Chapter 2: Corporate Liquidation

Problems in corporate liquidation normally require familiarization in the preparation of a statement of

affairs. In the actual CPA examination, problems involving corporate liquidation are seldom given,
therefore, in terms of alternative subjects to be studied within a limited period of time, this topic should
have a relatively low priority. In preparing for CPA examination, fair knowledge of the principles and
procedures relating to the preparation of a statement of affairs is only required.

Statement of Affairs

Typical financial statements are prepared on a going concern basis, which means that assets are
maintained at historical cost and expenses are expirations of historical costs. Corporation that faces
bankruptcy or liquidation is quitting concern, not a going concern. Consequently, statement of financial
position, which reports the financial position of a going concern, is inappropriate for a corporate
liquidation.

The financial statement designed for an insolvent corporation is the statement of affairs. It is a statement
of financial condition as of a given date presenting the assets and liabilities of a corporation from a
liquidation viewpoint. Assets are carried at fair values and assets and liabilities are presented according
to priorities. Accompanying statement of affairs is a statement of realization and liquidation. This
statement shows gains or losses on realization of additional assets and a list of additional costs
associated with the liquidation.

Chapter 3: Joint Arrangements

A joint arrangement is an arrangement of which two or more parties have joint control.

A joint arrangement has the following characteristics:

(a) The parties are bound by a contractual arrangement. An enforceable contractual arrangement is
often, but not always in writing, usually in the form of contract between the parties. Joint
arrangements may be structured though a separate vehicle. When joint arrangements are
structured through a separate vehicle, the contractual arrangements will in some cases be
incorporated in the articles or by-laws of the separate vehicle.
(b) The contractual arrangement gives two or more of those parties joint control of the
arrangement.

Separate vehicle – is a separately identifiable financial structure, including separate legal entities or
entities recognized by statute, regardless of whether those entities have a legal personality. This maybe
in the form of partnership or corporation.

Joint control – is the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous consent of the parties sharing control.

TYPES OF JOINT ARRANGEMENT

Joint arrangements are established for a variety of purposes (e.g. as a way for parties to share costs and
risks, or as way to provide the parties with access to new technology or new markets), and can be
established using different structures and legal forms. Examples of joint arrangements are construction
services, shopping center operated jointly, joint manufacturing and distribution of a product, bank
operated jointly, and oil and gas exploration, development and production activities.

A joint operation is either a joint operation or a joint venture.

JOINT OPERATION

- A joint arrangement whereby parties that have joint control of the arrangement have rights to
the assets, and obligations for the liabilities, relating to the arrangement. Those parties are
called joint operators. To manage the activities of the joint arrangement, joint operators may
appoint an operator or manager, who will be an employee of the joint operators.

JOINT VENTURE

- A joint arrangement whereby parties have joint control of the arrangement have right to the net
assets of the arrangement. Those parties are called joint venturers. This type is usually
structured through a separate vehicle ( a partnership or corporation).
- A joint arrangement in which the assets and liabilities relating to the arrangement are held in a
separate vehicle can be either a joint venture or joint operation. A joint arrangement that is not
structured through a separate vehicle is a joint operation.

ACCOUNTING PROCEDURES

Joint Operations

A joint operator shall recognize in relation to its interest in a joint operation:

(a) Its assets, including its share of any assets held jointly;
(b) Its liabilities, including its share of any liabilities incurred jointly;
(c) Its revenue from the sale of its share of the output arising from the joint operation;
(d) Its share of the revenue from the sale of the output by the joint operation;
(e) Its expenses, including its share of any expenses incurred jointly.

When a joint operator sold or contributed assets to the joint operation, the joint operator shall recognize
gains and losses resulting from such transaction only to the extent of the other parties’ interest in the
joint operation. If such transaction provides evidence of a reduction in the net realizable value of the
assets to be sold or contributed to the joint operation, or of an impairment loss of those assets, those
losses shall be recognized full by the joint operator.

When a joint operator purchases assets from the joint operation, it shall recognize its share of the gains
and losses until it resells those assets to outsiders. When such transactions provide evidence of the
reduction of net realizable value of the assets to be purchased or of an impairment loss of those assets, a
joint operator shall recognize its share of those losses.
 Joint ventures

A joint venture shall recognize its interest in a joint venture as an investment and shall account for the
investment using equity method.

