Icare 05 Far First PB
Icare 05 Far First PB
Icare 05 Far First PB
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
1. What is the minimum amount of external revenue that must be reported by the reportable operating
segments?
a. 60,000,000
b. 67,500,000
c. 72,000,000
d. 52,500,000
2. What is the minimum amount of revenue to an external customer to be regarded as a major customer?
a. 8,000,000
b. 7,000,000
c. 9,000,000
d. 7,200,000
4. Badger Corporation purchased a machine for 1,500,000 on January 1, 2021. Badger will depreciate the
machine using the straight-line method using a five-year period with no residual value. As a result of an error
in its purchasing records, Badger did not recognize any depreciation for the machine in its 2021 financial
statements. Badger discovered the problem during the preparation of its 2022 financial statements. What
amount should Badger record for depreciation expense on this machine for 2022?
a. 500,000
b. 300,000
c. 375,000
d. 600,000
1|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
6. On the December 31, 2022, statement of financial position of Bob Company, the current receivables
consisted of the following:
What should Bob Company report as current net receivables on December 31, 2022?
a. 5,700,000
b. 5,100,000
c. 5,200,000
d. 4,900,000
Dillinger maintains the same rate for uncollectibility on its accounts receivable at yearend.
9. When an accounts receivable aging schedule is prepared, a series of computations is made to determine
the estimated uncollectible accounts. The resulting amount from this aging schedule
a. When added to the total accounts written off during the year is the desired credit balance of the allowance
for doubtful accounts at year-end.
b. Is the amount of doubtful accounts expense for the year.
c. Is the amount that should be added to the beginning allowance for doubtful accounts to get the doubtful
accounts expense for the year.
d. Is the amount of desired credit balance of the allowance for doubtful accounts to be reported at year-end.
2|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
10. Mike Company’s December 31, 2022, unadjusted current assets and shareholders’ equity are as follows:
Cash 4,000,000
Financial assets at FVOCI (including P1,000,000 of Mike
Company’s ordinary shares) 8,000,000
Trade accounts receivable - net 10,000,000
Inventory 6,000,000
Total assets 28,000,000
The financial assets and inventory are currently reported at their cost. The financial assets have a fair value
of P11,000,000 and the necessary adjustments have not yet been recorded. In the 2022 statement of
changes in equity, what is the correct total amount of equity on December 31, 2022?
a. 25,000,000 c. 30,000,000
b. 27,000,000 d. 31,000,000
11. Nacho Company provided the following information for the year ended December 31, 2022:
The debt-to-equity ratio is 50% at December 31, 2022. What was the retained earnings balance on January
1?
a. 1,600,000 c. 400,000
b. 1,800,000 d. 4,600,000
13. Which statement is incorrect concerning the “line items” on the face of the statement of financial position?
a. As a minimum, PAS 1 requires that the face of the statement of financial position shall include certain
line items.
b. Additional line items, headings and subtotals shall be presented on the face of the statement of financial
position when such presentation is relevant to the understanding of the entity’s financial position.
c. PAS 1 simply provides a list of items that are sufficiently different in nature or function to warrant separate
presentation on the face of the statement of financial position.
d. PAS 1 prescribes the order or format in which items are to be presented on the face of the statement of
financial position.
3|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
14. Howard Company provided the following information with respect to its cash and cash equivalents on
December 31, 2022.
What amount would be reported as unrestricted cash and cash equivalents on the statement of financial
position?
a. 9,200,000 c. 8,700,000
b. 7,700,000 d. 8,200,000
16. During 2022, Hector Company had the following unusual financial events:
* A steel forming segment suffered P1,000,000 in losses due to storm damage. This was the fourth similar
loss sustained in a three-year period.
* The local government for its beautification and livelihood projects purchased a tract of land owned by
Hector. The sale resulted in a P300,000 loss.
* Bonds payable were retired 3 years before the scheduled maturity, resulting in a P800,000 loss. This is
the first time Hector retired its bond issue due to significant interest rate declines.
* A division of Hector’s operations, steel transportation was sold at a loss of P2,000,000. This was Hector’s
first divestiture of one of its segments.
Before income tax, what amount of losses should be reported as component of income from continuing
operations?
a. 4,100,000 c. 2,100,000
b. 2,300,000 d. 3,000,000
17. Operations and cash flows that can be clearly distinguished, operationally and for financial reporting
purposes, from the rest of the entity
a. Cash-generating unit
b. Component of the entity
c. Discontinued operations
d. Disposal group
4|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
For Numbers 18 to 21
Arthur Company provided the following information for the current year:
Arthur’s tax rate is 25%. Other comprehensive items listed above are all net of tax amounts.
