FAR Flashcards
Assume that BHT Company had post-tax profits for 2X21 of P1,375,000 and issued share capital of P1,650,000 comprising 1,000,000 ordinary shares of P0.65 each and 1,000,0000 at P1, 10% preference shares that are classified as equity. Which of the following is the profit attributable to ordinary shares?
P1,275,000.00
These are the references used to record a Supplies account using a single-entry system listed in the statement of financial position.
Physical count and reference to purchase orders
On December 31, Year 1, Choconut Inc. harvested cacao beans costing P4,300,000 and with fair value less cost to sell of P4,500,000 at the point harvest. Due to the long aging and maturation process after harvest, the harvested cacao beans were still on hand on December 31, Year 2. On such date, the fair value less cost to sell is P4,900,000, and the net realizable value is P4,200,000. What is the measurement of the coffee beans inventory on December 31, Year 2?
P 4,200,000
Kiel Company purchased a new delivery truck on December 1, 20X4, in exchange for a previous delivery truck obtained in 20X1. The old vehicle cost P3,500,000 and had a book value of P1,330,000 when it was acquired. The old vehicle was worth P1,400,000 at the time of the exchange. Kiel also paid cash for the new vehicle, which had a quoted price of P6,300,000. The exchange lacked commercial substance. At what amount should Kiel record the new truck for financial accounting purposes?
P5,880,000
This is computed by deducting or adding any increase or decrease in accounts receivable for the period from the sales revenue.
Cash receipts from customers
On January 1, 20X1, Azure Company bought 40,000 equity shares with a par value of P100 per share in Faux Company, representing 5% of the company’s total issued equity share capital. Azure Company has a portfolio of investments with the goal of trading to realize changes in fair value. At the time of purchase, the shares in Faux Company were treated as part of that portfolio, despite management’s intention to hold these shares for the long term, with the possibility of acquiring another investment in Faux Company at a later date.
During the year ended December 31, 20X2, the fair value of shares in Faux Company fell significantly. In the financial statements for the year ended December 31, 20X2, the loss on remeasurement of these shares has been recognized in other comprehensive income.
According to IFRS 9 Financial Instruments, is this treatment correct?
No, because Azure Company did not make an irrevocable election to recognize changes in fair value in other comprehensive income when the shares were initially recognized
Assume that Seed Corp. purchased two (2) P0.65 shares at a market price of P5 each in Fruit Company on January 01, 2ax1 and that on January 02, 2ax1, the company offered a 1:2 rights issue at P4.25 per share. If Seed Corp. had bought at the market price, how much would be the average cost per share?
P5.00
A can of tuna is being sold at a market price of P30. The variable cost incurred in producing one (1) can is P10, while the fixed expense of the business is P8,000 per year. Compute for the contribution margin per unit.
P20
Milo Company’s income statement reports a depreciation expense of P2,500,000 and net income of P23,800,000 for the year. The company also sold two (2) major equipment: AB001 which costs P10,000,000 and sold at P10,500,000, and AB002 which costs P12,800,000, and sold at P11,700,000. If there were no other non-cash items, which is the net cash provided by the operating activities?
P26,900,000
These are the references used to record an Accounts Payable account using a single-entry system listed in the statement of financial position.
Records, documents, and confirmation from creditors
It is a change in capital structure that affects the EPS described as giving existing shareholders the privilege of buying additional shares at a price below the fair value, which is usually the current market price.
Right Issues
Assume that Avante Company had post-tax profits for 2X21 of P1,375,000 and issued share capital of P1,650,000 comprising 1,000,000 ordinary shares of P0.65 each and 1,000,0000 at P1, 10% preference shares that are classified as equity. Which of the following are the dividends on preference shares classified as equity?
P100,000.00
Ladies’ blouses are sold at a price of P300 per piece with a variable cost of P150. The fixed expense of the business is P30,000 per year. Compute for the break-even point in units.
200
Assume that KTV Company had post-tax profits for 2X21 of P1,375,000 and issued share capital of P1,650,000 comprising 1,000,000 ordinary shares of P0.65 each and 1,000,0000 at P1, 10% preference shares that are classified as equity. Which of the following are the basic earnings per share?
1.28
If the entity uses the fair value model for investment property, which statement is true?
Changes in fair value are reported in profit or loss in the current period
Pinoy Town Company’s income statement reports net income of P2,380,000 and depreciation expense of P250,000 for the year. If there were no other non-cash items, which amount is the net cash provided by the operating activities?
P2,630,000
Assume that Karen Dela Cruz Corp. purchased two (2) P0.65 shares at a market price of P5 each in Alvin Santos Company on January 01, 2ax1 and that on January 02, 2ax1, the company offered a 1:2 rights issue at P4.25 per share. If Karen Dela Cruz Corp. had bought at the market price, how much would be the total cost of three (3) shares on January 02, 2ax1?
P15.00
The following are non-adjusting events after the reporting period that relates to a condition different from the state as of the reporting period, EXCEPT:
Discovery of fraud or errors that shows the financial statements are incorrect.
The cost of demolishing an old building to make room for the construction of a new building should be:
Added to the cost of the new building
An entity that changed from cash basis to accrual basis of accounting during the current year should report
Prior period adjustment resulting from the correction of an error.
On July 1, 2023, YKL Co. purchased a long-term investment amounting to P1,000,000 of BIC Company’s 8% bonds for P956,000, including accrued interest of P40,000. The bonds were purchased to yield 10% interest. The bonds mature on January 1, 2029, and pay interest annually on January 1. YKL Co. used an effective interest method of amortization. What amount should be reported as interest income for 2023?
P 45,800
Ponz Company issued at par P 2,000,000, 5-year, 10% bonds convertible into 100,000 shares of Pobre’s ordinary shares on January 2, 2023. Without a conversion option, the bonds were selling at the market rate of 12 percent. Interest on the bonds is due every December 31. During the year 2023, no bonds were converted. Pobre had 400,000 ordinary shares outstanding throughout 2023. The company’s net income for 2023 was P 4,000,000 and a tax rate of 25%. What is the diluted earnings per share for 2023?
P 8.33
It is a change in capital structure that affects the EPS described by companies prompted to redeem their shares when there is a fall in the stock market.
Buybacks Market Value
Assume that NKT Corp. purchased two (2) P0.65 shares at a market price of P5 each in TXT Company on January 01, 2ax1 and that on January 02, 2ax1, the company offered a 1:2 rights issue at P4.25 per share. If NKT Corp. had bought at the market price, how much would the two (2) shares cost on January 01, 2ax1?
P10.00
