FinAcc 3 Quizzes

Quiz #1
1. Interest Receipts can be computed by multiplying the Present Value by the

Nominal Rate
Correct answer: False
2. Interest Revenue can be computed by multiplying Face Amount by the Effective

Rate
3. The following data pertains to Rainbow Corporation’s investments in marketable

securities:
Market Value
Cost 12/ 31/ 20 12/31/19 12/31/18
FAFVPL P 150,000 P 160,000 P 155,000 P 100,000
FAFVOCI 150,000 150,000 130,000 126,000
What amount should Rainbow Corporation report as unrealized holding gain in

other comprehensive income on December 31, 2020?
Correct answer: 20,000
4. On January 1, 2017, Dumaguete Company purchased bonds with face amount of

P4,000,000 for P4,206,000. The business model in managing the financial asset
is to collect contractual cash flows that are solely payments of principal and
interest.
The bonds are quoted on 90 on December 31, 2017 and 95 on December 31,
2018.
What amount of unrealized gain/ (loss) should be reported in the income

statement in 2018?
Correct answer: 0
5. The following data pertains to Rainbow Corporation’s investments in marketable

securities:
Market Value
Cost 12/ 31/ 20 12/31/19 12/31/18
FAFVPL P 150,000 P 160,000 P 155,000 P 100,000
FAFVOCI 150,000 150,000 130,000 126,000
What amount should Rainbow Corporation report as unrealized holding loss in its
2018 Income statement?
6. On January 1, 2017, Pearl Company purchased as a long-term investment
P5,000,000 face value of Shaw Company’s 8% bonds for P4,562,000. The bonds
were purchased to yield 10% interest. The business model of Pearl Company is
to collect contractual cash flows only.
The bonds mature on January 1, 2022 and pay interest annually on December
31. The interest method of amortization is used.
What is the carrying amount of the bond investment on December 31, 2018
Correct answer: 4,680,000
7. In IFRS9, the straight- line method is the method of calculating the amortized
cost of a financial asset or a financial liability (or group of financial instruments)
and of allocating the interest income or expense over the relevant period.
8. Financial instrument is any contract which gives rise to both a financial asset of
one entity and a financial liability or equity instrument of another entity.
Correct answer: True
9. On January 1, 2017, Pearl Company purchased as a long-term investment

P5,000,000 face value of Shaw Company’s 8% bonds for P4,562,000. The bonds
were purchased to yield 10% interest. The business model of Pearl Company is
to collect contractual cash flows only.
The bonds mature on January 1, 2022 and pay interest annually on December
31. The interest method of amortization is used.
What is the interest income for 2018?

10. Other words for nominal rate are stated rate and market rate
11. Financial Instruments are short-term, highly liquid investments that are readily
convertible to known amounts of cash which are subject to an insignificant risk of
changes in value.
12. Equity instruments can be classified as FAAC

13. ABC Corporation purchased 6,000 trading securities of CNN for P10 each during
April 1, 2020. On August 1, 2020, CNN Corporation declared a 20% stock
dividend. The market value of the shares on December 31,2020 is P 9 per share.
What amount of dividend income will be reported in the 2020 income statement?
Correct answer: 0
14. The following information of By the Way, Inc. portfolio of marketable investments
for the year ended December 31, 2007
Cost Fair Value, 2007 Activities Fair Value,
Dec. 31, Purchase Sales Dec. 31,
2006 2007
FAAC P 100,000 P 95,000
Security –
ABC
FAFVPL – P150,000 P100,000 P155,000
DEF Shares
FAFVOCI – 170,000 175,000 160,000
Security
JKL
The unrealized holding gains or loss to be reported in 2007 Profit / Loss is

15. IFRS9 (Financial instruments) shall apply to those interests in subsidiaries,

associates and joint ventures
16. Debt instruments cannot be classified as FAAC

17. Debt instruments measured at FAFVPL do not need to be amortized

18. Other words for effective rate are yield rate and market rate
19. The following information of By the Way, Inc. portfolio of marketable investments
Cost Fair Value, 2007 Activities Fair Value,
Dec. 31, Purchase Sales Dec. 31,
2006 2007
FAAC P 100,000 P 95,000
Security –
ABC
FAFVPL – P150,000 P100,000 P155,000
DEF Shares
FAFVOCI – 170,000 175,000 P 160,000
Security
JKL
for the year ended December 31, 2007
Unrealized gain or loss to be reported at December 31, 2007, as a separate

component of stockholders‟ equity entitled “accumulated other comprehensive
income” is
Correct answer: (10,000)
20. Equity instruments can be classified as FAFVOCI

------------------------ THE END-------------------------

Quiz #2
1. It is an entity over which the investor has significant influence

Correct answer: Associate
2. On January 1, 2007, Sampaloc Co. bought 30% of the outstanding common

stock of Malate Corporation. Sampaloc Co. accounts for this investment by the
equity method. At the date of acquisition of the stock, Malate Corporation’s net
assets had a carrying value of P11,800,000. Assets with an average remaining
life of 5 years have a current market value that is P2,600,000 in excess of their
carrying values. The remaining difference between the purchase price and the
value of the underlying stockholders‟ equity cannot be attributed to any tangible
asset.
At the end of 2007, Malate Corporation reports net income of P3,600,000. During
the 2007, Malate Corporation declared and paid cash dividends of P400,000.
The balance of Sampaloc’s investment in Malate Corporation is P5, 922,000 at
December 31, 2007.
What is the total dividend income for 2007?

