Reference no: EM132787626

Questions -

Q1) For interim reporting, a gain on disposal of land occurring in the third quarter is

A. Recognized and allocated over the quarters

B. Recognized and allocated over four quarters

C. Recognized immediately in the third quarter

D. Deferred until the annual reporting

Q2) If an entity prepares interim financial statements, which statements are required?

A. Statement of financial position, income statement and statement of comprehensive income.

B. Statement of financial position, income statement, statement of cash flows and statement of changes in equity.

C. Income statement, statement of comprehensive income and statement of cash flows

D. Statement of financial position, statement of comprehensive income, statement of cash flows and statement of changes in equity.

Q3) The following statements are based on PAS 34 - "Interim Financial Reporting":

Statement 1: Interim financial report means a financial report containing either a complete set of financial statements or a set of condensed financial statements for an interim period

Statement 2: If an entity publishes a complete set of financial statements in its interim financial report, the form and content of those statements shall conform to the requirements of PAS 1 for a complete set of financial statements.

Statement 3: An entity shall apply difference accounting policies in its interim financial statements and in its annual financial statements.

A. Only statement 1 is true

B. Only statement 2 is true

C. Only statement 3 is false

D. All of the statements are true

Q4) Which one among the following statements is not a characteristic of the integral view of presenting interim financial statements?

A. It is the more acceptable view.

B. Each interim period is recognized as a separate accounting period, regardless of the length of time involved.

C. Each interim period is a part of the annual period.

D. The revenues and expenses for the annual period are allocated among interim periods on

Q5) Which of the following is not true regarding standards for interim reporting?

A. Declines in inventory value should be deferred to future interim periods.

B. Use of the gross margin method for computing cost of goods sold must be disclosed.

C. Costs and expenses not directly associated with interim revenue must be allocated to interim periods on a reasonable basis.

D. Gains and losses that arise in an interim period should be recognized in the interim period in which they arise if they would not normally be deferred at year-end.

Q6) Crippling Corporation had the following transactions during the quarter ended March 31, 2016:

Loss from typhoon damage 210,000

Payment of fire insurance premium for calendar year 2016 300,000

What amount should be included in Crippling's income statement for the quarter ended March 31, 2016?

Use the following information for the next two (2) questions:

On February 1, 2019, Fowl Company purchased machinery for P2,400,000 with a 10-year useful life and no residual value. On March 20, 2019, Fowl incurred repairs and maintenance cost to the equipment for P150,000.

Fowl used the percentage of sales method is estimating doubtful accounts. Doubtful accounts are estimated to be 6% of sales in each quarter. In 2019, Fowl followed this procedure for the first three quarters. However, in the fourth quarter, Fowl determined that doubtful accounts expense for the year showed be P550,000 based on aging of accounts receivable. Following the calendar year, sales per quarter are: first quarter - P1,500,000, second quarter - P1,000,000, third quarter - P2,000,000, fourth quarter - P1,600,000.

Q7) What total amount of expenses should be recognized in the first quarter?

A. 190,000

B. 240,000

C. 280,000

D. 300,000

Q8) What total amount of expenses should be recognized in the fourth quarter?

A. 340,000

B. 280,000

C. 156,000

D. 197,500

Q9) Beerus Company prepared quarterly interim financial statements and used the percentage of credit sales method in computing doubtful accounts. The credit sales for the first, second, third and fourth quarters totaled P2,000,000, P1,500,000, P3,500,000 and P4,000,000 respectively. The doubtful account percentages for the first, second, third and fourth quarters effective for the entire year are 2%, 2%, 4%, and 5% respectively. What amount of doubtful accounts expense should be recognized in the fourth quarter income statement?

A. 550,000

B. 270,000

C. 200,000

D. 137,500

Q10) Ascension Company has estimated that total depreciation expense for the year ending December 31, 2014 will amount to P2,000,000, and the 2014 year-end bonuses to employees will total P4,000,000. Ascension paid P500,000 property taxes assessed for the year 2014. On June 30, 2014, Ascension incurred a permanent inventory loss from market decline of P800,000 and extraordinary loss of P200,000. In the interim income statement for the six months ended June 30, 2014, what total amount expense relating to these items should be reported?

