1. Which of the following differences would result in future taxable amount?

A. Expenses or losses that are tax deductible after they are recognized in financial income.
B. Revenues or gains that are taxable before they are recognized in financial income.
C. Revenues or gains that are recognized in financial income but are never included in taxable income.
D. Expenses or losses that are tax deductible before they are recognized in financial income.

2. The unavoidable costs under an onerous contract represent the “least net cost of exiting from the contract”
which is equal to.
A. Cost of fulfilling the contract
B. Penalty arising from failure to fulfill the contract
C. Lower of the cost of fulfilling the contract or the penalty arising from failure to fulfill the contract
D. Higher of the cost of fulfilling the contract of the penalty arising from failure to fulfill the contract

3. A new drug named “EEE” was introduced by Genius Inc. in the market on December 1, 2021. Genius Inc.’s
financial year ends on December 31, 2021. It was the only company that was permitted to manufacture this
patented drug. The drug is used by patients suffering from an irregular heartbeat. On March 31, 2022, after the
drug was introduced, more than 1,000 patients died. After a series of investigations, authorities discovered that
when this drug was simultaneously used with “BBB,” a drug used to regulate hypertension, the patient’s blood
would clot and the patient suffered a stroke. A lawsuit for Php100,000,000 has been filed against Genius Inc.
The financial statements were authorized for issuance on April 30, 2022. Which of the following options is the
appropriate accounting treatment for this post–balance sheet event under PAS 10?
A. The entity should provide Php100,000,000 because this is an “adjusting event” and the financial statements
were authorized to be issued after the accident.
B. The entity should disclose Php100,000,000 as a contingent liability because it is an “adjusting event.”
C. The entity should disclose Php100,000,000 as a “contingent liability” because it is a present obligation with
an improbable outflow.
D. Assuming the probability of the lawsuit being decided against Genius Inc. is remote, the entity should
disclose it in the footnotes, because it is a nonadjusting material event.

4. In computing diluted EPS, dividends on convertible cumulative preference shares shall be

A. Ignored
B. Deducted from net income, whether declared or not
C. Deducted from net income only when declared
D. Added to net income net of tax

5. If the fair value less cost to sell cannot be determined

A. The asset is not impaired.
B. The recoverable amount is the value in use.
C. The net realizable value is used.
D. The carrying value of the asset remains the same.

6. When a public shareholding company changes an accounting policy voluntarily, it has to

A. Inform shareholders prior to taking the decision.
 B. Account for it retrospectively.
C. Treat the effect of the change as an extraordinary item.
D. Treat it prospectively and adjust the effect of the change in the current period and future periods.

7. If the payment of employee’s compensation for future absences is probable, the amount can be reasonably
estimated and the obligation relates to rights that accumulate, the compensation should be
A. Accrued if attributable to employee’s services whether already rendered or not
B. Accrued if attributable to employee’s services already rendered
C. Recognized only when actually paid
D. Accrued if attributable to employee’s services not yet rendered

8. Under PAS 37, which of the following statements is true concerning the measurement of a provision?
I. The amount recognized as a provision should be the best estimated of the expenditure required to settle
the present obligation at the end of reporting period.
II. The best estimate of the expenditure required to settle the present obligation is the amount that an entity
would rationally pay to settle the obligation at the end of reporting period or to transfer it to a third
party at that time.

A. I only C. Both I and II

B. II only D. Neither I nor II

9. The following are nonfinancial assets, except

A. Trademark
B. Leased Asset
C. Prepaid Expenses
D. Trade accounts receivable

10. There is gain on early settlement of retirement benefit under a defined benefit plan when the
A. Settlement price exceeds the amount contributed to the plan
B. Settlement price exceeds the present value of defined benefit obligation settled
C. Amount contributed to the plan exceeds the settlement price
D. Present value of defined benefit obligation settled exceeds the settlement price

11. If a share option is converted on March 31 of the current year

A. The potential ordinary shares are included in diluted EPS up to March 31, and in basic EPS from the date
converted to the year-end, both weighted accordingly.
B. The ordinary shares are not included in the diluted EPS calculation but are included un basic EPS.
C. The ordinary shares are not included in the basic EPS but are included in diluted EPS.
D. The effects of the share option are included only in previous year’s EPS calculation.

