NATIONAL FEDERATION OF JUNIOR PHILIPINNE INSTITUTE OF ACCOUNTANTS –

NATIONAL CAPITAL REGION

ADVANCED FINANCIAL ACCOUNTING & REPORTING (AFAR)

1. Certa
Certain
in bal
balanc
ance
e shee
sheet
t acco
account
unts
s of a forei
foreign
gn subs
subsidi
idiar
ary
y of Rose
Rose Com
Compan
pany
y have
have
been stated in Philippine pesos as follows:
Stated
Curr
Curren
ent
t Rat
Rates
es Hist
Histor
oric
ical
al Rate
Rates
s
Accounts receivable current P !""""" P !!""""
Accounts receivable long#term 1""""" 11""""
Prepaid insurance $"""" $$"""
%oodwill &"""" &$"""
P '("""" P ')""""
*. +he subsidiary,s
subsidiary,s functional
functional currency is the local currency unit. -hat
amount should Rose,s balance sheet include for the preceding items
a. P'("""" b. P'($""" c. P''"""" d. P'$""""
**. +he subsidiary,s
subsidiary,s functional
functional currency is peso. -hat total amount Rose,s
balance sheet include for the preceding items
a. P'("""" b. P'($""" c. P''"""" d. P'$""""
 A. * / c0 ** / a C. I – a; II – c
B. * / a0 ** / d . 2one of the above
!. A part
partner
nersh
ship
ip begi
begins
ns its
its fir
first
st yea
year
r with
with the
the fol
follow
lowing
ing capit
capital
al bal
balanc
ances
es:
:
Arthur capital P 3""""
4a5ter capital &""""
Cartwright capital 1"""""
+he articles of partnership stipulate
stipulate that profits and losses be assigned in
the following manner:
 6ach partner is allocated interest e7ual to 1" percent of the beginning
capital balance.
 4a5ter is allocated compensation of P!"""" per year.
 Any
Any rema
remain
inin
ingg prof
profit
its
s and
and loss
losses
es are
are allo
alloca
cate
ted
d on a (:(:
(:(:'
' basi
basis
s
respectively.
 6ach partner is allowed to withdraw up to P$""" cash per year.
Assuming that the net income is P$"""" and that each partner withdraws the
ma5imum amount allowed what is the balance in Cartwright,s capital account
at the end of that year
A. P1"$&"" C. P1"38""
4. P1"3!"" D. P107,400

(. 9nder PAS !8 one of the following is an indicator of hyperinflation.

a. People
People prefer
prefer to eep
eep thei
theirr wealt
wealth
h in mone
monetar
tary
y asset
assets
s
 b. People prefer to keep their wealth in relativel !table forei"n
forei"n c#rrenc
c. *ntere
*nterest
st rates
rates
 wages
wages and
and prices
prices are
are not
not lined
lined to
to a price
price inde5
inde5
d. +he cumul
cumulati
ative
ve inflat
inflation
ion rate
rate over
over three
three ;(< years
years e5ceed
e5ceeds
s or is approach
approaching
ing
$"=
'. +he follo
followi
wing
ng are infor
informat
matio
ion
n reg
regard
ardin
ing
g par
partne
tners
rship
hip busin
business
ess:
:
*. A partnership has the following capital balances:
Allen capital P3""""
4urns capital (""""
Costello capital 8""""
Profits
Profits and losses
losses are split as follows
follows:: Allen
Allen ;!"=<
;!"=< 4urns
4urns ;("=<
;("=< and
Coste
Costello
llo ;$"=<.
;$"=<. Coste
Costello
llo wants
wants to leave
leave the partn
partners
ership
hip and is paid
paid
P1""
P1"""
"""
"" from
from the
the busi
busine
ness
ss base
based
d on prov
provis
isio
ions
ns in thethe arti
articl
cles
es of
partnership.
partnership. *f the partnership uses the bonus method what is the balance
of 4urns,s capital account after Costello withdraws
a. P!'""" b. P!)""" c. P((""" d. P(3"""

**. At year#end the Cisco partnership has the following capital balances:
>ontana capital P1(""""
Rice capital 11""""
Craig capital &""""
+aylor capital )""""
Profi
Profits
ts and
and losses
losses are
are split
split on a (:(:!
(:(:!:!
:! basis
basis
 respe
respecti
ctive
vely.
ly. Craig
Craig
decides
decides to leave
leave the partnershi
partnership
p and is paid P8""""
P8"""" from the busines
business
s
based on the original contractual agreement. *f the goodwill method is to
be applied what is the balance of >ontana,s capital account after Craig
withdraws
a. P1((""" b. P1()$"" c. P1'"""" d. P1'$"""
A. * / a0 ** / d C. * / b0 ** / d
4. * / b0 ** / c D. $one of the above
NFJPIA-NCR Page 2 of 14

$. +he following are information regarding a partnership undergoing

li7uidation:
*. A local partnership is li7uidating and is currently reporting the
following capital balances:
Angela capital ;$"= share of
all profits and losses< P 18"""
-oodrow capital ;("=< 1&"""
Cassidy capital ;!"=< ;1!"""<
Cassidy has indicated that a forthcoming contribution will cover the
P1!""" deficit. However the two remaining partners have ased to
receive the P!$""" in cash that is presently available. How much of this
money should each of the partners be given
a. Angela P1("""0 -oodrow P1!"""
b. Angela P11$""0 -oodrow P1($""
c. Angela P1!"""0 -oodrow P1("""
d. Angela P1!$""0 -oodrow P1!$""

**. A partnership has the following balance sheet ?ust before the final
li7uidation is to begin:
Cash P!3""" @iabilities P $""""
*nventory (1""" Art capital ;'"=< 1&"""
ther assets 3!""" Raymond capital ;("=< !$"""
BBBBBBBB arby capital ;("=< !3"""
+otal P118""" +otal P118"""
@i7uidation e5penses are estimated to be P1!""". +he other assets are
sold for P'"""". -hat distribution can be made to the partners
a. P#"# to Art P1$"" to Raymond P!$"" to arby.
b. P1((( to Art P1((( to Raymond P1((' to arby.
c. P#"# to Art P1!"" to Raymond P!&"" to arby.
d. P3"" to Art P1!"" to Raymond P!!"" to arby.

