St. Paul University Philippines
St. Paul University Philippines
Name:_____________________
[FAR]
On January 1, 2017, Panorama Company leased a building from a lessor with the following pertinent information:
On December 31, 2017, Ames Company leased equipment for 10 years. The entity contracted to pay P400,000 annual
rent on December 31, 2017, and on December 31 of each of the next nine years.
The lease liability was recorded at P2,700,000 on December 31, 2017, before the first payment.
The equipment’s useful life is 12 years, and the interest rate implicit in the lease is 10%. The entity used the straight line
method to depreciate all equipment.
5. In recording the December 31, 2018 payment, by what amount should be the lease liability be reduced?
a. 270,000 c. 225,000
b. 230,000 d. 170,000
6. What is the interest expense for 2018?
a. 270,000 c. 200,000
b. 230,000 d. 0
GE Company, lessor, leased an equipment under an operating lease. The lease term is 5 years and the lease payments
are made in advance on January 1 of each year as shown in the following schedule:
8. On December 31, 2108, what amount should be recognized as accrued rent receivable?
a. 700,000 c. 400,000
b. 800,000 d. 0
Guiller Company leased equipment to Faye Company on Januaru 1, 2017. The lease is for an eight-year period expiring
December 31, 2024. The first of eight equal annual payments of P900,000 was made on January 1, 2017.
The entity had purchased the equipment for P4,800,000. The lease is appropriately accounted for as a sales type lease.
The present value on January 1, 2017 of all rent payments over the lease term discounted at a 10% interest rate was
P5,280,000.
Camia Company is in the business of leasing new sophisticated equipment. As lessor, the entity expects a 12% return. At
the end of the lease term, the equipment will revert to Camia Company.
On January 1, 2017, an equipment is leased to another entity under a direct financing lease.
On January 1, 2017, Shaira Company sold a building and immediately leased it back. The following data pertain to the
sale and leaseback transaction:
c. 717,780 d. 400,000
18. What is the annual rental income of the buyer-lessor?
a. 600,000 c. 270,728
b. 329,272 d. 300,000
[TAXATION]
19. Regardless of the relationship to the done, donations made by the donor are subject to the scheduler rates of
2% to 15%, if such donation was made prior to the effectivity of the TRAIN Law. A relative by consanguinity in
the collateral line within the fourth degree of relationship is not a stranger.
a. Only the first statement is correct c. Both statements are correct
b. Only the second statement is correct d. Both statements are correct
20. For donations made prior to 2018, where the done or beneficiary is a stranger, the tax payable by the donor
shall be
a. 30% of the gross gifts
b. 30% of the net gifts
c. Based on the graduated rates with the first P100,000 net gif exempt or 30%
d. Based on the graduated rates with the first P100,000 net gift exempt or 30% of the net gifts whichever is
higher.
[MAS]
The Ladies Belt Division of Leather Goods Corp. is classified as an investment center. For the month of November, it had
the following operating statistics:
Sales 675,000
Cost of goods sold 400,000
Operating expenses 237,500
Total assets 750,000
Weighted-average cost of capital 4%
25. What is the Ladies’ Belt division’s return on investment?
a. 4% c. 7.5%
b. 5% d. 3%
Page 4 of 4
[AFAR]
27. Which of the following items will not affect the acquisition year’s consolidated net income in a business
combination?
a. Stock issuance cost
b. Direct cost of business combination
c. Gain on bargain purchase
d. Amortization of difference between fair value and carrying amount of net assets of acquire
28. Under IAS 27, how should the parent entity account for an investment in subsidiary in the separate financial
statements?
a. Equity method
b. Fair value method
c. Cost method
d. Equity method, fair value, or cost method
[AUDITING]
29. The most important output control is
a. Distribution control, which assures that only authorized personnel receive the reports generated by the
system
b. Review of the data for reasonableness by someone who knows what the output should look like
c. Control totals, which are used to verify that the computer’s results are correct.
d. Logic tests, which verify that no mistakes were made in processing
30. Which of the following is not an application control?
a. Processing controls
b. Hardware controls
c. Output controls
d. Input controls
END