3/10/2021 BADVAC3X - 2T 2021 Final Exam

BADVAC3X - 2T 2021 Final Exam

Government and Non-for-profit Accounting

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* Required

The objectives of government accounting include all of the following, except *

(1 Point)

To simplify government accounting and its eventual computerization

To adopt a system that is conformity with Philippine Financial Reporting Standards (PFRS)

To keep close tabs on erring officers that misappropriate government funds

To generate periodic and relevant financial reports for better monitoring of performance

It is the government body that keeps the general accounts of the government
and prepares the annual financial statement of the national government, local
government agencies and government-owned or controlled operations
(GOCCs) *
(1 Point)

Commission on Audit (COA)

Bureau of Treasury
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Department of Budget and Management

Department of Finance

What are the components of the financial statements (FS) under government
accounting? *
(1 Point)

Balance sheet, statement of income and expenses and notes to the FS

Balance sheet, statement of income and expenses and cash flow statement

Balance sheet, statement of income and expenses and statement of government equity

Balance sheet, statement of income and expenses, cash flow statement, statement of
government equity and notes to the FS

It is an authorization made by law or other legislative enactment, directing

payments of goods and services out government funds under specified
condition or for specific purposes *
(1 Point)

Allotment

Appropriation

Obligation

Malversation

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It refers to the commitment by a government agency arising from an act of a

duly authorized official that binds the government to the immediate or eventual
payments of a sum of money *
(1 Point)

Allotment

Appropriation

Obligation

Malversation

It is an authorization issued by the DBM to government agencies to withdraw

cash from the National Treasury through the issuance of Modified
Disbursement System Checks. *
(1 Point)

Allotment

Appropriation

Obligation

Notice of Cash Allocation

This phase of Budgetary Procedures which involves the submission of the

National Budget to the Legislative Body for review, deliberation and formulation
of an Appropriate Bill: *
(1 Point)

Preparation and Presentation

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Budget Authorization

Budget Execution

Budget Accountability

Modified Disbursement System Checks are checks issued by an agency

I Chargeable against the accounts of the National Treasurer maintained with
different MDS government servicing banks
II Chargeable against the agency checking accounts with government servicing
banks *
(1 Point)

I only

II only

Both I and II

Neither I nor II

This serves as the covering letter in transmitting the agency’s financial

statements to the COA, DBM and other oversight agency *
(1 Point)

Preclosing trial balance

Postclosing trial balance

Statement of management responsibility

Note to the financial statements

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10

This financial statement shall be prepared from information taken directly from
year-end postclosing trial balance *
(1 Point)

Statement of financial position

Statement of income and expenses

Statement of cash flows

Statement of government equity

11

The statement of income and expenses shall be prepared from information

taken directly from the year-end *
(1 Point)

Preclosing trial balance

Postclosing trial balance

Chart of accounts

Statement of financial position

12

What is the entry to record the grant of cash advance for travel *
(1 Point)

Debit, Advances to Officer and Employees; Credit, Cash, MDS – Regular

Debit, Advances to Officers and Employees; Credit, Subsidy from National Government

Debit, Due from Officers and Employees; Credit, Cash, MDS – Regular

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Debit, Due to Officers and Employees; Credit, Cash, MDS – Regular

13

It is the process of analyzing, recording, classifying, summarizing and

communicating all transactions involving the receipt and disposition of
government funds and property and interpreting the results thereof *
(1 Point)

Government auditing

Government budgeting

Government accounting

National treasury

14

Suppplies and materials purchased for inventory purposes shall be recorded

using *
(1 Point)

Periodic system and FIFO

Periodic system and weighted average

Perpetual system and moving average

Perpetual system and FIFO

15

What is the depreciation method under the government? *

(1 Point)

Straight line with 5% residual value

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Straight line with 10% residual value

Accelerated method with 10% residual value

Straight line without residual value

16

Tangible items below the capitalization threshold of P15,000 shall be accounted

as *
(1 Point)

Property, plant and equipment

Expense

Semi-expendable property

Prepaid expense

17

The following are the characteristics of heritage assets except: *

(1 Point)

Specialized in nature and do not have alternative uses

Their value in cultural, environmental, educational, and historical terms is unlikely to be fully
reflected in a financial value based purely on a market price

