasury on January
1, 2018. During 2018, transactions were as follows:
May 1 - 1,000 shares of treasury were sold
August 1 – 10,000 unissued were sold
Nov 15 – A 2-for-1 share split took effect
On December 31, 2018, how many shares were issued and outstanding?
Issued Outstanding
- 220,000 212,000
On December 1, 2012, Abel Corporation exchanged 30,000 shares of its P10 par value
common stock held in treasury for a used machine. The treasury shares were acquired by Abel
at a cost of P40 per share, and are accounted for under the cost method. On the date of the
exchange, the common stock had a fair value of P55 per share (the shares were originally
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issued at P30 per share).As a result of this exchange, Abel's total stockholders' equity will
increase by -1,650,000
On September 1, 2012, Valdez Company reacquired 16,000 shares of its P10 par value
common stock for P15 per share. Valdez uses the cost method to account for treasury stock.
The journal entry to record the re-acquisition of the stock should debit - Treasury Stock for
240,000.
Pierson Corporation owned 10,000 shares of Hunter Corporation. These shares were
purchased in 2009 for P90,000. On November 15, 2013, Pierson declared a property dividend
of one share of Hunter for every ten shares of Pierson held by a stockholder. On that date,
when the market price of Hunter was P21 per share, there were 90,000 shares of Pierson
outstanding.
What unrealized gain and net reduction in retained earnings would result from this property
dividend?
Unrealized Net Reduction in Gain Retained Earnings
- 108,000 81,000
Percy Corporation was organized on January 1, 2012, with an authorization of 1,200,000

