This study source was downloaded by 100000873202307 from CourseHero com on 10 06 2023 00 05 14 GMT 05 00 https www coursehero com file 151288313 PRELIM EXAM CA51010 with answers 1doc UNIVERSITY OF SANTO TOMASAMV COLLEGE OF ACCOUNTANCYPRELIMINARY EXAMINATIONCA51010 INTERMEDIATE ACCOUNTING IITEST I THEORIES 40 1 Bonds with a face value of P3 000 000 with a stated interest rate of 12 payable semi annually on March 1 and September 1 were issued on August1 The total cash received for the issuance amounted to P3 100 000 Thebest explanation for the excess amount received over the face value is thatA The bonds were issued at a premium B The bonds were issued at a discount plus accrued interest C The bonds were issued at face value plus accrued interest DNo explanation is possible without knowing the maturity date of the bondsissued 2 INTACC Company made a year end amortization by decreasing interestexpense and carrying value of the bonds payable The bonds must havebeen issued A At a PremiumB At a Discount C At Face valueD In the middle of Nowhere3 There is a substantial modification of terms of an old financial liability if thedifference between the PV of modified cash flow and the carrying value ofthe liability isA More than 10 of the carrying amount of the old liabilityB 10 or more of the carrying amount of the old liabilityC Less than 10 of the carrying amount of the old liabilityD At least 10 of the carrying amount of the new liability4 If the fair value of the equity instruments issued cannot be reliablymeasured the equity instruments issued to extinguish a financial liabilityshall be measured atA Fair value of the liability extinguishedB Par value of the equity instruments issuedC Fair value of liability or Par value of shares whichever is lowerD Carrying amount of the liability extinguished5 The cumulative unrealized gains or losses which are recognized separately inequity of the statement of financial position are from securities classifiedasa FVPL onlyb FVPL and FVOCIc FVOCI and Investment in Associated FVOCI only6 For an investment in equity securities classified as fair value investmentsunder PFRS 9 impairment loss isa The excess of fair value over the original cost b The excess of amortized cost over the fair valuec The excess of original cost over the fair value d Not recognized7 MACBABY Company neglected to amortize the discount on outstanding ten year bonds payable What is the effect of the failure to record the discountamortization on interest expense and bond carrying value respectively A Understate UnderstateC Overstate Overstate B Understate OverstateD Overstate UnderstatePage 1 of 9 This study source was downloaded by 100000873202307 from CourseHero com on 10 06 2023 00 05 14 GMT 05 00 https www coursehero com file 151288313 PRELIM EXAM CA51010 with answers 1doc 8 When convertible bonds are retired before maturity date the differencebetween carrying value of the share premium bond conversion privilege andthe retirement price on account of equity isa Treated as a gain and taken to profit or lossb Treated as a loss and taken to profit or lossc Treated as either gain or loss and taken to equityd Not recognized 9 The following statements are based on PAS 28 Investment in Associate Statement I Generally the Investment in Associate shall be accounted forusing the equity method True Statement II Cash dividend received should not be treated as dividendincome in all cases even if the investor loses significant influence over theassociate False Statement III Impairment loss is recognized as the difference betweenrecoverable amount and the carrying value of the investment in all cases Falsea Only statement I is trueb Only statement II is true c Only statement III is falsed All of the above statements are false10 An entity has 20 investment in ordinary share and 25 investment inpreference share over the investee Which of the following is true A Only the cash dividend received related to 20 is treated as dividendincomeB Only the cash dividend received related to 25 is treated as dividendincomeC Cash dividend received for both investments should be treated as dividendincomeD Cash dividend received for both investments should be treated as adeduction from investment11 If an associate has a preference share the proper way of computing theshare in net income of an associate for the current year assuming thepreference share is cumulative would bea Deduct the preference dividend for the current year only whether declaredor not b Deduct the preference dividend for the current year if declared onlyc Deduct the preference dividend for the current year including any previousundeclared preference dividendd Deduct both the preference and ordinary dividend for the current yearonly whether declared or not12 Which of the following is true about amortization of premium or discounton the part of the issuer A Amortization of discount decreases interest incomeB Amortization of premium increases interest expenseC Amortization of discount increases interest expenseD Amortization of premium decreases interest income13 Theoretically when bonds are issued between interest payment dates anyaccrued interest received is credited toA Interest income B Interest payableC Premium on bonds payableD Either A or B14 When bonds are retired before maturity date the difference between thecarrying value of the bonds and the retirement price isa Treated as a gain and taken to profit or lossb Treated as a loss and taken to profit or lossc Treated as either gain or loss and taken to profit or lossd Treated as either gain or loss and taken to equityPage 2 of 9 This study source was downloaded by 100000873202307 from CourseHero com on 10 06 2023 00 05 14 GMT 05 00 https www coursehero com file 151288313 PRELIM EXAM CA51010 with answers 1doc 15 Which of the following items should be treated as dividend income a Reverse stock splitb Same class of share dividendc Different class of share dividendd Cash dividend under equity method16 If the present value of a note issued in exchange for a property is less thanits face value the difference should bea Included in the cost of the assetb Amortized as interest expense over the life of the notec Amortized as interest expense over the life of the assetd Included in interest expense in the year of issuance17 Which of the following statements concerning non interest bearing notespayable is generally a false statement a Discount on notes payable should be deducted to arrive at the