1 In accounting for corporate liquidation, which of the following statements is incorrect?

a Fully secured creditors no longer share in the remaining free assets after payment of unsecured liabilities without priority.
b Assets used as security for partially secured liabilities are offsetted to their secured debts and can no longer be used to pay unsecured liabilities.
c Unsecured credits with priority such as liabilities to employees and taxes due to government can always be fully recovered by the said creditors in every corporate liquidation.
d The unsecured portion of the liabilities to partially secured creditors are added to unsecured credits without priority in the computation of recovery percentage of the
unsecured creditors without priority.

2 ABC Inc. will be undergoing liquidation proceedings. Its statement of financial position immediately before commencement of the liquidation process were as follows:

Cash 250,000 Trade payable 530,000

Trade receivables 300,000 Salary payable 400,000
Inventory 250,000 Loan payable 1,120,000
Equipment, net 1,000,000 Share capital ?
Accumulated
Intangible assets 200,000 deficit (?)
TOTAL 2,000,000 TOTAL 2,000,000

On the first day of liquidation, the following estimates were determined:

A total of P50,000 is expected to be incurred for the trustee’s fee;

Trade receivables were estimated to be only 60% collectible;
Only 20% of the inventories were deemed to be completely obsolete;
Equipment, which was pledged as a collateral for the loan, was fairly stated.

During the first month of liquidation, trustee’s fee actually incurred amounted to P50,000. All unsecured liabilities with priority were paid during the first month of liquidation.
No other liabilities were settled during that month. P300,000 of the trade receivables were collected in full. All of the inventories were sold for a total of only P200,000.
Equipment remained unsold as of the month end, while intangible assets were no longer expected to be realized for any amount.

In the statement of affairs, how much is the estimated deficiency?

a 270,000 c 470,000
b 420,000 d 720,000

3 Based on the statement of affairs, what is the estimated recovery rate to unsecured non-priority creditors?
a 27.69% c 58.46%
b 35.38% d 77.62%

Statement of Affairs
Cash

Trade receivables Inventory

250,000

180,000

200,000

Total free assets 630,000

Less: Trustee fee

Salaries payable

-50,000

-400,000

Net free assets 180,000

Add: Estimated deficiency 470,000

Unsecured nonpriority claims 650,000*

 *650,000 = 530,000 + (1,120,000 – 1,000,000)

Net free assets 180,000

Total unsecured non-priority claims ÷ 650,000

Estimated recovery percentage 27.69%

4 “Assets realized” is placed on which side of a statement of realization and liquidation?

a credit side, measured at realizable value c debit side, measured at book value
b credit side, measured at actual net proceeds from sale d no side

5 ABC Inc. will be undergoing liquidation proceedings. Its statement of financial position immediately before commencement of the liquidation process were as follows:

Cash 250,000 Trade payable 530,000

Trade receivables 300,000 Salary payable 400,000
Inventory 250,000 Loan payable 1,120,000
Equipment, net 1,000,000 Share capital ?
Intangible assets 200,000 Accumulated deficit (?)
TOTAL 2,000,000 TOTAL 2,000,000

On the first day of liquidation, the following estimates were determined:

A total of P50,000 is expected to be incurred for the trustee’s fee;

Trade receivables were estimated to be only 60% collectible;
Only 20% of the inventories were deemed to be completely obsolete;

Equipment, which was pledged as a collateral for the loan, was fairly stated.

During the first month of liquidation, trustee’s fee actually incurred amounted to P50,000. All unsecured liabilities with priority were paid during the first month of liquidation.
No other liabilities were settled during that month. P300,000 of the trade receivables were collected in full. All of the inventories were sold for a total of only P200,000.
Equipment remained unsold as of the month end, while intangible assets were no longer expected to be realized for any amount.
In the statement of realization and liquidation, how much is the estate equity / (estate deficit) at the end of the first month of liquidation?
a 250,000 c -350,000
b -50,000 d -420,000
Solution:

Statement of Realization and Liquidation

Trade receivables 300,000 Trade receivables 300,000

Inventories 250,000 Inventories 200,000
Equipment 1,000,000
Intangibles 200,000
Equipment 1,000,000
Salaries payable 400,000 Trade payable 530,000
Salaries payable 400,000
Loans payable 1,120,000
Trade payable 530,000
Loans payable 1,120,000
Trustee fee 50,000
Subtotal 3,850,000 Subtotal 3,550,000
Loss on
realization 300,000
Total 3,850,000 Total 3,850,000

Beginning estate deficit (50,000)+loss on realization (300,000)=Ending estate deficit (350,000)

6 Statement 1: Should the realizable value of the total free assets not be enough to satisfy the unsecured liabilities, then the total free assets will be
proportionately paid to all unsecured creditors.
Statement 2: Should the realizable value of the total free assets be more than all the total unsecured claims, then the shareholders will share proportionately in this excess.

a Both statements are true c Statement 1 is true; statement 2 is false

b Both statements are false d Statement 1 is false; statement 2 is true

7 ABC Company is currently experiencing severe financial difficulties and is considering the possibility of liquidation. At this time, the company has the following assets
 at estimated realizable value and liabilities:
Assets (pledged against liabilities of P175,000) 290,000
Assets (pledged against liabilities of P325,000) 125,000
Other Assets 200,000
Liabilities with priority 105,000
Unsecured without priority 500,000
Compute the estimated payment to partially secured creditors
a 325,000 c 185,000
b 125,000 d 500,000

Solution:
115,000 + 200,000 - 105,000 = 210,000 Net Free
500,000 + 200,000 = 700,000 Total Unsecured
200,000 x 30% = 60,000 + 125,000 = 185,000

8 Statement 1: A joint arrangement is accounted for under PFRS 11 only if all the parties have joint control over the arrangement.
Statement 2: A joint arrangement involving joint ownership over an asset is most likely to be classified as a joint venture under PFRS 11.
a Both statements are true c Statement 1 is true; statement 2 is false
b Both statements are false d Statement 1 is false; statement 2 is true

9 ABC Company and DEF Company acquired each acquired 50% of the outstanding voting shares of GHI Corporation, obtaining joint control in the process. Each of them spent
P900,000 for the investment. GHI Corporation’s performance for the year resulted to a net income of P600,000. The following intercompany transactions were
noted during the year:

ABC sold inventories costing P100,000 to GHI for P150,000. As of the end of the year, all of these inventories have been resold by GHI to other parties.
GHI sold a piece of equipment to DEF at the start of the year. The sale resulted to a gain on GHI’s books amounting to P50,000. As of the time of sale, the equipment
still had a remaining useful life of 2 years.

How much is the investment income of DEF for the year?

a 300,000 c 287,500
b 275,000 d 262,500

Solution:
Share in the net income before interrelated transactions (600,000 x 50%) 300,000
Share in the unrealized gain (50,000 x 50%) -25,000
Share in the realized gain [(50,000 ÷ 2) x 50%] 12,500
Investment income of DEF 287,500

10 ABC Co. and DEF Co. are publishers of textbooks. ABC and DEF enters into a contract to put up a GHI which shall be named Knowledge GHI. Knowledge will have its own assets,
incur its own liabilities, and earn and incur its own revenues and expenses. ABC and DEF will each have a 50% interest in the net assets and profits of Knowledge.
The arrangement between ABC and DEF is most likely a
a joint operation c joint venture
b jointly controlled net assets d none of these

11 Anne and Belle decide to enter into an arrangement to produce a new product. Anne undertakes one manufacturing process and Belle undertakes the other. Anne and Belle
have agreed that decisions regarding relevant activities will be unanimously made and that each will bear their own expenses and take an agreed share of the sales
revenue from the product. What type of an arrangement does Anne and Belle had?
a Associate c Joint operation
b Merger d Joint venture

12 ABC Incorporated, a joint operator, has a contractual right to 40% of the revenues and expenses of a joint operation, together with DEF Corporation which owns the rest of the 60%.
The joint operation earned P4,000,000 sales revenue during the same year when it sold a total of P500,000 worth of goods to ABC Incorporated and another P500,000 to
DEF Corporation. As of the end of that year, ABC Incorporated was only able to sell 75%, while DEF Corporation was only able to sell 80% of these goods to third parties.