12. Interim Financial Statements emphasizes

A. Comparability over neutrality
B. Timeliness over reliability
C. Reliability over relevance
D. Reliability over relevance

13. Which of the following is within the scope of PAS 37?

A. Financial instrument carried at fair value
B. Future payment under employment contract
C. Future payment on vacant leasehold premises
D. An insurance company’s policy liability

14. At the balance sheet date, December 31, 2021, ABC Inc. carried a receivable from XYZ, a major customer, at
Php10 million. The “authorization date” of the financial statements is on February 16, 2022. XYZ declared
bankruptcy on Valentine’s Day (February 14, 2022). ABC Inc. will
A. Disclose the fact that XYZ has declared bankruptcy in the footnotes.
B. Make a provision for this post–balance sheet event in its financial statements (as opposed to disclosure in
footnotes).
 C. Ignore the event and wait for the outcome of the bankruptcy because the event took place after the year-
end.
D. Reverse the sale pertaining to this receivable in the comparatives for the prior period and treat this as an
“error” under PAS 8.

15. Which of the following pertains to the transfer of resources from the government to an entity in exchange
for past or future compliance with certain conditions relating to the operating activities of the entity is called
A. Government asset transfer
B. Government financial assistance
C. Government presents
D. Government grants

16. How should an unrealized gain on foreign currency translation be presented in a cash flow statement?
A. As an inflow in the “financing activities” section of the cash flow statement because it arises from a foreign
currency translation.
B. It should be ignored for the purposes of the cash flow statement as it is an unrealized gain.
C. It should be ignored for the purposes of the cash flow statement as it is an unrealized gain but it should be
disclosed in the footnotes to the financial statements by way of abundant precaution.
D. As an adjustment to the net income in the “operating activities” section of the statement of cash flows.

17. When a change in the tax rate is enacted into law, its effect on existing deferred income tax accounts should be
A. handled retroactively in accordance with the guidance related to changes in accounting principles.
B. considered, but it should only be recorded in the accounts if it reduces a deferred tax liability or increases a
deferred tax asset.
C. reported as an adjustment to tax expense in the period of change.
D. applied to all temporary or permanent differences that arise prior to the date of the enactment of the tax rate
change, but not subsequent to the date of the change.

18. Which of the following is not a characteristic of property, plant and equipment?
A. The property, plant and equipment are tangible assets.
B. The property, plant and equipment are used in business.
C. The property, plant and equipment are expected to be used over a period of more than one year.
D. The property, plant and equipment are subject to depreciation

19. Smile Co. provide the following information:

Fair value of plan assets, Jan. 1, 2022 P 2,000,000

Defined benefit obligation, Jan. 1, 2022 2,300,000
Vested past service cost 300,000
Unvested past service cost (5years vesting period) 500,000
Current service cost 900,000
Benefits paid to retirees during the year 650,000
Loss on settlement of plan 65,000
Gain on remeasurement of defined benefit obligation 28,000
Actual return on plan assets during the year 160,000
Discount rate based on high quality corporate bonds 10%

What amount should be reported as employee benefit expense?

A. 2, 195,000 C. 1,795,000
B. 1,735,000 D. 1,665,000

20. Certain balance sheet accounts of a foreign subsidiary of Gold Inc. at December 31, 2022 have been translated
into Philippine pesos as follows:

Translated at
Current Rate Historical Rates
Notes Receivable, long-term P 240,000 P 200,000
 Prepaid Rent 95,000 90,000
Patent 185,000 160,000
P 520,000 P 450,000

The subsidiary’s functional currency is the currency of the country in which it is located.

What total amount should be included in Gold Inc.’s December 31, 2022 consolidated balance sheet for the
above account?

A. 520,000 C. 970,000
B. 450,000 D. 70,000

21. For an event to be an obligating event, it is necessary that the entity has no realistic alternative but to settle the
obligation created by the event and this is the case only:
I. Where the settlement of the obligation can be enforced by law.
II. Where the event creates valid expectation in other parties that the entity will discharge the obligation
as in the case of a constructive obligation

A. I only C. Either I or II
B. II only D. Neither I nor II

22. The investment in subsidiaries, associates or joint ventures are accounted for
A. At Cost, in accordance with PFRS 9 or using equity method under PAS 28
B. At Fair Value in accordance with PFRS 8 or using equity method under PAS 29
C. A or B
D. Only A

23. Which is not a related party transaction?

A. Guarantee and collateral
B. License Agreement
C. Finance arrangements including loans and equity contributions in cash or in kind
D. None of the above

24. The following statements relate to inventory. Which statement is true?

I. Cost of factory management shall be included in the cost of inventory.
II. Maintenance expense for an item of equipment used in the manufacturing process shall be included
in the cost of inventory.