Under the equity method, on initial recognition the investment in joint venture is recognized at cost, and
the carrying amount is increased or decreased to recognize the venturer’s share of the profit or loss of
the joint arrangement after the date of acquisition. Distributions received from the joint arrangement
reduce the carrying amount of the investment. The venturer’s share of the profit or loss is recognized in
the venturer’s profit or loss.

APPENDIX

Investment in Joint Ventures for SMEs

This appendix is an integral part of the IFRS for SMEs.

Small and Medium Enterprise (SMEs)

• Entities with total assets between P3Mn to P350Mn and total liabilities of P3Mn to P250Mn
• That publish general purpose financial statements for external users
• That are not in the process of filing their financial statements for the purpose of issuing any class
of instruments in a public market;
• And they do not have public accountability

An entity has public accountability if:

• Its debt or equity instruments are traded in a public market or in the process of issuing such
instruments for trading in a public market.
• It holds assets in a fiduciary capacity for a board group of outsiders as one its primary
businesses. This is typically the cases for financing companies, insurance companies, brokers and
dealers of securities, and investment banks.

Joint Venture defined

Section 15 0f IFRS for SMEs defines joint venture as contractual arrangements whereby two or
more parties undertake an economic activity that is subject to joint control joint ventures can take the
form of jointly controlled operations, jointly controlled assets or joint controlled entities.

The above definition is different from the definition provided in IFRS 11(joint arrangements) and IRFS
(Investment in associates and joint ventures). However, they share the following characteristics:

• A contractual arrangement exists between the parties involved in the venture.

• The contractual arrangement establishes joint control.

ACCOUNTING PROCEDURES
Jointly Controlled Operations

The operation of this type involves the use of the asset and other resources of the parties (venturer)
rather than the establishment for a corporation, partnership or the other entity, or a financial structure
that is separate from the parties themselves. Each party uses its own property, plant and equipment and
carries its own inventories. It also incurs its own expenses and liabilities and raises its own finance, which
represents its own obligations. The activities may be carried out by a manager, who is an employee of
the parties. The agreement usually provides a means by which the revenue expenses incurred in
common are shared among the parties.

Jointly Controlled Assets

This type involves the joint control, and often the joint ownership, by the parties (venturers) of one or
more assets contributed to, or acquired for the purpose of, the joint venture and dedicated to the
purposes of the joint venture.

Jointly Controlled Entities

A jointly controlled entity is a joint venture that involves the establishment of a corporation, partnership
or other entity in which each venturer has an interest. The entity operates in the same way as other
entities, except that a contractual arrangement between the venturers establishes joint control over the
economic activity of the entity.

This is similar to the joint venture type of joint arrangements under IFRS 11.

Measurement

Section 15(Investment in Joint ventures of the IFRS for SMEs requires an entity to choose one of the
following three models to account for its investment in joint ventures:

• Cost Model- the investment in a joint venture is measured at cost (including transaction costs)
less any accumulated impairment losses. However, an investor using the cost model is required
to use the fair value model for any investment in a joint venture for which a published price
quotation exists. The investor shall recognize distributions received from the investment as
income without regard to whether the distributions are from accumulated profits of the jointly
controlled entity raising before or after the date acquisition.
• Equity Method- the investments is a joint venture is initially recognized at the transaction price
(including transaction cost) and adjusted threreafter for the post-acquisition change in the
investor’s share of profit or loss and other comprehensive income of the joint venture.
• Fair Value Model- the investment in joint venture is initially recognized at the transaction price
(excluding transaction costs). After initial recognition, at reporting date, the investment in joint
venture is measured at fair value. Changes in fair value are recognized in profit or loss. However,
an investor using the fair value model is required to usethe cost model for any investment in the
 joint venture for which it is impractical to measure fair value reliably without undue cost or
effort.

Cost of Acquisition

The cost of acquisition in exchange for the control of the acquiree includes the fair value of assets given,
liabilities incurred or assumed and equity instruments issued by the acquirer, plus any directly
attributable costs.

Transaction between a venturer and a joint venture

When a venturer contributes or sells assets to a joint venture, recognition of any portion of a gain or loss
from the transaction shall reflect the substance of the transaction. While the assets are retained by the
joint venture and provided the venturer has transferred the significant risks and rewards of ownership,
the venturer shall recognize only that portion of the gain or loss is attributable to the interest of the
other venturers. The venturer shall recognize the full amount of any loss when the contribution or sale
provides evidence when the contribution or sale provides evidence of an impairment loss.

