National Federation of Junior Philippine Institute of Accountants

In cooperation with
Isla Lipana & Co. and CRC-ACE

National mock board examination 2014

PRACTICAL ACCOUNTING 1
Instruction: On the answer sheet provided, Shade the letter representing the best answer for each of
the following questions. Necessary computations should be made on separate sheets of paper. Avoid
making erasures. The scanning machine may invalidate your answer.
1. On July 31, 2013 New Inc. purchased for P75,000,000 a tract of land on which a decrepit office building was located. The
intention of New Inc. is to demolish the office building (wi th a remai ning useful life of 5 years) and replace it wi th a new
building. New will not use the office building prior to the demolition. The following data were collected concerning the
property:

Fair Value
7/31/13
Land P 60,000,000
Office Building 20,000,000

The new building that will be constructed in late 2014 will be classified as owner-occupied property and that New uses the
cost model of accounting i ts Property, plant and equipment. What is the amount of depreciation expense recognized for fiscal
year ended June 30, 2014 in relation to the above transaction?
a. P -0- b. P 4,000,000 c. P 3,750,000 d. P 3,437,500

Less Outstanding checks 457
Cash per l edger, December 31, 2010 P 8,425

2. In preparing reconciliation, the adjusted cash and cash equivalents should be
a. P7,965 b. P4,833 c. P 5,933 d. P6,393

3. The cash shortage (if any) is
a. P105 b. P360 c.P555 d. P 0

4. Flu Company provided you wi th the following information in relation to its post-retirement benefit plan; current service
cost P100,000; expected return on plan assets P40,000; actual return on plan assets P45,000. Pension expense for the
period assuming further that Flu Company was classified as an SME
a. 0 b. 100,000 c. 55,000 d. 60,000
Use the following information for the next five items

UA Company was organized in January 1, 2012. Sel ected balances as of December 31, 2015 were as follows:
Land (revalued on December 31, 2014) 1,000,000
Factory building (constructed December 31, 2012) 500,000
Investment property (purchased on January 1, 2012) 800,000
Inventory 600,000
Note receivable (received January 1, 2015 200,000

The general price index had moved on December 31 of each year as follows: December 31, 2012 140; December 31, 2013
190; December 31, 2014 240; December 31, 2015 280

5. The restated amount for the factory building is
a. 500,000 b. 1,000,000 c. 1,400,000 d. 583,333


February 15-16, 2014
6. The restated amount for l and is
a. 1,000,000 b. 2,000,000 c. 1,166,667 d. 1,473,684

7. The restated amount for the investment property is
a. 800,000 b. 1,600,000 c. 933,333 d. 1,179,000

8. The restated amount for i nventory is
a. 646,154 b. 1,200,000 c. 700,000 d. 790,588

9. The fraction to be used in restating notes receivable
a. 280/280 b. 280/140 c. 280/240 d. 280/260
e.
10. ABC Company has 100,000 ordinary shares in issue. It also has 50,000 convertible bonds (face value of each bond is P1) in
issue, which may be converted into ordinary shares on the basis of one share for every five bonds. The i nterest coupon on
the bond is 8%, and the tax rate in force is 25%. It has also issued share options with respect to 12,000 shares, which are
exercisable at a price of P40. The average fair value of ABC Companys shares during the year was P60. The converti ble
bonds and options were outstanding since the beginning of the year. Basic earnings per share for the year are calculated to
be P3.97.

What is the number of shares used to compute for diluted earnings per share for ABC Company?
a. P 114,000 b. P100,000 c. P122,000 d. Not applicable

11. On March 31, 2012, Almost Paradise Co. leased a new machine from Lucky Corporation. The following data relate to the
lease transaction at the inception of the lease:
Lease term 6 years
Quarterly rental payabl e Php120,000
Estimated life of machine 6.5 years
Implicit interest rate 12%
Fair value of the machine Php2,134,800
Estimated residual value Php0
Negotiation costs pai d by lessee Php52,400

(Round off present value factor to four decimal places.)

