Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao

Since 1977

ADVANCED FINANCIAL ACCOUNTING

AND REPORTING DE LEON/DE LEON/DE LEON
FIRST PRE-BOARD EXAMINATION FEBRUARY 26, 2021

Multiple Choice. Select the letter that corresponds to the b. P5,070,000 d. P5,550,000
best answer. This examination consists of 100 items and
the exam is good for three (3) hours. Good luck! On January 1, 20X0, Voltez 5 Company, an SME, has a
30% equity of Takuza 4 Enterprises for P92,800. The latter
Amer Company, Brad Company, and Cris Enterprises are company is a joint venture undertaking. Transaction costs
participants in a joint undertaking bound by a contractual of 3% of the purchase price of the shares were incurred
agreement for the sharing of control over its relevant by SME Voltez 5 Company. On December 31, 20X0,
activities. An assessment of their participation shows they Takuza 4 declared and paid dividends of P24,000 and
have rights over assets and obligations over liabilities. reported a profit of P67,200. Published price quotations do
They have equal shares in interest. not exist for Takuza shares but appropriate valuation
techniques determined the fair value of the investment at
On July 1, 20X0, Amer sells machinery to the joint P104,000. Costs to sell are estimated at P5,200.
undertaking for P102,400. The cost to Amer of the
machinery transferred is P40,960. The machinery had an 7. What is the amount of the Investment in JV to be
estimated remaining useful life of 5 years at that date. recognized by Voltes 5 in its December 31, 20X0
balance sheet using the fair value method?
1. At what NET amount will Amer show the machinery a. P 94,640 c. P 65,520
at its balance sheet at July 1, 20X0? b. P104,000 d. P 92,800
a. P13,653 c. P17,067
b. P34,133 d. P17,076 8. What is the amount of Investment in JV to be
recognized by Voltes 5 in its December 31, 20X0
2. At what NET amount will Amer show the machinery balance sheet under the equity method.
at its balance sheet at December 31, 20X0? a. P 108,544 c. P98,800
a. P27,306 c. P12,890 b. P 180,445 d. P89,800
b. P26,376 d. P12,288
9. Which of the following would be least likely to be
3. At what NET amount will Brad show the machinery used as a means of allocating profits among partners
in its balance sheet at December 31, 20X0? who are active in the management of the
a. P27,320 c. P37,200 partnership?
b. P30,720 d. P32,700 a. Salaries
b. Bonus as a percentage of net income before the
On January 1, 20X0, X Company signed an agreement with bonus
Z Corporation to form a new corporation (XXYY) for the c. Bonus as a percentage of sales in excess of a
production of special gadgets. They contributed targeted amount
P1,000,000 each and will share in equity and profits d. Interest on average capital balances
equally.
10. When an investment of a new partner exceeds the
During 20X0 XXYY Corporation reported a net profit of new partners’ initial capital balance and goodwill is
P92,000 and declared dividends of P30,000 at year-end. not recorded, who will receive the bonus?
On the other hand, X Company reported a net profit of a. The new partner
P1,216,000 for year 20X0. At January 1, 20X0, its share b. The old partners in their old profit or loss ratio
capital and retained earnings were P2,400,000 and c. The old partners in the new profit or loss ratio
P736,000 , respectively. d. The old ad the new partners in their new profit
and loss ratio
Before adjustments for its share of XXYY’s profit and the
recognition of the dividend receivable, the balance sheet On March 31, 20X1, Emong, Bobby, and Ramil formed the
draft of X Company shows a total assets of P5,024,000. POGI Partnership to operate a CPA review center. The
following is a list of their contributions at that date:
4. Determine the balance of the Investment in JV
account to be reported by X Company in its balance (Amounts Emong Bobby Ramil
sheet at December 31, 20X0. in ‘000)
a. P1,031,000 c. P1,046,000 Book Fair Book Fair Book Fair
b. P1,040,320 d. P1,000,000 Value value Value value Value Value
Cash P132 P132 P100 P100 P120 P120
5. Determine the amount of Retained Earnings X Inventory 80 75
Company will report in its balance sheet at Land 150 188
December 31, 20X0. Equipment,
a. P 736,000 c. P4,398,000 net ___ ___ ____ ___ 90 90
b. P 782,000 d. P1,998,000 Totals P282 P320 P180 P175 P210 P210

