CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

ADVANCED FINANCIAL ACCOUNTING AND REPORTING

Final Preboard Examination

SOLUTIONS

1. B

$ 100,000
- 20,000
80,000
- 40,000
40,000
P 55
P 2,200,000

2. C

$40,000 x (P59 – P55) = (P160,000)

NOTE: Forex loss since there was an increase in exchange rate therefore increase also in
accounts payable

3. D
4. A

Beg 55,500
NI 12,500
Div - 3,500
End 64,500

@closing 3,225,000
@historical 2,664,000
650,000
- 161,000
Adj 72,000
40%
OCI 28,800 DR
Hedge from loan (50-48) x 12,000 24,000 CR
4,800 DR

5. B

Investment in assoc (non-monetary) 100,000 x 0.016 = 1,600 EURO

NOTE: Non-monetary remeasured using transaction/historical rate

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Investment in assoc 1,600 EURO x 4.01 = QR6,416

NOTE: Asset translated using the closing rate

6. D

Investment in debt sec. held at amortized cost (monetary) 50,000 x 0.018 = 900 EURO

NOTE: Monetary remeasured using closing rate

Investment in debt sec. held at amortized cost 900 EURO x 4.01 = QR3,609

NOTE: Asset translated using the closing rate

7. C

900,000 when donation was received

8. C

900,000 when purchase was made

9. B

Gross patient service rendered 800,000

Charity care (32,000)
Gross patient service revenue 768,000

10. C

Cost 800,000
sh in NI 1,000,000
sh in OCI 250,000
div - 100,000
Bal 1,950,000

11. A

Cost 300,000
sh in NL - 300,000
bal '23 - unabsorbed loss -600,000
sh in NI 120,000
bal '24 120,000 unabsorbed loss -
sh in NI 1,200,000
div - 200,000
bal '25 1,120,000 unabsorbed loss -
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12. B

13. A

Beg 400,000
Trans cost 20,000
End 420,000

NOTE: No impairment loss because the recoverable amount was greater than the carrying
amount of the investment
14. C

Sh in NI 50,000
Impairment - 30,000
P/L 20,000

NOTE: There was impairment because the recoverable amount, 430,000 was less than the
carrying amount of the investment (420,000 + 50,000 - 10,000) 460,000

15. B
16. C
17. C

18. A

NOTE: authority to disburse means receipt of notice of cash allocation

19. D

NOTE: Choice A, memo entry only in RAPAL; choice B, the 1M is not revenue and other
receipts, but it is unused notice of cash allocation; choice C, the 39M is only authorization
to incur obligation, therefore allotment only

20. D
21. D
22. D
23. B (Reference IAS 29 par 14-15)
24. D
25. C
26. D

27. C

Direct Labor (500 x 42hrs) 21,000

MOH (250 x 5) + (500 x 3) 2,750

28. B
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29. B

30. B

Consolidated receivables (3,412,500 + 1,148,000 - 84,000) = 4,476,500

31. D

2,030,000 - 1,190,000 = 840,000 unrealized gain

840,000/8 years = 105,000 x 5/12 = 43,750 realized gain
840,000 - 43,750 = 796,250 x 30% = 238,875 decrease

32. B

1,246,000/125% x 25% = 249,200 x 45% = 112,140 x 65% = 72,891

33. D

1,055,700/90% =1,173,000 - 1,148,000 = 25,000/5 years = 5,000

1,148,000 + 25,000 - 5,000 + 147,000 - 90,000 [5,000 shares x P18]=1,225,000 x 10% = 122,500

34. C

HQ 329,500 + (360,000 x 30%) = 437,500 - 493,750 = 56,250/30% = 187,500 total gain

668,000 + 416,250 + 329,500 + 360,000 + 187,500 = 1,961,250 + 698,550

35. D

(600,000) + [435,000 x 20%] + 3,206,000 = 2,693,000

36. A

NI 1,500,000 - 190,000 = 1,310,000 x 3/12 = 327,500 x 70% = 229,250

1,310,000 x 9/12 = 982,500 x 80% = 786,000
229,250 + 786,000 + 4,500,000 - (750,000 x 80%) = 4,915,250

37. A

M 360,000 + 240,000 = 600,000 - 216,000 = 384,000/20% = (1,920,000)

(1,920,000) x 30% = 576,000 share of E in the loss [1,080,000 - 576,000] 504,000 received by C
(1,920,000) x 50% = 960,000 share of R in the loss (R will not receive cash)

Total cash distributed to partners P216,000 + 504,000 = 720,000 + 1,200,000 (outsiders)

1,920,000 + 48,000 (cash withheld) - 360,000 (cash beginning) = 1,608,000
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38. A

