1. QUIRK ACCIDENT Co. reports profit before tax of P200,000 in its 2nd quarter interim financial statements before consideration for the following: a. Inventory with a carrying amount P10,000 has a net realizable value of P12,000. It is expected that the change in value will reverse in the 3rd quarter. There have been no write-downs of inventory recognized in previous periods. b. An investment property measured under the cost model has a carrying amount of P150,000 but its recoverable amount is P140,000. C. An investment in FVPL measured at acquisition cost of P20,000 has a fair value of P38,000 as at the end of 2nd the quarter. However, the increase in fair value is expected to be only temporary. d. No depreciation is recognized during the 2nd quarter. The annual straight-line depreciation of items of PPE is P60,000. e. ABC Co. has a policy of providing 12 days paid vacation leaves for its employees. The vacation leaves are vesting and accumulating. Total paid vacation leaves eligibility of employees for the full year is P140,000. However, only P20,000 worth of paid vacation leaves have been availed of during the quarter. f. It was discovered that depreciation in the previous year was overstated by P7,000. Requirement: Compute for the adjusted profit before tax.
1. QUIRK ACCIDENT Co. reports profit before tax of P200,000 in its 2nd quarter interim financial statements before consideration for the following: a. Inventory with a carrying amount P10,000 has a net realizable value of P12,000. It is expected that the change in value will reverse in the 3rd quarter. There have been no write-downs of inventory recognized in previous periods. b. An investment property measured under the cost model has a carrying amount of P150,000 but its recoverable amount is P140,000. C. An investment in FVPL measured at acquisition cost of P20,000 has a fair value of P38,000 as at the end of 2nd the quarter. However, the increase in fair value is expected to be only temporary. d. No depreciation is recognized during the 2nd quarter. The annual straight-line depreciation of items of PPE is P60,000. e. ABC Co. has a policy of providing 12 days paid vacation leaves for its employees. The vacation leaves are vesting and accumulating. Total paid vacation leaves eligibility of employees for the full year is P140,000. However, only P20,000 worth of paid vacation leaves have been availed of during the quarter. f. It was discovered that depreciation in the previous year was overstated by P7,000. Requirement: Compute for the adjusted profit before tax.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1. QUIRK ACCIDENT Co. reports profit before tax of
P200,000 in its 2nd quarter interim financial statements
before consideration for the following:
a. Inventory with a carrying amount P10,000 has a net
realizable value of P12,000. It is expected that the change
in value will reverse in the 3rd quarter. There have been no
write-downs of inventory recognized in previous periods.
b. An investment property measured under the cost model
has a carrying amount of P150,000 but its recoverable
amount is P140,000.
c. An investment in FVPL measured at acquisition cost of
P20,000 has a fair value of P38,000 as at the end of 2nd the
quarter. However, the increase in fair value is expected to
be only temporary.
d. No depreciation is recognized during the 2nd quarter. The
annual straight-line depreciation of items of PPE is
P60,000.
e. ABC Co. has a policy of providing 12 days paid vacation
leaves for its employees. The vacation leaves are vesting
and accumulating. Total paid vacation leaves eligibility of
employees for the full year is P140,000. However, only
P20,000 worth of paid vacation leaves have been availed
of during the quarter.
f. It was discovered that depreciation in the previous year was
overstated by P7,000.
Requirement: Compute for the adjusted profit before tax.
||
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