Legal and/or statutory obligations may impose prohibitions or severe restrictions on disposal
by sale

They are often irreplaceable and their value may increase over time, even if their physical
condition deteriorates

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18

Statement I: Depreciation on heritage assets shall not be recognized

Statement II: Impairment on heritage assets shall not be recognized *
(1 Point)

Both statements are true

Both statements are false

Statement I is true; statement II is false

Statement I is false; statement II is true

19

Revenue from non-exchange transactions arises from transactions where the

NGA’s receive resources and they provide no or nominal consideration directly
in return. An example of revenue from non-exchange transactions is *
(1 Point)

Registration fees

Tax revenue – individual and corporation

Clearance and certification fees

Passport and visa fees

20

These are transactions in which one entity receives assets or services, or has
liabilities extinguished, and directly give approximately equal value (primarily in
the form of cash, goods, services or use of assets) to another entity in exchange
*
(1 Point)

Exchange transactions
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Non-exchange transactions

Transfers

None of the above

21

Revenues received by the NGAs from exchange transactions are derived from
the following except *
(1 Point)

Sale of goods or provisions of services to third parties or to other NGAs

Use by other entity of assets yielding interest, royalties, dividends or similar transactions

Taxes, gifts and donations, goods in kind and fines and penalties

Interest income, royalties and dividends

22

These are economic benefits or service potential received or receivable by

NGAs, from an individual or other entity, as determined by court or other law
enforcement body, as a consequence of the individual or other entity breaching
the requirements of law or regulations *
(1 Point)

Royalties

Taxes

Fines

Bequest

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23

These are economic benefits or service potential compulsory paid or payable to

public sector agencies, in accordance with law or regulations, established to
provide revenue to the government *
(1 Point)

Royalties

Taxes

Fines

Bequest

24

On January 1, 2020, the Department of Agriculture (DA) received a P 10,000,000

appropriation from the national government for the acquisition of construction
machinery. On February 1, 2020, DA received the allotment from the
Department of Budget and Management. On March 1, 2020, DA entered into a
contract with Entity A for the acquisition of the machinery with a price of
P8,000,000
On April 1, 2020, DA received the Notice of Cash Allocation from Department of
Budget and Management net of 1% withholding tax for income tax supplier and
5% withholding of Final Tax on VAT of supplier. On May 1, 2020, Entity A
delivered the machinery to DA. On June 1, 2020, DA paid the obligation to
Entity A. On July 1, 2020, DA remitted the withheld income tax and final VAT at
BIR.
What is the journal entry on July 1, 2020? *
(1 Point)

Debit Cash — MDS, Regular, P7,520,000 and Credit Subsidy Income from National
Government, P7,520,000

Debit Machinery, P8,000,000 and Credit Accounts Payable, P8,000,000

Debit Accounts Payable, P8,000,000 and Crédit Due to BIR P480,000 and Cash - MDS, Regular,
P7,520,000

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Debit Due to BIR, P480,000 and Credit Subsidy Income from National Government, P480,000

25

Agency AAA has the following allotment for year 20x8

Capital Outlay (CO) P70,000,000
Maintenance and Other Operating Expenses (MOOE) 14,000,000
Personal Services (PS) 7,000,000
Financial Expenses (FE) 140,000
Total P91,140,000
The entry to record the receipt of the allotment from the DBM would be *
(1 Point)

No journal entry

Posting/Memorandum entry in Registry of Allotments and Obligations

Debit, National Clearing Account, P91,140,000; Credit, Appropriation allotted, P91,140,000

Debit, Cash – MDS Regular, P91,140,000; Credit, Subsidy from National Government,
P91,140,000

26

Agency BBB received Notice of Cash Allocation (NCA) – P63,000,000 for the year
20x8, the entry would be *
(1 Point)

No journal entry

Posting/Memorandum entry in Registry of Allotments and Obligations

Debit, National Clearing Account, P63,000,000; Credit, Appropriation allotted, P63,000,000

Debit, Cash – MDS Regular, P63,000,000; Credit, Subsidy from National Government,
P63,000,000

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27

Agency DDD was grated cash advance for payroll amounting to P392,000, the
entry would be *
(1 Point)