406,000 - [105,000 x 20%] 385,000 - 372,400 = 12,600 bonus to remaining

448,000 + 539,000 + 12,600 - [105,000 x 80%] = 915,600

39. D

7,200,000 + 3,600,000 - 4,800,000 = 6,000,000

6,000,000 - 9,000,000 = 3M share in net income ÷ 40% = 7,500,000

40. B

PK 1,575,000 - 1,769,250 = 194,250 x 4 = 777,000 bonus to old

2,940,000 + 1,575,000 + 777,000 = 5,292,000 TAC of old partners
5,292,000/75% = 7,056,000 x 25% = 1,764,000 + 777,000 = 2,541,000
41. B

540,000 + 450,000 + 360,000 = 1,350,000 TCC of all partners

TAC 1,350,000 x ⅓ = 450,000 TAC of new partner
360,000 - 450,000 = 90,000 bonus to new
90,000 x 60% = 54,000 shares of G
G 540,000 - 54,000 = 486,000

42. D

1,000 x 270 = {270,000 + [(21,000 x 270)/2]} = 3,105,000

43. C

20,000 x 36 = ({720,000 + [500 x 14] - [300 x 20]} ÷ 19,700) = 36.60

44. B

1,200,000/400,000 = 3 x 440,000 = 1,320,000 (applied) - 1,300,000 (actual)

45. B

6,000,000 + 72,000 = 6,072,000 + 5,625,000 + [50 x (5,625,000/62.50)]

16,197,000 + 96,000 = 16,293,000

46. A

3,066,250/55,000 = 55.75 per machine hour x 1,040 = 57,980

230,850/1,500 = 153.90 per order x 60 = 9,234
730,550/1,900 = 384.50 per inspection hour x 30 = 11,535
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Sales 360 x P568.50 = 204,660

Prime cost 360 x P298.80 = (107,568)
OH (ABC) (78,749)
Gross margin 18,343

47. A

48. B

FIFO Actual/Physical Materials CC

Units
Units trans-out (beg) 70,000 0 21,000
(started) 679,000 679,000 679,000
In process, end 140,000 140,000 14,000
Normal 16,800 0 0
Abnormal 4,200 4,200 4,200
Units as accounted (FIFO) 910,000 823,200 718,200

2,551,920/823,200 = 3.10 material cost per unit

3,375,540/718,200 = 4.70 conversion cost per unit
255,500 + 231,600 + [21,000 x P4.70] + [679,000 x 7.80] = 5,882,000

49. C
12/31/2023 12/31/2024
Site labor costs including site supervision for the year 7,000,000 10,000,000
Cost of direct materials used in construction for the year 5,000,000 6,800,000
Actual cost incurred each year 12,000,000 16,800,000

12/31/2023 12/31/2024
Actual cost incurred to date 12,000,000 28,800,000
Estimated cost to complete the condominium at year end 8,000,000 7,200,000
Total estimated cost 20,000,000 36,000,000

12/31/2023 12/31/2024
Actual cost incurred to date 12,000,000 28,800,000
Total estimated cost ÷ 20,000,000 ÷ 36,000,000
Percentage of completion 60% 80%

Contract price 60,000,000

Total estimated cost 2024 (36,000,000)
Estimated gross profit 24,000,000
Percentage of completion 2024 x 80%
Gross profit to date as of 2024 19,200,000

Actual cost incurred to date 2024 28,800,000

Gross profit to date as of 2024 19,200,000
Construction in progress as of 2024 48,000,000
Progress billings as of 2024
(42,000,000)
(60,000,000 x 70%)
Excess CIP over billings 6,000,000
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50. D

Date Collect Interest (5%) Principal Balance

01/01/2023 519,538
06/30/2023 120,000 25,977 94,023 425,515
12/31/2023 120,000 21,276 98,724 326,791

Down payment 400,000

PVof Note (120,000 x 4.32948) 519,538
Initial Franchise Fee 919,538
Interest income in 2023
47,253
(25,977 + 21,276)
Contingent fee (200,000 x 5%) 10,000
Total revenue in 2023 946,791

51. A

Down payment 750,000

PV of Note (4,250,000 ÷ 5) x 3.79079 3,222,172
Initial franchise fee 3,972,172

IFF allocated to performance obligation (trade-name) (3,972,172 x 500/1,000) 1,986,086

IFF allocated to performance obligation (install and deliver store equipment)
(3,972,172 x 300/1,000) 1,191,652
IFF allocated to performance obligation (10,000 units of merchandise)
(3,972,172 x 200/1,000) 794,434

IFF allocated to performance obligation (install and deliver store equipment) 1,191,652
IFF allocated to performance obligation (trade-name) (1,986,086 x 1/5) 397,217
IFF allocated to performance obligation (10,000 units of merchandise)
(794,434 x 3,500/10,000) 278,052
Revenue from initial franchise fees 1,866,921

52. C

Revenue from initial franchise fees 1,866,921

Continuing franchise fees (2,500,000 x 15%) 375,000
Interest income (3,222,172 x 10%) 322,217
Total revenue for the year end 12/31/2022 2,564,138
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53. A
2024
Contract price 7,500,000
Total estimated cost (7,850,000)
Estimated gross profit/(loss) (350,000)
x 100%
Gross profit/(loss) to date as of 2024 (350,000)