shares of common stock with a par value of P6 per share. During 2012, the corporation had
the following capital transactions: January 5 issued 900,000 shares @ P10 per share July 28
purchased 120,000 shares @ P11 per share December 31 sold the 120,000 shares held in
treasury @ P18 per share Percy used the cost method to record the purchase and reissuance of
the treasury shares.What is the total amount of additional paid-in capital as of December 31,
2012? -4,440,000
The stockholders' equity of Howell Company at July 31, 2012 is presented below: Common
stock, par value P20, authorized 400,000 shares; issued and outstanding 160,000 shares
P3,200,000 Paid-in capital in excess of par 160,000 Retained
earnings 650,000 P4,010,000 On August 1, 2012, the board of directors of Howell
declared a 10% stock dividend on common stock, to be distributed on September 15th. The
market price of Howell's common stock was P35 on August 1, 2012, and P38 on September
15, 2012.What is the amount of the debit to retained earnings as a result of the declaration and
distribution of this stock dividend? -560,000
Luther Inc., has 3,000 shares of 6%, P50 par value, cumulative preferred stock and 100,000
shares of P1 par value common stock outstanding at December 31, 2013, and December 31,
2012. The board of directors declared and paid a P7,500 dividend in 2012. In 2013, P36,000
of dividends are declared and paid. What are the dividends received by the preferred
stockholders in 2013?-10,500
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Sosa Co.'s stockholders' equity at January 1, 2012 is as follows:
Common stock, P10 par value; authorized 300,000 shares;
Outstanding 225,000 shares P2,250,000
Paid-in capital in excess of par 700,000
Total 5,140,000
During 2012, Sosa had the following stock transactions:
Acquired 6,000 shares of its stock for 270,000.
Sold 3,600 treasury shares at P50 a share.
Sold the remaining treasury shares at P41 per share.
No other stock transactions occurred during 2012.
Assuming Sosa uses the cost method to record treasury stock transactions, the total amount of
all additional paid-in capital accounts at December 31, 2012 is - 708,400
The stockholders' equity section of Gunkel Corporation as of December 31, 2012, was as
follows: Common stock, par value P2; authorized 20,000 shares; issued and outstanding
10,000 shares P 20,000 Paid-in capital in excess of par 30,000 Retained
earnings 95,000 P145,000 On March 1, 2013, the board of directors declared a 15% stock
dividend, and accordingly 1,500 additional shares were issued. On March 1, 2011, the fair
value of the stock was P6 per share. For the two months ended February 28, 2013, Gunkel
sustained a net loss of P10,000. What amount should Gunkel report as retained earnings as of
March 1, 2013?-76,000
current year.Assuming that P105,000 will be distributed as a dividend in the current year, how
much will the preferred stockholders receive? - 105,000.
ws:
y accounts:
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Covid's Additional paid-in capital balance at December 31, 2019 is:
Answer: 1,860,000
ws:
y accounts:
Covid's Retained Earnings balance at December 31, 2019 is:
Answer: 2,010,000
Presented below is the stockholders' equity section of Oaks Corporation at December 31,
2012:
Common stock, par value $20; authorized 75,000 shares;
issued and outstanding 45,000 shares 900,000
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Paid-in capital in excess of par value 250,000
Retained
earnings 300,000
1,450,000
During 2013, the following transactions occurred relating to stockholders' equity:
3,000 shares were reacquired at P28 per share.
3,000 shares were reacquired at P35 per share.
1,800 shares of treasury stock were sold at P30 per share.
For the year ended December 31, 2013, Oaks reported net income of P450,000.
Assuming Oaks accounts for treasury stock under the cost method, what should it report as
total stockholders' equity on its December 31, 2013, balance sheet? -1,765,000.
Tiktok Company issued 10,000 of its 6% preference share; par P100, at P125 per share. Each
share carried a detachable share warrant for one share of Tiktok's ordinary share, P40 par, a t a
specified option price of P50 per share. Immediately after issuance, the market value of
Tiktok's preference share was P1,140,000 and the warrants was P60,000.What portion of the
proceeds should be credited to ordinary share warrants outstanding?
Answer: 62,500
Bisdak Company issued 6,000 shares of its P100 par ordinary share to Labella as
compensation for 1,000 hours of legal services performed. Labella usually bills P500 per hour
for legal services. On this date of issuance, the share was selling at a public tr ading at P150
per share. By what amount should share premium account of Bisdak Company decrease as a
result of the issuance of those shares?
Answer: 0
Cheezy Company disclosed the following information for the year ended December 31, 2020:
Bonds Payable P 300,000
Share premium ordinary 50,000
Donated capital 40,000
Treasury share at cost 20,000
Ordinary share capital, par P100 500,000
Ordinary share options warrants 100,000
Invest at fair value through OCI 70,000
Share premium treasury 15,000
Accumulated profits and losses 135,000
PROBLEMS
What is the total shareholder's equity of Cheezy Company for the year ended December
31,2020?
Answer: 820,000
On July 1, 2020, Boom na Boom exchanged 20,000 shares of its P200 par value of equity
shares for land. A few months ago, the land was appraised by an independent appraiser at
P5,000,000. Boom na Boom shares are currently traded at the stock exchange at P300. The
earnings per share is P40.How much should be debited to land account?
Answer: 6,000,000
As the beginning of the accounting year 2020, Datu Company has machinery with a historical
cost of P4,500,000 and accumulated depreciation of P1,500,000.On December 31, 2020, Datu
Company declared the machinery as dividend which has a carrying value amount at that time
P 2,500,000. Datu policy is to measure all depreciable assets at costs. At the time of
declaration, the equipment has a fair market value of P2,000,000.What total amount should
Datu Company charged its Accumulated Profits and Losses related to machinery during 2020?
Answer: 3,000,000
The shareholder's equity section of K-Pop Company revealed the following information on
December 31, 2020:Preference share (P100 par), P2,300,000; share premium in excess of par
preference, P805,00; ordinary share (P15 par), P5,250,000, share premium in excess of par-
ordinary, P2,750,000; subscribed ordinary share, P50,000; Accumulated profits and losses,
P1,900,000; and subscriptions receivable - ordinary, P400,000.How much is the legal capital?
Answer: 7,600,000
On July 1, 2020, Paasa Company has 200,000 shares at P10 par ordinary shares outstanding
and the market price of the share is P12 per share. On the same date, Paasa declared a 1 for 2
reverse split. The par of the share was increased from P10 to P20. Immediately before the
split, the total Share Premium was P900,000.What would be the balance in Paasa Share
Premium account after the reverse stock/share split is effected?
Answer: 900,000
The AS IF Corporation is authorized to issue 100,000 shares at P20 par ordinary share. At the
beginning of 2020, 18,000 ordinary shares were issued and outstanding. These shares had
been issued at P27 per share. During 2020, the company entered into the following
transactions:January 2 - issued 1,300 ordinary shares at P28 per share.March 19 - Exchanged
12,000 ordinary shares for a machine. The ordinary share was selling at P30 per share.May 8 -
Reacquired 500 ordinary shares at P29 per share.July 19 - Accepted subscriptions for 1,000
PROBLEMS
ordinary shares at P31, per share. The contract called for 10% down payment with the balance
on December 1.September 1 - Sold 500 treasury shares at P32 per share.December 1 -
Collected the balance due on July 1 subscriptions and issued stock certificate.How much is
the total contributed capital for December 31, 2020?
Answer: 914,900
During 2019, Naghihingalo Company issued 10,000 shares of P100 par value convertible
preference shares for P110 per share. One preference share can be converted into 3 shares of
Naghihingalo's P25 par ordinary share at the option of the preference shareholder. On
December 31, 2020, when the market value of the ordinary share was P40, the entire
preference share was converted.How much should Naghihingalo credit to Share Premium as a
result of conversion?
Answer: 350,000
Problemado Company was organized on January 2, 2020 with P300,000 ordinary shares with
a P6 par value authorized. During 2020, Problemado had the following stock transactions:
January 2 - Issued 60,000 shares at P10 per share.
March 8 - Issued 20,000 shares at P11 per share.
May 11 - Purchased 7,500 shares at P12 per share.
July 2 - Issued 15,000 shares at P13 per shares.
August 17 - Sold 5,000 treasury shares at P14 per share.
Problemado uses the FIFO method for purchase-sale purposes.
If Problemado uses the cost method to record treasury stock transactions, how much would be
the Share Premium at December 31, 2020?
Answer: 455,000
The accounts shown below appear in December 31, 2020 trial balance of Hello Corporation:
Preference Share, authorized, P50 par P 10,000,000
Unissued Preference Share 3,600,000
Ordinary Share, authorized, P20 par 4,000,000
Unissued Ordinary Share 2,000,000
Subscription Receivable, preference 380,000
Subscription Receivable, ordinary 360,000
Subscribed Preference Share 600,000
Subscribed Ordinary Share 440,000
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Treasury Share, preference, at cost 1,360,000
Share Premium 1,700,000
Accumulated Profits and Losses 2,000,000
Subscription Receivable Ordinary will be collected in 2020 and Preference will be on
2022.How much is the total shareholder's equity of Hello Corporation?
Answer: 11,400,000
On October 1, 2020, Papasa Ba Company declared its non-current asset as a dividend with a
carrying value of P2,000,000 and a current fair value of P1,800,000. On December 31, 2020,
the non-current asset has a fair value of P1,700,000. The nun-current asset was distributed on
March 31, 2021 when its fair value was P1,600,000.What amount of asset held for disposal
should the company disclose in its December 31, 2020 statement of financial positions?
Answer: 1,700,000
Laban Lang Company was organized on January 2, 2020 at which date it issued 200,000
shares of P10 par ordinary share at P15 per share. During the period January 2, 2021 to
December 31, 2022, Laban Lang reported cumulative net income of P900,000 and paid cash
dividends of P460,000. On January 2, 2022, Laban Lang purchased 12,000 of its ordinary
share at P12 per share. On December 31, 2022, Laban Lang sold 8,000 treasury shares at P8
per share.What is the total shareholders' equity at December 31, 2022?
Answer: 3,360,000
The shareholder's equity section of Pasado Corporation's balance sheet at December 31, 2019
was as follows:
Ordinary Share (P10 par value, authorized 1,000,000)
shares issued and outstanding 900,000 shares P
9,000,000
Share Premium 2,700,000
Accumulated Profits and Losses 1,300,000
On January 2, 2020 - Pasado purchased and retired 100,000 shares of its own equity for
P1,800,000.Immediately after the retirement of these 100,000 shares, the balance of share
premium will be -
Answer: 2,400,000
PROBLEMS
The Hula Ho Corporation was incorporated on January 1, 2020, with the following authorized
capitalization:- 40,000 ordinary shares, no par value, stated value P40 per share.- 10,000
shares of 5% cumulative preference share, par value of P10 per share.During 2021, Hula Ho
issued 24,000 ordinary shares for a total of P1,200,000 and 6,000 preference share at P16 per
share. In addition, on December 19, 2021, subscriptions for 2,000 preference shares were
taken at a purchase price of P17. These subscribed shares were paid for on December 31,
2021. What should Hula Ho report as total contributed capital in its December 31, 2021
balance sheet?
Answer: 1,330,000
Galante Company had the following classes of shares outstanding as of December 31,
2020:Ordinary shares, P20 par value, 20,000 outstanding; Preference shares, 6% P100 par
value, cumulative and fully participating, 1,000 shares were outstanding.The last payment of
preference dividend was on December 31, 2017. On the December 31, 2020, a total cash
dividend of P90,000 was declared. What amount should ordinary share will received?
Answer: 32,400
Easy Lang Company had sufficient Accumulated Profits and Losses in 2020 as a basis for
dividends but was temporary short of cash. Easy declared a P1,000,000 dividend on July 1,
2020 and issued a promissory notes to its shareholders in lieu of cash. The not es, which
dated June 1, 2020, had a maturity date of May 31, 2021 and a 10% interest rate. Convert
your answer to nearest peso.How much is the interest expense should accrued by Easy Lang
on December 31, 2020?
Answer: 58,333
The following capital accounts are shown in the balance sheet of ASA Pa More
Corporation:
Ordinary Share, 10,000 shares, par value P100 P 1,000,000
Premium on ordinary share 20,000
Share Premium - treasury share 30,000
Accumulated Profits and losses 750,000
Treasury Share, 2,000 shares at cost 250,000
The entire treasury shares were sold for P300,000.
What would be the balance of Accumulated Profits and Losses account after this sales?
Answer: 750,000
PROBLEMS
On October 1, 2020, Papasa Ba Company declared its non-current asset as a dividend with
a carrying value of P2,000,000 and a current fair value of P1,800,000. On December 31,
2020, the non-current asset has a fair value of P1,700,000. The nun-current asset was
distributed on March 31, 2021 when its fair value was P1,600,000.What amount should be
charged to retained earnings at the time the dividend was declared?
Answer: 1,800,000
MIDTERM
At December 31, 2019, Maria Angela Corporation had the following investments that were
purchased during 2018, its first year of operations:
Cost Fair Value
Trading Securities:
Security A 700,000 725,000
Security B 210,000 200,000
Securities Available for Sale:
Security C 500,000 560,000
Security D 850,000 865,000
No investments were sold during 2019. All are considered short-term investments except
Securities C.
The amount of investment to be reported as non-current assets is:
Answer: 560,000
On September 30, 2020, Pilgrims Company exchanged equipment for 2,500 shares of Theme
Company’s ordinary share. On that date, the equipment had a carrying value of P250,000 and
its fair market value was not clearly determinable. The par value of Theme’s share was P80 per
share but its market value on September 30, 2020 is P90 per share.
What is the cost of the investments?
Answer: 225,000
On January 2, 2020, Lotus Company purchased 8,000 shares of Pearl Co. at P100 per share and
designated the equity instrument at fair value to OCI. Brokerage fees of P24,000 and tax of
P4,000 were paid on the same date. Assuming Lotus investment in Pearl Company has a total
market value of P900,000 as of December 31, 2020, what amount of unrealized loss should be
shown in the statement of comprehensive income?
Answer: 0
PROBLEMS
Cost Fair Value
Trading Securities:
Security A 700,000 725,000
Security B 210,000 200,000
Security C 500,000 560,000
Security D 850,000 865,000
Securities C. The unrealized gain component of other comprehensive income…
Answer: 0
Cost Fair Value
Trading Securities:
Security A 700,000 725,000
Security B 210,000 200,000
Security C 500,000 560,000
Security D 850,000 865,000
Securities C. The unrealized gain component of income before taxes is:
Answer: 15,000
On December 30, 2020, Tandem Company acquired 5,000 ordinary shares (P120 par) and
designated at fair value to other comprehensive income of Thermal Company. Tandem
Company settled the shares by exchanging its equipment with a carrying value of P900,000 but
currently has a market value of P800,000. Shares of Thermal Company are not actively traded
in the market and its market value cannot be reliably determined. At what amount should the
investment in equity instrument be recorded?
Answer: 800,000
PROBLEMS
Cost Fair Value
Trading Securities:
Security A 700,000 725,000
Security B 210,000 200,000
Security C 500,000 560,000
Security D 850,000 865,000
Securities C.
The amount of investment to be reported as current assets is:
Answer: 1,790,000
The following data pertains to Rainbow Corporation‟s investments in marketable securities:

Cost 12/31/17 FMV 12/31/16 FMV
Trading P 150,000 P 155,000 P 100,000
Available-for-sale 150,000 130,000 126,000
What amount should Rainbow Corporation report as accumulated unrealized loss on
marketable equity securities at December 31, 2017, presented in other comprehensive income?
Answer: 20,000
On September 30, 2020, Pilgrims Company exchanged equipment for 2,500 shares of Theme
Company's ordinary share. On that date, the equipment had a carrying value of P250,000 and
its fair market value was not clearly determinable. The par value of Theme's share was P80 per
share but its market value on September 30, 2020 is P90 per share.What is the amount of gain
on disposal of the equipment?
Answer: 0
The following data pertains to Rainbow Corporation‟s investments in marketable securities:

Cost 12/31/17 FMV 12/31/16 FMV
Trading P 150,000 P 155,000 P 100,000
Available-for-sal 150,000 130,000 126,000
What amount should Rainbow Corporation report as unrealized gain in its 2017 income
statement?
PROBLEMS
Answer: 55,000
Turbo Company bought 2,000 shares of Miguel Company on January 2, 2020 at P150 per
share and paid P2,250 as brokerage fee and P1,500 non-refundable tax. at the time of
acquisition, Turbo had designated the equity at fair value to other comprehensive income. Prior
to the date of acquisition, information revealed that on December 8, 2019, Miguel Company
declared a P10 cash dividend to shareholders of record as of January 31, 2020 payable on April
30, 2020. There were no other transactions in 2020 involving the investment in Miguel
Company.What is the historical cost of the investment account?
283,750
Answer:
Threshold Company purchased 20,000 shares out of 200,000 shares outstanding of Power
Company's ordinary shares on February 14, 2019 for P924,000. Threshold Company's
designated the equity at fair value to other comprehensive income. Threshold Company
received a P40,000 cash dividend on Power Company on July 1, 2019. Power declared a 10%
share dividend on December 1, 2019 to shareholders of record as of December 31, 2019. The
dividend was distributed on January 31, 2020. The market price of the shares was P38 on
December 1, 2019, P40 on December 31, 2019 and P42 on January 31, 2020.What amount
should Threshold record as dividend income for the year ended December 31, 2019?
Answer: 40,000
Company's ordinary shares on February 14, 2019 for P924,000. Threshold Company's
designated the equity at fair value to other comprehensive income. Threshold Company
received a P40,000 cash dividend on Power Company on July 1, 2019. Power declared a 10%
share dividend on December 1, 2019 to shareholders of record as of December 31, 2019. The
dividend was distributed on January 31, 2020. The market price of the shares was P38 on
December 1, 2019, P40 on December 31, 2019 and P42 on January 31, 2020.What amount
should Threshold Company report the investment in its 2019 statement of financial position?
Answer: 880,000
Guess Company purchased 50,000 shares (5% ownership) of Fortune Company on January 2,
2019. Guess received a share dividend of 15% on March 31, 2019 when the market price of the
share is P40. On November 30, Guess paid P20 per share special assessment on the shares. On
December 15, 2019, Fortune paid a cash dividend of P8 per share. In the December 31,
2019 statement of comprehensive income of Guess Company, what amount should be reported
as dividend income?
Answer: 460,000
PROBLEMS
US Bank purchased the following portfolio equity securities designated as fair value to other
comprehensive income in 2020 and reported the following balances at December 31, 2020. No
Sales occurred during the year.
Security Cost Fair Market Value
C P 240,000 P255,000
D 420,000 390,000
E 296,000 290,000
The only transaction in 2021 was the sale of security E for P320,000 on December 31, 2021.
What is the loss on the equity securities?
Answer: 0
Kite Company acquired 4,000 shares of Sky Corporation ordinary shares on November 1, 2018
at a cost of P440,000. Sky Company designate the investment at fair value to other
comprehensive income. On January 2, 2019, Sky distributed a 10% ordinary share dividend.
On November 30, Kite Company received a cash dividend of P10 per share. On December 31,
2019, Sky Company shares are selling at P110 per share. If the shares are to be sold to Kite
Company will have to incur P5,000 transaction cost. On January 31, 2020, Kite sold 2,400
shares of its Sky shares for P276,000 and incurred transaction cost of P3,000.What amount of
gain or loss on the sale of the security should the company recognize?
Answer: 9,000
On December 31, 2019, Tandem Company acquired 5,000 ordinary shares P120 par and
designated at fair value to other comprehensive income of Thermal Company. Tandem
Company settled the shares by exchanging its equipment with a carrying value of P900,000 but
currently has a market value of P800,000. Shares of Thermal Company are not actively traded
in the market and its market value cannot be reliably determined. At what amount should the
investment in equity be recorded?
Answer: 800,000
On January 2, 2019, Lotus Company purchased 8,000 shares of Pearl Co. at P100 per share and
designated the equity at fair value to other comprehensive income. Brokerage fees of P24,000
and tax of P4,000 were paid on the same date. On July 31, 2014, Lotus Company received a
10% share dividend.Assuming Lotus investment in Pearl has a total market value of P900,000
as of December 31, 2019, what amount of unrealized gain should be shown in the other
comprehensive income?
Answer: 72,000
Turbo Company bought 2,000 shares of Miguel Company on January 2, 2019 at P150 per
share and paid P2,250 as brokerage fee and P1,500 non-refundable tax. At the time of
PROBLEMS
acquisition, Turbo designated the equity security at fair value to other comprehensive income.
Prior to the date of acquisition, information revealed that on December 31, 2018, Miguel
Company declared a P10 cash dividend to shareholders on record as of January 31, 2019
payable on April 30, 2019. There were no other transactions in 2019 involving the investments
in Miguel Company.
What is the historical cost of the investment account?
Answer: 283,750
On September 30, 2019, Pilgrims exchanged equipment for 2,500 of Theme Company's
ordinary share. On that date, the equipment had a carrying value of P250,000 and its fair
market value was not clearly determinable. The par value of Theme's share was P80 per share
but its market value on September 30, 2019 is P90 per share.What is the cost of investment?
Answer: 225,000
shares of its Sky shares for P276,000 and incurred transaction cost of P3,000.For the year
ended December 31, 2019, what amount of dividend income should the company recognized?
Answer: 44,000
World Company owns 10,000 ordinary shares of Nuke Company, which has hundred thousand
shares publicly traded. World Company purchased these 10,000 shares in 2019 for P120 per
share. World Company irrevocable designated the equity shares at fair value to other
comprehensive income. On October 31,2019, World Company received P20 per share from
Nuke as cash dividend. On December 30, 2019 World Company sold 6,000 shares of Nuke
Company for P126 per share which is equal to the prevailing market price of Nuke Company
and incurred P10,000 transaction cost. As a result of the disposal, World Company has decided
to reclassify the equity investment from fair value to other comprehensive income to fair value
to profit or loss.How much is the carrying amount of investment on December 31, 2019?
Answer: 504,000
World Company owns 10,000 ordinary shares of Nuke Company, which has hundred thousand
shares publicly traded. World Company purchased these 10,000 shares in 2019 for P120 per
share. World Company irrevocable designated the equity shares at fair value to other
comprehensive income. On October 31,2019, World Company received P20 per share from
Nuke as cash dividend. On December 30, 2019 World Company sold 6,000 shares of Nuke
Company for P126 per share which is equal to the prevailing market price of Nuke Company
and incurred P10,000 transaction cost. As a result of the disposal, World Company has decided
PROBLEMS
to reclassify the equity investment from fair value to other comprehensive income to fair value
to profit or loss.What amount of gain from sale should the company recognize?
Answer: 26,000
On September 30, 2019, Pilgrims exchanged equipment for 2,500 of Theme Company's
ordinary share. On that date, the equipment had a carrying value of P250,000 and its fair
market value was not clearly determinable. The par value of Theme's share was P80 per share
but its market value on September 30, 2019 is P90 per share.What is the amount of gain on the
disposal of the equipment?
Answer: 0
shares of its Sky shares for P276,000 and incurred transaction cost of P3,000.What amount of
unrealized gain should the company that would presented in other comprehensive income on
December 31, 2019?
Answer: 44,000
Comfort Company purchased 10,000 shares of Abel ordinary shares at P90 per share on
January 2, 2019. On December 31, 2019, Comfort received 2,000 shares of Abel ordinary share
in lieu of cash dividend of P10 per share. On this date, the Abel ordinary share has a quoted
market price of P60 per share.In its 2019 statement of comprehensive income, how much
should Comfort report as dividend income?
Answer: 120,000
On November 1, 2018, Grain Company invested P600,000 in equity securities representing