A. I – b; II – b C. * / b0 ** / a
4. * / c0 ** / a . 2one of the above

3. Under PFRS 11, joint arrangements that are joint ventures (which were ‘jointly controlled enes’
under the PS !1" are accounted #or under
a. Cost method in accordance with PAS (8
b. 67uity method in accordance with PAS !&
c. air value method in accordance with PRS 8
d. Proportionate con!oli%ation &etho% in accor%ance with PA' (1

). Under PFRS 1$, when a %arent loses control o# a su&sidiary, it must recogni'e any investment retained
in the #ormer su&sidiary at
a. Carrying amount
b. air value with any gain or loss recogniDed in profit or loss
c. )air val#e, with an "ain or lo!! reco"ni*e% in other co&prehen!ive
inco&e
d. riginal ac7uisition cost ad?usted for any dividend received from
the subsidiary

&. A chemical company manufactures ?oint products Pep and Eim and a by#
product. Fest. Costs are assigned to the ?oint products by the maret value
method which considers further processing costs in subse7uent operations. or
allocating ?oint costs to the by#product the maret value or reversal cost
method is used. +he total manufacturing costs for 1"""" units were P1)!"""
during the 7uarter. Production and cost data follow:
Pep Eim Fest
9nits produced $""" '""" 1"""
Sales price per unit P$" P'" P $
urther processing cost per unit 1" $ #
Selling and administrative e5pense per unit !
perating profit per unit 1
*. +he value of Fest to be deducted from the ?oint costs is:
a. P$""" b. P(""" c. P!""" d. Fero
**. Compute the gross profit for Pep:
a. P " b. P)"""" c. P &"""" d. P1"""""
A. * / c0 ** / a C. * / c0 ** / d
4. I – %; II – %  . 2one of the above

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NFJPIA-NCR Page 3 of 14

8. +he following are information regarding parent and subsidiary:

*. Clar Company had the following transactions with affiliated parties
during !""&:
Sales of P3"""" to ean with P!"""" gross profit. ean had P1$"""
of this inventory on hand at year#end. Clar owns a 1$= interest in
ean and does not e5ert significant influence.
Purchases of raw materials totaling P!'"""" from Gent Corporation a
wholly#owned subsidiary. Gent,s gross profit on the sale was P'&""".
Clar had P3"""" of this inventory remaining on ecember (1 !""&.
4efore eliminating entries Clar had consolidated current assets of
P(!"""". -hat amount should Clar report in its ecember (1 !""&
consolidated balance sheet for current assets
a. P(!"""" b. P(1)""" c. P("&""" d. P("("""
**. Par Company owns 3"= of Sub Corp.,s outstanding capital stoc. n >ay 1
!""& Par advanced Sub P)"""" in cash which was still outstanding at
ecember (1 !""&. -hat portion of this advance should be eliminated in
the preparation of the ecember (1 !""& consolidated balance sheet
a. P)"""" b. P'!""" c. P!&""" d. P "
A. I – c; II – a C. * / c0 ** / d
4. * / d0 ** / d . 2one of the above

1". he modi)ed accrual &asis in accounng #or government transacons means
a. *ncome is recogniDed when received while e5penses are recogniDed
when incurred
b. *ncome is recogniDed when earned while e5penses are recogniDed when
paid
c. *ncome is recogniDed when received while e5penses are recogniDed
when paid e5cept for transactions that are re7uired by law to be
accounted for under another basis
%. Inco&e i! reco"ni*e% when earne% while e+pen!e! are reco"ni*e% when
inc#rre%, e+cept for tran!action! that are re#ire% b law to be
acco#nte% for #n%er ca!h or another ba!i!

11. o &e highly e*ecve, the actual results o# the hedge must &e within a range o#
a. 100-  1/0-
b. 1""= # 1!$=
c. &"= # 1""=
d. &"= # 1!$=

1!. Under PFRS +, it re#ers to a %arty that has a right to receive com%ensaon under an insurance
contract i# an insured event occurs
a. Ce%ant
b. *nsurer
c. Reinsurer
d. Policyholder
1(. Hartwell Company distributes the service department overhead costs to
producing departments and the following information for the month of anuary
is presented as follows:
>aintenance 9tilities
verhead costs incurred P1&)"" P 8"""
Services provided to:
>aintenance department # 1"=
9tilities department !"= #
Producing department A '"= ("=
Producing department 4 '"= 3"=
Hartwell Company distributes service department overhead costs based on the
reciprocal method what would be the formula to determine the total
maintenance costs
A. > I P1&)"" J .1"9 C. > I P1&)"" J .("9 J.'"A J .'"4
4.   P 2,000 3 .05 . > I P!))"" J .'"A J .'"4

1'. Financial statement o# not-#or-%ro)t organi'aon #ocuses on

a. 4asic information for the organiDation as a whole
 b. 'tan%ar%i*ation of f#n%! no &enclat#re
c. *nherent differences of not#for#profit organiDation that impact
reporting presentations
d. istinctions between current fund and noncurrent fund