18. What is the net income reported for the current year?
a. 5,000,000
b. 3,800,000
c. 3,500,000
d. 3,600,000
23. On July 1, 2022, Honey Company purchased as trading investment a P2,000,000 face value 10% bond
for P2,100,000 plus accrued interest and transaction costs of P100,000. The bond pays interest annually on
January 1. On December 31, 2022, the bond investment has a market value of P1,800,000. On February
15, 2023, Honey Company sold the bond investment for P2,300,000. In its 2022 income statement, what
amount should Honey report as unrealized loss?
a. 400,000 c. 200,000
b. 500,000 d. 300,000
5|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
For Numbers 24 to 27
Cliff Company accepted from a customer P5,000,000 face amount, six months, 12% note dated August 1, 2022.
On October 1, 2022, Cliff discounted the note at Chase Bank for the company’s operating needs. The
discounting is accounted for as a conditional sale with a contingent liability.
24. What amount will Cliff receive from Citibank on October 1, 2022?
a. 5,300,000 c. 5,100,000
b. 5,088,000 d. 5,150,000
25. What is the loss on discounting that Cliff will recognize on the transaction?
a. 15,000 c. 16,000
b. 12,000 d. 45,000
26. If the discounting is accounted for as a secured borrowing rather than a conditional sale, what is the
amount of interest expense to be recognized?
a. 100,000 c. 12,000
b. 88,000 d. 0
27. What is the net interest income to be recognized on the note in the 2022 statement of comprehensive
income?
a. 0 c. 12,000
b. 100,000 d. 88,000
For Numbers 29 to 30
On January 1, 2022, Leaf Company sold goods to Green Company in which Green issued a noninterest-bearing
note requiring annual payment of P400,000 for 5 years. The first payment was made on January 1, 2022. The
prevailing interest rate for this similar note is 12%. The present value factor of an ordinary annuity for 5 periods
at 12% is 3.60 while the factor for an annuity due for 5 periods at 12% is 4.04.
29. What is the total amount of income that should be recognized at December 31, 2022?
a. 1,616,000
b. 2,000,000
c. 1,761,920
d. 1,584,000
30. What is the current portion of the notes receivable on December 31, 2022?
a. 400,000
b. 257,920
c. 230,810
d. 254,080
31. Accounting for interest in a noninterest bearing note receivable is an example of what aspect of accounting
theory?
a. Matching
b. Verifiability
c. Substance over form
d. Accounting entity
32. During the year 2022, Rowena Company was sued by a competitor for P6,000,000 for infringement of a
trademark. Based on the advice of the company’s legal counsel, Rowena Company accrued the sum of
6|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
P4,000,000 as a provision in its financial statements for the year ended December 31, 2022. After the
balance sheet date on February 15, 2023, the Supreme Court decided in favor of the party alleging the
infringement of the trademark and ordered the defendant to pay the aggrieved party a sum of P4,500,000.
The financial statements were prepared by the company’s management on January 31, 2023 and approved
by the board on February 20, 2023. How much should be accrued as a provision on December 31, 2022?
a. 6,000,000
b. 4,500,000
c. 4,000,000
d. 5,000,000
For Numbers 34 to 37
Lavender Company accounted for noncurrent assets using the revaluation model. On October 1, 2022, the
entity classified a land as held for sale. At that date, the carrying amount of the land was P6,000,000 and the
balance in the revaluation surplus was P2,000,000. At same date, the fair value of the land was estimated at
P7,500,000 and the cost of disposal at P200,000. The land was sold on January 31, 2022, for P8,000,000.
34. What amount should be included as an impairment loss on the date of reclassification?
a. 0
b. 500,000
c. 200,000
d. 600,000
35. What is the carrying amount of the NCA on December 31, 2012?
a. 7,500,000
b. 6,000,000
c. 8,000,000
d. 7,300,000
37. How much was transferred to retained earnings from the sale of the land?
a. 2,000,000
b. 1,800,000
c. 0
d. 3,500,000
38. An entity shall recognize any subsequent increase in fair value less cost to sell of a noncurrent asset or
disposal group classified as held for sale as
a. Deferred gain as component of equity
b. Deferred gain as component of liability
c. Gain entirely to be included in profit or loss
d. Gain to be included in profit or loss but not in excess of the cumulative impairment loss previously
recognized.
39. On October 15, 2022, Grunweld Company purchased goods costing P5,000,000. The freight term is FOB
Destination. Some of the costs incurred with the sale and delivery of the goods were:
7|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
These goods were received on October 17, 2022. What amount of cost for these goods should be included
in Grunweld’s inventory?
a. 5,600,000
b. 5,000,000
c. 5,500,000
d. 5,300,000
40. An extract from Tudor Company’s unadjusted trial balance on December 31, 2022, appears below. Tudor
uses the perpetual method to record inventory transactions.