No journal entry

Memorandum entry in RAOPS

Debit, Advances for Payroll, P392,000; Credit, Cash – MDS Regular, P392,000

Debit, Cash – Disbursing Officer, P392,000; Credit, Due from National Government, P392,000

28

Agency DDD was grated cash advance for payroll amounting to P392,000.
Before the end of the month, Agency DDD set-up payable to officers and
employees as follows:
Salaries P420,000
PERA (Personal Economic Relief Allowance) 98,000
Total P518,000
Less: Salary deductions
Withholding tax P84,000
Life and retirement 28,000
Pag-ibig 5,600
Philhealth 8,400 126,000
Net Amount P392,000
The entry to record the above transaction would be: *
(1 Point)

Debit, Obligations Liquidated, P518,000; Credits, Cash Disbursing Officer, P392,000, Due to
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National Agency, P84,000, Due to GSIS, P33,600, Due to Philhealth, P8,400

Debit, Salaries etc, P518,000; Credits, Withholding tax payable, P84,000, Cash, Disbursing
Officer, P434,000

Debits, Salaries and Wages - Reg Pay, P420,000, PERA, P98,000; Credit, Due to Officers and
Employees, P392,000, Due to BIR, P84,000, Due to GSIS, P28,000, Due to Pag-ibig P5,600, Due
to Philhealth, P8,400

No entry required

29

What is the entry to record the collection of P21,000,000 corporate income tax
by the BIR in its agency books? *
(1 Point)

Memo entry

Debit, Cash – Collecting Officer, P21,000,000; Credit, Income tax – Corporation, P21,000,000

Debit, Cash, National Treasury – MDS, P21,000,000; Credit, Income tax – Corporation,
P21,000,000

Debit, Income tax – Corporation, P21,000,000; Credit, Cash – Collecting Officer, P21,000,000

30

Agency OOO had a balance of P1,400,000 of unused NCA (Cash, MDS) balance.
What would be the entry to adjust this unused NCA? *
(1 Point)

Debit, Subsidy Income from National Government, P1,400,000; Credit, Due from National
Government Agencies, P1,400,000

Debit, Subsidy Income from National Government, P1,400,000; Credit, Cash – MDS, Regular,
P1,400,000

Debit, Cash – MDS, Regular, P1,400,000; Credit, Subsidy Income from National Government,
P1,400,000

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No adjusting entry is required

31

A statement of functional expenses is required for which one of the following

private nonprofit organizations? *
(1 Point)

Colleges

Hospitals

Voluntary health and welfare organizations

Performing arts organizations

32

The statement of financial position (balance sheet) for Founders Library, a

private nonprofit organization, should report separate dollar amounts for the
library’s net assets according to which of the following classifications? *
(1 Point)

Unrestricted and permanently restricted

Temporarily restricted and permanently restricted

Unrestricted and temporarily restricted

Unrestricted, temporarily restricted, and permanently restricted

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33

Pinto Art Museum, a private nonprofit organization, has both regular(for

investment) and term endowments. On the museum’s statement of financial
position (balance sheet), how should the net assets of each type of endowment
be reported? *
(1 Point)

Term endowments, Temporary Restricted; Regular endowments, Permanently Restricted

Term endowments, Permanently Restricted; Regular endowments, Permanently Restricted

Term endowments, Unrestricted; Regular endowments, Temporary Restricted

Term endowments, Temporary Restricted; Regular endowments, Temporary Restricted

34

Kerry College, a private not-for-profit college, received $25,000 from Ms. Mary
Smith on April 30, 2012. Ms. Smith stipulated that her contribution be used to
support faculty research during the fiscal year beginning on July 1, 2012. On
July 15, 2012, administrators of Kerry awarded research grants totaling $25,000
to several faculty in accordance with the wishes of Ms. Smith. For the year
ended June 30, 2012, Kerry College should report the $25,000 contribution as *
(1 Point)

Temporarily restricted revenues on the statement of activities

Unrestricted revenue on the statement of activities

Temporarily restricted deferred revenue on the statement of activities

An increase in fund balance on the statement of financial position

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35

Good Hope, a private not-for-profit voluntary health and welfare organization,

received a cash donation of $500,000 from Mr. Charles Peobody on November
15, 2012. Mr. Peobody directed that his donation be used to acquire equipment
for the organization. Good Hope used the donation to acquire equipment
costing $500,000 in January of 2013. For the year ended December 31, 2012,
Good Hope should report the $500,000 contribution on its *
(1 Point)