20,000 ordinary shares of Brain Company. The investment was designated as investment to
other comprehensive income. On December 31, 2019, this investment has a market value of
P580,000. On December 31, 2020, the market value of the investment was P640,000. On
January 15, 2021, Grain Company sold the investment for P650,000.What amount of realized
gain should Grain Company recognize on the disposal of the equity security?
Answer: 10,000
Dancer Company purchased 40,000 shares of Lancer Company's newly issued 6% cumulative
preference shares, P50 par for P3,040,000 on May 8, 2020. Each share carried one detachable
warrants entitling the holder to acquire at P60 one share of Lancer ordinary shares. On May 8,
2020, the market price of the preference ex-warrant was P69 per share and the market price of
PROBLEMS
the share warrant was P6 per warrant. On December 31, 2020, Dancer sold stock warrants for
P295,000. What is the gain on sale of the warrants?
Answer: 51,800
On January 1, 2020, Pacer Company paid P1,920,000 for 60,000 shares of Lennon Co.'s voting
common stock which represents a 45% investment. No allocation to goodwill or other specific
account was made. Significant influence over Lennon was achieved by this acquisition.
Lennon distributed a dividend of P2.50 per share during 2020 and reported net income of
P670,000.
What was the balance in the Investment in Lennon Co. account found in the financial records
of Pacer as of December 31, 2020?
Answer: 2,071,500
Posthorn Corporation acquired 20,000 of the 100,000 outstanding common shares of Stamp
Company on January 1, 2010, for a cash consideration of P 200,000. During 2020, Stamp
Company had net income of P120,000 and paid dividends of P80,000. At the end of 2010,
shares of Stamp Company were trading for P11 each. If Posthorn Corporation accounts for its
investment in Stamp Company at fair value through other comprehensive income, how much
dividend income would recognize in December 31, 2020.
Answer: 20,000
Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to
account for the investment. During 2020, Dew reported income of P250,000 and paid
dividends of P80,000. There is no amortization associated with the investment.During 2020,
how much income should Yaro recognize related to this investment?
Answer: 75,000
Company on January 1, 2020, for a cash consideration of P200,000. During 2020, Stamp
investment in Stamp Company using the equity method, what will the balance in the
Investment in Stamp Company be at December 31, 2020?
Answer: 208,000
PROBLEMS
investment in Stamp Company using the cost method, what will the balance in the Investment
in Stamp Company be at December 31, 2020?
Answer: 200,000
Company's ordinary shares on February 14, 2020 for P924,000. Threshold Company
designated the equity security at fair value to other comprehensive income. Threshold
Company received a P40,000 cash dividend on Power Company on July 1, 2020. Power
declared 10% share dividend on December 1, 2020 to shareholders of record as of December
31, 2020. The dividend was distributed on January 31, 2021. The market price of the share was
P38 on December 1, 2020, P40 on December 31, 2020 and P42 on January 3, 2021.What
amount should Threshold Company report the investment in 2020 statement of financial
position.
Answer: 880,000
Company had net income of P 120,000 and paid dividends of P 80,000. At the end of 2020,
investment in Stamp Company at fair value through profit or loss, what will the balance in the
Investment in Stamp Company be at December 31, 2020?
Answer: 220,000
Company's ordinary shares on February 14, 2020 for P924,000. Threshold Company
designated the equity security at fair value to other comprehensive income. Threshold
Company received a P40,000 cash dividend on Power Company on July 1, 2020. Power
declared 10% share dividend on December 1, 2020 to shareholders of record as of December
31, 2020. The dividend was distributed on January 31, 2021. The market price of the share was
P38 on December 1, 2020, P40 on December 31, 2020 and P42 on January 3, 2021.What
amount should Threshold reported as dividend revenue for the year ended December 31, 2020?
Answer: 40,000
Guess Company purchased 50,000 shares (5% ownership) of Fortune Company on January 1,
2020. Guess received a share dividend of 15% on March 1, 2020 when the market price of the
share is P40. On November 30, Guess paid P20 per share as special assessment on the shares.
On December 15, 2020, Fortune paid a cash dividend of P8 per share.In December 31, 2020
statement of comprehensive income of Guess Company, what amount should be reported as
dividend income?
Answer: 460,000
PROBLEMS
Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value
method to account for this investment. Trace reported net income of P110,000 for 2020 and
paid dividends of P60,000 on October 1, 2020. How much income should Gaw recognize on
this investment in 2020?
Answer: 9,000
On January 3, 2019, Roberts Company purchased 30% of the 100,000 shares of common stock
of Thomas Corporation, paying P1,500,000. There was no goodwill or other cost allocation
associated with the investment. Roberts has significant influence over Thomas.
During 2019, Thomas reported income of P300,000 and paid dividends of P100,000.
On January 4, 2020, Roberts sold 15,000 shares for P800,000. What is the balance in the
investment account after the sale of the 15,000 shares?
Answer: 780,000
Comfort Company purchased 10,000 shares of Abel ordinary shares at P90 per share on
January 2, 2020. On December 31, 2020, Comfort received 2,000 shares of Abel ordinary share
in lieu of cash dividend of P10 per share. On this date, Abel ordinary share has quoted market
price of P60 per share.In its 2020 statement of comprehensive income, how much should
Comfort report as dividend income?
Answer: 120,000
The Holy Family Inc, a medium size business entity. Holy Family, Inc. fully adopts PFRS for
SME's. On December 31, 2019 contains the following investment in equity securities:
- Anima co. ordinary, 3% ownership, 5,000 shares; cost, P100,000; market value, P105,000;
classified investment to profit or loss
- Christi Inc, preference, 2,000 shares, cost P40,000; market value, P43,000; classified as
investment to profit or loss.
- Soul Inc. ordinary, 30% ownership, 20,000 shares; cost, P1,150,000 excluding P5,000
transaction costs; market value, P1,170,000, classified as investment in associates. The
company adopts the fair value model for investment in associates.
- Body Co. ordinary, 15% ownership, 25,000 shares; costs, P67,500; market value, P50,000;
classified as investment to profit or loss.
It is the company's accounting policy to adopt the fair value model for all types of investment
in equity.
On February 14, 2020, Body Co. ordinary shares was sold for P42,500.
How much is the loss on sale of Body Co.?
Answer: 7,500
PROBLEMS
in equity.
What amount of unrealized gain (loss) should be included in the profit or loss?
Metrobank Company purchased the following portfolio of Investments to profit or loss and
reported the following balances at December 1, 2019.
Securities Cost Market Value
P 450,000 480,000
I 650,000 725,000
C 375,000 450,000
On February 1, 2020, Company decided to sell Securities I for P690,000.
How much is the realized gain on sale of Security I?
Answer:0
PCIB Corporation has the following short-term marketable securities classified as equities to
profit or loss as of December 31, 2019:
Historical Cost Market Value
ABC 1,625,000 1,700,000
DEF 2,375,000 2,400,000
On March 31, 2020, PCIB decided to dispose ABC and DEF securities for a lump sum price of
P4,365,000. What is the amount or realized gain that PCIB should report in its 2020 profit or
loss as a result of the sale of securities?
Answer: 265,000
Nindot Bai Corp. reported the following balances at December 1, 2019.

