Ast PRTC

Excel Professional Services Inc.
Management Firm of Professional Review and Training Center (PRTC)

Online • Manila • Cavite • Laguna • Cebu • Cagayan De Oro • Davao
Since 1977
Advanced Financial Accounting

and Reporting (AFAR) CPA Review DE LEON/DE LEON/ALENTON
FIRST PRE-BOARD EXAMINATION February 19, 20 & 21, 2023
Multiple Choice. Select the letter that corresponds to the or cost-recovery (point in time/time of completion)
best answer. This examination consists of 70 items and the method is employed.
exam is good for three (3) hours. Good luck! b. recognized in the current period under the
percentage-of-completion (over time) method. but
1. Salaries to partners typically should be the cost-recovery (point In time/time of
a. A device for sharing net income completion) method defers recognition of the loss
b. An operating expense of the partnership to the time when the contract is completed.
c. Drawings by the partners c. recognized in the current period under the cost-
d. Reduction for the partners’ capital account balances recovery (point in time/time of completion)
method. but the percentage-of-completion (over
2. Initially, a partner’s interest in a partnership is generally time) method defers the loss until the contract Is
equal to completed.
a. The sum of the fair values of the assets contributed d. deferred and recognized when the contract is
to the firm, increased by the liabilities of the completed, regardless of whether the percentage-
partners assumed by the partnership of-completion (over time) or cost-recovery (point
b. Total fair market value of assets contributed less in time/time of completion) method is employed
liabilities, at book value, to be assumed by the
partnership 8. State the correct sequence of the following steps of
c. Total fair market value of assets contributed revenue recognition under PFRS 15.
d. Net assets contributed at fair market value I. Determine the transaction price
II. Recognize revenue when (or as) the entity
3. Partnership net income is defined as satisfies a performance obligation
a. the interest allocation to the partners, based on III. Identify the performance obligations in the
weighted average invested capital contract
b. partnership income after deducting partner salaries IV. Allocate the transaction price to the
and interest. performance obligations in the contract
c. partnership income after deducting partner V. Identify the contract with the customer
salaries. a. V, IV, II, I, III c. V, III, I, IV, II
d. partnership income before deducting salaries and b. V, I, IV, III, II d. V, I, III, IV, II
interest.
9. Which of the following correctly relates to ‘Step 2’ in the
4. If the total debits in the statement of realization and recognition of revenue under PFRS 15?
liquidation exceeds the total credits, there is a. The entity shall assess the customer’s ability and
a. Net loss for the period c. Either A or B intention to pay the consideration in the contract
b. Net gain for the period d. None of these when they become due.
b. The entity shall determine the transaction price and
5. It is the initial report prepared at the start of the shall consider whether the transaction price
liquidating process. includes, among other things, a variable
a. Cooling-off statement consideration or significant financing.
b. Statement of break up c. The entity shall treat each promise to transfer a
c. Statement of love affairs distinct good or service as a performance
d. Statement of affairs obligation.
d. The entity shall recognize revenue when (or as) a
6. Which of the following is not true about revenue performance obligation is satisfied.
recognition with respect to long-term construction
contracts? 10. A promise to grant a license is most likely to be distinct
a. Long-term construction contract s often are viewed if
as having a single performance obligation, because a. the license is integral to the functionality of a
goods and services fail the "separately identifiable tangible good.
" criterion. b. the customer can benefit from the license only in
b. Long-term construction contracts often satisfy the conjunction with a related service.
criteria for recognizing revenue over time. c. the performance obligation is satisfied over time.
c. Long-term construction contracts require d. the customer can benefit from the license on its own
accounting for construction in progress as well as and the license is separately identifiable.
billings to customers.
d. Long-term construction contracts typically include 11. If the promise to transfer a license is distinct,
multiple performance obligations because of all the a. the entity shall treat all the promises in the contract
different types of goods and services included for as a single performance obligation.
each project b. the entity shall determine whether the
performance .obligation is satisfied over time or at
7. Cost estimates on a long-term contract may indicate a point in time using the general principles' of
that a loss will result on completion of the entire PFRS 15.
contract. In this case, the entire expected loss should c. the entity shall determine the nature of the grant
be of license as either "right to access" or "right to
a. recognized in the current period. regardless of use."
whether the percentage-of completion {over time) d. B and C
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TEAM PRTC
12. An entity enters into a contract with a customer to 17. Under PFRS3 Business Combination, goodwill is
license (for a period of three years) intellectual property computed as:
related to the design and production processes for a a. Cost of investments less subsidiary's fair value at
good. The contract also specifies that the customer will the beginning of the year.
obtain any updates to that intellectual property for new b. Cost of investments less subsidiary's book value at
designs or production processes that may be developed the acquisition date.
by the entity. The updates are essential to the c. Cost of investments less subsidiary's fair value at
customer's ability to use the license because the acquisition date.
customer operates in an industry in which technologies d. Cost of investment less subsidiary's book value of at
change rapidly. The entity does not sell the updates the beginning of the year
separately and the customer does not have the option
to purchase the license without the updates. Which of 18. Which of the following Is not a true statement with
the following statements is incorrect? regard to a statutory merger?
a. The promises to grant the license and to provide the a. One entity continues to exist
updates are two separate performance obligations. b. One entity ceases to exist
b. The license and the updates are accounted for c. The name of the new entity is not the same as either
together as a single performance obligation. of the entities
c. The general principles are applied to determine how d. All of the above are true statements with regard to
the performance obligation is satisfied. a statutory merger
d. The single performance obligation is satisfied over
time. 19. Consolidated Net Income attributable to the owners of
the parent is computed as
13. Which of the following would most likely not be a. Net income of the group less non-controlling
considered as a separate performance obligation in interest net income
relation to a franchise agreement? b. Parent net income from its own operation plus share
a. grant of license to use the franchisor's trade name of parent in the subsidiaries net income
b. transfer of equipment to be used in the franchisee's c. Consolidated net Income attributable to owners of
business the parent plus net income attributable to NCI
c. franchisor's promise to undertake activities to d. Parent separate net income plus NCI net income
support the franchise
d. all of the these are separate performance 20. Goodwill is attributed to both the owners of the parent
obligations and non-controlling interests (NCI) if
a. the NCI is measured at 'proportionate share.
14. Which of the following would most likely not be b. the NCI is measured at 'fair value'.
considered as a separate performance obligation in c. in both a and b
relation to a franchise agreement? d. the goodwill is big
a. grant of license to use the franchisor's trade name
b. transfer of equipment to be used in the franchisee's The balance sheet of Piedmont Enterprises and Skelton
business Company at December 31, 2021 are summarized as follows:
c. franchisor's promise to undertake activities to
support the franchise Piedmont Skelton
d. all of the these are separate performance Assets P5,000,000 P 2,000,000
obligations Liabilities P1,500,000 P 500,000
Capital stock , P40 par 2,500,000
15. Statement 1 (S1): The balance of the Allowance for Capital stock, P25 par 1,000,000
Overvaluation of Inventories: Branch ledger account is Retained earnings 1,000,000 500,000
deducted from the balance of the Investment in Branch
account in the separate balance sheet of the home At the date of acquisition, Skelton’s assets are understated
office. while its liabilities are fairly valued.
Statement 2 (S2]: If the home office bills shipments of
merchandise to the branch ai 25% above home office On January 1, 2022, Piedmont purchased 80% of Skelton
cost and the adjusted balance of the Allowance for Company’s outstanding shares for P2,000,000 when the fair
Overvaluation of Inventories: Branch ledger account is value of Skelton’s net assets was P2,200,000. Piedmont
P20,400, the amount of branch inventories at billed issued 10,000 unissued shares in consideration of the
prices is P81,600. acquisition. Piedmont is to assign an amount to the non-
a. S1 - True; S2 – True c. S1 - False: S2 - True controlling interests at the date of acquisition based on the
b. S1 - True; S2 – False d. S1 - False: S2 - False total fair value of Skelton’s outstanding shares.
16. Statement 1 (S1): A home office records shipments to 21. How much is the consolidated assets at the date of
its branch at billing prices and adjusts the loading acquisition?
account (deferred profit) at year-end. When this a. P9,000,000 c. P8,000,000
approach is used, the loading account during the period b. P9,700,000 d. P 8,700,000
will always be zero.
Statement 2 (S2): If a "loading" account is used, the 22. How much is the consolidated liability at the date of
"shipments to branch" account on the home office acquisition?
books is created for the actual cost of shipments made a. P2,000,000 c. P1,800,000
to the branch whereas the "shipments from the home b. P1,500,000 d. P 500,000
office" on the branch's books includes any initial
unrealized profit 23. How much is the stockholders’ equity in the
a. S1 - True; S2 – True c. S1 - False: S2 - True consolidated balance at January 1, 2022?
b. S1 - True; S2 – False d. S1 - False: S2 - False a. P7,000,000 c. P6,000,000
b. P5,500,000 d. P6,700,000
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TEAM PRTC
28. Assuming DLSU is not an SME, determine the amount

24. Assume the amount assigned to the non-controlling of goodwill / ( income from acquisition) that will result
interest at the date of acquisition is based on the total from the combination.
fair value of identifiable net assets at that date, calculate a. P 20,000 c. P 40,000
the amount of goodwill recognized at January 1, 2022. b. (P 40,000) d. P 95,000
a. P300,000 c. P 20,000
b. P280,000 d. P240,000 29. Assuming DLSU’s Retained earnings at January 1, 2018
was P500,000, at what amount will the Retained
The Carl Company will issue P10 par value common stock Earnings be shown on the balance at this date?
for the net assets of PBA Company. The fair market value DLSU is not an SME DLSU is an SME
per share of Carl’s common stock is P40. The following is
a. P 445,000 P 485,000
the list of accounts of PBA Company on the date of the
acquisition. b. P 365,000 P 445,000
c. P 485,000 P 405,000
Book Value Fair Market Value d. P 405,000 P 485,000
Current assets P280,000 P 320,000
Plant assets (net) 680,000 1,280,000 BAHAY-PARE CORPORATION purchases all the outstanding
Liabilities 320,000 shares of SINAG-TALA COMPANY on January 2, 2022 for
Common stock 64,000 P385,000 cash. On this date the stockholders equity of
Additional paid-in capital 256,000 SINAG-TALA is as follows:
Retained earnings 320,000
Share capital, P10 par P175,000
25. To have an income from acquisition of P120,000, the Paid-in capital in excess of par 87,500
number of shares to be issued by Carl Company should Retained earnings 175,000
be
a. 30,000 shares c. 29,000 shares Any excess of the fair value of net assets over the fair value
b. 30,400 shares d. 35,000 shares of the investment is attributable to SINAG-TALA’s building
which is currently overstated in its books. All other net asset
26. Same data as in previous number, to have a goodwill of items of the acquired company are fairly valued at the
P 120,000, the number of shares to be issued by Carl acquisition date. The building has an estimated life of 10
Company should be years from January 2, 2022 without salvage value.
a. 30,000 shares c. 29,000 shares
b. 30,400 shares d. 35,000 shares The condensed trial balances of the affiliated companies on
December 31, 2022 appear as follows:
The following balance sheet was prepared for ACADEME BAHAY-PARE SINAG-
COMPANY just before DLSU CORPORATION acquired its TALA
entire net assets on January 1, 2018. Current assets P 420,000 P 302,750
Land 210,000 210,000
Particulars Book Value Fair Value Building (net) 1,050,000 283,500
Cash P 10,000 P 10,000 Investment in SINAG- 385,000 -
Accounts receivable 40,000 40,000 TALA
Inventory 100,000 145,000 Current liabilities (708,750) (367,500)
Plant assets 300,000 350,000 Ordinary shares, P3 par (525,000) -
Goodwill 50,000 - Share capital, P10 par - (175,000)
P500,000 P545,000 Paid-in capital in (315,000) ( 87,500)
Accounts payable P140,000 P140,000 excess of par
Bonds payable 60,000 65,000 Retained earnings, Jan. (446,250) (175,000)
Ordinary shares 200,000 2, 2022
Share premium 20,000 Sales (367,500) ( 70,000)
Retained earnings 80,000 Cost of goods sold 210,000 61,250
P500,000 Operating expenses 78,750 17,500
Dividends declared 8,750 -
Totals -- --
DLSU issued 10,000 shares of stocks with a par value per
share of P5 and a fair value of P30. Additional cash
30. Compute the consolidated net income for 2022.
payments made by DLSU in completing the acquisition
a. P75,520 c. P72,550
were:
b. P70,525 d. P75,250
Broker’s fee paid to firm that located P10,000
31. Compute the consolidated Retained Earnings at
ACADEME COMPANY
December 31, 2022.
Cost to issue and register the shares 40,000
a. P517,250 c. P515,270
Professional fees paid to accountants 30,000
b. P525,170 d. P512,750
Professional fees paid to lawyers 25,000
Professional fees paid to official valuers 15,000 The following information was taken from the books of
Indirect acquisition costs 15,000 MAYON COMPANY and its Naga City branch on December
31, 2022, before adjusting entries were recorded.
27. Assuming DLSU is an SME, calculate the goodwill /
(income from acquisition) that will result from the Branch books
combination. Sales P300,000
a. P 20,000 c. P 40,000 Inventory, January 1 19,000
b. (P 40,000) d. P 95,000 Purchases 20,000
Shipment from Home Office 180,000

TEAM PRTC
Expenses 80,000 activities. An assessment of their participation shows they

Home Office books have rights over assets and obligations over liabilities. They
Sales P400,000 have equal shares in interest.
Inventory, January 1 40,000
Purchases 210,000 On July 1, 2022, Amer sells machinery to the joint
Shipment to Branch 150,000 undertaking for P102,400. The cost to Amer of the
Expenses 210,000 machinery transferred is P40,960. The machinery had an
Allowance for overvaluation of branch 31,500 estimated remaining useful life of 5 years at that date.
inventory, December 31
There are no merchandise shipments in transit as at the 38. At what amount will Amer show the machinery, net at
year-end. The ending inventories are: its balance sheet at July 1, 2022?
a. P13,653 c. P17,067
Home Office (all from outside suppliers) P50,000
b. P34,133 d. P17,076
Branch office (40% from outside suppliers, 40,000
the rest from home office)
39. At what amount will Amer show the machinery, net at
its balance sheet at December 31, 2022?
32. How much is the overstatement of the branch’s 2022
cost of sales per home office cost?
a. P27,306 c. P34,133
a. P 12,500 c. P 27,000 b. P10,922 d. P12,288
b. P 13,500 d. P 27,500
40. At what amount will Brad show the machinery in its
33. Calculate the company’s 2022 net income. balance sheet at December 31, 2022?
a. P 140,000 c. P 181,000 a. P27,320 c. P37,200
b. (160,000) d. P 208,500 b. P30,720 d. P32,700
On January 1, 2020, SME Voltex 5 Company has a 30%

