SMEs MODULE ACTIVITIES

PROBLEMS

Problem 24-1 Multiple choice (IFRS)

1. D

2. A

3. D

4. D

Problem 24-2 (Philippine SEC)

1. D

2. D

3. A

4. C

5. A

Problem 24-3 MCQ

1. B

2. C

3. C

4. B

CH.25 SMEs – FINANCIAL STATEMENTS

PROBLEMS

Problem 25-1 (IFRS)

 SME

Statement of Financial Position

As of December 31, 2020

ASSETS
Non-current Assets
Property, plant and equipment 3,520,000
Investment property 2,500,000
Total non-current assets 6,020,000
Current Assets
Inventory 1,180,000
Accounts receivable 1,700,000
Cash and cash equivalents 230,000
Total current assets 3,110,000
TOTAL ASSETS 9,130,000
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 1,500,000
Retained earnings 2,690,000
Non-controlling interest 730,000
TOTAL EQUITY 4,920,000
Non-current liabilities
Long-term debt 1,800,000
Environmental restoration provision 280,000
Total non-current liabilities 2,080,000
Current Liabilities
Trade payables 250,000
Accrued payables 200,000
Current portion of the long-term debt 500,000
Interest accrued on long-term debt 230,000
Warranty provision 400,000
Provision for vacation leave 450,000
Dividends payable 100,000
Total current liabilities 2,130,000
TOTAL LIABILITIES 4,210,000
TOTAL LIABILITIES AND EQUITY 9,130,000
Problem 25-2 (IFRS)

SME

Statement of Financial Position

As of December 31,2020

ASSETS
Non-current assets
Property, plant and equipment:
Vacant land 320,000
Land and buildings 960,000
Plant 450,000
Equipment 830,000
Investment property 650,000
Intangible assets 1,520,000
Investment in associates 560,000
Deferred tax asset 30,000
Total non-current assets 5,320,000
Current assets
Inventories 1,580,000
Trade and other receivables 120,000
Prepayments 50,000
Cash and cash equivalents 130,000
Total current assets 1,880,000
TOTAL ASSETS 7,200,000
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 2,500,000
Treasury shares (400,000)
Retained earnings 1,000,000
Other reserves 500,000
Non-controlling interest 300,000
TOTAL EQUITY 3,900,000
Non-current liabilities
Interest-bearing loans and borrowings- 950,000
noncurrent
Government grants – noncurrent 100,000
Deferred revenue 10,000
Other long-term liabilities 210,000
Deferred tax liability 50,000
Long-term provisions 180,000
Total non-current liabilities 1,500,000
Current liabilities
Trade and other payables 960,000
Interest-bearing loans and borrowings 500,000
Government grants – current 130,000
Deferred revenue – current 60,000
Income tax payable 25,000
Short-term provisions 125,000
Total Current liabilities 1,800,000
TOTAL LIABILITIES 3,300,000
TOTAL LIABILITIES AND EQUITY 7,200,000

Problem 25-3 (IFRS)

SME

Statement of Income

For the year ended December 31, 2020

Revenue 6,000,000
Less: Cost of goods sold (3,700,000)
Gross margin 2,3000,000
Other income 100,000
Total income 2,400,000
Less: Expenses
Employee benefit expense 800,000
Depreciation and amortization expense 400,000
Other expenses 80,000
Finance cost 120,000
Income before income tax 1,000,000
Less: Income tax expense 300,00
Net Income 700,000
 SME

Statement of Retained Earnings

For the year ended December 31, 2020

Retained earnings – January 2020 1,400,000

Correction of error due to under depreciation (650,000)
for the year ended December 31, 2018
Corrected beginning balance 750,000
Add: Net income 700,000
Less: Dividends paid (150,000)
Retained earnings – December 2020 1,300,000

Problem 25-4 (IFRS)

1. C

COGS = P1,100,000 + 130,000 = P1,230,000

P5,500,000 + 100,000 – 1,230,000 – 2,260,000 – 520,000 – 380,000 – 150,000 – 60,000 –
300,000 = 700,000

2. D
10,000 – 4,000 = 4,000
3. D
700,000 + 4,000 = 704,000

Problem 25-5 (IFRS)