When a venturer purchases assets from joint venture, the venturer shall not recognize its share of the
profits of the joint venture from the transaction until it resells the assets to an independent party. A
venturer shall recognize its share of the losses resulting from these transactions in the same way as
profits except that losses shall be recognized immediately when they represent an impairment loss.

The above principles are similar to the principles of accounting for Joint Operation type of Joint
Arrangement (IFRS 11).

Sample Problems: joint operation

A and B ( the parties) are two companies whose businesses are the construction of many types of public
and private construction services . they set up a contractual arrangement types of public and private
construction services. They set up contractual arrangement to work together for the purpose of the of
fulfilling a contract with the government for the construction of a motor way between two cities for
P24Milion (a fixed price contract). gross

The contractual arrangement determines the participation shares of A and B and Establishes:

a. Joint control of the arrangement;

b. The rights to all the assets needed to undertake the activities of the arrangement are shared by
the parties on basis of their participation share in the arrangement;
c. The parties have joint responsibility for all operating and financial obligations relating to the
activities of the arrangement on the basis of their participation shares in the arrangement; and
d. The profit or loss resulting the activities of the arrangement is shared by A and B on the basis of
their participation shares in the arrangement.

In 2013, in accordance with the arrangement between A and B:

 • A and B each used their own equipment and employees in the construction activity.
• A constructed three bridges needed to cross rivers on the route at a cost of P8 million.
• B constructed all of the other elements of the motorway at a cost of P10 million.
• A and B shares equally in the P24 million jointly invoiced to (and received from) the government.

1. What is the gross profit of the joint arrangement?

a. P8 million
b. P14 million
c. P6 million
d. P4 million

CA: C

Solution:

Construction revenue P24 M

Construction cost 18
_____
Gross profit P 6M

2. What is the gross profit earned by A in 2013?

a. P6 million
b. P14 million
c. P4 million
d. P2 million

CA: C

Solution:
revenue of 24M
Construction revenue(P24 M/2) P12M
Construction cost 8
_____
Gross profit earned by A P 4M

3. What is the gross profit earned by B in 2013?

a. P2 million
b. P14 million
c. P7 million
d. P6 million

CA: A

Solution:
 Construction revenue (P24 M/2) P12M
Construction cost 10
_____
Gross profit earned by B P 2M

Chapter 4: Installment Sales

Installment sales problems have appeared very often in the CPA exam. Therefore, candidates should be
familiar with the accounting techniques applicable to this topic.

When a sale is made on the installment basis, the buyer usually makes a down payment and promises to
pay the balance in regular installments over a specified period of time. Profit on installments sales is
recognized only when earned. Although there are several theoretical points at which the profit can be
assumed to be earned, for CPA examinations purposes, the choice is generally limited to the installment
method.

Installment Method

Under this method, income recognized only when collections are made. Problems requiring the use of
the installment method of recognizing income have appeared quite regularly in the CPA exam. The
following are the typical problems often encountered in the CPA exam.:

1. Computation of Gross Profit rate for each year of sales.

2. Computation of Realized Gross profit each year of sales
3. Computation of Deferred Gross account balance at the end of the year .
4. Computation of Gain or loss repossessions.

Computation of Gross Profit Rate

To compute the realize gross profit in proportion to the collections made, it is necessary to determine
the gross profit rate for each year’s operations. The following are the formulas in computing gross profit
rate:

Current year sales:

Gross profit sales= Gross profit/ Installment sales

Prior sales:

Gross profit sales= Defered gross sales (Beg.) – Prior Year Sales / Installment account Receivables (beg.)-
Prior year sales

Computation of Realized Gross Profit

Once the gross profit rates are known, it is possible to compute the realized gross profit based on cash
collections. The formula to be used is:

Realized Gross Profit= Collections (excluding interest) x Gross profit rate (based on sale)

Missing factors. Inasmuch as the realized gross profit under the installment method depend on the cash
collections on receivables, it is important that the amounts collected must be known. However, in some
problems, the collections are not specifically stated. Such collections must be reconstructed from related
information available from the data given. The candidate should remember the following format in
computing the collections.

