| | CPA REVIEW SCHOUL OF THE PHILIPPI : | ! Manila : PRACTICAL ACCOUNTING PROBLEMSI SME VALIX SIY VALIX FERRIR 1. An SME prepared the following postclosing trial baianot on December 31, 2014: * honfefindable purchase taxes. The purchase agreement provi Property, plant and equipment ' 2,300,900 Intangibles assets * "850,000 Investraent in associate | 1,100,000 taxasset - | 40,000 Inventqny vi : 500,000 ‘Trade rpeeivabiis | | 600,000 Cash of hand -~ . 1,15¢,000 Investment in aonputtable ordinary shares-listed-=*? $30,000 Investrgent ia nonconvertible nonputable preference shares-urlisted 500.000 oe eet ween # 400,000 Demanii deposit in bank 200,006 Loan rceivable froin employee — fixed term 10,000 Loan receivable from’ associate ~ on deraund 300,000 Bank loans 1,100,000 Other tpng-term employee benefits 250,000 Obligations under finance leases 400,000 Trade payables $80,000 Warrajty obligation— sve 20,000 Rent pple 10,000 Interes} pevabie 20,000 tax linoility © seed ee too 210,000 Bank dverdrafl-on demand 40,000 Share dapital 4,000,000 1,900,000 is the total amount of basic fi.ancial assets? a. [4,810,000 | : + b, 13,710,000 i e. [3,750,000 > . a. 13,160,000 2. Wifat is the total amount of basic financial liabilities? a. [2,330,690 b, [2,120,000 «. | 1,720,000 4. | 1,930,009 On Jahuary 1, 2014, an SME acquired a building for P10,450,000 inciuding P500,000 ided for payment to be made in December 31, 2014, Legal foes of P220,000 were incurred in cquiring the building full and paid on Jotitary 1, 204 The building is held to cam lease rentals end for capital ay fation, The discount rate is 10% What is the initial cost of the investment property? a. 10,170,000 : b. 9,700,000 7 c, — 94500,000 . ‘On Japuary i, 2014, an SME acquired a building to be, held es investment property for .000. The fai value ennnot be measured zeliably without undue cost or effort on an ‘basis. On December 31, 2014, management assessed the useful life at 50 yrars. At Year-ebd, the enity declined sx: unsolicited offer to purchase the building for P6,500.000. This ig # one-time offer that is unlikely to be repeated in the foreseeable future. What is the lg amount of the investment property on December 31, 20147 4,900,000 . | 5831| PRACTICAL ACCOUNTING PROBLEMS 1 F Page 2 4. On Janvery 1, 2014, SME acquired 25% of the equity of each of entities A und B for P1,000(C00 and P3,500,000 respectively, Transaction costs of 10% of the purchase price of __ the shabes were incuried by, SME, Cn Snnuary 2, 2014, entity A Meclared and paid dividend of P8C0,000. For the yep ended Decenber 31, 2014, entity A recognized profit of P1,000)000. However, entity B recognized a loss of P2,000,000 for that year. Published price | quotstipns de not exist for the sharer ‘of entities A’ and B. Using appropriate valustion ‘technic SME detertnined the fair value of the investments in entities A.and B on December 31, 2014 at: P1,500,000. and P2,000,000 ‘respectively. Costs of disposal are estimalkd af 10% of the fiir Valuvof the investments. * Ayo 1s Uniter the cost model, what is the total carrying amount of the investments in associates A on Pecember 31, 20147 \2,900,009 {3,400,000 14,000,000 - : {2,800,000 pee le" the equity method, what is the total carrying amount of the investments in bciater on December 31, 2014? 3,650,000 12,950,000 3,650,000 3,950,000 ler the isir value model, whot is the total carrying amount of the investments in eiates on December 31, 2014? 3,100,000 : 4,000,000 3,5¢0,000 3,150,000 Q BPTPR Bc pe oP gs A, > An SMB incu:red and paid the following expenditures in acquiring an administration ‘buildirlg and the land on which itis built during 2014: January 1 20% of the price is attributable to land 50,000,000 January 1 ‘Nonrefundable transfer taxes not included in the PSU,000,000 purchase price 1,000,000 January 1 Legal cost, directly aitributable to the acquisition 200,000 January 1 ibursig the previous ovmer for prepeying the ‘nonrefiindable local government property taxes for the six-mohth period erding June 30, 2014 100,600 Sune 3} N ible apnaal local goyerninent property taxes for the year ending fume 30, 2015 200,090 During 2014 Day, to-day repairs and maintenance, 250,000 On Di ‘ber 31, 2014, SME assessed tat the useful life of the building is 4¢ years with + residudi value of P2,000,000, On same date, the fair value less cost of disposal of the land wand building is P60,000,000. What is the initial carrying amount of the land and building, ly? : ; : a, 10,240,000 and. 40,960,000 . 101200,009 and 40,800,000 ¢. 10]000,000 and 40,000,000 4 &. 12/000,000 and 48,000,000 : : END : | 5831