CPA REVIEW SCHOOL OF THE PHILIPPINES Advanced Financial Accounting pene m i Pre-week Materials (Practical Accounting Two) 4, i a < On January 1, 2020, Toni: Abbie and JM entered into articles of co-plrtnership for the operation of TAP computer shop. Toni codiributed Investment property with assessed value oPR1,700,000 subject 1o mortgage payable of 500,000 to be assumed by the ip. Abbie contri uipment with cost of P600,000 with accumulated depreciation of P200,000. The fiir mark puter equipment is P300,000. On January 2, 2020, the partnership was able to sell the inyeSument property Yor P2,000,000. How much cash shall be contributed by JM ifthe article of cop Provide it Ton wil OE rest inthe pareship? a. 500,000 F ow —_ Y ». 700,000 ew f ©, 800,000 hurd (etarctoed) 3 aA 4. 600,000 cigars oat ¢ & Dn January 1, 2010, Ys and Nadine organized YAN partnership by investing PSM, 2M and P3M for capital interest ratio of eotively. Nadine has been appointed as managing partner. During year 2010, ke partnership repor’si net income of P3,000,000, Their profivioss distribution ang drawiny ent are presented below: $F a 20% interest on beginning capital 4 a tp uo 10,000, P20,000 and PS0,000 monthiy salary, respectively 25% bonus of net income after interest and salary to managing partner yn} iv. The remainder will be divided equally amng the partners. crear et Gai te wnat cemetrtnpepPe 1S what thcapil blanc of Nane on Besar 31 2010 ¥ aa atta : k it» £ i Biss te un hee Po January 1, 2030, Carta, Aika and Roma organized CAR partnership wherein Carla contributed PIM for 20% Interest in the partership, Aika contributed PSN. for acaptal erst of P2.5M. After closing the accounting book, Aika and Roma made drawings of P300,000 and P100, 000, especie. The 7 At epee. Ther pies eget a presented i, Quarterly salary of P20,000, P5,000 and P60,000 respectively af ~ fo, ii, The remainder will be divided in the ratio of 1:5:4 , + ‘On December 31, 2030, the capital balance of Roma is 1,690,000. What is the net income of the parmership for ‘the year ended December 31, 20307 a ) = La am 2 sio.00 al _ Tey b. 300,000 <4 2 2) 240.00 ‘ ‘ y “4. P440,000 7" & 4. ‘Using the same data in the preceding number, what is the capital balance of Aika on December 31, 20307 a. P2,200,000 7 Hoy 4D Diao ‘b. P2,220,000 a4 DE ee. (250° 9») a. P20,000 < $/On December 31, 2010, the capital balance of partners Aiza, Ren and Trish of ART Partnership are P2 Lig ts rai ie oo ‘admitted to the partnership by sequiring 40% of Trishyeagital interest and profit i ee of PIS00,606° ARTS partnership roported PIM net incoms for year X01}? What is the capifal balance, yDecember 3]. 2017 pir SI ® P1740.000 3 té say ‘b. P1,900,000 « s © Pladoooo 7 a. P1600.000 a ee 1s tO eteu) : = 4p * 6. Using the sae data jn the precoding number, what ste capil balance Aig on December 1201 2 100,00 eee OS ‘b. P2,130,000 SNE \ ©. P2,040,000 Chee tem SE G 4. P2,070,000 ae PoE Lo ayae iy ee ee, 5 ‘December 31, 2020, the capi and POM, respectively with prore snd received P400,000 from the race ‘of 4:1:5, On January 1, 202 ed PAO, the partershin TP 5 time of retirement, ow much isthe cen assets ofthe partnership are 1 balance of parmers Cristy, aula and Ara of CPA Partnership are PIM, PIM sty decided to retire F900 balance of Paula after the retirement of \ sad b. P2,850,000 7 gS te ot 2.100000 ‘) ie ers / 4. P3,150,000 Gs g ww ¥ 6) a x meet na, O40; he septal balance of partners f, Alice and Rein of BAR are P2M, PSM and PIM, 7’ Tespectively with profit or loss aprement rio of 2:3:5. On January |, 2041, Ena was adited 0 BARE arnership upon investment of PIM for 25% interest in the new pi with nev, igtalagregs capitaizai "16M, How much sth share of Alen thease ea ay al . % ‘b. P2,500,000, el ea CE Fee cnet: 2) Pan d.P3,125,000 Oo, In - ae tt pesto = Re ee ei mmutee: ‘what is the bonus received by Ena from the old partners? b. P1,200,000 & ©. P1,000,000 & 4. P1,500,000 10. Using'the in ou yr a aa i sob sane dain mame 8, hat st otha es aaa aor ze um He wel b. PI,500,000 Py ©. 3,500,000 ere 4. P500,000 @ rf inancal Poston of iC Parmership with profit or loss ratio of 4:5:1 Cash IM Liability to third person 2M Advances to A oM Advances from B IM Noneash asset oM ‘Advances from C 2M A, Capital oM B, Capital 3M Capital IM On January 1, 2001, ABC partnership isviqfideted herein liquidation expenses amounting to P400,000 has been incurred. If partner B receives PIM, evo sie by Cth tinge liquidation? ‘a, P2,400,000" A. b> —F Cf \ '. P1,000,000 eo 7 , 2,000,000 z None @ the 1g the same data in number 11, what isthe net proceeds from the sale 1. 