The lease has no renewal option and the possession of the machi ne reverts to Lucky Corporation when the lease terminates.
Almost Paradise Co. applies the sum-of-the-years di gits method in depreciating its property and equipment.

What is the carrying amount of the machine on December 31, 2012?
a. P1,732,217 b. P1,824,078 c. P1,489,043 d. P1,637,947
Use the following information for the next two items

On January 1, 2010 Glen Company started construction of its own warehouse. Glen Company specifically borrowed
P1,000,000 to finance the construction of the warehouse. Interest incurred during the construction amounted to P120,000
while the income derived from its temporary investment amounted to P30, 000. Total construction cost was P1,400,000.

The warehouse expected useful life was 10 years wi th no expected residual value. Glen Company depreciates similar assets
using the strai ght-line method

On January 1, 2012 Glen Company adopted the revalued model. The sound value of the warehouse was P1,510,000.

12. The depreciation expense i n 2010, assuming that Glen Company for reporting purposes was considered an SME
a. P140,000 b. P149,000 c. P152,000 d. P240,000

13. The revaluation surplus recognized on January 1, 2012, assuming that Glen Company for reporting purposes was
classified as an SME
a. P -0- b. P390,000 c. P318,000 d. P294,000

14. Entity As plan provides a pension of 3% of final salary for each year of service. The benefits become vested after 5 years
of service. On January 1, 2013 of the year for which statements are being prepared, Entity A improved the pension to 4%
of final salary for each year of service retroactive to each employees starting date with the company. At the date of the
improvement, the present value of the addi tional benefits for service up to January 1, 2013 (the date of the plan change) is
as follows:
Employees with more than 5 years service at the date of the plan change P200,000
Employees with less than 5 years service at the date of the plan
change (average period until vesting: 2 years) P100,000


In accordance with PAS 19 Employee Benefi ts (Revised), how should Entity A account for this in its 2013 profit or loss?
a. Additional expense of P300,000 related to both fully vested benefi ts and unvested benefits
b. Additional expense of P200,000 related to fully vested benefits at the date of the plan change
c. Additional expense of P250,000, P200,000 related to fully vested benefits at the date of the plan change and P50,000
related to the 2013 portion of the unvested benefits (recognized on a strai ght line basis over the average vesti ng
period)
d. No effect to 2013 profit or loss
15. The historical comprehensive income statement of Reese Company for 2011
Sales 2,500,000
Less: Cost of sales
Inventory, January 1 175,000
Add: Purchases 1,250,000
Less: Inventory, December 31 250,000 1,175,000
Gross profit 1,325,000
Less: Operating expenses, other than depreciation 1,000,000
Depreciation expense 1,000,000
Net loss 675,000

Sales were earned, purchases other than endi ng i nventory were made and operating expenses other than
depreciation expense were i ncurred evenly throughout the year.
Ending inventory was acqui red during the last week of December 2011
Depreciable assets were acquired on January 1, 2008
General price indices were:

January 1, 2008 125
January 1, 2011 140
December 31, 2011 360

If Reese Company was operating in a hyperinfl ationary economy, the amount to be reported as net income (loss) is
a. 2,720,000 b. 2,412,000 c. 972,000 d. 675,000
16. The balance of inventory after adjusting for hyperinflation
a. 1,500,000 b. 1,350,000 c. 1,687,500 d. 1,215,000

17. The balance of property, plant and equipment after adjusting for hyperinfl ation
a. 900,000 b. 1,125,000 c. 500,000 d. 450,000

18. The balance of non-current liabilities after adjusting for hyperinflation
a. 250,000 b. 312,500 c. 500,000 d. 1,000,000

19. The balance of the share capital after adjusting for hyperi nflation
a. 600,000 b. 200,000 c. 750,000 d. 400,000

20. The balance of retained earnings after adjusting for hyperinflation
a. 1,375,000 b. 1,175,000 c. 1,470,000 d. 1,305,000

