KEY ANSWER TO ACC 107 P1 EXAM

1. D
2. C
3. C
4. D
5. C
6. A (SEE AMORTIZATION TABLE)
7. B (SEE AMORTIZATION TABLE)
Solution:
Date Collections Interest income Amortization Present value
1/1/x1 3,807,853
12/31/x1 400,000 456,942 56,942 3,864,795

8. B – the fair value on Dec. 31, 20x1

9. B (Receive 15% - Pay 12%) = 3% net receipt x 1,000,000 = 30,000 receipt
10. C
11. C
12. B ₱630,000 + (₱400,000 × .2) – (₱100,000 × .2) = ₱690,000.
13. C - Statements I and III.
14. B
15. D
16. A
17. C
18. D
19. A ₱480,000 – (₱300,000 × 25%) + (₱120,000 × 25%) = ₱435,000.
20. A
21. A
22. B
23. A
24. A
25. D
26. B
27. E
28. A
29. D
Solution:
The “most advantageous market” is determined as follows:
Active Market Active Market
#1 #2

Quoted price 130,000 135,000

Transport costs (10,000) (12,000)

Costs to sell (2,000) (3,000)

 Net sale
proceeds 118,000 120,000

The fair value is computed as follows:

135,000 price in active market #2 – 12,000 transport costs = 123,000

30. A

STRAIGHT PROBLEMS
1.
FAIR VALUE OF THE ASSETS (600,000+750,000+1,550,000) 2,900,000
CARRYING AMOUNT OF THE ASSETS (500K+1M+1.5M) (3,000,000)
UNREALIZED LOSS (100,000)

2.
SELLING PRICE 950,000
CARRYING AMOUNT (600,000)
GAIN ON SALE 350,000

3. ZERO (0). UNREALIZED GAIN/(LOSS) SHOULD BE RECOGNIZED IN OTHER COMPREHENSIVE

INCOME AND NOT IN THE INCOME STATEMENT.

4. FAIR VALUES AT THE END OF THE YEAR (750K+1.2M+2.35M) 4,300,000

5.
DATE INTEREST INTEREST AMORTIZATION PRESENT VALUE
INCOME RECEIPT
JAN. 1, 20X1 3,697,120
DEC. 31, 369,712 320,000 49,712 3,746,832
20X1
374,683 320,000 54,683 3,801,515

6.
NET INCOME OF CHAIR (INVESTEE) P 600,000
DIVIDENDS RELATED TO CUMULATIVE PREFERENCE SHARES (900,000 X 10%) (90,000)
NET INCOME AVAILABLE TO ORDINARY SHARES 510,000
EQUITY OF TABLE (INVESTOR) IN NET INCOME 50%
SHARE OF INVESTOR IN NET INCOME-ORDINARY SHARES P255,000
SHARE IN THE AMOUNT OF PREFERENCE DIVIDENDS (20% X 90,000) 18,000
TOTAL REVENUE P 273,000

7.
 SHARE IN NET INCOME (8M X 40%) P 3,200,000
UPSTREAM SALE INVETORY (2M X 40%) (800,000)
UPSTREAM SALE EQUIPMENT (1.5M X 40%)4/5 480,000
TOTAL INVESTMENT INCOME 1,920,000

8.
CHANGE IN FAIR VALUE DUE TO GROWTH AND PRICE CHANGE 2,000,000
NEW BORN CALF AT YEAR-END AT FAIR VALUE 400,000
DECREASE IN FAIR VALUE DUE TO HARVEST (250,000)
GAIN ON BIOLOGICAL ASSET 2,150,000

9.
COST 5,000,000
NEW BORN CALF 400,000
GAIN (net) 1,750,000
FAIR VALUE LESS COST TO SELL 7,150,000

10. 3,000,000 (30M/10 years)