Inventory 1,620,000
Sales 8,000,000
Sales return 500,000
Cost of goods sold 5,100,000
Inventory losses 200,000
On December 28, 2022, Tudor recorded a P250,000 credit sale of goods costing P180,000. These goods
were sold FOB shipping point terms and were in transit on December 31, 2022. The goods were however
included in the physical count.
The inventory on hand on December 31, 2022 determined by the physical count had a cost of P1,800,000 and a
net realizable value of P1,500,000. All inventory write-down and other normal losses shall be included in cost of
goods sold. How much should be reported as cost of goods sold for 2022?
a. 5,100,000
b. 5,600,000
c. 5,220,000
d. 5,420,000
41. All of the following costs should be charged against revenue in the period, except
a. Manufacturing overhead costs for a product manufactured and sold in an accounting period.
b. Costs that will not benefit any future period.
c. Costs from idle manufacturing capacity resulting from an unexpected plant shutdown.
d. Costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory.
42. Information regarding Gus Company’s nontrading financial assets measured at fair value through other
comprehensive income on December 31, 2022, is as follows:
On January 1, 2022, Gus reported an unrealized gain of P200,000 as a component of shareholders’ equity.
What is the unrealized gain to be recognized in the 2022 statement of comprehensive income?
a. 700,000
b. 300,000
c. 500,000
d. 900,000
8|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
43. Kyle Company issued rights to subscribe to its stock, the ownership of 4 shares entitling the stockholders to
subscribe for 1 share at P100. Jimmy Company owns 50,000 shares of Kyle Company with total cost of
P6,000,000. The stock is quoted ex-right at 125. The stock rights are accounted for separately and
measured initially at fair value. What is the allocated cost from the receipt of the stock rights?
a. 250,000
b. 300,000
c. 212,500
d. 312,500
44. Under the fair value option for debt instruments, an entity may
a. Irrevocably designate a financial asset as measured at fair value through profit or loss even if the amortized
cost measurement is satisfied.
b. Irrevocably designate a financial asset as measured at fair value through other comprehensive income.
c. Revocably designate a financial asset as measured at fair value through profit or loss even if the amortized
cost measurement is satisfied
d. Designate all instruments as measured at fair value through profit or loss
45. At the beginning of the year, Ion Company embarked on a real estate development project involving single
family dwellings. On July 1, 2022, Ion Company purchased a track of land for P60,000,000. Rolls incurred
additional cost of P10,000,000 during the remainder of 2022 in preparing the land for sale as follows.
The building was subsequently revalued on January 1, 2023, and the revaluation report showed that the asset
had a replacement cost of P32,000,000 and was determined to have no change in its useful life.
On January 1, 2024, the building was tested for recoverability and the fair value was determined to be
P18,000,000 on this date, with no change on its remaining useful life.
9|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
48 PAS 16 require that revaluation surplus resulting from initial revaluation of property, plant and equipment
should be treated in which of the following way?
a. Credited to retained earnings as this is unrealized gain.
b. Released to the income statement at the amount equal to the difference between the depreciation
calculated on historical cost vis-à-vis revalued amount.
c. Deducted from current assets and added to the property, plant and equipment.
d. Debited to the class of property, plant and equipment that is being revalued and credited to “revaluation
surplus”, which is presented under “equity”.
49. On July 1, 2022, Varga Company purchased 40% of the outstanding ordinary shares of Michelle
Company for P5,000,000. On this date, Michelle’ net assets were P10,000,000 which approximated their
fair values, except for equipment whose fair value exceeded its carrying amount by P1,500,000. Any other
excess is attributable to implied goodwill. The equipment has a remaining 5-year life. Michelle’ 2022 net
income was P4,000,000. What is the maximum amount, which could be included in Varga’s 2022 income
before tax to reflect its equity in earnings from Michelle?
a. 1,600,000
b. 1,480,000
c. 740,000
d. 680,000
50. The excess of the investor’s share of the net fair value of the associate’s net assets over the cost of the
investment is
a. Included in the determination of the investor’s share of the associate’s profit or loss in the period in which
the investment is acquired.
b. Credited to retained earnings directly.
c. Credited to equity and amortized over the useful life.
d. A deferred gain.
51.What is the amount of total sales for the year ended 2022?
a. 4,890,000
b. 4,250,000
c. 5,040,000
d. 4,950,000
53.What is the effect of net markups on the cost-retail ratio when using the conservative retail method?
10 | P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
54. Eladio Company makes cotton towels for hotels year-round. Eladio uses 50,000 pounds of cotton each
month in its production process. On December 1, 2022, Eladio purchased a call option as a cash flow hedge
to buy 50,000 pounds of cotton on February 1, 2023. The option exercise price is P50 per pound. Eladio
paid P50,000 for the call option.
