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Problem: Color Unite Company reported the following on December 31, 2020: 8% cumulative preference share capital, P50 par value 4,500,000 Ordinary share capital, P1 par,

Problem:

Color Unite Company reported the following on December 31, 2020:

8% cumulative preference share capital, P50 par value 4,500,000

Ordinary share capital, P1 par, 10,000,000 shares 10,000,000

Share Premium 20,000,000

Retained earnings, January 1, 2020 132,000,000

Net Income for 2020 35,000,000

12. The net income included an expropriation loss of P8,000,000. What amount should

be reported as basic earnings per share?

a. 3.46

b. 4.04

c. 4.63

d. 3.67

Problem:

During 2020, Innovative Company had outstanding 500,000 ordinary shares and 30,000

cumulative preference shares with a P10 per share dividend. Each preference share is

convertible into four ordinary shares. The entity had a P 5,000,000 net loss for 2020. No

dividends were paid or declared.

13. What amount should be reported as basic loss per share?

a. 10.6

b. 10

c. 9.4

d. 8.06

Problem:

Blossom Company reported the following liabilities in the statement

Accounts payable 1,000,000

Bonds payable 3,000,000

Accrued expense 500,000

Finance lease liability 4,000,000

Advances from customer 1,200,000

Unearned revenue 300,000

Deferred tax liability 400,000

Estimated warranty liability 200,000

14. In preparing financial statements in a hyperinflationary economy, what total amount

should be classified as monetary liabilities?

a. 8,500,000

b. 4,500,000

c. 8,900,000

d. 9,700,000

Problem:

Alibaba Company reported the following assets in the statement of financial position:

Cash in bank 2,000,000

Patent 1,000,000

Accounts receivable 4,000,000

Advances to employees 200,000

Inventory 1,500,000

Advances to supplier 400,000

Financial asset at fair value 500,000

Prepaid expenses 100,000

15. In preparing financial statements in a hyperinflationary economy, what total amount

should be classified as monetary asset?

a. 6,200,000

b. 6,600,000

c. 6,700,000

d. 7,700,000

THEORIES

18. In computing basic earning per share, an entity would include which of the following?

a. Dividends on nonconvertible cumulative preference shares

b. Dividend on ordinary shares

c. Interest on convertible bonds

d. Number of nonconvertible cumulative preference shares.

19. EPS disclosures are required for

a. Entities whose ordinary shares and potential ordinary shares are publicly

traded.

b. Entities that are in the process of issuing ordinary shares in the public market

c. All entities

d. Entities whose ordinary shares and potential ordinary shares are publicly

traded and entities that are in the process of issuing ordinary shares in public

market.

20. EPS disclosures are

a. Required for all public and nonpublic entities

b. Required for public entities and encouraged for nonpublic entities

c. Encourage for public entities and required for nonpublic entities

d. Encouraged for all entities

21. In computing basic earnings per share, the amount of preference dividend on

noncumulative preference shares should be

a. Deducted from net income whether declared or not

b. Deducted from net income only when declared

c. Added to net income only when declared

d. Ignored

22. In computing basic loss per share, the annual preference dividend on cumulative

preference shares should be

a. Ignored

b. Deducted from the net loss whether declared or not

c. Added to the net loss whether declared or not

d. Added to the net loss only when declared

23. Purchasing power gain or loss results from

a. Monetary assets

b. Monetary liability

c. Monetary asset and nonmonetary liability

d. Nonmonetary asset and nonmonetary liability

24. Financial statement that are expressed under a stable monetary unit are

a. Constant peso financial statements

b. Nominal peso financial statements

c. Current cost financial statements

d. Fair value financial statements

25. During a period of inflation, an account balance remains constant. With respect to

this account, a purchasing power gain will be recognized if the account is a

a. Monetary liability

b. Monetary asset

c. Nonmonetary liability

d. Nonmonetary asset

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