Actual cost incurred to date 2024

7,300,500
(1,995,000 + 5,305,500)
Gross profit/(loss) to date as of 2024 (350,000)
Construction-in-progress as of 2024 6,950,500

NOTE: Since in 2024 there was an estimated loss then it must be recognized immediately
100%

54. B

2023 2024
Actual cost incurred to date
1,995,000 7,300,500
2024: (1,995,000 + 5,305,500)
Total estimated cost ÷ 5,700,000 ÷ 7,850,000
Percentage of completion 35% 93%

2023 2024
Contract price 7,500,000 7,500,000
Total estimated cost (5,700,000) (7,850,000)
Estimated gross profit/(loss) 1,800,000 (350,000)
Percentage of completion x 35% x 100%
Gross profit/(loss) to date 630,000 (350,000)
Prior gross profit/(loss) - (630,000)
Gross profit/(loss) for the year 630,000 (980,000)

Construction revenue as of 2024 (7,500,000 x 93%) 6,975,000

Construction revenue for the year 2023 (7,500,000 x 35%) (2,625,000)
Construction revenue for the year 2024 4,350,000

Construction revenue for the year 2024 4,350,000

Construction cost of sales for the year 2024 (5,330,000)
Gross profit/(loss) for the year 2024 (980,000)
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55. B

2023 2024
Actual cost incurred to date
2023: (5,800,000 – 280,000 – 120,000) 5,400,000 14,400,000
2024: [5,400,000 + (10,400,000 – 800,000 – 600,000)]
Estimated cost to complete at year end 12,600,000 1,600,000
Total estimated cost 18,000,000 16,000,000

2023 2024
Actual cost incurred to date 5,400,000 14,400,000
Total estimated cost ÷ 18,000,000 ÷ 16,000,000
Percentage of completion 30% 90%

2023 2024
Contract price 20,000,000 20,000,000
Total estimated cost (18,000,000) (16,000,000)
Estimated gross profit/(loss) 2,000,000 4,000,000
Percentage of completion x 30% x 90%
Gross profit/(loss) to date 600,000 3,600,000
Prior gross profit/(loss) - (600,000)
Gross profit/(loss) for the year 600,000 3,000,000
OPEX (400,000) (1,400,000)
Net income for the year 200,000 1,600,000

56. A

Actual cost incurred to date 2024 14,400,000

Gross profit to date as of 2024 3,600,000
Construction in progress as of 2024 18,000,000
Progress billings as of 2024
(9,600,000)
(1,600,000 + 8,000,000)
Excess CIP over billings 8,400,000

57. B

Cost of 10 sneaker (6,000 x 10) 60,000

Capitalized freight from consignor to consignee 6,000
Total cost of 10 sneakers 66,000
Unsold sneaker ratio x 4/10
Total cost of unsold sneakers 26,400

58. D
59. D
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NOTE: 100% because the net free assets can recover all claims with priority.

Total free assets 2,100,000

Claims with priority (salaries and taxes)
(45,000 + 105,000) (150,000)
Net free assets 1,950,000

Total unsecured creditors

(with and without priority) 3,150,000
Claims with priority (salaries and taxes)
(45,000 + 105,000) (150,000)
Total unsecured creditors without priority 3,000,000

Net free assets 1,950,000

Total unsecured creditors without priority ÷ 3,000,000
Estimated recovery percentage 65%

FMV of receivable (120,000 x 60%) 72,000

Recoverable balance of note
[(90,000 – 72,000) x 65%] 11,700
Estimated payment for partial secured note 83,700

60. C
61. A
62. B

Investment in Anton Home Office Current

Unadjusted balance 265,600 256,600
Branch error in recording shipment - 9,000
No recording of depreciation (8,240) (8,240)
Adjusted Balance 257,360 257,360

NOTE: The collection of Anton branch of the customer’s account of the Andi branch has
no effect in the reciprocal accounts of the Home Office and Anton branch because it is a
Andi branch error. Since it is the company’s policy to record the asset in Anton’s books
and the fact that Anton also bought the asset, therefore the error of Anton has no effect on
the reciprocal accounts.

63. D
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64. A

BI (70,000 / 140%) + 70,000 120,000

Purchases 250,000
Shipments from HO (cost)
(500,000 / 125%) 400,000
EI [(200,000 x 14%) / 140%] 20,000
[(200,000 x 26%) / 125%] 41,600
(200,000 x 60%) 120,000
(181,600)
COS 588,400

65. B

Total Sales 1,800,000

Total COS (600,000 (HO) + 588,400 (Branch)) (1,188,400)
GP 611,600
Opex (300,000)
Income before tax 311,600
x 70%
Net income 218,120

66. D

EI @BP (200,000 * 40%) 80,000

EI @cost
[(200,000 x 14%) / 140%] 20,000
[(200,000 x 26%) / 125%] 41,600
(61,600)
18,400

67. A
68. C
69. A
70. B

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