AFAR – NCR Frontliners 2017

NFJPIA-NCR Page 4 of 14
1$. Pistahan Corporation is a manufacturing company engaged in the production of a
single special product nown as K>arvelL. Production costs are accumulated
with the use of a ?ob#order#cost system.
+he following information is available as of une 1 !"1!:
-or#in process.........................................P 1")1"
irect materials inventory.............................. '&3""
*n analyDing the ?ob#order cost sheets the records disclosed that the
compositions of the wor#in#process inventory on une 1 !"1! were as follows:
irect materials used...................................P (83"
irect labor ;8"" hours<................................ '$""
actory overhead applied................................ !!$"
P 1")1"
+he following manufacturing activity occurred during the month of une !""&:
Purchased direct materials costing P 3""""
irect labor wored 88"" hours at P $ per hour
actory overhead of P !.$" per direct labor hour was applied to production.
At the end of une !"1! the following information was gathered in connection
with the inventories:
*nventory of wor#in#process:
irect materials used..........................P 1!83"
irect labor ;1$"" hours<..................... )$""
actory overhead applied....................... ()$"
P !'!1"
*nventory of direct materials........................P $1"""
Compute the cost of goods manufactured:
A. P 1'!$3" C. P 1(1,6/0
4. P 11&($" . P 1"&3""
13. M N and F a partnership formed on anuary 1 !"1! had the following
initial investment:
MOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOP 1"""""
NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 1$""""
FOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO !!$"""
+he partnership agreement states that the profits and losses are to be shared
e7ually by the partners after consideration is made for the following:
- Salaries allowed to partners: P3"""" for M P'&""" for N and P(3"""
for F.
- Average partners, capital balances during the year shall be allowed 1"=.
Additional information:
- n une (" !"1! M invested an additional P3"""".
- FF withdrew P)"""" from the partnership on September (" !"1!.
- Share the remaining partnership profit was P$""" for each partner.

Partnership net profit at ecember (1 !"1! before salaries interests and
partners, share on the remainder was:
A. P188)$" C. P11,/
4. P!"))$" . P!!!)$"
1). +he following statements are based on PRS ( ;4usiness Combinations<:
Statement I: An entity shall account for each business combination by
applying the ac7uisition method.
Statement II:+he ac7uirer shall measure the identifiable assets ac7uired
and the liabilities assumed at their ac7uisition date fair values.
Statement III:For each business combination, the acquirer shall measure any non-
controlling interest in the acquiree either at fair value or at the non-controlling interest’s
 proportionate share of the acquiree’s identifiable net assets.
a. All of the statements are true
b. nly statement * is true
c. nly statement ** is false
%. 8nl !tate&ent III i! fal!e

1&. Kanlaon Corporation started operations on January 1, 2010 selling home

appliances and furniture sets both for cash and on installment basis. Data on
the installment sales operations of the company gathered for the years ending 
December 31, 2010 and 2011 were as follows
010 011
*nstallment sales P'""""" P$"""""
Cost of installment basis !'"""" ($""""
Cash collected on installment sales:

AFAR – NCR Frontliners 2017

 NFJPIA-NCR Page 5 of 14
!"1" installment sales !1"""" 1$""""
!"11 installment sales   ("""""
 !dditional information
n anuary $ !"1! an installment sales on !"1" was defaulted and the
merchandise with an appraised value of P$""" was repossessed. Related
installment receivable balance on anuary $ !"1! was P&""".
+he balance of the eferred %ross Profit controlling account at ecember (1
!"11 was:
A. P )3""" C. P13""""
4. P1("""" D. P120,000

18. A Philippine importer that purchases merchandises from a foreign firm,s

foreign current unit ;C9< would be e5posed to a net e5change gain on the
unpaid balance if the
a. Pe!o weakene% relative to the )C5 an% the )C5 wa! the %eno&inate%
c#rrenc
b. Peso weaened relative to the C9 and the peso was the denominated
currency
c. Peso strengthened relative to the C9 and the C9 was the denominated
currency
d. Peso strengthened relative to the C9 and the peso was the
denominated currency

!". Abnormal spoilage in a manufacturing process should be charged to

a. Profit or lo!!
b. Accumulated profit or loss
c. >anufacturing overhead applied
d. >anufacturing overhead control

!1. -hat is the correct accounting for oint Arrangements

a. All ?oint arrangements are accounted for under PAS !&.
b. oint arrangements classified as ?oint ventures are accounted for under
PRS 11.
c. 9oint arran"e&ent! cla!!ifie% a! :oint vent#re! are acco#nte% for #n%er
PA' 6.
d. oint arrangements classified as ?oint operations are accounted for
under PAS !&.

!!. %ains or losses that arise as a result of translating foreign currency

denominated operations into the reporting currency are recogniDed in income:
a. only if they are material items
 b. onl when the are !ettle% in ca!h
c. in the reporting period in which they arise
d. only when the interest in the foreign operation is sold

!(. Under PAS , !hen it is probable that total contract costs on a fi"ed price construction
contract !ill e"ceed total contract revenue, the e"pected loss should be
a. Set off against profit of other construction contract where
available
b. RecogniDed as an e5pense immediately unless revenue to date e5ceeds
costs to date
c. Apportioned to the years of the contract according to the percentage
of completion method
d. eco"ni*e% a! an e+pen!e i&&e%iatel
!'. @ucille *nc. manufactures a product that gives rise to a by#product called
Robon. +he only costs associated with Robon are additional processing costs
of P1."" for each unit. @ucille accounts for Robon sales first by deducting
its separable costs from such sales and then by deducting this net amount from
the cost of sales of the ma?or product. or the past year !""" units of Robon
were produced which were sold for P(."" each.
Sales revenue and cost of goods sold from the main product were P$""""" and
P'""""" respectively. Compute the gross margin after considering the by#
product sales and costs.
*f @ucille changes its method of accounting for Robon sales by showing the net
amount as ther *ncome the effect on the gross margin would be:
A. P " C. P4,000
4. P!""" . P3"""

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NFJPIA-NCR Page 6 of 14
!$. A lumber company produces t!o-by-fours and four-by-eights as #oint products and sa!dust as
a by-product. $he pac%aged sa!dust can be sold for P& per pound. Pac%aging costs for the
sa!dust are P.' per pound and sales commissions are '( of sales price. $he by-product net
revenue serves to reduce #oint processing costs for #oint products. )oint products are assigned #oint
costs based on board feet. *ata follo!s+
oint processing costs . . . . . . . . . . . . . . P $""""
+wo#by#fours produced ;board feet< . . . . . . . . !"""""
our#by#eights produced ;board feet< . . . . . . . . 1"""""
Sawdust produced ;pounds<. . . . . . . . . . . . . . 1"""
-hat is the cost assigned to two#by#fours
A. P(!""" C. P(!!""
B. P(,1(( . P(((((
!3. +he following information summariDes the standard cost for producing one metal
tennis racet frame. *n addition the variances for one monthQs production are
given. Assume that all inventory accounts have Dero balances at the beginning
of the month:
'tan%ar% Co!t 'tan%ar% onthl
Per 5nit Co!t!
  <<<<<
>aterials P '."" P &'""
irect labor ! hrs P!.3" $.!" 1"8!"
actory overhead:
Eariable 1.&" ()&"
i5ed $."" 1"$""
Eariances:
>aterials price P!''.)$ unfavorable
>aterials 7uantity P$""."" unfavorable
@abor rate P$!"."" unfavorable
@abor efficiency P!"&"."" unfavorable
-hat were the actual direct labor hours wored during the month
 A. /,000 C. '"""
4. '&"" . ('""
!). 9sing the same information in 2o. !3 what were the actual 7uantities of
materials used during the month
 A. ,1/ C. !!!$
4. !1"" . 18)$
"tems 2# and 2$ are based on the following information
Presented below is the unad?usted trial balance of Sterling Products
Corporation at ecember (1 !"1":
Debit Cre%it
Cash P $"""
*nstallment accounts receivable !""8 '""""
*nstallment accounts receivable !"1" 1'""""
*nventory 1!(1!"1" !"""""
ther assets '8)"""
Accounts payable / trade P $""""
9nrealiDed gross profit / !""& 1""""
9nrealiDed gross profit / !""8 &3"""
9nrealiDed gross profit / !"1" 1"""""
Capital stoc 3"""""
Retained earnings &""""
%ain on repossession 3"""
perating e5penses BBB$"""" BBBBBBBB
+otal P 8(!""" P 8(!"""
Cost of goods sold had been uniform over the years at 3"= of sales.
Sterling Products Corporation adopts perpetual inventory procedures. n
installment sales the corporation charges installment accounts receivable and
credits inventory gross profit accounts.
Repossessions of merchandise have been made during !"1" due to some customers,
failure to pay maturing installments. Analyses of these transactions were
summariDed as follows:
*nventoryOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO )$""
9nrealiDed gross profit !""&OOOOOOOOOOOOOOOOO &""
9nrealiDed gross profit !""8OOOOOOOOOOOOOOOOO !'""
*nstallment Accounts Receivable / !""&OO !"""
*nstallment Accounts Receivable / !""8OO 3"""
%ain on repossessionOOOOOOOOOOOOOOOOOOOO !)""

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 NFJPIA-NCR Page 7 of 14
+he repossessed merchandise was unsold at ecember (1 !"1". *t was
ascertained that they were booed upon repossession at original costs. A fair
valuation of these items would be a sale price of the repossessed merchandise
at P1"""" after incurring costs of reconditioning of P$""" and cost to
dispose them in the maret at P$"".
!&. RealiDed gross profit on !"1" sales was:
A. P44,000 C. P1!'"""
4. P$3""" . P1(3"""
!8. %ainloss on repossession was:
A. P!"" loss C. P("" loss
4. P!"" gain D. P(00 "ain
(". +he ?oint venture accounts in the boos of the venturers ;participants< > 2
and  show the balances below upon termination of the ?oint venture and
distribution of the profits:
B88=' of
  $ 8
Accounts with r Cr r Cr r Cr
> 8"" 8""
2 )$" )$"
 13$" 13$"
inal settlement of the ?oint venture will re7uire payments as follows0
A. > pays P8"" to  and 2 pays P)$" to 
4.  pays P8"" to > and P)$" to 2
C. 2 pays P13$" to > and  pays P8"" to 2
D.  pa! P200 to $ an% $ pa! P7/0 to 8

(1. he cost %er e.uivalent unit under the weighted average method o# %rocess cosng considers
a. Current cost only
b. Current cost plus cost of ending wor in process inventory
c. C#rrent co!t pl#! co!t of be"innin" work in proce!! inventor
d. Current cost less cost of beginning wor in process inventory
(!. +he wor#in#process account of the >alinta Company which uses a ?ob order
cost system follows:
  >orkinproce!!

April 1 balance P!$""" inished goods P1!$'$"

irect materials $""""
irect labor '""""
verhead applied (""""
verhead is applied to production at a predetermined rate based on direct
labor cost. +he wor#in#process on April (" represents the cost of ob 2o.
'$3 which has been charged with direct labor cost of P(""" and ob 2o. )&8
which has been charged with applied overhead of P!'"".
+he cost of direct materials charged to ob 2os. '$3 and )&8 amounted to:
A. P'!"" C. P7,/00
4. P'$"" . P&)""
((. +he 2atural Company ac7uired &"= of +he @oco Company for a consideration
transferred of P1"" million. +he consideration was estimated to include a
control premium of P!' million. @ocoQs net assets were P&$ million at the
ac7uisition date. Are the following statements true or false according to
PRS( Business combinations?
(1) %oodwill should be measured at P(! million if the non#controlling interest
is measured at its share of @ocalQs net assets.
(2) %oodwill should be measured at P(' million if the non#controlling interest
is measured at fair value.
Statement (1) Statement (2) Statement (1) Statement (2)
 A. alse alse C. ?r#e )al!e
B. alse +rue . +rue +rue
('. +he >oon Company ac7uired a )"= interest in +he Swan Company for P1'!""""
when the fair value of SwanQs identifiable assets and liabilities was
P1!""""". >oon ac7uired a 3$= interest in +he Homer Company for P("""""
when the fair value of HomerQs identifiable assets and liabilities was
P3'"""". >oon measures non#controlling interests at the relevant share of the
identifiable net assets at the ac7uisition date. 2either Swan nor Homer had
any contingent liabilities at the ac7uisition date and the above fair values
were the same as the carrying amounts in their financial statements. Annual