The Dasmarinas Corporation operates a branch in Calamba equity of Takuza 4 Enterprises for P92,800. The latter
City. The home office ships merchandise to the branch at company is a joint venture undertaking. Transaction costs
more than cost. Selected information Selected information of 3% of the purchase price of the shares were incurred by
from the December 31, 2022 trial balances are as follows: SME Voltex 5 Company.
Home Branch On December 31, 2010, Takuza 4 declared and paid

Office Office dividends of P24,000 and reported a profit of P67,200
Books Books Published price quotations do not exist for Takuza shares
Sales P600,000 P300,000 but appropriate valuation techniques determined the fair
Shipment to Branch 200,000 value of the investment at P104,000. Costs to sell are
Purchases 350,000 - estimated at P5,200.
Shipment from Home office 230,000
Inventory, January 1 100,000 40,000 41. What is the amount of the Investment in JV to be
Allowance for overvaluation of 58,000 recognized by Voltex 5 in its 2020 balance sheet using
branch inventory the fair value method?
Expenses 120,000 50,000 a. P 94,640 c. P 65,520
Inventory at December 31, 2022 b. P104,000 d. P 92,800
Home office P30,000
Branch office P40,000 42. What is the amount of Investment in JV to be recognized
by Voltex 5 in its 2020 balance sheet under the equity
Merchandise shipment in transit at December 31, 2022 is method.
P20,000 at billed price. a. P 108,544 c. P98,800
b. P 180,445 d. P89,800
34. The net income reported by the home office for its
2022 operation is: On March 31, 2022, Emng, Bobby, and Ramil formed the
a. P260,000 c. P 20,000 POGI Partnership to operate a CPA review center. The
b. P 38,000 d. P200,060 following is a list of their contributions at that date:
In ‘000 Emong Bobby Ramil

35. The net income reported by the branch for its 2022
operation is Book Fair Book Fair Book Fair
Value value Value value Value Value
a. P20,000 c. P260,000
Cash P132 P132 P100 P100 P120 P120
b. P200,060 d. P 38,000
Inventor 80 75
y
36. How much is the overstatement of the cost of sale in Land 150 188
the branch 2022 income statement resulting from the Equipme
home office billing policy? nt, net ____ ____ _____ _____ 90 90
a. P46,000 c. P20,000
Totals P282 P320 P180 P175 P210 P210
b. P38,000 d. P 0
Bobby has an accounts payable of P50,000 on the inventory
37. How much net income was reported in the company’s
and Ramil has a mortgage payable of P60,000 on the
2022 income statement?
equipment. The partners have agreed to assume only the
a. P362,000 c. P236,000 mortgage payable but not the accounts payable. They
b. P263,000 d. P326,000 further agreed for the capital ratio to be 50%, 20%, and
30% to Emong, Bobby, and Ramil, respectively.:
Amer Company, Brad Company, and Cris Enterprises are
participants in a joint undertaking bound by a contractual
agreement for the sharing of control over its relevant

TEAM PRTC
The partnership starts operation on April 1, 2022 and on value through the non-cash assets prior to Clara’s
December 31, 2022 reported a net income of P305,400. admission.
The following is the profit and loss agreement among the 47. How much will be the capital balances of Alma and
partners Bella after the admission of Clara?
• 10% interest to each partner’s beginning capital a. P 150,000 and P150,000
• Salaries of P30,000 per quarter will be given to Emong b. P 210,000 and P190,000
and Ramil c. P210,000 and P210,000
• Bonus of 10% of net income after interest, salaries, and d. P190,000 and P19,000
bonus will be given to Emong.
• Residual profit/(loss) will be divided equally. 48. The entry to record the admission of Clara will not
include
43. How much is the net asset contribution of Ramil? a. A debit to Cash of P400,000
a. P210,000 c. P175,000 b. A debit to Alma, capital of P210,000
b. P150,000 d. P125,000 c. A debit to Bella, capital of P190,000
d. A credit to Clara, capital of P400,000
44. What is the beginning capital of Partner Bobby?
a. P352,500 c. P129,000 The balance sheet of Abby, Blanche, and Celia partnership
b. P211,500 d. P141,000 on January 1, 2019, the date of partnership dissolution, was
as follows:
On December 31, 2019, the balance sheet for the XYZ
Partnership follows: Cash P 4,000 Liabilities P 8,000
Other 26,000 Abby, loan 1,000
Cash P 10,000 Accounts payable P 17,500 assets
Accounts 15,000 Loan from Zoilo 12,500 Celia, loan 2,000 Abby, capital (20 2,000
receivable % P/L)
Inventory 35,000 Xander, capital 35,000 Blanche, capital(40 9,000
(20%) % P/L)
Plant 30,000 Ysabel, capital 25,000 ________ Celia, capital (40 12,000
assets, net (20%) % P/L)
Loan to 15,000 Zoilo, 15,000 P 32,000 P 32,000
Xander capital(60%)
Total P105,000 Total P105,000 In January, other assets with a book value of P16,000 were
assets liability/equity sold for P10,000.
The percentages shown are for the residual profit and loss 49. How much will each partner receive from the cash
sharing ratios. The partners dissolved the partnership on distribution after the liabilities had been paid.
January 1, 2020 and began the liquidation process. During a. Abby, P1,200; Blanche, P1,800; and Celia, P3,000
January the following events occurred: b. Abby, P 0; Blanche, P2,500; and Celia P3,500
c. Abby P1,800; Blanche , P1,800; and Celia, P2,400
• Receivables of P7,500 were collected. d. Abby, P 0; Blanche, P2,000; and Celia, P 4,000
• All inventory was sold for P10,000.
• All available cash was distributed on January 31, 2020, 50. If the partners have retained available cash of P400 for
except for P5,000 that was set aside for contingent future liquidation expenses, after the liabilities have
expenses. been paid, how much will Blanche receive from the
cash distribution?
45. How much cash would Ysabel receive from the cash a. P1,800 c. P2,500
that is available for distribution on January 31 b. P2,000 d. P2,300
a. P0 c. P 5,000
b. P3,000 d. P 1,000 The following data were taken from the Statement of Affairs
of Greenfield Corporation.
46. How much cash would Xavier receive from the cash
that is available for distribution on January 31 Pledged Assets : BCV ERV
a. P 5,000 c. P 3,000 Plant, property, and equipment P72,000 P60,000
b. P0 d. P1,000 (PPE)
Merchandise inventory 59,200 41,600
Alma and Bella formed a partnership in the Philippines,
Free assets 56,000 32,000
which uses PFRS based on IASB accounting principles. The
two partners agree on a profit and loss ratio of 60% and Total assets P187200 P133,600
40% to Alma and Bella, respectively. At a later date, the Secured liabilities
partners agree to admit Clara into the partnership for a Bonds payable (secured by P24,000
50%interestin capital and in earnings. PPE)
Notes payable (secured by 48,000
Capital accounts of the partners immediately before the merchandise inventory)
admission of Clara are: Alma, P300,000 and Bella,
Unsecured liabilities:
P300,000.
Clara invested P400,000 for the partnership interest and Taxes P 3,000
that this is a fair price for the share of partnership interest Salaries and wages 2,600 5,600
to be acquired. Clara paid the money directly to Alma and Accounts payable 89,600
Bella for 50% each of their existing interests. The partners
have decided to revalue partnership interest to current fair

TEAM PRTC
51. What is the estimated amount the holders of the notes

payable will receive in the event of liquidation? Best Ever Constructions uses the cost-to-cost method in
a. P52,700 c. P56,200 measuring the progress of satisfying performance
b. P45,760 d. P57,000 obligation in contracts with customers. During 2022, a single
long-tem contract was begun for a contracted price of
52. What is the estimated amount the unsecured creditors P2,135,000. Information on the project follows:
with priority will receive in the event of liquidation?
a. P5,600 c. P7,500 2022 2023
b. P6,000 d. P6,200 Revenue earned to date P 427,000 P1,281,000
Progress billings to date 350,000 1,470,000
53. What is the estimated amount holders of the accounts Cost incurred to dat 367,500 1,039,500
payable will receive upon liquidation? Collections to date 320,000 1,050,000
a. P58,240 c. P52,480
b. P54,840 d. P89,600 58. What is the gross profit recognized from this long-
term contract in
54. Using the data provided EXCEPT that the accounts 2022 2023 2022 2023
payable is P49,600 (instead of P89,600), compute the a. P77,000 P798.000 c. P59,500 P 175,000
estimated amount the stockholders will receive upon b. P77,000 P350,000 d. P59,500 P 182,000
liquidation.
a. P10,400 c. P14,000 CCC Construction Company started work on three job sites
b. P 0 d. P 6,400 with different customers during 2020. Data relating to the
three jobs are given below (In ‘000):
Amounts related to the statement of affairs of Distressed
Company as of April 30, 2019 follow: Site Contract Costs Costs to Progress Collections
Price Incurred Complete Billings
Abra P500 P375 P0 P500 P400
Assets pledged for fully secured P 80,000
liabilities Bohol 700 100 400 100 80
Assets pledged for partially secured 50,000 Cebu 250 100 100 130 120
liabilities
Free assets 272,000 59. What amount of gross profit should be recorded for the
Fully secured liabilities 60,000 current year if the cost recovery method is used for all
Partially secured liabilities 80,000 contracts?
Unsecured liabilities with priority 40,000 a. P100,000 c. P240,000
Unsecured liabilities without priority 330,000 b. P125,000 d. P375,000
55. Calculate the expected amount recoverable by partially 60. What amount of gross profit would be reported for the
secured creditors in the event of liquidation. current year if the percentage of completion method is
a. P71,000 c. P69,500 used for all contracts?
b. P50,000 d. P80,000 a. P 65,000 c. P215,000
b. P190,000 d. P240,000
Home office bills its branch for merchandise shipments at
30% above cost. 61. Aside from uncollected contract receivable, at what
The following are some of the account balances on the books amounts should (1) Bohol and (2) Cebu be shown in
of home office and its branch as of December 31, 20X0: the balance sheet at the year-end, respectively, under
the % of completion method?
Home Office Branch a. (1) P40,000 Contract asset and (2) P5,000
Books Books contract liability
Inventory, January 1 35,000 101,500 b. (1) P20,000 Contract asset and (2) P10,000
Shipments from Home Office 263,900 Contract Asset
Purchases 1,575,000 350,000 c. (1) P40,000 contract liability and (2) P10,000
Shipments to Branch 253,750 contract asset
Branch Inventory Allowance 91,875 d. (1) P40,000 contract liability and (2) P5,000
Sales 2,100,000 1,260,000 contract asset
Operating Expenses 507,500 192,500
Per physical count, the ending inventory of the branch is

P73,500 including goods from outside purchases of
P48,475; the ending inventory of the home office is
P210,000.
56. What is the total ending inventory to be shown on the

combined financial statements?
a. P118,475
b. P277,725
c. P328,475
d. P280,000
.
57. What is the combined net income for the year?
a. P957,950
b. P871,850
c. P891,975
d. P942,725

TEAM PRTC
BRIGADIER CONSTRUCTIONS, INC. had been working on a. a debit to consignment-Out of P7,935

three different projects during 2023, which had been started b. a credit to Consignment profit of P8,255
in different years. The following data pertain to the jobs at c. a credit to Consignment-Out of P9,375
the end of 2023. The company uses the percentage of d. a debit to Consignment-In of P P37,500
completion method in accounting for long-term projects.
Joey Muffler sells franchise arrangements throughout Luzon
Job Const Contract Costs To- and Visayas. Under a franchise agreement, Joey receives
Period price date P600,000 in exchange for satisfying the following
performance obligations:
1 2023 520,000 330,000
• franchisees have a five-year right to Operate as a Joe
Muffler retail establishment in an exclusive sales
2 2022 5,529,600 1,843,200 territory.
• franchisees receive initial training and certification as a
2023 3,446,784 Muffler Mechanic, and
• franchisees receive a Joey Muffler. building and
necessary equipment.
3 2021 8,000,000 1,024,000
2022 3,993,600 The stand-alone selling price of the initial training and
certification is P15,000, and P450,000 for the building and
2023 6,473,600 equipment. Joey received P75,000 on July 1, 20x6, from
Althea and accepted a note receivable for the rest of the
franchise price. Joey will construct and equip Altheas'
Job Estimated Billings To- Collections
building and train and certify Althea by September 1, and
Costs To Date To-Date
Altheas' five-year right to operate as a Joey Muffler
Complete
establishment will commence on September 1 as well.
1 --- 520,000 440,000
Franchisee has the right to access on the franchise
agreement.
2 P3,072,000 1,935,360 1,843,200
2,297,856 3,686,400 3,512,080 68. What amount would Joey assign as the stand-alone
selling price of the five year right to operate as a Joey
3 4,096,000 1,500,000 1,310,000 Muffler retail establishment?
a. P135,000 c. P585,000
2,246,400 5,250,000 5,000,000
b. P150,000 d. P600,000
--- 8,000,000 7,800,000
69. How much revenue would Joey recognize in the year
62. The gross profit recognized in 2021 was ended December 31, 20x6, with respect to its franchise
a. P675,000 c. P756,000 arrangement with Althea? (Ignore any interest on the
b. P657,000 d. P576,000 note receivable.)
a. P9,000 c. P465,000
63. The total gross profit for all the projects to be b. P450,000 d. P474,000
recognized in 2023 will be
a. P144,650 c. P146,450 70. Ronella Ocampo sells hairstyling franchises. Ronella
b. P144,560 d. P145,460 Ocampo receives P50,000 from a new franchisee for
providing equipment and furnishings that have a stand-
Under a consignment arrangement, CONSIGNOR COMPANY alone selling price of P50,000. Ronella Ocampo also
ships 24 units of special electronic gadgets called Tsamba receives P30,000 per year for use of, the Ronella
Bebe to CONSIGNEE ENTERPRISES. The cost per unit to Ocampo name and for ongoing consulting services
Consignor, Inc. is P1,500 and the goods will be sold at (starting on the date franchise is purchased). Carlos
P2,400 each for a 10% commissions on gross sales. Freight became a Ronella Ocampo franchisee on July 1, 20x6
charges paid by the consignor on the shipments was P1,500. had completed training and was open for business. How
At the end of 30 days, the consignee rendered an Account much revenue in 20x6 will Ronella Ocampo recognize
Sales for 18 units sold and reimbursable charges for: for its arrangements with Carlos?
Delivery expenses, P1,000 and Advertising, P1,500, among a. Zero c. P65,000
others. The consignor uses the Consignment-Out account in b. P10,000 d. P70,000
accounting for the consignments. On the other hand, the
Consignee uses the Consignment-In account. Thank you for participating in Team PRTC
Nationwide Online Open First Pre-Board
64. How much is the net remittance by the consignee? Examination.
a. P36,380 c. P33,680
b. P36,830 d. P30,638
65. How much is the net profit of the consignor?