Current Year Sales Prior year sales

Installment accounts receivable- Beginning xx xx
Installment accounts receivable- end (xx) (xx)
_______________ _____________
Total credits xx xx
Credits for repossessions (unpaid balance) (xx) (xx)
Credit for installment A/C written off (xx) (xx)
________________ ______________
Credit representing collections xx xx
_________________ ________________

Computation Deferred Gross profit, end

To compute the balance of Deferred Gross profit at the end of the year, the following formula may be
used:

Installment Account Receivable - End x GPR= Deferred Gross Profit – End

Or

Deferred Gross Profit- before adjustment xx

Less: Realized Gross Profit xx

______

Deferred Gross profit – End xx

Computation of Gain or Loss on Repossessions

If a customer does not make an installment payment at the specified time, it is necessary to repossess
the merchandise in order for the seller to minimize his loss.

The gain or loss on repossession is computed as follows:

 Fair value of repossessed merchandise xx
Less: Unrecovered cost
Unpaid balance xx
Less: deferred gross profit (unpaid balance x GP rate) xx xx
_____________ _____________
Gain (loss)on repossession) xxx

The fair value is repossessed merchandise at the time of repossession should be before reconditioning
cost and before adding a normal gross profit from sale of repossessed merchandise.

Trade In

This is a type of installment sale use by car dealers, whereby an old car is received as down paymnent
from the buyer for sale of the new car. Usually the old car traded-in is overvalued to induce the trade-in.
for problem solving purposes the overevaluation is computed using the formula below:

Trade-in valued allowed on old car Pxx

Less: Actual value net book value
Estimated selling price Pxx
Less: Normal gross profit from the sale of the Pxx
used car
Reconditioning costs xx xx xx
___________ _________ ____________
Overallowance on the old car Pxx

The overallowance is treated as deduction from the selling price of the new ca. when there is
overallowance on the old car traded-in, the gross profit rate is computed as follows:

Gross Profit / Net sales (net of overallowance)

The realized gross profit is alsocomputed as follows:

Collections (cash + actual value of old car) x GPR

Sample Problems:

1. Oro Company began operations on January 1, 2012 and appropriately uses the installment sales
method of accounting. The following data are available for 2012 and 2013:
2012 2013
Installment sales P1,500,000 P1,800,000
Gross profit sales 30% 40%
Cash collections from:
2012 sales 500,000 600,000
 2013 sales 700,000

The realized gross profit for 2013 is:

a. P720,000 based on collections
b. P520,000
c. P460,000
d. P280,000

CA: C

Solution:

2012 sales 2013 sales

Collections during 2013 P600,000 P700,000
Gross profit rate 30% 40%
_______________ _____________
Realized gross profit P180,000 P280,000
Total realized gross profit (180,000 + P280,000) P460,000
r3alized gross profi5 2012
500,000*30%=150,000
2. Roco Corp., which began business on January 1, 2013, appropriately uses the installment sales
method of accounting for income tax reporting purposes. The following data are available for
2013:
Installment account receivables, 12/31/2013 P200,000
Installment sales for 2013 P350,000
Gross profit on sales 40%
Under the installment method, what would be Roco’s deferred gross profit at December 31,
2013? based on account
a. P20,000
b. P90,000
c. P80,000
d. P60,000

CA: C

Solution:

Installment account receivables, 12/31/2013 P200,000

Gross profit on sales 40%
__________________
Deferred gross profit, December 31, 2013 P80,000

3. Gray Co., which began operations on January 1, 2013, appropriately uses the installment method
of accounting. The following information pertains to Gray operations for the 2013:
Installment sales P500,000
Regular sales 300,000
Cost of installment sales 250,000
 Cost of Regular sales 150,000
General and administrative expenses 50,000
Collection on Installment sales 100,000
In December 31, 2013 statement of financial position, what amount should Gray report as
deferred gross profit? account receivable
a. P250,000
b. P200,000
c. P160,000
d. P75,000

CA: B

Solution:

Installment sales P500,000

Collections 100,000
___________
Installment accounts receivable, 12/31/2013 400,000
Gross profit rate (P250,000/P500,000) 50%
_____________
Deferred gross profit, 12/31/2013 or P200,000
_____________________
Deferred gross profit (P500,000-P250,000) 250,000
Realized gross profit, 12/31/2013 (P100,000 x 50%) 50,000
______________
Deferred gross profit, 12/31/2013 P200,000
____________________

