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NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  

ELIMINATION  ROUND   EASY   QUESTION  NO.  1  


 
Gandalf  Inc.  exchange  a  thousand  liters  of  milk  valued  at  P1,200,000  to  a  thousand  liters  of  milk  owned  
by  Weary  Dairy  located  closer  to  Gandalf’s  customers.  Instead  of  selling  the  milk  to  the  customer  for  
cash,  however,  the  customer  exchanged  the  said  one  thousand  liters  of  milk  for  a  five  hundred  kilos  of  
butter  valued  at  P1,500,000.  Gandalf  Inc.  paid  P250,000  cash  to  the  customer.      
 
How  much  revenue  should  be  recognized  from  the  above  transactions  in  the  books  of  Gandalf?  
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   EASY   QUESTION  NO.  2  
 
Wee   Company’s   accounting   records   show   that   changes   in   ledger   account   balances   occurred  
during  2018  as  follows:  
                                                                   Increase  (Decrease)  
Cash                 800,000  
Accounts  Receivable                                                  (400,000)  
Inventory               300,000  
Equipment             950,000  
Note  Payable  –  bank           500,000  
Accounts  payable                                        (600,000)  
Share  Capital             700,000  
Share  Premium             300,000  
 
There  were  no  transactions  affecting  retained  earnings  other  than  a  P1,500,000  cash  dividend  
and  a  P250,000  prior  period  error  in  2017  from  understatement  of  ending  inventory.    
 
What  was  the  net  income  for  2018?  
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   EASY   QUESTION  NO.  3  
 
 
 
Any  loss  incurred  from  the  sale  of  treasury  shares  shall  be  charged  to  
 
  a.   Share  premium  from  original  issuance,  share  premium  from  treasury  shares  and  
then  retained  earnings.  
  b.   Loss  on  sale  of  treasury  shares  to  be  reported  as  other  expense  
  c.   Retained  earnings  and  then  share  premium  from  treasury  shares  
  d.   Share  premium  from  treasury  shares  and  then  retained  earnings.  
 
 
 
 
 
 
 
 
 
 
 
 
   
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   EASY   QUESTION  NO.  4  
 
  On   December   31,   2018,   a   typhoon   damaged   a   warehouse   of   Aggressive   Corporation.     The   entire  
company  and  many  accounting  records  stored  in  the  warehouse  were  completely  destroyed.    Although  
the   inventory   was   not   insured,   a   portion   could   be   sold   for   scrap.     Through   the   use   of   microfilmed  
records,  the  following  data  were  gathered:  
 
     Inventory,  January  1,  P450,000;;  Purchases,  P2,160,000;;  Cash  sales,  P273,600;;  Cash  received  on  
collection  of  accounts  receivable,  P2,520,000;;  Accounts  receivable-­January  1;;  P210,000;;  Accounts  
written   off   due   to   impairment,   P9,600;;   Recovery   of   receivable   impairment   recognized   last   year,  
P3,600;;  Accounts  receivable,  P342,000;;  Sales  returns,  P36,000;;  Sales  discounts,  P14,400;;  Purchase  
returns,   P60,000;;   Purchase   discounts,   P12,000;;   Freight   in,   P21,600;;   Salvage   value   of   damaged  
inventory,   P90,000   while   an   undamaged   inventory   that   were   marked   to   sell   at   P150,000   were  
recovered.  Gross  profit  percentage  on  sales,  32%.      
 
   How  much  is  the  value  of  inventory  loss?  
 

NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  


ELIMINATION  ROUND   EASY   QUESTION  NO.  5  
The  inventory  on  hand  at  December  31,  2018  of  Coconut  Inc.  is  valued  at  a  cost  of  P247,800.    Mark-­
up  on  costs  for  all  sales  is  at  30%.  The  following  items  were  not  included  in  the  inventory  amount:  
 
a.  Goods  sold  to  Ube  Company,  under  terms  FOB  destination,  invoiced  for  P24,400  which  includes  
P1,000  freight  charges  to  deliver  the  goods.    The  goods  are  in  transit.      
b.   Purchased   goods   in   transit,   terms   FOB   shipping   point.     Invoice   price   at   P48,000.     Freight   cost,  
P3,000.  
c.   Goods   out   on   consignment   to   Can   Company,   sales   price,   P36,400.     Shipping   cost   of   P2,000   to  
deliver  the  goods  to  consignee  was  incurred.  According  to  the  consignee’s  report  40%  of  the  units  on  
consignment  has  already  been  sold.  
d.  Inventories  sold  at  P26,000  to  ABC  Inc.  with  right  of  repurchase  after  3  months  at  the  same  price  
plus  12%  interest.  
 
