Reference no: EM132633682

The following information were made available to you by Katz Corp. in line with your audit of its financial statements as of and for the period ended December 31, 2016:

Sales                                                                                 P53,000,000
Purchases                                                                              32,000,000
Sales discount                                                                              2,000,000
Purchase discount                                                                                1,200,000
Sales returns and allowance                                                              1,000,000
Purchase returns and allowance                                                            800,000
Correction of merchandise inventory, beginning error, net of
Income tax - credit                                                                              400,000
Merchandise Inventory, January 1 (adjusted)                                            3,400,000
Merchandise Inventory, December 31                                                        3,500,000
Distribution costs                                                                                  5,000,000
General and administrative expenses                                                          4,000,000
Interest expense                                                                                        2,000,000
Gain on early extinguishment of long-term debt                                                        500,000
Foreign translation adjustment, net of income tax - credit                                  250,000
Revaluation surplus for the period, net of income tax                                        700,000
Unrealized loss on financial assets at fair value through other
comprehensive income or losses, net of income tax                                            550,000
Investment income - equity method                                                                       3,000,000
Gain on expropriation of asset                                                                               2,000,000
Income tax expense                                                                                         5,000,000
Proceeds from sale of land with a carrying value of P5,300,000                               4,800,000
Dividends declared                                                                                            1,300,000
Accumulated profits, January 1, 2016                                                                   4,200,000

Question 1: Two entities are not necessarily related parties if

A. one entity has significant influence over the other C. the entities share joint control over a third entity
B. one entity has control over the other D. one entity has joint control over the other

Question 2: Related party transactions are not required to be disclosed when

A. the only related party transactions are between the reporting entity and its owner-manager
B. all related party transactions are at arm's length, ie the transaction takes place at same price, terms and conditions that apply to transactions between willing buyers and willing sellers in an active market
C. a price is not charged in all related party transactions
D. none of the above

Question 3: Entity A has significant influence over entity B. Entity B has significant influence over entity C. Assuming entity A does not have significant influence in entity C. From entity A's perspective

A. entity B is a related party (but entity C is not a related party)
B. entity C is a related party (but entity B is not a related party)
C. entities B and C are both related parties
D. Neither entity B nor entity C is a related party

Question 4: Entity A has significant influence over entity B. Entity B has significant influence over entity C. From entity C's perspective

A. entity A is a related party (but entity B is not a related party)
B. entity B is a related party (but entity A is not a related party)
C. entities A and B are both related parties
D. Neither entity A nor entity B is a related party

Question 5: Entity A has control over entity B. Entity B has control over entity C.

A. From entity A's perspective, entities B and C are both related parties
B. From entity B's perspective, entities A and C are both related parties
C. From entity C's perspective, entities A and B are both related parties
D. All of the above are true