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 NFJPIA-NCR Page 8 of 14
impairment reviews have not resulted in any impairment losses being
recogniDed.
9nder PRS ( 4usiness combinations what figures in respect of goodwill and of
gains on bargain purchases should be included in >oonQs consolidated statement
of financial position
 A. @oo%will P/60,000; @ain! on the bar"ain p#rcha!e! P11,000
4. %oodwill: 2il or Dero0 %ains on the bargain purchases: P113"""
C. %oodwill: 2il or Dero0 %ains on the bargain purchases: 2il or Dero
. %oodwill: P$&""""0 %ains on the bargain purchases: 2il or Dero
($. A 4 and C are partners in an accounting firm. +heir capital account
balances at year#end were A P8""""0 4 P11"""" and C P$"""". +hey share
profits and losses on a ':':! after the following special terms:
1. Partner C is to receive a bonus of 1"= of net income after the bonus.
!. *nterest of 1"= shall be paid on that portion of a partners capital in
e5cess of P1""""".
(. Salaries of P1"""" and P1!""" shall be paid to partners A T C
respectively.
Assuming a net income of P''""" for the year the total profit share of
partner C was:
A. P 7,600 C. P18'""
4. P13&"" . P18&""
"tems 3% and 3& are based on the following information
+he income statement submitted by the Pampanga 4ranch to the Home ffice for
the month of ecember !"1" is shown below. After effecting the necessary
ad?ustments the true net income of the 4ranch was ascertained to be P1$3""".
Sales OOOOOOOOOOOOOOOOOOOOOOOOOOOOO P 3"""""
Cost of sales:
*nventory ecember 1OOOOOOOOOOOO P &""""
Shipments from Home fficeOOOOOOO ($""""
@ocal purchasesOOOOOOOOOOOOOOOOOO (""""
+otal available for saleOOOOOOOOO P'3""""
*nventory ecember (1OOOOOOOOOOO 1""""" (3""""
%ross margin OOOOOOOOOOOOOOOOOOOOOO P!'""""
perating e5penses OOOOOOOOOOOOOOOO 1&""""
2et income P 3""""
+he branch inventories were:
12'01'201 12'31'201
0  0 
>erchandise from home officeOOOOOOO P )"""" P &'"""
@ocal purchasesOOOOOOOOOOOOOOOOOOOO 1"""" 13"""
+otal OOOOOOOOOOOOOOOOOOOOOOOOOOOOO P &"""" P1"""""
(3. +he billing price based on cost imposed by the home office to the branch
and
A. 1'"= C. 40-
4. 1""= . !8=
(). +he balance of allowance for overvaluation of branch ecember (1 !""&
after ad?ustment.
A. P1"""" C. P1,000
4. P!'""" . 2one of the above
(&. $he partners of the  Partnership started liquidating their business on )uly , &'', at
!hich time the partners !ere sharing profits and losses /'( to  and 0'( to . $he balance
sheet of the partnership appeared as follo!s+
 !ssets (iabilities )
Capital
Cash P &&"" Accounts payable P (!'""
Receivable !!'"" > capital P(1"""
*nventory (8'"" > drawing BB$'"" !$3""
67uipment P3$!"" 2 capital P((!""
Accumulated 2 drawing BBB!"" (("""
epreciation ("&"" (''"" 2 loan 1'"""
+otal P1"$""" +otal P1"$"""
uring the month of uly the partners collected P3"" of the receivables with
no loss. +he partners also sold during the month the entire inventory on which
they realiDed a total of P(!'"".
How much of the cash was paid to >,s capital on uly (1 !"1"
A. P!$3"" C. P(!"
B. P /,400 . P "

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 NFJPIA-NCR Page 9 of 14

(8. ollowing data pertain to >atiisin Company which sells appliances on an

installment basis:
006 002 010
*nstallment sales P(8"""" P'!"""" P'&""""
Cost of sales !()8"" !'(3"" !&&"""

)ro& 'ale! a%e in

*nstallment accounts
receivable balances: 006 002 010
anuary 1 !"1" P !'""" P ("""""
ecember (1 !"1" # P 3"""" P (!""""
Repossessions on defaulted accounts were made during !"1" as follows:
)ro& 'ale! a%e in
!""8 !"1"
Account balance P 1"""" P $"""
2et resale value of
repossessed merchandise '$"" ($""
+he total realiDed gross profit in !"1" on the collections of !""& !""8 and
!"1" sales was:
A. P 8(3" C. P 833""
4. P,000 . P13)83"
'". +he net gain ;loss< on repossession on defaulted sales of !""8 and !"1"
was:
A. P $"" C. P 600
4. P;&""< . P;1(""<
'1. Pasig %arment Company operates a branch in Cabanatuan City. At the end of
the year the 4ranch account in the boos of the home office at >anila shows a
balance of P1$"""". +he following information are ascertained:
1. +he home office has billed the branch the amount of P()$"" for the
merchandise which was in transit on ecember (1.
!. A home office accounts receivable for P1"$"" was collected by the branch.
Said collection was not reported to the home office by the branch.
(. Supplies of P'$"" was returned by the branch to the home office but the
home office has not yet reflected in its records the receipt of the
supplies.
'. +he branch made profit of P1"1"" for the month of ecember but the home
office erroneously recorded it as P111&".
$. +he branch has not received the cash in the amount of P!$""" sent by
home office on ecember (1. +his was charged to %eneral 65pense account.
All transactions are presumed to have been properly recorded.
-hat is the balance of the Home ffice account on the boos of the branch as
of ecember (1 before ad?ustments
A. P1!18!" C. P11)'!"
4. P1(,000 . P1"38!"
'!. -hat is the ad?usted balance of the reciprocal accounts
A. P 83'!" C. P117,40
4. P1"38!" . P1)88!"
'(. +he Carly Company owns )$= of +he Halley Company. +he following figures are
from their separate financial statements:
Carly: +rade receivables P1"'"""" including P("""" due from Halley.
Halley: +rade receivables P!1$""" including P'"""" due from Carly.
According to PAS !) Consolidated and separate financial statements what
figure should appear for trade receivables in CarlyQs consolidated statement
of financial position
A. P1!1$""" C. P1!$$"""
4. P1!!$""" D. P1,16/,000
''. +he -hite Company ac7uired an &"= interest in +he Pulley Company when
PulleyQs e7uity comprised share capital of P1""""" and retained earnings of
P$""""". PulleyQs current statement of financial position shows share capital
of P1""""" a revaluation reserve of P'""""" and retained earnings of
P1'""""".
9nder PAS !) Consolidated and separate financial statements what figure in
respect of PulleyQs retained earnings should be included in the consolidated
statement of financial position

