(CPA REVIPW SCHOOL. OF THE PHILIPPINES MANILA PRACTICAL ACCOUNTING PROBLEMS 11 Sunday, Sept 13,2015 . Fleal Pre-board Examination " 3:30 pa. to 630 pou Uss the following information for question 1 (GPA Corporation purchased a 10% intetest in Sicky Company on January 1, 2010 as an avallable for-sale investment for a pice of P120,000. On January 1, 2016, CPA Corporation purchases 7,000 aidonal shares of Sticky Company from existing stockholders for P845,000, This purchase Increased. CPA\ interest to 70%. Sticky Company had the following statement of fnancial position just porto CPA’ second purchase: “Aves abies “Curentassets 495.000 Liaites 198,000 Buidings (et) 420,000 Common'stock, P30 par 300,000 Equipment (net) 300,000 _ Retained eamings Total assets _ 1,216,000. Total abies and equty On.the date ofthe second purchase, CPA determines that the equpment of Sticky wes understated by 150,000 and had a 6-year remaining fo. All other book values approximate fair values. Any remaining “excess is atrbuted to goodwil ‘On January 4, 2016 consolidated statement of financial position, what isthe amount of goodwill to ‘be reported? ‘A. P180,000 —- B. P45,000 ._P75900 D.P120,900 Use the following information for questions 2 and 3 Penny Company owns an 80% contoling Interest in the Money Company. Money reguarly sells ‘merchandio to Penny. which then sold to outs partes. The grose profton al such sales Is 4%. On January 1, 2014, Penny sok! land and a bung to Money, The val of Ue parcels 20% to Tana, end 80% to siuctures The pertinent data ae the folowing’ te Penny Honey itera generated nel income, 2014 P_ 1,560,000 P_750,000, ee faied net income, 2015 70.320 00 705,000 Interompany merchandise sales, 2014 300,000 Inlreompany merchandise sles, 2015 360,000 Tnlereomany inventory, December 34,2018 45,000 Inreompany inventory, December 31, 2015. 60.000 ast of ea estate sold on Janay 1, 2014 “p00, 006 ‘Sales pice of el estate on Janay 1, 2014 2,400,000 Deprecibl fe of bulcing years 2.For 2014, whats the consolidated comprehensive Income attributable to controling interest? AP 1\508,600 8, P41575000 . P1.875900 , D. 1,597,500, 3. Using se data in umber 2, or 201, what fs contoiated comprehensive nome atibutble to controling Interast? = A, 4,603,200, B. P 1,629,000 ©. °P 1,380,000 D. P 1,630,200, Page 1 of 16Selected information from the separate and consolated income slatements of People Corporation ‘subsitiary, Society Company forthe year ended December 31, 2015 are as follows People Corp. Soslaty Co. Consolidated Use the following information for question 4 J 6 is Seles P epooo «P2000» P=s24.000 (Cost of Goods Sold 350,000. 330,000 693,000 Goss Prot P 166,000 “P2000 P 231,000 Duting 2018, People Corporation sold goods to Society Company a the same mark-up on cost that People uses for all sales. At December 31, 2015, Society had not paid al ofthese goods and sil held 37.5% of them in inventory. ‘What isthe original cost of goods in Society's inventory acquired from People Corp.? A, P36,000 B. P7700 ©. P 9,000 D. P.18,000 Use the following information for question 5 ‘Selected data fortwo subsides of Rack Corp. taken ftom December 31,2015 pre-closing tial balances ae as flows: Site, | Seo, et Debit_| creat _| Shipments $1 _ =| ssotto |” Shipmons to $2 oo exo | | intercompany Inventory oof on ttl shigments =| 180000 Addon Dalarelaing w be December 312015 eno a 8 lows | | inventory acquled from outside pees {525000 | 760,000 [ventory acquired from $2 180,000 ‘At December 31,2048 the Inventory reported onthe combined stateriert of financial postion of the ‘wo subsidiaries should be: A. 4,275,000 8. P1'306.000 * c. P1440,000 D. 41,485,000 Use