21. On December 31, 2012 Margaux Company had monetary assets of P3,000,000 and monetary liabilities of P1,200,000.
The index number on January 1, 2012 was 125; December 31, 2012 was 225
Purchasing power gain/loss in 2012
a. 3,240,000 gain b. 3,240,000 loss c. 1,800,000 loss d. 1,800,000 gain

Use the following information for the next four items

On November 20, 2012 Sunshi ne Company received an i nquiry from Moonlight Company asking if i t was interested to lease
its construction equipment. The carrying amount of the construction equipment was P12,400,000 which approximates its
fair value at this time. Because of the offer Sunshi ne Company is contemplating on l easing the equipment for 6 years the
equipments useful life and would like to have a 9% return rate over the term of the l ease. Initial direct costs for this
contract was computed at P80, 000. At the end of the lease term, Sunshine Company estimates the residual value of the
equipment to be P200,000.

On November 26, 2012 Moonlight Company sent a proposal in which it agrees with the condi tions initially conveyed by
Sunshine Company. Moonlight Company suggested that the commencement date be on January 1, 2013 and that the annual
rentals be schedul ed every December 31, starting on December 31, 2013. Furthermore Moonlight Company communi cated
that it will only guarantee 70% of the residual value computed by Sunshine Company.

On December 8, 2012, the lease agreement between Sunshine Company and Moonlight Company was signed.

(Round PV factors to 3 decimal places)

22. The annual rentals to be received by Sunshine Company is
a. 2,535,083 b. 2,745,555 c. 2,755,417 d. 2,763,388

23. Interest income in 2014 to be recognized by Sunshine Company is
a. 976,300 b. 977,188 c. 975,583 d. 996,130

24. The lease liability reported by Moonlight Company December 31, 2014 is
a. 9,605,292 b. 9,026,181 c. 8,926,902 d. 6,889,090

25. Depreciation expense for 2013 is
a. 2,040,704 b. 2,050,707 c. 2,060,124 d. 2,074,037

Use the following information for the next two items

At the end of January2013, the city government provided Hesington Company a zero interest P30,000,000 3 -year loan used
by the Company in acquiri ng a building on the same date. The prevailing market rate of interest for this type of loan is 8%.
The government imposes that the building must be used for social housing for ten years. The Company estimated that there
is reasonable assurance that i t will meet the terms of the grant. The Company will classify the building as owner occupied
property after the socialized housing project. The Company opted to use the cost model of accounting the building wi th a 15 -
year life from the date of acquisition.

(Round PV factors to 4 decimal places)

26. Applying provisions of PAS 20 Accounting for Government Grants and Disclosures of Government Assistance, what is the
amount recognized as income from the grant as of December 31, 2013?
a. P618,600 b. P 567,050 c. P 1,746,360 d. P 1,905,120

27. Applying provisions of PAS 20 Accounting for Government Grants and Disclosures of Government Assistance, what is the
net effect of the above transactions and events to the Companys profi t or loss for calendar year ended December 31,
2016?
a. (P 2,000,000) b. (P2,134,846) c. (P 3,438,930) d. (P3,589,815)

Use the following information for the next three items

Yin-Yang Company is involved in the exploration for and extraction of mineral resources. The Companys accounting policy
for recognition purpose for these types of activities is the successful effort method. On January 1, 2010 Yin -Yang Company
acquired two quarrying ri ghts. A schedule of the expendi tures made wi th respect to the quarrying sites is provided as
follows:
Site O Site X
Quarrying rights 2,300,000 1,000,000
Topographical studies 1,200,000 200,000
Exploratory drilling 1,100,000 300,000
Trenching and sampling 1,600,000 400,000
Development costs (road construction to access site) 1,400,000 100,000
Depreciation of drilling rigs used for exploration 300,000 120,000

At the end of 2010 Yin-Yang Company had decided to continue exploration and extraction activities in site O (technicall y and
commercial viable). Unfortunately, further exploratory and development plans on site X would be abandoned (not
technically feasible and viable)

On January 1, 2011 Yin-Yang started extracti ng the mineral reserves from site O. It was expected that a total of 10,000,000
tons of mineral ore would be extracted from the site and it would be totally extracted wi thin 8 years.