A. 4,250,000

B. 3,850,000

C. 3,750,000

D. 3,450,000

Q11) Prinsipe ng Saiyan Company, a calendar-year corporation, has the following income before income tax provision and estimated effective annual income tax rates for the first three quarters of the current year:

Quarter Income before income tax Estimated effective annual tax rate at end of quarter

First 60,000 40%

Second 70,000 40%

Third 40,000 45%

Prinsipeng Saiyan's income tax provision in its interim income statement for the third quarter should be

A. 76,500

B. 25,500

C. 24,500

D. 18,000

Q12) On January 1, Lessor Company signed a 1-year rental with quarterly payments of P100,000 due at the end of each quarter. In addition, the lessee must pay contingent rent of 5% of all sales in excess of P10,000,000. The contingent rent is paid in one payment on December 31. The same lessee has used the building for the past 5 years, and in each of those years the lessee reached the contingent rent threshold of P10,000,000 in sales. Sales of the lessee for the first two quarters are as follows:

Quarter ended Amount

March 31 P3,200,000

June 30 3,000,000

The rent expense should be reflected in Lessee's quarterly income statement for the three months ended June 30 is

A. 100,000

B. 125,000

C. 130,000

D. 160,000

Q13) Cosmic Cleave Company has historically reported bad debts expense of 5% of sales in each quarter. For the current year, the company allowed the same procedure in the three quarters of the year. However, in the fourth quarter, the company, in consultation with its auditor, determined that bed-debt expense for the year should be P4,500,000. Sales in each quarter of the year were as follows: first quarter, P20,000,000; second quarter, P15,000,000; third quarter, P25,000,000; fourth quarter, P40,000,000. How much bad debt expense should be recognized for the fourth quarter?

A. 1,500,000

B. 2,000,000

C. 3,000,000

D. 4,000,000

Q14) Sharac Company prepares quarterly interim financial reports. The company sells it products through sales agents who are paid a fixed monthly salary and a commission of 5% that is paid at year-end. Sales for the first quarter were P20,000,000. However, in the second quarter, the employee's union negotiated that agent's commissions be increased to 10% and be applied as of the beginning of the current year. Sales in the second quarter were P25,000,000. What would be the sales commission expense of Sharac Company charged in the second quarter's interim financial statements?

A. 1,000,000

B. 2,000,000

C. 2,500,000

D. 3,500,000

Q15) Chrysalis Company's P10,000,000 net income for the quarter ended September 30, 2016 included the following after tax items:

A P1,200,000 gain realized on April 30, 2016 was allocated equally to the second, third and fourth quarters of 2016.

A P3,000,000 cumulative loss resulting from a change in inventory valuation method recognized on August 2, 2016.

In addition, Chrysalis paid P600,000 on February 1, 2016, for 2016 calendar-year property tax. Of this amount, P150,000 was allocated to the third quarter of 2016. For the quarter ended September 30, 2016, Chrysalis should report net income of

A. 12,750,000

B. 12,600,000

C. 11,800,000

D. 9,600,000

Q16) The following transactions for Brutavious Enterprises during the second quarter of 2014:

Sales amounted to P5,000,000 and related cost of goods sold was P3,000,000

Selling expenses for the given period was P250,000.

Depreciation is usually recorded by Brutavious at annual amount of P1,200,000.

Real property taxes for the year in the amount of P600,000 were paid on April 1, 2014.

An inventory loss arising from a temporary market decline of P400,000 had occurred on June 30, 2014.

Ignoring income taxes, net income for the second quarter ending June 30, 2014 should be

A. 750,000

B. 900,000

C. 1,150,000

D. 1,300,000

Q17) Shatterstorm Company's P6,000,000 net income for the quarter ended September 30, 2017, included the following after-tax items:

A P900,000 gain realized in May 2017 was allocated equally to the second, third and fourth quarters of 2017.

A P500,000 cumulative effect loss resulting from a change in inventory valuation method was recognized on August 31, 2017.

In addition, Shatterstorm paid P200,000 on February 1, 2017, for 2017 calendar-year real property tax. Of this amount, P50,000 was allocated to the third quarter of 2017.

What is the net income for the quarter ended September 30, 2017?

A. 6,200,000

B. 6,500,000

C. 6,150,000

D. 5,700,000