the following information for question 6 On Jly 1,205, Baa Company purchased 80% ofthe oustanding shares of Biol Company at a cost « 9f P4,000,00. On that date, Bicol had P2.500,00 of capital stock and P3,600,000 of retained earnings, For 2016, Balwag hed income of Pt,400,000 fom its separate operations and paid dividends of P760,000, For 2016, Biol reported income of P325,000 end paid dividends of P150,000, All the assets and Kabiltios of Biol have book values equal other respective flr market values, Assume income was earned evenly {troughout the year except fr the iterompany transaction on October‘. On October 1, 2015, Balvag Burchased machinery from Bico! fr P500,000, The book valve of the machinery on that date was 600,000 The oss of 100,000 is reflected inthe income of Blea indicated above, The machkery is ‘expecied io have a usefl if ofS years fom the dae of sl. In the December 31, 2015 consolidated balan attributable to the parent Company? * A. tp06;000 8.2,326,000 1, 2388,000 .2;406;000, 168 sheet, how much is the consolidated net income Page 2 of 16Use the following Information for questions 7 and 8 . Repriave Co. issued 20,000 addtional shares fis common stock for P8000. Reprieve Co’s owners’ equity secton immediately before and immediatoly ater the issuance of sock transaction are presented below: fore afer Capita Stock, P50 par vale 3,000,000 3.500 000 ‘Aion paid in capita 7,500,000 41,700.00 Retained Earnings 41,700,000 170000 Total Owners’ Equity 200000 27,000,000 7. Assume that Reprieve Co. Issued this stock to the general public, by what amount should Respite Corp. the ovner of 80,000 of the outstanding shares of Reprieve Co. adjust its investment In subsidiary account because of the issuance of stock by Reprieve Co,? A. 240,000 crelt B. 240,000 debit , 3,840,000 crest D. 3,840,000 debit, 8, Assume that Repriove Co. issued the stock to Respite Corp,, whose ownership intrest thersby Increased from 80,000 shares to 100,000, If the carrying value of the identifiable assets of Repriove ‘is equal to their fair value atthe time the additional shares are issued, the goodwill indicate inthe purchase ofthe additional shares equals A e000 B. 60,000 960,000 D. 961,000 Use the folowing information for question 9 (On January 1, 2015, ® Company puchesed 32,000 shares of the 40,000 austaning shares of $ ‘Company ata ree of P1,200000, wih an excess of 30,000 over the book value ofS Company's net acels P15000 ofthe exooss is atbuted fo an undervalued equipment with a remaining sete of ‘ght year rom the date of ecqustion and thereto the amounts atbued a good. For he year 2016, P Company raprid a net income of P760,000 and paid cends of P180,000 While S Company reported a net income of P240,000 and paid didends to P Company amouning to P39,000, Goodwi was. tat impated in 2018, The retained earings of P Company tthe end of 2016 per books is P1025 000. P ‘Company uses the cost med to account for is investment in 8 Company. Nen-ontoling ilerest is measured at far market value. Compute for the non-controlting interest in net assets ‘A P339875 7 ©. P338.475 8. P34 525 D. P337,925 Use the following information for quostlon for 10 ‘On June 15, 2015, Psalm Company purchased merchandise worth 100,000 Swiss francs fom its Swiss supplier payable within 30 days under an open account agreement, Psaim issued a 30-day 6% note payebe in Swiss francs, On July 15, 2015, Psalm paid the not in ful. The following spot rates (PISF) are provide: Buying Selling June 15, 2018 P2403 P2415 ‘hly 15,2015, 24.45 AD How much is te loss on the payment tothe Swiss supplier did Psalm recognizs? A. 7,000 B 7085. ©. 12,000 D. 12,060 vat anita * Page 3 of 16