Statement of activities as unrestricted revenue

Statement of financial position as temporarily restricted deferred revenue

Statement of financial position as unrestricted deferred revenue

Statement of activities as temporarily restricted revenue

36

Save the Planet, a private nonprofit research organization, received a $500,000

contribution from Ms. Greta Thunberg. Ms. Thunberg stipulated that her
donation be used to purchase new computer equipment for Save the Planet’s
research staff. The contribution was received in August of 2012, and the
computers were acquired in January of 2013. For the year ended December 31,
2012, the $500,000 contribution should be reported by Save the Planet on its *
(1 Point)

Statement of activities as unrestricted revenue

Statement of activities as deferred revenue

Statement of activities as temporarily restricted revenue

Statement of financial position as deferred revenue

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37

Which of the following is an example of volunteer services received by a not-

for-profit entity that should be recognized as revenue?
I. Services requiring specialized skills, provided by individuals with those
skills, that otherwise would have to be purchased.
II. Services of lay faculty at a private university operated by a religious order
III. Services that create or enhance non-financial assets, regardless of whether
or not they require specialized skills *
(1 Point)

I only

I and III only

II and III only

I, II, and III

38

Investment income for not-for-profit entities may include:

I. interest from debt investments
II. dividends from equity investments
III. changes in the fair values of both debt and equity investments *
(1 Point)

I only

I and II only

I and III only

I, II, and III

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39

A private not-for-profit university generally must depreciate all tangible fixed

assets, except:
I. works of art and other historical treasures
II. administration buildings *
(1 Point)

I only

II only

Both I and II

Neither I nor II

40

A private college received an offer from a CPA who is an alumnus to teach a

one-semester advanced accounting course at no cost. This contribution of
service: *
(1 Point)

need only be disclosed in the footnotes to the financial statements

be recorded as an asset with an equivalent amount recorded in the unrestricted fund balance

be recorded as a revenue with an equivalent amount recorded as an expenditure

need not be recorded if the service is for a period less than one academic year

41

Contributions from donors which are to be permanently invested should be

disclosed on the statement of activities of a private university as an increase in:
*
(1 Point)

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Permanently restricted net assets

Permanently restricted fund balance

Endowment fund balance

Deferred revenues

42

Military Family Center (MFC) is a voluntary welfare organization funded by

contributions from the general public. During 20x4, unrestricted pledges of
P800,000 were received, half of which were payable in 20x4 with the other half
payable in 20x5. It was estimated that 10% of these pledges would be
uncollectible. How much should MFC report as net contribution revenue for
20x4 with respect to these pledges? *
(1 Point)

P800,000

P720,000

P360,000

P0

43

J. Napoles Foundation, a voluntary health and welfare organization, supported

by contributions from the general public, included the following costs in its
statement of functional expenses for the year ended December 31, 20x4:
Fund raising P1,000,000
Administrative 600,000
Research 200,000
Napoles’ functional expenses for 20x4 program services included: *
(1 Point)

P200,000

P600,000

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P1,000,000

P1,800,000

44

A private university offers graduate assistantships to qualified students each

year. In exchange for the waiver of tuition, graduate assistants are required to
assist faculty members with research and other activities. Assume a graduate
assistant received a $4,000 tuition waiver for the current academic year. Based
on these facts, the university should record *
(1 Point)

tuition revenues of $4,000 and expenditures of $4,000

tuition revenues of $0 and expenditures of $0

tuition revenues of $4,000 and expenditures of $0

tuition revenues of $4,000 and a reduction of tuition revenues of $4,000

45

For the year ended June 30, 2019, a university assessed its students a total of
$4,000,000 for tuition and fees. Included in this amount was $300,000 of tuition
remissions awarded to graduate teaching assistants, and $150,000 of
scholarships awarded to undergraduate students. Tuition and fees totaling
$3,550,000 were collected during the year ended June 30, 2019. What amount
should be reported in the unrestricted fund as net revenue from tuition and
fees for the year ended June 30, 2019? *
(1 Point)