A. I only C. II only
B. Both I and II D. Neither I nor II

25. Which is incorrect separate acquisition of an intangible asset?

A. If an intangible asset is required separately, the cost of the intangible asset can usually be measured reliably.
B. The cost of an intangible asset comprises its purchase price and any directly attributable expenditure on
preparing the asset for its intended use.
C. If payment for an intangible asset is deferred beyond normal credit terms, its cost is equal to the cash price
equivalent
D. The cost of an intangible asset includes initial operating losses.

26. Which statement is true about capitalization of borrowing cost?

I. If the borrowing is directly attributable to a qualifying asset, the borrowing cost is required to be
capitalized as cost of the asset.
II. If the borrowing is not directly attributable to a qualifying asset, the borrowing cost shall be expensed
as incurred.

A. I only C. I and II
B. II only D. None of the above is true
27. Which should not be considered as a qualifying asset?
A. A ship that normally takes one to two years to complete
B. A power generation plant that takes two years to construct
C. An expensive jet that can be purchased from a vendor
D. A toll bridge that usually takes more than a year to build

28. Include the gain or loss on purchasing power in a hyperinflationary economy in

A. Equity
B. Comprehensive Income
C. Retained earnings
D. Profit or loss and separately disclosed

29. Employer Wang Enterprises wants to determine the cost of the retirement benefits of its employees. Which PAS
should he refer to?
A. PAS 19 C. PAS 24
B. PAS 20 D. PAS 26

30. Where ordinary shares are issued but not fully paid, the ordinary shares are treated in the calculation of basic
EPS
A. In the same way as fully paid ordinary shares.
B. As a fraction of an ordinary share to the extent that that they are entitled to participate in dividends
C. In the same way as warrants or options and are included only in diluted EPS.
D. Are ignored for basic and diluted EPS.

31. Hyperinflation is evidenced by all of the following, except

A. The cumulative inflation rate over three years is approaching or exceeds 100%
B. Interest rates, wages and prices are linked to a price index
C. The general population prefers to keep wealth in nonmonetary assets
D. All of the above

32. Land that is related to agricultural activity is measured

A. At fair value
B. In accordance with PAS 16, Property, Plant and Equipment or PAS 40, Investment Property.
C. At fair value in combination with the biological asset that is being grown on the land.
D. At the resale value separate from the biological asset that is being grown on the land.

33. Dividends from subsidiaries, associates or joint ventures are recognized in

A. Statement of Financial Position
B. Statement of Profit or Loss
C. Statement of Changes in Equity
D. Statement of Cash Flows

34. Which of the following statements best describes value in use?

A. The present value of estimated future cash flows expected to arise from the continuing use of an asset and
from its ultimate disposal.
B. The amount of cash or cash equivalents that could currently obtained by selling an asset in an orderly
disposal.
C. The amount which an entity expects to obtain for an asset at the end of its useful life.
D. The amount at which an asset could be exchanged between knowledgeable and willing parties in an arm’s
length transaction.

35. When an independent valuation expert advises an entity that the salvage value of its plant and machinery had
drastically changed and thus the change is material, the entity should
A. Retrospectively change the depreciation charge based on the revised salvage value.
B. Change the depreciation charge and treat it as a correction of an error.
C. Change the annual depreciation for the current year and future years.
D. Ignore the effect of the change on annual depreciation, because changes in salvage values would normally
affect the future only since these are expected to be recovered in future.
36. Which statement is correct concerning property leased to an affiliate?
I. From the perspective of the individual entity that owns it, the property leased to an affiliate is considered
an investment property.
II. From the perspective of the affiliates as a group and for purposes of consolidated financial statements,
the property is treated as owner-occupied property.

A. Both I and II C. I only

B. Neither I nor II D. II only

37. All of the statement pertains to intangible asset except

A. An identifiable nonmonetary asset without physical substance.
B. A resource controlled by an entity as a result of past event.
C. A resource from which future economic benefits are expected to flow to the entity.
D. Held for use in the production or supply of goods or services, for rental to others, or for administrative
purposes.

38. Entity A wants to change the presentation of and the classification of some items in its financial statements.
Which of the following statements is incorrect?
A. Entity A can make the change if it is required by a PFRS.
B. Entity A can make the change if the change is expected to result in reliable and more relevant information
to the users of its financial statements.
C. Entity A may be required to provide an additional balance sheet dated as at the beginning of the preceding
period.
D. Entity A can make the change only if it makes an irrevocable promise not to make another change within
the next five years.

39. When a plant asset is acquired by deferred payment, which condition generally does not indicate the need to
consider the imputation of interest?
A. The interest rate stated on the deferred obligation is significantly different from market interest rate.
B. The cash price of the plant asset is significantly different from the deferred obligation.
C. The instrument representing the deferred obligation is noninterest bearing.
D. The face amount of the deferred obligation is equal to the fair value of the plant asset exchanged.

40. On January 1, 2022, Bright Company took out a loan of P27,000,000 in order to finance specifically the
renovation of a building. The renovation work started on the same date.

The loan carried annual interest at 10%. Work on building was substantially complete on October 31, 2022.

The loan was repaid on December 31, 2022 and P250,000 investment income was earned in the period to October
31on the proceeds of the loan not yet used for the renovation.

What (a) amount of capitalizable borrowing cost should be included in the cost of the building and the (b)
amount that should be reported as interest expense for 2022?

A. a. 2,000,000 b. 270,000
B. a. 2,700,000 b. 450,000
C. a. 2,500,000 b. 270,000
D. a. 2,000,000 b. 450,000

41. Under PFRS 1, the early application of PFRSs that have not yet become effective as of the current reporting
period
A. is required.
B. is permitted, but not required.
C. is required, but not permitted.
D. is prohibited.

42. If an entity owns and manages a hotel, services provided to guests are significant component of the arrangement
as a whole. In such a case, the hotel is classified as
 A. Investment property
B. Owner-occupied property
C. Partly investment property and partly owner-occupied property
D. Neither investment property now owner-occupied property

43. Under PFRS 2, a cash settled share-based payment transaction will increase which of the following?
A. A current asset
B. A noncurrent asset
C. Equity
D. A liability

44. When it is difficult to distinguish between a change of estimate and a change in accounting policy, then an entity
should
A. Treat the entire change as a change in estimate with appropriate disclosure.
B. Apportion, on a reasonable basis, the relative amounts of change in estimate and the change in accounting
policy and treat each one accordingly.
C. Treat the entire change as a change in accounting policy.
D. Since this change is a mixture of two types of changes, it is best if it is ignored in the year of the change; the
entity should then wait for the following year to see how the change develops and then treat it accordingly.

45. Korean Enterprises reported the following assets and liabilities in its statement of financial position on
December 31, 2022.

Cash in Bank 3,000,000

Accounts Receivable 4,500,000
Inventory 1,850,000
Financial asset at fair value 550,000
Patent 900,000
Loans to employees 350,000
Advances to suppliers 500,000
Prepaid Expenses 250,000
Accounts Payable 1,250,000
Accrued Expenses 420,000
Bonds Payable 2,100,000
Finance Lease Liability 3,000,000
Unearned Revenue 200,000
Deferred Tax Liability 300,000

In preparing the financial statements in a hyperinflationary economy, what total amount should be classified as
(a) monetary assets and (b.) monetary liabilities, respectively?

A. a. 6,550,000 b. 4,720,000
B. a. 6,850,000 b. 5,770,000
C. a. 7,550,000 b. 6,720,000
D. a. 7,850,000 b. 6,770,000

46. The following are related parties, except

A. Postemployment benefit plan for the benefit of employees
B. Two venturers who share joint control over a joint venture
C. Both A and B
D. Only B

47. Which statement is incorrect with respect to depreciation?

A. The depreciation method shall reflect the pattern in which the asset's economic benefits are consumed by
the entity.
B. Depreciation of an asset begins when it is available for use or when it is in the location and condition
necessary for the intended use.
C. Depreciation ceases at the date the asset is derecognized.
 D. Depreciation is not recognized if the fair value of an asset exceeds carrying amount.

48. At the beginning of the current year, Dongjoo Company received a grant of P20,000,000 from the Japanese
government for the construction of a laboratory and research facility with an estimated cost of P27,000,000 and
useful life of 5 years.

The laboratory and research facility were completed and ready for the intended use at the end of the current
year.

What amount of grant income should be included in the income statement for the current year?

A. 20,000,000 C. 4,000,000
B. 0 D. 5,400,000

49. The cost of inventories that are not ordinarily interchangeable and goods or services produced and segregated
for specific projects shall be measured using
A. FIFO C. LIFO
B. Average Method D. Specific Identification

50. What are vested benefits?

A. The transfer of assets to an entity separate from the employer’s entity to meet future obligations for the
payment of retirement benefits.
B. Are the assets of a plan less liabilities other than the actuarial present value of promised retirement benefits.
C. The present value of expected payments by a retirement benefit plan to existing and past employees,
attributable to service already rendered.
D. The rights to which under the conditions of a retirement benefit plan are not conditional on continued
employment.