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NFJPIA-NCR Page 10 of 14
 A. P )!"""" C. P1"'""""
B. P1''"""" D. P1,/0,000
'$. +he Snipes Company owns 3$= of +he %enie Company. n the last day of the
accounting period %enie sold to Snipes a non#current asset for P!""""". +he
asset originally cost P$""""" and at the end of the reporting period its
carrying amount in %enieQs boos was P13"""". +he groupQs consolidated
statement of financial position has been drafted without any ad?ustments in
relation to this non#current asset.
9nder PAS!) Consolidated and separate financial statements what ad?ustments
should be made to the consolidated statement of financial position figures for
non#current assets and retained earnings
2on#current assets Retained earnings
 A. *ncrease by P(""""" *ncrease by P18$"""
B. Reduce by P'"""" Reduce by P!3"""
C. e%#ce b P40,000 e%#ce b P40,000
D. *ncrease by P(""""" *ncrease by P("""""
'3. 4onifacio contractors had a (#year construction contract in !"1! for
P8""""". +he company uses the percentage#of#completion method for financial
statement purposes. *ncome to be recogniDed each year is based on the ratio of
cost incurred to total estimated cost to complete the contract. ata on this
contract follows:
Accounts receivable / construction contract billings P (""""
Construction in progressOOOOOOOOOOOOOOOOOOOOOOOOOOOOP 8()$"
@ess: Amounts billedOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO &'()$
1"= retentionOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 8()$
2et income recogniDed in !"1! ;before ta5<OOOOOOOOOO 1$"""
4onifacio Contractors maintains a separate ban account for each construction
contract. 4an deposits to this contract amounted to P$"""".
-hat was the estimated total income before ta5 on this contract
 A. P4/,000 C. P1($"""
4. P8'""" . P1''"""
'). +he @aers Company owns )$= of +he Eiing Company. n ecember (1 !"1!
the last day of the accounting period Eiings sold to @aers a noncurrent
asset for P!""""". +he assetQs original cost was P$""""" and on ecember (1
!"1! its carrying amount in Eiing,s boos was P13"""". +he groupQs
consolidated statement of financial position has been drafted without any
ad?ustments in relation to this non#current asset.
9nder PAS !) Consolidated and separate financial statements what ad?ustments
should be made to the consolidated statement of financial position figures for
retained earnings and non#controlling interest
Retained earnings 2on#controlling interest
 A. *ncrease by P!!$""" *ncrease by P)$"""
B. *ncrease by P(""""" 2o change
C. e%#ce b P(0,000 e%#ce b P10,000
D. Reduce by P'"""" 2o change
'&. +he Eirgil Company owns 3$= of +he >igu Company. n ecember (1 !"1! the
last day of the accounting period Eirgil sold to >igu a noncurrent asset for
P1""". +he assetQs original cost was P!$"" and on ecember (1 !"1! its
carrying amount in EirgilQs boos was P&"". +he groupQs consolidated statement
of financial position has been drafted without any ad?ustments in relation to
this non#current asset.
9nder PAS!) Consolidated and separate financial statements what ad?ustments
should be made to the consolidated statement of financial position figures for
non#current assets and non#controlling interest
2on#current assets 2on#controlling interest
 A. *ncrease by P1$"" *ncrease by P$!$
B. Reduce by P!"" 2o change
C. Reduce by P!"" Reduce by P)"
D. Increa!e b P1,/00 $o chan"e
'8. +he Roel Company ac7uired e7uipment on anuary 1 !""8 at a cost of
P&""""" depreciating it over & years with a nil residual value. n anuary
1 !"1! +he >uldon Company ac7uired 1""= of Roel and estimated the fair value
of the e7uipment at P'3"""" with a remaining life of $ years. +his fair

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NFJPIA-NCR Page 11 of 14
value was not incorporated into RoelQs boos and the depreciation e5pense
continued to be calculated by reference to original cost.
9nder PAS !) Consolidated and separate financial statements what ad?ustments
should be made to the depreciation e5pense for the year and the statement of
financial position carrying amount in preparing the consolidated financial
statements for the year ended ecember (1 !"1(
epreciation e5pense Carrying amount
 A. *ncrease by P&""" *ncrease by P!'"""
B. *ncrease by P&""" ecrease by P!'"""
C. ecrease by P&""" *ncrease by P!'"""
D. Decrea!e b P6,000 Decrea!e b P4,000
$". %oodwill should be recorded in the accounting records only when
a. *t is internally generated
b. *t can be established that a definite benefit or advantage has
resulted to a firm from some item such as good name capable staff
or reputation
c. It i! ac#ire% thro#"h the ac#i!ition of another b#!ine!!
d. A firm reports above normal earnings for five or more consecutive
years
"tems *1 and *2 are based on the following information
Apo Supply Company is engaged in merchandising both at Home ffice in >aati
>etro >anila and a branch in avao. Selected accounts in the trial balances of
the Home ffice and the branch at ecember (1 !"1" follow:

