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REO AFAR First Preboard 2021
Accountancy (ACCTG102)
Cotabato State University
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Page 1 of 11 | AFAR 1st PB
FIRST PREBOARD
MARK ALYSON B. NGINA, CPA, CMA
FIRST PREBOARD
MARK ALYSON B. NGINA, CPA CMA
REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience
reocpareview REAL EXCELLENCE ONLINE CPA
REVIEW
Upon the formation of partnership, in the absence of _______, the asset should be valued at ________. Use the ______ of assets if two valuation can't be used. a. Book value, agreed value, fair market value b. Agreed value, fair market value, book value c. Agreed value, book value, fair market value d. Fair market value, book value, agreed value
Puppy, Pappa and Pappi formed a partnership on April 30, with the following assets, measured at their fair values, contributed by each partner: Puppy Pappa Pappi Cash ₱ 100,000 ₱ 420,000 ₱ 300, Delivery Trucks 1,500,000 280,000 - Computers 85,000 51,000 - Office Furniture - 53,250 - Although Pappa has contributed the most cash to the partnership, he did not have the full amount of ₱420, available and was forced to borrow ₱200,000. The delivery truck contributed by Puppy has a mortgage of ₱900, and the partnership is to assume responsibility for the loan. Aside from the cash contributed by Pappi, he also agreed to contribute the use of his land with a fair value of ₱1,500,000. The partnership provides that Puppy, Pappa and Pappi share profits and losses 25:55:20, respectively. The agreement further provides that the partners should initially have an equal interest in the partnership capital. Cash settlements among the partners are to be made outside the partnership. Using the Bonus method: a. Pappa and Pappi pays Puppy, ₱125,500 and ₱629,750 respectively b. Puppy and Pappa pays Pappi, ₱344,750 and ₱325,500 respectively c. Pappa pays Puppy, ₱253,000 and Pappi, ₱207, d. Pappi pays Puppy, ₱155,250 and Pappa, ₱174,
Salaries, interest and bonus is given to partners as a means of allocating the profit or loss equitably. Under this theory, salaries to partners are regarded as distribution of net income rather than as a determinant of net income. a. Proprietary theory c. Fund theory b. Entity theory d. Residual equity theory
If the partners did not agree on any profit sharing scheme, the partnership profit shall be allocated to partners based on a. Equal sharing c. Additional investment
b. Initial investment d. Existing capital 5. S1: Additional investment or withdrawal made on the last day of the accounting period has an effect in the computation of simple average capital. S2: Additional investment or withdrawal made on the last day of the accounting period has an effect in the computation of the weighted average capital. a. True, true b. True, false c. False, true d. False, false
During 2021, Rebecca and Ramsay formed a partnership and agreed to share profits and losses equally by providing themselves annual salaries of ₱200,000 and ₱300,000, respectively, and a bonus of 10% on operating profit to Rebecca. Their statement of comprehensive income for the 6 months period ended December 31, 2021 is shown below: Sales ₱4,000, Less: Cost of sales 3,000, Gross profit ₱1,000, Other income 20, Less: Expenses 940, Profit ₱80, Compute for Rebecca’s profit sharing if the partnership expenses already include the salaries. a. ₱156,500 b. ₱311,000 c. ₱ 269,000 d. ₱ 336,
Roger and Silvanna agreed to share profits and losses 40:60, respectively after providing Silvanna 17% bonuses on partnership net income after tax and after bonus. Roger received ₱360,000 as final profit distribution. The share of the partners on partnership profit is subject to 10% withholding tax. The partnership is also subject to 35% income tax. Compute the partnership operating income assuming that it equals taxable income.