P 450,000 465,000
I 650,000 675,000
C 375,000 400,000
On February 1, 2020, Company decided to sell all the securities receiving net proceeds of
P1,750,000.
PROBLEMS
What is the total amount of realized gain that Nindot Bai should recognize on the sale of the
securities?
Answer: 210,000
in equity.
What is the total amount of investment that will be presented in financial position on December
31, 2019?
Answer: 1,385,000
The following information related to Trust Company for 2019:

Realized gain on sale of investment P 40,000
Unrealized gain arising from change of FMV to P/L 120,000
What amount of other comprehensive income should Trust Company presented in its statement
of comprehensive income?
Answer: 0
Information regarding ABC Bank portfolio of equity securities to profit or loss as follows:
Aggregate Cost, December 31, 2019 P 3,000,000
Unrealized gains, December 31, 2019 90,000
Unrealized losses, December 31, 2019 (300,000)
Net realized gains during 2019 350,000
If the company has an accounting policy of offsetting unrealized gains and losses with realized
gains and losses on their investments amount of net realized gain should the company report in
their statement of comprehensive income?
PROBLEMS
Answer: 140,000
National Company began business in February 2019. During the year, National Company
purchased the three equity securities through profit or loss listed below. In its December 31,
2019 statement of financial position, National Company appropriately reported a P40,000 debit
balance in its “Fair Value Adjustments” – account. There was no change during 2020 in the
composition of National Company’s portfolio of equity securities. Pertinent data are as
follows:
Security Cost Market Value
C 1,200,000 1,260,000
N 900,000 950,000
D 1,600,000 1,620,000
What amount of gain on these securities should be included in National Company’s profit or
loss for the year ended December 31, 2020?
Answer: 90,000
Primary Company purchased the following portfolio of equity securities through profit or loss
during 2019 and reported the following balances at December 31, 2019. No sales occurred
during 2019.
M 400,000 390,000
N 600,000 630,000
O 500,000 540,000
How much should Primary Company report as unrealized gain related to the securities
transactions in its 2019 profit or loss?
Answer: 60,000
During 2019, Hong Kong Bank purchased marketable equity securities as a short-term
investment in equity to profit or loss. The cost and market value at December 31, 2019 were as
follows:
Security Shares Cost Market Value
PROBLEMS
X 200 84,000 102,000

Y 2,000 430,000 459,000
Z 4,000 945,000 885,000
Hong Kong Bank sold the investment in Security Y on March 9, 2020 for p250 per share.
How much should Hong Kong Bank report as realized gain on the sale?
Answer: 41,000
Anchor Company acquired the following portfolio of investment through profit or loss
securities during 2019 and reported the following balances at December 31, 2019:
A 350,000 360,000
B 425,000 400,000
S 525,000 640,000
No sales occurred during 2019. What is the carrying value of the securities on December 31,
2019 on anchor’s statement of financial position?
Answer: 1,400,000
Morgan Company began business in February 14, 2019. During the year, Morgan purchased a
portfolio or investment in profit or loss equity securities. In its December 31, 2019 statement of
financial position, Morgan appropriately reported a P100,000 credit balance in its "Fair Value
Adjustments account. There was no change in during 2020 in the composition of Morgan's
portfolio of equity securities to profit or loss. Pertinent data are as follows:
P 2,400,000 2,250,000
Q 2,500,000 2,350,000
R 1,900,000 1,800,000
What amount of unrealized loss on these securities should be included in Morgan's profit or
loss for the year ended December 31, 2020?
Answer: 300,000
PROBLEMS
Cordial Company purchased the following portfolio equity securities through profit or loss
during 2019 and reported the following balances at December 31, 2019. No sales occurred
during 2019.
G 800,000 820,000
M 1,400,000 1,320,000
A 320,000 280,000
How much should Cordial Company reported as unrealized loss related to the securities
Answer: 100,000
Master Company acquired the following portfolio of equities through profit or loss during
2019 and reported the following balances at December 31, 2019:
C 300,000 280,000
B 360,000 370,000
N 500,000 460,000
No sales occurred during 2019. How much is the unrealized loss?
Answer: 50,000
The following information related to Trust Company for 2019:

Realized gain on sale of investment P 40,000
Unrealized gain arising from change of FMV to P/L 120,000
What amount of unrealized / realized gain should Trust Company presented in its statement of
profit or loss?
Answer: 160,000
PROBLEMS
Master Company acquired the following portfolio of equities through profit or loss during
2019 and reported the following balances at December 31, 2019:
C 300,000 280,000
B 360,000 370,000
N 500,000 460,000
No sales occurred during 2019. What is the carrying value of the securities on December 31,
2019 on Master’s financial position?
Answer: 1,110,000
On November 1, 2019, Ribbon Company invested P600,000 in equity securities representing