What  is  the  correct  balance  of  the  inventories  as  of  December  31,  2018?  
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   EASY   QUESTION  NO.  6  
 
This  is  the  power  to  participate  in  the  financial  and  operating  policy  decisions  of  the  investee  but  not  
control  or  joint  over  those  policies.  
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   EASY   QUESTION  NO.  7  
 
Which  of  the  following  are  qualifying  assets?  
 
I.  Intangible  Assets  
II.  Investment  Properties  
III.  Equipment  bought  from  supplier  
IV.  Power  Generation  Facilities  
 
 
 
 
 
 
   
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   EASY     QUESTION  NO.  8  
 
This  is  an  amount  attributable  to  the  asset  or  liability  for  tax  purposes.  

NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  


ELIMINATION  ROUND   EASY   QUESTION  NO.  9  
 
Give  the  complete  title  of  PAS  24.  
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   EASY   QUESTION  NO.  10  
 
The  following  information  was  included  in  the  bank  reconciliation  for  Reason  Co.  for  July:  
 
Checks  &  charges  recorded  by  bank  in  July,    
including  a  July  service  charge  of  P2,800                                                                P  1,232,600  
     Service  charge  made  by  bank  in  June  and  recorded  in  books  in  July                                                      1,200  
     Total  credits  to  cash  in  all  journals  in  July                                                1,222,000  
     Customer’s  NSF  check  returned  as  a  bank  charge  in  July    
           (no  entry  made  in  books)                                                                                                                                                                                                    6,000  
Customer’s  NSF  check  returned  in  June,  recorded  by  the  company  in  July                              15,000  
Outstanding  checks  in  July  31                                      300,000  
Checks  issued  in  July  for  P20,000  recorded  by  the  company  as                                                                            2,000  
Erroneous  bank  charge  in  July                                          20,000  
Erroneous  bank  credit  in  June  corrected  in  July                                                                              30,000  
Erroneous  book  receipt  in  June  corrected  in  July                                                                                                  5,000  
 
Assume  all  other  reconciling  items  are  listed  above,  what  were  the  total  outstanding  checks  at  the  
end  of  June?  
 
a.  P245,000       c.    P255,000  
b.  P250,000       d.    P268,000  
 
 

 
 
 
 
 
 
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  1  
 
Tim   Corporation   acquired   40,000   of   Telecom   Corp.’s   ordinary   shares   on   September   30,   2017.   The  
shares  were  acquired  at  P145  per  share.  The  book  value  of  the  net  assets  of  Telecom  Corp.  on  this  
date  was  at  P25M  and  its  total  outstanding  shares  was  at  200,000.  Telecom’s  depreciable  assets  with  
average  remaining  life  of  10  years  were  understated  on  this  date.    Additional  relevant  information  follow:  
                 2017                                          2018  
Net  income  for  the  year                                            P3,800,000                  P5,200,000  
Dividend  paid                P2  per  share                                                  P4  per  share  
Foreign  exchange  loss                                                                  -­                                        400,000  
Unrealized  holding  gain  –  OCI                                          -­                  300,000  
Fair  value                155  per  share                          169  per  share  
 
What  it  is  the  carrying  value  of  the  investment  as  of  December  31,  2018?  
 
 
 
 
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  2  
 
In  response  to  your  letter  of  audit  inquiry,  Luzon  Company’s  lawyers  informed  you  that  the  company  
is  involved  in  a  lawsuit  for  violating  environmental  laws  regulating  hazardous  waste.    Although  the  
litigation  is  still  pending,  Luzon  Company’s  lawyers  is  certain  that  Luzon  Company  will  most  probably  
have  to  pay  cleanup  cost  and  fines  of  P2,000,000.    Luzon  Company  neither  accrued  nor  disclosed  
this  loss  in  the  financial  statements.    On  April  1,  2018,  before  the  2017  financial  statements  were  
approved  for  issuance,  the  court  has  finalized  its  decision  penalizing  the  company  a  total  of  
P2,600,000  in  cleanup  costs  and  fines.    
 
