Question
On September 30, 2011, Criseldas, Inc. received from Ambo P550,000 representing franchise fee. Franchise services were immediately started by Criseldas and these completed on October
On September 30, 2011, Criseldas, Inc. received from Ambo P550,000 representing franchise fee. Franchise services were immediately started by Criseldas and these completed on October 31, 2011 at cost amounting to P330,000. The franchise fee revenue to be reported by Criseldas in its October 31, 2011 income statements is:
a. P 0 c. P220,000
b. P137,500 d. P550,000
Your client furnished you with the following data:
Merchandise inventory, Jan. 1 P 60,000
Purchases, Jan. 1 to Oct. 31 415,000
Purchases returns and allowances 5,000
Transportation In 10,000
Sales, Jan. 1 to Oct. 31, at 35% above cost 540,000
Merchandise not damaged by fire on Oct. 31 42,000
Using the gross profit test, what was the estimated loss in inventory due to the fire?
a. P38,000 c. P80,000
b. P60,000 d. None of the choices
You were engaged to audit the books of accounts of A. Bonifacio Contractors which had a 3-year construction contract in 2006 for P900,000. A. Bonifacio uses the percentage-of-cost-completion method for financial statement purposes. Income to be recognized each year is based on the ratio of cost incurred to total estimated cost to complete the contract. Data on this contract follows:
Accounts receivables construction contract billings P30,000
Construction in progress P93,750
Less: Amount billed 84,375
10% retention 9,375
Net income recognized in 2006 (before tax) 15,000
Bonifacio Contractors maintains a separate bank account for each construction contract. Bank deposits to this contract amounted to P50,000.
How much cash collected on the contract was not yet deposited as at December 31, 2006?
a. P4,375 c. P19,375
b. P13,750 d. P28,750
On an audit engagement for 2006 you handled the audit of fixed assets of A. Luna Copper Mines. This company bought the exploration rights of Maharishi Mineral Exploration on June 30,2006 for P7,290,000. Of this purchase price, P4,860,000 was allocated to copper ore which had remaining reserves estimated at P1,620,000 tons. A. Luna Copper Mines expects to extract 15,000 tons of ore a month with an estimated selling price of P50/ton. Production started immediately after some new machineries costing P600,000 were bought on June 30, 2006. These new machineries had an estimated useful life of 5 yrs with a scrap value of 10% of cost after the ore estimate has been extracted from the property, at which time the machineries will already be useless. Among the operating expenses of A. Luna Copper Mines at Dec. 31, 2006 were:
Depletion expense P 405,000
Depreciation, Machineries 40,000
Recorded depletion expense was:
a. Overstated by P90,000 c. overstated by P135,000
b. Understated by P90,000 d. understated by P135,000
As to source, the Tax Code classifies income into:
a. Income which is derived in full from sources within the Philippines.
b. Income which is derived in full from sources outside the Philippines.
c. Income which is derived partly from sources outside the Philippines.
d. None of the choices.
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