a. P 8,705 c. P 8,255
b. P 5,555 d. P 2,513
66. How much is the adjusted balance of the Consignment

Out account after recognition of the net profit?
a. P7,935 c. P 5,973
b. P9,375 d. P 3,957
67. The reclassification entry to be recorded by the

consignor to recognize the deferred cost in its balance
sheet will include

Since 1977
FIRST PRE-BOARD EXAMINATION July 29 and 30, 2023
Multiple Choice. Select the letter that corresponds to 7. Which of the following is the only reason why a home
the best answer. This examination consists of 70 items office cannot report inventory shipments to a branch
and the exam is good for three (3) hours. Good luck! as sales?
a. The inventory transfer is a transaction with a
1. Which of the following results in dissolution of a
related party.
partnership?
b. There is no practicable means of determining
a. The contribution of additional assets to the
whether the transfer prices approximate those that
partnership by an existing partner.
would occur in an arms-length transaction between
b. The receipt of a draw by an existing partner.
independent parties.
c. The winding up of the partnership and the
c. Only inventory transaction between the company
distribution of remaining assets to the partners.
and outside third parties can be considered sales.
d. The withdrawal of a partner from a partnership.
d. The principles of conservatism.
2. When property other than cash is invested in a
8. The home office bills its branch for merchandise
partnership, at what amount should the noncash
transfers at a price in excess of cost. In the home
property be credited to the contributing partner’s
office separate financial statements, the allowance for
capital account?
unrealized profit in branch inventory account would
a. Contributing partner’s original cost.
appear in the financial statements of the home office
b. Assessed valuation for property tax purposes.
as
c. Fair value at the date of contribution.
a. An operating expense of the current period.
d. Contributing partner’s tax basis.
b. Deduction from the cost of goods sold.
3. If a new partner acquires a partnership interest c. Addition to the cost of goods sold.
directly from the partners rather than from the d. Deduction from the investment in branch account.
partnership itself,
9. Which of the following statements is true regarding a
a. No entry is required.
statutory merger?
b. The partnership assets should be revalued.
a. The original companies dissolve while the
c. The existing partners capital accounts should be
remaining as separate divisions of a newly created
reduced and the new partner's account increased.
company.
d. The partnership has undergone a quasi-
b. Both companies remain in existence as legal
reorganization.
corporations with one corporation now a subsidiary
4. If the partnership agreement does not specify how of the acquiring company.
income is to be allocated, profits and loss should be c. The acquired company dissolve as a separate
allocated corporation and becomes a division of the acquiring
a. Equally company.
b. In proportion to the weighted average of capital d. The acquiring company acquires the stock of the
invested during the period. acquired company as an investment.
c. Equitably so that partners are compensated for the
10. Toks Co. acquired all of the assets and liabilities of
time and effort expended on behalf of the
Owen Co. for cash in a legal merger. Which one of the
partnership.
following would not be recognized by Tok on its books
d. In accordance with their capital contribution.
in recording the business combination?
5. According to IFRS 11, Joint Arrangement, what is the a. Accounts receivable
method of accounting for investment in joint venture? b. Investment in Owen Co.
a. Proportionate consolidation method c. Intangible asset – Patent
b. Cost method d. Accounts payable
c. Equity method
11. In accordance with IFRS 10, Consolidated Financial
d. Fair value method
Statements, and IFRS 12, Disclosure of interests in
6. IFRS 11, Joint Arrangement, provides that the Other Entities, a consolidated statement of financial
classification of the arrangements will require entities position (or notes thereto) would not present
to apply judgment when assessing their rights and information relating to
obligations arising from the arrangement by a. Investment in Subsidiaries.
considering the following except b. Goodwill acquired by the group.
a. The terms agreed by the parties in the contractual c. Loans to entities not related to the group.
arrangements. d. Non-controlling interests' share of consolidated net
b. The structure and legal form of the arrangement. assets.
c. When structured in a legal entity, the choice
12. According to IFRS/PFRS for SMEs, the term "control"
between proportionate consolidation and the equity
means ownership, directly or indirectly through
method.
subsidiaries of
d. When relevant, other facts and circumstances.

TEAM PRTC
a. More than one-half of the outstanding voting stock completion) method defers recognition of the loss
of another company. to the time when the contract is completed.
b. At least 20% of the voting stock of another c. recognized in the current period under the cost-
company. recovery (point in time/time of completion)
c. At least 50% of the voting stock of another method. but the percentage-of-completion (over
company. time) method defers the loss until the contract Is
d. At least 10% of the voting stock of another completed.
company. d. deferred and recognized when the contract is
completed, regardless of whether the percentage-
13. Which of the following best illustrates the insolvency
of-completion (over time) or cost-recovery (point
of a firm?
in time/time of completion) method is employed.
a. The filing of bankruptcy proceedings against the
firm. 19. Goods on consignment should be included in the
b. A deficit in the firm's retained earnings. inventory of
c. The firm has more liabilities than assets. a. The consignor but not the consignee.
d. The firm has negative working capital. b. Both the consignor and consignee.
c. The consignee but not the consignor.
14. If the value of the pledged property is lesser than the
d. Neither the consignor nor the consignee.
obligation, what is the treatment of the liability?
a. Partially secured. c. Collateralized. 20. In accounting for sales on consignment, sales revenue
b. Fully secured. d. Unsecured and the related cost of goods sold should be
recognized by the
15. The revenue model framework provides Step#1
a. Consignor when the goods are shipped to the
Identify the Contract with the Customer. All of the
consignee.
following are criteria of a contract with a customer
b. Consignee when the goods are shipped to the third
within the scope of IFRS 15, except
party.
a. The right of each party in relation to the goods or
c. Consignor when notification is received that the
services to be transferred can be identified.
consignee has sold the goods.
b. The terms and conditions of payment for the goods
d. Consignee when cash is received from the
or services to be transferred can be identified.
customer.
c. The contract has commercial substance.
d. The contract must be in writing only and approved On January 1, 20X5, MC and AC agreed to form a
by the parties to the contract. partnership. The following are their assets and liabilities:
Accounts MC AC
16. Under IFRS 15, how does an entity satisfy the
Cash P34,000 P19,000
performance obligation on its contracts with
Accounts Receivable P22,000 P12,000
customers?
Inventories P76,000 P91,000
a. Satisfaction of performance obligation over time
Machinery P120,000 P110,000
b. Satisfaction of performance obligation at a point of
Accounts Payable P54,000 P36,000
time
Notes Payable P35,000 P15,000
c. Either A or B
d. Neither A nor B MC decided to pay-off his notes payable from his personal
assets. It was also agreed that AC’s inventories were
17. When accounting for revenue over time for a long-
overstated by P6,000 and MC’s machinery was over
term contract, the percentage of completion used to
depreciated by P5000. AC is to invest/withdraw cash in
recognize revenue in the first year usually is
order to receive a capital credit that is 20% more than
determined by measuring:
MC’s total net investment in the partnership.
a. Costs incurred in the first year, divided by
estimated remaining costs to complete the project. 21. How much is the contributed net asset of MC?
b. Costs incurred in the first year, divided by a. P163,000 c. P198,000
estimated total costs for the completed project. b. P203,000 d. P175,000
c. Costs incurred in the first year. divided by
22. How much cash will be presented in the partnership’s
estimated gross profit.
statement of financial position?
d. Costs incurred In the first year, divided by
a. P 90,600 c. P102,600
estimated total costs to be incurred in the
b. P112,600 d. P121,600
remaining years of the project.
23. The partnership agreement of AAA and BBB provides
18. Cost estimates on a long-term contract may indicate
that interest at 10% per year is to be credited to each
that a loss will result on completion of the entire
partner on the basis of weighted-average capital
contract. In this case, the entire expected loss should
balances. A summary of BBB’s capital account for the
be
year ended December 31, 2009, is as follows:
a. recognized in the current period regardless of
whether the percentage-of completion (over time) Balance, January 1 P 140,000
or cost-recovery (point in time/time of completion) Additional Investment, July 1 40,000
method is employed. Withdrawal, August 1 15,000
b. recognized in the current period under the What amount of interest should be credited to BBB’s
percentage-of-completion (over time) method. but capital account for 2009?
the cost-recovery (point In time/time of a. P15,250 c. P16,500
b. P15,375 d. P17,250

TEAM PRTC
Mawet,
Nicole, Candace and Maxinne formed a partnership named Capital
CLK Enterprise. Their beginning contributions amounted (20%) P143,600
to P70,000, P105,000 and P65,000, respectively. Total Total
Furthermore, they share profit and losses 20:35:45. For Assets P560,000 Liabilities
the first year of their operation, they earned P82,000. The and Equity P560,000
following conditions were established on the first day of On January 1, 2023, the partners decided to liquidate. For
the first year of operation. the month of January, assets with a book value of
• Nicole is entitled to have a salary of P6,400 yearly. P250,000 were sold and liabilities to outsiders were fully
• Bonus is to be distributed to Nicole and Maxinne equal paid.
to 5% of net income after deducting Salaries and 29. How much were the noncash assets sold if Mawet
bonuses. received the amount as prioritized to him as per Cash
• Interest is to be given to all partners amounting to Distribution Program?
P4,500 each. a. P223,200 c. P273,200
• Nicole invested additional cash during the mid-year b. P296,800 d. P269,800
amounting to P17,000.
• Each partner is allowed to withdraw P8,000 yearly Angel Co. is undergoing liquidation. Relevant information
which they availed. follows:
On the second year of their operation, the business earned Carrying Realizable
P52,600. All the conditions remained the same except that amount value
each partner will be allowed to take cash out of the Assets pledged with
business 15% higher than last year which only Candace partially secured creditors 80,000 50,000
availed, the remaining partners availed only the amount Free assets 220,000 160,000
equal from last year. Moreover, Maxinne invested Expected
additional P14,000 to the business. settlement Amount
24. How much is the share of Nicole in the income during amount unsecured
the first year of operation? Liabilities with priority 16,000 -
a. P23,715 c. P25,480 Partially secured creditors 75,000 25,000
b. P24,424 d. P32,805 Unsecured creditors 155,000 155,000
25. How much is the ending capital of Maxinne during the 30. What is the total amount available for payment of
first year of their operation? claims of unsecured creditors without priority?
a. P72,905 c. P94,760 a. 210,000 c. 144,000
b. P89,805 d. P97,805 b. 160,000 d. 0
26. How much is the total partnership capital after the first 31. What is the amount of deficiency to creditors?
year of operation? a. 36,000 c. 160,000
a. P298,000 c. P315,000 b. 144,000 d. 180,000
b. P306,000 d. P322,000 On November 1, 2023, Walang Forever Inc.’s trustee
27. How much is the share of Candace in the income prepares a Statement of Affairs with the following
during the second year of operation? information:
a. P16,875 c. P17,885 i. P340,000 cash will be received by Delta whose
b. P16,429 d. P14,405 claims totalled P1,360,000
ii. Alpha received a 12% note of P124,000 from
28. How much is the net change in Nicole’s capital from WALANG FOREVER on March 1, 2023, secured
first year beginning balance to second year ending with machinery with a market value of P115,000
balance? iii. WALANG FOREVER issued to Beta a 12%, 1-year
a. P45,240 c. P40,940 note of P136,000 on January 1, 2023. Nothing has
b. P42,840 d. P38,740 been pledged to this note.
iv. Charlie holds a note of P137,500 on which interest
The Statement of Financial Position of RMM’s partnership
of P7,452 is accrued, secured with equipment with
as of December 31, 2022 is given below:
a book value of P153,000. The fair value of the
RMM Company
equipment is determined to be P173,250
Statement of Financial Position
v. WALANG FOREVER still owes D, its cashier, with
As of December 31, 2022
her salary worth P12,220
Assets Liabilities
and Equity 32. Beta will receive
Cash P 30,000 Liabilities P 80,000 a. 37,400 c. 38,080
Noncash Loan from b. 34,000 d. 37,740
Assets P520,000 Mawet P 10,000
Loan to Roman, 33. The cashier will receive
Manoy P 10,000 Capital a. 3,055 c. 12,000
(50%) P123,400 b. 12,220 d. 3,080
Manoy,
Capital 34. Charlie will be paid an amount of
(30%) P203,000 a. 137,500 c. 153,000
b. 144,952 d. 7,452

