Accountancy Department

Semi-final examination in ADFINA 2

5
Name of student: _________________________________ Score: ______

Class Schedule: _________________________________ Date: ______

Problem A. Pure Corporation acquired an 80% interest in

Sincere Company on January 2, 2014 for P3,520,000. On this
date, the share capital and retained earnings of the two
10 companies follow:
Pure Corp. Sincere Co.

Share Capital P6,000,000 P2,250,000

Retained Earnings P3,000,000 P450,000
15
On January 2,2014, the assets and liabilities of Sincere Co.
Were stated at their fair values except for machinery which
is undervalued by P 225,000 (remaining life is 3 years). On
September 30,2014, Sincere sold merchandise to Pure at an
20 inter-company profit of P 150,000; 25% was still unsold at
year end. Likewise, on October 1, 2015, Sincere purchased
merchandise from Pure for P 3,600,000. The selling affiliate
included in a 20% mark-up on cost on this sale. Only 75% of
these purchases had been sold to unrelated parties as of
25 December 3,2015. As of December 31, 2015, goodwill was
determined to be impaired by P 60,000.

The following is the summary of the 2015 transactions of the

affiliated companies:
30 Pure Corp Sincere Co.
Net Income P1,500,000 P600,000
Dividends declared and paid P600,000 P180,000

On the 2015 consolidated financial statements, how much

35 would be the:
(1) Goodwill per consolidated financial statement
(2) Goodwill per single financial statement of the acquirer
(3) Goodwill per single financial statement of the target firm
(4) Consolidated profit
40 (5) Net income attributable to the parents equity holders
(6) Net income attributable
Page 1 of 3to the minority controlling stake

2nd Semester Admission Year 2016 - 2017

K.T. Tegio
 Problem B. Given the following information for Australian dollars,
compute for the following independent cases below: The agreement is
5 to exchange currencies of different countries on a specified future date
at the specified rate. Option price is P20.60. The following direct
exchange rates were as follows:
10/02/15 10/25/15 11/02/15 12/01/15 12/31/15 1/30/16 2/28/16
3/31/16
10 Buy 20.70 20.85 20.70 20.50 20.40 20.30 20.15 20.10
Sell 20.95 21.10 22.40 20.30 25.25 29.35 29.50 29.70

150-day 120-day 90-day 60-day 30-days

Futures futures futures futures futures
15
March 31, 2016 23.40 22.70 25.85 26.50 29.40
Feb. 28, 2016 23.15 22.40 25.20 26.25 29.25
Jan.30, 2016 22.10 21.75 20.55 23.75 25.50
Dec. 31, 2015 21.30 22.80 20.20 21.40 25.30
20 Dec. 1, 2015 20.25 23.15 21.40 23.50 24.10
Nov. 2, 2015 20.40 24.10 22.85 24.15 23.30

Transaction 1. On October 25, 2015 compact company ordered

merchandise worth $975,000 From a company in Sydney, payable on
25 February 28, 2016 in Australian $. It was shipped on November 2, 2015
to hedge this foreign currency exposure, compact company bought
$975,000 on December 1, 2015 for delivery on January 30, 2016 under
a forward contact with BDO.
(7) What amount will affect profit or loss regarding the
30 transaction to sell on the financial statement in 2015 and
2016?

Transaction 2. On October 2, 2015, flash company received an order

of merchandise from a company in Brisbane. It was invoiced and
35 shipped on October 25, 2015 to the customer. The price of $370,000 is
to be collected in Australian dollars on February 28, 2016. To hedge
this foreign currency expose, Flash Company sold $370,000 for
delivery on march 31, 2016 under a forward contract with BPI, which
was entered into by flash company on November 2, 2015.
40 (8) What amountPage will2 of
affect
3 profit or loss regarding the
transaction to sell on the financial statement in 2015 and
2016?
(9) Bonus
(10) Bonus

2nd Semester Admission Year 2016 - 2017

K.T. Tegio
 End of examination

Page 3 of 3

2nd Semester Admission Year 2016 - 2017

K.T. Tegio