20,000 ordinary shares of Carbon Company. The investment was classified as equity security
to profit or loss since the company intends to sell the security for a short-term for profit. On
December 15, 2019, this investment has a market value of P580,000. On January 15, 2020,
Ribbon Company sold the investment for P630,000.
What amount of realized gain should Ribbon company recognize on the disposal of the trading
security?
Answer: 50,000
Fortune Company purchased the following portfolio of equity securities through profit or loss
during 2019 and reported the following balances at December 31, 2019.No Sales occurred
during 2019.
A 200,000 205,000
B 350,000 330,000
C 280,000 270,000
How much should Fortune Company reported as unrealized loss related to the securities
Answer: 25,000
PROBLEMS
During 2019, Hong Kong Bank purchased marketable equity securities as a short-term
investment in equity to profit or loss. The cost and market value at December 31, 2019 were as
follows:
Security Shares Cost Market Value
X 200 84,000 102,000
Y 2,000 430,000 459,000
Z 4,000 945,000 885,000
Hong Kong Bank sold the investment in Security Y on March 9, 2020 for P250 per share.
How much should Hong Kong Bank report as carrying amount of investment in December 31,
2020 assume there's no changes in the fair market value?
Answer: 987,000
Anchor Company acquired the following portfolio of investment through profit or loss
securities during 2019 and reported the following balances at December 31, 2019:
A 350,000 360,000
B 425,000 400,000
S 525,000 640,000
No sales occurred during 2019.
How much is the unrealized loss on December 31, that would presented to profit or loss?
Answer: 0
FINALS
Presented below is pension information for Welch Company for the year 2018:
Actual return on plan assets P 24,000
Interest on vested benefits 15,000
Service cost 30,000
Interest on projected benefit obligation 21,000
Amortization of prior service cost due to increase
in benefits 18,000
The amount of pension expense to be reported for 2018 is –
45,000
Presented below is information related to Marley Inc. pension data for 2018.
PROBLEMS
Service cost P 900,000

Actual return on plan assets 210,000
Amortization of unrecognized net loss 90,000
Amortization of unrecognized prior service cost 165,000
Expected return on plan assets 180,000
What amount should be reported for pension expense in 2018?
-1,365,000
Question 33 / 3 points
The following information is related to the pension plan of King, Inc. for 2018.
Actual return on plan assets P 200,000
Amortization of unrecognized net gain 82,500
Amortization of unrecognized prior service cost 150,000
Expected return on plan assets 230,000
Service cost 800,000
Pension expense for 2018 is
-1,000,000
The following information for Monroe Enterprises is given below: December 31, 2018
Assets and obligations
Plan assets (at fair value) P 1,200,000
Market-related asset value 1,160,000
Accumulated benefit obligation 1,280,000
Projected benefit obligation 1,840,000
Amounts to be Recognized
Prepaid/(accrued) pension cost at beginning of year P (32,000)
Pension expense (240,000)
Contribution 216,000
Prepaid/(accrued) pension cost at end of year P (56,000)
Unrecognized prior service costs P 275,000
Unrecognized gains (net) (140,000)
What is the amount that Monroe Enterprises should report as Intangible Asset—
Deferred Pension Cost as of December 31, 2018?
-24,000
Downing, Inc. received the following information from its pension plan trustee concerning the
operation of the company's defined-benefit pension plan for the year ended December 31,
2018.
1/1/18 12/31/18
Projected benefit obligation P 11,400,000 P 11,760,000
Market-related asset value 6,000,000 6,900,000
Accumulated benefit obligation 2,400,000 2,760,000
PROBLEMS
Unrecognized net (gains) and losses -0- 240,000

The service cost component of pension expense for 2018 is P840,000 and the amortization of
unrecognized prior service cost is P180,000. The settlement rate is 10% and the expected rate
of return is 8%.
What is the amount of pension expense for 2018?
-1,365,000
Randel, Inc. received the following information from its pension plan trustee concerning the
operation of the company's defined-benefit pension plan for the year ended December 31,
2017.
January 1, 2018 December 31, 2018
Market-related asset value P4,200,000 P4,500,000
Projected benefit obligation 4,800,000 5,160,000
Accumulated benefit obligation 840,000 1,020,000
Unrecognized net (gains) and losses -0- (90,000)
The service cost component of pension expense for 2018 is P360,000 and the amortization of
unrecognized prior service cost is P60,000. The settlement rate is 10% and the expected rate of
return is 9%.
What is the amount of pension expense for 2018? -522,000
What is the pension expense that Monroe Enterprises should report for 2018?-240,000
On January 1, 2018, Kinder Co. has the following balances:
Projected benefit obligation P 2,100,000
Fair value of plan assets 1,800,000
The settlement rate is 10%. Other data related to the pension plan for 2018 are:
Amortization of unrecognized prior service costs 60,000
Contributions 300,000
Benefits paid 105,000
PROBLEMS

The fair value of plan assets at December 31, 2018 is -2,232,000
What is the amount that should be reported as the total liability related to pensions as
of December 31, 2018? -80,000
Presented below is information related to Bitner Manufacturing Company as of December 31,
2018:
Projected benefit obligation in excess of plan assets P 900,000
Unrecognized net gain 300,000
Unrecognized prior service cost 405,000
The amount to be reported as accrued pension cost at the end of 2018 is -795,000
Koble, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation
of the plan for the year 2018.
Contributions to the plan 220,000
Projected benefit obligation (beginning of year) 2,400,000
Market-related and fair value of plan
assets (beginning of year) 1,600,000
The expected return on plan assets and the settlement rate were both 10%.
The amount of pension expense reported for 2018 is -280,000
The following data are for the pension plan for the employees of Nickels Company.
1/1/17 12/31/17 12/31/18
Accumulated benefit obligation 7,500,000 7,800,000 10,200,000
Projected benefit obligation 8,100,000 8,400,000 11,100,000
Market-related asset value 6,600,000 8,700,000 9,300,000
Plan assets (at fair value) 6,900,000 9,000,000 9,900,000
PROBLEMS
Unrecognized net loss -0- 1,440,000 1,500,000

Settlement rate (for year) 10% 9%
Expected rate of return (for year) 8% 7%
Nickels' contribution was P1,260,000 in 2008 and benefits paid were P1,125,000. Nickels
estimates that the average remaining service life is 15 years.
The amount of unrecognized net loss amortized in 2018 was – 38,000
1/1/17 12/31/17 12/31/18
The unexpected gain on plan assets in 2018 was – 156,000
On January 1, 2018, Kinder Co. has the following balances:
The balance of the projected benefit obligation at December 31, 2018 is – 2,385,000
1/1/17 12/31/17 12/31/18
The actual return on plan assets in 2018 was -765,000
PROBLEMS
Spencer Company has the following information at December 31, 2018 related to its pension
plan:
Plan assets (fair value) 2,000,000
Accrued pension cost 300,000
What amount of additional pension liability would be recognized if Spencer Company
had prepaid pension cost of P220,000 rather than accrued pension cost of P 300,000?
-1,420,000
On January 1, 2018, Nen Co. has the following balances:

The balance of the projected benefit obligation at December 31, 2018 is -4,635,000
Presented below is information related to Kluth Inc. as of December 31, 2018.

Unrecognized gains and losses 90,000
Vested benefits 1,620,000
Plan assets (at fair value) 3,384,000
Unrecognized prior service cost -0-
Assume that cumulative pension expense equaled pension funding through 2018.
The amount reported as the total pension liability on Kluth's balance sheet at December
31,2018 is -36,000
On January 1, 2018, Nen Co. has the following balances:

Service cost 240,000
PROBLEMS
The fair value of plan assets at December 31, 2018 is -4,059,000
The following information relates to the pension plan for the employees of Polzin Co.:
1/1/17 12/31/17 12/31/18
Accum. benefit obligation 5,280,000 5,520,000 7,200,000
Fair value of plan assets 5,100,000 6,240,000 6,888,000
Market-related value of assets 4,920,000 6,192,000 6,780,000
Unrecognized net (gain) or loss -0- (864,000) (960,000)
Polzin estimates that the average remaining service life is 16 years. Polzin's contribution was P
378,000 in 2018 and benefits paid were P 282,000. -
The interest cost for 2018 is –657,360
1/1/17 12/31/17 12/31/18
378,000 in 2018 and benefits paid were P 282,000.
The amount of unrecognized net gain amortized in 2018 is – 15,300
The following pension plan information is for Ladd Company at December 31, 2018.
Pension expense for 2018 3,000,000
PROBLEMS
Contribution for 2018 2,400,000

Prior to 2018, cumulative pension expense equaled cumulative contributions
The amount to be reported as Intangible Asset—Deferred Pension Cost on the December 31,
2018 balance sheet is -540,000
Presented below is information related to Kluth Inc. as of December 31, 2018.

Unrecognized gains and losses 90,000
Vested benefits 1,620,000
Unrecognized prior service cost -0-
Assume that cumulative pension expense equaled pension funding through 2018.
The amount reported as an intangible asset on Kluth's balance sheet at December 31, 2018 is
-0
The following information relates to Haywood, Inc.

For the Year Ended December 31,
2017 2018
Plan assets (at fair value) P 1,260,000 P 1,824,000
Pension expense 570,000 450,000
Annual contribution to plan 600,000 450,000
Unrecognized prior service cost 480,000 420,000
Prior to 2017, cumulative pension expense recognized equalled cumulative contributions.
The amount reported as the total liability for pensions on the December 31, 2017 balance sheet
-360,000
1/1/17 12/31/17 12/31/18
The actual return on plan assets in 2018 is – 456,000
PROBLEMS
Coble Company has a defined-benefit plan. At the end of 2018, it has determined the
following information related to its pension plan:
Projected benefit obligation P 700,000
Market-related asset value of pension plan 600,000
Accumulated benefit obligation 660,000
Fair value of pension plan assets 610,000
The amount of the total pension liability that is reported in Coble's balance sheet at the end of
2018 is -50,000
Barkley Corporation received the following report from its actuary at the end of the year:
December 31, 2017 December 31, 2018
Accu. benefit obligation 1,300,000 1,480,000
Fair value of pension plan assets 1,380,000 1,440,000
Prepaid pension cost 80,000 100,000
Assume that no prepaid or accrued pension cost exists on January 1, 2017.
The amount reported as the total pension liability at December 31, 2018 is -0
The following pension plan information is for Ladd Company at December 31, 2018.
Pension expense for 2018 3,000,000
Contribution for 2018 2,400,000
Prior to 2018, cumulative pension expense equaled cumulative contributions.
The amount to be reported as the total liability for pensions on the December 31, 2018 balance
sheet is -1,350,000
Barkley Corporation received the following report from its actuary at the end of the year:
December 31, 2017 December 31, 2018
Accu. benefit obligation 1,300,000 1,480,000
Fair value of pension plan assets 1,380,000 1,440,000
Prepaid pension cost 80,000 100,000
Assume that no prepaid or accrued pension cost exists on January 1, 2017.
The amount reported as the total pension liability at December 31, 2017 is -0
PROBLEMS

2017 2018
The amount reported as an intangible asset on the December 31, 2018 balance sheet is - 0
2017 2018
The amount reported as the total liability for pensions on the December 31, 2018 balance sheet
is – 60,000
1/1/17 12/31/17 12/31/18
The corridor (ceiling) for 2018 is – 619,200
Presented below is pension information related to Marten Company as of December 31,2018:

Accumulated benefit obligation P 3,000,000
PROBLEMS

The amount to be reported as Intangible Asset—Deferred Pension Cost as of December 31,
2018 is -100,000
Spencer Company has the following information at December 31, 2018 related to its pension
plan:
Plan assets (fair value) 2,000,000
The amount of additional pension liability Spencer Company would recognize at December
31. 2018 – 900,000
1/1/17 12/31/17 12/31/18
The unexpected gain or loss on plan assets in 2018 is - 22,560
Derby Company, a public limited company, has granted a share options to its employees with a
fair value of P12,000,000. The option vest in three years time.
Grant date - January 1, 2020, estimate of employees leaving company during the vesting
period - 5%
Revision of estimate - January 1, 2021- estimate of employees leaving the company during
the vesting period - 6%
Actual number of employees leaving the company - December 31, 2022 - 5%
What would be the amount of expense charged in the profit or loss for the year ended
December 31, 2021?
(3,720,000)
On January 2, 2020, X Company grants 50 shares each to 400employees, conditional upon the
employees' remaining in the company's employ during the vesting period. The shares will vest
PROBLEMS
at the end of 2020 if the company's earning increased by more than 15%; or at the end of 2021
if the earnings increased by an average of 12% over the two-year period; or at the end of 2022
if the earnings increased by an average of 10% over the three- year period. The shares have a
fair value of P25 on January 2, 2020, which is equal to the share price on the grant date.
At the end of 2020, earnings had increased by 13% and 20 employees have left and the
company expects that earnings will continue to increase at a similar rate in 2021 and expects to
vest in 2021. The company also expects, on the basis of weighted average of probability, that a
further 20 employees will leave during 2021.
At end of 2021, earnings increased by only 9% and therefore shares do not vest at the end of
2021. Also, 15 employees have left the company in 2021 but expect that 10 employees will
leave the company in 2022. The company expects that earnings will continue to increase at
similar rate.
At the end of 2022, earnings increased by 9% and 5 employees have left the company in 2020.
What amount of remuneration expense should the company recognize in its December 31,
2022 profit or loss?
(154,167)
On January 1,2020, an entity granted 500 share options to each member of the sales team
composed of 20 employees.
The vesting period is three years and that the sales team must sell at least 50,000 units during
the three year vesting period.
The fair value of the share option is P30 on grant date.
On December 31, 2021, the entity increased the sales target to 100,000 units and by December
31, 2022, the sales team only sold 55,000 units and the share option did not vest based on the
modified condition.
How much the remuneration expense that will be presented in profit or loss in December 31,
2020.
(100,000)
On January 2, 2020, X Company grants 50 shares each to 400 employees, conditional upon the
if the earnings increased by an average of 12% over the two-year period; or the end of 2021 if
the earnings increased by an average of 10% over the three-year period. The shares have a fair
value of P25 on January 1, 2020, which is equal to the share price on the grant date.
At the end of 2020, earnings had increased by 13% and the company expects that the earnings
will continue to increase at a similar rate in 2021 and expects to vest in 2021. At the end of
2021, earnings increased by only 9% and therefore shares do not vest at the end of 2021. The
company expects that earnings will continue to increase at similar rate. At the end of 2022,
earnings increased by 9%.
Round off your answer to nearest peso.
PROBLEMS
What amount or remuneration expense should the company recognize in its December 31,
2022?
(166,667)
employees’ remaining in the company’s employ during the vesting period. The shares will vest
at the end of 2020 if the company’s earning increased by more than 15%; or at the end of 2021
2021?
(83,333)
Grant date – January 1, 2020, estimate of employees leaving company during the vesting
period – 5%
Revision of estimate – January 1, 2021- estimate of employees leaving the company during
the vesting period – 6%
Actual number of employees leaving the company – December 31, 2022 – 5%
December 31, 2020?
(3,800,000)
PROBLEMS
2020?
(250,000)
employees’ remaining in the company’s employ during the vesting period. The shares will vest
at the end of 2020 if the company’s earning increased by more than 15%; or at the end of 2021
similar rate.
(70,833)
Grant date - January 1, 2020, estimate of employees leaving company during the vesting
period - 5%
Revision of estimate - January 1, 2021- estimate of employees leaving the company during
the vesting period - 6%
Actual number of employees leaving the company - December 31, 2022 - 5%
December 31, 2022?
(3,880,000)
PROBLEMS
similar rate.
(225,000)
On January 1, 2020, COU, Inc. granted 80,000 cash shares appreciation rights to the executives
on condition that the executive remain employ for the next three years.
The entity estimates that the fair value of the shares appreciation rights at the end of each year
in which liability exists are as follows:
2020 2021 2022
Fair Values P 15 P 18 P 20
Compensation expense relating to the plan is to be recorded over a three-period beginning
January 1, 2020.
What amount of compensation expense should COU recognize for the year ended December
31, 2021?
(560,000)
On January 1, 2020, F Company grants 100 share options to each of its 400 employees. Each
grant is conditional upon the employee remaining in the employ of the compony over the next
three years. F Company estimates that that the fair value of each option is P20. On the basis of
weighted average probability. F Company estimates that 100 employees will leave during the
three-year period and therefore their right to the share option will be forfeited.
During 2020, 30 employees had left and the share price dropped and F Company reprices its
share options, and that the repriced share options vest at the end of 2022. F Company estimates
that a further 70 employees will leave during 2021 and 2022. During 2021, 35 employees left
the company and the company estimates that 30 employees will leave in 2022, while during
2022, 28 employees left the company.
At the end of 2020 (date of repricing), the company estimates that the fair value of each of the
original share options granted (before taking into account the repricing) is P6 and that the fair
value of each repriced share option is P9.
What amount of remuneration expense should the company recognize in in its December 31,
(252,417)
PROBLEMS
On January 1, 2020, Diva Company granted Sister Stella, it’s president, 5,000 share
appreciation rights for the past services rendered. The rights are exercisable immediately and
expire three years after the date of grant. On exercise, Stella is entitled to receive cash for the
excess of the market value of the shares over the market value on the grant date. Stella
exercised all the rights on December 31, 2021. The market prices of Diva;s shares were as
follows:
Jan. 1, 2020 P 25 December 31, 2020 P 30 December 31, 2021 P 40
As a results of the shares rights, how much should Diva recognize as compensation expense in
2021.
(50,000)
The company granted Vati Cann, a top executive of Rome Corporation, a share option on
December 31, 2019, when the market price of the company's share was P90 per share. The
share option allows Vati to acquire 2,000 shares of P15 ordinary shares for P85.50 per share
after completing a 2-year service period. The option expires on December 31, 2020. On April
15, 2020, Vati Cann exercised the option.
How much is the share premium from the exercise of the share option on April 15, 2020?
(15,000)
On January 2, 2020, Spinster Corp. granted Spencer, the president, an option to purchase
100,000 shares of the company’s P20 par value ordinary share at P30 per share. The option
intended as additional compensation to Spencer for the next two years. The option is
exercisable within a 4-year period beginning January 1, 2022. The market price of Spinster’s
ordinary share was P35 per share on January 1, 2022, and P37 on December 31, 2022.
As a result of the share option, how much should Spinster’s charge as compensation expense in
2022?
(250,000)
In order to retain certain key employees, Creative Company granted them incentive share
options on December 31, 2018. ten thousand (10,000) options were granted at an option of P35
per share. market prices of the shares are shown below:
December 31, 2019 P 46 per share December 31, 2020 P 51 per share
The options were granted as compensation for executives services to be rendered over a two
year period beginning January 1 2021. Total compensation expense shall be P100,000.
What amount of compensation expense should Creative recognize as a result of this plan for
the year ended December 31, 2021 under fair value method?
(50,000)
PROBLEMS
2020 2021 2022