TEAM PRTC
35. Alpha will be paid an amount of relevant activities of ENGELBERT equally with three other
a. 124,000 c. 115,000 venturers. Transaction costs of 3% of the purchase price
b. 133,920 d. 119,730 of the shares were incurred by TOM JONES.
36. Jhimminy Co. and Kurtsy Co. are joint operators in the On December 24, 2023, ENGELBERT CORPORATION
development of Kaboom, a software system. Each declared and paid dividends of P24,000.
joint operator retains control over the assets ENGELBERT CORPORATION recognized a loss of P67,200
contributed to the joint operation and share equally in for the year ended December 31, 2023.
the profits and losses of the joint operation. During
Published price quotations are not available for the shares
the year, Jhimminy Co. earns revenue of P1,000,000
of ENGELBERT CORPORATION. Using appropriate
from its own operations. Sales of Kaboom amount to
valuation techniques, TOM JONES COMPANY determined
P400,000. How much total revenue shall be reported
the fair value of its investment at December 31, 2023 as
in Jhimminy Co.’s statement of profit or loss for the
P104,000.
year?
a. P1,000,000 c. P1,400,000 Costs to sell are estimated at 8% of the fair value of the
b. P1,200,000 d. Either a or b investment.
37. Jhimminy Co. and Kurtsy Co. are joint venturers of 41. The Investment in Joint Venture account TOM JONES
Blessing Co., a producer of high mobile phones. Both will show in its 2023 balance sheet under the fair value
venturers, each have a 50% interest in the net assets model will be
of Blessing Co. During the year, Jhimminy Co. earns a. P 95,680 c. P 92,800
revenue of P1,000,000 from its own operations while b. P 104,000 d. P 95,584
Blessing Co. reports revenue of P400,000. How much
total revenue shall be reported in Jhimminy Co.’s 42. The profit/(loss) to be recognized by TOM JONES in
statement of profit or loss for the year? its income statement for 2023 under the fair value
a. P1,000,000 c. P1,400,000 model will be
b. P1,200,000 d. Either a or b a. P 17,200 c. P 14,416
b. P 8,880 d. P 6,096
A and B formed a joint operation. The following were the
transactions during the year: On May 1, 2023, GEMMO Enterprises consigned 80
freezers at a cost of P5,000 each, to NORMA COMPANY.
A B The cost of shipping the freezers amounted to P8,400
Total purchases 100 80 and was paid by GEMMO Enterprises. On December 30,
Total sales 120 60 2023, a report was received from the consignee, indicating
Expenses paid 200 that 40 freezers had been sold for P7,500 each.
Other income 10 Remittance was made by the consignee for the amount
due, after deducting a commission of 6%, advertising of
The joint operation was completed at the end of the year.
P2,000, and total installation costs of P3,200 on the
Each joint operator is entitled to a 10% commission on its
freezers sold.
purchases and a 20% commission on its sales. Any
remaining profit or loss is divided equally. 43. Compute the inventory value of the units unsold in the
hands of the consignee.
38. How much cash is due operator A?
a. P 0 c. P 200,000
a. 200 c. 212
b. P 204,200 d. P 205,800
b. 100 d. 88
39. How much is A’s cash settlement? 44. Compute the net profit of the consignor for the units
a. 92 payment c. 190 receipt sold.
b. 92 receipt d. 88 payment a. P 72,600 c. P 74,200
b. P 689,400 d. P 70,400
On January 1, 2023, Cubicle Company and Expander
Company formed XX Corporation in their joint 45. Compute the amount of cash that will be remitted by
undertaking. Cubicle and Expander contributed cash of P the consignee.
600,000 and equipment with a book value of P380,000, a. P 268,400 c. P 276,800
respectively. The said equipment has a fair value of b. P 300,000 d. P 294,800
P400,000 at the date of contribution. Cubicle and
46. Assuming the consignee remitted to the consignor
Expander companies agreed that mutual consent is
only 90% of the total amount due, the journal entry
necessary for all management decisions regarding the
to be recorded by the consignor upon receipt of the
undertaking regardless of the agreed ratio of 6:4 to
account sales will not include
Cubicle and Expander respectively.
a. A debit to cash of P249,120
40. On January 1, 2023 the entries in the books of b. A debit to expenses of P23,200
Expander will include: c. A debit to receivable from consignee of P27,680
a. Debit Equipment in JO of P 240,000 d. A credit to consignment sales of P272,320
b. Credit Gain on Sale of P 8,000
The consignment-out ledger account for the month of July,
c. Debit Cash in JO of P 240,000
2023 in the accounting records of MANILA COMPANY for
d. Debit Investment in JV of P400,000
BALIWAG ENTERPRISES, a new consignee, follows:
On January 1, 2023, TOM JONES COMPANY , an SME,
acquired a 25% equity of ENGELBERT CORPORATION for
P92,800. TOM JONES will share in the joint control of the

TEAM PRTC
CONSIGNMENT OUT – BALIWAG Enterprises 2026 2027 2028

Date Particulars Debits Credits Balance Estimated cost to
July Shipped 100 P14,000 P14,400 dr 675,000 400,000 -
complete
1 units @ P144
Billings to Elly Inc. 150,000 550,000 275,000
1 Freight cost 1,160 15,560 dr
31 Charges by 54. Under the percentage of completion method, how
consignee: much is the Construction in Progress on December 31,
Delivery 450 16,010 2027?
expense a. 597,500 c. 685,000
Commissions 3,406 19,416 dr b. 672,500 d. 575,000
@ 20% of
sales 55. Under the Zero Profit method, how much is the
31 Sale of 65 17,030 2,386 dr contract asset (liability) on December 31, 2027?
units at P262 a. 50,000 asset c. 50,000 liability
b. 125,000 asset d. 125,000 liability
The consignor debited the consignment-out account for all
costs relating to the consignment and credited the 56. Under the percentage of completion method, how
Consignment-Out account for the selling price of units sold much is the realized gross profit/(loss) at December
by the consignee. 31, 2028?
a. (72,500) c. (50,000)
47. The amount remitted by the consignee on July 31 to b. (75,000) d. (100,000)
the consignor is
a. P13,174 c. P11,274 The MENDOZA BUILDERS started work on three job sites
b. P17,134 d. P14,127 during the current year. Data relating to the three jobs are
given below (Amounts in ‘000s):
48. The consignment profit earned by the consignor from Estimate Collection
the consignee sales in July of 2023 is Con- Actual d Cost to Billings from
a. P 3,060 c. P3,600 Site tract Cost Complet on Customers
b. P 6,300 d. P6,030 Price e Contract
Manila P500 P 375 - P500 P500
ROYSKI Corp. sold franchise to BLANCHE, Inc for a Fairview 600 254 P 381.25 180 100
franchise period of 6 years. The sale agreement penned Makati 250 100 100 150 100
on January 1, 2023 states that a down payment of
P300,000 plus four (4) P100,000 annual payments 57. Calculate the net amount to be reported on the
beginning December 31 of the current year. The prevailing balance sheet for the above projects under the
rate during the year is 10% (use 2 decimal places). percentage of completion method:
Moreover, indirect costs incurred amounted to P25,000 a. Contract Liability P (11,250)
while direct costs totaled for P240,000. The franchisee b. Contract Liability P (13,750)
acquires the right to use on the license granted. c. Contract Assets P 13,750
d. Contract Assets P 11,250
49. How much is the contract price?
a. 700,000 c. 617,000 58. Calculate the net amount to be reported on the
b. 617,000 d. 736,000 balance sheet for the above projects under the zero
profit method.
50. How much is the profit for 2023? a. Contract Liability P(11,250)
a. 435,000 c. 420,300 b. Contract Liability P 11,250
b. 352,000 d. 400,000 c. Contract Assets P 13,750
51. How much is the profit for 2024? d. Contract Assets P(13,750)
a. None c. 40,000 DE LEON Co. operates a branch in Manila. The following
b. 75,130 d. 68,300 are selected accounts taken from December 31, 2023
52. WHAT IF, the scheme in this transaction is that the financial statements of DE LEON and its branch:
franchisee acquires the right to access, how much will HOME BRANCH
be considered as profit for 2023? OFFICE
a. 106,133 c. 115,250 Sales P7,500,000 P3,750,000
b. 137,550 d. 137,963 Shipments to branch P1,250,000
Shipments from home P1,562,500
53. WHAT IF, the scheme in this transaction is that the office
franchisee acquires the right to access, how much will Inventory, Jan. 1, 2023 P750,000 P375,000
be considered as profit for 2024?
Inventory, Dec. 31, 2023 P630,000 P270,000
a. 106,133 c. 115,250
Purchases P6,200,000 P950,000
b. 137,550 d. 137,963
Allowance for P337,500
On July 1, 2026, Sarita Construction Corporation overvaluation before
contracted to build an office building for Elly Inc. for a total adjustment
contract price of 975,000. Operating expenses P300,000 P270,000
2026 2027 2028 The ending inventory of the branch includes P120,000
Contract cost incurred purchased from outside suppliers.
75,000 600,000 1,050,000
to date

TEAM PRTC
59. What is the combined cost of ending inventory?

Additional information
a. P942,500 c. P868,110
a. On December 31, 2023, in late afternoon, the home
b. P900,000 d. P870,000
office sent a P5,000 check to its branch to replenish
60. The combined net income is: working capital
a. P3,300,000 c. P2,992,500 b. The home office credits the shipment to branch at
b. P2,962,500 d. P3,305,000 cost without a loading factor.
c. The branch had transmitted P1,600 in cash to the
Separate balance sheets for P Company and S Company
home office which was not received until January 2,
on December 31, 2022 are as follows:
2024.
P COMPANY S COMPANY
Cash P 150,000 20,000 67. Compute the correct balance of the branch account in
Other current assets 150,000 80,000 the books of the home office, before closing entries
Land 300,000 50,000 are made.
Buildings 400,000 150,000 a. P78,400 c. P68,400
Current liabilities 200,000 50,000 b. P93,400 d. P96,600
Common stock, P 10 par 600,000 100,000
The following data were taken from the records of Mandy
Additional paid-in capital 60,000 75,000
Corporation of Manila and its La Union branch for 2023:
Retained earnings 140,000 75,000
Manila La Union
P Company issued 20,000 shares of its own common
HO Branch
stock with a market value of P250,000 on January 1,
Sales P P 126,000
2023 in exchange for 80% of S Company’s outstanding
424,000
stock. All of the excess differential is attributable 25%
Inventory, 1/1 46,000 17,800
to land and the balance to the buildings. The following
Purchases 328,000 -
out of pocket costs were paid by P Company
Shipment to 84,000
Finder’s fees 25,000 Branch
Fees paid to company accountants 5,000 Shipment from HO 105,000
Cost to register and issue stocks 30,000 Inventory, 12/31 57,000 23,400
Cost of printing the stock certificates 25,000 Expenses 152,800 40,600
Legal fees paid 5,000
The home office consistently bills the branch for
Direct acquisition cost 20,000
merchandise shipments; there are no shipments of
Indirect cost 10,000
merchandise in transit at December 31, 2023.
61. Total amount of land on the Consolidated Balance
68. Calculate the overstatement of the branch cost of
Sheet
sales arising from the home office billing policy.
a. P 300,000 c. P 375,000
a. P19,880 c. P18,980
b. P 350,000 d. P 365,626
b. P19,808 d. P18,890
62. Total amount of buildings on the Consolidated Balance
69. Calculate the branch net income insofar as the home
Sheet.
office is concerned.
a. P 550,000 c. P 596,875
a. P 5,880 c. P6,480
b. P 400,000 d. P 592, 350
b. P5,088 d. P6,840
63. Total Assets in the Consolidated Balance Sheet
70. Calculate the net income from the home office
a. P 1,362,000 c. P 1, 362,500
operation for 2023.
b. P 1,000,000 d. P 1,242,500
a. P32,800 c. P30,820
64. Total Common Stock in Consolidated Balance Sheet b. P30,280 d. P38,200
a. P 800,000 c. P 600,000
b. P 850,000 d. P 900,000
Thank you for participating in Team PRTC
65. Total APIC in Consolidated Balance Sheet Nationwide Open First Pre-Board Examination.
a. P 55,000 c. P 135,000
b. P 110,000 d. P 80,000
66. Total retained earnings on the Consolidated Balance
Sheet
a. P 75,000 c. P 20,000
b. P 70,000 d. P 140,000
Cebu Corporation’s home office and branch pre-closing
trial balances on December 31, 2023 contained the
following accounts and amounts among others:
Home Office Branch Book
Books
Branch P95,000
Home Office 73,400
Shipments to branch 90,000
Shipments from HO 75,000

Since 1977

FINAL PRE-BOARD EXAMINATION April 29 & 30, 2023
Multiple Choice. Select the letter that corresponds to the d. joint control by the parties over the activities of an'
best answer. This examination consists of 70 items and the operation.
exam is good for three (3) hours. Good luck!
7. When accounting for revenue over time for a long-term
1. Which statement is true concerning the safe payment contract, the percentage of completion used to
and cash distribution plan approaches to liquidation? recognize revenue in the first year usually is
a. Both approaches are used in simple liquidations. determined by measuring:
b. The safe payment approach determines how the a. Costs incurred in the first year, divided by
current available cash Is distributed, but not future estimated remaining costs to complete the project.
payments. b. Costs incurred in the first year, divided by
c. The safe payment approach is more conservative estimated total costs for the completed project.
than the cash distribution plan. c. Costs incurred in the first year. divided by
d. The safe payment approach uses the right of offset, estimated gross profit.
but the cash distribution plan does not d. Costs incurred In the first year, divided by
estimated total costs to be incurred in the
2. If the agreement provides for the division of losses remaining years of the project.
only. Profits should be divided:
a. Equally 8. In accounting for sales on consignment, sales revenue
b. According to beginning capital ratio and the related cost of goods sold should be recognized
c. According to original capital ratio by the:
d. According to average capital ratio a. consignor when the goods are shipped to the
consignee
3. The total unsecured liabilities without priority can be b. consignee when the goods are shipped to the third
computed as party
a. Sum of administrative expenses, unpaid employee c. consignor when notification is received the
salaries and benefits, and taxes and assessments consignee has sold the goods.
b. Total liabilities minus priority claims d. consignee when cash is received from the customer
c. Unsecured creditors without priority plus deficiency
of assets pledged to partially secured creditors 9. Which of the following would most likely not be
d. Unsecured creditors without priority less estimated considered as a separate performance obligation in
realizable value of assets pledged to partially relation to a franchise agreement?
creditors a. grant of license to use the franchisor's trade name
b. transfer of equipment to be used in the franchisee's
4. The estimated recovery of partially secured creditors is business
equal to c. franchisor's promise to undertake activities to
a. The realizable value of the assets pledged plus the support the franchise
excess amount multiplied by the estimated d. all of the these are separate performance
recovery percentage obligations
b. The realizable value of the assets pledged minus
the excess amount multiplied by the estimated 10. Contract costs recognized as asset are
recovery percentage a. amortized in a manner that is consistent with the
c. Their claims multiplied by the estimated recovery recognition of the related revenue.
percentage b. deferred and amortized using the straight-line
d. Any of these method
c. depreciated over the estimated useful life of the
5. Which of the following statements is not correct? asset.
a. Joint arrangements may be entered into to manage d. expensed immediately when incurred.
risks involved in a project
b. Joint arrangements may be entered into to provide 11. A debit to the Income Summary ledger account and a
the parties with access to new technology or new credit to the Home Office account appear in:
markets. a. The accounting records of the home office to record
c. Joint arrangements require investors to have equal the net income of the home office
interests in the joint arrangement. b. The accounting records of the home office to record
d. The key feature of a joint arrangement is that the the net income of the branch
parties involved have joint control over the decision c. The accounting records of the branch to record the
making in relation to the joint arrangement. net income of the branch
d. Some other manner
6. The particular relationship between parties that
signifies the existence of a join arrangement is: 12. How is the non-controlling interest in the subsidiary’s
a. significant influence by one party over the other net assets presented in the consolidated statement of
party financial position?
b. control over the operating policies of one party by a. As a mezzanine item between liabilities and equity
another party b. Within equity but separately from the equity of the
c. shared influence by two parties over the activities owners of the parent.
of another party; c. Within equity as part of retained earnings
d. Any of these as a matter of accounting policy choice
Page 1 of 7 www.teamprtc.com.ph AFAR.FinPB5.23

TEAM PRTC
13. How should negative goodwill be shown on the 19. Which of the following would most likely comes first in
consolidated financial statements of the acquirer? the budget process?
a. As a gain on the statement of comprehensive a. President’s enactment of the budget
income b. Presentation to the Office of the President
b. As a loss on the statement of comprehensive c. Budget Call from the DBM
income d. Budget accountability report
c. As a liability on the statement of financial position
d. As a separate amount under shareholders' equity 20. Statement I – Temporarily Restricted Net Assets are
on the statement of financial position net assets whose use is limited by donor-imposed
stipulations that do not expire and cannot be removed
14. When there is on intercompany transaction, how much by action of the entity.
of any profit or loss created as a result of the Statement II – NPOs account for revenues and
transaction is eliminated during the consolidation expenses under the cash basis of accounting.
process a. Only statement I is true
a. None of the profit or loss is eliminated b. Only statement II is true
b. All of the profit or loss is eliminated c. Both statements are true
c. The parent's ownership interest in the profit or loss d. Both statements are false
is eliminated
d. If is not possible to determine how much of the Partners Bee, Cee, Dee and Gee who share profits
profit or loss is eliminated without knowing whether 5:3:1:1, respectively, decide to liquidate their
the transaction is upstream or downstream partnership. Capital balances before liquidation are:
15. In the period of an intercompany asset transaction, the Bee P 60,000

consolidated balance sheet will present what amount in Cee 40,000
the asset account? Dee 30,000
a. The purchase price by the new owner
b. The purchase price by the original owner Gee 10,000
c. The purchase price by the original owner plus the
parent's ownership percentage of the gain or loss The partners agree to the following:
on the sale recognized at the time of the
intercompany transaction (1) Partnership’s computer equipment with a book
d. The purchase price by the original owner plus the value of P12,000 is to be taken over by partner Bee
noncontrolling interests percentage of the gain or at a price of P15,000.
loss on the sale recognized at the time of the
intercompany transaction (2) Partnership’s liabilities are to be paid off and the
balance of cash on hand, P30,000 is to be divided
16. After a purchase or sale denominated in a foreign in a manner that will avoid the need for any
currency occurs, what is created on a Philippine possible recovery of cash from a partner.
company’s financial records as a result of the change in
the exchange rate of a foreign currency? 21. How much of the P30,000 cash be distributed to Partner
a. Foreign exchange option Cee?
b. Exchange gains and losses a. P 10,000 c. P 20,000
c. Settlement date b. P 0 d. P 15,000
d. Foreign currency forward contract
Angelo and Hercules, partners in a firm, share profits
17. Which of the following statements is correct with equally and each has a capital balance of P900,000.
regard to foreign currency transactions? Superman is admitted as a new partner by a cash
a. The company must hedge a foreign currency investment of P1,200,000 for a one-third interest in
transaction if there is a balance sheet date between both the firm’s assets and profits. Superman will be
the transaction date and the settlement date credited in full for amount invested.
b. When there is a balance sheet date between the
transaction date and the settlement date, the 22. The firm’s new capital should be
transaction is initially recorded using the projected a. P3,000,000ct! c. P2,400,000
spot rate on the settlement date b. P3,600,000 d. P4,200,000
c. An adjusting entry is required on the balance sheet
date to reflect the change in the estimated value of On June 30, 2021, the Warle, Xin, and Yates partnership
the monetary account associated with the had the following fiscal year-end balance sheet:
transaction.
d. Any gains or losses are amortized on the period Cash P4,000 Accounts P7,000
from the date of the initial transaction until the payable
settlement date using the effective interest rate Accounts 6,000 Loan from 5,000
method. receivable Xin
Inventory 14,000 Warle, 14,000
capital(20%)
18. Process costing should be used in assigning cost to
Plant 12,000 Xin, 10,000
products in which, of the following situations?
assets- capital(30%)
a. If the product is composed of mass-produced net
homogeneous units. Loan to 6,000 Yates, 6,000
b. If the product is manufactured individually based Warle capital(50%)
on an order received. Total P42,000 Total P42,000
c. When the product is composed of heterogeneous assets liab./equity
units made in a job shop.
d. Whenever cost allocation is not used.

TEAM PRTC
The partners dissolved the partnership on July 1, 2023, and 29. Suppose Janice, instead, paid P450,000 directly to the
began the liquidation process. During July the following old partners for 20% each of their respective capital to
events occurred: acquire her one-fifth interest, (1) how much will be
• Receivables of P3,000 were collected. Donna’s capital after Janice’s admission? and (2) how
• The inventory was sold for P4,000. much cash will Blanche receive in exchange for her sold
• All available cash was distributed on July 31, interest?
except for P2,000 that was set aside for a. (1) P412,800, (2) P159,300
contingent expenses. b. (1) P421,800, (2) P139,500
c. (1) P428,100, (2) P195,300
23. The book value of the partnership equity on June 30, d. (1) P482,010, (2) P153,900
2023 is:
a. P38,000 c. P34,000 OAS Company is insolvent and its statement of affairs shows
b. P32,000 d. P30,000 the following information:
24. The cash distributed to the partners on July 31, 2023 Estimated gains on realization of P1,440,000
is: assets
a. P6,000 c. P2,000 Estimated losses om realization 2,000,000
b. P4,000 d. P8,000 of assets
Additional assets 1,280,000
25. How much cash would Xin receive from the cash that is Unpaid liabilities 220,000
available for distribution on July 31,2023? Share capital 2,500,000
a. P7,500 c. P2,000 Deficit 1,200,000
b. P12,000 d. P9,000
30. The estimated recovery for shareholders is:
R and E formed a partnership agreeing to share profits
equally. R contributed P10,000 cash and P400,000 newly a. .38 c. .41
b. .32 d. .27
purchased equipment. E contributed P15,000 cash and a
parcel of land acquired 5 years ago for P100,000. Three
hours after formation, the land was sold for P200,000. The following were taken from the Statement of Affairs of
Gael Corporation:
26. How much is the capital balance of E?
a. P165,000 c. P150,000 Assets pledged with fully secured creditors
b. P115,000 d. P215,000 (current fair value is P166,000) P 208,000
Assets pledged with partially secured creditors
Summary balance sheet for the ABD Partnership follows: (current fair value is P112,000) 144,000
Abner, Blanche, and Donna share profits in the ratio of Free assets (current fair value is P104,000) 124,000
5:3:2, respectively. Liabilities with priority 26,000
Fully secured creditors 76,000
Cash P100,000 Partially secured creditors 136,000
Accounts receivable 125,000 Unsecured creditors without priority 276,000
Inventory 200,000
31. Determine the estimated amount to be paid to partially
Land 800,000 secured creditors:
Buildings, net 1,500,000 a. P112,000 c. P136,000
Total P2,725,000 b. P125,440 d. P144,000
Accounts payable P 250,000
Forever Company is in bankruptcy and is being liquidated.
Long-term debt 450,000 The trustee has converted all assets into P300,000 and has
Abner, capital 810,000 prepared the following list of approved claims:
Blanche, capital 729,000
Accounts payable, unsecured P75,000
Donna, capital 486,000 Trustee’s fees and other costs of liquidation 40,000
Total P2,725,000 Mortgage payable, secured by property that as 150,000
sold for P200,000
The partners agree to admit Janice for a one-fifth interest. Note payable to PRTC Bank, secured by all the
The fair value of the land is appraised at P900,000 and the accounts receivable of which P75,000 were 100,000
market value of the inventory is P250,000. The assets are collected and P5,000 were written off
to be revalued prior to the admission of Janice. Prepaid revenue (P2,500 each of two customers
that ordered Products that were never 5,000
delivered
27. By how much will the capital accounts of Abner,
Property taxes payable 10,000
Blanche, and Donna increase due to the revaluation of
the assets?
a. The capital accounts will increase by P50,000 each. 32. How much is the total amount of unsecured priority
b. P60,000, P54,000, and P36,000 respectively. claims
c. P75,000, P45,000, and P30,000 respectively. a. P55,000 c. P50,000
d. P60,000, P50,000, and P40,000 respectively. b. P40,000 d. P45,000
28. How much cash will Janice have to invest into the 33. How much is the total amount of deficiency to
partnership to acquire her one-fifth interest? unsecured non-priority claims
a. P534,750 c. P547,350 a. P 20,000 c. P100,000
b. P553,740 d. P543,750 b. 0 d. P 80,000

TEAM PRTC
34. How much will the bank be paid for the note payable? The following information was taken from the books of
a. P 80,000 c. P75,000 MAYON COMPANY and its Naga City branch on December
b. P100,000 d. P76,250 31, 2023, before adjusting entries were recorded.
The Consignment-Out ledger account for the month of April, Branch books
2023 in the accounting records of MAXINNE COMPANY Sales P300,000
follows: Inventory, January 1 19,000
Purchases 20,000
CONSIGNMENT –OUT of Robert, Inc. Shipment from Home Office 180,000
Expenses 80,000
Date Particulars Debits Credits Balance Home Office books
April 4, Shipped 80 P11,520 P11,520 Sales P400,000
2023 units dr Inventory, January 1 40,000
4 Freight costs 936 12,456 Purchases 210,000
dr Shipment to Branch 150,000
31 Charges by Expenses 210,000
consignee: Allowance for overvaluation of 31,500
Delivery Expense 360 12,816 branch inventory, December
dr 31
Commissions on 2,625 15,441 There are no merchandise shipments in transit as
sale of 50 units dr at the year-end. The ending inventories are:
31 Selling price of P13,125 2,316 dr Home Office (all from outside P50,000
50 units suppliers)
Branch office (40% from 40,000
35. How much is the consignment profit of MAXINNE outside suppliers, the rest
COMPANY? from home office)
a. P5,340 c. P 2,355
b. P 2,490 d. P 2,004 40. Calculate the 2023 net income of the branch that was
closed to the reciprocal accounts
36. How much is the balance of the Consignment Out a. P 121,000 c. P 68,500
account after the recognition of the consignment profit? b. P 41,000 d. P 140,000
a. P 7,656 c. P 4,671
b. P 4,806 d. P 4,320 41. Calculate the net income that was closed to the
Retained Earnings
Bobby Tan Trading established a branch in Pasay City to a. P 140,000 c. P 181,000
distribute part of the goods purchased by it from other b. (160,000) d. P 208,500
suppliers. Bobby Tan ships merchandise to the branch at
20% above cost. The following account balances are taken 42. The amount of branch 2023 net income closed by the
from ledger balances of the home office and the branch: home office to its Income Summary account in its year-
end closing entries is
Home Office Branch Office a. P 68,500 c. P 140,000
Sales P384,000 P134,400 b. P 41,000 d. P 208,500
Beginning inventory 76,800 38,400
Purchase 320,000 Cebu Corporation’s home office and branch pre-closing trial
Shipment to branch 83,200 balances on December 31, 2023 contained the following
Shipment from Home 99,840 accounts and amounts among others:
Office
Operating expenses 46,080 23,040 Home Office Branch Books
Ending inventory 62,720 30,720 Books
Branch P95,000
All of the branch inventory is acquired from the Home Office. Home Office P73,400
Shipments to 90,000
37. Calculate the overstatement of cost of sales in the branch
branch income statement for the year in term of home Shipments from 75,000
office cost home office
a. P 17,920 c. P33,760
b. P 19,360 d. P16,192 Additional information
38. Calculate the true branch net income. a. On December 31, 2023, in late afternoon, the home
a. P 21,760 c. P 3,840 office sent a P5,000 check to its branch to
b. P 17,920 d. P 19,360 replenish working capital
b. The home office credits the shipment to branch at
39. Calculate the combined net income. cost without a loading factor.
a. P 90,880 c. P108,800 c. The branch had transmitted P1,600 in cash to the
b. P104,960 d. P106,080 home office which was not received until January
2, 2024.
43. Compute the correct balance of the branch account in

the books of the home office, before closing entries are
made.
a. P78,400 c, P68,400
b. P93,400 d. P96,600