1. C
6,700,000 + 120,000 – 5,100,000 + 25,000 + 60,000 = 1,805,000
2. A
1,805,000 – 175,000 – 810,000 – 70,000 – 30,000 – 20,000 – 5,000 – 260,000 = 435,000
3. B
2,100,000 + 435,000 – 150,000 = 2,385,000

Problem 25-6 Multiple choice (IFRS)

1. D
2. A
3. D
4. A
5. A
 Problem 25-7 Multiple choice (IFRS)

1. D
2. D
3. A
4. D
5. D

Problem 25-8 Multiple choice (IFRS)

1. B
2. D
3. C
4. A

Problem 25-9 Multiple choice (IAA)

1. B
2. B
3. B
4. C
5. B

CH. 26

Problem 26-1

1. A

150 units X P500 = P75,000 X 0.70 = P52,500

Problem 26-2

1. D

P1,000,000 – 50,000 = P950,000 X 0.909 = P863,550 + 20,000 = P883,550

Problem 26-3
Journal entries:
Cost model:
ENTITY B
Investment in associate 1,010,000
Cash 1,010,000

Cash 25,000
Dividend income 25,000

ENTITY C
Investment in associate 1,515,000
Cash 1,515,000

Cash 200,000
Dividend income 200,000

ENTITY D
Investment in associate 2,828,000
Cash 2,828,000

Impairment loss 1,403,000

Investment in associate 1,403,000

Equity method:
ENTITY B
Investment in associate 1,010,000
Cash 1,010,000

Cash 25,000
Investment in associate 25,000

Investment in associate 125,000

Investment income 125,000

ENTITY C
Investment in associate 1,515,000
Cash 1,515,000
Cash 200,000
Investment in associate 200,000

Investment in associate 450,000

Investment income 450,000

ENTITY D
Investment in associate 2,828,000
Cash 2,828,000

Investment income 500,000

Investment in associate 500,000

Impairment loss 903,000

Investment in associate 903,000

Fair value model:

ENTITY B
Financial asset – FVPL 1,000,000
Cash 1,000,000

Cash 25,000
Dividend income 25,000

Financial asset - FVPL 300,000

Unrealized gain - FVPL 300,000

ENTITY C
Financial asset – FVPL 1,500,000
Cash 1,500,000

Cash 200,000
Dividend income 200,000

Financial asset – FVPL 1,400,000

Unrealized gain 1,400,000

ENTITY D
Financial asset – FVPL 2,800,000
Cash 2,800,000

Unrealized gain – FVPL 1,300,000

Financial asset 1,300,000

Problem 26-4
1. D
P1,020,000 – P40,000 = P980,000
2. A
P1,020,000
Problem 26-5
1. B
P15,000,000 – P13,250,000 = P1,750,000 – (P2,500,000 X 0.30) = P1,000,000
2. C
P20,000,000 X 30% = P6,000,000
P750,000/5 = P150,000
P1,000,000/10 = P100,000
P6,000,000 – 150,000 – 100,000 = P5,750,000
3. A
P7,500,000 X 30% = P2,250,000
P15,000,000 + P5,750,000 – 2,250,000 = P18,500,000

Problem 26-6
Journal entries:
Jan 1, 2020 Investment property 180,000,000
PPE (land and 20,000,000
building)
Cash 200,000,000

Investment property 18,000,000

PPE (land and 2,000,000
buildings)
Cash 20,000,000

Investment property 900,000

PPE 100,000
Cash 1,000,000

Prepaid expenses 100,000

Cash 100,000
 Profit or Loss- 500,000
Advertising campaign
(Operating expenses)
Cash 500,000

Profit or loss 200,000

Cash 200,000

June 30, 2020 Prepaid taxes 200,000

Cash 200,000

December 2020 Profit or loss - Tax 100,000

expense
Prepaid taxes 100,000

Profit or loss - Tax 100,000

expense
Prepaid taxes 100,000

December 2020 Repairs and 120,000

maintenance
(Operating expenses)
Cash 120,000

Cash 270,000
Refundable 270,000
deposits – liability

Cash 1,550,000
Rent income 1,550,000

Unearned income 50,000

Rent income 50,000

Depreciation expense 353,600

- building
Accumulated 353,600
depreciation

Investment property 26,100,000

Gain from change 26,100,000
in fair value
26-7

1. B
2. A
3. A
4. A
5. C

26-8

1. D
2. B
3. B
4. A
5. D
6. A
7. C
8. B
9. C
10. C

26-9

1. D
2. C
3. D
4. D
5. D
6. B
7. D
8. B

26-10

1. D
2. C
3. B
4. D
5. D
CH. 27

Problem 27-1

Journal entries:
January 1, 2020 Land and buildings 50,000,000
Cash 50,000,000

Land and buildings 1,000,000

Cash 1,000,000

Land and buildings 200,000

Cash 200,000

Prepaid taxes 100,000

Cash 100,000

June 30, 2020 Prepaid taxes 200,000

Cash 200,000

December 31, 2020 Expense - Tax 100,000

Prepaid taxes 100,000

Expense - Tax 100,000

Prepaid taxes 100,000

Operating expenses 250,000

Cash 250,000

Depreciation expense 974,000

- building
Accumulated 974,000
depreciation

Problem 27-2
January 1, 2020 Cash 1,000,000
Liability 1,000,000

PPE 2,100,000
Cash 2,100,000
April 1, 2021 Liability 600,000
Government grant- 600,000
income

December 31, 2021 Depreciation expense 78,750

Accumulated 78,750
depreciation

April 1, 2022 Liability 100,000

Government grant - 100,000
income

December 31, 2022 Depreciation expense 105,000

Accumulated 105,000
depreciation

Problem 27-3
January 1, 2020 Trademark 3,000,000
Cash 3,000,000

December 31, 2020 Amortization expense 300,000

Accumulated 300,000
amortization

December 31, 2021 Amortization expense 300,000

Accumulated 300,000
depreciation

December 31, 2022 Amortization expense 300,000

Accumulated 300,000
depreciation

December 31, 2003 Amortization expense 700,000

Accumulated 700,000
depreciation

Impairment loss 900,000

Trademark 900,000

Problem 27-4
 1. A – 30,000 + 90,000 = P120,000
2. B – 120,000/5 = 24,000 X ½ = P12,000
3. C – 15,000 + 10,000 + 25,000 + 12,000 = P62,000

27-5

1. C
2. A
3. C
4. C

27-6

1. A
2. D
3. A
4. B
5. D

27-7

1. B
2. B
3. D
4. B
5. B

27-8

1. C
2. B
3. A
4. D
5. D

CH.28
Problem 28-1
D
P10,000,000 X 0.10 X 0.03 = P30,000
P10,000,000 X 0.90 X 0.02 = P180,000
P210,000 X 1.06 = P222,600
P222,600 X 0.50 = P111,300
P222,600 – P111,300 X 0.95238 = P106,000

Problem 28-2
D
P200,000 X 0.20 X 0.70 = P28,000
P100,000 X 0.80 X 0.70 = P56,000
P28,000 + P56,000 = P84,000 X 1.07 = P89,880
D
P89,880 X 0.95 = P85,386

28-3

1. A
2. D
3. D
4. B
5. A

28-4

1. D
2. D
3. C
4. D
5. A

28-5

1. A
2. B
3. B
4. B
5. B
28-6

1. D
2. A
3. A
4. C
5. B
6. C
7. A
8. D
9. B
10. A

Problem 28-7
1. D
2. C
3. C
4. D

CH.29

Problem 29-1
1. A
2. C
3. B
4. C
5. B

Problem 29-2
1. B
2. C
3. D
4. A
5. C
6. C
7. D
8. D
9. C
10. C

Problem 29-3
1. D
2. D
3. B
4. C
5. A
6. D
7. D
8. D
9. C
10. B

CH.30

Problem 30-1
1. D
2. D
3. C
4. C
5. C

Problem 30-2
1. D
2. A
3. C
4. A
5. A

Problem 30-3
1. C
2. C
3. D
4.C
5. D
6. A
7. A
8. A
9. D
10. A

Problem 30-4
1. B
2. A
3. C
4. C
5. A
6. C
7. A
8. A
9. C
10. B