3,000,000 Qukh tt J b. 4,400,000 low) e. P4,800,007° 4 Lal 13. Secember 31, 2010, the Statement of Financial Poston of DEF with profi or loss rt ted it wut 2M Libiltywhied ponon $M foncash asset aM D, capital : x E, capital 13M F, capital 1M January 1,2011, DEF partnership has been subjected o installment liquidation. As of December 31, 2011, the On Jong data concerning liquidation are provide following cash asset with book value of PEM has boen old at loss of P2M. us Nona expen amourting © PAN 000 ha een incured forthe mo of nay. > paboj000 cash hasbeen witbeld for frre liuidaton expense. ¢ > aM liability hasbeen paid. mis Pe be nai os ha ine maxi posible os on Se aNG A «71300000 Cano wee on X (ao CY) te. P1,000,000 ree en ae bas 9 os ree co oe +) Page 2 of 17st ing the same data it is ig the pe ii ‘number 13, what is the amount received by E on January 31, 20117 b. 700,000 b ©. P1,000,000 dd. -Notie reer) b. P120,000 Heine 900 wren & pio echt, ee (oSe, bic et g . Using the same Gata in m 15, what is the amount ti ef) créditors wiphout priority? wrt % Wap the Nutbbiin, the sale of spake asses of liquidated corporation resulted to net proceeds of P1,000,000. iquidation expense emounting to 60,900 has been paid at the start of liquidation. Before the liquidation, the following data are provided concemité the financial postion SPtHE sald financially distressed corporation: ficiency amounting to (P340,000.) > The corporation has total assets with book value of P2,000,000 and de AP An investment property with book value of 'PS00,000 and realizable value payable amounting to P100,000. > Taventary with book value of P1,000,000 and realizable valve of P100,000 secured a note payable ‘amounting to P200,000. > Salaries payable and income tax payable amounted to ‘What is the amount received by partially secured cre ‘of P300,000 secured loan 40,000 respective: agqo P600,000 £ psmmano # (an 2) ¢. P700,000 4. 800,000 Zee we oe 17, On January 1, 2020, VINO Ine. and Oppo Inc, estab so, smanufscturing entity under thd trade name Create oo a2 Ne OF IE corporatonWillte owned equally by VIVO In. and Oppo Iie, This com eer Ino, The common ashone components tht car be sold tothe incorporatos and third peso. Te Mrngement between VIVO and OPPO provides Vat the relevant ectvitis of rosie Ine. wil ined to operste at breakeven. The assets and liabilities of of the sai Create Inc. is normally reais Tne. ee crte the name of VIVO and Oppo. The contractual arrangement provides for the following assets ana Tabilities the business: ’ re of VIVO but it widhemewet for the mortgage payable. > The land will be in the nam F The building will be owned by OPPO bet it wil! shoulder the loans payable. 7 > Other assets, liabilitics and elements of finenciat statements Ser be shated on the basis of their equity interest. “The statenenn of financial position of Create Inc, as of Decemer 31, 2020 is present below: Current assets 10M counrs payable 20M Building 30M Leen payable 40M Land 60M Momgege payeble 10M Grdinmy sock 4 20M ef 10M Retgines comings Gp inclusive of sales te VIVO and OPPO in the During 2020, Create Ino. revorted ‘otal sales amounting ¢9 Ding ep iOM and PaOM, respectively. During 1/20, VIVOTwas able to Fost 80% of iaventory ‘from Create infurd persons while OPPO was able io resold 50% yiventory from Create 1 hid pesos }PPC) Inc. in relation to his interest to this arrangement for What isthe amo svanue to be reported | the yer ended December 1, 207 Bea! . . weed Oo” b. —_P10,000,000 Cor 3 pe % &Fiso0.000 (eK aZa+ @ —P19,000,000 = v (Af: Psing the same data in number 17, what is the amount of La be reported by VIVO line. in relation to his Ko oer thi arangement sof December 3, 20207 C me oeat 8g : k ‘ P65,000,000 b, 35,000,000 te Cv) 7 6, 50,000,000 4. 60,000,000, 79, Qsing the same data in numicr 17, whats the encunt of cal Hiliies 10 be reported by! i har ig angen Det 312020) —$—$—~ ¥ $50,000,000 uP we ‘e. 35,000,000 4. 