How much is the share of ABC Incorporated in the sales revenue of the joint operation?
a 1,550,000 c 1,400,000
b 1,510,000 d 1,200,000
Solution:

Sales revenue 4,000,000

Intercompany upstream to NS (unsold) -125,000
Intercompany upstream to CP (unsold) -100,000
Total 3,775,000
x share of NS 40%
 Total share of NS in revenue 1,510,000

13 A, B and C formed a joint operation. They agreed on the following:

C is the appointed as the manager. As compensation, C is entitled to a ₱120 salary plus bonus of 25% of profit after deducting the salary and the bonus. However, C will
be charged for the cost of any unsold inventory.
Interest of 10% per annum is allowed to A’s and B’s capital contributions.
Any remaining profit or loss is divided equally.

The joint operation was complete after a year. The following were the transactions:
A contributed cash of ₱400 and merchandise costing ₱800.
B contributed merchandise costing ₱1,600. B paid freight of ₱80 in the transfer.
C purchased merchandise worth ₱400 using A’s cash contribution.
C paid expenses of ₱800 using his own cash.
C made total sales of ₱3,200.
All inventories were sold except one-half of those contributed by B.

How much is the joint operation’s profit after deduction for salary but before deduction for bonus?
a 192 c 360
b 240 d 420

Solution:
Joint operation
Merchandise – A 800 3200 Sales – C
Purchases - A's
cash 400
Unsold inventory
Merchandise – B 1600 840 charged to C*
Freight - in – B 80
Expenses – C 800
Profit before
salary and bonus
360 - Credit balance
Salaries expense
–C 120
Profit after
salary but before
bonus - Credit
240 balance
Bonus expense** 48
Profit after salary
192 and bonus

*Unsold inventory: (₱1,600 plus ₱80 freight-in) multiplied by one-half.

**Bonus is computed as follows:
P
B #ERROR! P - 1 + Br
B = 240 – (240 ÷ 1.25%) = 48

14 Which of the choices will result to a joint arrangement classified as a joint venture?
a Two entities partnering up to combine their resources without establishing a separate vehicle for it.
b One entity purchasing all the assets and assuming all the liabilities of another company
c Two entities owning the rights to the assets and obligations to the liabilities of another entity
d Two entities having joint control over a separate vehicle which is allowed to have significant transactions with third parties

15 On January 1, 2022, ABC Corporation acquired 50% interest in a company for a total cost of P1,100,000, gaining joint control in the process. The investee is properly classified as a
Joint Venture under IFRS 11. In its statement of comprehensive income for the year ended December 31, 2022, the joint venture reported a net profit of P2,500,000 and
other comprehensive income of P500,000.

On November 10, 2022, the joint venture declared P300,000 cash dividends to ABC Corporation, to be paid on January 2, 2023.
How much is the balance of the investment in joint venture account of ABC as of December 31, 2022?
a 2,200,000 c 2,300,000
b 2,450,000 d 3,800,000
Solution:
Investment in Joint Venture
1,100,000 300,000
 1,250,000
250,000
2,300,000

16 ABC COMPANY, a business classified as SME, purchased 5,000 shares of DEF COMPANY for P100 per share, and paid 1% broker’s commission. The shares purchased represent
50% of DEF COMPANY’s equity, which granted ABC COMPANY joint control over DEF COMPANY together with another entity.
During the year, DEF COMPANY earned P200,000 net income and declared P50,000 cash dividends. The fair value of the shares of DEF COMPANY at the end
of the year amounted to P110 per share, and estimated cost to sell of P12 per share. The value in use cannot be determined reliably. ABC COMPANY elected to use the
cost method to account for its investment in joint venture in accordance with the PFRS for SMEs.

