303solman advance accounting PDF

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Summary

Silverman Company reports net income of P200,000 each year and pays on dividend of P70,000. The company holds net assets of P1,500,000 on January 1, 20x3. On that date, Weights Company purchases 50 percent of the outstanding stock for P900,000, which gives it the ability to have joint control with T...

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1. Silverman Company reports net income of P200,000 each year and pays on dividend of P70,000. The company holds net assets of P1,500,000 on January 1, 20x3. On that date, Weights Company purchases 50 percent of the outstanding stock for P900,000, which gives it the ability to have joint control with Treadmill over Silverman. At the purchase date, the excess of Weights's cost over its proportionate share of Goldman's book value was assigned to goodwill. On December 31, 20x4, what is the investment in Silverman Company balance (equity method) in Weights's financial records?

___390,000___ (1,030,000) Assume that Silverman Company's ownership structure is as follows: 80% is needed to direct relevant activities: 50% ownership of Weights Company; 30% ownership of Treadmill Company; and 20% ownership of Punchbag Company What is the amount of Income from Investment in Silverman 's Company in Weights financial records as of December 31, 20x5?

___391,000___ (100,000) Assuming that Silverman Company's ownership structure is as follows: 55% is needed to direct relevant activities: 15% ownership of Weights Company; 40% ownership of Treadmill Company; 10% ownership of Punchbag Company; and Widely dispersed - other companies What is the amount of Income from Investment in Silverman 's Company in Weights financial records as of December 31, 20x5?

___569,000___ (10,500) Assuming that Silverman Company's ownership structure is as follows: 50% is needed to direct relevant activities: 20% ownership of Weights Company; 30% ownership of Treadmill Company; and 10% ownership of Punchbag Company Widely dispersed - other companies What is the amount of Income from Investment in Silverman 's Company in Weights financial records as of December 31, 20x5?

________ (40,000)

1 / 3 points

2. On July 1, 20x4, Joey Company acquired 30% of the shares of Leo Company for P200,000. On that date the equity of Leo was P500,000 with all identifiable assets and liabilities being measured at fair value. Profits/ (losses) made since the date of acquisition are as follows: Year ended 30 June 20x5 20x6 20x7 20x8 20x9

Profit/(Loss) P 30,000 (300,000) (400,000) 15,000 30,000

There have been no dividends paid or movements in reserves since the date of acquisition. On June 30, 20x5 the equity method accounted balance of the investment in Lea was:

___371,000___ (209,000) On June 30, 20x7 the equity method accounted balance of the investment in Leo was:

___0___(33.33 %) At 30 June 20X8 the equity method accounted balance of the investment in Leo was:

___0___ (3,500) 0 / 2 points

3. Aye Company purchases 40% of Cee Company on January 1 for P1,000,000 that carry voting rights at a general meeting of shareholders of Bee Company. Aye Company are Bee Company immediately agreed to share control (wherein unanimous consent is needed to all the parties involved) over Cee Company. Cee reports assets on that date of P2,500,000 with liabilities of P1,000,000. One building with a five-year life is undervalued on Bee's books by P250,000. Also Cee's book value for its trademark (10-year life) undervalued by P450,000. During the year, Cee reports net income of P200,000, while paying dividends of P50,000. What is the Investment in Cee Company balance (equity method) in Aye's financial records as of December 31?

___2,008,000___ (1,022,000)

The Income from Investment in Cee Company in Aye's financial records as of December?

___1,028,000___ (42,000) 0 / 1 point

4. Ray Corporation purchased 25 percent of Dee Company's stock in January 2, 20x5 for P800,000. At the acquisition date, Dee has equipment with a market value P180,000 greater than book value. The equipment has an estimated remaining life of 10 years. In 20x5, Dee has net income of P320,000 and pays P100,000 of dividends. What is the balance in the investment account on Ray's financial records at the end of 20x5?

___855,000___ (850,500) 0 / 8 points

5. Flower Corporation purchased 30 percent of Down Company's stock in January 1, 20x5 for P1,500,000. At the acquisition date, Down has equipment with a market value P500,000 greater than book value. On that date, Flowers Corporation gives the ability to have joint control with another entity over Down Company's. The equipment has an estimated remaining life of 10 years. In 20x5, Down has net income of P250,000 and pays P100,000 of dividends. What is the balance in the investment account on Flower's financial records at the end of 20x5?

