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Final Round:Second Subround: EASY – 3 POINTS1.An entity reported the following information on January 1, 2017:Ordinary share capital, P10 par, 800,000 shares8,000,000Preference share capital, P50 par, 50,000 shares2,500,00012% Bonds payable5,000,000The preference share capital is 10% cumulative and convertible into 100,000 ordinary shares. Dividends on preference shares are in arrears for two years.The 12% bonds are convertible into 80 ordinary shares for each P1,000 bond.Unexercised share options to purchase 90,000 ordinary shares at P20 per share were outstanding at the beginning and ending of 2017. The average market price of the ordinary share was P30 per share and the market price on December 31, 2017 was P40 per share. May 1Issued 60,000 ordinary shares at P25 per share.July 1Purchased 100,000 ordinary shares at P15 to be held as treasury.Oct. 1Converted bonds with face amount of P2,000,000.Dec. 31The net income for 2017 was P5,000,000. The tax rate is 30%.What is the amount of basic earnings per share?a6.02b5.26c5.72d5.42efg2.Marie Company sells gift certificates redeemable only when merchandise is purchased. These gift certificates have an expiration date of two years after issuance date. Upon redemption or expiration, Marie recognizes the unearned revenue as realized. Information for 2007 as follows:hiGift certificate payable 12/31/2006 P 520,000jGift certificate payable 12/31/2007 680,000kGift certificate redeemed 1,560,000lExpired gift certificates 80,000mCost of goods sold 80%noHow much gift certificates sold during the year?
ab3.An entity acquired 40% of another entity’s shares on January 1, 2017 for P15,000,000. The investee’s assets and liabilities at that date were as follows:acad CarryingamountaeFair valueafagCashah1,000,000ai1,000,000ajAccounts receivableak4,000,000al4,000,000amInventory – FIFOan8,000,000ao9,000,000apLandaq5,500,000ar7,000,000asPlant and equipment – netat14,000,000au22,000,000avLiabilitiesaw7,000,000ax7,000,000ayazThe plant and equipment have a 10-year remaining useful life. The inventory was all sold in 2017. The entity sold the land in 2018 for P8,000,000 and reported a gain of P2,500,000.babbThe investee reported net income of P3,000,000 for 2017 and P5,000,000 for 2018. The investee paid P1,000,000 cash dividend on December 31, 2017 and P2,000,000 on December 31, 2018.bcbdWhat is the implied a goodwill arising from the acquisition?4.On April 1, 2016, ESPI Inc. entered into a franchise agreement with FIFI franchisee. The initial franchise fees agreed upon is P246,900, of which P46,900 is payable upon signing and the balance to be covered by a non-interest bearing note payable in four equal annual installments. The down payment is refundable within 100 days. ESPI Inc. has a high credit rating, thus, collection of the note is reasonably assured. Out-of-pocket costs is P125,331 and P12,345 were incurred for direct expenses and indirect expenses respectively. Prevailing market rate is 9%. PV factor is 3.2397bhbiFor the fiscal year ended June 30, 2016, how much revenue from franchise fee will the franchisor recognize?