1. The Conceptual Framework for Financial Reporting is intended to establish.
a. Generally accepted accounting principles in financial reporting.
b. The meaning of "present fairly in accordance with GAAP".
c. The objectives and concepts for use in develop
Problem 11-1 Multiple choice (PAS 17)
1. It is a contract that transfers substantially all the risks and rewards incidental to ownership of an
asset, although title may or may not eventually transferred.
b. Finance lease
c. Operating lease
Problem 8-1 Multiple choice (PFRS 9)
1. An entry shall measure initially a note payable not designated at fair value through profit or loss at
Fair value plus transaction cost
Fair value minus transaction cost
2. After i
Problem 12-8 (IAA)
Desiree Company is in the business is leasing new sophisticated equipment. The lessor expects a 12%
return on net investment. All leases are classified as direct financing lease. At the end of the lease term,
the equipment will revert t
Problem 7-1 Multiple choice (PAS 32)
1. A financial instrument is any contract that gives rice to
a. A financial asset
b. A financial liability
c. A financial asset of one entity and a financial liability
of another entity
d. A financial asset of one enti
Problems 3-1 Multiple choice (AICPA Adapted)
1. An entity sells appliances that include a two-year warranty. Service calls under the warranty are
performed by an independent mechanic under contract with the entity. Based on experience,
warranty costs are
Problems 5-1 Multiple choice (PFRS 9)
1. Bonds payable not designated at fair value through profit loss shall be measured initially
a. Fair Value
b. Fair value plus bond issue cost
c. Fair value minus bond issue cost
d. Face mount
2. After initial reco
Problem 9-16 (AICPA Adapted)
Hull Company is indebted to Apex Company under a P5,000,000, 12%, three-year note dated December
31, 2014. Because of financial difficulties developing in 2016, Hull Company owed accrued interest of
P600, 000 on the note on De
Problem 3-5 (AICPA Adapted)
Chester Company reported the following payroll for the month of January:
Income tax withheld
All wages paid were subject to SSS. The SSS tax rates were 7% each for employee and employer.
The entity re
Problem 6-1 Multiple choice (IAA)
1. How should an entity calculate the net proceeds to be received from bond issuance?
Discount the bonds at the stated rate of interest.
Discount the bonds at the market rate of interest.
Discount the bonds at
Problem 8-8 (IAA)
Joshua Company bought a new machine and agreed to pay in equal annual installment of P600,000 at
the end of the next five years. The prevailing interest rate for this type of transaction is 12%.
The present value of an ordinary annuity o
Problems 4-1 Multiple Choice (PAS 37)
1. Which is the correct definition of a provision?
a. A possible obligation arising from past events
b. A liability of uncertain timing or amount
c. A liability which cannot be easily measured
d. An obligation to tran
Problem 1-1 Multiple Choice (PFRS 9)
1. An entity shall measure initially a financial liability not designated at fair value through
profit loss at
Fair value plus directly attributable transactions cost
Fair value minus di
1. Nonstock dividends shall be recognized as liabilities on the
a. Date of declaration
b. Date of record
c. Date of payment
d. Date of issuing check
2. When shareholders may elect receive cash in lieu of stock dividend, the amount to be charged to
Problem 7-13 (AICPA Adapted)
On March 1, 2016, Fence Company issued 12% P5,000,000 nonconvertible bonds at 103 which are due on
February 28, 2021. In addition, each P1,000 bond was issued 30 share warrants, each of which entitled the
bondholder to purchas
1. When shares with par value are sold, the excess of the proceeds over the par is credited to
a. Share capital
b. Share premium
c. Retained earnings
d. Gain on issuance of share capital
2. When shares without par value are sold, the proceeds
Problem 6-14 (IAA)
On January 1, 2016, Marsh Company issued 10% bonds payable in the face amount of P6,000,000. The
bonds mature on January 1, 2026. The bonds were issued for P5,316,000 to yield 12%, resulting in bond
discount of P684,000. The entity used
Problem 1-15 (IAA)
Ducky Company reported the following information at the end of reporting period:
Advances to employees
Unearned rent revenue
Estimated liability under warranties
Cash surrender value of officers life insurance
Problem 2-7 (AICPA Adapted)
In an effort to increase sales, Mill Company inaugurated a sales promotional campaign on June
30, 2016. The entity placed a coupon redeemable for a premium in each package of cereal sold.
Each premium cost P20 and five coupons
Problem 4-20 (IFRS)
In May 2016, Cherry Company relocated an employee from Manila head office to a branch in Zamboanga
On June 30, 2016, the costs were estimated to be P350, 000 analyzed as follows:
Cost for shipping
Problem 15-21 (ACP)
Pat Company reported a pretax accounting income of P5,000,000 for current year.
The following items are included in the determination of the accounting income.
Estimated litigation loss which will become tax deductible when settled in
1. Total shareholders equity dividend by the number of shares outstanding represents the
a. return on equity
b. stated value per share
c. book value per share
d. price-earnings ratio
2. which of the following shareholder rights is most common
Problem 12-1 Multiple choice (IFRS)
1. Gross investment in the lease is the
a. Aggregate of the minimum least payment under a finance lease of the lessor and any unguaranteed
residual value accruing to the lessor.
b. The minimum lease payments under a fin
Problems 25-1 Multiple choices (PAS 33)
1. It is a financial instrument that gives the holder the right to purchase ordinary shares.
Warrant or option
Debt or equity instrument convertible into ordinary share.
Employee plan that allow
Problem 5-13 (AICPA Adapted)
Glen Company had the following long-term debt:
Sinking fund bonds, maturing in instalment
Industrial revenue bonds, maturing in instalments
Subordinate bonds, maturing on a single date
What is the t
Problem 24 14 (AICPA Adapted)
Madden Company had 60,000 ordinary shares issued and outstanding on
January 1, 2016. During 2016, no additional ordinary shares were issued. On
January 1, 2016, the entity issued 40,000 non-convertible preference shares.
Problem 2-1 Multiple choice (IFRS)
1. It is a marketing scheme whereby an entity grants award credits to customers and entity can
redeem the award credits in exchange for free or discounted goods or services.
a. Customer loyalty program
b. Premium plan
Problem 9-1 Multiple choice (IFRS)
1. In debt restructuring that is considered an asset swap, the gain on extinguishment is equal to the
Excess of the fair value of the asset over its carrying amount
Excess of the carrying amount of the debt o
West company determined that it has an obligation relating to employees right to receive compensation
for future absences attributed to employees service already rendered.
The obligation relates to rights that vest , and payment of the compen