Which of the following is false?

a The initial recognition of the investment in joint venture is P505,000 c Dividend income of P25,000 will be recognized by ABC COMPANY during the year
b The balance of the investment in joint venture at the end of the year is P505,000 d None of the above

Solution
Investment in Joint Venture
500,000
5,000
505,000 15,000
490,000

P/L
15,000 25,000
10,000

17 Under IFRS 15, an asset is transferred to the customer when customer obtains
a satisfaction c control
b possession d recognition

18 The contract has 2 performance obligations, and payment will not occur until both performance obligations are satisfied. Upon completion of 1 of the performance obligations:
(1) the seller will credit sales revenue; (2) the seller will debit accounts receivable.
a Statement 1 is true; statement 2 is false c Both statements are true
b Statement 1 is false; statement 2 is true d Both statements are false

19 The company will recognize over time if at least one of the choices is met. Choose the exception
a the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs
b the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced
c the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date
d none of the choices are exceptions

20 Which of the following is LEAST LIKELY to be a factor to be considered in determining the transaction price?
a Bonuses to be awarded for meeting certain criteria stipulated in the contract c Fair value of any non-cash consideration
b Time value of money for payments due in less than 1 year d Penalties for defects and delays

21 A contract liability most closely resembles

a Sales revenue c Contract asset
b Deferred revenue d Construction in progress

22 The BEST evidence of the stand-alone selling price is

a Cost of the goods or service plus a modest amount of profit c Adjusted market prices of similar products offered by competitors
b Observable price of the goods or service when sold separately d The transaction price divided by the number of performance obligations

23 Under IFRS/PFRS 15, where a contract with a customer has multiple performance obligations, what will be the accounting treatment to the transaction price?
a The transaction price shall be recognized as revenue to the most important performance obligation.
b The transaction price shall be allocated equally to the different performance obligations.
c The transaction price shall be allocated to the different performance obligations by reference to their relative standalone selling prices.
d The transaction price shall be recognized as revenue only at the end of completion of all performance obligations

24 The BEST evidence of the stand-alone selling price is

a Cost of the goods or service plus a modest amount of profit c Adjusted market prices of similar products offered by competitors
b Observable price of the goods or service when sold separately d The transaction price divided by the number of performance obligations

25 ABC Inc. signed a contract on October 1, 2021 worth P1,600,000 with the following performance obligations stipulated:
Provision of right to access the intellectual property for 5 years.
 Construction and renovation of the premises of the franchisee
Delivery of 400,000 units of products

By the end of the year, construction and renovation of the premises were 70% complete and a total of 312,000 units were already delivered.
The standalone selling prices for the rights to access the license, renovation of the premises, and delivery of the goods are P700,000, P875,000, and P175,000 respectively.

How much is the revenue earned by ABC Inc from this contract for the year ended December 31, 2021?
a 80,000 c 812,800
b 716,800 d 875,000

Solution:
Performance obligation allocation bases Right to access license 700,000
Construction and renovation 875,000
Delivery of goods 175,000
1,750,000
640,000
Allocation of initial franchise fee to performance obligation Right to access license (1,600,000 x 700/1,750)
Construction and renovation (1,600,000 x 875/1,750) 800,000
Delivery of goods (1,600,000 x 175/1750) 160,000
Revenue from right to access license (640,000 x 1/5 x 3/12) 32,000
Revenue from construction and renovation (800,000 x 70%) 560,000
Revenue from delivery of goods (160,000 x 312/400) 124,800
Total revenue recognized at December 31, 2021 716,800

26 On January 1, 2021 ABC Inc. entered into a long-term construction contract to build a skyscraper for a customer. The construction project is expected to be completed on the
last quarter of 2025. Relevant excerpts from the contract are extracted:

Contract price of P15,000,000 shall be billed in 5 tranches every year end until completion of the contract
The contract price is subject to a bonus of P1,000,000 if the project is completed before October 1, 2025.
The contract price shall be reduced by a penalty of P1,500,000 if the project is completed after December 31, 2025.