___1,650,000___ (1,530,000) The income from investment in Flower's financial records at the end of 20x5:

___250,000___ (60,000) Assuming the same information except that the Joint Venturer (investor] does not prepare Consolidated Financial Statements: The investment account in Flower's financial records at the end of 20x5;

___1,400,000___ (1,530,000) The income from investment in Flower's financial records at the end of 20x5:

___1,000,000___ (60,000) Assuming the same information except that the Joint Venturer (Investor) prepares Consolidated Financial Statements: The investment account in Flower's financial records at the end of 20x5:

___300,000___ (1,500,000) The income from investment in Flower's financial records at the end of 20x5:

___250,000___ (30,000) The investment account in the consolidated financial statements at the end of 20x5:

___100,000___ (1,530,000)

The income from investment in the consolidated financial statements at the end of 20x5:

___200,000___ (60,000) 1 / 1 point

6. Peter Inc. owns 40 percent of Wendy and applies the equity method. During the current year, Peter buys inventory costing P89,000 and then sells its Wendy for P145,000. At the end of the year. Wendy still holds only P36,250 of merchandise. What amount of unrealized gross profit must Peter defer in reporting this investment using the equity method?

___5,600___ 7.

1 / 1 point Investor owns 35% of Investee and applies the equity method. In 20x2, Investor sells merchandise costing P50,000 to Investee for P90,000. Investee's ending inventory includes 45,000 purchased from Investor. What amount of unrealized gross profit must be deferred in the equity method entry?

___7,000___ 8.

1 / 1 point Investor owns 30% of Investee and applies the equity method. In 20x2, Investee sell merchandise costing P20,000 to Investor for P50,000. Investor's ending inventory includes P10,000 purchased from Investee. What amount of unrealized gross must be deferred in the equity method entry?

___1,800___ 0 / 2 points

9. Apple Company has an investment balance amounting to P250,000 in the voting shares of Pear Ltd. On December 31, 20x5 Pear reported a net income of P1,000,000 and declared dividends of P500,000. During 20x5, Apple had sales to Pear of P450,000, and Prince had sales to Apple of P250,000. On December 31, 20x5, the inventory of Apple contained an intercompany profit of P50,000, and the inventory of Pear contained an intercompany profit of P75,000. On January 1, 20x5, Apple sold equipment to Pear and recorded an profit of P100,000 on the transaction. The equipment had a remaining useful life of five years on this date. Apple uses the equity method to account for its investment in Pear. Apple owns 25% of Pear, and Pear is a joint venture using equity method. The investment account in Apple's financial records at the end of 20x5:

___550,000___ (348,750)

The investment income in Apple's financial records at the end of 20x5:

___50,000___ (223,750) 6.003 / 15 points

10.X Co. and Y Inc. formed XY Company on January 1, 20x4. X Co. invested equipment with a carrying amount of P420,000 and a fair value of P980,000 for a 25% interest in XY Company, while Y Inc. contributed equipment, which was similar to the equipment contributed by X Co., with a total fair value of 1,225,000, for a 60% interest in XY Company. The equipment has an estimated useful life of 10 years. On December 31, 20x4, XY Company reported a net income of P250,600. Assume that the transaction does not have a commercial substance in this situation because X Co. owned a similar portion of the same type of equipment both before and after the contribution to the joint venture. Determine the unrealized gain on transfer to XY Company (the separate vehicle) on January 1, 20x4.

___560,000___(6.67 %) Determine the realized gain through depreciation on transfer of equipment to XY Company on December 31, 20x4.

___56,000___(6.67 %) Determine the gain on transfer of equipment to be presented in the 20x4 income statement,

___56,000___(6.67 %) The same data are identical in all respects to those from previous problem except that the Y Co. contributes technology (rather than equipment) with a fair value of P1,225,000. Assume that the transaction does have commercial substance in this situation because X Co. owned equipment before its contribution to the joint venture but indirectly owned a portion of equipment and technology after the contribution. Determine the unrealized gain and realized gain on transfer to XY Company (the vehicle) on January 1, 20x4 : Unrealized gain on January 1, 20x4:

___224,000___ (140,000) Realized gain on January 1, 20x4:

___336,000___ (420,000) Determine the realized gain in income statement on transfer of equipment to XY Company

on December 31, 20x4.