TEAM PRTC
JULIO COMPANY and AUGUSTO COMPANY are participants Cost of printing the stock 25,000
in a joint arrangement sharing control and profits equally. certificates
They contributed P500,000 each. JULIO’s contribution is Legal fees paid 5,000
cash. AUGUSTO contributed an equipment with a carrying Direct acquisition cost 20,000
value of P480,000. The equipment has a ten-year remaining Indirect cost 10,000
life when contributed. They established APRIL MAY
CORPORATION on January 2, 2023 to carry on the joint 48. Total amount of land on the consolidated balance sheet
undertaking, thus JULIO AND AUGUSTO have equal rights a. P 300,000 c. P 375,000
over the net assets of the business. b. P 350,000 d. P 365,625
The following information is relevant in answering the
various questions: 49. Total amount of buildings on the consolidated balance
sheet
JULIO CO. AUGUSTO APRILMAY a. P 550,000 c. P 596,875
CO. CO. b. P 400,000 d. P 592, 350
Net income during P 72,000 P80,000 P144,000
the year 50. Total APIC on the consolidated balance sheet
Cash dividends 18,000 24,000 36,000 a. P 55,000 c. P 135,000
paid during the b. P 110,000 d. P 80,000
year
Retained earnings, 100,000 P70,000 P0 51. Total retained earnings on the consolidated balance
1/1/23 sheet
a. P 75,000 c. P 20,000
44. How much total amount of asset(s) will AUGUSTO b. P 70,000 d. P 140,000
COMPANY recognize on January 2, 2023 to record its
investment? On January 1, 2023, GININTUANG PUSO CORPORATION
a. P490,000 c. P 0 acquired 80% of the outstanding shares of BAGAL SULONG
b. P500,000 d. P480,000 COMPANY for P743,750. At this date, the stockholders’
equity of BAGAL SULONG follows:
45. At what amount will the investment of AUGUSTO
COMPANY be shown in its December 31, 2023 balance Ordinary shares, P5 par P 350,000
sheet? APIC 175,000
a. P 432,000 c. P608,000 Retained earnings 175,000
b. P 450,000 d. P554,000 P 700,000
46. At what amount will JULIO COMPANY report its The net assets of BAGAL SULONG on January 1, 2023 were
Retained Earnings at December 31, 2023? fairly valued. GININTUANG PUSO assigned the full fair value
a. P 100,000 c. P 154,000 to the non-controlling interest at the date of acquisition in
b. P 226,000 d. P 298,000 analyzing the fair value of its investment.
47. The journal entry AUGUSTO COMPANY will record its Selected information over the first two (2) years of affiliated
investment on January 2, 2023 will include operations follows:
a. a debit to Cash in JO of P250,000
b. a debit to Equipment in JO of P240,000 • Intercompany merchandise sales are summarized as
c. a credit to gain on sale of P20,000 follows:
d. a credit to gain on sale of P10,000
Purchaser’s
Separate balance sheets for P Company and S Company on Date Transaction Sales GPR Remaining
December 31, 2022 are as follows: Amount Ending
P COMPANY S COMPANY Inventory
Cash P150,000 20,000
Other current 150,000 80,000 In Upstream 25% 6,125
assets 2023 35,000
Land 300,000 50,000 In Downstream 30% 10,500
Buildings 400,000 150,000 2024 56,000
Current liabilities 200,000 50,000
Common stock, 600,000 100,000
P10 par • Condensed trial balances of the two (2) companies on
Additional paid-in 60,000 75,000 December 31, 2024 follow:
capital
Retained earnings 140,000 75,000 GININTUANG BAGAL
PUSO CORP. SULONG
P Company issued 20,000 shares of its own common stock COMPANY
with a market value of P250,000 on January 1, 2023 in Current assets P 1,428,000 P 387,275
exchange for 80% of S Company’s outstanding stock. All of Investment in BAGAL 743,750 ---
the excess is attributable 25% to land and the balance to SULONG
the buildings. The following out of pocket costs were paid Equipment, net 1,891,750 262,500
by P Company Buildings, net 1,592,500 332,500
Goodwill 105,000 ---
Finder’s fees 25,000 Liabilities (1,123,500) (186,025)
Fees paid to company 5, 000 Common Stocks, P1 par ( 437,500) ---
accountants Ordinary shares, P5 par (350,000)
APIC (2,187,500) (175,000)
Cost to register and issue 30,000
stocks

TEAM PRTC
Retained earnings, (1,933,750) (245,000) FOREVERMORE INDUSTRIES manufactures products X, A,

January 1, 2020 and K from a joint production process at a cost of P58,800.
Sales (1,540,000) (1,102,500) Additional information for the current period follows:
Dividend income ( 42,000) ---
Cost of goods sold 1,232,000 882,000 Units Sales Estimated Costs Units
Other expenses 227,500 141,750 Value
Dividends declared 43,750 52,500 After
Totals P 0 P 0 Product Produc Further To To Sell Sold
s ed Processing Complet
e
52. Compute the consolidated cost of goods sold for 2024.
X 800 P40,000 P 5,000 P4,000 700
a. P2,050,355 c. P2,500,553
A 600 34,200 4,000 4,200 382
b. P2,059,619 d. P2,056,381
K 400 32, 000 3,000 2,000 350
53. Compute the consolidated net income for 2024 1,800 P 106,000 P12,000 P10,20 1,600
a. P 195,125 c. P215,915 0
b. P 161,043 d. P157,631
58. Compute the amount of Joint cost allocated to Product
Pilipinas Company, a Philippine entity, delivers goods to a A under the NRV /reversal cost method.
foreign buyer for FC1,000,000 on December 1, 2022. a. P18,900 c. P19,800
Payment is due on March 1, 2023. Pinoy enters into a b. P21,700 d. P 18,200
forward contract to mitigate the probability of huge losses
in foreign currency. It was designated as a fair value hedge. 59. Compute the unit cost for Product A under the NRV
Pinoy’s incremental borrowing rate is 12% per year. method of joint cost allocation.
a. P33.38 c. P 54.75
Other relevant data regarding spot and forward rates follow: b. P37.00 d. P 38,33
Forward Rates Aggregate Corporation has two (2) service departments,

Date Spot Rate Sales forward Purchase namely Service A and Service B and also two (2) production
forward departments, namely Production I and Production II. The
12/01/22 P0.320 P0.305 P0.33 to budgeted costs of the service departments are allocated to
3/01/23 the production departments on the basis of the number of
12/31/22 0.330 0.316 0.340 to employees. Shown below are the number of employees and
3/01/23 the budgeted amounts for each department.
03/01/23 0.300 0.300 0.300 Expiry
Department # of Employees Budgeted Costs
54. Calculate the hedging cost (Gain/Loss) recognized by Service A 10 P 40,000
Pilipinas in 2022. Service B 25 60,000
Production I 265 480,000
a. P5,000 c. P10,000
Production II 250 520,000
b. P783 d. P15,000
Totals 550 P 1,100,000
55. If designated as a cash-flow hedge instead, and hedge
accounting is applied, the hedging cost recognized by The company is to use the step method in the allocation of
Pilipinas in 2023 would be service department costs to the producing departments, to
a. P5,000 c. P10,000 begin with Service A’s cost.
b. P14,217 d. P15,000
60. Compute the amount of cost allocated to Service B from
The following assets of Manila Corporation’s South Korean the allocation of Service A’s cost.
subsidiary have been converted into Philippine pesos at the a. P0 c. P 1,852
following exchange rates: b. P1,143 d. P 1,413
Current Rates Historical Rates

61. Compute the amount of cost allocated to Service A from
Accounts receivable P 850,000 P 875,000
the allocation of Service B’s cost.
Inventories 600,000 575,000 a. P0 c. P1,852
Plant assets 1,200,000 900,000 b. P1,143 d. P1,582
Totals P2,650,000 P2,350,000
The RENDOR Corporation was recently formed to produce a
56. If the South Korean subsidiary maintains an integrated semiconductor chip that forms an essential part of the
operations with the Philippine parent’s operations, the personal computer manufactured by a major corporation.
assets should be reported in the consolidated financial The direct materials are added at the start of the production
statements of Manila Corporation and subsidiary in the process while conversion costs are added uniformly
total amount of throughout the production process. June is Rendor's first
a. P2,650,000 c. P2,350,000 month of operations, and therefore, there was no beginning
b. P2,325,000 d. P2,320,000 inventory. Direct materials cost for the month totaled
P950,000, while conversion costs equaled P4,050,000.
57. If the South Korean subsidiary maintains a stand-alone Accounting records indicate that 475,000 chips were started
operations fully independent from the parent’s in June, and that 425,000 chips were completed. The ending
operations, the assets should be reported in the inventory was 50% complete as to conversion costs.
consolidated financial statements of Manila Corporation
an subsidiary in the total amount of 62. What is the total manufacturing cost for June?
a. P2,320,000 c. P2,350,000 a. 4,789,750 c. 328,750
b. P2,325,000 d. P2,650,000 b. 5,120,000 d. 5,000,000

TEAM PRTC
63. Allocate the total costs between the completed chips

and the chips in ending inventory. RRR Resto bar sold a fast food restaurant franchise to EEE.
a. 4,789,750 and 328,750 The sale agreement penned on January 1, 2021 states that
b. 4, 789,570 and 330,250 a down payment of P100,000 plus four P50,000 annual
c. 4,675,000 and 325,000 payments beginning December 31 of the current year. The
d. 4,657,000 and 352,000 prevailing rate during the year is 10% which has a PV of 1
of .68 and PV of annuity of 3.17. Moreover, indirect costs
On July 1, 2026, Sarita Construction Corporation contracted incurred amounted to P15,000 while direct costs totaled for
to build an office building for Elly Inc. for a total contract P27,000. The franchisee acquires the right to use scheme in
price of 975,000. this matter.
Compute for the following:

2026 2027 2028
Contract cost 75,000 600,000 1,050,000 67. How much is the profit for 2021?
incurred to date a. P224,350 c. P212,150
Estimated cost to 675,000 400,000 - b. P232,350 d. P228,350
complete
Billings to Elly 150,000 550,000 275,000 68. How much is the profit for 2022?
Inc. a. P15,225 c. P14,115
b. P17,845 d. P12,435
64. Under the percentage of completion method, how much
is the Construction in Progress on December 31, 2027? 69. WHAT IF, the scheme in this transaction is that the
a. 597,500 c. 685,000 franchisee acquires the right to access, how much will
b. 672,500 d. 575,000 be considered as profit for 2021?
a. P54,725 c. P58,725
65. Under the Zero Profit method, how much is the contract b. P72,725 d. P68,725
asset (liability) on December 31, 2027?
a. 50,000 asset c. 50,000 liability 70. WHAT IF, the scheme in this transaction is that the
b. 125,000 asset d. 125,000 liability franchisee acquires the right to access, how much will
be considered as profit for 2022?
66. Under the percentage of completion method, how much a. P75,225 c. P73,725
is the realized gross profit/(loss) at December 31, b. P70,310 d. P67,460
2028?
a. (72,500) c. (50,000)
b. (75,000) d. (100,000) Thank you for participating in Team PRTC
Nationwide Open Final Pre-Board Examination.

Since 1977
FINAL PRE-BOARD EXAMINATION September 16 & 17, 2023
Multiple Choice. Select the letter that corresponds to Parent Co. These are then transferred to Parent Co,
the best answer. This examination consists of 70 items which sells them to third parties.
and the exam is good for three (3) hours. Good luck! C Co is 75% owned and is located in France. It
manufactures and sells its own range of products
1. In a partnership, which of the following statements is locally. It negotiates its own day to day financing
true regarding the allocation of profits and losses needs with French banks.
among partners?
a. Profits and losses must be allocated equally 5. Which of the subsidiaries are likely to have a different
among all partners. functional currency from Parent Co?
b. Profits and losses can be allocated in any manner a. A Co and B Co c. B Co and C Co
agreed upon by the partners. b. A Co and C Co d. all three subsidiaries
c. Profits must be allocated based on each partner’s
capital contribution, and losses must be allocated 6. When a parent has a foreign subsidiary whose
equally. functional currency is the national currency of the
d. Profits must be allocated equally, and losses must country where it operates, which rates of exchange
be allocated based on each partner’s capital should be used to translate the items below into the
contribution. parent’s functional and presentation currency?
Non-current Non-current
Receivables
2. When a partner withdraws more money from the assets liabilities
partnership than their share of profits, what is the a. closing rate closing rate closing rate
result? b. historic rate closing rate closing rate
a. An increase in that partner’s capital account.
historic
b. A decrease in that partner’s capital account. c. historic rate closing rate
rate
c. No impact on the partner’s capital account.
historic
d. An increase in the partnership’s assets. d. historic rate historic rate
rate
3. In a statement of affairs, assets pledged for partially
The San Lorenzo Association, a private non-profit
secured creditors are
organization, received a contribution of P50,000 in 2018
a. Included with assets pledged for fully secured
restricted for membership training in providing emergency
creditors
aid during calamity situations. None of the contribution
b. Offset against partially secured creditors
was spent in 2018. In 2019, P35,000 of the contribution
c. Included with free assets
was used to finance a training seminar as to the role its
d. Disregarded
members may take in helping people in flood disaster
situations.
4. Which of the following statements, in respect of
foreign currency translation, are correct according to
7. Unrestricted net assets are typically the assets in the
PAS 21 The effects of changes in foreign exchange
a. General fund
rates?
b. Restricted fund
I. The functional currency of an entity is selected
c. Permanent endowment fund
by management
d. Loan fund, term endowment fund, annuity fund,
II. The presentation currency of an entity is
life income fund and plant fund
selected by management
III. The functional currency of an entity is
8. In the cash distribution plan, which partner gets the
identified by reference to circumstances of the
first cash distribution?
business
a. The partner with the largest loan balance
IV. The presentation currency of an entity is
b. The partner with the largest loss absorption
identified by reference to circumstances of the
potential
business.
c. The partner with the largest capital balance
a. I and II only c. I and IV only
d. The partner with the largest profit or loss ratio
b. II and III only d. III and IV only
Agency LLL, a national government agency, incurs an
Parent Co has three overseas subsidiaries:
obligation on April 20 2016 for the purchase of IT Software
A Co is 80% owned. A Co does not normally enter into
for P120,000 for delivery on April 24, 2016 and to be paid
transactions with Parent Co, other than to pay
on May 25, 2016.
dividends. It operates as a fairly autonomous entity
on a day to day basis although Parent Co controls
9. The entry to be recorded by LLL for the incurred
its long term strategy.
obligation would correctly include a
B Co is 100% owned and has been set up in order to
a. Debit to Equipment and Software
assemble machines from materials provided by
b. Credit to Accounts Payable
Page 1 of 8 www.teamprtc.com.ph AFAR.FPB10.23