4. Filstate Co. is a real state developer that began operations on January 2, 2013. Filstate
appropriately uses the installment method of revenue recognition. Filstate sales are made on the
basis of 10% downpayment, with the balance payable over 30 years. Filstate goss profit
percentage is 40%. Relevant information for Filstate first year operations is as follows:
sales P16,000,000
Cash collections 2,020,000
The realize gross profit and deferred profit at December 31,2013 are:

a. P808,000 and P5,592,000

b. P5,040,000 and P808,000
c. P5,600,000 and P808,000
d. P808,000 and P6,400,000

CA: A

Solution:
 Realized gross profit (P2,020,000 x 40%) P 808,000
Deferred gross profit, 12/31/2013: installment accounts receivable, P13,980,000
12/31/2013 (P16,000,000 – P2,020,000)
Gross profit rate 40%
____________
Deferred gross profit P5,592,000

5. Long Co., which began operations on January 1, 2013, appropriately uses the installment
method of accounting. The following information pertains to Long’s operations for the year
2013:
Installment sales P1,000,000
Regular sales 600,000
Cost of installment sales 500,000
Cost of regular sales 300,000
General and administrative expenses 100,000
Collections on installment sales 200,000
What is the total comprehensive income on December 31, 2013?

a. P400,000
b. P200,000
c. P300,000
d. P100,000

CA: C

Solution:

Regular sales P 600,000

Cost of regular sales 300,000
____________
Gross profit on regular sales P 300,000
Realized Gross profit on installment sales
collections P200,000
Gross profit rate (P500,000/P1,000,000) 50% 100,000
_____________
Total realized gross profit 400,000
General and administration expense 100,000
______________
Total comprehensive income P300,000

Chapter 5: Long Term Construction Projects (PAS11)

Long term construction projects generally are construction project that extend over one accounting
period. Problems on long term construction projects have appeared very often in the CPA board
examination.

The principal problem to be encountered by CPA candidates on this topic is the computation of the gross
profit to be recognize each year.

The procedures and principles used in solving this problem is based on Philippine Accounting Standard
(PAS) 11 “Construction Contract”

Gross Profit Recognition

The gross profit on construction project may be recognized upon its completion or each year as the
construction progresses. These two alternative methods of gross profit recogniotion are referred to as:

1. The Zero Profit Method

2. The Percentage of Completion Method

Zero Profit Method all or nothing

This method is used when reasonable estimate of the percentage of completion cannot be made. Under
this method, revenue is recognized each year in an amount exactlty equal to costs incurred until
reasonable estimates of the percentage of completion is available. The total gross profit on the project is
recognized in the year of completion of the project.

based on the percentage of

Percentage of Completion Method completed project

Under this method, gross profit is recognized at the end of each accounting period based on the
percentage of completion of the project. The percentage of completion is usually computed by dividing
the cost incurred to date by the total estimated cost to complete the project.

The formula to compute the gross profit to be recognized each year is as follows:

Contract price Pxx

Less: Total estimated costs
(1) Cost incurred to date Pxx
Estimated cost to complete xx
________
(2) Total estimated cost xx
________
Estimated gross profit xx
Multiply by percentage of completion (1 / 2) %
_________
Gross profit earned to date xx
Less: gross profit earned earned in prior year xx
 ___________
Gross profit earned this year Pxx
______________

Once the percentage of completion is known, the following alternative formula may be used:

Contract price Pxx

Multiply by the percentage of completion %
__________
Value of contract earned xx
Less: cost incurred to date xx
_________
Gross profit earned to date xx
Less: gross profit earned in prior year (s) xx
__________
Gross profit earned this year Pxx
____________

• Cost incurred to date- these include pre contract costs and costs incurred after contract
acceptance. Precontract costs include costs of architectural designs, cost of securing the contract
and any other costs that are expected to be recovered if the contract is accepted.
• Estimated costs to complete- these are the anticipated cost of materials, labor, subcontracting
costs, and indirect costs (overhead) required in completing the project at a scheduled time.
• Cost of Materials purchased in Advance in their Use- construction materials purchased several
weeks or moths before they are actually use in constructions should not be treated as costs
incurred for purposes of computing the percentage of completion ratio until the materials have
been physically used in production, unless they are specifically purchased for the project.

