PPL CUP PRTC - EASY

1. Aaron Company sells subscription to a specialized directory that is published semiannually and shipped to subscribers on April 15 and October 15. Subscriptions receivedafter March 31 and September 30 cutoff dates are held for the next publication. Cashfrom subscriber is receive evenly during the year and is credited to deferred revenuesfrom subscriptions. Data relating to 2009 are as follows:

Deferred revenues from subscriptions,balance 12/31/08 P 1,500,000

Cash receipts from subscribers P 7,200,000

In its December 31 2009 balance sheet, Aaron should report deferred revenues fromsubscription of

a. P 1,800,000 c. P 3,600,000b. P 3,300,000 d. P 5,400,000

2. At January 1, a sole proprietorships asset totaled P210,000, and its liabilitiesamounted to P 120,000. During the year, owner investments amounted to P 72,000, Andowners withdrawal totaled P75,000. At year end, assets totaled P 270,000 and liabilitiesamounted to P 171,000. The amount of net income for the year was

a. P 0 c. 9,000b. P6,000 d. 12,000

3. The following pertains to Bull Companys biological assets:

Price of the asset in the market P 5,000Estimated commission to brokers and dealers 500Estimated transport cost and other cost necessary to getasset to the market 300Selling price in a binding contract to sell P 5,200

The entitys biological assets should be valued ata. P 4,700 b.4,400 c. 4,500 d. 4,200

4. Buyer Co. regularly buys shirts from Vendor Company and is allowed trade discountsof 20% and 10% from the last price. Buyer purchased shirts from Vendor on May 27,2009 and received an invoice with a list price of P 100,000 and payment terms 2/10, n/30.If buyer uses the net method of recording purchases, the journal entry to record thepayment of June 8, 2009 will include

a. A debit to Accounts payable P 72,000b. A debit on purchase discount lost of P 1,400c. A credit to purchase discount of P 1,400d. A credit to Cash of P 70,560

5. White Airlines sold a used jet aircraft to brown company for P 800,000 accepting afive year 6% note for the entire amount. Browns incremental borrowing rate was 14%.The annual payment of principal and interest on note was to be P189,930. The aircraftcould have been sold at an established cash price of P 651,460. The present value of anordinary annuity of P1 at 8% for five periods is 3.99. The aircraft should be capitalizedon Browns book at

a. P 949,650 c. P 757,820b. P 800,000 d. P 651,460

6. On October 1, 2009 WAN acquired YANG, a small company that specializes inpharmaceutical drug research and development. The purchase consideration was by waya share exchange and valued at P 35 million. The fair value of Yangs net asset was P15million (excluding any item referred to below)

Yang owns a patent for an established successful drug that has a remaining life of 8years. A firms of specialist advisors, Tantsahan, has estimated the current value of thispatent to be P 10 million; however, the company is awaiting for outcome of clinical trialswhere the drug has been tested to treat a different illness. If trials were successful, thevalue of the drug is then estimated to be 15 million. Also included in the companysbalance sheet is P 2 million for medical research that has been conducted on behalf of aclient.

Compute the amount of goodwill for this acquisition.

a. P 8,000,000 c. P 3,000,000b. P 5,000,000 d. P 20,000,000

7. A factory equipment with an estimated useful life of 10 years was purchased byCarranglan Co. on December 30, 2005. The equipment was expected to have a residualvalue of P 5,000 at the end of its service life. The sum of the years digit method wasused in computing depreciation. For the year ended December 31, 2009 the depreciationapplicable to this equipment was P 42,000. The cost of the factory equipment purchasedon December 30, 2005 was

a. P 325,000 c. P 335,000b. P 293,750 d. P 330,000

8. On December 28, 2009, Hornets Company commits itself to purchase a financial assetto be classified as held to maturity for P 1,000,000 its fair value on commitment (trade)date. This security has a fair value of P 1,002,000 and P 1,005,000 on December 31, 2009(Hornets Financial Year End), and January 5, 2010 (settlement date), respectively. IfHornets applies the settlement date accounting method to account for regular waypurchases of its securities, the financial asset should be recognized on January 5, 2010 at

a. P 1,000,000 b. P 1,005,000 c. P 1,002,000 d. P 0

9. On July 2009, Jenny Ltd leases a machine with a fair value of P 109,445 to Rose Ltdfor five years at annual rental (in advance) of P 25,000 and Rose Ltd guarantees in fullestimated residual value of P 15,000 on return of the asset. What would be the intestestrate implicit in the lease?

a. 14% c. 10%b. 12% d. 9%

10. D Company had the following deferred tax balances at reporting date Deferred taxassets, P 1,200,000; Deferred tax liabilities, P 3,000,000. Effective from the first day offinancial period, the company rate of income tax was reduced from 40% to 30%. Theadjustment to income tax expense to recognize the impact of the tax rate change is:

a. DR P 600,000 c. DR P 450,000b. CR P 600,000 d. CR P 450,000

11. On December 31, 2009, Entity X acquired an investment for P100,000 plus apurchase commission of P 2,000. The investment is classified as available for sale. OnDecember 31, 2009, quoted market price of the investment is P 100,000. If theinvestment were sold, a commission of P 3,000 would be paid. On December 31, 2009,the entity should recognize unrealized loss directly in equity of

a. P 2,000 c. P 5,000b. P 3,000 d. P 0

12. As of June 30, 2009, the bank statement of Ang Po Trading had an ending balance ofP 373,612. The following data were assembled in the course of reconciling the bankbalance:

The bank erroneously credited Ang Po Trading for P 2,150 on June 22. During the month, the bank charged back NSF checks amounting to P 2,340 of

which P 800 had been redeposited by the 25th of June. Collection for June 30 totaling P 10, 330 was deposited the following month. Checks outstanding as of June 30 were P 30,205 Notes collected by the bank for Ang Po Trading were P 8,150 and the

corresponding bank charges were P 50.

The adjusted bank balance on June 30, 2009 isa. P 351, 587 c. P 353 927b. P 358, 147 d. P 359 687

Suggested Answers:

1. a2. d3. d4. b5. d6. a7. c8. a9. b10. d11. a12. a