$4,000,000

$3,550,000

$3,700,000

$3,850,000

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46

St. Luke Hospital, a nonprofit hospital affiliated with a religious group, reported
the following information for the year ended December 31, 2012:
Gross patient service revenue at the hospital’s full established rates $980,000
Bad debts expense 10,000
Contractual adjustments with thirdparty payors 100,000
Allowance for discounts to hospital employees 15,000
On the hospital’s statement of operations for the year ended December 31,
2012, what amount should be reported as net patient service revenue? *
(1 Point)

$865,000

$880,000

$855,000

$955,000

47

A spot rate may be defined as *

(1 Point)

The US Dollar value of a foreign currency

The forecasted future value of a foreign currency

The price a foreign currency can be purchased or sold today

The price today at which a foreign currency can be purchased or sold in the future

48

Hedging a forecasted transaction is a *

(1 Point)

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Cash flow hedge

Fair value hedge

Net investment hedge

Undesignated hedge

49

The ineffective portion of an FX gain or loss on a fair value hedge must always
be reported currently in *
(1 Point)

Earnings, Yes; OCI, Yes

Earnings, Yes; OCI, No

Earnings, No; OCI, Yes

Earnings, No; OCI, No

50

When an account payable or receivable in foreign currency appears in the

unadjusted trial balance of a Philippine company at year-end, its balance is
translated to Philippine pesos using *
(1 Point)

The current exchange rate at the end of the year

The exchange rate which was current when the account payable or receivable was originally
entered

The projected exchange rate on the settlement date

The average exchange rate for the year

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51

Beth had the following foreign currency transactions during 2015:

Purchased merchandise from a foreign supplier on January 20,2015 for the
Philippine peso equivalent of P60,000 and paid the invoice on April 20, 2015 at
the Philippine peso equivalent of P68,000
On September 1, 2015, borrowed the Philippine peso equivalent of P300,000
evidenced by a note that is payable in the lender’s local currency on September
1, 2016. On December 31, 2015, the Philippine peso equivalent of the principal
amount was P320,000.

In Beth’s 2015 income statement, what amount should be included as a foreign

exchange loss? *
(1 Point)

P4,000

P20,000

P22,000

P28,000

52

DD Inc., a Philippine company, bought machine parts from a foreign country on

March 1, 20x4 for 30,000 foreign currency units (FCU), when the spot rate for
FCU was P0.4895. DD’s year-end was March 31, when the spot rate was P0.4845.
On April 20, 20x5, DD paid the liability with 30,000 FCU’s at a rate of P0.4945.
DD’s income statements should report a foreign exchange gain or loss for years
ended March 31, 20x4 and 20x5 of *
(1 Point)

March 31, 20x4, P 0; March 31, 20x5, P 0

March 31, 20x4, P 0; March 31, 20x5, P 150

March 31, 20x4, P 150; March 31, 20x5, P 0

March 31, 20x4, P 150; March 31, 20x5, P 300

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53

The exchange rates between the US dollars and the Philippine peso were as
follows:
November 1, 2016 $1 = P46.50
December 1, 2016 $1 = P47.16
January 1, 2017 $1 = P48.65
February 1, 2017 $1 = P49.35
March 1, 2017 $1 = P50.05
Interpret the above chart in connection with importation of goods by Filipinos
from the United States of America *
(1 Point)

This chart shows a strengthening of the US dollars which makes it less expensive for Filipinos
to buy American goods

The chart shows a weakening of the US dollars which makes it less expensive for Filipinos to
buy American goods

The chart shows a strengthening of the US dollar which makes it more expensive for Filipinos
to buy American goods

This chart shows a weakening US dollar which makes it more expensive for Filipinos to buy
American goods

54

The following assets of Manila Corporation's South Korean subsidiary have been
converted into Philippine pesos at the following exchange rates:
Accounts Current Rates Historical Rates
Accounts receivable P 850,000 P 875,000
Inventories 600,000 575,000
Plant assets 1,200,000 900,000
Totals P2,650,000 P2,350,000
If the French subsidiary maintains an integrated operations with the Philippine
parent's operations, the assets should be reported in the consolidated financial
statements of Manila Corporation and subsidiary in the total amount of *
(1 Point)