TEAM PRTC
c. Credit to Cash-NT-MDS b. The retained earnings of the acquirer plus any

d. Memo entry in RAOCO income from acquisition
c. The retained earnings of the acquirer only
10. Under PFRS 11, joint arrangements that are joint d. The retained earnings of the acquirer less any
ventures are accounted for under amortization of goodwill
a. cost method in accordance with PAS 39.
b. equity method in accordance with PAS 28. 17. The percentage of completion of a construction
c. fair value method in accordance with PFRS 9. contract is based on all of the following, except
d. proportionate consolidation method in accordance a. The proportion that contract costs incurred for
with PAS work performed to date bear to the estimated
total contract costs.
11. A private not-for-profit organization (NPO) should b. Survey of work performed.
recognize contributed services which would be c. Completion of a physical proportion of the contract
purchased if not donated as an increase in both work.
expenses and contributions, if the following d. Progress payments and advances received from
requirement(s) for such recognition is/are met. customers.
I. The contributed service creates or enhances a
non-financial asset 18. A Company uses the percentage of completion method
II. It require specialized skills, are provided by to account for a four-year construction contract.
individuals possessing those skills, and would Which of the following would be used in the calculation
typically need to be purchased if not provided of the income recognized in the first year?
by donation. Progress billings Collection on progress billings
a. No No
a. Both I and II c. Neither I or II b. No Yes
b. I only d. II only c. Yes No
d. Yes Yes
12. In the preparation of a cash distribution program for
the liquidating Partnership ABC, the balance of A, Loan 19. The units transferred in from the first department to
among the assets in the accounting records of the the second statement should be included in the
partnership is: computation of the equivalent units for the second
a. Added to A, Drawing, account balance department for which of the following methods of
b. Included with the total of the noncash asset process costing
accounts FIFO AVERAGE
c. Disregarded a. Yes Yes
d. Deducted from A, Capital, account balance b. Yes No
c. No Yes
13. Foreign exchange gains and losses on accounts d. No No
receivable and payable are denominated in a foreign
currency are: 20. In the computation of manufacturing cost per
a. Accumulated and reported upon settlement equivalent unit, the weighted average method of
b. Deferred and treated as transaction price process costing considers
adjustment a. Current costs only
c. Reported as equity adjustments from translation b. Current costs plus cost of ending work-in-process
d. Recognized in the period in which the exchange inventory
rates change c. Current cost plus cost of beginning work-in-
process inventory
14. When a home office pays expenses of a branch and d. Current cost less cost of beginning work-in-
apportions the expense without notifying the branch, process inventory
the following accounts increase
Home Office Investment in Branch PROBLEMS
a. Yes Yes
b. Yes No The working paper eliminating entry recorded by Acquirer
c. No Yes Company on January 1, 2023, the date of acquisition of
d. No No its subsidiary follows:
Common Stock – Acquired Company P 200,000
15. When as asset is transferred to a branch from its head APIC – Acquired Company 300,000
office, which of the following occurs?
Retained Earnings – Acquired 250,000
a. Only a memo entry is made
Company
b. A credit to Home Office account
Inventory 75,000
c. A debit to Home Office account
d. A credit to Investment in Branch account Plant Assets (net) 105,000
Patent 70,000
16. Under the acquisition method, the retained earnings Goodwill 200,000
of the acquirer after the combination is equal to Investment in Acquired Company P 920,000
a. The sum of the retained earnings of the acquire
Non-controlling interest in Acquired 280,000
and acquirer
Company

TEAM PRTC
years to complete the contract. The company uses the

Of the goodwill recorded, P30,000 belongs to the non- percentage of completion method to report profits. (Use
controlling interest. two decimal places for the percentage of completion, i.e.
64.28%).
21. Determine the percentage of outstanding voting
shares of the subsidiary acquired by the parent. The following information details the actual and estimated
a. 76.67% c. 72.00% costs from 2020 to 2023.
b. 78.00% d. 75.00% Year Actual cost each Estimated cost to
year complete
Amounts related to the statement of affairs of Distressed 2020 P3,120,000 P3,264,000
Company as of April 30, 2023 follow: 2021 1,584,000 1,800,000
Assets pledged for fully secured P 80,000
2022 1,152,000 912,000
liabilities
Assets pledged for partially secured 50,000 2023 1,080,000 -
liabilities
Free assets 272,000 25. Determine the realized gross profit (loss) in 2023.
Fully secured liabilities 60,000 a. P(168,000) c. P48,000
Partially secured liabilities 80,000 b. P127,000 d. (P48,000)
Unsecured liabilities with priority 40,000
Unsecured liabilities without 330,000 26. Using zero-profit-method instead, how much is the
priority realized gross profit (loss) in 2022?
a. P(168,000) c. P 48,000
22. Calculate the expected amount recoverable by b. P127,000 d. P (48,000)
partially secured creditors in the event of liquidation.
a. P71,000 c. P69,500 On January 1, 2023, E, F, and G (all are corporations)
b. P50,000 d. P80,000 establish a joint arrangement to manufacture a product
that they will share equally They will each contribute
During 2020, there was no change in either the raw P200,000. E and F are to contribute cash while G is to
material or the work in process beginning and ending contribute a piece of equipment with a fair value of
inventories. However, finished goods, which had a P200,000. In the books of G, the carrying value of the
beginning balance of P25,000, increased by P 15,000. equipment is P225,000. Assume the equipment has a
remaining life of 10 years from this date.
23. If the manufacturing costs incurred totaled P 600,000
during 2020, the goods available for sale must have 27. On January 1, 2023, in G Corporation balance sheet,
been: the Equipment in JO account (net) will be presented
a. P 585,000 c. P 610,000 at:
b. P 600,000 d. P 625,000 a. P61,667 c. P66,667
b. P50,000 d. P75,000
The BACOLOD Company bills its branch for merchandise
at 135% of cost. On December 31, the following items are Manila Corporation operates two (2) production
contained in the branch records: departments, namely, Department A and Department B.
Merchandise Merchandise Appropriately, Department A uses weighted average
from HO (at from other Merchandise costing while Department B uses FIFO costing in
billed price) vendors Total accounting for their respective operations.
Merchandise P 162,000 P 40,000 P 202,000 The following data are available for the August, 2023
Inventory, operations of Department B, the company’s final
12/1 production process.
Additional 202,500 120,000 322,500
Merchandise Units: In process, August 1 (40% 6,000
for stock, in converted) units
Dec. Received from Department 34,000
Merchandise 189,000 50,000 239,000 A during the month
Inventory, Completed and transferred 30,000
12/31 In process, August 31 (60% 9,200
converted)
24. What is the balance of the Allowance for Overvaluation
account in the home office books before any Materials in this department are added as follows:
adjustment is made for branch sales to outsiders in 40% at the start of the process; 30% at mid-point of the
December? process; and 30% at the end of the process. Quality
a. P 94,500 c. P100,000 control inspection is at the end of the process and lost
b. P 45,500 d. P 99,500 units, if any, are discovered only at this point.
Units lost within 2% of good output is deemed normal.
Among the normal losses are 20 units from the In-Process
MAWET Contractors was recently awarded a P6,720,000 at the beginning.
contract to construct a trade center for SOUND Lending, Costs: In process, beginning
Inc. MAWET Contractors estimates it will take about 4 From the preceding P 1,060
department

TEAM PRTC
In this department: 2,725 Costs incurred in Department 2 during the current month
Materials are given below
Conversion 1,015 Materials 24,000
Transferred in during 34,000 Labor and overhead 45,240
August
Added during the month: 51,900
In answering Questions 31 through 34 that follow, assume
Materials
the following unit costs for April were determined from the
Conversion 28,832
above-mentioned information.
Total charged to the P119,532
Preceding department P 7.00
department in August
Materials 3.00
28. Compute the EUP for materials in the Finishing Labor and overhead 3.90
Department during August, 2023. Cumulative P13.90
a. P36,400 c. P30,640
b. P30,640 d. P34,600 31. Compute the cost of units completed from the In-
Process, April 1
29. Compute the EUP for conversion in the Finishing a. P 25,364 c. P26,680
Department during August, 2023 b. P 25,436 d. P 25,463
a. P33,920 c. P33,900
b. P33,912 d. P33,870
32. Compute the cost of units completed from those
received during April
A reconciliation of the Makati branch account of Manila a. P 83,400 c. P 87,490
Head Office and the Head Office account carried in the
b. P 89,470 d. P 84,970
books of the branch office shows the following
reconciliation items on December 31, 2023. 33. Compute the cost of production charged to Factory
1. A credit for merchandise allowance of P9,562.50 was Overhead Control
taken up by the branch as P8,437.50. a. P 9,549 c. P 9,954
2. A charge by the branch of P6,750 for an advance
b. P 9,945 d. P10,510
taken by the Branch Operations manager when he
visited the branch was recorded twice by the 34. Compute the cost of units still in process at April 30,
Home Office. 2023
3. The branch has not taken up P4,375 covered by a
a. P 46,850 c. P 45,680
credit memo from the home office. b. P 48,560 d. P48,650
On January 1, 2023, G&A and SCHEMA agreed to form a
The Makati branch account in the head office books had a
partnership. The following are their assets and liabilities:
debit balance of P380,625 on December 31, 2023. The Accounts G&A SCHEMA
reciprocal accounts were in agreement at the beginning of
Cash P34,000 P19,000
the year. Accounts Receivable P22,000 P12,000
Inventories P76,000 P91,000
30. The unadjusted balance of the Head Office account in Machinery P120,000 P110,000
the branch books on December 31, 2023 is: Accounts Payable P54,000 P36,000
a. P392,875 c. P387,375
Notes Payable P35,000 P15,000
b. P379,375 d. P381,875 G&A decided to pay-off his notes payable from his
personal assets. It was also agreed that SCHEMA’s
BIGLANG-SIGAW MANUFACTURERS uses process costing inventories were overstated by P6,000 and G&A’s
in its manufacturing operations and adopts the FIFO
machinery was over depreciated by P5000. SCHEMA is to
method in costing its production. In Department 2, invest/withdraw cash in order to receive a capital credit
conversion costs are incurred uniformly throughout the that is 20% more than G&A’s total net investment in the
process. Materials are added following inspection, which partnership.
occurs at the 90% stage of completion. In view of the 35. How much cash will be presented in the partnership’s
simplicity of the production process, losses are not
statement of financial position?
expected, thus any spoiled units are deemed abnormal a. P 90,600
and their costs charged to Factory Overhead Control
b. P112,600
account. c. P102,600
d. P121,600
The following information relates to Department 2 for April YELLOW and RED are partners who have the agreement
2023. to share profit and loss in the following Manner:
Units Pesos
YELLOW RED
In process, April 1 (40% 2,000 P16,000 Annual Salaries P 52,200 P 51,800
converted) Interest on ave. balances 5% 10%
Received from Department 1 12,000 84,000 Bonus (based on net 10%
Transferred to finished product 8,000 income after salaries and
In process, April 30 (70% 5,000 interest)
converted) Remainder 50% 50%
Lost units 1,000 During the year ended December 31, 2023, the
partnership generated a profit of P115,000 before any

TEAM PRTC
deductions. YELLOW’s and RED’s average capital balances

for the year are P120,000 and P60,000, respectively. 41. The partially secured creditor will be paid an amount
Income is distributed to the partners only as far as it is of
available. a. 120,000 c. 121,350
36. How much is the total share of RED in the net income b. 119,730 d. 118,800
for the year ended 2023?
a. P57,300 c. P57,500 Ashy enters into a contract with a customer to build a 50-
b. P57,700 d. P59,133 storey building for P 100,000,000, with a performance
The Statement of Financial Position of MAN’s partnership bonus of P 50,000,000 that will be paid based on the
as of December 31, 2023 is given below: timing of completion. The amount of the performance
bonus decreases by 10% per week for every week beyond
MAN Company the agreed-upon completion date. The contract
Statement of Financial Position requirements are similar to contracts that Ashy has
As of December 31, 2023 performed previously, and management believes that
Assets Liabilities there is a 60% probability that the contract will be
and Equity completed by the agreed-upon completion date, a 30%
Cash P 30,000 Liabilities P 80,000 chance that it will be completed one week late, and only a
Noncash P520,000 Loan from P 10,000 10% probability that it will be completed two weeks late.
Assets MAX
Loan to ACE P 10,000 NICK, P123,400 42. Determine the expected value of the contract price.
Capital a. 90,000,000 c. 147,500,000
(50%) b. 150,000,000 d. 145,000,000
ACE, Capital P203,000
(30%) 43. Determine the most likely value of the contract price.
MAX, Capital P143,600 a. 90,000,000 c. 147,500,000
(20%) b. 150,000,000 d. 145,000,000
Total Assets P560,000 Total P560,000
Liabilities On January 2, 2022, CHERRY Company acquired 90%
and Equity of the outstanding share of LEMON Inc. at book value.
During 2022 and 2023, intercompany sales amounted
On January 1, 2015, the partners decided to liquidate. For to P2,000,000 and P4,000,000, respectively. CHERRY
the month of January, assets with a book value of consistently recognized a 25% mark-up based on cost
P250,000 were sold and liabilities to outsiders were fully while LEMON had 25% gross profit on sales. The
paid. inventories of the buying affiliate, which all came from
37. How much were the noncash assets sold if MAX inter-company transactions show:
received the amount priority to him? Dec 31, 2022 Dec 31, 2023
a. P223,200 c. P273,200 CHERRY P240,000 P160,000
b. P296,800 d. P269,800
On November 1, 2023, Kurtsymon (KURTSYMON) Inc.’s LEMON 100,000 40,000
trustee prepares a Statement of Affairs with the following
information: The following are the separate Statement of
• P340,000 cash will be received by the unsecured Comprehensive Income for the 2 companies forthe
creditors whose claims totaled P1,360,000 year 2023:
• W received a 12% note of P124000 from KURTSYMON CHERRY LEMON
on March 1, 2023, secured with machinery with a
Sales P25,000,000 P14,000,000
market value of P115,000
• KURTSYMON issued to X a 12%, 1-year note of Cost of Sales 15,000,000 8,400,000
P136,000 on January 1, 2023. Nothing has been
pledged to this note. Gross Profit 10,000,000 5,600,000
• Y holds a note of P137,500 on which interest of P7,452 Operating Expenses 6,000,000 3,800,000
is accrued, secured with equipment with a book value
of P153,000. The fair value of the equipment is Operating Profit 4,000,000 1,800,000
determined to be P173,250
Other Expenses 18,000
• KURTSYMON still owes Z, its cashier, with her salary
worth P12,220 Other Income 40,000
38. The unsecured creditor without priority will receive
a. 37,400 c. 36,950 Net Income 4,000,000 1,822,000
b. 38,600 d. 37,360 Compute for the following amounts as of 31 December
2023:
39. The unsecured creditor with priority will receive 44. Consolidated Sales
a. 3,055 c. 3,150 a. 19,368,000 c. 19,400,000
b. 2,880 d. 2,950 b. 23,336,000 d. 20,350,000
40. The fully secured creditor will be paid an amount of 45. Consolidated Cost of Sales
a. 140,250 c. 144,952 a. 39,000,000 c. 33,000,000
b. 138,950 d. 143,600 b. 35,000,000 d. 37,000,000

