📘 MOCK BOARD EXAM – FINANCIAL REPORTING
Answer each of the following comprehensive problems. Complete solutions are shown below
each question.
1. Consolidated Financial Statements
On January 1, 2024, Alpha Corp. acquired 80% of Beta Corp. for P4,000,000 when Beta's net
assets had a fair value of P4,500,000. During 2024, Beta earned net income of P800,000 and
declared dividends of P200,000.
Solution:
a) NCI at year-end = 20% × (P4,500,000 + P800,000 - P200,000) = 20% × P5,100,000 =
P1,020,000
b) Parent's share of net income = 80% × P800,000 = P640,000
✅ Consolidated net income attributable to parent = P640,000
2. Lease Accounting (Lessee - IFRS 16)
On January 1, 2025, XYZ Co. entered into a 5-year lease of equipment with annual lease
payments of P300,000 payable every January 1. The interest rate implicit in the lease is 8%.
Solution:
a) PV of annuity due (n=5, i=8%) = 4.31213. PV = P300,000 × 4.31213 = P1,293,639
b) Jan 1, 2025 Entry:
Dr Right-of-Use Asset P1,293,639
Cr Lease Liability P1,293,639
Dr Lease Liability P300,000
Cr Cash P300,000
3. Revenue Recognition (IFRS 15)
MNO Company entered into a contract on March 1, 2025, to deliver 100 customized machines
over 10 months. Contract price is P10,000,000. As of June 30, 40 machines were delivered. Cost
incurred = P3,200,000; Est. cost to complete = P4,800,000.
Solution:
a) % of completion = 3.2M / (3.2M + 4.8M) = 40%
b) Revenue = 40% × P10M = P4,000,000; GP = Revenue - Cost = P4,000,000 - P3,200,000 =
P800,000