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P2,650,000

P2,325,000

P2,350,000

P2,320,000

55

The following assets of Manila Corporation's South Korean subsidiary have been
converted into Philippine pesos at the following exchange rates:
Accounts Current Rates Historical Rates
Accounts receivable P 850,000 P 875,000
Inventories 600,000 575,000
Plant assets 1,200,000 900,000
Totals P2,650,000 P2,350,000
If the French subsidiary maintains a stand-atone operations fully independent
from the parent's operations, the assets should be reported in the consolidated
financial statements of Manila Corporation an subsidiary in the total amount of
*
(1 Point)

P2,320,000

P2,325,000

P2,350,000

P2,650,000

56

Foreign exchange gains and losses on accounts receivable and payable are
denominated in a foreign currency are: *
(1 Point)

Accumulated and reported upon settlement

Deferred and treated as transaction price adjustment

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Reported as equity adjustments from translation

Recognized in the period in which the exchange rates change

57

A Philippine Corporation has a Thailand subsidiary, Hototay, Inc. whose

functional currency is the Thailand Baht. At December 31, 2017, Hototay has an
account receivable denominated in Korean Won.
Which one of the following statements is true? *
(1 Point)

Because all accounts of the subsidiary are translated into Philippine peso at the current rate,
the account receivable is not adjusted on the subsidiary's books before translation

The account receivable is remeasured into the functional currency and remeasurement
obviates translation

The account receivable is first adjusted to reflect the current exchange rates in Thailand Baht
and then translated at the current rate into pesos

The account receivable is adjusted to bath at the current exchange rate and any resulting gain
or loss is included as a translation adjustment in the stockholders' equity section of the
subsidiary's separate balance sheet

58

Pinoy Company, a Philippine entity, delivers goods to a foreign buyer for on

December 1, 2016. Payment is due on March 1, 2017. Pinoy enters into a
forward contract to mitigate the probability of huge losses in foreign currency.
It was designated as a fair value hedge. Pinoy's incremental borrowing rate is
12% per year
Other relevant data regarding spot and forward rates follow:
Date Spot rate Forward Rates
Sales forward Purchase forward
12/01/16 P0.320 P0.305 P0.333 to 3/01/17
12/31/16 P0.330 P0.316 P0.340 to 3/01/17
3/01/17 P0.300 P0.300 P0.300 Expiry
Calculate the hedging cost recognized by Pinoy in 2016 *
(1 Point)

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P5,000

P783

P10,000

P15,000

59

Pinoy Company, a Philippine entity, delivers goods to a foreign buyer for on

December 1, 2016. Payment is due on March 1, 2017. Pinoy enters into a
forward contract to mitigate the probability of huge losses in foreign currency.
It was designated as a fair value hedge. Pinoy's incremental borrowing rate is
12% per year
Other relevant data regarding spot and forward rates follow:
Date Spot rate Forward Rates
Sales forward Purchase forward
12/01/16 P0.320 P0.305 P0.333 to 3/01/17
12/31/16 P0.330 P0.316 P0.340 to 3/01/17
3/01/17 P0.300 P0.300 P0.300 Expiry
If designated as a cash-flow hedge instead, and hedge accounting is applied,
the hedging cost recognized by Pinoy in 2017 would be *
(1 Point)

P5,000

P14,217

P10,000

P15,000

60

Foreign operations that are an integral part of the operations of the entity
would have the same functional currency as the entity. Where a foreign
operation functions independently from the parent, the functional currency will
be *
(1 Point)

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That of the parent

Determined using the guidance for determining an entity's functional currency

That of the country of incorporation

The same as the presentation currency

61

On December 12, 2010, IMP Company entered into three forward exchange
contract to purchase 100,000 foreign currency (FC) in 90 days. The relevant
exchange rates are as follows:
Dates Spot Rate Forward Rate (March 12, 2011)
November 30, 2010 P .87 P .89
December 12, 2010 . 88 .90
December 31, 2010 .92 .93
IMP entered into the first forward contract to hedge a purchase of inventory in
November 2010, payable in March 2011. At December 31, 2010, what amount
of FC transaction gain from this forward contract should IMP include in net
income? *
(1 Point)

P0

P 3,000

P 5,000

P10,000

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62

On December 12, 2010, IMP Company entered into three forward exchange
contract to purchase 100,000 foreign currency (FC) in 90 days. The relevant
exchange rates are as follows:
Dates Spot Rate Forward Rate (March 12, 2011)
November 30, 2010 P .87 P .89
December 12, 2010 . 88 .90
December 31, 2010 .92 .93
At December 31, 2010, what amount of FC transaction loss should IMP include
in income from the revaluation of the Accounts Payable of 100,000 FC incurred
as a result of the purchase of inventory at November 30, 2010 payable in March
2011? *
(1 Point)