TEAM PRTC
will undertake any activities that significantly affect

The accounts of SARSKY, a Philippine-based company, the intellectual property to which the customer has
shows P813,000 accounts receivable and P389,000 rights. The software is transferred to the customer on
accounts payable at December 31, 2023 before adjusting February 1, 20x1. However, the code, which is
entries are made. An analysis of the balances reveals the necessary for the customer to use the software, is
following: transferred only on April 1, 20x1. How should
Pongcuter Co. recognize revenue from the fixed
Accounts receivable consideration in the contract?
a. in full on February 1, 20x1
Receivable denominated in P285,000 b. in full on April 1, 20x1
Philippine Peso c. deferred and amortized over four years starting
Receivable denominated in 118,000 on February 1, 20x1
200,000 Japanese Yen d. deferred and amortized over four years starting
Payable denominated in 150,000 410,000 on April 1, 20x1
Thailand Baht
Total P813,000 P Corporation issued 120,000 shares of P10 par common
stock with a fair value of P2,550,000 for all the net
Accounts payable assets of M Company. In addition, P incurred the
following costs
Payable denominated in P68,500
Philippine Peso Professional fees to arrange P27,000
Payable denominated in 10,000 76,000 the business combination
Hongkong Dollar Cost of SEC Registration 12,000
Payable denominated in 250,000 244,500 Cost of printing and issuing 3,000
Thailand Baht stock certificates
Total P389,000
Immediately before the business combination in which M
Current exchange rates on December 31, 2023 are as company was dissolved, M’s assets and equities were as
follows: follows (in thousands)
Japanese Yen P0.66
Thailand Baht P1.65 Accounts Book Fair
Hongkong Dollars P7.00 value value
Current P1,000 P1,100
46. What should be the net exchange gain or loss that assets
should be reflected in SARSKY’s statement of Plant 1,500 2,200
comprehensive income for 2023 after the year-end assets
adjustments? Liabilities 300 300
a. 19,500
b. 16,500 Common 2,000
c. 3,000 stock
d. 14,000 Retained 200
earnings
47. What is the balance of the accounts receivable that
should be reported in SARSKY’s December 31, 2023 50. What is the amount of goodwill (gain on acquisition)?
statement of financial position? a. P450,000 c. P(550,000)
a. 813,000 b. P(450,000) d. P500,000
b. 829,500
c. 544,500 51. How much additional paid in capital is recorded by P?
d. 412,500 a. P1,350,000 c. P1,335,000
b. P1,365,000 d. P1,330,000
48. What is the balance of the accounts payable that
should be reported in C31’s December 31, 2023 52. P should recognize expense of
statement of financial position? a. P32,000 c. P27,000
a. 389,000 b. P15,000 d. P12,000
b. 317,500
c. 386,000 53. Red Corporation will issue common shares with a par
d. 247,500 value of P10 for the net assets of Blue Company. Red’s
Common stock has a current market value of P40 per
49. On January 1, 20x1, Pongcuter Co. enters into a share. Blue’s statement of financial position on the
contract with a customer to grant a software license date of acquisition follow:
for ₱1,000,000. The fee is payable at contract Current assets P320,000
inception. The license has a term of four years, to Property and Equipment 880,000
reckon from the date the customer can use the Liabilities 400,000
software. The customer can determine how and when Common stock, P5 par P80,000
to use the right without further performance by Additional paid in capital 320,000
Pongcuter Co. and does not expect that Pongcuter Co. Retained Earnings 400,000

TEAM PRTC
Merchandise shipment in transit at December 31, 2023 is

Current assets are appraised at P400,000 and the P20,000 at billed price.
property and equipment was also appraised at
P1,600,000. Its liabilities are fairly value. 57. The net income reported by the home office for its
Accordingly, Red Corporation issued shares of its 2023 operation is:
common stock with a total market value equal to a. P260,000 c. P 20,000
that of Blue’s net assets including goodwill. To b. P 38,000 d. P200,060
recognize goodwill of P200,000, how many shares
were to be issued? 58. The net income reported by the branch for its 2023
operation is
a. 45,000 c. 50,000 a. P20,000 c. P260,000
b. 40,000 d. 55,000 b. P200,060 d. P 38,000
A Consignment Out account on the books of Consignor 59. How much is the overstatement of the cost of sale in
Inc. appears below the branch 2023 income statement resulting from the
Consignment Out – Consignee Sales home office billing policy?
Jan. 3 Shipped 12 P16,800 Jan 31 P21,600 a. P46,000 c. P20,000
sets Sales, 9 b. P38,000 d. P 0
sets
3 Freight charges 1,440 60. How much net income was reported in the company’s
31 Charges by 2023 income statement?
consignee a. P362,000 c. P236,000
Delivery exp. 900 b. P263,000 d. P326,000
Commission(20%) 4,320
Advertising 1,000 The Carl Company will issue P10 par value common stock
54. The consignment profit realized by Consignor, Inc. on for the net assets of PBA Company. The fair market value
the consignment during the month was per share of Carl’s common stock is P40. The following is
a. P 1,700 c. P 3,360 the list of accounts of PBA Company on the date of the
b. P 4,340 d. P 4,800 acquisition.
Book Value Fair Market Value
55. The adjusted balance of the Consignment-Out account Current assets P280,000 P 320,000
after recognition of the net profit will be Plant assets (net) 680,000 1,280,000
a. P 6,450 c. P 4,560 Liabilities 320,000 320,000
b. P 4,605 d. P 6,540 Common stock 64,000
Additional paid-in capital 256,000
56. The amount of cash remitted by Consignee was Retained earnings 320,000
a. P 14,300 c. P 15,380
b. P 19,700 d. P 21,600 61. To have an income from acquisition of P120,000, the
number of shares to be issued by Carl Company
The Dasmarinas Corporation operates a branch in should be”
Calamba City. The home office ships merchandise to the a. 30,000 shares c. 29,000 shares
branch at more than cost. Selected information Selected b. 30,400 shares d. 35,000 shares
information from the December 31, 2023 trial balances
are as follows: 62. Same data as above, to have a goodwill of P 120,000,
the number of shares to be issued by Carl Company
Home Branch should be
Office Office a. 30,000 shares c. 29,000 shares
Books Books b. 30,400 shares d. 35,000 shares
Sales P600,000 P300,000
Summary information is given for P Company and S
Shipment to Branch 200,000
Company at July 1, 2023. The quoted market price of P
Purchases 350,000 - Co.’s stock on July 1, 2023 is P 32 per share.
Shipment from Home 230,000 P Company S Company S Company
office Per books Per books Fair values
Inventory, January 1 100,000 40,000 Current assets P19,200,000 P6,400,000 P7,200,000
Allowance for 58,000 Plant assets 20,800,000 17,600,000 20,800,000
overvaluation of branch Liabilities 12,000,000 4,000,000
inventory Common stock, 16,000,000 8,000,000
Expenses 120,000 50,000 P10 par
Additional paid-in
Inventory at December 31,
capital 800,000 800,000
2023
Retained earnings 11,200,000 11,200,000
Home office P30,000
Branch office P40,000 Assume that P Company issues 1,000,000 shares of its
own stock for the net assets of S Company on July 1,

TEAM PRTC
2023, in a purchase business combination in which S

Company is dissolved. Cutting Sewing
P Company incurred the following costs: Direct materials P950,000 P 210,000
Legal fees to arrange the business combination 20,000 cost
Cost of SEC registration 9,600 Direct labor hours 7,000 15,000
Cost of printing and issuing new stock certificates 2,400 Direct labor cost P560,000 P1,200,000
Indirect costs of combining 16,000
Machine hours 16,000 30,000
63. The goodwill from the business combination is
a. P10,000,000 c. P10,040,000
66. The company follows a policy of applying overhead for
b. P10,025,000 d. P 8,000,000
the entire plant on the basis of machine hours.
Determine the total costs of Priscilla Company’s order.
The BAM Manufacturing Co. uses a job-order costing
a. P2,920,000
system, and it applies factory overhead to production at a
b. P5,146,400
pre-determined rate based on direct labor cost. The
c. P4,944,000
following account appears in the general ledger:
d. P2,226,400
Work in Process
67. The company follows a policy of allocating support
Beg. P50,000 Finished P250,900
function costs to the producing departments using the
goods
direct method. Administration costs are allocated on
Direct Materials 100,000
direct labor hours; Maintenance on square meters of
Direct Labor 80,000
space occupied; Cutting on machine hours; and
Applied 60,000
Sewing on direct labor hours. Determine the total
overhead
costs of Priscilla Company’s order.
a. P5,146,400
64. The ending work in process represents the cost of
b. P5,041,350
Job# 26 which has been charged with P6,000 of direct
c. P2,121,350
labor and the cost of Job # 27 which has been charged
d. P5,125,600
with applied factory overhead of P4,800. 64. Total cost
of direct materials in the ending work in process was
Ashton Corporation manufactures two products out of a
a. P8,400 c. P15,200
joint process: Aozi and Pedigree. The joint costs incurred
b. P9,000 d.P17,400
are P2,500,000 for a standard production run that
generates 120,000 gallons of Aozi and 80,000 gallons of
Pin company incurred the following costs during the
Pedigree. Aozi sells for P20 per gallon while Pedigree
month: direct labor, P122,000; factory overhead, 108,000
sells for P32.50 per gallon.
and direct materials purchases, P160,000. Inventories
show the following costs:
68. If there are no additional Processing costs incurred
after the split-off point, calculate the amount of joint
Beginning Ending
cost of each production run allocated to Aozi on a
Finished goods P27,000 P30,000 physical-units basis.
Work in process 61,500 57,500 a. P1,500,000
Direct materials 37,500 43,500 b. P1,000,000
c. P1,200,000
65. How much is the cost of goods manufactured? d. P1,300,000
a. P443,500 c. P386,000
b. P382,000 d.P388,000 69. If there are no additional processing costs incurred
after the split-off point, calculate the amount of joint
Noreen Women’s Clothing specializes in designer skirts cost of each production run allocated to Pedigree on a
which it manufactures to customer order. The budgeted relative-sales-value basis.
data for its main plant for 2023 are: a. P1,500,000
b. P1,000,000
Support Functions Producing Departments c. P1,200,000
Adminis Mainten Cutting Sewing
d. P1,300,000
tration ance
Overhead P800,000 P300,000 P5,000,000 P6,000,000 70. Suppose the following additional processing costs are
Cost required beyond the split-off point in order to obtain
Labor 20,000 20,000 80,000 Aozi and Pedigree: P1.00 per gallon for Aozi and
Hours P11.00 per gallon for Pedigree, calculate the amount
Machine 100,000 150,000 of joint cost of each production run allocated to Aozi
Hours on a net-realizable-value basis.
Space 7,000 50,000 25,000 a. P1,200,000
Occupied 4,500
b. P1,300,000
(m2)
c. P1,425,000
d. P1,075,000
During the year, Priscilla Co. placed an order that was
started and completed by year’s end.
Thank you for participating in Team PRTC
Data for this job include the following information:
Nationwide Open Final Pre-Board Examination.

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Excel Professional Services Inc.

Management Firm of Professional Review and Training Center (PRTC)

Advanced Financial Accounting

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28. Assuming DLSU is not an SME, determine the amount

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Expenses 80,000 activities. An assessment of their participation shows they

On January 1, 2020, SME Voltex 5 Company has a 30%

Home Branch On December 31, 2010, Takuza 4 declared and paid

In ‘000 Emong Bobby Ramil

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51. What is the estimated amount the holders of the notes

Per physical count, the ending inventory of the branch is

56. What is the total ending inventory to be shown on the

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BRIGADIER CONSTRUCTIONS, INC. had been working on a. a debit to consignment-Out of P7,935

65. How much is the net profit of the consignor?

66. How much is the adjusted balance of the Consignment

67. The reclassification entry to be recorded by the

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CONSIGNMENT OUT – BALIWAG Enterprises 2026 2027 2028

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59. What is the combined cost of ending inventory?

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Advanced Financial Accounting

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15. In the period of an intercompany asset transaction, the Bee P 60,000

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43. Compute the correct balance of the branch account in

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Retained earnings, (1,933,750) (245,000) FOREVERMORE INDUSTRIES manufactures products X, A,

Forward Rates Aggregate Corporation has two (2) service departments,

Current Rates Historical Rates

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63. Allocate the total costs between the completed chips

Compute for the following:

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c. Credit to Cash-NT-MDS b. The retained earnings of the acquirer plus any

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years to complete the contract. The company uses the

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deductions. YELLOW’s and RED’s average capital balances

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will undertake any activities that significantly affect

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Merchandise shipment in transit at December 31, 2023 is

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2023, in a purchase business combination in which S