AFAR QUIZ BEE (Average Round)

In which of the following cases would consolidation be inappropriate?

• The subsidiary is in bankruptcy

• Subsidiary's operations are dissimilar from those of the parent.

• The parent owns 90 percent of the subsidiary's common stock, but all of the subsidiary's nonvoting preferred stock is held by a single investor.

• Subsidiary is foreign.

On January 1, 2018, A, B, and C formed ABC Partnership with a total agreed capitalization of P1,000,000. The capital interest ratio of the ABC Partnership is 5:1:4 while the profit or loss ratio is 3:2:5, respectively for A, B, and C.

During 2018, A and B made additional investments of P200,000 and P500,000, respectively. At the end of 2018, B and C made drawings of P300,000 and P100,000, respectively. On December 31, 2018, the capital balance of B is reported at P200,000.

What is the net income or net loss of ABC Partnership for the year ended December:

• 500,000 loss

• 1,000,000 loss

• 800,000 income

• 1,200,000 income

Under IFRS a parent may exclude a subsidiary from consolidation only if all of the following conditions exist, except

• Its parent prepares consolidated financial statements that comply with IFRS

• It has one class of stock

• It is wholly owned as its owners do not object to no consolidation

• It does not have any debt or equity instruments publicly traded

JUMBO Corp. uses the percentage-of-completion method of revenue recognition in

accounting for its long-term construction contracts. JUMBO Corp.’s progress billings

account is a

• Revenue account

• non-current liability account

• Contra current asset account

• Contra non-current asset account

The year-end balance sheet and residual profit and loss sharing percentages for the Ara, Belle, and Grace partnership on December 31, 2005, are as follows:

Cash P 30,000

Accounts payable P 200,000

Loan to Ara 40,000

Loan from Belle 50,000

Other assets 480,000

Ara, capital (25%) 70,000

Belle, capital (25%) 80,000

Grace, capital (50%) 150,000

The partners agree to liquidate the business and distribute cash when it becomes available. A cash distribution plan for the Ara, Belle, and Grace partnership will show that cash available, after outside creditors are paid, will initially go to:

• Ara in the amount of P20,000.

• Belle in the amount of P45,000.

• Belle in the amount of P55,000.

• Ara in the amount of P20,000.

A silent partner in a general partnership

• Helps manage the partnership without letting those outside the partnership know this.

• Retains unlimited liability for the debts of the partnership.

• None of the above is correct.

• Both of the above are correct.

If the Alaska Museum, a not-for-profit organization, received a contribution of

historical artifacts, it need not recognize the contribution if the artifacts are to be sold and the proceeds used to

• Acquire other items for collections.

• Support general museum activities.

• Purchase buildings to house collections

• Repair existing collections.

Company Pea owns 90 percent of Company Essone which in turn owns 80 percent of Company Esstwo.

Company Esstwo owns 100 percent of Company Essthree. Consolidated financial statements should be prepared to report the financial status and results of operations

for:

• Pea.

• Pea plus Essone

• Pea plus Essone plus Esstwo plus Essthree

• Pea plus Essone plus Esstwo.

Princeton Company acquired 75 percent of the common stock of Sheffield Corporation on December 31, 2009. On the date of acquisition, Princeton held land with a book value of $150,000 and a fair value of $300,000; Sheffield held land with a book value of $100,000 and a fair value of $500,000. Using the entity theory, at what amount would land be reported in a consolidated balance sheet prepared immediately after the combination?

• $650,000

• $500,000

• $550,000

• $375,000

A hedge of the exposure to changes in the fair value of a recognized asset or liability, or an unrecognized firm commitment is classified as a

• Foreign currency hedge

• Fair value hedge.

• Underlying.

• Cash flow hedge.