Anticipated Loss on Long Term Construction Projects

In some cases, the total estimated costs may increase due to increase in the costs of construction
materials. While the increase in the total estimated costs may result in a loss in the year the estimated
costs increased, the entire contract will still result in a profit. Sometimes, however, an increase in total
estimated costs is so great that a loss on the entire contract is anticipated; that is, total estimated costs
exceeds the total revenue from the contract. When a loss is anticipated, PAS No. 26 “Construction
Contracts” require reporting the loss in its entirely immediately when the loss is first anticipated.

Construction in Progress in Excess of Billings/ Billings in Excess of Construction in Progress

This represents the difference between the Construction in Progress (CIP) account and the Contract
Billings as shown before:

Construction in Progress Pxx

 Less: Contract Billings xx
________
CIP in excess of billings (current asset) Pxx
____________
Billing in excess of CIP (Current liability) Pxx
____________

Under the zero profit method, the Construction in Progress account before the year ofcompletion is
debited for the costs incurred to date. In the year of completion the Construction in progress account is
debited for the cost incurred and gross profit earned on the project.

On the other hand, under the percentage of completion m ethos, the Construction in Progress account is
debited every year for the costs incurred and gross profit earned each year. In the year of completion,
the balance of Construction in Progress account is closed to the Contract billings account which have the
same balance.

Accounting for Change Order

Change orders are modifications of an original contract. Contract revenue and costs should be adjusted
to reflect change orders that are approved by the contractor and customers.

Sample Problems:

1. The following data pertains to Bell Co’s construction jobs, which commended during 2013.
Project 1 Project 2
Contract price P420,000 P300,000
Cost incurred during 2013 240,000 280,000
Estimated costs to complete 120,000 40,000
Billed to customers during 2013 150,000 270,000
Received from customers during 2013 collection 90,000 250,000

What amount gross profit (loss) would Bell report in 2013 under the zero profit method and the
percentage of completion methos?

a. P(20,000) and P20,000

b. P20,000 and P(20,000)
c. P20,000 and P340,000
d. P40,000 and P420,000

CA: A

Solutions:
 2. Cord Builders Inc. has consistently used the percentage of completion method of accounting for
construction type contracts. During 2011 Cord started work at P9,000,000 fixed price
construction contract that was completed in 2013. Cord’s accounting records disclosed the
following:
December
2011 2012
Cumulative contract cost incurred P3,900,000 P6,300,000
Estimated total cost at completion 7,800,000 8,100,000

How much income would Cord have recognized on this contract for the year ended December
31, 2012?
a. P100,000
b. P300,000
c. P600,000
d. P700,000

CA: A
 3. State Co. recognizes construction revenue and expenses using the percentage of completion
method. During 2012 a single long term project was begun, which continued through 2013.
Information on the project follows:
2012 2013
Accounts receivable from construction contract P100,000 P300,000
Construction expenses 105,000 192,000
Construction in progress 122,000 364,000
Partial billings on contract 100,000 420,000

Profit recognized from the long-term construction contract in 2013 should be

a. P50,000
b. P108,000
c. P128,000
d. P228,000

CA: A
4. Lake construction company has consistently used the percentage of completion method of
recognizing income. During 2012 lake entered into a fixed-price contract to construct an office
building for P10,000,000. Information relating to contract is as follows:

At December 31
2012 2013
Percentage of completion 20% 60%
Estimated total cost of Completion P7,500,000 P8,000,000
Income Recognized (cumulative) 500,000 1,200,000
Contract costs incurred during 2013 were

a. P3,200,000
b. P3,300,000
 c. P3,500,000
d. P4,800,000

CA: B

Solution:

5. Hansen Construction, Inc. has consistently used the percentage of completion method of
recognizing income. During 2013, Hansen started work on a P3,000,000 fixed price construction
contract. the accounting records disclosed the following data for the year ended December 31,
2013.

Cost incurred P 930,000

Estimated Cost to complete 2, 170,000
Progress billings 1, 100,000
Collections 700,000

How much loss should Hansen have recognize in 2013?

a. P230,000
b. P100,000
c. P 30,000
d. P 0

CA; B
Solution: