NCR Cup 1 Far Elimination Round

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?


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?


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.


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?


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?


This is the power to participate in the financial and operating policy decisions of the investee but not
control or joint over those policies.


Which of the following are qualifying assets?

I. Intangible Assets
II. Investment Properties
III. Equipment bought from supplier
IV. Power Generation Facilities


This is an amount attributable to the asset or liability for tax purposes.


Give the complete title of PAS 24.


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

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?


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


Give the complete title of PFRS 1.


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?


When is the effectivity date of Long-term Interests in Associates and Joint Ventures (Amendments
to IAS 28)?


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

The recognition of an impairment loss on property, plant and equipment is not an application of
faithful representation. True or False?

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


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?



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

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.


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?


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?


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?


Give the complete title of PAS/IAS 33.


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?


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?


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


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


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.

NCR Cup 1 Far Elimination Round

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

NCR Cup 1 Far Elimination Round

Hochgeladen von

Copyright:

Verfügbare Formate

NCR CUP 1: FINANCIAL ACCOUNTING AND REPORTING

ELIMINATION ROUND EASY QUESTION NO. 1

NCR CUP 1: FINANCIAL ACCOUNTING AND REPORTING

NCR CUP 1: FINANCIAL ACCOUNTING AND REPORTING

NCR CUP 1: FINANCIAL ACCOUNTING AND REPORTING

NCR CUP 1:FINANCIAL ACCOUNTING AND REPORTING

Das könnte Ihnen auch gefallen