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> The McGraw Company manufactures and sells Abriza handbags to assorted prints. Data for 2014

follows:

Selling price per piece P8.00

Variable cost per piece P2.00

Number of handbags to breakeven 25,000

Net post-tax income (35% tax rate) P5,850

In 2015, the company estimates that the selling price will be P9.50 per piece, variable cost to

manufacture will increase by 25%, and fixed costs will increase by 20%.Income tax rate of

35% will not change.

How many units of handbags does McGraw Company must see in 2015 in order to maintain the

same net income after tax as in 2014?

xxxx

Spouses Ramsay and Sansa sold their family home, a capital asset for P10,000,000. It was acquired

in 1980 at P3,000,000. The fair market value as determined by the BIR is P12,000,000 but the fair

market shown in the schedule of values of the City Assessor is P11,000,000. Later, the spouses

utilized P8,000,000 for the acquisition of their new family home.

xxxx

A race track bettor won on the following bets:

On double, a bet of P200 and dividend of P100 per P10 ticket

On winner take all, a bet of P500 and a dividend of P700 per P50 ticket

On forecast, a bet of P1,000 and dividend of P150 per P50 ticket

xxxxxxx

On December 31, 2015, an entity has an asset of Php4,000 for interest receivable that will be taxed

when the cash is received in 2016. Tax is payable at 20 percent on the first Php500,000 of taxable

profit earned and 30 percent on any remainder. In 2015, the entity earned taxable profit of

Php450,000. In 2016, the entity expects to earn taxable profit of Php550,000. What amount should

the entity recognize for the deferred tax liability relating to the interest receivable?

xxxx

Jon Snow Company had the following results of operations for the taxable year 2015:

Gross Income P500,000

Business expenses P200,000

Capital Gain (capital asset held for one(1) year) P 50,000

Capital Loss (capital asset held for 24 months) P100,000

How much is the taxable income of John Snow Company for the year 2015?

xxxxxx

Cersei owns shares of stocks of Castle Black Corporation which she purchased several years ago for

P1 million. The stocks have a current fair market value of P10 million. She donates one-half of the

stocks to her daughter Myrcella on December 31, 2014 and the remaining half to her daughter

Myrcella again on January 2, 2015 when the fair market value of the stocks was P5 million.

Assuming Myrcella subsequently sold all the shares of stocks to Ellaria Sand for P10 million, how

much did Cersei gain on the sale?

xxxxxxx

Which of the following observations by an auditor is most likely to indicate the existence of

control weaknesses over safeguarding of assets?

I. A service department's location is not well suited to allow adequate service to other units.

II. Employees hired for sensitive positions are not subjected to background checks.

III. Managers do not have access to reports that profile overall performance in relation to other

benchmarked organizations.

IV. Management has not taken corrective action to resolve past engagement observations

related to inventory controls.

xxxxx

As of December 31, 2014, Passive company has the following deferred tax items in its accounting

records:

Deferred tax asset Php443,800

Deferred tax liability 1,092,000

At the beginning of January 2015, the government reduced the company tax rate from 35%

to 32% effective January 2, 2015. The recorded tax balances represent the tax effect of

future taxable amounts and future deductible amounts at 35%. What amount of tax expense

or savings should Passive Company recognize as a result of the change in tax rates?

xxx

Management of Rapler Corporation is considering a lockbox system. The bank will charge P10,000

annually for the service, which will save the firm approximately P5,000 in processing costs. The

lockbox system will reduce the float for cash receipts by three days. Assuming that the average

daily receipts are equal to P100,000, and short-term interest costs are 5%, calculate the benefit or

loss from adopting the lockbox system.

xxx

The memorandum records of Smile Inc. for its defined benefit plan show the following balances:

Plant asset, 1/1/2015 Php5,000,000

Defined benefit obligation, 1/1/2015 5,200,000

2015 Information:

Current service cost 750,000

Market yields on government bonds at year- 10%

end

Contributions made Php1,800,000

Benefits paid 480,000

Past service cost as a result of plan

amendment

2,300,000

Plan asset, 12/31/2015 8,000,000

Defined benefit obligation, 12/31/2015 8,350,000

The fair value of the plan asset at year-end includes the unpaid contributions due from

Smile Inc., to the fund as well as the non-transferable FVPL issued by Smile Inc. and held by

the fund amounting to Php700,000 and Php300,000 respectively. Determine the amount

recognized in profit or loss in accordance with PAS 19 Employee Benefits.