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5/28/2016 iCPA: I Can Pass Anything | Quiz

https://www.icpa.ph/review/session/308794/answer 1/13

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iCPA

DashboardPracticeChallenge (00:35:34)Students

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Question 1

Which of the following accounting practices has been outlawed by PFRS 4?

An impairment test for reinsurance assets

Catastrophe provisions

Shadow accounting

A test for the adequacy of recognized insurance liabilities

Question 2

Control is presumed to exist when the parent owns directly or indirectly through subsidiaries

More than half of the preference and ordinary shares of an entity

More than half of the equity of an entity.

More than half of the ordinary shares of an entity

More than half of the voting power of an entity.

Question 3

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PFRS 4 was introduced principally for what reason?

Because of pressure from the financial services authorities in several countries. as a response to recent scandals within the insurance

industry To ensure that insurance companies could comply with International Financial Reporting Standards by 2005. to completelyoverhaul insurance accounting.

Question 4

Net assets restricted by the government by the governing board of a non-government, not-for-profit organization are reported as part of:

Permanently restricted net assets

Any of these, depending on the terms

Unrestricted net assets

Temporarily restricted net assets

Question 5

Hall, Inc., - enters into a forecasted call option contract with Bennett Investment Co. on January 2, 2016. This contract gives Hall the optionto purchase 1,000 shares of Bennett stock at P100 per share. The option expires on April 30, 2016. Bennett shares are trading at P100 per share on January 2, 2016, at which time Hall pays P100 for the call option.The call option would be recorded in the accounts of Hall as:

An asset A liability A gain Would not be recorded in the accounts (memorandum entry only)

Question 6

On October 1, 2013 The Fernando Company acquired 100% of The Austria Company when the fair value of Austria's net assets was P116million and their carrying amount was P120 million. The consideration transferred comprised P200 million in cash transferred at the

acquisition date, plus another P60 million in cash to be transferred 11 months after the acquisition date if a specified profit target was met byAustria. At the acquisition date there was only a low probability of the profit target being met, so the fair value of the additionalconsideration liability was P10 million. In the event, the profit target was met and the P60 million cash was transferred.What amount should Fernando present for goodwill in its statement of consolidated financial position at December 31, 2014, according toPFRS 3 Business Combinations?

80,000,000

84,000,000

144,000,000

94,000,000

Question 7





In a business combination, the acquiree is the business that:

obtains control of the acquiree. the acquirer obtains control of in a business combination. pays the acquisition consideration.finances the business combination.

Question 8

It is the annual contribution from each province, city or municipality in the amount approved by law for each barrio and intended solely for

community development projects.Infrastructure Fund

Trust Fund

Barrio Development Fund

Special Education Fund

Question 9

The process of preparing the combined financial statements of a group of entities is known as:

combination. aggregation. consolidation. accumulation.

Question 10

According to the cost recovery method of accounting, gross profit on an installment sale is recognized as income:

In proportion to the cash collections. On the date of sale. On the date the final cash collection is received. After cashcollections equal to the cost of sales have been received.

Question 11

Agency NN issued check to Nongovernment Organization (NGO’s) for fund assistance amounting to P100,000. The entry to record thistransaction would be:

Debit: Due from National Government Agency (100,000)

Credit: Cash-National Treasury, MDS (100,000) Debit: Other Receivables (100,000)

Credit: Cash-National Treasury, MD (100,000) Memorandum entry in RAOMO No entry

Question 12





When should an anticipated loss on a long term contract be recognized under the percentage of completion method?

over life of project immediately prorated when contract is completed contract complete

Question 13

Initially, a foreign currency transaction shall be recorded by applying

The spot exchange rate at the date of the settlement of the transaction.

The average exchange rate during the year

The closing rate at the end of the reporting period

The spot exchange rate at the date of transaction.

Question 14

Company B acquired the assets (net of liabilities) of Company S in exchange for cash. The acquisition price exceeds the fair value of the netassets acquired. How should Company B determine the amounts to be reported for the plant and equipment, and for long-term debt of theacquired Company S?

Plant and equipment (fair value); Long term debt (fair value)

Plant and equipment (S's carrying amount); Long term debt (fair value)

Plant and equipment (S's carrying amount); Long term debt (S's carrying amount)

Plant and equipment (fair value); Long term debt (S's carrying amount)

Question 15

A hedge of the exposure to changes in the fair value of a recognized asset or asset or liability or an unrecognized firm commitment, isclassified as a

Fair value hedge

Underlying

Foreign currency hedge

Cash flow hedge

Question 16

Damon Limited acquired the net assets of Gina Limited. Damon Limited provided an item of equipment as part of the consideration. The

fair value of the equipment was P13,000. It cost P20,000 and had a carrying amount of P12,000. Which of the following entriesappropriately reflects the gain or loss on the equipment?





Debit: Loss on sale (P1,000) Credit: Gain on sale (P1,000) Debit: Gain on sale (P1,000) Credit: Loss on sale (P1,000)

Question 17

If the Quezon Museum, a not-for-profit organization, received a contribution of historical artifacts, it need not recognized the contribution if the artifacts are to be sold and the proceed used to

Repair existing collections Purchase buildings to house collections. Support general museum activities Acquire other items

for collections.

Question 18

In a business combination, the acquiree is the party that:

finances the business combination gives up control over the net assets acquired pays the acquisition consideration. obtainscontrol of the net assets the other entity

Question 19

The effect of the pre-acquisition entry is to eliminate the Shares in subsidiary asset and the:

net assets of the parent at the acquisition date. equity of the parent at the acquisition date. net assets of the subsidiary at the

acquisition date. equity of the subsidiary at the acquisition date.

Question 20

The Rissa Company has entered into a contract on June 1, 20X3 that requires it to issue its own ordinary shares with a value of CU250,000on 31 May 20X6. In accordance with PAS32, Financial instruments presentation, the company should classify the contract as

Equity instrument

Embedded derivative

Financial asset

Financial liability

Question 21

Kenneth Company, Inc. franchisor, entered into a franchise agreement with Orville Trading, franchisee on March 31,2013. The totalfranchise fee is P500,000, of which P100,000 is payable upon signing and the balance in four equal annual installments. The downpaymentis refundable in the event the franchisor fails to render services and none thus far had been rendered. When Kenneth Company prepares its





financial statements on March 31, 2013, the franchise fee revenue to be reported is:

500,000

100,000

400,000

0

Question 22

The risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss isreferred to as:

credit risk. liquidity risk; interest rate risk; market risk;

Question 23

The information contained within Appendix B of PFRS 3 in relation to disclosure:

contains prescribed presentation formats for disclosure of business combinations is complementary to the main disclosure

requirements within the body of PFRS 3 is not mandatory, but contains optional additional disclosures is an integral part of PFRS 3

Question 24

The investment in a subsidiary recorded as a purchase by the parent should be recorded on the parent's books at

the fair value of the consideration given.

the fair value of the subsidiary's net identifiable assets.

the fair value of the consideration given plus an estimated value for goodwill.

underlying book value of the subsidiary's net assets.

Question 25

PFRS requires that on initial recognition, financial assets and liabilities be measured at:

fair value. net present value. lower of cost or market value. historical cost.

Question 26

Exchange differences arising from translation of financial statement of a foreign entity areRecognized directly in retained earnings





Recognized as accumulated translation adjustments in profit or loss

Capitalized if the differences resulted from severe devaluation of a currency

Recognized as accumulated translation adjustments in the equity section

Question 27

If the construction in progress account has a balance of 1,000,000 while the Progress Billings on Contracts accounts balance is P800,000,how should these accounts be reflected on the balance sheet?

The difference between the two accounts will be reflected as a current asset. The difference between the two accounts will be

reflected as a current liability. Progress Billings on Contracts will be shown as a current liability. Construction in Progress will beshown as a current asset.

Question 28

Francis Enterprise uses the installment method of accounting and it has the following data at the year-end:

Gross margin on cost 66-2/3%

Unrealized gross profit 192,000

Cash collections including down payments

360,000

What was the total amount of sales on installment basis?

840,000 648,000 552,000 480,000

Question 29

Which of the following is not a characteristic of a conditional promise to a:

Gift may have to be returned to donor if condition is not met Depends on the occurrence of a specified future and uncertain events to

bind the promisor. Recognized as contribution revenue when the conditions are substantially met Depends on demand by the promise for performance

Question 30

In translating the financial statements of a foreign operation for inclusion in the reporting entity's financial statements, assets and liabilitiesare translated at





Weighted average rate

Forward rate

Closing rate

Historical rate

Question 31

The currency of the country in which the foreign operation is based is referred to as the:

operational currency. local currency. presentation currency. functional currency.

Question 32

A business combination may be structured in all of the following, except

An entity acquires assets that are not a business.

One or more businesses become subsidiaries of an acquirer

One entity transfers its net assets to another entityA group of former owners of one of the combining entities obtains control of the combined entity

Question 33

The consideration transferred in a business combination is measured as the fair value of the:

net assets acquired consideration given only costs directly attributable to the combination consideration given plus directlyattributable costs.

Question 34

Which of the following is not a derivative instrument?

Future contracts

Variable annuity contracts

Credit indexed contracts

Interest rate swaps

Question 35

According to the Conceptual Framework, recognition of an asset occurs if it is probable that future economic benefits will flow to the entity





and:

it has a value that can be measured with certainty. it is a current asset. it has a value that can be measured with reliability. it isa non-current asset.

Question 36

A company has a 40% share in a joint venture and loans the venture P2,000,000, what figure will be shown for the loan in the balance sheet

of the venturer? 1,200,000 2,000,000 0 800,000

Question 37

These are the "financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and itssubsidiaries are presented as those of a single economic entity".

Separate financial statements

Group financial statements

Consolidated financial statements

General purpose financial statements

Question 38

A single set of financial statements that combines the separate sets of financial statements for all entities within an economic entity, isknown as:

consolidated financial statements. a condensed financial report. a concise financial report. combined financial statements.

Question 39

When an acquiree disposes of a business, the gain or loss is recognised in:

revaluation surplus the statement of profit or loss and other comprehensive income capital profits retained earnings

Question 40

A loss from a construction contract shall be fully and immediately recognize under

The cost recovery method Neither the cost recovery nor percentage-of-completion method Both the cost recovery and

percentage-of-completion method The percentage-of-completion method





Question 41

With respect to the cost a business acquisition, PFRS 3 requires cost(total consideration) to be allocated

Based on original costs

Based on recoverable amounts

Based on fair values

To the assets based on their carrying values

Question 42

If the foreign operation reports in the currency of a hyperinflationary economy, assets, liabilities income and expenses shall be translated at

Forward rate

Exchange rate on the date of transaction

Closing rate

Average rate

Question 43

Which of the following business combination expenses would not qualify as a direct acquisition expense for a purchase?

All are direct acquisition expenses

Stock issuance fees

Fees for purchase audit

Outside legal fees

Question 44

Which one of the following is true when the effective interest method of amortizing bond discount is used?

Interest expense as a percentage of the bonds' carrying amount varies from period to period

Interest expense remains constant for each period

Interest expense increases each period

The interest rate decreases each period

Question 45

S and L owes the Kurt Corporation P6,000 on account, which is secured by accounts receivable with a book value of P5,000. Its statement





of affairs lists the accounts receivable securing the Kurt account with an estimated realizable value of P4,500. Assume that S and L account

is unsecured. How much can Kurt expect to receive?

4,000

6,000

4,800

Cannot be determined without additional data

Question 46

The property, plant and equipment of a not-for-profit hospital should be accounted for as part of:

Unrestricted funds Restricted funds Specific purpose funds Other non-operating funds

Question 47

Red Company had an agency in Davao. For the period just ended, the agency transaction showed the following:Receipt from sales 350,000

Disbursements:Purchases 400,000Salaries and commissions 70,000Rent 20,000Advertising supplies 10,000Other expenses 5,000

The agency had P100,000 receivables and P50,000 payables as of the end of the period. Also, there were inventories on hand of P90,000 andunused advertising supplies of P6,000. The agency was set up as an experiment for one period and would be closed if losses were incurred.The agency should:

Review again because it was a break even operation.Continue with the period's profit of P25,000.

Close with the period's operational loss of P9,000.

Close with the period's operational loss of P155,000.

Question 48

Which of the following is not a distinguishing characteristic of a derivative instrument?

One or more underlyings and notional amounts

Terms that require or permit net settlement No initial net investment





Must be "highly effective" throughout its life

Question 49

It is a transaction or other event in which an acquirer obtains control of one or more businesses.

Merger

Intercorporate directorship

Business combination

Consolidation

Question 50

Which of the following countries is not a member of the Group of Eight

Thailand

U.S.

JapanItaly

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