P0

P 3,000

P 4,000

P 5,000

63

On December 12, 2010, IMP Company entered into three forward exchange
contract to purchase 100,000 foreign currency (FC) in 90 days. The relevant
exchange rates are as follows:
Dates Spot Rate Forward Rate (March 12, 2011)
November 30, 2010 P .87 P .89
December 12, 2010 . 88 .90
December 31, 2010 .92 .93
IMP entered into the second forward contract to hedge a commitment to
purchase equipment being manufactured to IMP’s specification. The expected
delivery date is March 2011 at which time settlement is due to the
manufacturer. The hedge qualifies as a fair value hedge. At December 31, 2010,
what amount of FC transaction gain from this forward contract should IMP
include in net income? *
(1 Point)

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P0

P 3,000

P 5,000

P 10,000

64

On December 12, 2010, IMP Company entered into three forward exchange
contract to purchase 100,000 foreign currency (FC) in 90 days. The relevant
exchange rates are as follows:
Dates Spot Rate Forward Rate (March 12, 2011)
November 30, 2010 P .87 P .89
December 12, 2010 . 88 .90
December 31, 2010 .92 .93
IMP entered into the third forward contract for speculation. At December 31,
2010, what amount of FC translation gain from this forward contract should IMP
include in net income? *
(1 Point)

P0

P 3,000

P 5,000

P 10,000

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65

Certain balance sheet accounts in a foreign subsidiary of SS Company on

December 31, 20x4, have been restated in pesos as follows:
Particulars Restated at Current Rates Historical Rates
Accounts receivable, current P100,000 P110,000
Accounts receivable, long term 50,000 55,000
Prepaid insurance 25,000 30,000
Patents 40,000 45,000
Total P215,000 P240,000
What total should be included in SS’ balance sheet for December 31, 20x4, for
the above items? *
(1 Point)

Functional Currency - LCU, P225,000; Functional Currency - Peso, P215,000

Functional Currency - LCU, P225,000; Functional Currency - Peso, P225,000

Functional Currency - LCU, P215,000; Functional Currency - Peso, P215,000

Functional Currency - LCU, P215,000; Functional Currency - Peso, P225,000

66

Which of the following would probably not be covered by PFRS 4/17? *

(1 Point)

Motor insurance

Life insurance

Medical insurance

Pension plan

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67

It is an agreement whereby the reinsurer in consideration of a premium, agrees

to indemnity the principal ceding insurer against loss, or part of the loss, which
the latter may sustain under the policy that the insurer has written *
(1 Point)

Reinsurance

Claims

Acquisition costs

Pipeline premiums

68

The PFRIC 12 applies only if: *

(1 Point)

The grantor controls or regulates what service the operator must provide with the
infrastructure, to whom it must provide them, and what price

The grantor controls – through ownership, beneficial entitlement or otherwise – any

significant residual interest in the infrastructure at the end of the term of the arrangement

Both applies

Neither applies

69

To the extent that it has unconditional contractual right to receive cash or

another asset from, or at the direction of the grantor for the constructions
services. The operator recognizes it as *
(1 Point)

A financial asset
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An intangible asset

Property, plant and equipment

Leasehold rights

70

Sky Inc. entered into a concession agreement with the Philippine government to
operate the Skyway 3 expressway connecting SLEX to NLEX. The contract
provides that Sky Inc. has received a right, not a license, to charge motorist for
the public service and the revenue receivable is not agreed upon in advance.
The contract will last for 30 years.
How shall Sky Inc. account for its infrastructure asset in that service concession
agreement? *
(1 Point)

The infrastructure asset shall be capitalized as property, plant and equipment to be

depreciated over the contract life of 30 years

The infrastructure asset shall be capitalized as financial asset to be remeasured subsequently

at fair value

The infrastructure asset shall be capitalized as intangible asset to be amortized over the
contract life of 30 years

The infrastructure asset shall be capitalized as prepaid asset to be amortized over the contract
life of 30 years

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