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Sample Problems For Intermediate Accounting 3

This document contains three multiple choice questions regarding the classification and reporting of certain financial statement accounts: 1) The first question asks which component of other comprehensive income should be reclassified to profit or loss, with the answer being gain or loss on equity investments measured at fair value through other comprehensive income. 2) The second question involves calculating total shareholders' equity given various asset and equity account balances, with the answer being 7,300,000 after accounting for treasury shares. 3) The third question also involves calculating total shareholders' equity based on various equity account balances, with the answer being 31,500,000 after considering the appropriate inclusion and exclusion of various reserves and adjustments.

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2K views2 pages

Sample Problems For Intermediate Accounting 3

This document contains three multiple choice questions regarding the classification and reporting of certain financial statement accounts: 1) The first question asks which component of other comprehensive income should be reclassified to profit or loss, with the answer being gain or loss on equity investments measured at fair value through other comprehensive income. 2) The second question involves calculating total shareholders' equity given various asset and equity account balances, with the answer being 7,300,000 after accounting for treasury shares. 3) The third question also involves calculating total shareholders' equity based on various equity account balances, with the answer being 31,500,000 after considering the appropriate inclusion and exclusion of various reserves and adjustments.

Uploaded by

Luxx Lawliet
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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13.

All of the following components of OCI should be reclassified to profit or loss,


EXCEPT
a. Gain or loss from translating the financial statements of a foreign
operation
b. Gain or loss on remeasuring debt investment at fair value through other
comprehensive income
c. Gain or loss on derivatives designated as a cash flow hedge
d. Gain or loss on equity investment measured at fair value through
other comprehensive income

Answer: D
Explanation:
Gain or loss on equity investment measured at fair value through OCI is reclassified
to retained earnings

14. The following current assets and shareholders' equity are provided by Mory
Company at year-end:

Cash 600,000
Financial assets at fair value through profit or loss,
including cost of P200,000 of United Company
shares 1,000,000
Accounts receivable 3,500,000
Inventory 1,500,000
Total current assets 6,600,000

Share capital 5,000,000


Share premium 2,000,000
Retained earnings 500,000
Total shareholders' equity 7,500,000

What amount should be reported as total shareholders' equity?


a. 7,200,000
b. 7,300,000
c. 7,800,000
d. 5,200,000

Solution Answer B
Share capital 5,000,000
Share premium 2,000,000
Retained earnings 500,000
Treasury shares, at cost ( 200,000)*
Total shareholders' equity 7,300,000

15. Ariel Company provided the following information at year-end:


Share capital 15,000,000
Share premium 5,000,000
Treasury shares, at cost 2,000,000
Actuarial loss on defined benefit plan 1,000,000
Retained earnings unappropriated 6,000,000
Retained earnings appropriated 3,000,000
Revaluation surplus 4,000,000
Cumulative translation adjustment-credit 1,500,000

What amount should be reported as total shareholders' equity?


a. 31,500,000
b. 32,500,000
c. 28,500,000
d. 25,500,000

Solution Answer A
Share capital 15,000,000
Share premium 5,000,000
Retained earnings unappropriated 6,000,000
Retained earnings appropriated 3,000,000
Revaluation surplus 4,000,000
Cumulative translation adjustment-credit 1,500,000 *
Actuarial loss on defined benefit plan (1,000,000) **
Treasury shares, at cost (2,000,000) ***
Total shareholders' equity 31,500,000

*The credit in the cumulative translation adjustment account is a translation gain


reported as component of other comprehensive income.
**The actuarial loss on defined benefit plan is reported as component of other
comprehensive income.
If the cumulative translation adjustment account has debit balance, it is translation
loss.
***The treasury shares are excluded from financial assets at fair value through profit
or loss but should be reported as a deduction from shareholders' equity.

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