During 2021, ABC Inc estimates that it is 40% likely to complete the project on August 2025, and 25% likely that the project will be completed on February 2026.
This estimate remained unchanged for 2022, but was readjusted to 50% chance for early completion and 20% chance for delayed completion in the years 2023 and onwards.
Other relevant information are as follows:
2021 2022 2023 2024 2025
Cost incurred to date 2,550,000 5,250,000 7,750,000 11,200,000 14,500,000
Estimated cost to complete 14,450,000 9,750,000 7,750,000 2,800,000 0

If the expected value approach was used as the basis for determining the transaction price, how much is the construction revenue of ABC Inc for the year
ended December 31, 2023?
a 9,941,250 c 2,280,000
b 2,341,250 d 2,253,750

Solution: 2021 2022 2023 2024

Cost incurred to
date 2,550,000 5,250,000 7,750,000 11,200,000
Estimated cost to
complete 14,450,000 9,750,000 7,750,000 2,800,000
Total estimated
cost 17,000,000 15,000,000 15,500,000 14,000,000
Cost incurred to
date 2,550,000 5,250,000 7,750,000 11,200,000
÷
14,0
Total estimated 00,0
cost ÷ 17,000,000 ÷ 15,000,000 ÷ 15,500,000 00
Percentage of
completion 15% 35% 50% 80%
Contract price for 2021 and 2022 15,000,000
Bonus (1,000,000 x 40%) 400,000
Penalty (1,500,000 x 25%) -375,000
Adjusted contract price 2021 and
2022 15,025,000
Contract price for 2023 and 2024 15,000,000
Bonus (1,000,000 x 50%) 500,000
Penalty (1,500,000 x 20%) -300,000
Adjusted contract price 2023 and
2024 15,200,000
 Adjusted contract price 2022 15,025,000
Percentage of completion 2022 x 35%
Revenue to date as of 2022 5,258,750
Adjusted contract price 2023 15,200,000
Percentage of completion 2023 x 50%
Revenue to date as of 2023 7,600,000
Revenue to date as of 2022 -5,258,750
Revenue for the year 2023 2,341,250

27 A construction contractor has a fixed price contract for P100,000 to construct a building (the project). The contractor’s initial estimate of total contract costs is P60,000. It will take
two years to construct the building. At the end of the first year of the project (31 December 2022) the contractor has incurred costs of P20,000 on the contract, including P2,000
on cement that is held offsite. The entity’s estimate of total contract costs has stayed the same.

The contractor determines the stage of completion of the construction contract by reference to the proportion that costs incurred for work performed to date
bear to the estimated total costs.

Determine the revenues, expenses, and profit for the year 2022
a REVENUES-30,000; EXPENSES-18,000; PROFIT-12,000 c REVENUES-31,333; EXPENSES-18,000; PROFIT-13,333
b REVENUES-32,000; EXPENSES-20,000; PROFIT-12,000 d REVENUES-33,333; EXPENSES-20,000; PROFIT-13,333

Solution:
Cost incurred to date: 20,000 – 2,000 = 18,000
Percentage of completion: 18,000 ÷ 60,000 = 30%
Revenue: 100,000 x 30% = 30,000
Profit: 30,000 – 18,000 =12,000

28 ABC enters into a contract with a customer to build an apartment building for P1,800,000. The customer hopes to rent apartments at the beginning of the school year
and provides a performance bonus of P270,000 to be paid if the building is ready for rental beginning August 1, 2022. The bonus is reduced by P90,000
each week that completion is delayed.
Based on prior experience, ABC estimates the following outcomes:

Completed by Probability
August 1, 2022 70%
August 8, 2022 20%
August 15, 2022 5%
After August 15,
2022 5%

Determine the transaction price for this contract

a 2,160,000 c 2,029,500
b 2,070,000 d 1,800,000

Solution:
Completion Date Probability Expected Value
August 1 70% chance of P2,070,000 = 1,449,000
August 8 20% chance of P1,980,000 = 396,000
August 15 5% chance of P1,890,000 = 94,500
After August 15 5% chance of P1,800,000 = 90,000
2,029,500

29 In accounting for a long-term construction contract using the percentage-of-completion method, the gross profit recognized during the first year would be the estimated total gross
profit from the contract, multiplied by the percentage of the costs incurred during the year to the
a Total contract price c Total estimated cost
b Unbilled portion of the contract price d Total costs incurred to date

30 ABC Inc. has entered into a profitable fixed price contract for constructing a high-site building over a period of three years. It incurs the following costs relating to
the contract during the first year:
Cost of material – P2.5 million
Site labor cost – P2.0 million

Administrative costs reimbursable per contract – P1 million

Depreciation of plant used for the construction – P0.5 million
Marketing costs for selling apartments completed – P1.0 milion
 Depreciation of idle equipment – P0.5 million Total estimated cost of the project is P18 million.

The percentage of completion of this contract at year-end is

a 33 1/3% c 25%
b 27% d 39%

Solution:
Cost incurred to date
(2,500,000 + 2,000,000 + 1,000,000 + 500,000) ÷ 18,000,000
Total estimated cost
Percentage of completion 33 1/3 %

Use the following information for the next 2 items:

On January 1, 2022, ABC Constructions entered into a long-term construction contract with a customer, with a target completion date of December 31, 2024.
The following information were made available:
2022 2023 2024
Cost incurred P6,000,000 P5,000,000 P9,000,000
Estimated cost to
complete P18,000,000 P16,500,000 nil
The contract provides that the transaction price is P25 million, subject to a P1 million bonus for early completion, and P1 million penalty for late completion. On December 31, 2022,
the company estimated that there is a 50% chance of the project being completed on time, and a 50% chance of an early completion. On December 31, 2023, the company
estimated that there is a 90% chance of the project being delayed, and 10% chance of the project being completed on time. The project was actually completed on time on
December 31, 2024. The expected value approach is determined to be the best basis for estimating the contract price and the performance obligation is being satisfied over time.
31 How much is the construction revenue for the year ended December 31, 2022?
a 6,375,000 c 6,025,000
b 6,250,000 d 6,000,000

32 How much is the realized gross profit for the year ended December 31, 2024?
a 8,400,000 c 5,000,000
b 7,500,000 d 1,600,000

Solution (48&49)
2022 2023 2024
Contract Price 25,500,000 24,100,000 25,000,000
Cost Incurred -6,000,000 -11,000,000 -20,000,000
Est. Cost to -18,000,000 -16,500,000 -
Complete
Est. Gross Profit 1,500,000 -3,400,000 5,000,000
% of Completion 25% 100% 100%
RGP to date 375,000 -3,400,000 5,000,000
RGP PY - -375,000 3,400,000
RGP CY 375,000 -3,775,000 8,400,000
Cost Incurred 6,000,000 11,000,000 20,000,000
RGP to date 375,000 -3,400,000 5,000,000
CIP, gross 6,375,000 7,600,000 25,000,000
Constr. Rev 6,375,000 17,725,000 900,000
Cost of constr. 6,000,000 21,500,000 -7,500,000
RGP CY 375,000 -3,775,000 8,400,000

33 The contract has 2 performance obligations, and payment will not occur until both performance obligations are satisfied. Upon completion of 1 of the performance obligations:
(1) the seller will credit sales revenue; (2) the seller will debit accounts receivable.
a Statement 1 is true; statement 2 is false c Both statements are true
b Statement 1 is false; statement 2 is true d Both statements are false

34 ABC Co. started work on a P10M fixed price construction contract in 20x1. The performance obligation in the contract is satisfied overtime. ABC Co. measures its progress
based on professional survey of performance completed to date (i.e., an output method). The estimated total contract costs are P6M. Information on the contract is as follows:
20x1 20x2
Costs incurred per year 2,700,000 1,980,000
Progress on the contract 42% 80%
The customer accepted all billings but defaulted in its payment in 20x2. ABC Co. assessed, on December 31,20x2, that it cannot collect 4% of the total contract price.
What is the profit to be recognized in 20x2? 1500
a 1,680,000 c 4,200,000
b 1,120,000 d 3,800,000

35 On July 3, 2021, Rendon Builders Corporation entered into a long-term construction contract to build a gymnasium for a contract price of P34,000,000.
 Relevant information are as follows:
2021 2022 2023
Cost incurred 3,550,000 ? ?
Percentage of completion 10% 25% 40%
Realized gross profit ? 2,000,000 0

How much is the construction in progress as of December 31, 2023?