MARK ALYSON B. NGINA, CPA, CMA
First Pre Board
REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience
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a. ₱1,170,000 b. ₱1,053,000 c. ₱1,800,000 d. ₱1,620,
After several years of operation, J retired from JKL Partnership. J, K and L have outstanding capital balances prior to J’s withdrawal of ₱100,000, ₱300,000 and ₱150,000, respectively. The partners also share profits and losses 20%:50%:30% to J, K and L, respectively. J has a loan to the partnership totaling ₱30,000. The partnership also has outstanding loans: ₱50,000 to K and ₱10,000 to L. J agreed to take an item of equipment with a book value of ₱40,000 for an agreed value of ₱50,000. How much cash is necessary to for the full settlement of J’s interest? a. ₱100,000 b. ₱22,000 c. ₱82,000 d. ₱80,
The following condensed statement of financial position is presented for the partnership of Carlsen and Caruana, who share profits and losses in the ratio of 60:40, respectively: Cash ₱ 450, Other assets 6,250, Caruana, loan 300, ₱ 7,000, Accounts payable ₱ 1,200, Carlsen, capital 3,480, Caruana, capital 2,320,
₱ 7,000, The assets and liabilities are fairly valued on the statement of financial position. Carlsen and Caruana decide to admit Chess as a new partner with 20% interest. No goodwill or bonus is to be recorded. What amount should Chess contribute in other assets assuming there is an assumed mortgage of ₱450,000? a. ₱1,000,000 b. ₱1,900,000 c. ₱1,160,000 d. ₱1,450,
Partner’s equity is not relevant under which of the following scenario? a. Partnership liquidation b. Retirement of a partner c. Admission of a new partner by investment d. Withdrawal of a partner
S1: Under the installment liquidation plan, the amount of cash distributed to partner is equal under the safe payments schedule and the cash priority program. S2: Under the cash priority program, all non-cash asset is assumed not realized and should be written off as a loss and allocated to the partners using their profit and loss ratio. a. True, true b. True, false c. False, true d. False, false
Aronian, Levon, Carlsen, and Magnus are partners sharing earnings in the ratio of 3/21; 4/21; 6/21 and 8/21. The balances of their capital accounts on December 31, 2020 are as follows: Aronian ₱ 1, Levon 25, Carlsen 25, Magnus 9,
₱ 60, The partners decide to liquidate, and they accordingly convert the non-cash assets into ₱23,200 of cash. After paying the liabilities amounting to ₱3,000, they have ₱22,200 to divide. Assume that a debit balance of any partner’s capital is uncollectible. After the ₱22,200 was divided, the capital balance of Levon was: a. ₱3,200 b. ₱3,920 c. ₱4,400 d. ₱17,
Partners PG, PD and CG share profits and losses in the ratio of 5:3:2. At the end of a very unprofitable year, they decided to liquidate the firm. The partner’s capital account balances at this time are as follows: PG ₱330, PD 373, CG 225, The liabilities accumulate to ₱450,000, including a loan of ₱150,000 from PG. The cash balance is ₱90,000. All the partners are personally solvent. The partners plan to sell the assets in installment. If PD received ₱54,000 from the first distribution of cash, how much did CG receive at that time? a. Nil b. ₱12,000 c. ₱18,000 d. ₱33,
Classification of asset under corporate liquidation is a. Current and non-current. b. Financial and non-financial. c. Free assets, asset pledged with fully secured creditors and asset pledged with partially secured creditors. d. Free assets, asset pledged with fully secured creditors, asset pledged with partially secured creditors and asset
pledged with unsecured creditors with priority. 15. The percentage recovery of partially secured creditors a. Is 100%
MARK ALYSON B. NGINA, CPA, CMA
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- Tito, Vic and Joey formed a joint operation in 2020 to sell sportswear merchandise. Joey is designated as the manager of the joint operation. The operators agreed to divide profits and losses equally. The joint operation is terminated on December 31, 2020 even though there is still unsold merchandise. On this date, Joey’s trial balance shows the following account balances before profit or loss distribution: Debit Credit Joint Operation Cash ₱52, Joint Operation 10, Tito, Capital 24, Vic, Capital ₱28, Joey receives ₱7,500 for his share in the joint operation profit. Furthermore, he agrees to be charged for the unsold merchandise as of December 31, 2020. What is the cost of the unsold merchandise charged to Joey?
a. ₱18,000 b. ₱3,000 c. ₱33,000 d. ₱12, 26. On 1 January 2021 entity A acquired 30 per cent of the ordinary shares that carry voting rights at a general meeting of shareholders of entity B for ₱300,000. On 1 January 2021 entity A’s share of the fair values of the net identifiable assets of entity B is ₱280,000 and the fair value of one of entity B’s assets (a machine) exceeded its carrying amount (in entity B’s statement of financial position) by ₱50,000. That machine is depreciated on the straight-line method to a nil residual value over its remaining five-year useful life. Entity A estimated the useful life of the implicit goodwill to be five years.
For the year ended 31 December 2021 entity B recognized a profit of ₱400,000. On 30 December 2021 entity B declared and paid a dividend of ₱150,000 for the year 2021. At 31 December 2021 the fair value of entity A’s investment in entity B is ₱425,000. However, there is no published price quotation for entity B. Applying PFRS for SME, the investment income of Entity A should be reported at a. ₱113,000 b. ₱115,000 c. ₱115,800 d. ₱115, 27. Darrell Company has two merchandise outlets, its main store and its Center Mall branch. All purchases are made by the main store and shipped to the Center Mall branch at cost plus 10%. On January 1, 2020, the main store and Center Mall inventories were ₱170,000 and ₱49,500, respectively. During 2020, the main store purchased merchandise costing ₱50,000 and shipped 40% of it to Center Mall. At December 31, 2020, Center Mall made the following closing entry: Sales ₱400, Inventory, end 60, Inventory, beg. ₱ 49, Shipments from main store 220, Expenses 131, Main store 60, If the main store inventory at December 31, 2020 is ₱140,000, the combined main store and branch inventory that should appear in Darrell Company’s December 31, 2019 statement of financial position is: a. ₱189,500 b. ₱195,000 c. ₱182,270 d. ₱215,
On December 31, 2020, the home office current account on the books of Quezon Branch has a balance of ₱2,275,000. In analyzing the activity in each of these accounts for December, you find the following differences:
- A ₱84,000 branch remittance to the home office initiated on December 31, 2020 was recorded twice by the home office on December 26 and 28.
- The home office incurred ₱126,000 of advertising expense and allocated 1/3 of this amount to the branch on December 20. The branch recorded this transaction on December 22 amounting to ₱63,000.
- Inventory costing ₱853,300 was sent to the branch by the home office on December 15. The billing was at cost, but the branch recorded the transaction at ₱903,700.
- The home office erroneously recorded the branch net income at ₱243,075. The branch reported net income of ₱261,975. The adjusted balance of the Branch Current account as of December 31, 2020 is? a. ₱2,100,700 b. ₱2,203,600 c. ₱2,254,000 d. ₱2,222,
At the beginning of 2020, Video One established a Session Branch and a La Trinidad Branch in order to provide wider distribution of its merchandise. Merchandise is transferred to the branches at a price of 30% above cost. All branch merchandise is acquired from the home office. At the end of 2020, the Session Branch and the La Trinidad Branch reported net income and ending inventory balances as follows: Net income Ending inventory Session Branch ₱455,000 ₱650, La Trinidad Branch 520,000 780,
MARK ALYSON B. NGINA, CPA, CMA
First Pre Board
REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience
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The year-end balances in the home office account’s allowance for unrealized gross margin in branch inventory are ₱487,500 for the Session Branch and ₱585,000 for the La Trinidad branch. The income from Branch, home office should record is: a. ₱1,717,500 b. ₱975,000 c. ₱1,305,000 d. ₱742,
Rexona, Inc., acquired net assets of Vernona Corporation on January 1, 2018, for ₱700,000 in cash. This portion of the consideration transferred results in a fair-value allocation of ₱35,000 to equipment and goodwill of ₱88,000. At the acquisition date, Rexona also agrees to pay Vernona’s previous owners an additional ₱110,000 on January 1, 2020, if Vernona earns a 10% return on the fair value of its assets in 2018 and 2019. Vernona’s profits exceed this threshold in both years. Which of the following is true? a. The additional ₱110,000 payment is a reduction in retained earnings. b. The fair value of the expected contingent payment increases goodwill at the acquisition date. c. Goodwill as of January 1, 2020, increases by ₱110,000. d. The ₱110,000 is recorded as an expense in 2020.
Khaycee Co. merged into Mae Corp. on July 1, 2020. In exchange for net assets at fair market value of Khaycee Co. amounting to ₱696,450, Mae issued 68,000 shares at ₱9 par value with a market price of ₱12 per share. Out of pocket costs of the combination were as follows: Legal fees for the contract of business combination ₱35, Audit fee for SEC registration of share issue 90, Printing costs of share certificates 14, Broker’s fee 23, Accountant’s fee for pre-acquisition audit 80, Other direct cost of acquisition 75, General and allocated expenses 43, Listing fees in issuing new shares 30, Documentary stamp tax on the new shares 6, Khaycee will pay an additional cash consideration of ₱455,000 in the event that Mae’s net income will be equal or greater than ₱950,000 for the period ended December 31, 2020. At acquisition, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be ₱195,000. Actual net income for the period ended December 31, 2020 amounted to ₱1,250,000. The additional consideration was paid. What amount of expense is to be recognized for the year ended 12/31/2020? a. ₱547,200 b. ₱553,200 c. ₱287,200 d. ₱517,
On January 1, 2020, Popol and Kupa Company purchased 80% of Selena Corporation’s ₱10 par common stock for ₱2,437,500. On this date, the carrying value of Selena’s net assets was ₱2,500,000. The fair value of Selena’s identifiable assets and liabilities were the same as their book values except for plant assets (12 years original useful life), purchased on December 31, 2017, which were ₱250,000 in excess of the carrying amount. For the year ended December 31, 2020, Selena’s net income of ₱475,000 and paid cash dividends totaling ₱312,500. In the December 31, 2020 consolidated statement of financial position, non -controlling interest should be reported at: a. ₱704,375 b. ₱699,375 c. ₱636,875 d. ₱641,
The separate incomes of Pony Corporation and Sony Corporation, its 80% owned subsidiary, for 2020 were
determined as follows: Pony Sony Sales ₱ 400,000 ₱ 100, Less: Cost of sales 200,000 60, Gross profit ₱ 200,000 ₱ 40, Less: Other expenses 100,000 30, Separate incomes ₱ 100,000 ₱ 10,
During 2020 Sony sold merchandise that cost ₱20,000 to Pony for ₱40,000, and at December 31, 2020 half of these inventory items remained unsold by Sony. The consolidated cost of sales for 2020:
a. ₱230,000 b. ₱248,000 c. ₱270,000 d. ₱300, 34. The Man Company owns 65% of The Manny Company. On the last day of the accounting period Manny sold to Man a non-current asset for ₱200,000. The asset originally cost ₱500,000 and at the end of the reporting period its carrying amount in Manny's books was ₱160,000. The group's consolidated statement of financial position has been drafted without any adjustments in relation to this non-current asset. Under PFRS 10 Consolidated financial statements , what adjustments should be made to the consolidated statement of financial position figures for non- current assets and retained earnings? Non-current assets Retained earnings Non-controlling interest a. Increase by ₱300,000 Increase by ₱195,000 Reduce by ₱40, b. Reduce by ₱40,000 Reduce by ₱26,000 Reduce by ₱14, c. Reduce by ₱40,000 Reduce by ₱40,000 Reduce by ₱14, d. Increase by ₱300,000 Increase by ₱300,000 Reduce by ₱26,
MARK ALYSON B. NGINA, CPA, CMA
First Pre Board
REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience
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obtained control as a result of the disposal) when its identifiable net assets were ₱83M. Of the increase in net assets, ₱6M had been reported in profit or loss, and ₱3M had been reported in comprehensive income. The sale proceeds were ₱65M, and the remaining equity interest was fair valued at ₱25M. After the disposal, Machine is classified as an associate under PAS 28 Investments in Associates and Joint Venture. How much gain or (loss) is to be recognized in profit or loss? a. ₱1 b. ₱17 c. (₱1) d. None of the choices
The public company in a reverse acquisition or backdoor listing is the a. Legal acquiree’s net assets b. Legal acquirer’s net assets c. Accounting acquirer’s net assets d. Any of the choices
S1: Indirect quotation is the exchange rate stated in how much of a local currency must be exchanged to receive one unit of a foreign currency. S2: Direct quotation is the exchange rate stated in how much of a foreign currency must be exchanged to receive one unit of local currency. a. False, True b. True, False c. False, False d. True, True
During the year, a Philippine company made a purchase denominated in foreign currency. When the purchasing power of the Philippine peso (PHP) has strengthened in relation to the foreign currency, the Philippine company will record a a. Foreign currency transaction gain. b. Foreign currency transaction loss. c. Foreign operation translation gain. d. Foreign operation translation loss.
S1: All exchange differences arising from foreign currency denominated transaction should be reported as part of P&L. S2: Gains and losses from translation of financial statement of a foreign operation is presented as part of other comprehensive income. S3: All gains and losses from restatement of financial statement of a foreign operation operating in hyperinflationary economy should be reported as part of P&L. a. False, True, True b. True, False, True c. False, False, False d. True, True, True
On 1 March 2020, AFAR Lovers Company, a Philippine Company, entered into a contract with a US Company to purchase a machine for use in its business. Under the terms of the contract, AFAR Lovers Company pays the supplier a fixed purchase price of $10,000 on 1 April 2020. On 15 April 2020, AFAR Lovers Company takes delivery of the machine. The following direct exchange rates are relevant: 1 March 2020 ₱ 50 1 April 2020 55
15 April 2020 60 Applying PAS 21 The Effects of Changes in Foreign Exchange Rates and IFRIC 22 Foreign Currency Transactions and Advance Consideration, which of the following statements is incorrect? a. AFAR Lovers Company initially recognizes a non-monetary asset on 1 April 2020 at ₱550,000. b. AFAR Lovers Company does not update the translated amount of that non-monetary asset; hence, no exchange gain or loss will be recognized from 1 March 2020 to 15 April 2020. c. On 15 April 2020, AFAR Lovers Company derecognizes the non-monetary asset and recognizes the machine as property, plant and equipment applying PAS 16 Property, Plant and Equipment. d. On initial recognition of the machine, AFAR Lovers Company recognizes the cost of the machine at ₱600,
- On November 1, 2021, Near AFAR Inc., which is operating in the Philippines, purchased debt securities in USA at a price of $10,000 payable on January 31, 2022. To hedge this exposed foreign currency denominated accounts payable, Near AFAR entered into a forward contract with BDO for the purchase of $10,000 to be collected on January 31, 2022. Near AFAR Inc. accounts its investment as financial asset at fair value through profit or loss (FVTPL). On December 31, 2021, the fair market value of the FVTPL is $12,000. The following direct exchange rates are provided by the bank: 11/1/2021 12/31/2021 1/31/ Buying spot ₱ 40 ₱47 ₱ 45 Selling spot ₱ 45 ₱ 50 ₱ Buying forward-30 days ₱ 38 ₱ 32 ₱ 35 Selling forward-30 days ₱ 34 ₱ 41 ₱ Buying forward-60 days ₱ 43 ₱ 35 ₱ Selling forward-60 days ₱ 40 ₱ 41 ₱ 43 Buying forward-90 days ₱ 42 ₱ 40 ₱ 38 Selling forward-90 days ₱ 43 ₱ 40 ₱
MARK ALYSON B. NGINA, CPA, CMA
First Pre Board
REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience
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What is the foreign currency gain or (loss) in relation to the FVTPL translation for the year ended December 31, 2021? a. ₱30,000 b. ₱36,000 c. ₱60,000 d. ₱50,
In a hyperinflationary economy, non-monetary items a. Are not restated because they are already expressed in terms of the measuring unit current at reporting date. b. Are restated because they do not represent money held and items to be received or paid in money. c. Are restated applying the general price index. d. Are restated applying the specific price index.
Market risk is a. The risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. b. The risk that one party to a financial instrument will cause a loss for the other party by failing to pay for its obligation. c. The risk that an entity will have difficulties in paying its financial liabilities. d. The risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices.
Single Company purchased equipment from U.S. for $100,000 on December 16, 2018, with payment due on February 14, 2019, Independence’s Day. On December 16, 2018, Independence also acquired a 60-day forward contract to purchase dollars on February 14, 2019. The direct spot and forward rates were: Spot Rate Forward rate Selling Buying 60-day 45-day 30-day December 16, 2018 ₱43 ₱42 ₱43 ₱44 ₱43. December 31, 2018 ₱45 ₱44 ₱43 ₱46 ₱45. February 14, 2019 ₱45 ₱44 ₱42 ₱46 ₱44.
The hedged risk in the foregoing transaction is a. Exposed accounts payable c. Currency risk b. Forward contract to buy d. Purchased equipment
- A government non-profit organization should prepare its financial statements in accordance with
a. PAS 1 b. PFRS 1 c. SFAS 117 d. GAM 51. Which of the following is not a component of general-purpose financial statement (GPFS) of a government agency? a. Statement of financial position c. Statement of financial performance b. Statement of changes in equity d. Statement of changes in net assets/equity.
Which of the following is part of budget authorization cycle of government budget? a. President’s enactment b. Presentation to the Office of the President c. Preparation of budget accountability reports d. Audit by the Commission on Audit (COA)
S1: The capitalization threshold of PPE under the GAM is ₱15,000. S2: Operating cash flows of a government agency may be presented using direct or indirect method.
a. True, True b. False, False c. False, True d. True, False 54. The journal entry to reverse Unused Notice of Cash Allocation amounting to ₱1,000,000? a. SING 1,000, Cash – MDS 1,000, b. SING 1,000, Revenue and Expense Summary 1,000, c. SING 1,000, Accumulated Surplus 1,000, d. Cash - MDS 1,000, SING 1,000,
An entity need not recognize contributions of works of art, historical treasures, and similar assets if the donated items are added to collections that meet all of the following conditions (choose the exception) a. Are held for public exhibition, education, or research in furtherance of public service rather than financial gain. b. Are protected, kept unencumbered, cared for, and preserved. c. Are subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections. d. To be sold and the proceeds used to support general museum activities.
A joint arrangement that is structured through a separate vehicle a. Joint operation only b. Joint venture only
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Dividends paid 15,. Total HK$ 282,000 HK$ 282, Additional information:
- Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.
- Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year’s depreciation is taken in the year of acquisition. The equipment was acquired on March 2.
- The dividends were declared on November 1 and paid on November 15.
- Exchange rates were as follows: January 1 HK$1 = ₱7. March 2 HK$1 = ₱7. November 1 HK$1 = ₱7. November 15 HK$1 = ₱7. December 31 HK$1 = ₱8. 2020 Average HK$1 = ₱7. The translation gain to be presented in the statement of comprehensive income amounts to a. ₱57,500 gain b. ₱59,000 gain c. ₱54,500 d. Nil
An entity has a subsidiary that operates in a foreign country. The subsidiary sold goods to the parent for 2 million baht. The functional currency of the entity in the pesos. The cost of the goods to be subsidiary was 1 million baht. The goods were recorded by the entity at the ₱1 million (2 baht = ₱1) and were all unsold at the year-end of December 31, 2020. The exchange rate at that date was 1 baht = ₱1. What is the value of the intragroup profit that will be eliminated at December 31, 2020? a. ₱205,000 b. ₱600,000 c. ₱450,000 d. ₱350,
The following “equity” relates to an entity operating in a hyperinflationary economy (in millions): Before PAS 29 After restatement Share capital ₱ 100 ₱ Revaluation reserve 20? Retained earnings 30? ₱ 150 ₱ What would be the balances on the revaluation reserve and retained earnings after the restatement for PAS 29? a. Revaluation reserve ₱0, retained earnings ₱100. b. Revaluation reserve ₱100, retained earnings ₱0. c. Revaluation reserve ₱20, retained earnings ₱80. d. Revaluation reserve ₱70, retained earnings ₱30.
Josefa Company was formed on January 1, 2017. Selected balances from historical cost statement in financial
position on December 31, 2020 were: Land (purchased on January 1, 2017) ₱2,400, Investment in bonds (purchased on January 1, 2020 1,200, And held to maturity) Long term debt (issued on January 1, 2017) 1,600, The general price index was 120 on January 1, 2017, 150 on January 1, 2020, and 300 on December 31, 2020. Josefa should report the balances at Land Investment Long-term debt a. ₱2,400,000 ₱1,200,000 ₱1,600, b. ₱6,000,000 ₱2,400,000 ₱4,000, c. ₱6,000,000 ₱2,400,000 ₱1,600,
d. ₱6,000,000 ₱1,200,000 ₱1,600, 65. A contract, not traded on an exchange, that allows a company to buy a specified quantity of a commodity or a financial security at a specified price on a future date is referred to as a. Interest rate swap b. Forward contract c. Futures contract d. Option
- OP Company entered into a forward contract to hedge a sale of inventory in November 25, 2019 to be collected on January 24, 2020, 36,000 FC (foreign currency) in 60 days. The relevant exchange rates are as follows:
Spot rate
Forward rate (01/24/2020) November 25, 2019 ₱52 ₱52. December 31, 2019 52 52. January 24, 2020 52. What is the net forex gain (loss) from this transaction and hedge that will be reported on OP’s 2019 income statement?
a. ₱1,080 b. ₱(1,080) c. ₱3,240 d. ₱(4,320)
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- On November 1, 2019, Lucky-braso concluded that the Thailand baht would weaken during the next six months because of a coup that transpired recently. In hopes of reporting a gain, Lucky-braso entered into a foreign exchange forward for speculation on November 1, 2019, to sell 1,000,000 baht on April 30, 2020 at the forward rate. 11/01/2019 12/31/2019 04/30/ Spot rate (baht) ₱1 ₱1 ₱1.
Forward rate (baht) 1 1 1. On April 30, 2020, foreign exchange gains or loss on forward contract amounted to (ignoring any discount reversal): a. ₱23,000 loss b. ₱23,000 gain c. ₱30,000 loss d. ₱30,000 gain
Madali Hedging, Inc. placed an order for inventory costing 500,000 foreign currency (FC) with a foreign vendor on April 15 when the spot rate was 1 FC =₱0. Madali Hedging received the goods on May 1 when the spot rate was 1 FC=₱0. Also on May 1, Madali Hedging entered into a 90-day forward contract to purchase 500,000 FC at a forward rate of 1 FC=₱0. Payment was made to the foreign vendor on August 1, when the spot rate was 1 FC=₱0. Madali Hedging has a June 30 year-end. On that date, the spot rate was 1 FC=₱0, and the forward rate on the contract was 1 FC=₱0. Changes in the current value of the forward contract are measured as the present value of the changes in the forward rates over time. The relevant discount rate is 6%. The net income effect on June 30 amounted to: a. ₱2,000 b. ₱1,000 c. ₱1,005 d. ₱2,
On January 1, 2019, Red Cross Inc., a non-profit organization, received ₱10M cash donation from Mr. MMM who stipulated that the amount should be invested indefinitely in revenue producing investment. The deed of donation also provides that the dividend income shall be used for the acquisition of computers of the NPO. On December 31, 2019, Red Cross Inc. received ₱200,000 cash as dividend income from the investment of the fund. On January 1, 2020, Red Cross Inc. acquired a personal computer at a cost of ₱50,000 with useful life of 5 years without residual value. How shall the transaction be reported in NPO’s Statement of Activities for the year ended December 31, 2019? a. There shall be increase in unrestricted net asset by ₱50,000. b. There shall be decrease in temporary restricted net asset by ₱200,000. c. There shall be increase in permanently restricted net asset by ₱10M and increase in temporary restricted net asset by ₱200,000. d. There shall be increase in unrestricted net asset by ₱10,200,000.
In April 2019, Ruth donated ₱250,000 cash to her church, with the stipulation that the income generated from this gift is to be paid to Claire during her lifetime. The conditions of this donation are that, after Ruth dies, the principal can be used by the church for any purpose voted on by the church elders. The church received interest of ₱20, on the ₱250,000 for the year ended March 31, 2020 and the interest was remitted to Claire. In the church’s March 31, 2020 financial statements a. ₱20,000 should be reported under support and revenue in the activity statement. b. ₱230,000 should be reported under support and revenue in the activity statement. c. ₱250,000 should be reported as deferred support in the balance sheet. d. The gift and its terms should be disclosed only in notes to the financial statements.
-- END OF PREBOARD --
REO AFAR First Preboard 2021
Course: Accountancy (ACCTG102)
University: Cotabato State University
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