ebits Home ffice 4ranch

*nventory anuary 1 !"1" P !(""" P 11$$"
avao 4ranch $&(""
Purchases 18"""" 1"$"""
reight#in from home office $$""
Sundry e5penses $!""" !&"""
Credits
Home office P $((""
Sales P1$$""" 1'""""
Sales to 4ranch 11""""
Allowance for
branch inventory anuary 1 !"1" 1"""
Additional information:
1. avao branch receives all its merchandise from the home office. +he Home
ffice bills the goods at cost plus 1"= mar#up. At ecember (1 !"1" a
shipment with a billing value of P$""" was in transit to the branch.
reight on this shipment was P!$" which is to be treated as part of
inventory.
!. ecember (1 !"1" inventories e5cluding the shipment in transit  are:
Home office at costOOOOOOOOOOOOOOOOP (""""
avao branch at billed value
;e5cluding freight of P$!"<OOO 1"'""

$1. 2et income of the Home ffice was:

A. P1"""" C. P0,000
4. P1$""" . P!$"""
$!. 2et income of avao branch was:
 A. P10,470 C. P1!')"
4. P11')" . P1(')"
$(. A hospital has the following account balances:
Revenue from newsstand P $""""
Amount charged to patients &"""""
*nterest income (""""
Salary e5pense / nurses 1"""""
4ad debts 1""""
9ndesignated gifts &""""
Contractual ad?ustments 11""""
 -hat is the hospital,s net patient service revenue
 A. P&&"""" C. P20,000
 4. P&""""" . P3&""""
$'. n anuary 1 !"1( two real estate companies ;the parties # Pacet Company
and Sacet Company< set up a separate vehicle ;Harrison Company< for the
purpose of ac7uiring and operating a shopping centre. +he contractual

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NFJPIA-NCR Page 12 of 14
arrangement between the parties establishes ?oint control of the activities
that are conducted in Harrison Company. +he main feature of Harrison,s legal
form is that the entity not the parties has rights to the assets and
obligations for the liabilities relating to the arrangement. +hese activities
include the rental of the retail units managing the car par maintaining the
centre and its e7uipment such as lifts and building the reputation and
customer base for the centre as a whole.
As a result Pacet Company paid P1.3 million for $"""" shares of Harrison,s
voting common stoc which represents a '"= investment. 2o allocation to
goodwill or other specific account was made. +he ?oint control over Harrison
is achieved by this ac7uisition and so Pacet applies the e7uity method.
Harrison distributed a dividend of P! per share during the year and reported
net income of P$3"""". -hat is the balance in the *nvestment in Harrison
account found in Pacet,s financial records as of ecember (1 !"1(
a. P1,74,000 c. P1&''"""
b. P1)&'""" d. P1&&'"""
$$. Connie Corp. had a realiDed foreign e5change loss of P1$""" for the year
ended ecember (1 !"11 and must also determine whether the following items
will re7uire year#end ad?ustment:
U Connie had an P&""" loss resulting from the translation of the
accounts of its wholly owned foreign subsidiary for the year ended
ecember (1 !"11.
U Connie had an account payable to an unrelated foreign supplier
payable in the supplier,s local currency. +he Philippine peso
e7uivalent of the payable was P3'""" on the ctober (1 !"11
invoice date and it was P3"""" on ecember (1 !"11. +he invoice
is payable on anuary (" !"1!.
*n Connie,s !"11 consolidated income statement what amount should be
included as foreign e5change loss
A. P 11,000 C. P 18"""
4. P 1$""" . P !("""
$3. 2oting that there was a P$)&"""" translation ad?ustment gain ora *nc.
;the parent company< secured a foreign ban loan denominated in the
functional currency when the spot rate was 1 +aiwan 2t dollar I P1"!!. +he
ban loan has a principal amount of !"""""""" 2t dollars. *nterest
calculations are ignored. +he ban loan is designated as a hedge of net
investment and is considered to have satisfied all necessary criteria.
Selected e"change rates bet!een the functional currency 1t dollar2 and the peso a re as follo!s+
Date +ate
anuary 1 !"11 . . . . . . . . . . . . P ".8&
ctober 1 !"1! . . . . . . . . . . . . 1.""
ecember (1 !"1! . . . . . . . . . . 1."$
!"1! average. . . . . . . . . . . . . 1."(
+he ecember (1 !"1! @oans payable account balance obtained to hedge the net
investment amounted to
A. P183"""""" C. P!"3""""""
4. P!"""""""" D. P10,000,000
$). Guchen >anufacturing uses bacflush costing to account for an electronic
meter it maes. uring August !"11 the firm produced 13""" meters of which
it sold 1$&"". +he standard cost for each meter is:
irect material P !"
Conversion costs ''
+otal P 3'
Assume that the company had no inventory on August 1. +he following event too
place in August:
1. Purchased P(!"""" of direct materials.
!. *ncurred P)"&""" of conversion costs.
(. Applied P)"'""" of conversion costs to Raw and *n Process *nventory.
'. inished 13""" meters.
$. Sold 1$&"" meters for P1"" each.
Compute the inished %oods ending and the amount of Cost of %oods Sold after
the ad?ustment of over#under applied conversion cost:
inished %oods ending Cost of %oods Sold as ad?usted
A. P #"# P 1"1$!""
4. 1!&"" 1"11!""
C. #"# 1"!'"""
D. 1,600 1,01/,00
5!e the followin" infor&ation for #e!tion! /6 to /2

