Reference no: EM132947857

Question -

Q1. Consider a firm with an EBIT of P552,000. The firm finances its assets with P1,020,000 debt (costing 5.7 percent) and 202,000 shares of stock selling at P11.00 per share. The firm is considering increasing its debt by P900,000, using the proceeds to buy back 77,000 shares of stock. The firm is in the 40 percent tax bracket. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at P552,000. Calculate the EPS after the change in capital structure and indicate changes in EPS.

Q2. On January 1, 2021, ABC Co. purchased 50,000 units at P100 per unit. During 2021, the entity sold 40,000 units at P180 per unit. The entity paid P700,000 for operating expenses. The current replacement cost of the inventory on December 31, 2021 is P150 per unit. What is the net income under current cost accounting for the year 2021?

Q3. ABC Company acquired an equipment on January 1, 2020 for P5,000,000. Depreciation is computed using the straight-line method. The estimated useful life of the equipment is five years with no residual value. A specific price index applicable to the equipment was 150 on January 1, 2020 and 225 on December 31, 2020. What is the unrealized holding gain on the equipment to be reported in 2020?

Q4. A property was purchased on December 31, 2016 for 20 million pesos. The general price index in the country was 60.1 on that date. On December 31, 2018, the general price index had risen to 240.4. If the entity operates in a hyperinflationary economy, what would be the carrying amount in the financial statements of the property after the restatement?