This derivative option contract means that if the market price is higher than P50, Eladio can exercise the
option and buy the asset at the fixed option price of P50. If the market price is lower than P50, Eladio does
not need to exercise the option. The option contract will be settled by an exchange of cash on February 1,
2023, based on the price of cotton on that date.
The price of cotton on December 31, 2022, is P65 per pound and P45 on February 1, 2023. How much is
the loss on the call option to be recorded by Eladio on February 1, 2023?
a. 50,000 c. 300,000
b. 250,000 d. 200,000
55. Chuck Company purchased an equipment for P4,000,000 with a useful life of 5 years and a residual value of
P500,000 on July 1, 2022. Chuck opted to depreciate this asset using the double declining balance method of
depreciation and did not foresee any changes in its estimate to occur. What is the depreciation expense on this
equipment for the calendar year ended December 31, 2023?
a. 800,000 c. 1,280,000
b. 960,000 d. 1,600,000
56. Which is incorrect concerning the residual value of an item of property, plant and equipment?
a. The depreciable amount of an asset is determined after deducting the accumulated depreciation of the
asset.
b. In practice, the residual value of an asset is often insignificant and therefore is immaterial in the
calculation of the depreciable amount.
c. The residual value of an asset may increase to an amount equal or greater than the asset’s carrying
amount.
d. The residual value of an asset shall be reviewed at least at each financial year-end and if expectation
differs from previous estimate, the change shall be accounted for as a change in accounting estimate.
57. What is the carrying amount of the biological assets on December 31, 2022?
a. 22,100,000
b. 21,300,000
c. 17,100,000
d. 18,800,000
11 | P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
62. Land and an old building were acquired from a seller by Ignacio Company at 4,000,000 as the new location.
The old building had a fair value of P500,000 that was demolished at the end of the reporting period at a cost
of P100,000. Other cost incurred in connection with the land, applicable taxes and other cost before
construction of the new office are as follows:
12 | P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
63.On July 1, 2022, Andrei Company purchased rights to a mine for minerals. The total purchase price was
P50,000,000 of which P5,000,000 was allocated to the land. Estimated reserves were 10,000,000 tons of the
minerals. Andrei expects to extract and sell 100,000 tons per month.
Andrei Company purchased new equipment on July 1, 2022, for P12,000,000 with estimated life of 10 years.
However, after all the resource is removed, the equipment will be of no use and will be sold for P1,000,000.
What is the depreciation of the equipment for 2022?
a. 1,320,000
b. 1,100,000
c. 660,000
d. 550,000
64.On January 1, 2022, Lowell Company received a grant of P7,000,000 from the Australian government to
compensate for massive losses incurred because of a recent tsunami. The grant requires no fulfillment of
certain conditions.
The grant was for the purpose of giving immediate financial support to the entity. It will take Lowell 2 years
to reconstruct its facilities destroyed by the tsunami.
How much income from the government grant should be recognized by Lowell in 2022?
a. 3,500,000
b. 7,000,000
c. 1,000,000
d. 0
Principal Interest
12% bank loan 15,000,000 1,500,000
14% long-term loan 25,000,000 3,500,000
The construction began on January 1, 2022 and was completed on December 31, 2022. Expenditures on
the building were made as follows:
January 1 10,000,000
June 30 7,500,000
November 1 1,500,000
13 | P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
68. The owners of Huell Company are planning to sell the business to new interests. The cumulative net earnings
for the past 3 years was P7,000,000 including casualty loss of P500,000. The current value of net assets of
Huell Company was P22,000,000. Goodwill is determined by capitalizing average earnings at 10%. What is
the amount of goodwill?
a. 1,333,333
b. 1,800,000
c. 3,000,000
d. 1,250,000
69. Tyrese Company purchased a patent on January 1, 2019, for P6,000,000. The patent’s remaining legal life
was 15 years expiring on December 31, 2033; however it was determined that due to the competitive nature
of the product that the patent will only be valid for 10 years. During 2022 Tyrese determined that the
economic benefits of the patent would not last longer than eight years from the date of acquisition. What
amount should be reported in the statement of financial position as patent, net of accumulated amortization,
at December 31, 2022?
a. 4,400,000
b. 3,360,000
c. 3,675,000
d. 3,600,000
70. The following information pertains to Kim Company’s defined benefit pension plan for the year 2022:
Prepaid pension cost, January 1 500,000
Service cost 2,000,000
Interest cost 600,000
Interest income 800,000
Actual return on plan assets 900,000
Past service cost 300,000
Decrease in PBO due to changes in
actuarial assumptions 200,000
Employer contributions 1,200,000
In its December 31, 2022 statement of financial position, what amount should be reported as accrued pension
cost?
a. 500,000 c. 100,000
b. 600,000 d. 400,000
<<END>>
14 | P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO