SVFC BS Accountancy - 8th Set Online Resources SY20-19 1st Semester PDF

SAINT VINCENT DE FERRER COLLEGE AUGUST 2019
BS ACCOUNTANCY (1st semester SY 2020-2019) Part 8

ONLINE RESOURCES
AUDITING THEORY
I. Topic(s):
Audit Sampling
II. Learning Objective(s):

Understand concepts about audit sampling
III. Rundown
Please read and watch related link
Please also read textbooks related to audit sampling.
https://www.youtube.com/watch?v=DdHFtkESrQ0
IV. Recommended Reference(s):

1. Text Book - Auditing Theory Latest Edition by Salosagcol
2. Text Book – Assurance Principle by Cabrera
3. Text Book Auditing & Assurance Services - David Ricchiute
4. Philippine Standards on Auditing Compilations
5. http://www.aasc.org.ph/
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Copyright of Prof. Hector U. Santos Jr., CPA, MBA
This online resource is intended solely to whom it is authorized to receive it. If you are not the intended recipient you are hereby notified that
any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be
unlawful.
ONLINE RESOURCES
MANAGEMENT ADVISORY SERVICES
I. Topic(s):
Standard Costing and Operating Performance Measures
II. Learning Objective(s)

(after studying the topics, you should be able to):
1 Explain how direct materials standards and direct labor standards are set.
2 Compute the direct materials price and quantity variances and explain their significance.
3 Compute the direct labor rate and efficiency variances and explain their significance.
4 Compute the variable manufacturing overhead rate and efficiency variances.
5 Compute delivery cycle time, throughput time, and manufacturing cycle efficiency (MCE).
6 (Appendix 11A) Compute and interpret the fixed overhead budget and volume variances.
7 (Appendix 11B) Prepare journal entries to record standard costs and variances.
III. Rundown
1. Please watch below link to know and understand the topic
https://www.youtube.com/watch?v=iH4oVQ0sUew
https://www.youtube.com/watch?v=__zn4Ax9iNg

1. Managerial Accounting by Garrison
2. Managerial Accounting by Kieso Weyganth
3. Managerial Accounting by local authors
4. Internet
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ONLINE RESOURCES
THEORY OF ACCOUNTS
I. Topic(s):
Intangible Assets
II. Learning Objectives:

Understand concepts of intangible assets
III. Rundown
Please read the latest textbook version of “Financial Accounting” by Valix
Important things to remember
1. Recognition – An intangible is recognized if, and only if

a. it is probable that future economic benefits attributable to the asset will flow to
the enterprise
b. The cost of the asset can be measured reliably
Identifiable Intangibles – can be identified a part from other assets of the enterprise
and can be sold separately. Example – patents, copyrights, customer list, trademarks
or trade names and franchises.
Unidentifiable Intangibles – assets that cannot be sold, transferred, licensed, rented or

exchange separately. Example – goodwill
2. Measure of intangibles – Initial Recognition: The Intangible asset is initially recognized

at historical cost.
The historical cost of an intangible is its cash price equivalents. The cash price equivalent
is determined by the following ways of acquiring an intangible asset.
By purchase – the purchase price and any import duties and non-refundable purchase
taxes and any directly attributable expenditure on preparing the asset for its intended use
such as professional fees for legal services.
By a deferred plan beyond a normal credit terms – the cash price equivalents (the cash
price or the present or discounted value for a non-interest long term liability). The
difference of the cash price equivalents and the total amount of payments is interest and
recognized as expense over the term of the credit period.
By the issuance of equity instruments – the fair market value of the instruments, this is
equal to the fair market value of intangible.
By part of a business combination – the fair market value on the date of acquisition. The
fair market value is equal to the following.
 If there is an active market – quoted market price which is usually the current bid
price.
 If there is no active market – the amount, which would have been paid by the
company in an arm’s length transaction between knowledgeable and willing
parties (by discounting estimated cash flows from the intangible asset).
If the fair market value of the intangible asset in a business combination cannot
be measured reliably, the asset is not recognized as a separate intangible but is included within
the over-all cost of purchase goodwill.
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ONLINE RESOURCES
By government grant – if it was acquired free of charge or by payment of nominal

consideration.
Benchmark accounting treatment – the nominal amount or zero or any
expenditure that is directly attributable to preparing the asset for its intended use.
Allowed alternative method – the fair market value (1) by reference to
active market and (2) if active market does not exist, the asset must be recognized at cost
(including cost to prepare the asset for its intended use).
By exchange – the cost of the intangible asset is measured at the fair market value
unless the transaction lacks commercial substance. If the exchange lacks the necessary
commercial substance, the intangible asset is not measured at fair market value but its
cost is the carrying value of the asset given up.
Internally generated intangible – are the cost that can be directly attributed or
allocated on a reasonable and consistent basis to creating, producing and preparing the
asset for its intended use. The cost includes the following:
 Cost of materials and services used or consumed in generating the intangible

asset.
 Salaries and wages and other employment related cost of personnel directly
engaged in generating the asset.
 Expenditure that is directly attributable to generating the asset such as fees to
register a legal right and amortization of patents and licenses that are used to
generate asset .
 Overhead that is necessary to generate the asset and that can be allocated on a
reasonable and consistent basis to the asset.
3. Measurement subsequent to acquisition:

Cost model – after initial recognition, the intangible shall be carried at its cost less
accumulated amortization and accumulated impairment losses.
Revaluation model – after initial recognition, an intangible asset shall be carried at a

revalued amount, being its fair value at the date of revaluation less any subsequent
accumulated amortization and any accumulated impairment losses.
4. Amortization period – the amortizable/depreciable amount of an intangible asset should

be allocated on a systematic basis over the best estimate of its useful life. The intangible
assets with a limited life are amortized over their useful life. The intangible assets with
indefinite life are not amortized but are tested for impairment at least annually. The
method of amortization shall reflect the pattern in which the future economic benefits
from the asset are expected to be consumed by the entity. If the pattern cannot be
determine reliably, the straight line method is used. The residual value of an intangible
asset shall be presumed to be zero, unless a third party is committed to buy a intangible
asset at the end of its useful life or unless there is an active market. Any change in the
method of amortization or life of an intangible should be treated as a change in estimate.
5. Impairment of intangible assets – impairment loss on intangible asset is recognized if its

recoverable amount is lower than its carrying amount. The recoverable amount of an
intangible asset is higher of its fair value (the amount obtainable from the sale of an asset
in an arm’s length transaction between knowledgeable and willing parties) and value in
use (the present value of future cash flows expected to be derived from the asset).
6. Specific guidelines on specific intangibles:

Patent – an exclusive right granted by the government to an inventor enabling him to
control the manufacture, sale or other use of his invention for a specified period of time.
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The cost of a purchased patent should be amortized over its legal life (20 years) or
useful life whichever is shorter.
The cost of a developed patent (the cost should include only the licensing and
other related legal fees in securing the patent rights) should be amortized the
shorter of the legal life or useful life.
If a competitive patent was acquired to protect the old patent, the competitive
patent should be amortized over the remaining life of the old patent.
Legal fees and other costs of successfully prosecuting or defending a patent
should be charged outright as an expense including the unamortized cost of the
patent.
If a new patent negates the old patent’s value, the cost of the new patent can be
made for adding the unamortized cost of the old patent; however, most business
enterprises rely on the conservatism constraint and immediately write-off the
unamortized cost of the old patent.
Copyright – exclusive right granted by the government to the author, composer or artist
enabling to publish, sell or otherwise benefit from his literacy, musical and artistic
work.
The costs (the expenses incurred in the production of the work including those
required to establish or obtain the right) should be amortized over the period it is
expected to provide a revenue or legal life whichever is shorter. However, if
revenues are expected to be received for an indefinite period of time and renewal
and registration can be done with minimal effort and cost, it should not be
amortized but should however be reviewed for impairment at each reporting date.
Franchise – an exclusive right granted by the franchisor (government or private

companies) to a franchise to use the property or the rights (trademark, patent and
process of the franchisor)
The cost of the franchise should be amortized or should be reviewed at each

reporting period for impairment.
a. If the franchise has a definite period – it should be amortized over the

definite period (not exceeding 20years) or useful life whichever is shorter.
b. If the franchise has an indefinite life, it is not amortize but should however
be reviewed for impairment at each reporting date.
Trademark/trade name/brand name – is a symbol, sign, slogan or name use to

mark a product to distinguish it from other products. The cost of the intangible should
include
a. When purchased – the purchase price or the cash price equivalents.

