Intacc 1 Quiz 1 For Finals

DON HONORIO VENTURA STATE UNIVERSITY
Villa de Bacolor, Pampanga

MEXICO CAMPUS
San Juan, Mexico, Pampanga
[email protected]
Name: Date:
Course, Year & Section:
QUIZ 1: STRATEGIC MANAGEMENT
MULTIPLE CHOICE:
INSTRUCTION: Read each statement carefully and ENCIRCLE the LETTER of the best answer.
1. On January 1, 20x1, ABC Bank extended a 12%, ₱1,000,000 loan to XYZ, Inc. Principal is due on January 1, 20x5 but
interests are due annually every January 1. ABC Bank incurred direct loan origination costs of ₱88,394 and indirect loan
origination costs of ₱18,000. In addition, ABC Bank charged XYZ a 2.5-point nonrefundable loan origination fee. How
much is the interest income in 20x2?
a. 104,973
b. 105,364
c. 106,339
d. 136,661
Use the following information for the next two questions:

On January 1, 20x1, ABC Bank extended a ₱900,000 loan to XYZ, Inc. Principal is due on December 31, 20x5 but 12%
interest is due annually every December 31.
On December 31, 20x3, XYZ, Inc. was delinquent and it was ascertained that the loan is impaired. ABC Bank assessed
that interests accruing on the loan will not be collected; however, the principal is expected to be received in three equal
annual installments starting on December 31, 20x4. Accrued interest receivable on December 31, 20x3 amounted to
₱100,000. The current market rate on December 31, 20x3 is 14%.
2. How much is the balance of allowance for impairment loss on December 31, 20x3 immediately after impairment
testing?
a. 279,460
b. 303,510
c. 203,510
d. 179,460
3. How much is the interest income in 20x5?

a. 86,465
b. 64,810
c. 60,841
d. 0

On January 1, 20x1, ABC Co. received a ₱1,000,000 note receivable from XYZ, Inc. Principal payments of ₱200,000 and
interest at 12% are due annually at the end of each year for 5 years. The first payment starts on December 31, 20x1.
XYZ, Inc. made the required payments during 20x1 and 20x2. However, during 20x3 XYZ, Inc. began to experience
financial difficulties, requiring ABC Co. to reassess the collectability of the note on December 31, 20x3. Because of the
loss event, ABC Co. did not accrue the interest on December 31, 20x3. The current rate of interest on December 31, 20x3
is 10%. ABC Co. made the following cash flow projections on December 31, 20x3:
Date of expected receipt Amount of cash flow
January 1, 20x4 200,000
January 1, 20x5 150,000
January 1, 20x6 150,000
4. How much is the impairment loss recognized in 20x3?

a. 146,492
b. 195,082
c. 139,669
d. 181,518

a. 54,421
b. 30,421
c. 16,071
d. 0
6. Scott Company received a one-year non-interest-bearing note receivable. When the note receivable was recorded,
which of the following were debited or credited?
Interest Receivable Discount on Note Receivable
a. Yes Yes
b. Yes No
c. No Yes
d. No No
7. What factor should you use for a ₱2,000 note receivable that is collectible in full after five years?
a. Present value of 1
b. Present value of an ordinary annuity of 1
c. Present value of an annuity due of 1
d. Any of these
8. On Jan. 2, 20x1, an entity sold a machine in which the receipt of the consideration is deferred to May 1, 20x2. The total
collection on May 1, 20x2 will include both principal and interest. Assuming interest at a 10% rate, the initial
measurement of the receivable would be computed as the total collection multiplied by what time value of money factor?
a. Future value of annuity of 1
b. Future value of 1
c. Present value of annuity of 1
d. Present value of 1
9. Which of the following is true regarding non-interest-bearing note receivables?

a. they are always discounted to their present value on initial recognition
b. they include a specified principal amount but an unspecified interest amount
c. they include a specified principal and specified interest
d. they cause no interest income to be recognized over their term
e. they include an unspecified principal and an unspecified interest
10. On July 1, 2010, a company obtained a two-year 8% note receivable for services rendered. At that time, the market
rate of interest was 10%. The face amount of the note and the entire amount of the interest are due on June 30, 2012.
Interest receivable at December 31, 2010, was
a. 5% of the face value of the note.
b. 4% of the face value of the note.
c. 5% of the July 1, 2010 present value of the amount due on June 30, 2012.
d. 4% of the July 1, 2010 present value of the amount due on June 30, 2012.
Fact pattern for the next three independent questions:

Information on a note receivable:
Face amount ₱800,000
Effective interest 14%
11. The note is due in lump sum in five years’ time. What is the carrying amount of the note at initial recognition?
a. 415,495
b. 432,158
c. 567,823
d. 591,834
12. The note is due in four equal annual installments. The first installment is due one period from initial recognition.
What is the carrying amount of the note at initial recognition?
a. 582,742
b. 567,823
c. 591,834
d. 602,158
13. The note is due in five equal annual installments. The first installment is due at initial recognition. What is the
carrying amount of the note at initial recognition before any collection?
a. 582,742
b. 567,823
c. 602,158
d. 626,194
On January 1, 20x1, Kakadwa Co. sold transportation equipment with a historical cost of ₱12,000,000 and accumulated
depreciation of ₱7,000,000 in exchange for cash of ₱100,000 and a noninterest-bearing note receivable of ₱4,000,000 due
in 4 equal annual installments starting on January 1, 20x1 and every January 1 thereafter. The prevailing rate of interest
for this type of note is 12%.

a. 408,230 c. 328,964
b. 278,334 d. 288,220
15. How much is the carrying amount of the receivable on December 31, 20x1?
a. 1,690,510 c. 2,690,051
b. 892,857 d. 1,594,388
16. An entity determines that the credit risk on a loan receivable has not increased significantly since initial recognition.
The entity should recognize loss allowance equal to
a. the 12-month expected credit losses on the instrument.
b. the lifetime expected credit losses on the instrument.
c. sum of a and b
d. none; credit losses should be recognized only when there is objective evidence of a loss event.
17. According to PFRS 9, it refers to the expected credit losses that result from all possible default events over the expected life
of a financial instrument.
a. 12-month expected credit losses
b. Lifetime expected credit losses
c. Loss allowance
d. Absolute loss
18. According to the PFRSs, receivables (with allowed practical expedient for trade receivables) are initially recognized at
a. fair value.
b. present value.
c. cost.
d. fair value plus transaction costs.

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DON HONORIO VENTURA STATE UNIVERSITY

Villa de Bacolor, Pampanga

Use the following information for the next two questions:

3. How much is the interest income in 20x5?

Use the following information for the next two questions:

Date of expected receipt Amount of cash flow

January 1, 20x4 200,000

January 1, 20x5 150,000

January 1, 20x6 150,000

4. How much is the impairment loss recognized in 20x3?

5. How much is the interest income in 20x4?

9. Which of the following is true regarding non-interest-bearing note receivables?

Fact pattern for the next three independent questions:

14. How much is the interest income in 20x1?

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