AFAR Flashcards
What is the classification of the joint arrangement when the assets and liabilities relating to the arrangement are held by a separate vehicle or when the arrangement is established with a separate vehicle?
It can be either a joint operation or joint venture depending on the legal form of the separate vehicle, terms of the contractual arrangement or other relevant facts and circumstances.
Peza Company uses a predetermined factory overhead application rate based on direct labor cost. For the year ended December 31, 20X1, Peza’s budgeted factory overhead was P600,000, based on a budgeted volume of 50,000 direct labor hours at a standard direct labor rate of P6.00 per hour. Actual factory overhead amounted to P620,000, with an actual direct labor cost of P325,000. For 20X1, overapplied factory overhead was:
P30,000
Magic Corp. has its main office in Marikina City and established a branch in Bacolod. During 20x1 its first year of operations, the home office in Marikina shipped goods to the branch in Bacolod at a total billing price of P303,050, which was 10% above the cost. On December 31, 20x1. The branch reported a net income from its operations of P5,500 and an ending inventory of P61,050. How much is the net income (loss) of the branch insofar as the home office is concerned?
P27,500
XYZ entered into a long-term construction contract to construct an underpass for an initial contract price of P75,000,000. During 200B, the contract price decreased due to the change in the project design.
The following data were available:
200A
200B
200C
Cost incurred
P18,000,000
P30,000,000
?
Realized gross profit/(loss)
?
(12,000,000)
P4,000,000
Percentage of completion as of year end
30%
60%
80%
Compute the cost of construction presented in the Statement of Comprehensive Income of XYZ for the year ended December 31, 200C.
P10,500,000
Juwan Manufacturing has the following account balances at the beginning of the current year:
Raw Materials Inventory
P 112,500.00
Work in Process Inventory
P 337,500.00
Finished Goods Inventory
P 270,000.00
Additional information:
Issuance of Raw Materials to the production department, 10% are indirect materials.
P 405,000.00
Direct Labor
P 270,000.00
Indirect Labor
P 45,000.00
Overhead Charged
P 166,500.00
At the end of the month:
Unfinished jobs
P 168,750.00
Unsold finished goods
P 202,500.00
Which of the following is the amount to be reported as the cost of goods sold?
P1,037,250.00
Which of the following are constant amounts per unit basis as activity changes within a relevant range?
Variable Costs
Alvin Corporation is undergoing liquidation. On January 1, 200A, its Statement of Financial Position showed the following accounts:
Cash
P150,000
Salaries Payable
P85,000
Accounts Receivable-net
290,600
Accounts Payable
120,700
Inventory
50,000
Mortgages Payable
428,000
Prepaid Expenses
10,400
Loan Payable
130,000
Building
380,000
Notes Payable
84,300
Goodwill
80,000
Ordinary Shares
170,000
Deficit
(57,000)
Total Assets
P961,000
Total Liabilities & Equity
P961,000
The mortgage payable is secured by the Building having a realizable value of P400,000. Accounts Payable amounting to P75,000 is secured by receivables amounting to P90,600 (P9,900 of which is uncollectible). The balance of receivables which has a realizable value of P187,500 is used to secure the loan payable. Inventory has a realizable value of P41,200. In addition to recorded liabilities are: accrued interest on mortgage payable amounting to P4,280, liquidation expenses amounting to P11,300 and taxes amounting to P5,600.
What is the estimated payment to unsecured creditors without priority? (Use 2 decimal place for estimated recovery percentage. example: 88.89%)
P122,161
Morning Manufacturing has the following account balances at the beginning of the current year:
Raw Materials Inventory
P 112,500.00
Work in Process Inventory
P 337,500.00
Finished Goods Inventory
P 270,000.00
Additional information:
Issuance of Raw Materials to the production department, 10% are indirect materials.
P 405,000.00
Direct Labor
P 270,000.00
Indirect Labor
P 45,000.00
Overhead Charged
P 166,500.00
At the end of the month:
Unfinished jobs
P 168,750.00
Unsold finished goods
P 202,500.00
Which of the following is the amount to be reported as the cost of goods manufactured?
P969,750.00
Theo and Mat have stipulated in their partnership agreement the following:
a. Salary allowances of P60,000 each.
b. 20% bonus to Theo out of the net income after deducting the salary allowances but before deducting the bonus.
c. Remaining profit to be shared equally.
The partnership has produced a profit of P360,000. What amount is the share of Mat in the profit?
P156,000
If the trade-in value is less than the fair value of the asset, there is:
Under Allowance
Parc Links Development builds replicas of residences of famous and infamous people. The company is highly automated, and the new accountant-owner has decided to use machine hours as the basis for predicting maintenance costs. The following data are available from the company’s most recent four (4) months of operations:
Month
Machine Hours
Maintenance Costs
1
460
P 6,836.50
2
399
P 5,324.00
3
496
P 5,989.50
4
424
P 5,505.50
Using the high-low method, which of the following is the variable cost per unit?
P6.86
Which of the following combines direct material and direct labor actual costs with the overhead assigned using a predetermined rate/s?
Normal Cost System
Shoyu Development builds replicas of residences of famous and infamous people. The company is highly automated, and the new accountant-owner has decided to use machine hours as the basis for predicting maintenance costs. The following data are available from the company’s most recent six (6) months of operations:
Month
Machine Hours
Maintenance Costs
1
289
P 5,783.00
2
319
P 6,176.25
3
344
P 5,041.88
4
334
P 6,478.75
5
387
P 7,272.81
6
350
P 6,327.50
Using the high-low method, the variable cost per unit is P15.20. Which of the following are the fixed costs of the highest and lowest level of activity?