___22,400___ (434,000) The same data facts are identical in all respects to those from previous problem except that that X Co. receives a 25% interest in XY Company, plus P245,000 in cash in return for investing equipment with a fair value of P980,000, while Y Inc. contributed equipment with a for value of P806,400 plus cash of P245,000, for a total contribution of P966,900. Determine the immediate gain from selling equipment to X Inc. on January 1, 20x4.

___140,000___(6.67 %) Determine the unrealized gain on transfer to XY Company (the separate vehicle) on January 1, 20x4.

___420,000___(6.67 %) Determine the realized gain through depreciation on transfer of equipment to XY Company on December 31, 20x4.

___14,000___ (42,000) Determine the gain on transfer of equipment to be presented in the 20x4 income statement

___182,000___(6.67 %) Using the same information, assume the increase in the amount of cash that X Co. received when it invested equipment for a 25% interest in XY Company and the cash received was P571,667. Because Y Inc. invested only P245,000 cash in the joint venture, the additional P326,667 was borrowed by XY Company. Determine the sales proceeds and the return of equity of X Company. (round up to nearest whole number)

___408,333___ (490,000) Determine the immediate gain from selling equipment to Y Inc. on January 1, 20x4. (use rounded-up answer in previous question for the ratio)

___252,000___ (280,000) Determine the unrealized gain on transfer to ST Company (the separate vehicle) on January 1,20x4.

___308,000___ (280,000) Determine the realized gain through depreciation on transfer of equipment to XY Company on December 31, 20x4.

___30,800___ (28,000) Determine the gain on transfer of equipment to be presented in the 20x4 income statement.

___282,800___ (308,000)

Use the following Information for questions 1 to 4: On January 1, 20x4, XX Company and YY Company signed an agreement to form a joint operation to manufacture a product called plasma. This product is used in the manufacturing of television. The following are transactions transpired in relation to joint operations for 20x4:   

    

 

To commence the operation, both operators contributed P252,000 in cash. Contributions of cash by the operators. Use of cash and loan to buy machinery & equipment costing P134,400 (cash paid, P84,000 and the balance on a loan account) and raw materials purchase on account costing P109,200. Labor incurrence amounting to P120,960 with P131,600 paid in cash. Loans from the bank, P100,800. Repayment of loan - machinery and equipment, P16,800, raw materials amounting to P70,560 and other factory expenses, of P218,400. Depreciation of machinery and equipment, P13,440. Transfer of materials, labor and overhead to Work-in-Process: payroll, P120,960; Materials, P80,640; Factory overhead – heat, light and power, P218,400 and depreciation of P13,440. Transfer of Work-in-Process to Finished Goods Inventory, P302,400 Transfer of Finished Goods Inventory, P268,800 to Joint Operators throughout the year

Determine the ending balance in cash: P0 P 80,640

P151,200 None of the above Question 2

Determine the work in process ending balance amounted to: P 117,600 P 131,040

P 433,440

1/1 point

None of the above 1/1 point

Question 3 The December 31, 20x4 total assets amounted to:

P263,760 P381,360 P394,800

None of the above 0/1 point

Question 4

The December 31, 20x4 XX's investment amounted to: P235,200

P117,600 P252,000 None of the above 1/1 point

Question 5

AA Company and BB Company agreed to form a joint operation to offer health services. To start the operation the joint operators agreed to contribute cash of P300,000 each. The joint operation will record which of the following entries to recognize this event? DR Joint operator contributions 600,000 CR Cash 600,000 DR Cash 600,000 CR Joint operator contributions 600,000 CR Venturer's equity-AA CR Venturer's equity-BB CR Cash

300,000 300,000 600,000

CR Cash 600,000 CR AA-Joint operation contribution 300,000 CR BB-Joint operation contribution 300,000 1/1 point

Question 6

Cash contributed to a joint operation was used to purchase Equipment (P100,000) and raw materials (P70,000). The following entry would be part of the overall recording of these transactions: DR Equipment DR Raw materials CR Cash

DR Work in progress CR Joint operation capital

100,000 70,000 170,000

170,000 170,000

DR Cash 170,000 CR Contribution to joint operation 170,000 DR Cash CR Equipment CR Raw materials