b. When developed - the expenditures required to establish including filing
fees, registry fees and other expenses incurred in securing the trademark.
The legal life of the trademark or trade name or brand name is 10 years
and maybe renewed for periods of 10 years each – R.A. No. 8293). The cost
of a trademark is not amortized but subject to test of impairment at least
annually as a result of the almost automatic renewal. Trademark maybe
properly classified as an intangible asset with an indefinite life. However, if its
life is no longer considered indefinite, it should be amortized over its
remaining useful life.
Goodwill:
Only purchased goodwill (external) should be recognized as an asset.
Developed (internal) goodwill should be charged outright as an expense.
Subsequent costs related to the goodwill should be charged immediately
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ONLINE RESOURCES
against income. The cost of goodwill is determined by the following

computations:
a. Acquisition cost less the fair market value of net asset acquired
b. Purchase of average excess earnings: average earnings – normal earnings
x number of years
c. Capitalization of average excess earnings: average earnings – normal
earnings / capitalization rate
d. Capitalization of average earnings: average earnings / capitalization rate –
net assets
The cost of goodwill is not amortized because its useful life is indefinite.
However, goodwill shall be tested for impairment at least annually or more
frequently if events or changes in circumstances indicate a possible
impairment.
The amount of goodwill impairment is determined by comparing the

recoverable amount for the cash generating unit (CGU) to which the goodwill
belongs against the carrying the value of the cash generating unit to which the
goodwill belongs.
 If the recoverable amount of the CGU exceeds the carrying value of the
CGU, the CGU and the goodwill allocated to that unit shall be regarded as
not impaired.
 If the carrying amount of the CGU exceeds the recoverable amount of the
unit, the company must recognize an impairment loss.
Research – an activity undertaken to discover new knowledge that will be useful in

developing new product or that will result in significant improvement of existing
product. Examples of these are: laboratory research aimed at obtaining or discovering
new knowledge; searching for application of research findings and other knowledge;
conceptual formulation and design of possible product or process alternative and;
testing in search for product or process alternative.
Development – is the application of research findings or other knowledge to a plan

or design for the production of new or substantially improved material, device,
product, process, system, and prior to the commencement of commercial production.
Examples of these are: a) design, construction and testing of pre-production prototype
and model; b) design of tools, jigs, molds and dies involving new technology; c)
design, construction and operation of a pilot plant that is not of a scale economically
feasible to the enterprise for commercial production, and d) design, construction and
testing of a chosen alternative for new or improved product or process.
The standard allows recognition of an intangible asset during the development

phase, provided the enterprise can demonstrate of the following:
a. Technical feasibility of completing the intangible asset so that it will be available

for use or sale
b. Its intention to complete the intangible asset and either use it or sell it
c. Its ability to use or sell the intangible asset
d. The mechanism by which the intangible will generate probable future economic
benefits.
e. The availability of adequate technical, financial and other resources to complete
the development and to use or sell the intangible asset, and
f. The entity’s ability to reliably measure the expenditure attributable to the
intangible asset during its development.
If the company cannot distinguish the research phase from the development phase,
the company treats the expenditure as if it was incurred in the research phase only.
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Internal Developed Computer Software – the cost incurred on the research stage in
creating the software should be charged outright to expense when incurred until a
technological feasibility has been established for the product. Technological feasibility is
established when a company has produced either a detailed program design of the
software are a working model. After establishing technological feasibility, the cost of
software to be capitalized shopuld includes the costs of coding and testing and the cost to
produce the product masters.
The cost of the computer software should be allocated base on the pattern in which the
asset’s future economic benefits are expected to be consumed by the entity. If such
pattern cannot be determined reliably, the straight –line method is used.
Purchase software:
a. If it is for sale – should be treated as inventory
b. If it is held for licensing or rental to others – recognized as intangible asset
c. If it is used and integral part to the hardware – treated as part of the hardware and
capitalized as property, plant and equipment.
7. Leasehold improvements – are alteration or modifications on the leased property made

by the lessee, such as buildings, walkways, pavements, landscaping, driveways, lightning
installations, major repairs or replacements, partitions, cabinets, shelves, ventilating
system and etc, made on leased assets.
Leasehold improvements are generally classified as property, plant and equipment. The
cost of leasehold improvements should be depreciated over the shorter of the life of the
improvements or the life of the leased asset.
If the lease contract contains a provision for an option to renew and the like hood of the
renewal option is highly probable, the cost of the leasehold improvements should be
depreciated the shorter of the life of the improvement and remaining extended lease term.
But when the renewal option is uncertain, the cost of the leasehold improvements should
be depreciated the shorter between the life of the improvements and the remaining lease
term, as if there was no renewal option.