a 13,600,000 c 13,100,000
b 13,400,000 d 12,600,000

Cost incurred to date 2021 Percentage of completion 2021 Total estimated cost 3,550,000
÷ 10%
35,500,000
Contract price 2021 34,000,000
Total estimated cost 2021 -35,500,000
Est. Gross profit / (loss) 2021 -1,500,000
x 100%
Gross profit / (loss) to date 2021 Prior gross profit / (loss) (1,500,000)
Gross profit / (loss) for the year 2021 - (1,500,000)
Gross profit / (loss) for the year 2021 -1,500,000
Gross profit / (loss) for the year 2022 2,000,000
Gross profit / (loss) for the year 2023 0
Gross profit / (loss) to date 2023 500,000
Percentage of completion 2023 ÷ 40%
Est. Gross profit / (loss) 2023 1,250,000
Contract price 2023 34,000,000
Est. Gross profit / (loss) 2023 -1,250,000
Total estimated cost 2023 32,750,000
Percentage of completion 2023 x 40%
Cost incurred to date 2023 13,100,000
Gross profit / (loss) to date 2023 500,000
Construction in progress as of 2023 13,600,000

36 Consignor consigned 10 items to consignee and the items had a cost of P21,600 each. The freight from consignor to consignee amounting to P14,400 was paid by the consignor.
The sales price of each item was P36,000. They also agreed that the consignee shall have a 15% commission based on the sales. The following costs were paid by the consignee
on behalf of the consignor: Selling expense P18,000; cartage cost upon receipt of the consigned goods P1,800. At the end of the year, consignee sold 6 items to customers.
What is the net income of the consigner at the end of the year?
a 25,560 c 26,280
b 58,680 d 55,800

37 What is the amount of the net remittance to the consignor?

a 163,800 c 216,000
b 196,200 d 164,700 1440

Total collections from sales 216,000

Selling expense paid by consignee on behalf of consignor -18,000
Cartage cost paid by consignee on behalf of consignor -1,800
Sales commission (216,000 x 15%) -32,400
Net remittance to consignor 163,800

38 The following is an consignment-out account in the books of Entity A:

CONSIGNMENT-OUT ENTITY B
Sept. 1 Shipped (10 items at cost) P3,500 Freight-out P300

Charges made by Entity B:

Sept. 30 Delivery expenses P175 Sept 30. Sales (7
Commission (20%) P840 items) P4,200

What is the net income of the consignor for the month of September?

a 1275 c 435
b 525 d 577.5

Sales 4,200
Cost of sales [(3,500 +300) x 7/10] -2,660
Gross profit 1,540
Delivery expense -175
Commission expense -840
Net income 525

NOTE: The "Freight-out is the freight from the consignor to the consignee, therefore it is capitalized in the cost.

39 CSGNR Inc. purchased 100,000 units costing P1,000,000, and paid P10,000 freight for its shipment. After a day, the company consigned these goods to OIEE Inc. stating
that the consignee is entitled to 10% of the revenue from all sold units. The shipment from the consignor to the consignee amounted to P5,000 with payment terms freight collect.
With a standard retail price of P19, the consignee remitted a total of P1,306,000. Other notable expenses paid by the consignee on the consignor’s behalf were P12,000
advertising expense, P3,000 delivery charges to customers, P7,800 installation fee on the customer’s premises.
How much was the cost of goods still out on consignment?
a 220,000 c 222,200
b 221,100 d 223,300

Net remittance 1,306,000

All payments made by consignee on behalf of con (5,000 + 12,000 + 3,000 + 7,800) 27,800 1,333,800
Cash collected net of commission signor
÷ 90%
Total sales 1,482,000
Selling price per unit ÷ 19
Units sold 78,000
Cost of goods consigned 1,000,000
Freight-in 10,000
Freight from consigner to consignee 5,000
Total cost of goods consigned 1,015,000
Units unsold ratio (22,000/100,000) x 22%
Cost of goods still out on consignment 223,300

40 How much is the net income from sale of consigned goods?

a 519,300 c 509,300
b 514,300 d 504,300

Sales 1,482,000
Cost of goods
sold (1,015,000 x
78%) -791,700
Gross profit 690,300
Expenses (12,000
+ 3,000 + 7,800) -22,800
Commission
expense
(1,482,000 x
10%) -148,200
Net income 519,300