FINALS QUIZ #2

SOCE, SOCI, AHFS and DO

Multiple Choice
1. The following are components of other comprehensive income that will be reclassified to retained earnings,
except?
a. Change in Revaluation Surplus
b. Gain or loss attributable to credit risk of a financial liability designated at fair value through profit or loss
c. Unrealize gain or loss on derivative contracts designated as a cash flow hedge
d. Unrealized gain or loss on equity investment classified measured through FVTOCI

2. The following are true about the Asset held for sale, except?
a. An asset held for sale should be highly probable sale which the sale should be made within a year
b. the asset that is classified as held for sale should be available for sale within a year.
c. the measurement of an asset held for sale should be lower between carrying amount and FV less cost of
disposal
d. any difference between the carrying amount and FV less cost of disposal is impairment loss

Modified True or False

Write TRUE if the statement is correct and write FALSE and correct the necessary word/s or phrases to correct
the sentence.

1. The traditional way or form of presenting and income statement is called natural presentation
2. Appropriation made whether legal, constructive, or voluntary are presented in the reserves
3. Current period and prior year errors are adjusted directly to the RE when it comes to the income and
expenses.
4. An asset which is measured subsequently at revaluation model should be revalued first on the date of
reclassification and effect the impairment loss thereafter.
5. When reclassifying an asset which is previously classified as asset held for sale to Property, plant and
equipment will be measured between the lower of CA if it is not reclassified and the recoverable amount
6. A disposal group is a group of assets and liabilities which can be separately reported to the other assets &
liabilities and presented only on a single account which is asset held for sale.

Problem 1
The “Hindi Ko Po Sure” Company have the following balances as of year-end 2020

Account title Amount

Bank Charges 1,500.00
COGS 2,456,000.00
Depreciation - Office Equipment 95,000.00
Depreciation - Store Equipment 103,500.00
Documentary stamp tax expense 77,000.00
Doubtful Accounts 210,000.00
Foreign Exchange Gain - OCI 155,000.00
Freight out 61,500.00
Gain on Sale of Land 45,000.00
Interest Expense 46,500.00
Interest Income 65,000.00
Litigation Cost 100,000.00
Net Sales 4,850,000.00
 Office Salaries 420,000.00
Packaging Expenses 186,000.00
Rental Income 240,000.00
Revaluation Surplus 340,000.00
Sales Salaries 400,000.00
Superintendence 144,000.00
Unrealized Loss - OCI 72,000.00

Required: Make a Statement of Comprehensive income (Single Statement) including notes

Problem 2
On the beginning of 2020, The Clueless Corporation have beginning balance of 100,000 ordinary shares with
par value of 50 pesos which is issued at Php 55 pesos per share and have accumulated profits of 5,450,000

On February 15, 2020, the audit made for the year 2020 shows that the ending inventory is understated by
150,000 and the doubtful accounts was also understated by 230,000. The correcting entry is made during the
year.

On April 10, 2020, the company reacquire 20,000 ordinary shares at 60 pesos.

On July 14, 2020, due to a good condition and business relationship with the investors, the company issued 100
par value 20,000 preference share at 10% rate. It is cumulative and non-participating

On August 25, 2020, the company reissued 4,000 shares at 62 pesos and on October 2, 2020 another 6,000 shares
at 56 pesos.

The company declared dividends to ordinary shares the following:

Cash 5 pesos per share
Equipment 600,000 carrying value and fair value at year end of 650,000
Shares 19,000 shares, FV of shares on date of declaration is at 58 pesos per share

The company paid the annual preferred dividends

The company earned a net profit after tax of 1,800,000

Required:
Make the statement of changes in Equity

Problem 3
Andaming prob Corporation have a land carried through revaluation method of measurement. On May 1,
2020 it has carrying amount of 5,000,000 with 1,000,000 revaluation surplus. The Company decided classified it
as held for sale and they located a buyer that the sale will take place within a year. The Fair value less cost to
sell on such date is 5,500,000 with cost to sell of 120,000. The asset is sold on October 31, 2020 at sales price of
5,100,000.

Required:
1. What is the adjusted value of the land on May 1, 2020
2. What is the amount of impairment loss incurred
3. What is the amount of loss or gain on sale of the land
4. What is the amount of revaluation reclassified to RE in 2020
Problem 4
The “Ngayon na Talaga” Corporation, have an equipment carried at cost subsequently. The equipment was
purchased on July 1, 2018 at 6,000,000 with a residual cost 200,000 and useful life of 8 years. On June 30, 2020,
the company decided to held it as for sale and it is expected to be sold within a year. The Fair Value of the
asset have 4,250,000 and cost of selling the asset and transfer is 200,000. On December 31, 2020, it has FV of
4,300,000 and cost of disposal of 150,000. It was not sold on the subsequent year. On July 1, 2020 it has Fair
Value less cost of disposal of 4,000,000

1. What is the amount of impairment loss

2. What is the entry made on December 31, 2020
3. What is the entry made on June 30, 2020

Problem 5
On April 15, 2020, The “Haizzt” Corporation will dispose its one of its operations which is Segment ZZZ. The
total asset and liabilities carried at the book is 4,600,000 and 1,400,000 respectively. The performance made by
the segment along with the other segment in year 2020 are as follows

Segment XXX Segment Why Segment ZZZ

Sales 6,400,000 2,800,0000 3,200,000
Expenses 1,235,000 650,000 400,000
COGS 2,650,000 1,200,000 1,300,000

Other information
 The prevailing tax rate is 30%
 The FV less cost to sell on of the discontinued operation is at 3,000,000
 The total separation incurred in the Segment ZZZ is 445,000

Required:
Make a Statement of Comprehensive income for the year ended 2020

Problem 6
The “Try lng po sir” Corporation have the following information on the year ended 2020

 Raw Materials Used is 1,660,000

 Cost of Goods sold is at 4,680,000
 Work in process ending is at 550,000 which is higher on its beginning balance by 10%
 Factory overhead is at 120% of direct labor cost
 Net purchases amounting to 1,700,000
 Finished Good Beginning Inventory is half of the ending balance
 Total Goods Available for sale is at 4,100,000
 The ending balance of the raw materials on 2019 is 25% of total purchases on the following year

“You cannot change what you refuse to confront. So, fight!”

-Anonymous