Correct answer: 0
3. On January 1 ,2014, Bart Company acquired a long-term investment for

P7,000,000, a 40% interest in Hall Company. Hall Company reported the
following net losses:
2014 5,000,000
2015 7,000,000
2016 12,000,000
How much should be reported as the carrying amount of investment in associate

at the end of December 31,2016?
Correct answer: 0
4. D Company Invested 30% of E Company's common shares. If E company sold

inventory to D Company, it is a called a downstream transaction
5. Cousin Company provided the following data for 2018
On September 1, Cousin received a P500,000 cash dividend from Ben Company

in which Cousins owns a 30% interest
On October 1, Cousin received a P 60,000 cash dividend from Hale company.

Cousin owns a 10% interest in Hale.
Cousin Company owns a 20% interest in Edgar company, which declared a

P2,000,000 cash dividend on November 15, 2018 payable on January 15, 2019.
How much is the dividend income for 2018?

6. Goodwill arising from an investment in associate is

Correct answer: Included in the carrying amount of the investment and not
amortized.

interest and also to sell the bonds in the open market.
The bonds mature on December 31, 2019 and pay 10% interest annually on
December 31 each year with 8% effective yield.
2018.
How much the ending balance of the bond investment on December 31, 2018?
8. What should happen when the financial statements of an associate are not
prepared at the same date as the financial statements of the investor?
Correct answer: The associate shall prepare financial statements for the
use of the investor at the same date as that of the investor.
9. Investment in Associate cannot be presented in the financial statements as a

negative amount
interest.
2018.
What amount of unrealized gain/ (loss) should be reported in the income

statement in 2018?
Correct answer: 0
11. MMM Company purchased 40% of BBB Company's Preferred Shares. MMM
company will account for this investment using IAS28.
2018.
What amount of unrealized loss should be reported as component of other

comprehensive income in 2017?
13. Which of the following statements best describes the term “significant influence”?
Correct answer: The power to participate in the financial and operating
policy decisions of an entity.
14. The excess of the investor’s share of the net fair value of the associate’s net
assets over the cost of the investment is
Correct answer: Included in the determination of the investor’s share of the
associate’s profit or loss in the period in which the investment is acquired.
15. Which statement is incorrect concerning the equity method?

Correct answer: Distributions received from the investee do not reduce the
carrying amount of the investment.
16. Significant influence is the power to control or joint control in the financial and
operating policy decisions of the investee
2018.
What amount of unrealized gain/ (loss) should be reported as component in other

comprehensive income in 2018?
18. Cousin Company provided the following data for 2017
On September 1, Cousin received a P500,000 cash dividend from Peregrine

Company in which Cousins owns a 30% interest
On October 1, Cousin received a P 60,000 cash dividend from Juan company.

Cousin owns a 5% interest in Juan.
Cousin Company owns a 10% interest in September company, which declared a

P2,000,000 cash dividend on November 15, 2017 payable on January 15, 2018.
What amount should be reported as dividend Income for 2017?

Correct answer: P 260,000
2018.
What amount of cumulative unrealized loss should be reported in shareholder’s

equity for 2018?
20. On January 1 ,2014, Bart Company acquired a long-term investment for

P7,000,000, a 40% interest in Hall Company. Hall Company reported the
following net losses:
2014 5,000,000
2015 7,000,000
2016 12,000,000
How much should be reported as loss from investment for 2016?


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Quiz #1

1. Interest Receipts can be computed by multiplying the Present Value by the

2. Interest Revenue can be computed by multiplying Face Amount by the Effective

3. The following data pertains to Rainbow Corporation’s investments in marketable

What amount should Rainbow Corporation report as unrealized holding gain in

4. On January 1, 2017, Dumaguete Company purchased bonds with face amount of

What amount of unrealized gain/ (loss) should be reported in the income

5. The following data pertains to Rainbow Corporation’s investments in marketable

9. On January 1, 2017, Pearl Company purchased as a long-term investment

What is the interest income for 2018?

12. Equity instruments can be classified as FAAC

The unrealized holding gains or loss to be reported in 2007 Profit / Loss is

15. IFRS9 (Financial instruments) shall apply to those interests in subsidiaries,

16. Debt instruments cannot be classified as FAAC

17. Debt instruments measured at FAFVPL do not need to be amortized

Unrealized gain or loss to be reported at December 31, 2007, as a separate

20. Equity instruments can be classified as FAFVOCI

------------------------ THE END-------------------------

1. It is an entity over which the investor has significant influence

2. On January 1, 2007, Sampaloc Co. bought 30% of the outstanding common

What is the total dividend income for 2007?

3. On January 1 ,2014, Bart Company acquired a long-term investment for

How much should be reported as the carrying amount of investment in associate

4. D Company Invested 30% of E Company's common shares. If E company sold

On September 1, Cousin received a P500,000 cash dividend from Ben Company

On October 1, Cousin received a P 60,000 cash dividend from Hale company.

Cousin Company owns a 20% interest in Edgar company, which declared a

How much is the dividend income for 2018?

6. Goodwill arising from an investment in associate is

7. On January 1, 2017, Dumaguete Company purchased bonds with face amount of

9. Investment in Associate cannot be presented in the financial statements as a

What amount of unrealized gain/ (loss) should be reported in the income

What amount of unrealized loss should be reported as component of other

15. Which statement is incorrect concerning the equity method?

What amount of unrealized gain/ (loss) should be reported as component in other

18. Cousin Company provided the following data for 2017

On September 1, Cousin received a P500,000 cash dividend from Peregrine

On October 1, Cousin received a P 60,000 cash dividend from Juan company.

Cousin Company owns a 10% interest in September company, which declared a

What amount should be reported as dividend Income for 2017?

What amount of cumulative unrealized loss should be reported in shareholder’s

20. On January 1 ,2014, Bart Company acquired a long-term investment for

How much should be reported as loss from investment for 2016?

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