Financial Accounting and Reporting

Financial Accounting and Reporting

This course introduces the nature, functions, scope, and limitations of the broad field of accounting theory. It deals with the study of the theoretical accounting framework objectives of financial statements, accounting conventions, and generally accepted accounting principles, standard setting process for accounting practice, national as well as international principles relating to the preparation and presentation of financial statements, the conditions under which they may be appropriately applied, their impact or effect on the financial statements; and the criticisms commonly leveled against them. The course covers the detailed discussion, appreciation, and application of accounting principles covering the assets, financial and non-financial. Emphasis is given on the interpretation and application of theories of accounting in relation to cash, temporary investments, receivables, inventories, prepayments, long-term investments, property, plant and equipment, intangibles, and other assets, including financial statement presentation and disclosure requirements. The related internal control, ethical issues, and management of assets are also covered. Exposure to computerized system in receivables, inventory, and lapsing schedules is a requirement in this course.



A decrease in a liability from primary operations.According to the Conceptual Framework, an entity's revenue may result from a/an
Both assignment and factoringWhich of the following is a method to generate cash from accounts receivable?
50,000Won Company follows the procedure of debiting bad debt expense for 2% of all new sales. Sales for three consecutive years and year-end allowance account balances were as follows:
Sales Allowance for bad debts
2015 3,000,000 40,000
2016 2,800,000 60,000
2017 3,500,000 80,000
What is the amount of accounts written off in 2017?
4% of the face value of the note.On July 1, year 1, a company obtained a two-year 8% note receivable for services rendered. At that time the market rate of interest was 10%. The face amount of the note and the entire amount of the interest are due on June 30, year 3. Interest receivable at December 31, year 1, was
Internal controlThis is defined as the plan of organization and all the methods and measures adopted within an entity to safeguard assets, check the accuracy of accounting data, promote operational efficiency, and encourage adherence to managerial policies
Comparability, understandability, relevance and reliabilityThe four principal qualitative characteristics that make information in financial statements useful to investors identified within The Framework are:
TRUETrade discounts are used to avoid frequent changes in catalogs and to alter prices for different quantities purchased.
Non-notification basisThe finance company made payments directly to the assignor and the assignor remits the collection to the assignee.
508,000.00Well Corp. has outstanding accounts receivable totaling P6.5 million as of December 31 and sales on credit during the year of P24 million. There is also a credit balance of P12,000 in the allowance for doubtful accounts. If the company estimates that 8% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year?
Notes ReceivableIt is a formal claim against another that is evidenced by a written promise, called promissory note, or a written order to pay at a later time, called time draft.
DiscountWhen the stated rate is less than the market rate, the note is at (a)
Due from factor: YesRecourse liability: NoWhich of the following is used to account for probable sales discounts, sales returns, and sales allowances?
Historical costIt is the most common measure of financial transactions.
A decline in the fair value of the asset below its previous carrying amountWhich of the following is not an objective evidence of impairment of a financial asset?
TRUEThe standard requires that companies assess their receivables for impairment each reporting period and begin the impairment assessment by considering whether objective evidence indicates that one or more loss events have occurred.
Comparative information in respect of the succeeding period.A complete set of financial statements includes the following items except;
Convertible debtThis refers to a debt instrument which can be converted at a specified price into equity of the issuer.
P50,000Rosa Co. uses the gross method to record sales made on credit. On June 10, 2017, it made sales of P100,000 with terms 2/10, n/30 to Fin Farms, Inc. On June 19, 2017, Rosa received payment for 1/2 the amount due from Fin Farms. Rosa's fiscal year end is on June 30, 2011. What amount will be reported in the statement of financial position for the accounts receivable due from Fin Farms, Inc.?
Time-lapse differences.Seldom does the balance of the cash in bank account in the depositor's books agree with the balance appearing in the bank statement at a particular date because of
Financial guarantee contractIt is defined as a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument
predictive valueFinancial information  can be used as an input to processes employed by users to predict future outcomes.
Transaction costsCosts that are directly attributable to the acquisition of the financial asset shall be capitalized as a cost of the financial asset.