Yin-Yang Company acqui red an extraction equipment for P600,000. The equipment which Yin-Yang Company intends to use
in another mining site was estimated to have a useful life of 12 years with salvage value of P5,000.

Fixed installations were likewise completed at the start of 2011. The total cost incurred was P800,000. The installations
expected useful life is 10 years with no expected salvage value. Yi n-Yang Company uses the straight-line method as its
depreciation policy for its long-lived assets.

Total tons extracted in 2011 and 2012 were 1,200, 000 and 1,600,000 respectively.
28. The exploration and evaluation assets to be reported in the 2010 statement of financi al position is
a. 6,500,000 b. 7,900,000 c. 8,520,000 d. 8,620,000

29. Depletion for 2011
a. 780,000 b. 948,000 c. 876,000 d. 1,044,000

30. Depreciation for 2011
a. 145,583 b. 129,583 c. 167,400 d. 174,375

31. On November 1, 2013, Bronze Company bought 2,400 ordi nary shares of Purpl e Corporation at P90 per share. The shares
represent less than 5% ownership in Purpl e Corporation and are intended to be traded in the near term; hence,
designated as i nvestments at fair value through profit or loss. In celebration of the Valentines day, Purple Corporati on
issued a 20% bonus issue on February 14, 2014 as a gift for its shareholders. On March 15, 2014, Bronze Company sold
2,000 shares of Purple Corporation ordi nary shares at P80 per share. The market value per share of Purple ordi nary share
is P93 on December 31, 2013 and P81 on December 31, 2014. What is the carrying amount per share of the Purple
Corporation ordinary share after receipt of the bonus issue?
a. P 90.00 b. P75.00 c. P81.00 d. P 77.50

32. On 1 January 2011, Company L issues a fixed rate cumulative perpetual instrument with a face value of Php10 million at
par. Dividends on the instrument are cumulative but discretionary and therefore it is ini tially classified as equity. On 1
January 2012, L adds a new clause to the instrument so that if L is subject to a change of control, L will be required to
redeem the instrument at an amount equal to the face value plus any accumul ated unpai d dividends. This results in a
reclassification of the instrument from equi ty to liability. The fair value of the instrument on 1 January 2012 is Php12
million.How should the reclassification be accounted for?
a. The financial liability should be recorded at the original issuance amount of Php 10 million.
b. The financial liability should be at Php 12 million, with difference of Php 2 million recognized
directly in profit or loss.
c. The financial liability should be at Php 12 million, with difference of Php 2 million recognized
directly in equity.
d. The Company shall record a financial liability of Php 2 million.

33. Jessica Pearson Inc. is a wholesaler of office supplies. The activity for Model V calculators during August is shown below:
Date Balance/Transaction Units Cost
Aug. 1 Inventory 2,000 P36.00
7 Purchase 3,000 37.20
12 Sales 3,600
21 Purchase 4,800 38.00
22 Sales 3,800
29 Purchase 1,600 38.60
If Jessica Pearson Inc. uses perpetual inventory records and that said records are kept in units only, the endi ng inventory of
Model V calculators using average method at August 31, is reported as
a. P150,080 b. P152,264 c. P150,160 d. P146,400

34. Candice Company reported net income of P34,000 for the year ended December 31, 2013 which included depreciati on
expense of P8, 400 and a gai n on sale of equipment of P1,700. The equipment had an historical cost of P40, 000 and
accumulated depreciation of P24,000. Each of the following accounts increased during 2013 (Assume that the increases in
the following accounts are due to cash transactions only.):
Patent P9,800
Prepaid rent* 4,500
Available for sale investment 8,000
Bonds payable 5,000
*To be consumed wi thin 12 months from the balance sheet date
What amount should be reported as net cash provided (used) by investing activities for the year ended December 31, 2013?
a. (P 100) b. (P1,800) c. (P17, 800) d. P 16,000

Use the following information for the next two items

On October 1, 2011, DJ Company acquired land and building for a total consideration of P1,000,000. The fair value of the land
and building were P800,000 and P400,000 respectively. Immediately after acquisition, the building was demolished at a
cost of P20,000 of which P5,000 was recovered as salvage proceeds. Leveling and gradi ng costs of P115,000, as well as
excavation costs of P110,000 were incurred during the last quarter of 2011.

On January 1, 2012, DJ Company borrowed P4, 000,000 at 10% from JL Financing for its building construction. Construction
started immedi ately and was completed at December 31, 2012. Income from the temporary placement of the construction
loan amounted to P30,000.

The following expenditures for the building construction were as follows:
January 1, 2012 P 2,500,000
April 1, 2012 2,000,000
July 1, 2012 1,000,000
October 1, 2012 600,000
December 31, 2012 200,000
Total 6,300,000

DJ Companys other borrowing aside from the construction loan was a 9%, P6,500,000 3-year loan maturing on December
31, 2014.

The building was to be depreciated using the sum-of-the-years digits method. Expected useful life and salvage value was 10
years and P55,000 respectively.

At the beginning of 2018, DJ Company decided to change its depreciation method to the straight-line method. There were no
changes in the expected life or on the estimated salvage value of the building.

35. The initial cost capitalized to the land account was
a. 796,666 b. 930,000 c. 1,130,000 d. 1,250,000

36. Depreciation expense reported in the 2018 i ncome statement is
a. 371,850 b. 382,850 c. 363,850 d. 394,850

Use the following information for the next two items

Knoll Corporation, a client, requests that you compute the appropriate balance of i ts estimated liability for product warranty
account for a statement as of June 30, 2011.

Knoll Corporation manufactures television components and sells them with a 6-month warranty under which defective
components will be replaced without charge. On December 31, 2010, Estimated Liability for Product warranty had a balance
of P620,000. By June 30, 2011, this balance had been reduced to P120,400 by debi ts for estimated net cost of components
returned that had been sold in 2010.

The corporation started out in 2011 expecti ng 7% of the peso volume of sales to be returned. However, due to the
introduction of new models during the year, this estimated percentage of returns was increase to 10% on May 1. It is
assumed that no components sold during a given month are returned in that month. Each component is stamped with a date
at time of sale so that the warranty may be properly administered. The following table of percentages indicates the l ikely
pattern of sales returns duri ng the 6-month period of the warranty, starti ng wi th the month following the sale of
components.

Month Following Sale
Percentage of Total
Returns Expected
First 30%
Second 20
Third 20
Fourth through sixth 10% each month 30
100%
Gross sales of components were as follows for the first six months of 2011:

The corporations warranty also covers the payment of freight cost on defective components returned and on the new
components sent out as replacements. This freight cost runs approximately 5% of the sales price of the components
returned. The manufacturi ng cost of the components is roughly 70% of the sal es price, and the salvage value of the r eturned
components averages 10% of their sales price. Returned components on hand at December 31, 2010, were thus valued in
inventory at 10% of their ori ginal sales price.

37. Requi red Estimated Liability for Product Warranty balance at June 30, 2011
a. P301,353 b. P421,753 c. P120,400 d. P77,847

38. Requi red adjustment to liability account
a. P301,353 debit b. P301,353 credit c. P421,753 debit d. P421,753 credit




Use the following information for the next two items

Jam Company prepared the following reconciliation of income per books with income per tax return for i ts first year of
operations the year ended December 31, 2012
Month Amount
January P4,200,000
February 4,700,000
March 3,900,000
April 3,250,000
May 2,400,000
June 1,900,000
Book income before income taxes P 50,000
Add: Future deductible amounts
_____________________ ______
_____________________ ______ ( 1 )

Less: Future taxable amounts
_____________________ ______
_____________________ ______ ( 2 )

Taxable income _____

Jam Company acquired an equipment at a cost of P500, 000 on January 1, 2012. Depreciation was recorded using the
strai ght-line method wi th no expected residual value for an estimated useful life of 5 years.. For tax purposes, the doubl e-
declining balance method was used.

Sales, cost of sales, operating expenses are recognized under the accrual method for both financial and tax reporti ng
purposes, except for the following items:

Rent income is recognized for financial reporting is recognized under accrual, for tax purposes rent is recognized
when collected. In 2012, Jam Company reported rent income of P140,000, while rent collected totaled to P90,000

Warranty costs are recognized for financial reporting purposes under the accrual method and provide an expense
equal to 5% of selling price. For tax purposes, warranty costs are recognized when actual payment is made. Total
warranty expenditures for 2012 was P320,000. At year end, Jam Company reported an estimated warranty
obligation of P40,000.

Bad debts expense reported during the year for financi al reporting was P65,000. For tax purposes, bad debts are
recognized as deductions only upon write-off which amounted to P30,000 duri ng the year.

Current and future tax rates was 30%

39. The deferred tax liability reported in the December 31, 2012 statement of financial position is
a. 15,000 b. 22,500 c. 30,000 d. 45,000

40. The deferred tax asset reported in the December 31, 2012 statement of financial position is
a. 15,000 b. 22,500 c. 30,000 d. 45,000

Use the following information for the next two items

As a result of a recent acquisition, an entity plans to close a factory in ten months and, at that time, terminate the
employment of all of the remaining employees at the factory. Because the entity needs the expertise of the employees at the
factory to complete some contracts, it announces a plan of termination as follows.

Each employee who stays and renders service until the closure of the factory will receive on the termination date a cash
payment of P30,000. Employees leaving before closure of the factory will receive P10, 000.

There are 120 employees at the factory. At the time of announcing the plan, the entity expects 20 of them to leave before
closure.

41. The entity will recognize a liability of how much for the termination benefits provided in accordance with the employee
benefit plan at the earlier of when the pl an of termination is announced and when the entity recognizes the restructuri ng
costs associated with the closure of the factory?
a. P -0- b. P 1,200,000 c. P3,200,000 d. P 2,000,000

42. The enti ty will recognize an expense of how much each month duri ng the service period of ten months rel ated to short
term employee benefits?
a. P -0- b. P320,000 c. P 200,000 d. P120,000

43. On July 1, 2011 DEF Corp. acquired 60,000 shares of the 200,000 shares outstanding of ZYX Inc. at P25 per share. The
company incurred P2 transaction per share. The book value of ZYX Inc.s net assets on this date amounted to P5M. The fair
value of one of its identifiable intangible with a 5 year remaining life higher than book value by P50,000 while its
Equipment having a remaini ng life of 8 years had a fair value P160,000 higher than book value. All other identifiable
assets had fai r value approximati ng their book values.

ZYX reported total net income in 2011 at P800,000 and distributed dividends at year end at P300,000. Fair value of shares
on this date was at P30 per share while cost to sell is at P2 share.

ZYX reported total comprehensive income in 2012 at P1,250,000 which is net of an foreign translation loss amounti ng to
P150,000. It also distributed dividends at year end at P500,000. Fair value of shares on this date was at P34 per share while
cost to sell remained P2 per share.

Assume that on January 1, 2013, DEF Corp. sold 24,000 ZYX shares P32/share. What is the net effect of this transaction i n the
companys comprehensive income in calendar year (CY) 2013?
a. P 5,400 increase b. P 40,500 increase c. P 85,500 increase d. P 130,500 increase

44. ABC Company has 100,000 ordinary shares in issue. It also has 50,000 convertible bonds (face value of each bond is P1) in
issue, which may be converted into ordinary shares on the basis of one share for every five bonds. The i nterest coupon on
the bond is 8%, and the tax rate in force is 25%. It has also issued share options with respect to 12,000 shares, which are
exercisable at a price of P40. The average fair value of ABC Companys shares during the year was P60. The converti ble
bonds and options were outstanding since the beginning of the year. Basic earnings per share for the year are calculated to
be P3.97.

What is the number of shares used to compute for diluted earnings per share for ABC Company?
e. P 114,000 f. P100,000 g. P122,000 h. Not applicable

45. On January 1, 2013, AJ Company purchased several pieces of inventory for P20,000. However, SC Company, the seller,
agreed to wait for exactly two years before receiving payment. Then, on December 31, 2013, AJ Company sells all of this
inventory to BY Corporation for P30,000. AJ Company agrees to wait for exactly three years to receive the P30,000
payment. A reasonable i nterest rate for these transactions is 8% although no separate cash i nterest is to be paid on ei ther
the purchase or the sale.

For the audi t of year ended December 31, 2013, the gross profit that AJ Company should recognize is
a. P10,000 b. P7,938 c. P6,668 d. P3,815

Use the following information for the next two items

On January 1, 2011 JLO Company acqui red a trademark for P500,000. The trademark has an indefinite useful life. The net
recoverable amount of the trademark on December 31, 2011 was 480,000.

46. The amount of expense included in JLO Companys 2011 fi nancial statement is
a. P -0- b. P20,000 c. P25,000 d. P50,000

47. The amount of expense to be reported in JLO Companys 2011 financial statements, assuming that JLO Company does not
have public accountability and applied the IFRS for SMEs for reporting purposes
a. P -0- b. P20,000 c. P25,000 d. P50,000
48. A car rental company acquired vehicles for a total cost of P15,000,000 with the i ntention of holding them as rental cars for a
limited period and then selling them. The car rental company, in the ordinary course of business, routinely sells vehicles
acquired for car rental. The estimated life of the vehicles acquired was 8 years and after 6 years, the said vehicles will be
available for sale. The proceeds from the sale of the vehicles was P10,000, 000 which happened at the end of the 7th year.
What is the amount of gai n from the subsequent sal e of these vehicles recognized in the 7th year applying PAS 16?
a. P -0- b. P 6,250,000 c. P 8,125,000 d. P 10,000,000

49. Ian Co. is calculating earni ngs per share amounts for inclusion in the Ian's annual report to shareholders. Ian has obtained
the following information from the controller's office as well as shareholder services:
Net income from January 1 to December 31 P125,000
Number of outstandi ng shares:
January 1 to March 31 15,000
April 1 to May 31 12,500
June 1 to December 31 17,000

In addition, Ian has issued 10,000 incentive stock options with an exercise price of P30 to its employees and a year-end
market price of P25 per share. Ian Company's diluted earnings per share for the year ended December 31 is
a. 4.63 b. 4.85 c. 7.35 d. 7.94

50. A lessee is required to pay a refundable deposit of P100,000 to the lessor at the inception of an operating lease for whi ch no
interest is receivable. The fixed lease term is 10 years. The market interest rate is 5% (i.e., that is the interest rate the lessor
would have to pay if he borrowed P100,000 for a 10 year term from a third party). The date of i nception is February 1, 2013.
Assuming the annual lease payment is P60,000, determine the net amount recognized in l essees profit or loss as of
December 31, 2014 applying PAS 17 Leases and financial instruments standards. (Round PV factors to 4 decimal places)
a. P 52,7186 decrease b. P 55,725 decrease c. P 60,651 decrease d. P 63,861 decrease

--END OF EXAMINATION--