P 1,389.57
Malolos Corporation bills its newly established branch for merchandise at 140% of the cost. At the end of its first month, the branch reported the following:
Merchandise from the home office, at billed price – P28,000;
Merchandise purchased locally by the branch, P10,000;
Inventory, January 31, of which P2,000 are of local purchases, P9,000;
Net sales for the month, P43,500.
What is the branch ending inventory at cost?
P7,000
Partners Carlo, Julia, Michael, and Oslo have decided to liquidate their partnership. The liquidation process will commence on January 1, 200B. Their statement of financial position as of December 31, 200A shows the following balances:
Cash
P123,000
Trade Receivables
542,000
Inventory
342,000
Equipment
738,000
Advances to Carlo
31,000
Receivable from Michael
55,000
Total Assets
1,831,000
Trade Payable
367,000
Long-term Debt
599,000
Payable to Julia
46,000
Carlo, Capital
361,000
Julia, Capital
341,000
Michael, Capital
345,000
Oslo, Capital
(228,000)
Total Liabilities & Equity
1,831,000
Partners share the profits and losses of the partnership equally. During 200B, trade receivables of P300,000 were collected and the rest were deemed uncollectible. Inventories were sold for a total gross profit of P13,000. Equipment was first refurbished for a cost of P8,000 cash before ultimately being sold to a buyer for P740,000. Creditors of trade payable amounting to P7,000 condoned the amount owed to them. Long-term debt incurred interests amounting to P1,000.
Assume that all partners are insolvent, how much cash will Carlo receive?
P177,667
Cologna Center reported the following information regarding its inventories:
Products in the beginning WIP Inventory (40% complete as to labor and overhead or conversion)
16,500
Products started during the current period
662,310
Products completed and transferred to FG Inventory
669,900
Products in ending WIP Inventory (80% complete as to labor and overhead or conversion)
8,910
Which of the following is the amount to be reported as the total physical units to account for?
678,810
On March 1, 20x1, Ana, Ben, and Ced formed a partnership by combining their separate business proprietorships. Ana contributed cash of P100,000. Ben contributed property with a P72,000 carrying amount, a P80,000 original cost, and P160,000 fair value. The partnership accepted responsibility for the P70,000 mortgage attached to the property. Ced contributed equipment with a P60,000 carrying amount, P80,000 original cost, and P110,000 fair value. The partnership agreement specifies that profits and losses are to be divided equally but is silent regarding capital contributions. Which partner has the largest capital account balance on March 1, 20x1?
Ced
Liwanag Company has provided the following information:
Estimated MOH
P 405,000.00
Materials cost
P 675,000.00
DL cost (100,000 DLH)
P 225,000.00
Machine hours
22,500
Units produced (est.)
90,000
Which of the following is the predetermined rate based on direct labor hours?
P4.05
A not-for-profit organization receives two gifts. One is P80,000 and is restricted for paying salaries of teachers who help children learn to read. The other is P110,000, which is restricted to purchasing playground equipment. The organization spends both amounts properly at the end of this year. The organization records no depreciation during this period and has elected to view the equipment as having a time restriction. On the statement of activities, what is reported for unrestricted net assets?
An increase of P80,000 and a decrease of P80,000.
SBN Company has provided the following information:
Estimated MOH
P 405,000.00
Materials cost
P 675,000.00
DL cost (100,000 DLH)
P 225,000.00
Machine hours
22,500
Units produced (est.)
90,000
Which of the following is the predetermined rate based on units of production?
P4.50
Samurai Development builds replicas of residences of famous and infamous people. The company is highly automated, and the new accountant-owner has decided to use machine hours as the basis for predicting maintenance costs. The following data are available from the company’s most recent eight (8) months of operations:
Month
Machine Hours
Maintenance Costs
1
275
P 4,048.00
2
319
P 4,620.00
3
209
P 2,970.00
4
341
P 5,060.00
5
418
P 6,215.00
6
363
P 4,840.00
7
451
P 5,445.00
8
385
P 5,005.00
Using the high-low method, which is the change in cost compared to the change in activity within the relevant range?
Machine Hours 242; Maintenance Costs P 2,475.00
A controlling interest in a company implies that the parent company:
Has acquired a majority of the subsidiary’s ordinary shares
A national government agency (NGA) in the Philippines paid one of its accounts payable and withheld cash of P9,000, which represents the 5% withholding VAT per relevant tax laws. The entry of the national government agency will include a debit to:
Accounts payable P180,000
On October 17, 20X1, Levis, Inc. purchased an inventory costing 10,000 baht from a Thailand firm. Payment is due on January 15, 20X2. Also, on October 17, Levis, Inc. entered into a foreign exchange forward to buy 10,000 baht on January 15, 20X2.
Spot rate (baht)
10/17/X1 P1.30
12/31/X1 P1.42
1/15/X2 P1.40
Forward rate (baht)
10/17/X1 1.36
12/31/X1 1.43
1/15/X2 1.40
In the profit and loss statement, foreign exchange gain or loss due to the forward contract amounted to:
20X1: P700 gain; 20X2: P300 loss