170,000 100,000 70,000

Question 7

1/1 point

Three joint operators are involved in a joint operation that manufactures ships chandlery. At the beginning of the year the joint operation held P50,000 in cash. During the year the joint operation incurred the following expenses: Wages paid P20,000. Overheads accrued P10,000. Additionally, creditors amounting to P40,000 were paid and the joint operators contributed P15,000 cash each to the joint operation. The balance of cash held by the joint operation at the end of the year is: P 5,000 P25,000 P 35,000

P 75,000 Question 8

Books of JOINT OPERATOR(S): Reporting Proportionate Share of the Assets, Liabilities, Revenues, and Expenses of the Joint Operation

1/1 point

XX Company and YY Company formed a joint operation and share in the output of the joint operation 60:40. The joint operation paid a management fee of P20 000 to XX Company during the current period. The cost to XX Company of supplying the management service was P14,000. XX Company records the management fee revenue as follows: CR Cash DR Fee revenue

20,000 20,000

CR Cash DR Fee revenue

14,000 14,000

CR Cash DR Fee revenue

12,000 12,000

CR Cash DR Fee revenue

8,000 8,000 1/1 point

Question 9

Company A and Company B formed a joint operation and share equally in the output of the joint operation. The joint operation paid a management fee of P20,000 to Company A during the current period. The cost to Company A of supplying the management service was P14,000. Company A records the management fee revenue as follows: CR Cash DR Fee revenue

20,000 20,000

CR Cash DR Fee revenue

14,000 14,000

CR Cash DR Fee revenue

6,000 6,000

CR Cash DR Fee revenue

10,000 10,000

Question 10

1/1 point

Company A Limited and Company B Limited formed a joint operation and share in the output of the joint operation 60:40. The joint operation paid a management fee of P20,000 to Company A Limited during the current period. The cost to Company A Limited of supplying the management service was P14,000. The amount of profit that

Company A Limited will recognise in relation to the provision of the management fee to the joint operation is: NIL P2,400

P3,600 P6,000 1/1 point

Question 11

A joint operation holds Equipment with a carrying amount of P1,200,000. The two joint operators participating in this arrangement share control equally. They also depreciate Equipment using the straight-line method. The Equipment has a useful life of 5 years. At reporting date each joint operator must recognize the following entry, in relation to depreciation, in its records: Depreciation, P240,000 Depreciation, P120,000

Investment in joint operation, P240,000 Assets in joint operation, P120,000. 1/1 point

Question 12

A 50:50 joint operation was commenced between two operators. Operator One contributed cash of P50 000, and Operator Two contributed a building with a fair value of P50,000 and a carrying amount of P40,000. Using the line-by-line method of accounting, Operator Two would record: DR Building in JO CR Building

40,000 40,000

DR Building in JO CR Building CR Gain on sale of building

50,000 40,000 10,000

DR Investment in joint operation 50,000 DR Building 40,000 CR Gain on sale of building 10,000

DR Cash in JO DR Building in JO CR Building CR Gain on sale of building

25,000 20,000 40,000 5,000 1/1 point

Question 13

A 60:40 joint operation was commenced between two participants. Participant One contributed cash of P60,000, and Participant Two agreed to provide technical services to the joint operation over a period of two years. The fair value of the services was determined to be P40,000 and the cost to provide the services was estimated to be P35,000. Using the line-by-line method of accounting, Operator Two would record: DR Cash in JO CR Obligation to JO

30,000 30,000

DR Cash in JO CR Obligation to JO

24,000 21,000

CR Profit on provisions of services

3,000

DR Cash in JO CR Obligation to JO

24,000 24,000

DR Cash in Joint Operation DR Receivable in JO CR Obligation to JO

24,000 16,000 40,000 1/1 point

Question 14

Three joint operators agree to an arrangement in which they have an equal share in an agricultural joint operation. The work undertaken in setting up the joint operation cost P300,000 and each operator contributed in cash. Each operator will need to recognize the following accounting entry: DR Cost of joint operation product 300,000 CR Cash 300,000 DR Inventory in JO CR Cash

100,000 100,000

DR Cash in JO CR Cash

300,000 300,000

DR Cash in JO

100,000

CR Cash

100,000

1/1 point

Question 15

A 50:50 joint operation was commenced between two participants. Joint Operator One contributed cash of P50 000, and Joint Operator Two contributed a Building with a fair value of P50,000 Using the line-by-line method of accounting Joint Operator One would record: Building in JO Cash

50,000 50,000

Cash in JO Cash