Transit, Inc. - Accounting Question & Answers

1. The SCOUTERS acquired 70% of the net assets of the Bleachers for P1.1 million. The assets of The Bleachers have a book value of P1.2 million and a fair market value of P1.3 million; its liabilities are P0.2 million.

What is the amount of ”excess of cost over book value of subsidiary” on the consolidated balance sheet?    EASY

1. P0 million                        c. P0.2 million
2. P0.1 million                        d. P0.4 million

1. TRANSIT, Inc. sold to a US customer, CIF US Port, merchandise worth US$10,000. As of TRANSIT, Inc.’s balance sheet cut-off date on June 30, the exchange rate was P26.60. On August 15, payment was received in the form of a bank transfer whereby TRANSIT, Inc.’s account was credited the amount of P265,400 before any charges. At the same time of acceptance of the merchandise in San Francisco, the exchange rate was P26.75. The appropriate exchange rate for the recognition of the sales was  EASY

1. P26.54                        c. P26.63
2. P26.60                        d. P26.75

1. A hedge of the exposure to changes in fair value of a recognized asset or liability or an unrecognized firm commitment, is classified as a  EASY

1. Foreign currency hedge
2. Fair value hedge
3. Cash Flow hedge
4. Underlying

1. These are the” financial statements of a group in which assets, liabilities, equity, income, expenses and cash flows of the patent and its subsidiaries are presented as those of a single economic entity”. EASY

1. Group financial statements
2. Separate financial statements
3. General purpose financial statements
4. Consolidated financial statements

1. Certain balance sheet accounts in a foreign subsidiary of Rose Co. at December 31, 2017, have been stated into Philippine pesos as follows:

Stated at

                                                        Current Rates                        Historical Rates

          Accounts Receivable, short term                P200,000                        P220,000

        Accounts Receivable, long term                        100,000                        110,000

Prepaid Insurance                                50,000                                55,000

Goodwill                                        80,000                                85,000

                                                P430,000                        P470,000

This subsidiary’s functional currency is a foreign currency. What total amount Rose’s balance sheet include for the preceding items? EASY

1. P430,000                b. P435,000                c. P440,000                d. P450,000

1. The Snipes Company owns 65% of the Genie Co. on the last day of the accounting period, Genie sold to Snipes a non-current asset for P200,000. The asset originally cost P500,000 and at the end of the reporting period its carrying amount in Genie’s books was P160,000. The Group’s consolidated statement of financial position has been drafted without any adjustments in relation to this non-current asset. Under PAS27 Consolidated and separate financial statements, what adjustments should be made to the consolidated statement of financial position figures for the non-current assets and retained earnings? EASY

Non-current assets                        Retained Earnings

1. Increase by P300,000                                Increase by P195,000
2. Reduce by P40,000                                        Reduce by P26,000
3. Reduce by P40,000                                        Reduce by P40,000
4. Increase by P300,000                                Increase by P300,000

1. An entity purchases plant from a foreign supplier for 3 million baht on January 31,2017, when the exchange rate was 2baht=P1. At the entity’s year-end of March 31,2017, the amount has not been paid. The closing rate was 1.5baht-P1. The entity’s functional currency is the peso. Which of the following statement is correct?  EASY

1. Cost of plant P2 million, exchange loss P0.5 million, trade payable P1.5 million
2. Cost of plant P1.5 million, exchange loss P0.6 million, trade payable P2 million
3. Cost of plant P1.5 million, exchange loss P0.5 million, trade payable P2 million
4. Cost of plant P2 million, exchange loss P0.5 million, trade payable P2 million

1. Property was purchased on December 31, 2018 for 20 million baht. The general price index in the country was 60.1 on that date. On December 31, 2020, the general price index has risen to 240.4. If the entity operates in a hyperinflation economy, what would be the carrying amount in the financial statements of the property after restatement?  AVERAGE

1. 2o million baht        b. 1.2 million baht        c. 80 million baht        d. 4.808 million baht

1. Post Inc. had a receivable from a foreign customer that is payable in the customer’s local currency. On December 31, 2010, Post correctly included this receivable for 200,000 local currency units (LCU) in its balance sheet at P110,000. When Post collected the receivable on February 15, 2011, the Philippine peso equivalent was P95,000. In Post’s 2011 consolidated income statement, how much should it report as a foreign exchange loss? AVERAGE

1. P-0-                b. P10,000        c. P15,000        d. P25,000

1. On Jan 1,2013, Shrimp Co purchased a delivery truck with an expected useful life of five years. On Jan 1, 2015, Shrimp sold the truck to Avocet Corp and recorded the following journal entry:

Cash                                50,000

Accumulated Depreciation        18,000

        Truck                                        53,000