P9,900.AC Inc. made a P10,000 sale on account with the following terms: 1/15, n/30. If the company uses the net method to record sales made on credit, how much should be recorded as sales revenue?
ensure that it has adequate cash available to meet maturing obligationsCash planning is important because a company wants
All of the above must occur.The transferor is considered to have surrendered control over its receivables if;
TRUEIn the gross method, sales discounts are reported as a deduction from sales.
Newly issued corporate bonds.All of the following may qualify as cash equivalents except;
Internal UsersThose who have ready access to accounting information for their decision-making needs;
Receivable from factorIf the factor retains a portion of the purchase price to cover probable sales discounts, returns and allowances such amount is charged to a
Combined responsibility for handling and recording cashWhich of the following is not a basic characteristic of a system of cash control?
Prepare the petty cash voucherAn employee asks for an authorized reimbursement of transportation charges out of the Imprest petty cash fund. To document this transaction, the petty cashier should?
A certified check is one drawn by a bank upon itselfWhich of the following statements is false?
President's letter.Which of the following represents a form of communication through financial reporting but not through financial statements?
To provide information about an entity's liquidation value.Which of the following statements is not normally an objective of financial reporting?
Equity investmentsAll of the following can be classified as cash and cash equivalent, except;
Deposits in transitIf the balance shown on an entity's bank statement is less than the correct cash balance and neither the entity nor the bank made any errors, there must be?
With the establishment of an imprest petty cash fund, one person is given the authority and responsibility for issuing checks to cover minor disbursementsThe following statements pertain to accounting for petty cash fund. Which statement is false?
Cash equivalents should be valued at maturity value, meaning face value plus interestWhich is false concerning valuation of cash and cash equivalents?
All of the choicesWhat is due process in the context of standard setting at the IASB?
debit to Petty CashThe entry to replenish the petty cash fund for P100 of various minor expenditures would include a____?
All of these are usersUsers of financial reports include all of the following except:
8,300,000Philip Company had the following account balances on December 31, 2016
statement of retained earnings.The financial statements most frequently provided include all of the following except;
Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).The two major standard-setting organizations in the world are;
When information that are a result of related party transactions are shown in the financial statements these financial statements lose their reliabilityWhich is INCORRECT concerning the qualitative characteristics of financial statements?
CashAll are non-financial assets except:
Always involves the legal restriction on the compensating cash balance.Which is INCORRECT about compensating balance agreement?
Gains are normally reported separately from revenue in the Statement of Profit or Loss and Other Comprehensive Income due to the different probabilities attached to that type of income.Which of the following statements in relation to income is true?
Money market checking accountsWhich of the following should be considered cash?
Salaries expense.Accounts maintained within the ledger that appear on the statement of financial position include all of the following except
errors made by the company.Bank statements provide information about all of the following except;
Decrease the balance per depositor's records.When preparing a bank reconciliation, an NSF check will:
cash receipts.Equity is not affected by all
three months or lessIn order to be classified as a cash equivalent, an investment must have a maturity date of
the safeguarding of cashCash control systems are the methods and procedures used to ensure
Decision-usefulness.The international financial reporting environment includes challenges in financial reporting including all of the following except;
Financial InstrumentIs any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Postdated checksWhich of the following would not be classified as cash?
available-for-sale securitiesCash equivalents would not include short-term investments in
When the sale occurs.When is revenue generally recognized?
Separately as noncurrent asset with appropriate disclosureIf material, deposits in foreign bank which are subject to foreign exchange restriction shall be classified
none of these.Debit always means
The entire balance in the sinking fund account should appear as noncurrent assetAt the current year-end, a trustee held cash in the sinking fund account representing annual deposits to the fund and the interest earned on these deposits. How should the sinking fund be reported?
48,000A petty cash fund of P50,000 was composed of the following on December 31, 200x:
not part of the entity's financial statementsWhich is true about cash over and short account?
Preferred sharesUsually provide a specific dividend that is paid before any dividends are paid to ordinary shareholders.
Philippine Interpretations CommitteeFormed by the FRSC in August 2006 to assist the FRSC in establishing and improving financial reporting standards in the Philippines.
Outstanding checksIf the cash balance shown in a company's accounting records is more than the correct cash balance and neither the company nor the bank has made any errors, there must be
journal.An accounting record where a company initially records transactions and selected other events is called the;
Deposit in transit.Which of the following is an appropriate reconciling item to the balance per bank in a bank reconciliation?
