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
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

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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

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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

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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

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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

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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

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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,

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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.

Page 8 of 8 www.teamprtc.com.ph AFAR.FPB10.23