CPA REVIEW SCHOOL OF THE PHILIPPINES. Manila First Preboard Examination Practical Accounting i © VALIX SIY VALIX FERRER LACO Sales 8,350,000 COS (1,040 + 3,720 - 850 = 3910) + 150) 4,060,000) Gross profit 4,290,000 Dividend income 100,000 Total income 4,390,000 ‘Total expenses (1,540 + 280+ 205 +125+10+85+40) (2,285,000) Income before tax 2,105,000 «Income tax 105,000) Income from continuing operations 2,000,000 Income from discontinued operations 500,000 Net income 2,500,000 RE- 1/15 3,000,000 Dividends declared (4,900,000) RE-12/31/15 4,500,000 1B 2a 3.8 4B 5. Office Supplies 950,000 Office Supplies expense 950,000 D 6, 25,000,000 x 10% = 2,500,000 B 7. Gross AR 8,000,000 Allowance for doubtful accounts (200,000 + 300.000) ( 500,000) Allowance for saies discount (5,000,000 x 5% x %) 125,000) Net realizable value 7,375,000 B 8. Cost 3,000,000 LCNRV applied individually (550 + 1,000 + 700+ 350) (2,600,000) Required allowance 400,000 Allowance before adjustment (150,000) Loss on writedown 250,000 D 9. 1,500,000 x 10% 150,000 D FV of 10% interest 2,500,000 Cost of additional investment §,000,000 initial cost of investment in associate 7,500,000 FV of net assets acquired (15,000,000 x 30%) (4,500,000) Excess cost 3,000,000 Undervaluation — Jand (2,000,000 x 30%) £600,000) 10. Goodwilt 72,400,000 B 11, Gain from increase in FV (2,500,000 ~ 2,000,000) 500,000 . Share in the net income (8,000,000 x 30%) 2,400,000 Total income 2,500,000 B 7,500,000 2,400,000 Dividends received (75,000 shares x 20) {1.500.000} 12. CA of investment '$,400.000 D13, 14. 15. 16. 7 19, 20. 21 22. 23. 24, Stock rights (10.000 x 20) 200,000 Payment (5,000 shares x 80) 400.000 Cost of new investment 609,000 Cost per share (600,000 / 5,000) 120 Cash 680,000 Financial asset ~ FVOCI 600,000 Unrealized loss - OCI 30,000 Retained earnings 50,000 12% ~ 10% = 2% x 5,000,000 = 100,000 x 1.69 169,000 asset Average interest rate (250,000 / 2,500,000) 9.2% Specific (2,000,000 x 7.5% x 9/12) 112,500 General (1,900,000 x 9.2% x 9/12) 131,100 ‘Actual expenditures 4.215.000 Cost of the building 4,458,600 1,200,000 — $00,000 700,000 }. 728,125 Depletion (8 x 1,200,000) 9,600,000 Depreciation {5 x 1,200,000) 6,000,000 Total expense 15,600,000 Revalued amount (fair value) 27,000,000 CA — December 31, 2015 (30,000,000 — 12,000,000) 18,000,006 Revaluation surplus before tax 9,000,000 Deferred tax liability (2,700,000) Revaluation surplus — 12/31/2015 6,300,000 CA (1.880,000 — 470.000) 1,410,000 RA 1,500,000 Impairment loss in 2015 Q CA (1,410,000 ~ 470,000) 940.000 RA 890.000 Impairment loss in 2016 50,000 50,000 ~ 5,000 + 3.000 = 48,000 x 40 1,920,000 CA- 12/31/15 8,320,000 Premium amortization up to 6/30/2016 Interest expense (8,320,000 x 10% x 6/12) 416,000 Interest paid (8,000,000 x 12% x 6/82) (480,000) (64,000) CA — 6/30/2016 8,256,000 Retirement price (8,000,000 x 105%) 400,000} Loss on retirement (144,000) Interest expense (15,000,000 ~ 2.500.000 = 12,500,000 x 9%) 1.125.000 Depreciation (15.000.000 / 10) 1,500,000 Total expense in 2016 2.625.000 Page 2