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NFJPIA-NCR Page 13 of 14
n anuary 1  ac7uired &" percent of the outstanding voting stoc of SF for
P!3"""" cash consideration. +he remaining !" percent of SF had an ac7uisition#
date fair value of P3$""". n anuary 1 SF possessed e7uipment ;$#year life<
that was undervalued on its boos by P!$""". SF also had developed several
secret formulas that  assessed at P$"""". +hese formulas although not
recorded on SF,s financial records were estimated to have a !"#year future life.
s o# /ecem&er !1, the )nancial statements a%%eared as #ollows0
 JJ SZ
Revenues                                 P !300"000# P!200"000#
Cos$ of goo%s so&%                         140"000 80"000
'()enses                                 20"000 10"000
Ne$ *n+o,e                               P!140"000# P!110"000#
Re$a*ne% ean*ngs 1.1                     P!300"000# P!150"000#
Ne$ *n+o,e                               !140"000# !110"000#
/*v*%en%s )a*%                             -0- -0-
Re$a*ne% ean*ngs" 12.31                   P!440"000# P!260"000#
Cas an% e+e*va&es                       P210"000 P90"000
Inven$o                                 150"000 110"000
Inves$,en$ *n JJ                           260"000 -0-
'u*),en$ !ne$#                           440"000 300"000
 o$a& asse$s                               P1"060"000 P500"000
*a*&*$*es                                 P!420"000# P!140"000#
Co,,on s$o+                           !200"000# !100"000#
Re$a*ne% ean*ngs" 12.31                   !440"000# !260"000#
 o$a& &*a*&*$*es an% eu*$*es                  P!1"060"000# P!500"000#
uring the year  bought inventory for P&"""" and sold it to SF for P1""""".
SF had paid for only half of this purchase by the end of the year. f these
goods SF still owns3" percent on ecember (1.
$&. -hat is the total of consolidated revenues
a. P$""""" c. P'!""""
b. P'3"""" %. P400,000
$8. -hat is the total consolidated cost of goods sold
a. P1'"""" c. P1(""""
b. P1$!""" %. P1(,000
3". or which type of hedge are changes in fair value deferred and amortiDed as
 adjustment
an equity 
a. Ca!h flow he%"e
b. perating hedge
c. air value hedge
d. 2otional value hedge

31. -hich models are allowed to be used by the private operator for build#
operate#transfer ;4+< schemes under *R*C 1!
* / inancial Asset model ** / *ntangible Asset model
222 3 Pro%erty, Plant 4 5.ui%ment model
a. I an% II
b. * and ***
c. ** and ***
d. * ** and ***

3!. *f shares are issued as part of the consideration paid transactions costs
such as broerage fees may be incurred. According to PRS ( 4usiness
Combinations the appropriate accounting treatment for such costs in the
records of the ac7uirer is a debit to:
a. Cash
b. *nvestments
c. 'hare capital
d. Ac7uisition e5penses

5!e the followin" infor&ation for #e!tion! ( to /

n 1(53 Pylu5 sold e7uipment costing P1""""" to its 1""=#owned subsidiary
Sylu5 for P&"""". At the time of the sale the e7uipment had been $"=
depreciated ;using the straight#line method and an assigned life of 1" years<.
Sylu5 continued depreciating the e7uipment by using the straigt!line metod 
 over
a remaining life of $ years.
3(. -hat are the cost and accumulated depreciation respectively of this
e7uipment in the 1!(153 consolidated balance sheet
a. P&"""" and P13""". d. P1""""" and P13""".
b. P&"""" and P$3""". e. P100,000 an% P0,000.
c. P&"""" and P3"""".

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3'. What is the amount of the intercompany profit or loss that must be deferred at
12/31/x6?
a. P3""" %. P4,000
b. P1'""" e. P(""""
c. P13"""
3$. What is the amount of the adjustment to Depreciation Expense in preparing the
consolidation or!sheet at 12/31/x6?
a. P/"/ d. P$"""
b. P(""" e. P,000
c. P'"""
5!e the followin" infor&ation for #e!tion!  an% 7.
CC Corporation subsidiary buys maretable e7uity securities and inventory on
April 1 !"5' for 1""""" foreign currencies each. *t pays for both items on
une 1 !"5' and they are still on hand at year# end. *nventory is carried at
cost under the lower#of#cost#or#maret rule. Currency e5change rates for 1 peso
follow:
anuary 1 !"5' . . . . . . .P".1$I1 C
April 1 !"5' . . . . . . . . ".13I1
une 1 !"5' . . . . . . . ".1)I1
ecember (1 !"5' . . . . . . ".18I1

33. Assume that the C ;foreign currency< is the subsidiary,s functional currency.
-hat balances does a consolidated balance sheet report as of ecember
(1!"5'
a. >aretable e7uity securities I P13""" and *nventory I P13""".
b. >aretable e7uity securities I P1)""" and *nventory I P1)""".
c. >aretable e7uity securities P18""" and *nventory I P13""".
%. arketable e#it !ec#ritie! P12,000 an% Inventor P12,000.
3). Assume that the peso is the subsidiary,s functional currency. -hat balances
does a consolidated balance sheet report as of ecember (1 !"5'
a. >aretable e7uity securities I P13""" and *nventory I P13""".
b. >aretable e7uity securities I P1)""" and *nventory I P1)""".
c. arketable e#it !ec#ritie! P12,000 an% Inventor  P1,000.
d. >aretable e7uity securities P18""" and *nventory P18""".

3&. 9nder PRS 1" which is 2+ one of the three ;(< elements of control
a. power over the investee
 b. hol%in" &a:orit votin" ri" ht!
c. e5posure or rights to variable returns from involvement with the
investee
d. the ability to use power over the investee to affect the amount of
the investor,s returns

38. he test indicating that an intra-group business transaction has been
realied is
a. the generation of profit from the transaction

 b. the involve&ent of an e+ter nal part in the tran!action

c. the presence of only within the group as parties to the transaction
d. whether or not an operating profit or loss occurred as a result of
the transaction

)". Under 67S, it is an authori'aon issued &y the /89 to government agencies to withdraw cash #rom
the 6aonal reasury through the issuance o# 9odi)ed /is&ursement System chec:s
a. Allotment
b. bligation
c. Appropriation
%. $otice of Ca!h Allocation

AFAR – NCR Frontliners 2017