6. How much total assets will be reported in X Bobby has an account payable of P50,000 on the inventory
Company’s balance sheet at December 31, 20X0? and Ramil has a mortgage payable of P60,000 on the
a. P5,024 ,000 c. P5,055,000

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EXCEL PROFESSIONAL SERVICES, INC.

equipment. The partners have agreed to assume only the 16. How much cash would Ysabel receive from the cash
mortgage payable but not the accounts payable. They that is available for distribution on January 31
further agreed for the capital ratio to be 50%, 20%, and a. P0 c. P 5,000
30% to Emong, Bobby, and Ramil, respectively.: b. P3,000 d. P 1,000

The partnership starts operation on April 1, 20X1 and on 17. How much cash would Xavier receive from the cash
December 31, 20X1 reported a net income of P305,400. that is available for distribution on January 31
a. P 5,000 c. P 3,000
The following is the profit and loss agreement among the b. P0 d. P1,000
partners
• 10% interest to each partner’s beginning capital 18. When a secured claim is not fully settled by the
• Salaries of P30,000 per quarter will be given to selling of the underlying collateral, the remaining
Emong and Ramil portion
• Bonus of 10% of net income after interest, a. of the claim cannot be collected by the creditor
salaries, and bonus will be given to Emong. b. is classified as an unsecured with priority claim
• Residual profit/(loss) will be divided equally. c. remains as a secured claim
d. is classified as an unsecured without priority
11. How much is the net asset contribution of Ramil? claim.
a. P193,500 c. P210,000
b. P150,000 d. P125,000 Alma and Bella formed a partnership in the Philippines,
which uses PFRS based on IASB accounting principles. The
12. What is the beginning capital of Partner Bobby? two partners agree on a profit and loss ratio of 60% and
a. P175,000 c. P129,000 40% to Alma and Bella, respectively. At a later date, the
b. P211,500 d. P141,000 partners agree to admit Clara into the partnership for a
50% interest in capital and in earnings.
13. How much is the interest allocation of Partner Capital accounts of the partners immediately before the
Emong out of the 20X1 net income? admission of Clara are: Alma, P300,000 and Bella,
a. P 32,250 c. P 15,413 P300,000.
b. P 14,513 d. P 24,188 Clara invested P400,000 for the partnership interest and
that this is a fair price for the share of partnership interest
14. How much of the 20X1 net income is allocated as to be acquired. Clara paid the money directly to Alma and
bonus to Partner Emong? Bella for 50% each of their existing interests. The partners
a. P7,200 have decided to revalue partnership interest to current fair
b. P7,002 value through the non-cash assets prior to Clara’s
c. P0 admission.
d. P7,020
19. How much will be the capital balances of Alma and
15. Which of the following is a characteristic of a joint Bella after the admission of Clara?
arrangement? a. P 150,000 and P150,000
a. The parties are not bound by a contractual b. P 210,000 and P190,000
agreement c. P210,000 and P210,000
b. The contractual agreement gives two or more d. P190,000 and P19,000
parties joint control over the arrangement
c. A and b 20. The entry to record the admission of Clara will not
d. Neither A nr B include
a. A debit to Cash of P400,000
On December 31, 20X0, the balance sheet for the XYZ b. A debit to Alma, capital of P210,000
Partnership follows: c. A debit to Bella, capital of P190,000
d. A credit to Clara, capital of P400,000
Cash P 10,000 Accounts payable P 17,500
Accounts 15,000 Loan from Zoilo 12,500 The balance sheet of Abby, Blanche, and Celia partnership
receivable on January 1, 20X1, the date of partnership liquidation,
Inventory 35,000 Xander, capital 35,000 was as follows:
(20%) Cash P 4,000 Liabilities P 8,000
Plant 30,000 Ysabel, capital 25,000 Other 26,000 Abby, loan 1,000
assets, net (20%) assets
Loan to 15,000 Zoilo, capital 15,000 Celia, loan 2,000 Abby, capital 2,000
Xander (60%) (20 % P/L)
Total P105,000 Total P105,000 Blanche, capital 9,000
assets liability/equity (40 % P/L)
________ Celia, capital 12,000
The percentages shown are for the residual profit and loss (40 % P/L)
sharing ratios. The partners dissolved the partnership on P 32,000 P 32,000
January 1, 20X1 and began the liquidation process. During
January the following events occurred: In January, other assets with a book value of P16,000 were
sold for P10,000.
• Receivables of P7,500 were collected.
• All inventory was sold for P10,000. 21. How much will each partner receive from the cash
• All available cash was distributed on January 31, distribution after the liabilities had been paid.
20X1, except for P5,000 that was set aside for a. Abby, P1,200; Blanche, P1,800; and Celia,
contingent expenses. P3,000
b. Abby, P 0; Blanche, P2,500; and Celia P3,500

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EXCEL PROFESSIONAL SERVICES, INC.

c. Abby P1,800; Blanche , P1,800; and Celia, 26. What is the estimated amount holders of the
P2,400 accounts payable will receive upon liquidation?
d. Abby, P 0; Blanche, P2,000; and Celia, P a. P58,240 c. P52,480
4,000 b. P54,840 d. P89,600

22. If the partners have retained available cash of P400 27. Using the data provided EXCEPT that the accounts
for future liquidation expenses, after the liabilities payable is P49,600 (instead of P89,600), compute
have been paid, how much will Blanche receive from the estimated amount the stockholders will receive
the cash distribution? upon liquidation.
a. P1,800 c. P2,500 a. P10,400 c. P14,000
b. P2,000 d. P2,300 b. P 0 d. P 6,400

The following items are derived from the Statement of 28. In the cash distribution program, which partner gets
Affairs of Bangkrap Company as of February 28, 20X1: the first cash distribution.
a. The partner with the largest loan bal ance
Book Value Fair Value b. The partner with the largest loss absorption
Asset 1 P37,000 P40,000 potential
c. The partner with the largest capital balance
Asset 2 35,000 20,000 d. The partner with the largest profit and loss ratio
Asset 3 60,000 17,600
29. Determine the true statement under PFRS11
Asset 4 55,200 56,000
a. Joint arrangement is either a joint operation or
a joint venture
The stockholders’ equity comprises: Share capital, b. Joint operation is either a joint arrangement or
P80,000; Share premium, P40,000; and Retained a joint venture
earnings, (P60,000). There are no contingent assets nor c. Joint venture is either a joint arrangement or a
contingent liabilities as at February 28, 20X1. joint operation
d. Joint arrangement, joint venture, and joint
23. Select the correct answer from the following choices operation are one and the same.
in consideration of the above data for Bangkrap
Company. Amounts related to the statement of affairs of Distressed
a. Partially-secured creditors will not be paid in full Company as of April 30, 20X1 follow:
b. The estimated recovery rate for unsecured
amounts is not determinable Assets pledged for fully secured P 80,000
c. The estimated loss on Asset 1 is P3,000 upon liabilities
liquidation. Assets pledged for partially secured 50,000
d. The estimated amount recoverable by liabilities
stockholders is P6,400. Free assets 272,000
Fully secured liabilities 60,000
The following data were taken from the Statement of Partially secured liabilities 80,000
Affairs of Greenfield Corporation. Unsecured liabilities with priority 40,000
Unsecured liabilities without priority 330,000
Pledged Assets : BCV ERV
Plant, property, and equipment P72,000 P60,000 30. Calculate the expected amount recoverable by
(PPE) partially secured creditors in the event of liquidation.
Merchandise inventory 59,200 41,600 a. P71,000 c. P69,500
Free assets 56,000 32,000 b. P50,000 d. P80,000
Total assets P187,200 P133,600
31. In a statement of affairs, estimated realizable values
Secured liabilities
of assets pledged for partially secured creditors are
Bonds payable (secured by P24,000 a. Included with assets pledged for fully secured
PPE) creditors.
Notes payable (secured by 48,000 b. Offset against partially secured creditors.
merchandise inventory) c. Included with free assets.
Unsecured liabilities: d. Disregarded.
Taxes P 3,000
Salaries and wages 2,600 5,600 32. On January 1, 20X1, Zeep and Beep have capital
Accounts payable 89,600 balances of P200,000 and P160,000, respectively.
On July 1, 20X1 Zeep invested an additional P40,000
while Beep withdrew P10,000. Profits and losses are
24. What is the estimated amount the holders of the
divided as follows: Beep is the managing partner
notes payable will receive in the event of liquidation?
and as such shall receive P160,000 as salary with
a. P52,700 c. P56,200
Zeep receiving P72,000; both partners shall receive
b. P45,760 d. P57,000
interest of 10% on their beginning capital balances
to offset whatever difference in capital investment
25. What is the estimated amount the unsecured
they have, and any remainder shall be divided
creditors with priority will receive in the event of
equally. The net income of the partnership for 20X1
liquidation?
was P96,000.
a. P5,600 c. P7,500
b. P6,000 d. P6,200
What was Zeep’s share in the net income for 20X1?
a. P92,000 c. P 48,000
b. P 8,800 d. P 6,000