Share capital-ordinary.Which of the following accounts is reported in the Equity section statement of financial position?
Factor's holdbackIt is a predetermined amount withheld by a factor as a protection against customer returns allowances and other special adjustments.
FALSETrade receivables advances to officers and employees.
PFRS 10The following are the standards which deal primarily with the accounting for financial instruments except;
Cash fund to pay for the purchase of equipmentAll of the following are included in cash and cash equivalents, except?
The debtor is late in meetingsThe following are indications that a receivable is impaired except:
Conceptual Framework for Financial ReportingIts main objective is to narrow the differences in financial reporting of different entities by harmonizing regulations, accounting standards and procedures relating to the preparation and presentation of financial statements.
The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for liabilities.Which of the following statement is true regarding debits and credits?
52,773.00On December 31, 2010, Flintstone Corporation sold for P75,000 an old machine having an original cost of P135,000 and a book value of P60,000.
The terms of the sale were as follows:
P15,000 down payment
P30,000 payable on December 31 each of the next two years
The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2010 rounded to the nearest peso? (The present value of an ordinary annuity of 1 at 9% for 2 years is 1.75911.)
The billing department supervisor matches pre-numbered shipping documents with entries in the sales journal.Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded?
Direct measurement of economic resources and obligations and changes in them in terms of moneyOne of the basic features of financial accounting is the
Internal controlThe plan of organization and all the methods and measures adopted within an entity to safeguard its assets, check the accuracy of its accounting data, promote operational efficiency, and encourage adherence to managerial policies is called?
Both I and IIIf financial assets are exchanged for cash and other consideration but the transfer does not meet the criteria for a sale, the transferor and the transferee should account for the transaction as (I) Secured borrowing and (II) Pledge of collateral
expenseIf a company usually sells its accounts receivable, it records any factoring commissions as a;
Present valueLong-term notes receivable which nominally bear no interest or an interest which is unreasonably low shall be recognized initially at;
Added to the face value of the noteAny unamortized premium is
Notes charged by the bankThe bank statement shall provide information about which of the following
Provide collateral for a loan.The purpose of assigning accounts receivable is to;
Concepts of liability and liability maintenanceThe Conceptual Framework deals with the ff. except;
AIS No.1 (Presentation of Financial Statements)Which of the following authoritative iGAAP guidance specifically addresses issues related to cash?
American Accounting AssociationAccounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information according to.
Charging bad debts as accounts are written off as uncollectible.Which of the following methods of determining bad debt expense does not properly match expense and revenue?
Current assetsTrade receivables which are expected to be realized in cash within the normal operating cycle or one year, whichever is longer, are classified as
Debit Accounts Receivable, credit Allowance for Doubtful Accounts.Which of the following is included in the normal journal entry to record the collection of accounts receivable previously written off when using the allowance method?
Within one year, the length of the operating cycle notwithstandingNon trade receivables are classified as current assets only if they are reasonably expected to be realized in cash
Discovering cash receipts that have been recorded but not been depositedA proof of cash would be useful for_______.
Included in total receivables with disclosureIf accounts receivable are pledge against borrowings, the amount of accounts receivable pledge shall be;
None of theseWhich of the following should be recorded in Accounts Receivable?
Present valueLong-term notes receivable which nominally bear no interest or an interest which is unreasonably low shall be recognized initially at
Window dressingThe payment of accounts payable made after the close of the accounting period are recorded as if it were made at the end of the current.
The date a security is purchased determines its "original maturity" for cash equivalent classification purposes.Which of the following statements regarding cash equivalents is true?
69,380The following data are given for Ryu Corp: September October November December Cash sales P7,000 P6,000 P8,000 P6,000 Credit sales P50,000 P48,000 P62,000 P80,000 Total sales P57,000 P54,000 P70,000 P86,000 Past experience indicates that credit sales collections normally occur in the following pattern:
the amount of the discount is not material.Assuming that the ideal measure of short-term receivables in the statement of financial position is the discounted value of the cash to be received in the future, failure to follow this practice usually does not make the statement of financial position misleading because
DiscountingIt refers to endorsing a promissory note to a bank or a financing company, the latter advancing the maturity value of the note less a charge called a discount.
Transfers of receivables can be treated as a sale if the transferee is a QSPE.Which of the following is NOT true regarding accounting for transfers of receivables under PFRS?
122,500Vivo, Inc had net sales in 2017 of P700,000. At December 31, 2016, before adjusting entries, the balances in selected accounts were: accounts receivable P125,000 debit, and allowance for doubtful accounts P1,200 debit. Vivo estimates that 2% of its net accounts receivable will prove to be uncollectable. What is the cash realizable value of the receivables reported on the statement of financial position at December 31, 2017?
Receivable financingIs the financial flexibility of an entity to raise money out of its receivables.
Income taxes.These are the result of statutory requirements imposed by governments and are not considered contractual obligations.
KitingA deficiency in cash control that may conceal cash shortage through bank-to-bank transactions.
Charging bad debts with percentage of sales for that periodWhich of the following methods of determining bad debt expense most closely matches expense to revenue?
Decrease the accounts receivable balance and decrease net incomeWhen the direct write-off method of recognizing bad debt expense is used, the entry to write off a specific customer account would
JournalThe debit and credit are made in the books of original entry called;
60 days at 12%After being held for 30 days, a 90-day 10% interest bearing note was discounted at a bank at 12%: Discount will be based on;
Debits two statement of financial position accounts and no income statement accounts.The trial balance will not balance when a company
SEC.Companies that are listed on a stock exchange are required to submit their financial statements to the
RateThe percentage specified on the note on an annual basis.
Debit Notes Receivable for P50,000May Roads sold P50,000 of goods and accepted the customer's P50,000 10%1-year note receivable in exchange. Assuming 10% approximates the market rate of return, what would be the debit in this journal entry to record the sale?
The dual effect of each transaction is recorded with a debit and a credit.The double-entry accounting system means
The transferor maintains continuing involvement.All but one of the following are required before a transfer of receivables can be recorded as a sale.
Insurance ContractA contract under which one party accepts significant insurance risk from another party by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder
Specific uncollectible account is written offWhen the allowance method of recognizing bad debt expense is used, the allowance for doubtful accounts would decrease when
Includes an unspecified principal amount and an unspecified interest amountWhich of the following best  describes a non-interest bearing note receivable?
Financial assets held for tradingCash equivalents do not include short-term investments in
TRUEIdeally, a company should measure receivables in terms of their present value, that is, the discounted value of the cash to be received in the future.
To assist preparers of financial statements in applying accounting standards and in dealing with issues that have yet to faint the subject of accounting standardsWhich the basic purpose of the Conceptual Framework for Financial Reporting?
Materiality is the threshold of recognition as to what accountable events will be recognized in the balance sheet and which will be recognized in the income statement.Which of the following statements is true with regard to the accountant's concept of Materiality?
FALSEThe percentage-of-receivables approach of estimating uncollectible accounts emphasizes matching over valuation of accounts receivable.
PremiumWhen the stated rate is greater than the market rate, the note is at (a)
NotesWhich contains information in addition to that presented in the statement of financial position, statement of profit or loss and other comprehensive income, separate income statement of profit or loss (if presented), statement of changes in equity and statement of cash flows?
Deducted from the face value of the noteAny unamortized discount is
Discount on transferred receivables that is to be amortized to interest expense over the borrowing period.If a transfer of receivables with recourse is not classified as a sale, and the proceeds received are less than the net receivables, the difference shall be treated as a
PAS and PFRSThe approved statements of the FRSC are known as
P9,000.On February 1, 2010, Henson Company factored receivables with a carrying amount of P300,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Henson factors the receivables on a without guarantee (recourse) basis. The loss to be reported is;
Income and expenses, excluding gains and lossesFinancial statements provide information about an entity's accounts except;
All the choicesAll the following are differences between financial and managerial accounting in how accounting information is used except to
to supply financial information to statement users so that they could make informed judgment and better decision.An accountant's primary task is to
Shipments to customers were properly invoiced.Tracing shipping documents to pre-numbered sales invoices provides evidence that;
62,500On December 30, year 1, Chong Co. sold a machine to Dora Co. in exchange for a noninterest-bearing note requiring ten annual payments of P10,000. Door made the first payment on December 30, year 1. The market interest rate for similar notes at date of issuance was 8%. Information on present value factors is as follows:
Period Present value of P1 at 8% Present value of ordinary
annuity of P1 at 8%
9 0.50 6.25
10 0.46 6.71
In its December 31, year 1 balance sheet, what amount should
Chong report as note receivable?
P109,800Vivo, Inc had net sales in 2017 of P700,000. At December 31, 2016, before adjusting entries, the balances in selected accounts were: accounts receivable P125,000 debit, and allowance for doubtful accounts P1,200 credit. Vivo estimates that 2% of its net sales will prove to be uncollectable. What is the cash realizable value of the receivables reported on the statement of financial position at December 31, 2017?
cash discount.When a customer purchases merchandise inventory from a business organization, she may be given a discount which is designed to induce prompt payment. Such a discount is called a
Maturity value less the discount at 15%After being held for 40 days, a 120-day 12% interest-bearing note receivable was discounted at a bank at 15%. The proceeds received from the bank equal
The contract shall not give rise to a financial asset of one party and financial liability or equity instrument of another party.Which of the following is a characteristic of a financial instrument?
All items except bank errors, outstanding checks and deposits in transitBank reconciliation are normally prepared on a monthly basis to identify adjustments needed in the depositor's records and to identify bank errors. Adjustments on the part of the depositor should be recorded for_______.
equity instrumentsExamples of physical assets include the following except;
Maturity valueIt pertains to the total amount due on the note at maturity date.
Cash Deposits JournalSpecial journals normally include the following except;
537,500.00Before year-end adjusting entries, Duncan Company's account balances at December 31, 2010, for accounts receivable and the related allowance for uncollectible accounts were P600,000 and P45,000, respectively. An aging of accounts receivable indicated that P62,500 of the December 31 receivables are expected to be uncollectible. The cash realizable value of accounts receivable after adjustment is
Individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers.The information provided by financial reporting pertains to;
Posting to the ledgerClassifying is the sorting or grouping of similar and interrelated economic transactions into their respective classes. It is actually accomplished by
Should be restored to the cash balanceUnreleased checks (checks drawn before the balance sheet date but held for later delivery to creditors)
An accounting standards board was established with the purpose of narrowing the range of divergence in accounting standards throughout the world.Which of the following statements about accounting standards is true?
Maturity dateThe date when the note is due and payable
Maturity value less the discount at 18%After being held for 30 days, a 90-day, 15 percent interest-bearing note receivable was discounted at a bank at 18 percent. The proceeds received form the bank upon discounting would be the:
Bearer BondsBonds for which the owners' names are not registered with the issuing corporation are called
Gain on investmentWhen liquidating dividends exceed the cost of investment, the difference is credited to________
FALSEWhen bond investment is held for "trading" or measured at fair value through profit or loss, it is necessary to amortize any premium or discount.
Equity instrumentsAny contract that evidence a residual interest in the assets of an entity after deducting all of its liabilities.
Stock rightA legal right granted to shareholders to subscribe for new shares issued by a corporation at a specified price during a definite period.
Reports all gains and losses in incomeThe fair value option
Share SplitNumber of share increases, but the total value of the shares remain the same
TRUETransaction costs directly attributable to the acquisition of financial asset held for trading or financial asset at fair value through profit or loss shall be expensed immediately.
DeclarationDividends shall be recognized at the date of
Date of declarationDate on which the payment of dividends is approved by the BOD
IWhich of the following statements is in accordance with the provisions of PAS 28?
I. The income or loss on the investment in associate is computed on the net income after tax of the associate.
II. The income or loss on the investment in associate is presented in the statement of profit or loss and other comprehensive income after the line item Income Tax Expense but before discontinued operations.
If the company is the beneficiary and has the right to cancel the policy at its option.DEF Co. purchased a P250,000 life insurance policy on the life of one of its key officers. When is the value of this policy an asset of the company?
Dividend income.When an investor uses the cost method to account for an investment in common stock, cash dividends are classified by the investor as:
Sell a specific security at fixed conditions of price and time.A put is an option that gives its owner the right to do which of the following?
Increase dividend revenueAn investor uses the cost method to account for investment. Dividends received in excess of the investor's share of investee's earnings subsequent to the date of investment
Sinking fundWhich is not a current fund?
Unrealized gain on intercompany inventory transfers for the prior year.Which of the following results in an increase in the investment account when applying the equity method?
Balance sheet as a non-current item.The Folk Arts Development Trading Co. has P1,250,000 appropriated for land acquisition and site development. The accountant should reflect this sum on his financial statement. On the
Impairment losses on investments in associates are not accounted for under PAS 28.Which of the following statement is the correct statement?
long-term investmentThe cash surrender value of the insurance policy on the corporation's president would be presented on the balance sheet as
Overstate and overstateAn entity neglected to amortize the premium on outstanding bonds payable. What is the effect of the failure to record premium amortization on interest expense and bond carrying value, respectively?
The cost method of accounting for an investment in a subsidiary recognizes the legal fact that the parent and subsidiary are one economic unit.Select the incorrect statement.
Systematic allocation of administrative production overheadThe costs of conversion of inventories include all of the following, except;
Addition to both cost and retail amount of purchasesWhen using the retail inventory method, departmental transfer -in is an _______________.
increase if the bonds were issued at either a discount or a premiumWhen the effective-interest method is used to amortize bond premium or discount, the periodic amortization will
Joint ventureIt is a contractual arrangement whereby two or more parties undertake an economic activity which is subject to join control.
Abnormal amount of wasted materialThe cost of inventories shall comprise all of the following costs, except:
Investee dividends from earnings since acquisition by investor are treated as reduction of investmentWhich of the following observations is not consistent with the cost method of accounting?
Record income when the fair value of its investment increases.The fair value option allows an entity to
Repayments plus or minus cumulative amortization and net of any reduction for uncollectibilityAmortized cost is the initial recognition amount of the investment minus
652,500On January 1, 2010, Reston Co. purchased 25% of Ace Corp.'s common stock; no goodwill resulted from the purchase. Reston appropriately carries this investment at equity and the balance in Reston's investment account was P720,000 at December 31, 2010. Ace reported net income of P450,000 for the year ended December 31, 2010, and paid common stock dividends totaling P180,000 during 2010. How much did Reston pay for its 25% interest in Ace?
Land to be leased out under a finance lease.Which of the following is not considered investment property?
FALSESignificant influence is the power to control or joint control over the financial and operating policy decisions of the investee.
Reports all gains and losses in incomeWhich is true about fair value option?
Bank prime rate and default on loanWhich of the following are observable inputs used for fair value measurement?
Would record 40% of the net income of Son Company as investment income each year.If Pop Company exercises significant influence over Son Company and owns 40% of its common stock, then Pop Company:
Both I and II.Which of the following risks are inherent in an interest rate swap agreement?
I. The risk of exchanging a lower interest rate for a higher interest rate.
II. The risk of nonperformance by the counter party to the agreement.
provides a relevant ending inventory valueWhich of the following is not a disadvantage of using the FIFO cost flow assumption?
23,916The present value of P30,000 to be received in two years, at 12% compounded annually, is (rounded to nearest peso)
The correct answers are: The total receivable should be disclosed separately., None of the receivable should be reported, but the entire receivable should be offset against Angles' payable to Pulham.In its financial statements, Pulham Corp. uses the equity method of accounting for its 30% ownership of Angles Corp. At December 31, 2010, Pulham has a receivable from Angles. How should the receivable be reported in Pulham's 2010 financial statements?
TRUEWhen an entity reclassification a financial asset from amortized cost to fair value through profit or loss, the fair value is determined at reclassification date.
TRUETransaction costs attributable to the acquisition of bond investments held for trading or at fair value through profit or loss are expenses immediately.
AssetInventories are presented as ______________ in the Statement of Financial Position.
P1,000 loss.On January 4, 2013, Frances Co. purchased 40,000 shares (40%) of the common stock of Alan Corp., paying P560,000. At that time, the book value and fair value of Alan's net assets was P1,400,000. The investment gave Frances the ability to exercise significant influence over the operations of Alan. During 2013, Alan reported income of P150,000 and paid dividends of P40,000. On January 2, 2014, Frances sold 10,000 shares for P150,000.
What is the gain/loss on the sale of the 10,000 shares?
Trade discounts applicable to purchases during the periodWhen using the periodic inventory system, which of the following generally would not be separately accounted for in the computation of cost of goods sold?
Jordan should use the fair-value method for 2013 and future years but should not make a retrospective adjustment to the investment account.On January 1, 2012, Jordan Inc. acquired 30% of Nico Corp. Jordan used the equity method to account for the investment. On January 1, 2013, Jordan sold 2/3 of its investment in Nico. It no longer had the ability to exercise significant influence over the operations of Nico. How should Jordan have accounted for this change?
Low-priced, high-volume merchandiseThe periodic inventory method is most commonly used by companies
559,680On January 1, 2013, Aldrine Company issued 3 year bonds with face value of P5,000,000 at 99. The nominal rate is 10% and the interest is payable annually on December 31. Additionally, Aldrine Company paid bond issue cost of P150,000.
The PV of 1 at 11% for 3 periods is .7312 and the PV of an ordinary annuity of 1 at 11% for 3 periods is 2.4437. The present value of the bonds using 11% is:
PV of principal (5,000,000 x .7312) 3,656,000
PV of annual interest payments (500,000 x 2.4437) 1,221,850
Total present value of bonds 4,877,850
The PV of 1 at 12% for 3 periods is .7118, and the PV of an ordinary annuity of 1 at 12% for 3 periods is 2.4018. The present value of the bonds using 12% is:
PV of principal (5,000,000 x .7118) 3,559,000
PV of annual interest payments (500,000 x 2.4018) 1,200,900
Total present value of bonds 4,759,900
What is the interest expense for 2013 using the effective interest method?
method used for inventory costing.An example of an inventory accounting policy that should be disclosed is the
costInvestments accounted for under the equity method are initially recognized at
Be recognized in other comprehensive income by a year-end credit of 24,015.Information concerning Atis Co.s portfolio of debt securities at December 31, 2019, and December 31, 2020, is shown below. These debt securities were purchased by Atis Co. during 2019. Prior to January 1, 2019, Atis Co. had non investments in debt or equity securities.
As of December 31, 2019
Amortized cost Fair value
Cloning Co. bonds 493,578 442,800
Blooming Corp. bonds 614,892 613,500
Maalindog, Inc. bonds 917,355 874,200
Totals 2,025,825 1,930,500
Assuming that the above securities are property classified as available-for-sale securities under PAS 39 (Financial Instruments: Recognition and Measurement), the unrealized gain or loss as of December 31, 2020, would.
Noncurrent investmentsInvestments that are intended to be held for more than one year or are not expected to be realized within twelve months after the end of the reporting period.
false, falseWhich of the following statements are in accordance with PAS 28?
I When the associate has cumulative preference shares, the investor computes its share in the profit or loss of the investee after deducting the preferred dividends, only when such dividends are declared.
II When the associate has non-cumulative preference shares, the investor computes its share in the profit or loss of the investee after deducting the preferred dividends,
Both I and IIAn investment property is recognized when I. It is probable that the future economic benefits that are associated with the investment property will flow to the enterprise. II. The cost of the investment property can be measured reliably.
33,400.00Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 200 units that cost 65 each. During the month, the company made two purchases: 300 units at 68 each and 150 units at 70 each. Chess Top also sold 500 units during the month. Using the FIFO method, what is the amount of cost of goods sold for the month?
A return on assets that is higher than the cost of financing these assets.Trading on the equity is
53,118On January 1, 2010, Kei Co. sold P1,000,000 of its 10% bonds for P885,296 to yield 12%. Interest is payable semiannually on January 1 and July 1. What amount should Kei report as interest expense for the six months ended June 30, 2010?
net income was correct and current assets and current liabilities were overstated.Dolan Co. received merchandise on consignment. As of March 31, Dolan had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be
any of theseWhen an entity elects to prepare separate financial statements, it shall account for its investment in associates
1,200,000 and 145,000.Risers Inc. reported total assets of 1,200,000 and net income of 135,000 for the current year. Risers determined that inventory was overstated by 10,000 at the beginning of the year (this was not corrected). What is the corrected amount for total assets and net income for the year?
Cost (No); Equity (No)Stock dividends on common stock should be recorded at their fair market value by the investor when the related investment is accounted for under which of the following methods?
639,000The following information was derived from the 2016 accounting records of Perez Co:
Perez's Central Warehouse Perez's Goods Held by Consignees
Beginning inventory 130,000 14,000
Purchases 575,000 70,000
Freight-in 10,000
Transportation to consignees 5,000
Freight-out 30,000 8,000
Ending inventory 145,000 20,000
Perez's 2016 cost of sales was?