What  is  the  correct  provision  from  environmental  damages  should  the  company  accrue  as  of  
December  31,  2017?  
 
a.  none  
b.  P2,000,000  
c.  P2,300,000  
d.  P2,600,000  
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  3  
 
Give  the  complete  title  of  PFRS  1.  
 
 
 
 
 
 
 
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  4  
 
Lilac  Company  has  200,000  shares  of  ordinary  shares  outstanding  on  January  1,  2018.    On  March  
31,  2018,  100,000  additional  ordinary  shares.    On  June  30,  the  company  issued  10%,  100,000  
convertible  preference  share  par  value  of  P20.  The  preference  shares  are  convertible  into  200,000  
shares  of  ordinary  shares.    On  December  31,  2018,  Lilac  Company  reported  a  net  income  of  
P1,140,000  after  tax  and  paid  dividends  of  P300,000  to  ordinary  and  P100,000  to  preference  
shareholders.    
 
What  is  the  diluted  earnings  per  share?  
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  5  
 
When  is  the  effectivity  date  of  Long-­term  Interests  in  Associates  and  Joint  Ventures  (Amendments  
to  IAS  28)?  
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  6  
 
Dividends  per  share  should  not  be  shown  in…  
 
a)  Statement  of  Changes  in  Equity  
b)  Statement  of  Financial  Position  
c)  Notes  to  the  financial  statements  
d)  None  of  the  above  
e)  All  of  the  above  
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  7  
The  recognition  of  an  impairment  loss  on  property,  plant  and  equipment  is  not  an  application  of  
faithful  representation.  True  or  False?  
 
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  8  
An  entity  shall  classify  an  asset  as  current  when:  
 
I.  The  asset  is  cash  or  a  cash  equivalent  unless  the  asset  is  restricted  from  being  exchanged  or  used  
to  settle  a  liability  for  at  least  twelve  months  after  the  reporting  period.  
II.  The  entity  holds  the  asset  primarily  for  the  purpose  of  trading  and  investing..  
III.  The  entity  expects  to  realize  the  asset  within  twelve  months  after  the  reporting  period.  
IV.  The  entity  expects  to  realize  the  asset  or  intends  to  sell  or  consume  it  within  the  entity’s  normal  
operating  cycle  

 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  9  
 
 
On  January  1,  2011,  Break  Company  agreed  to  grant  its  employees  ten  vested  vacation  days  each  
year,  with  the  provision  that  vacation  days  earned  in  a  particular  year  could  not  be  taken  until  the  
following  year.    For  the  year  ended  December  31,  2011,  all  ten  of  Break’s  employees  earned  P300  
per  day  each  and  earned  ten  vacation  days  each.    These  vacation  days  were  taken  during  the  first  
half  of  2012.    Wage  rates  remained  the  same  for  2012.    In  Break’s  2011  profit  or  loss,  how  much  
expense  should  be  reported  for  compensated  absences?  
     
 
 
 

NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  


ELIMINATION  ROUND   AVERAGE   QUESTION  NO.  10  
 
During   the   calendar   year   2012,   National   Company   purchased   an   equity   security   designated   as  
investment  to  other  comprehensive  income.    As  of  December  31,  2012  the  fair  market  value  of  the  
securities  was  P1,000,000  and  the  amount  of  unrealized  loss  was  P136,000  net  of  the  deferred  tax  
asset  of  P64,000.    On  March  1,  2013,  National  Company  sold  40%  of  the  equity  security  it  holds  for  
P620,000.    National  Company  incurred  P10,000  brokers  commission  in  relation  to  the  sale  of  equity  
security.    What  amount  of  realized  gain  should  National  Company  recognize?  
a)   P130,000           c)    P210,000  
b)   P140,000           d)    P220,000  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  1  
 
At  the  beginning  of  year  1,  Entity  A  grants  share  options  to  each  of  its  100  employees  working  in  the  
sales  department.  The  share  options  will  vest  at  the  end  of  year  3,  provided  that  the  employees  remain  
in  the  entity’s  employ,  and  provided  that  the  volume  of  sales  of  a  particular  product  increases  by  at  
least  an  average  of  5  per  cent  per  year.  If  the  volume  of  sales  of  the  product  increases  by  an  average  
of  between  5  per  cent  and  10  per  cent  per  year,  each  employee  will  receive  100  share  options.  If  the  
volume  of  sales  increases  by  an  average  of  between  10  per  cent  and  15  per  cent  each  year,  each  
employee  will  receive  200  share  options.  If  the  volume  of  sales  increases  by  an  average  of  15  per  cent  
or  more,  each  employee  will  receive  300  share  options.  
 
On  grant  date,  Entity  A  estimates  that  the  share  options  have  a  fair  value  of  P20  per  option.  Entity  A  
also  estimates  that  the  volume  of  sales  of  the  product  will  increase  by  an  average  of  between  10  per  
cent  and  15  per  cent  per  year,  and  therefore  expects  that,  for  each  employee  who  remains  in  service  
until  the  end  of  year  3,  200  share  options  will  vest.  The  entity  also  estimates,  on  the  basis  of  a  weighted  
average  probability,  that  20  per  cent  of  employees  will  leave  before  the  end  of  year  3.  
 
By  the  end  of  year  1,  seven  employees  have  left  and  the  entity  still  expects  that  a  total  of  20  employees  
will  leave  by  the  end  of  year  3.  Hence,  the  entity  expects  that  80  employees  will  remain  in  service  for  
the  three-­year  period.  Product  sales  have  increased  by  12  per  cent  and  the  entity  expects  this  rate  of  
increase  to  continue  over  the  next  2  years.    
 
By  the  end  of  year  2,  a  further  five  employees  have  left,  bringing  the  total  to  12  to  date.  The  entity  now  
expects   only   three   more   employees   will   leave   during   year   3,   and   therefore   expects   a   total   of   15  
employees  will  have  left  during  the  three-­year  period,  and  hence  85  employees  are  expected  to  remain.  
Product  sales  have  increased  by  18  per  cent,  resulting  in  an  average  of  15  per  cent  over  the  two  years  
to  date.  The  entity  now  expects  that  sales  will  average  15  per  cent  or  more  over  the  three-­year  period,  
and  hence  expects  each  sales  employee  to  receive  300  share  options  at  the  end  of  year  3.  
 
By  the  end  of  year  3,  a  further  two  employees  have  left.  Hence,  14  employees  have  left  during  the  
three-­year  period,  and  86  employees  remain.  The  entity’s  sales  have  increased  by  an  average  of  16  
per  cent  over  the  three  years.  Therefore,  each  of  the  86  employees  receive  300  share  options.  
 
Compute  for  the  amounts  to  be  recognized  as  compensation  expense  in  year  3.  
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  2  
 
As   of   December   31,   year   1,   Hunter   Company   had   100,000   shares   of   common   stock   issued   and  
outstanding.  In  year  2,  Hunter  issued  a  10%  stock  dividend  on  July  1.  At  the  end  of  year  2  there  were  
30,000  unexercised  stock  options  to  purchase  shares  of  common  stock  at  $20  per  share.  During  year  
2,   the   average   market   price   of   Hunter’s   common   stock   was   $36   per   share.   Year   2   net   income   was  
$860,000.  For  year  2,  what  are  the  diluted  earnings  per  common  share?  
 
 
 
 
 
 
 
 
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  3  
 
You  are  preparing  the  income  statement  of  Anonymous  Company  for  the  year  ended  December  31,  
2016.  You  determine  that  the  Company’s  income  from  continuing  operations  before  income  taxes  is  P  
2,400,000.   At   this   point,   you   are   considering   the   proper   treatment   of   the   items   listed   below.   Unless  
otherwise  indicated,  assume  that  none  of  the  items  listed  are  included  in  P  2,400,000  income  figure.  
 
a.  Because  of  changes  in  technology,  inventory  costing  P  100,000  was  written  off  as  obsolete  in  2016.  
The  company  had  never  recorded  this  type  of  loss  before.  
b.   An   unusual   earthquake   damaged   the   company’s   plant   on   January   10,   2017   resulting   in   a   loss   to  
Anonymous  of  P  400,000.  
c.  A  loss  of  P360,000  was  sustained  on  April  5,  2016  as  a  result  of  typhoon  damage  to  the  company’s  
warehouse  in  Davao.  Typhoons  rarely  occur  in  that  area.  
d.  Prior  to  2016,  Anonymous  used  an  accelerated  depreciation  method  for  its  plant  equipment.  In  2016,  
Anonymous   changed   to   the   straight-­line   method   for   previously   acquired   equipment   and   new  
acquisitions.  At  December  31,  2015,  the  carrying  amount  of  plant  equipment  was  P  7,000,000  .  If  the  
straight-­line  method  had  previously  been  used,  the  carrying  amount  would  have  been  P  7,500,00  on  
December  31,  2015.  
e.  In  2016,  Anonymous  changed  its  method  of  accounting  for  inventory  from  direct  costing,  which  was  
used  in  previous  years,  to  absorption  costing.  The  2016  ending  inventory  has  been  recorded  on  the  
absorption  cost  basis,  but  no  adjustment  has  been  made  to  beginning  inventory,  which  has  a  total  
cost   of   P   2,300,000,   made   up   of   P   1,400,   000   direct   materials   and   P   900,000   direct   labor.   The  
manufacturing  overhead  application  rate  is  75%  of  direct  labor  cost.  
f.  On  July  1,  2016,  Anonymous  paid  bondholders  P  1,  200,000  to  retire  its  bond  payable  with  a  carrying  
amount  of  P  950,000.  
 
How  much  should  be  reported  as  income  from  continuing  operations  before  income  taxes  for  
the  year  ended  December  31,  2016?  
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  4  
 
On  January  31,  2016,  May  Company  enters  into  a  contract  with  April  Company  to  receive  the  fair  value  
of  2,000  of  May  Company’s  own  outstanding  shares  as  of  February  1,  2017  in  exchange  for  a  payment  
of  P220,000  in  cash  or  an  equivalent  of  P110  per  share  on  February  1,  2017.  Delivering  a  fixed  amount  
of  cash  and  receiving  a  fixed  number  of  May  Company’s  shares  will  settle  the  contract.  At  the  time  
of  the  contract,  the  prevailing  rate  of  interest  is  10%.At  the  time  of  the  contract,  shares  of  May  Company  
are  selling  at  P100  per  share,  the  present  value  of  the  forward  contract  is  zero.  On  December  31,  2016,  
shares  of  May  Company  are  selling  at  P115  and  the  forward  contract  has  a  fair  value  of  P13,800.  On  
February   28,   2017,   shares   of   May   Company   a   reselling   at   P108   and   the   fair   value   of   the   forward  
contract  is  P4,000.  
 
What  amount  should  May  Company  recognize  as  liability  on  January  31,  2016?  
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  5  
 
Give  the  complete  title  of  PAS/IAS  33.  
 
 
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  6  
 
The  balance  sheet  at  December  31,  2018  of  Mall  Company  showed  a  cash  balance  of  P91,750.  An  
examination  of  the  books  disclosed  the  following:  
 
Cash   sales   of   P12,000   from   January   1-­7,   2019   were   predated   as   of   December   28-­31,   2018   and  
charged   to   the   cash   account.   Customers’   checks   totaling   P4,500   deposited   with   and   returned   by  
the  bank  “NSF”  on  December  27,  2018  were  not  recorded  in  the  books.  Checks  of  P5,600  in  payment  
of  liabilities  were  prepared  before  December  31,  2018  and  recorded  in  the  books,  but  withheld  by  the  
treasurer.   Post-­dated   checks   totaling   P3,400   are   being   held   by   the   cashier   as   part   of   cash.   The  
company’s   experience   shows   that   post-­dated   checks   are   eventually   realized.   The   cash   account  
includes  P20,000  being  reserved  for  the  purchased  of  a  mini-­computer  which  will  be  delivered  soon.  
Personal  checks  of  officers,  P2,700,  were  redeemed  on  December  31,  2018,  but  returned  to  cashier  
on  January  2,  2019.    
 
How  much  is  the  cash  balance  that  should  be  shown  in  the  December  31,  2018  balance  sheet?  
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  7  
 
Triumphant  Company  has  a  year-­end  of  31  March.    The  tax  year  in  the  jurisdiction  runs  from  April  1  to  
March  31.    The  relevant  income  tax  rate  for  2011/2012  is  32%.    Triumphant  Company  has  an  
accounting  profit  of  P1,500,000  for  the  year  ended  March  31,  2012.    The  rules  determining  the  
determination  of  taxable  profit  in  the  jurisdiction  are  identical  to  the  IFRS  for  SMEs  for  the  year  ended  
March  31,  2012,  except  for  the  following  income  and  expenses:  
*   P200,000  interest  revenue  recognized  in  2012  is  exempt  from  income  tax  
*   No  tax  deduction  is  permitted  for  entertainment  expenses  of  P50,000  
*   No  tax  deduction  for  bad  debts  is  allowed  until  the  debtors  are  derecognized  from  the  financial  
statements.    On  May  31,  2011,  P20,000  of  debts  were  derecognized  from  the  financial  statements  
because  the  entity  waived  payment  from  one  of  the  customers  who  was  suffering  financial  difficulty.    
The  bad  debt  provision,  which  is  offset  against  trade  receivables,  was  P40,000  and  P45,000  on  
March  31,  2011  and  March  31,  2012  respectively.    Consequently,  the  bad  debt  expense  for  the  year  
ended  March  31,  2012  was  P25,000  –  comprising  the  debts  written  off  and  the  increase  in  the  
provision.  
*   The  building  is  depreciated  at  a  faster  rate  for  tax  purposes.    The  amount  of  tax  depreciation  
deductible  in  the  year  ended  March  31,  2012  was  P430,000.    The  amount  of  accounting  depreciation  
in  the  financial  statements  for  the  same  building  for  the  year  was  P350,000.      
If  the  future  tax  rate  is  34%,  what  is  the  total  amount  of  tax  expense  to  be  disclosed  in  the  statement  
of  comprehensive  income  for  the  year  ended  March  31,  2012?  
 
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  8  
 
Under  PFRS  for  SMEs,  which  of  the  following  are  examples  of  basic  financial  instruments?  
 
I.  Cash  
II.  Commercial  Papers  
III.  Loans  to  and  from  subsidiaries  or  associates  that  are  due  on  demand  
IV.  Accounts  Payable  in  local  and  foreign  currency  
V.  Investments  in  nonconvertible  and  nonputtable  preference  shares  
 
NCR  CUP  1:  FINANCIAL  ACCOUNTING  AND  REPORTING  
ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  9  
 
Prestige  Company  manufactures  telecommunication  equipment  in  three  stages.    There  is  a  market  
for  the  semi-­finished  product  for  each  stage,  but  the  company  sells  the  completed  product.    The  
following  are  details  of  the  cost  structure  of  the  telecommunication  equipment  as  at  December  31,  
2014.  
               Cost      Selling  Price  
           Per  unit          Per  unit  
Stage  1                                P300                P240  
Stage  2  –  conversion  cost                                  80                    180  
Total                                    P380                P420  
Stage  3  –  conversion  cost                                120                    140  
Total                                      P500                P560  
Assuming  that  the  selling  costs  are  immaterial,  what  is  the  net  realizable  of  the  semi-­finished  product  
in  stage  1?          
 
 

NCR  CUP  1:FINANCIAL  ACCOUNTING  AND  REPORTING  


ELIMINATION  ROUND   DIFFICULT   QUESTION  NO.  10  
 
On  December  31,  2011,  Condor  Company  committed  to  a  plan  to  sell  a  manufacturing  facility  in  its  
present  condition  and  classifies  the  facility  as  held  for  sale  at  this  date.    After  a  firm  purchase  
commitment  is  obtained,  the  buyer’s  inspection  of  the  property  identifies  environmental  damage  not  
previously  known  to  exist.    Condor  Company  is  required  by  the  buyer  to  make  good  the  damage,  
which  will  extend  the  period  required  to  complete  the  sale  beyond  one  year.    However,  the  entity  has  
initiated  actions  to  make  good  the  damage,  and  satisfactory  rectification  of  the  damage  is  highly  
probable.  On  December  31,  2011,  the  carrying  value  of  the  facility  is  P4,000,000  and  its  fair  market  
value  is  P3,600,000.    In  its  December  31,  2011  statement  of  financial  position,  Candor  Company  
should  properly  report  this  manufacturing  facility  as:  
 
a)   Should  no  longer  be  included  in  the  December  31,  2011  balance  sheet.  
b)   Should  be  included  among  the  property,  plant  and  equipment  at  P4,000,000  
c)   Should  be  included  among  the  property,  plant  and  equipment  at  P3,600,000  
d)   Should  be  reported  separately  as  non-­current  asset  held  for  disposal  and  valued  at  
P3,600,000.