1. Latest Edition - Financial Accounting 1 by Conrado Valix
Philippine Accounting Standards
2. Philippine Accounting Standards Compilation
3. Internet
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ONLINE RESOURCES
BUSINESS LAW
I. Topic(s):
Law on Business Transactions – Contract of Pledge and Mortgage
II. Learning Objective(s):

To learn about the following concepts of contracts of pledge and mortgage:
1. Provisions common to pledge and mortgage
2. Provisions applicable only to pledge
3. Real mortgage
4. Chattel mortgage
III. Rundown
Please read above topic in the latest textbook version of “Law on Sales, Agency, Pledge and
Mortgage” by Filipino Business Law authors

Latest Edition - “Law on Sales, Agency, Pledge and Mortgage” by Filipino Business Law
authors
Civil Code
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ONLINE RESOURCES
ONLINE ASSESSMENTS
Reminders:
1. Should be submitted on or before JANUARY 15, 2020 exclusively to
saintvincentdeferrercollege@yahoo.com
2. Answers should follow below format for easy checking
On Line
Exam AT TOA MAS BL
1 a a b true
2 c a a a
3 PSA c c false
4 a d d c
5 a e a d
3. Failure to follow instruction 1 and 2 will automatically get zero score from this
edition of online assessment
4. Not all the answer in the online assessments can be found here, so it’s your
responsibility to read, read, read and read other resources such as text books etc.
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ONLINE RESOURCES
QUESTIONS:
(Multiple Choice, Computation, True or False & Identification)
Auditing Theory
1. The entire set of data about which the auditor wishes to draw conclusions is called
a. Population. c. Sampling frame.
b. Sample. d. Sampling unit.
2. Which of the following constitutes audit sampling?

a. Selecting and examining specific items to determine whether or not a particular procedure
is being performed.
b. Examining items to obtain information about matters such as the client’s business, the
nature of transactions, accounting and internal control systems.
c. Examining items whose values exceed a certain amount so as to verify a large proportion of
the total amount of an account balance or class of transactions.
d. Applying audit procedures to less than 100% of items within an account balance or class of
transactions such that all sampling units have a chance of selection.
3. Audit sampling is not involved in the following, except

a. Performing a walkthrough test.
b. Performing analytical procedures
c. Selecting the sample without following a structured technique.
d. Testing controls that leave no audit trail.
4. The following situations will likely lead the auditor to use 100% testing, except
a. When the population constitutes a small number of large value items.
b. When both inherent and control risks are high and other means do not provide sufficient
appropriate audit evidence
c. When the repetitive nature of a calculation or other process performed by a computer
information system makes a 100% examination cost effective.
d. When testing controls that leave audit trail.
5. Which of the following is true about sampling and non-sampling risks?

a. Sampling risk can be reduced by increasing sample size.
b. Sampling risk cannot be eliminated.
c. Non-sampling risk can be eliminated by proper engagement planning, supervision, and
review.
d. Non-sampling risk arises from the possibility that the auditor’s conclusion, based on a
sample may be different from the conclusion reached if the entire population were
subjected to the same audit procedure.
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ONLINE RESOURCES
Management Advisory Services
1. Standard and actual costs for direct labor for the manufacture of 1,000 units of product were as
follows:
Actual costs 960 hours @ $36.00

Standard costs 970 hours @ $35.50
Determine the (a) time variance, (b) rate variance, and (c) total direct labor cost variance.
2. The following information relates to manufacturing overhead for the Parker Company:
Standards:
Total fixed factory overhead - $450,000
Estimated production - 25,000 units (100% of capacity)
Overhead rates are based on machine hours.
Standard hours allowed per unit produced - 2
Fixed overhead rate - $9 per machine hour
Variable overhead rate - $3.50 per hour.
Actual:
Fixed factory overhead - $450,000
Production 24,000 units.
Variable overhead - $170,000
Required:
(a) Compute the volume variance.
(b) Compute the controllable variance.
(c) Compute the total factory overhead cost variance.
3. Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as
follows:
Actual costs 1,550 lbs. @ $9.10

Standard costs 1,600 lbs. @ $9.00
Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.
4. The Good News Company produced 8,600 units of their product that required 3.25 standard hours per
unit. The standard fixed overhead cost per unit is $1.20 per hour at 29,000 hours, which is 100% of
normal capacity. Determine the fixed factory overhead volume variance.
5. Diamond Company produces a chair that requires 5 yds. of material per unit. The standard price of one
yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 43,700 yards at a
cost of $7.60. Determine the (a) price variance, (b) quantity variance, and (c) cost variance.
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ONLINE RESOURCES
Theory of Accounts
1. Which of the following is not part of the definition of intangible assets?

a. Identifiable non-monetary assets lacking physical substance
b. Controlled by an enterprise
c. Future economic benefits
d. Depreciable over useful life
2. Identifiably is seen as the characteristic that conceptually distinguishes other intangible assets
from
a. Copyright
b. Franchise
c. Goodwill
d. Patent
3. It is the systematic allocation of the cost of an intangible asset, less any residual value, as an
expense over the asset’s useful life.
a. Amortization
b. Impairment
c. Bifurcation
d. Realization
4. The following expenditures should be expensed when incurred, except

a. Start-up costs
b. Advertising and promotion costs
c. Training, business relocation and reorganization costs
d. Advanced payment for delivery of goods or the rendering of services
5. The cost of intangible assets acquired separately does not include:

a. Purchase price of the intangible asset
b. Any import duties and non-refundable purchase taxes
c. Administration and other general overhead costs
d. Direct cost of preparing the asset for its intended use
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Business Law
1. _____________ is an oath in a mortgage contract wherein the parties “severally swear

that the mortgage is made for the purpose of securing the obligation specified in the
conditions thereof and for no other purpose and one not entered into for the purpose of
fraud”
2. The following may be the object of chattel mortgage contract, except

a. share of stocks b. interest in business c. vehicles d. condo unit
3. Generally, may the thing pledged be alienated?

Pledge is a contract whereby the debtor secures to the creditor fulfillment of a principal
obligation, especially subjecting to such security immovable property or real rights over
immovable property in case the principal obligation is not complied with at the time
stipulated?
a. True, True b. True, False c. False, True d. False, False
4. __________ defined as a transaction by which the mortgagor reacquires or buys back the
property which may have passed under the mortgage or divests the property of the lien
which the mortgage may have created.
5. Promise to constitute a pledge or mortgage gives rise to real right in the property
Delivery of property is not necessary in mortgage
a. True, True b. True, False c. False, True d. False, False
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SAINT VINCENT DE FERRER COLLEGE AUGUST 2019

BS ACCOUNTANCY (1st semester SY 2020-2019) Part 8

II. Learning Objective(s):

IV. Recommended Reference(s):

MANAGEMENT ADVISORY SERVICES

II. Learning Objective(s)

4 Compute the variable manufacturing overhead rate and efficiency variances.

IV. Recommended Reference(s):

II. Learning Objectives:

Important things to remember

1. Recognition – An intangible is recognized if, and only if

Unidentifiable Intangibles – assets that cannot be sold, transferred, licensed, rented or

2. Measure of intangibles – Initial Recognition: The Intangible asset is initially recognized

By government grant – if it was acquired free of charge or by payment of nominal

 Cost of materials and services used or consumed in generating the intangible

3. Measurement subsequent to acquisition:

Revaluation model – after initial recognition, an intangible asset shall be carried at a

4. Amortization period – the amortizable/depreciable amount of an intangible asset should

5. Impairment of intangible assets – impairment loss on intangible asset is recognized if its

6. Specific guidelines on specific intangibles:

Franchise – an exclusive right granted by the franchisor (government or private

The cost of the franchise should be amortized or should be reviewed at each

a. If the franchise has a definite period – it should be amortized over the

Trademark/trade name/brand name – is a symbol, sign, slogan or name use to

a. When purchased – the purchase price or the cash price equivalents.

against income. The cost of goodwill is determined by the following

The amount of goodwill impairment is determined by comparing the

Research – an activity undertaken to discover new knowledge that will be useful in

Development – is the application of research findings or other knowledge to a plan

The standard allows recognition of an intangible asset during the development

a. Technical feasibility of completing the intangible asset so that it will be available

7. Leasehold improvements – are alteration or modifications on the leased property made

IV. Recommended Reference(s):

II. Learning Objective(s):

IV. Recommended Reference(s):

2. Answers should follow below format for easy checking

2. Which of the following constitutes audit sampling?

3. Audit sampling is not involved in the following, except

5. Which of the following is true about sampling and non-sampling risks?

Management Advisory Services

Actual costs 960 hours @ $36.00

Actual costs 1,550 lbs. @ $9.10

1. Which of the following is not part of the definition of intangible assets?

4. The following expenditures should be expensed when incurred, except

5. The cost of intangible assets acquired separately does not include:

1. _____________ is an oath in a mortgage contract wherein the parties “severally swear

2. The following may be the object of chattel mortgage contract, except

3. Generally, may the thing pledged be alienated?

a. True, True b. True, False c. False, True d. False, False

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