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EXCEL PROFESSIONAL SERVICES, INC.

a. Present value calculated using an appropriate

33. Dulce Martin, a partner in a partnership that carries discount rate.
the name of the Sweet Shop, has a 30% b. Net realizable value.
participation in partnership profit. Her capital c. Historical rate.
account had a net decrease of P48,000 during 20X1. d. Book value.
In the same year, she withdrew P104,000 of capital
and contributed property valued at P20,000 to the 40. In a statement of affairs, assets are classified
partnership. a. according to whether they are pledged with
particular creditors.
The net income of the partnership in 20X1 was b. as current or noncurrent.
a. P 36,000 c. P120,000 c. as monetary or non-monetary.
b. P132,000 d. P440,000 d. as operating or non-operating.

Helen, Irene, and Jessie were partners with capital 41. What are free assets?
balances on January 2, 20X0 of P560,000, P672,000, and a. assets for which net realizable value is greater
P496,000 respectively. Their profit and loss ratio is 3:5:2. than historical cost.
On August 1, 20X0, Helen retires from the partnership. On b. assets for which no market exists.
the date of retirement, the partnership net loss from c. assets for which replacement cost is greater
January 2 is P384,000; and the partners agreed to revalue than historical cost.
inventories to P296,000 from P272,000. The payment to d. assets available to be distributed for liabilities
Helen for her interest is to be P454,800. with priority and other unsecured obligations.

34. Upon retirement of Helen, which of the following will 42. A joint arrangement that is structured without a
result? separate vehicle is a
a. Bonus to Irene of P2,000 a. Joint asset c. Joint operation
b. Goodwill to Jessie of P2,800 b. Joint entity d. Joint venture
c. Bonus to Jessie of P800
d. Irene’s capital is P66,800 more than Jessie’s. 43. Under PFRS 11, what are the two types of joint
arrangements (i.e., contractual arrangement where
35. An advance cash distribution plan is prepared two or more parties have joint control?)
a. Each time cash is distributed to partners in an a. Joint forces and joint agreement.
installment liquidation. b. Joint forces and joint venture.
b. Each time a partnership asset is sold in an c. Joint venture and joint agreement
installment liquidation. d. Joint venture and joint operation.
c. To determine the order and amount of cash each
partner will receive as it becomes available for 44. Which of the following is a characteristic of a joint
distribution. arrangement?
d. None of these. a. The parties are bound by a contractual
arrangement.
36. In the cash distribution plan, which partner gets the b. The contractual arrangement gives two or more
first cash distribution? parties joint control over the arrangement.
a. The partner with the largest loan balance c. The parties are bound by a contractual
b. The partner with the largest loss absorption arrangement and the contractual arrangement
potential gives the parties joint control over the
c. The partner with the largest capital balance arrangement.
d. The partner with the largest profit or loss ratio d. None of these.

37. A simple partnership liquidation requires 45. The Investment in Branch accounting has a balance
a. Periodic payments to creditors and partners that equals what account in the books of the branch?
determined by a safe payment schedule a. Home Office Current
b. Periodic payments to partners as cash becomes b. Liability
available c. Asset
c. Creditors be paid in an orderly manner d. None of the above.
d. Partnership assets be converted into cash with
full payment made to outside creditors before 46. A home office, month-end allocation of previously
remaining cash is distributed to partners in a recorded advertising expenses to a branch requires
lump sum payment. the following entry on the branch's books to record
the allocation:
38. Which of the following statements is true concerning a. Dr. Advertising Expense Cr. Accrued
the treatment of salaries in partnership accounting? Liabilities
a. Partner salaries may be used to allocate profits b. Dr. Branch Income Cr. Home office
and losses; they are not considered expenses of Capital
the partnership. c. Dr. Advertising Expense Cr. Branch
b. Partner salaries are equal to the annual partner Income
draw. d. None of the above
c. The salary of a partner is treated in the same
manner as salaries of corporate employees. 47. The Home Office ledger account in the accounting
d. Partner salaries are directly closed to the capital records of a branch is best described as
account. a. A revenue account
b. An equity account
39. In the reporting of a corporate liquidation, assets are c. A deferred revenue account
shown at d. None of the foregoing

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EXCEL PROFESSIONAL SERVICES, INC.

Branch Inventory 91,875

48. The Shipments to Branch ledger account in the Allowance
accounting records of the home office of a business Sales 2,100,000 1,260,000
enterprise: Operating Expenses 507,500 192,500
a. Is an asset valuation account
b. Indicates thot the home office uses the periodic Per physical count, the ending inventory of the branch is
inventory system P73,500 including goods from outside purchases of
c. Is adjusted at the end of the accounting period P48,475; the ending inventory of the home office is
to equal the unrealized profit in the branch's P210,000.
ending inventories
d. Is not displayed in the home office's separate 53. What is the cost of goods available for sale of the
financial statement home office?
a. P1,610,000
Among the journal entries (explanation omitted) in the b. P1,863,750
accounting records of the home office of Price Company c. P1,356,250
was the following: d. P1,575,000

Office Equipment - Lang Branch. 12,500 54. What is cost of goods available for sale of the
Investment in Lang Branch 12,500 branch?
a. P715,400
49. This journal entry indicates that: b. P781,375
a. The home office acquired office equipment for c. P689,500
the branch d. P638,750
b. The home office shipped office equipment to the
branch 55. What is the total ending inventory to be shown on
c. The branch acquired office equipment, which is the combined financial statements?
caried in the accounting records of the home a. P118,475
office b. P277,725
d. None of the foregoing occurred c. P328,475
d. P280,000
50. Control over an acquiree can be attained through
which of the following? 56. What is the combined net income for the year?
a. Acquisition of the acquiree assets a. P957,950
b. Acquisition of the acquiree stock b. P871,850
c. Either acquisition of the acquiree assets or stock c. P891,975
d. Neither acquisition of the acquiree assets or d. P942,725
stock
The San Miguel Branch of Taiwan Products, Inc. buys
51. In an acquisition where there is an exchange of stock merchandise from outsiders and receive merchandise from
(acquirer) for assets (acquiree), how does the value the home office for which it is billed at 20% above cost.
of the acquiree net assets change Below are excerpts from the trial balances and data on the
a. The net assets increase home office and San Miguel Branch for the month of April,
b. The net assets decrease 20X0:
c. There is no change in net assets
d. The net assets may increase, decrease or remain HOME OFFICE:
the same Cr. Allowance for overvaluation of 462,500
branch merchandise
52. Which of the following is not a true statement with Cr. Shipment to Branch 1,062,500
regard to a statutory merger? BRANCH:
a. One entity continues to exist Dr. Beginning inventory 1,800,000
b. One entity ceases to exist
Shipments from home office 1,275,000
c. The name of the new entity is not the same as
either of the entities Purchases 512,500
d. All of the above one true statements with regard Month-end additional data:
to a statutory merger Ending inventory of branch 1,825,000
From Home Office, billed price of 1,462,500
Home office bills its branch for merchandise shipments at
30% above cost. From outsiders, at cost 362,500

The following are some of the account balances on the 57. The total cost of goods sold of the San Miguel Branch
books of home office and its branch as of December 31, at cost (net of overvaluation) for the month just
20X0: ended amounted to:
a. P1,762,500 c. P1,543,750
Home Office Branch b. P1,731,250 d. P2,312,500
Books Books
Inventory, January 1 35,000 101,500 The following information are taken from the books and
Shipments from Home 263,900 records of Cebu City Company and its branch. The
Office balances are at December 31, 20X0, the second year of
Purchases 1,575,000 350,000 the company's operations.
Shipments to Branch 253,750

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EXCEL PROFESSIONAL SERVICES, INC.

Home Office Branch Office Total assets P40,000,000 P 8,000,000

Books Books Liabilities P12,000,000 P 2,000,000
Sales P500,000 Share capital, 20,000,000 3,000,000
Expenses 125,000 P10 par
Shipment to Branch P250,000 Share premium 3,000,000 1,000,000
Retained profit 5,000,000 2,000,000
Branch Inventory 71,875 Total equities P40,000,000 P 8,000,000
allowance
Out of pocket costs for the acquisition are as follows:
The branch obtains all its merchandise from the home
office. The home office ships the merchandise at 125% of Direct acquisition costs P 120,000
its cost. The ending inventory of the branch is P50,000 at Indirect acquisition 15,000
the billed price. costs
Stock registration and issuance 10,000
58. The true income of the branch is: costs
a. P 68,281.25 c. P127,500
b. P140,000 d. P 52,500 Assume the fair value of Rambutan’s net assets is
P30,000,000 and Coconut’s net assets is P9,000,000.
59. Teardrops Commercial Corp. maintains a branch in 61. The total net assets shown on the balance sheet of
Iloilo City. Selected balances taken from the books Rambutan just after the business combination is
of Teardrops and its Bacolod City branch as of a. P48,855,000 c. P36,860,500
December 31, 20X1 are as follows: b. P48,665,000 d. P36,855,000
Home Branch 62. The amount of retained profit shown on the same
Office Office balance sheet just after the business combination
Merchandise P 12,000 P 8,000 will be
Inventory, Jan 1 a. P4,855,000 c. P6,865,000
Purchases 150,000 30,000 b. P5,865,000 d. P5,855,000
Shipments from Home 93,750
Office 63. Using the same information in Item 61, but
Shipments to Branch 75,000 assuming Rambutan’s stock is selling at P22.81
Branch Inventory 19,750 each, calculate the goodwill from the business
Allowance combination
Sales 115,000 176,500 a. P124,000 c. P214,000
Merchandise 14,000 10,350 b. P142,000 d. P140,200
Inventory, Dec 31
The condensed balance sheets of X Company, Y
P4,350 of the branch's ending inventory came from Company, and Z Company as of December 31, 20X0 are
purchases from suppliers other than the home office. shown below:

As far as the home office is concerned, the cost of X Company Y Company Z

sales of the branch was: Company
a. P 97,120 c. P121,400 Assets P2,000,000 P2,750,000 P
b. P102,850 d. P131,850 250,000
Liabilities P1,425,000 P 750,000 P
87,500
60. During the year 20X0 the Bacolod Corporation bills Share capital, P5 750,000 500,000 125,000
its Iloilo branch at 140% of cost. Goods billed at par
P346,500 were shipped to the branch. The account Additional paid-in
Allowance for overvaluation has a balance of capital - 200,000 62,500
P122,400 before adjustment. The beginning Retained
inventory of the branch from the home office at cost Earnings(Deficit) (175,000) 1,300.000 ( 25,000)
is P93,600; the beginning inventory of the branch Total equities P2,000,000 P2,750,000 P 250,000
from outsiders is P15,200, purchases from outsiders
is P130,500. X Company’s stocks has a market value of P7.50 per share
while the other companies have no available stock market
Cost of goods available for sale of the Iloilo Branch quotations. X Company acquired the net assets of the
in 20X0 is other companies by issuing, in exchange, unissued shares
a. P486,800 c. P609,200 of its stocks as follows: 300,000 shares to Y Company and
b. P623,000 d. P468.800 25,000 shares to Z Company. The net assets of the
acquired are fairly valued at acquisition date.
Rambutan Company issues 400,000 shares of its own
P10 par common stock for all the net assets of Coconut. 64. How much goodwill would X Company recognize
Inc. on August 4, 20X0. On this date Rambutan’s stock is from these acquisitions?
quoted at P20 per share. Summary balance sheet data a. P0 c. P325,000
for the two companies at August 4, just before the b. P275,000 d. P812,500
merger are as follows:
65. How much will be the total stockholders’ equity of X
Rambutan Coconut Company just after the acquisition of Y and Z
Current assets P18,000,000 P 1,500,000 companies?
Plant and 22,000,000 6,500,000 a. P3,362,500 C. P3,632,500
Property b. P3,120,500 D. P3,012,500

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EXCEL PROFESSIONAL SERVICES, INC.

66. On July 1, 20X0 Pyramid Company paid P755,000

cash for the net assets of Stir Company. The
recorded assets and liabilities of Stir are: Cash,
P74,000; Inventory, P215,000; Land, P200,000;
Building (net), P208,000; and liabilities of P220,000.
At the same date Stir’s inventories had a fair value
of P184,000; the land, P271,500; and the building
(net), P187,500.

Determine the amount of goodwill resulting from the

business combination.
a. P285,000 c. P258,000
b. P280,500 d. P250,800

On January 1, 20X1, West Corporation purchased 80% of

the common stocks of Fast Company. Separate balance
sheets for the companies at acquisition date are as
follows:

West Fast Co. FMV

Corp
Cash P 12,000 P 119,000
Accounts 72,000 13,000
receivable
Inventory 66,000 19,000 29,000
Plant assets, net 230,000 120,000 140,000
Investment in 196,000 _________
Fast
Total assets P 615,000 P 271,000
Accounts payable P 103,000 P 71,000
Capital stock 400,000 150,000
Retained 112,000 50,000
earnings
Total equities P 615,000 P 271,000

67. Goodwill (income from combination)) to be

recognized by West Corp. at date of acquisition is
a. P 45,000 c. P 15,000
b. (P 26,000) d. (P 34,000)

68. Total assets on the consolidated balance sheet at

date of acquisition is
a. P 735,000 c. P 720,000
b. P 931,000 d. P 705,000

69. Non-controlling interest in net assets assigned as of

January 1, 20X1 is
a. P 39,200 c. P 46,000
b. P 40,000 d. P 49,000

70. The total stockholders’ equity in the consolidated

balance sheet is
a. P576,000 c. P712,000
b. P761,000 d. P561,000

End of Examination

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