20,000,000, Page 3 of 17 NO ai een i:|g gegumQteaca ‘ empl ty ay £30, Ayala Ind, and SM t rhe Create oe units The contractual arrangement between Ayala and $M provides thatthe relevant activities of In, wil require unanimous vote ofthe sid partes, The incorporated entity wil have over the «assets ofthe operation xd will answer for the libilties ofthe said operation. The parties {the=weraBfats of the operation, Ayala Inc. and SM Inc. invested PIOOM and P1SOM, 7 for 40:60 | Interest in the said established corporation. The financial statements of MRT7 Inc. for the 3 years of operation provided forthe following data: ‘Year ‘Net incoms/(Net loss) Dividends declared 2030 50M. 10M. 2031 300M) _ 2032 400M SoM On Devember 31, 2032, fair value less cost to sell of the Investment by Ayala and Investment by SM is ‘determined to be P130M and P205M, respectively. ‘What is the book value of Investment tobe reported 1c. on December 31, 2030? a P180,000,000 y '. 174,000,000 ©. P144,000,000 4. 150,000,000 21. Using the sary umber 20, what is the igyeinent on tobe reported by Ayala Ine. for the year ended December 31,0317 a, P120,0003 8. 116,000,000 y © 124,000,000 7 & Piod.o00.000: (Gat sme an nye 2 a ak tea ob et by Al December 31, 20327 x eee Me PRBS ae GN) (Segre mio what sth book vale of neste be predby SM neon December 1, 20327 a. P210,000,000 d & ». 204,000,000¢ oy ©, P205,000,000 aon 4. P208,000,000 a es ete LIMA Inc. and incurred transaction cost of P1000. PKI Inc. owned 50% interest in the said corporation. For the year ended December 31, 2020, LIMA Inc. reported net income in the amount of P$00,000 and declared dividends in the amount of P200,009, On Decembgr-31_2070, PKI determined that the fair value +om—OFHs: Investment in Lima is P1,500,000. The cost to sell bf the fair value. The value, ‘the investment io opnini tape = r bain: coke) ky 46 ‘What is the book value of the Investment on December/31,_ to be reported by PKI Inc. under the different models? Fair value mi Cost method Equity Mie 7 K. ts FE (SP snged v. 1,200,000 1,500,000 Ue! 1,100,000 « Tacs ©. 1,100,000 1,200,000 1,500,000 fe \ 2a" a 1,500,009, gg 1,100,000 1,250,000 ‘of PKI Ine. in relation to this investment for the year ended December 31, 2020 model “GF, Cost msthod Equity method de 300,000 increase <4N* 100,000 i 200,000 increase b, ae uaretas P200,000 increase £250,000 increase mee P300,000 increase 1,000 decrease 4 200,000 decrease 251,000 inarease 100,000 increase| 26. installment price of P100,000. Abenson received 200 as down payment. The fair value of the tadein TV paid in equal quarterly installment su epee st of P90,000. Abenson defaulted on the payment of cr of the television set with appraised value of P10, 000, ‘was resold ata cash price of PZ5;800 afer being reconditioned ‘What is the realized gross 2 PS DOb ss Profit tobe recognized by Abenson ne forthe year ended December 31, 2010? b. 20,000 \) ©. P7,000 4d. P22,500 7. Using the same data in number 26, what i ‘i “ ended Deco ja apnumber 26, what isthe loss on eposesion tobe recogized by Abenson Ic forthe your a P1250 ». P5,000 ce. P3,750 4. P2,500 28. Using the same data in number 26, what is the realized gross profit to be tized by Abenson Inc. fo ended December 31, 2011? ene on nee a P3,750 b. P15,000 «. P12,750 é. P18,750 29, On January 1, 2001, MDC Inc. entered into a long-term construction contract for the erection of iiding at a grice of PLOOM. Because of changes in the design of the project, the price increased by January A008. The project i completed on December A 2004 The fllowing ations! data. are pro we ‘ion fee equivalent to 3% of original gontract price must be made by the client deductible on the first billing, Billings on the project are made a, 2 aries ‘of the contract price, respectively, for the ve first three years of the project. Gov > MDC made eaah collection ftom the customer amoting to PHGM and P3OM on year 2002 and 2003. } The cost incurred on year 2001 is FIOM while te complete at the end of 2001 is PAOM. > ‘The cumulative cost incurred as of year 2002 i ith percentage of completion of 50% as oF the end of 2002. YO. ge 4 - ©) > The cost igcumed on vent th percentage of completion of ‘of the end of 2003, ae ‘What is the excess of cor SETESS Over progress billings (excess of progress billings over construct in progress) on December 34, 200) jer the following models? aw) - seen) aa Cos msoven gg 8) a P8M (P2My~ b PIM PIM . PSM 3M) 4 POM ro 30. Whats the realized gros fit (oss) forthe year ended éeember 31, 2002 der the elo wing models? + Percentage of completion Cost recovery.” ~ (P30M) (40M) (PSOM) (P50M) (PaoM) (P40M) om) ‘None yp n number 30, what is the balance ‘of construction in progress under the following models on 3 re of sk F Cost ry Percentage of completion recover PiosM— 90M. A 90M ‘PLOOM 100M POBM ir 4 Fiom Be aber 31, 20037 ‘32. What tie amount of account receivable to be reported MDC of December 31, ‘a P15,000,000 si b. P28,000,000 © 25,000,000 Cc 7 PI8,000,000 Page 5 of 17. On, 5 TAY 1, 2020, Taza Min Inc. granted a franchise right toa franchisee for the operation of coffee shop us Mia's trade name for a period of 10 years starting January 1, 2020, Te takin Comrie or taerundable inital franchise fee of PIOM snd continuing franchise fee of 10% of franchisee’s annual sales. ts ie ligation of Taza Mia to construct the coffee shop and to deliver the movables. In addition to that, Ttza Mia has the obligation to deliver 100,000 units of raw materials to the franchisee, The stand alone selling price of the ‘ght to use Taza Mia's trade name is PAM, The standalone selling price of the construction of the coffee shop Gelivery of movables is P3M while the stand along selling price of the 100,000 units of raw materials is PIM. Qn Tuly 1, 2020, Taza Mia finished the construction of the coffee shop and deliver i 8s. 5) Se ly 2a ni onstruction of the coffee shop red all the required movables. v 1 materials have been delivered as of December 31, 2020. The francisee reported sales revenue ‘mounting to P2M for year 2020. ‘What is the amount of total to be re ia. n eRe esate sported by Taza Mia Inc. forthe year ended December 31, 20207 . 4,700,000 & P8,750,000 . 4, 5,700,000 , wee er 34. On Desember+;-2007,Gawad Kalinga, a nonstock ponprofit organization, received PIM fund from a Philanthropist who impost the condition that said shall only be used for the research project of the ‘organization. On December 31, 2010, Gawad Kalinga |00,000 of the said fund far the research project. r sors Oecd Semen Cheep ‘What is the effect of the transaction Gf Gawad Kalinga for the year ended Dect 31, 20107 a fie ncn Td as 'b. Decrease in temporarily restricted net asset by 100,000 Y) ees aye 4. Davee ured eset by P1000 b ‘who stipulated that the amount should be inucsted indefinitely in revenue producing AAvestment. The deed of donation also provides that the dividend income shall be used for the gequisition December 31, 2020, Red Cross Inc. received P200,000 cash as dividend income from investment of the fund, (On January 152021) Red Cross Ino. acquired a personal computer at a cost of, with a useful life of $ ‘years without re¥iial Value. How shall the transactions be roported in NPO's S of Activites for the year ended December 31, 2 wW @ There shall be increase in unrestricted net asset by PS0,000. co b. There shall be decrease in temporary restricted net asset by P200,000. ©. There shall be increase in permanently restricted net asset by PIOM and increase in temporary restricted net asset by P200,000. 4. There shall be inerease in unrestricted net asset by P10,200,000, 36. Using the same data in number 35, how shall the transactions be reported in NPO's Statement of Activities for the ‘year ended December 31, 20217 TS SO etky cn erred @) OY, ‘a. There shall be increase in unrestricted net asset by P50,000. fg Cb BERS eer ce en ra 7 c. There shall be decrease in temporary restricted net asset by P50,000 and increase in unrestricted net asset by P40,000. dd. There shall be no effect in total net asset. 37. Using the same data in number 35, how shall the cash flows be reported in NPO's Statement of Cash Flows for the year ended December 31, 2020? ‘8. Cash receipts from operating activities by P200,000. 'b. Cash receipts from financing activities by P10,200,000. ‘e. Cash disbursements for investing activites by P200,000. 4. Cash disbursements for financing activities by P10,000,000. 38, Using the same data in number 35, how shall the cash flows be reported in NPO's Statement of Cash Flows for the year ended December 31, 2021? ‘a. Cash receipts from operating activities by P200,000. b. Cash receipts from financing activities by P10,200,000. ©. Cash disbursements for investing activities by P50,000. 4. Cash disbursements for financing activities by P10,000,000 Page 6 of 17