III.Multiple Choice - Computation (PFRS 8: Operating Segments)

1.Ariana Company and its divisions provided the following information for the current year:

Sales to unaffiliated customers

20,000,000

Intersegment sales of products similar to those sold to unaffiliated customers

6,000,000

Interest earned on loans to other operating segments

400,000

Ariana Company and all of its divisions are engaged solely in manufacturing operations.

What is the minimum amount of segment revenue in order that a division can be considered a reportable segment?

a. 2,640,000

b. 2,600,000

c.2,040,000

d. 2,000,000

Questions 17 and 18 are based on the following information:

Groom Company, a publicly owned entity, is subject to the requirements of segment reporting. In the income statement for the year ended December 31, 2018, the entity reported revenue of P50,000,000, excluding intersegment sales of P10,000,000, expenses of P47,000,000 and net income of P3,000,000. Expenses included in payroll costs of P15,000,000. The combined identifiable assets of all operating segments on December 31, 2018 totaled P40,000,000.

2.In the financial statements, the entity should disclose major customer data if sales to any single customer to at least

a. 5,000,000

b. 4,000,000

c. 6,000,000

d. 4,700,00

3.External revenue of reportable operating segments must be at least

a. 22,500,000

b. 30,000,000

c. 33,750,000

d. 37,500,000

4.Cloy Company has three lines of business, each of which was determined to be reportable segment. The entity sales aggregated P7,500,000 in the current year, of which Segment No. 1 contributed 40%.

Traceable costs were P1,750,000 for Segment No. 1 out of a total of P5,000,000 for the entity as a whole.

For external reporting, the entity allocated common costs of P1,500,000 based on the ratio of a segment's income before common costs to the total income before common costs.

In the financial statements for the current year, what amount should be reported as profit for Segment No. 1?

a. 1,250,000

b. 1,000,000

c.650,000

d. 500,000

5.Swift Company, a publicly owned entity, assess performance and makes operating decisions using the following information for the reportable segments:

Total revenue

7,680,000

Total profit and loss

406,000

The total profit and loss included intersegment profit of P61,000. In addition, the entity ha P5,000 of common costs for the reportable segments that are not allocated in reports reviewed by the chief operating decision maker. What amount should be reported as segment profit?

a. 350,000

b. 345,000

c.411,000

d. 406,000

IV.Multiple Choice - Theories (PFRS 13: Fair Value Measurement)

6.Fair value of an asset should be based upon

a.The replacement cost of an asset.

b.The price that would be received to sell the asset at the measurement date.

c.The original cost of the asset.

d.The price that would be paid to acquire the asset

7.Which of the following best describes a principal market for establishing fair value of an asset?

a.The market that has the greatest volume and level of activity for the asset

b.Any broker or dealer market

c.The most observable market

d.The market in which the amount received would be maximized

8.Which statement is true for measuring an asset at a fair value?

a.The price of the asset should be adjusted for transaction cost.

b.The fair value of the asset should be adjusted for cost of disposal.

c.The fair value is based upon an entry price to purchase the asset

d.The price should be adjusted for cost to transport the asset to principal market.

9.Which of the following would meet the qualifications as market participants?

a.A liquidation market in which sellers are compelled to sell

b.A subsidiary of the reporting unit interested in purchasing assets similar to those being valued.

c.An independent entity that is knowledgeable about the asset.

d.A broker or dealer that wishes to establish a new market.

10.Valuation techniques for fair value that include the Black-Scholes formula, a binomial model, or discounted cash flow are examples of which valuation technique?

a.Income approach

b.Market approach

c.Cost approach

d.Exit value approach