January 1, 2020.
31, 2022?
(640,000)
On January 1, 2020, Nightingale corporation granted Arthur Felipe, its president, 10,000 shares
appreciation rights for past services rendered. The rights are exercisable immediately and
expire on January 2, 2022. On exercise, Felipe is entitled to receive for the excess of the
market price of the stock on the exercise date over the market price on the grant date. Felipe
did not exercise any of the rights during 2020. The market price of Nightingale’s share was
P30 on January 2, 2020 and P45 on December 31, 2020.
As a result of the share appreciation rights, how much should Nightingale recognize as
compensation expense for 2020.
(150,000)
2020 2021 2022
January 1, 2020.
31, 2020?
(400,000)
On January 1, 2020, G Company grants 5,000 shares to each member of its sales department,
conditional upon the employee’s remaining in the company’s employ for three years, and the
department selling more than 60,000 units of product Zip over the three year period. The
company estimates that the fair value of the option on January 1, 2020 is P30 per option.
During 2021, G Company increases the sales target to 80,000 units. By the end of 2022, the
company has sold 70,000 units and share options are forfeited. And there were 10 members
remaining in the sales department for the three year period.
What amount of remuneration expenses should the company recognize in its December 31,
(500,000)
PROBLEMS
(200,000)
Marcus Company issues fully paid shares to 200 employees on December 31, 2020. Normally
shares issued to employees vest over two-year period, but these shares have been given as a
bonus to the employees because of their exceptional performance during the year. The shares
have a market value of P400,000 on December 31, 2020, and an average fair market value of
P450,000.
What amount would be charged against income in year 2020 related to share based payment
transactions?
(400,000)
On January 1, 2020, Drake Company granted an equity-settled award to certain employees for
services to be rendered over four years from the date of grant. The fair value of the award on
grant date is P500,000. On January 1,2022, the award was modified so as to become cash-
settled but it terms are otherwise unchanged. The fair value of the cash-settled is P150,000 but
it was settled at P180,000 on December 31,2023.
What amount of salaries expense should the company recognize on December 31, 2023?
(155,000)
PROBLEMS
(253,683)
On January 1, 2020, Drake Company granted an equity-settled award to certain employees for
services to be rendered over four years from the date of grant. The fair value of the award on
grant date is P500,000. On January 1,2022, the award was modified so as to become cash-
settled but it terms are otherwise unchanged. The fair value of the cash-settled is P150,000 but
it was settled at P180,000 on December 31,2023.
What is the amount of liability should Drake company recognize on January 1, 2022 as a result
of the modifications?
(75,000)
PROBLEMS

Acctng 104 Problems PDF

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PROBLEMS

Answer: 1,200,000 and 400,000

Ordinary Shares capital, P3

How much should Lincoln Company report as Shareholder's on December 31,2019?

Preference Share, P100 par value P230,000

Presented below is information related to Hale Corporation:

Presented below is information related to Hale Corporation:

The total legal capital of Hale Corporation is -

Percy Corporation was organized on January 1, 2019, with an authorization of 1,200,000

Presented below is information related to Edis Corporation:

Common Stock, P5 par P4,300,000

Hanna Company reported the following shareholders' equity on January 1, 2019:

Presented below is information related to Edis Corporation:

c. On July 15, 2019, Covid declared and distributed a property dividend of

Covid's Ordinary share balance at December 31, 2019 is:

An analysis of stockholders' equity of Hahn Corporation as of January 1, 2012, is as

Melvern's Corporation has an investment in 10,000 shares of Wallace Company common

Ordinary share 800,000

Percy Corporation was organized on January 1, 2012, with an authorization of 1,200,000

The following data pertains to Rainbow Corporation‟s investments in marketable securities:

The following data pertains to Rainbow Corporation‟s investments in marketable securities:

On November 1, 2018, Grain Company invested P600,000 in equity securities representing

Nindot Bai Corp. reported the following balances at December 1, 2019.

The following information related to Trust Company for 2019:

X 200 84,000 102,000

The following information related to Trust Company for 2019:

On November 1, 2019, Ribbon Company invested P600,000 in equity securities representing

Service cost P 900,000

Unrecognized net (gains) and losses -0- 240,000

Amortization of unrecognized net gain 18,000

Unrecognized net loss -0- 1,440,000 1,500,000

On January 1, 2018, Nen Co. has the following balances:

Presented below is information related to Kluth Inc. as of December 31, 2018.

On January 1, 2018, Nen Co. has the following balances:

The interest cost for 2018 is –657,360

Contribution for 2018 2,400,000

Presented below is information related to Kluth Inc. as of December 31, 2018.

The following information relates to Haywood, Inc.

The following information relates to Haywood, Inc.

Presented below is pension information related to Marten Company as of December 31,2018:

Plan assets (at fair value) 2,500,000

2020 2021 2022

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