Transit, Inc. – Accounting Question & Answers
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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? EASYP0 million c. P0.2 million P0.1 million d. P0.4 million 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 EASYP26.54 c. P26.63P26.60 d. P26.75A hedge of the exposure to changes in fair value of a recognized asset or liability or an unrecognized firm commitment, is classified as a EASYForeign currency hedgeFair value hedgeCash Flow hedgeUnderlyingThese 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”. EASYGroup financial statementsSeparate financial statementsGeneral purpose financial statementsConsolidated financial statementsCertain 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 100,000 110,000Prepaid Insurance 50,000 55,000
Goodwill 80,000 85,000 P430,000 P470,000This subsidiary’s functional currency is a foreign currency. What total amount Rose’s balance sheet include for the preceding items? EASYP430,000 b. P435,000 c. P440,000 d. P450,000The 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? EASYNon-current assets Retained EarningsIncrease by P300,000 Increase by P195,000Reduce by P40,000 Reduce by P26,000Reduce by P40,000 Reduce by P40,000Increase by P300,000 Increase by P300,000An 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? EASYCost of plant P2 million, exchange loss P0.5 million, trade payable P1.5 millionCost of plant P1.5 million, exchange loss P0.6 million, trade payable P2 millionCost of plant P1.5 million, exchange loss P0.5 million, trade payable P2 millionCost of plant P2 million, exchange loss P0.5 million, trade payable P2 millionProperty 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? AVERAGE2o million baht b. 1.2 million baht c. 80 million baht d. 4.808 million bahtPost 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? AVERAGEP-0- b. P10,000 c. P15,000 d. P25,000On 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 50,000Accumulated Depreciation 18,000 Truck 53,000