51. What are necessary disclosures that should be provided by either a defined contribution plan or a defined
benefit plan?
A. Transfers from or to other plans
B. Administrative tax and other expenses
C. Details of any investment in the employer
D. All of the above.

52. When should an item that meets the definition of an element be recognized, according to the Framework?
A. When it is probable that any future economic benefit associated with the item will flow to or from the entity.
B. When the element has a cost or value that can be measured with reliability.
C. When the entity obtains control of the rights or obligations associated with the item.
D. When it is probable that any future economic benefit associated with the item will flow to or from the entity
and the item has a cost or value that can be measured with reliability.

53. Which is not an equity instrument?

A. Preference share capital
B. Ordinary share capital
C. Share Option
D. Bonds Payable

54. On October 31, 2022, Dingo, Inc. had cash accounts at three different banks. One account balance is segregated
solely for a November 15, 2022, payment into a bond sinking fund. A second account, used for branch
operations, is overdrawn. The third account, used for regular corporate operations, has a positive balance. How
should these accounts be reported in Dingo’s October 31, 2022, classified balance sheet?
A. The segregated account should be reported as a noncurrent asset, the regular account should be reported as
a current asset, and the overdraft should be reported as a current liability.
B. The segregated and regular accounts should be reported as current assets, and the overdraft should be
reported as a current liability.
C. The segregated account should be reported as a noncurrent asset, and the regular account should be
reported as a current asset net of the overdraft.
 D. The segregated and regular accounts should be reported as current assets net of the overdraft.

55. Which statement is incorrect concerning the equity method?

A. Dividends received from the investee are accounted for as dividend income
B. The investment is initially recorded at cost
C. The investment in associate in increased or decreased by the investor’s share of the profit or loss of the
investee after the date of acquisition
D. The investor’s share of the profit or loss of the investee is recognized in the investor’s profit or loss

56. Which should be classified as current asset?

A. Cash designated for the redemption of callable preference shares0
B. Trade installment accounts receivables normally collectible in 18 months.
C. Cash surrender value of a life insurance policy
D. A deposit on machinery ordered. Delivery of which will be made within six months.

57. Directly attributable expenditures related to investment property include

A. Professional fees for legal services, property transfer taxes and other transaction costs.
B. Startup costs.
C. Initial operating losses incurred before the investment property achieves the planned level of occupancy.
D. Abnormal amounts of wasted material, labor and other resources incurred in constructing or developing
the property.

58. An entity has an ordinary “A” class, nonvoting share, which is entitled to a fixed dividend of 6% per annum.
The “A” class ordinary share shall
A. Be included in the “per share” calculation after adjustment for the fixed dividend.
B. Be included in the “per share” calculation for EPS without adjustment for the fixed dividend.
C. Not be included in the “per share” calculation for EPS.
D. Be included in the calculation of diluted EPS.

59. Which exchange has commercial substance?

A. Exchange of assets with no difference in future cash flows.
B. Exchange by entities in the same line of business.
C. Exchange of assets with difference in future cash flows.
D. Exchange of assets that causes the entities to remain in essentially the same economic position

60. Mr. A is assessing the ability of Entity A to generate future cash and cash equivalents. In making the assessment,
Mr. A uses not only the statement of cash flows but also the other components of a complete set of financial
statements. This is because of which of the following concepts?
A. Going concern C. Intercalation
B. Time period D. Articulation

61. What is the underlying concept governing the Generally Accepted Accounting Principles pertaining to
recording gain contingencies?
A. Conservatism C. Consistency
B. Relevance D. Faithful representation

62. Excellent Inc. built a new factory building during 2021 at a cost of Php20 million. At December 31, 2021, the net
book value of the building was Php19 million. Subsequent to year-end, on March 15, 2022, the building was
destroyed by fire and the claim against the insurance company proved futile because the cause of the fire was
negligence on the part of the caretaker of the building. If the date of authorization of the financial statements for
the year ended December 31, 2021, was March 31, 2022, Excellent Inc. should
A. Write off the net book value to its scrap value because the insurance claim would not fetch any
compensation.
B. Make a provision for one-half of the net book value of the building.
C. Make a provision for three-fourths of the net book value of the building based on prudence.
D. Disclose this nonadjusting event in the footnotes.

63. The date to transition to PFRSs is

 A. the beginning of the earliest period for which an entity presents full comparative information under PFRSs
in its first PFRS financial statements.
B. the end of the earliest period for which an entity presents full comparative information under PFRSs in its
first PFRS financial statements.
C. the beginning of the first PFRS reporting period.
D. the end of the first PFRS reporting period.

64. The period of time during which interest must be capitalized ends when
A. No further interest is being incurred
B. The activities that are necessary to get the asset ready for the intended use have begun
C. The asset is substantially complete and ready for the intended use
D. The asset is abandoned, sold or fully depreciated

65. Which of the following pertains to the date of transaction?

A. The date when cash is transferred.
B. The date when liability or receivable is settled.
C. The date when the transaction is recognized.
D. The date of recording the transaction in the books of the company.

66. Which of the following is correct regarding the provisions of PAS 34?
A. PAS 34 requires publicly listed entities to prepare at least a semi-annual financial report to be issued not
later than 60 days after the end of the interim period.
B. PAS 34 requires both publicly and non-publicly listed entities to prepare at least a semi-annual financial
report to be issued not later than 60 days after the end of the interim period.
C. PAS 34 encourages publicly listed entities to prepare at least a semi-annual financial report to be issued not
later than 60 days after the end of the interim period.
D. PAS 34 encourages publicly listed entities to prepare at least three quarterly financial reports to be issued
not later than 45 days after the end of each interim period.

67. The internal sources of information indicating possible impairment include all of the following, except
A. Evidence of obsolescence or physical damage of an asset.
B. Significant change in the manner or extent in which the asset is used with an adverse effect on the entity.
C. Evidence that the economic performance of an asset will be worse that expected.
D. Significant decrease in the market value of the asset.

68. An entity has entered into a contract with another entity which will supply a range of services. The payment for
those services will be in cash and based upon the price of the entity’s ordinary shares on completion of the
contract. In accordance with PFRS 2, what type of share-based payment transaction does this represent?
A. Asset-settled share-based payment transaction
B. Liability-settled share-based payment transaction
C. Cash-settled share-based payment transaction
D. Equity-settled share-based payment transaction

69. Where there is a production cycle of more than one year for a biological asset, PAS encourages separate
disclosures
A. Physical change only
B. Price change only
C. Total change in value
D. Physical change and price change

70. Entity A determined that an asset exists. However, the asset's low probability of inflows of economic benefits
and its very high level of measurement uncertainty affected Entity A's recognition decisions about the asset, as
these raised doubt on whether the asset's recognition would result in useful information. Consequently, Entity
A did not recognize the asset, but because Entity A deemed it relevant, information about the asset was
nonetheless provided in the notes. Which of the following statements is correct?
A. Entity A's treatment for the asset is acceptable. The asset is referred to as a non-existent asset.
 B. Entity A's non-recognition of the asset is correct. However, the asset should have been completely ignored
as providing information about unrecognized items in the notes is not acceptable under the Conceptual
Framework.
C. Entity A's accounting treatment is grossly incorrect because, according to the Conceptual Framework, all
items that meet the definition of an asset should always be recognized, regardless of the asset's potential to
produce economic benefits and its measurement uncertainty.
D. Entity A's treatment for the asset is acceptable. The asset is referred to as an unrecognized asset.

71. Which of the following is not dealt with by PAS 41?

A. The accounting for biological assets.
B. The initial measurement of agricultural produce harvested from the entity’s biological assets.
C. The processing of agricultural produce after harvesting.
D. The accounting treatment of government grant received in respect of biological asset.

72. Which is correct concerning the criterion of identifiability of intangible asset?

I. An intangible asset is identifiable when it is separable, meaning, the asset could be sold, transferred,
licensed, rented or exchanged.
II. An intangible asset is identifiable when it arises from contractual or legal right.

A. I only C. Both I and II

B. II only D. Neither I nor II

73. Separate Financial Statements are presented in addition to:

A. consolidated financial statements
B. the financial statements of an entity with an investment in associate or joint venture that is accounted for
using the equity method
C. A and B
D. A or B

74. Which statement is incorrect concerning initial measurement of an investment property?

A. The investment property shall be measured initially at fair value.
B. The cost of the purchased investment property includes its purchase price and any directly attributable
expenditure.
C. The initial cost of a property interest held under a lease and classified as an investment property shall be the
lower of the fair value of the property and the present value of the minimum lease payments.
D. If payment for an investment property is deferred, its cost is the cash price equivalent.

75. The financial statements of an entity that reports in the currency of a hyperinflationary economy shall be stated
in terms of
A. Current cost
B. Fair value
C. Historical cost
D. Measuring unit current at the end of the reporting period

76. At the beginning of the current year, Zi Company purchased 10% of Qi Company’s outstanding ordinary shares
for P5,000,000.

Zi Company is the largest single shareholder in Qi Company and Zi’s officers are a majority of Qi’s board of
directors.

The investee reported net income of P6,000,000 for the current year and paid cash dividend of P2,500,000.

What amount should be reported as investment in Qi Company at year-end?

A. 5,850,000 C. 5,350,000
B. 5,600,000 D. 4,650,000

77. Which of the following statements about the concepts in the Conceptual Framework is least accurate?
 A. Recognition means including an item in the totals of the financial statements when that item meets the
definition of a financial statement element and recognizing it would result in useful information.
B. A low probability of expected inflows or outflows of economic benefits resulting from an asset or liability
may affect the recognition of that asset or liability, but not necessarily its existence
C. General purpose financial reports are intended to meet equally the needs of all types of external users.
D. A high level of measurement uncertainty associated with an asset or liability can affect the faithful
representation of that asset or liability, but not necessarily its relevance.

78. What is a company's functional currency?

A. The reporting currency of its parent for a subsidiary.
B. The currency of the primary economic environment in which it operates.
C. The currency of the country where it has its headquarters.
D. The currency in which it prepares its financial statements.

79. Doldam Company provided the following information of their defined benefit plan:
Defined benefit obligation, beg. P 185,000
Defined benefit obligation, end 195,000
Benefits paid 70,000
Increase in DBO due to changes in actuarial assumptions 12,000
Discount rate 10%

What would be the current service cost?

A. 110,500 C. 86,500
B. 49,500 D. 73,500

80. Which of the following terms best describes the higher of fair value less cost to sell and value in use?
A. Recoverable amount
B. Revalued amount
C. Depreciable amount
D. Carrying amount

81. An investment property is recognized when

I. It is probable that the future economic benefits that are associated with the investment property will
flow to the entity
II. The cost of the investment property can be measured reliably.

A. Both I and II C. I only

B. Neither I nor II D. II only

82. It is contract in which the unavoidable costs of meeting the obligation under the contract exceed the economic
benefits to be received under the contract.
A. Onerous contract
B. Executory contract
C. Executed contract
D. Sale contract

83. Which is incorrect concerning the criterion of control by the entity of the intangible asset?
A. An entity controls an asset if the entity has the power to obtain the future economic benefits flowing from
the underlying resource and also can restrict the access of others to those benefits.
B. The capacity of the entity to control the economic benefits from an intangible asset would normally stem
from legal rights that are enforceable in a court of law.
C. Market and technical knowledge may give rise to future economic benefits which can be controlled by the
entity if the knowledge is protected by legal rights such as copyright.
D. The skill of employees arising out of the benefits of training costs can be recognized as intangible asset.

84. If a bonus issue occurs between the year-end and the date that the financial statements are authorized.
A. The EPS for both the current and the previous year are adjusted
 B. The EPS for the current year only is adjusted
C. No adjustment is made to EPS
D. Diluted EPS only is adjusted

85. How do you present the preference dividend on mandatorily redeemable preference shares?
A. Treated as interest expense
B. Deducted from share capital
C. Deducted from retained earnings
D. Deducted from share premium

86. Which of the following correctly characterizes defined contribution plan?

I. The investment risk under the defined contribution plan is borne by the employee.
II. Under defined contribution plan, the employer shall have no obligation to pay further obligations if the
fund does not hold sufficient assets to pay all employee benefits relating to employee service in the
current and prior periods.
III. Under defined contribution plan, the employer shall have obligation to pay further obligations if the
fund does not hold sufficient assets to pay all employee benefits relating to employee service in the
current and prior periods.
IV. The investment risk under the defined contribution plan is borne by the employer.

A. I and III C. I and II

B. II and IV d. II and III

87. Which statement is incorrect concerning the recognition and measurement of defined benefit plan?
A. The obligation is measured on a discounted basis.
B. The expense recognized for defined benefit plan is not necessarily equal to the amount of contribution due
that period.
C. Actuarial assumptions are required to measure the obligation and expense and there is possibility of
actuarial gains and losses.
D. None of the above statements is incorrect.

88. Mr. Doe, CPA, is a professor in a university where he teaches mainly home economics, music, and physical
education. Those subjects require that the teacher must be awesome. Mr. Doe is also frequently invited as a
judge in beauty pageants and singing contests and as referee in mixed martial arts competitions. Mr. Doe is
considered to be practicing accountancy in which of the following sectors?
A. Academe C. Commerce and Industry
B. Public Accounting D. None of these

89. How should repayment of a long-term loan comprising repayment of the principal amount and interest due to
date on the loan be treated in a cash flow statement?
A. The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities”
section; the interest payment belongs either in the “operating activities” section or the “financing activities”
section.
B. The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities”
section; the interest payment belongs either in the “operating activities” section or the “investing activities”
section.
C. The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities”
section; the interest payment belongs in the “operating activities” section (because PAS 7 does not permit
any alternatives in case of interest payments).
D. The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities”
section; the interest payment should be netted against interest received on bank deposits, and the net amount
of interest should be disclosed in the “operating activities” section.

90. At the beginning of the current year, an entity sold used equipment for a cash amounts equaling its carrying
amount for both book and tax purposes. During the year, the entity replaced the equipment by paying cash and
signing a note payable for new equipment. The cash paid for the new equipment exceeded the cash received for
the old equipment. How should these equipment transactions be reported in the entity’s Statement of Cash
Flows?
 A. Cash outflow equal to the cash paid less the cash received.
B. Cash outflow equal to the cash paid and note payable less the cash received.
C. Cash inflow equal to the cash received and a cash outflow equal to the cash paid and note payable.
D. Cash inflow equal to the cash received and a cash outflow equal to the cash paid.

91. An unconditional government grant related to a biological asset that has been measured at fair value less cost
to sell shall be recognized as
A. Income when the grant becomes receivable.
B. A deferred credit when the grant becomes receivable.
C. Income when the grant application has been submitted.
D. A deferred credit when the grant has been approved.

92. It is the date on which the entity and another party agree to a share-based payment arrangement, being when
the entity and the counterparty have shared understanding of the terms and conditions of the arrangement
A. Grant date
B. Measurement date
C. Exercise date
D. End of reporting period.

93. Which of the following items are comprised (added or deducted) in the cost of inventories according to PAS 2,
Inventories?
I. Storage costs for work in progress
II. Fixed administration overheads
III. Trade discount
IV. Storage costs relating to finished goods
V. Fixed production overheads

A. I, II and V only C. I, III and V only

B. I and V only D. All of them

94. Entity A receives land from the government conditioned that the land will only be used in Entity A’s primary
business activities and should never be sold. If in case, Entity A decides not to use the land in its primary
business activities, it shall return the land to the government. Which of the following standards is least likely to
be relevant in accounting for the land?
A. PAS 2
B. PAS 16
C. PAS 20
D. All of these are relevant

95. When bonds are issued with share warrants, the equity component is equal to
A. zero
B. The excess of the proceeds over the fair value of the bonds without the share warrants
C. The excess of the proceeds over the face amount of the bonds
D. The market value of the share warrants

96. According to PAS 34, measurements in the interim period are made on
A. a discrete basis.
B. a year-to-date basis.
C. an item-by-item basis.
D. A or B, as matter of accounting policy choice.

97. An entity is undertaking a reorganization. Under the plan, part of the entity’s business will be demerged and
will be transferred to a separate entity, Entity Z. This also will involve a transfer of part of the pension obligation
to Entity Z. Because of this, Entity Z will have a deductible temporary difference at its year-end of December
31, 2022. It is anticipated that Entity Z will be loss-making for the first four years of its existence, but thereafter
it will become a profitable entity. The future forecasted profit is based on estimates of sales to intergroup
companies. Should Entity Z recognize the deductible temporary difference as a deferred tax asset?
A. The entity should recognize a deferred tax asset.
 B. Management should not recognize a deferred tax asset as future profitability is not certain.
C. The entity should recognize a deferred tax asset if the authenticity of the budgeted profits can be verified.
D. The entity should recognize a deferred tax asset if the intergroup profit in the budgeted profit is eliminated.

98. If a government grant related to a biological asset is conditional on certain events, the grant shall be recognized
as
A. Income when the conditions attaching to the grant are met.
B. Income when the grant has been approved.
C. A deferred credit when the conditions attached to the government grant are met.
D. A deferred credit when the grant is approved.

99. An entity would disclose the following information in relation to related party transaction, except
A. Peso amount of the transaction
B. Nature of the relationship between the parties
C. Amount of due from or to related parties at the end of the reporting period
D. Nature of any future transactions planned between the parties and the terms involved.

100. An impairment loss that relates to an asset that has been revalued shall be recognized in
A. Profit or loss
B. Revaluation surplus that relates to the revalued asset
C. Opening retained earnings
D. Any reserve in e