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REVIEW OF FINANCIAL ACCOUNTING THEORY AND PRACTICE SEGMENT AND INTERIM REPORTING 1. On Octob October er 1, 2005 2005,, when hen the the carr carry yin in a!o" a!o"nt nt o# the the net net a$$e a$$et$ t$ o# a b"$i b"$ine ne$$ $$ $e!ent wa$ P50,000,000, Tar%ac &o!'any $ine( a %ea%%y bin(in contract to $e%% the b"$ine$ b"$ine$$ $ $e!ent. $e!ent. The $a%e $a%e i$ e)'ecte e)'ecte( ( to be co!'%ete( co!'%ete( by March March *1, 200+, at a $e%%in $e%%in 'rice o# P5,000,0 P5,000,000. 00. In a((ition, a((ition, 'rior to March *1, 200+, the $a%e contract contract ob%ie$ ob%ie$ Tar%ac Tar%ac &o!'any &o!'any to ter!ina ter!inate te the e!'%oy e!'%oy!ent !ent o# certain certain e!'%oye e!'%oyee$ e$ o# the b"$ine$$ $e!ent inc"rrin an e)'ecte( ter!ination co$t o# P*,000,000 to be 'ai( on -"ne -"ne *0, *0, 200+ 200+.. The The $e! $e!en ent t$ $ re/e re/en" n"e$ e$ an( an( o'er o'erat atin in e)'e e)'en$ n$e$ e$ #or #or 2005 2005,, re$'ecti/e%y re$'ecti/e%y,, were P*0,000,000 P*0,000,000 an( P*,000,000. P*,000,000. e#ore inco!e ta), how !"ch wi%% be re'orte( a$ %o$$ #ro! (i$contin"e( o'eration$ #or 2005 a. P1 P1+, +,00 000, 0,00 000 0 b. P10,000,000 c. P12,000,000 (. P 300,000
2. Sia$i Sia$i &o!'any &o!'any i$ a (i/er$i (i/er$i#ie( #ie( co!'any co!'any with nationwi nationwi(e (e intere$t$ intere$t$ in co!!erc co!!ercia% ia% rea% e$tate e$tate (e/e%o' (e/e%o'!ent !ent$, $, ban4in ban4in, , !inin !inin an( #oo( (i$trib"t (i$trib"tion. ion. The #oo( (i$trib"ti (i$trib"tion on (i/i$ion wa$ (ee!e( to be incon$i$tent with the %onter! (irection o# the co!'any. On October 1, 2005, the boar( o# (irector$ /ote( to a''ro/e the (i$'o$a% o# thi$ (i/i$ion. The $a%e i$ e)'ecte( e)'ecte( to occ"r in A""$t A""$t 200+. The #oo( (i$trib"tion (i$trib"tion ha( the #o%%owin re/en"e an( e)'en$e$ in 20056 -an"ary 1 to Se'te!ber *0, re/en"e o# P*5,000,000 an( e)'en$e$ o# P23,000,0007 October 1 to Dece!ber *1, re/en"e o# P15,000 P15,000,000 ,000 an( e)'en$e$ e)'en$e$ o# P10,000 P10,000,000 ,000.. The carryin carryin a!o"nt o# the (i/i$ion (i/i$ion$ $ a$$et$ a$$et$ at Dece!be Dece!berr *1, 2005 wa$ P5+,000,00 P5+,000,000 0 an( the reco/e reco/erab% rab%e e a!o"nt a!o"nt wa$ e$ti!ate e$ti!ate( ( to be P58,00 P58,000,00 0,000. 0. The $a%e contract contract re9"ire$ re9"ire$ Sia$i to ter!inat ter!inate e certain certain e!'%oy e!'%oyee ee$ $ inc"r inc"rrin rin an e)'ec e)'ecte( te( ter!in ter!inati ation on co$t co$t o# P,0 P,000, 00,00 000 0 to be 'ai( 'ai( by Dece!ber 15, 200+. The inco!e inco!e ta) rate rate i$ *2:. *2:. The inco!e inco!e $tate!ent $tate!ent #or the the year en(e( Dece!ber *1, 2005 wi%% re'ort inco!e #ro! (i$contin"e( o'eration at a. P12,000,000 b. P ,1+0,000 c. P 8,000,000 (. P +, +,12 120, 0,00 000 0
*. &onc &once' e'ci cion on &o!' &o!'an any y an( it$ it$ (i/ (i/i$io i$ion$ n$ are are ena enae e( ( $o%e $o%e%y %y in !an" !an"#a #act ct"r "rin in o'eratio o'eration$. n$. The #o%%owi #o%%owin n (ata (ata 'ertain 'ertain to the in("$tri in("$trie$ e$ in which which o'eratio o'eration$ n$ were were con("cte( #or the year en(e( Dece!ber *1, 2005. Se!ent$ 1 2 * 5 +
Tota% re/en"e 1*,000,000 10,000,000 ,000,000 *,000,000 *,500,000 2,500,000 0,000,000
O'eratin O'eratin 'ro#it ,000,000 2,000,000 1,500,000 1,000,000 00,000 300,000 10,000,000
I(enti#iab%e I(enti#iab%e a$$et$ 25,000,000 20,000,000 15,000,000 3,000,000 ,000,000 5,000,000 0,000,000
In it$ $e!ent in#or!ation #or 2005, how !any re'ortab%e $e!ent$ (oe$ &once'cion ha/e a. Three b. ;o"r c. ;i/e (. Si)
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. Pana!ao &o!'any, a '"b%ic%y owne( cor'oration, i$ $"b
5. P"ra &o!'any ha$ three !an"#act"rin (i/i$ion$, each o# which ha$ been (eter!ine( to be a re'ortab%e $e!ent. &o!!on co$t$ are a''ro'riate%y a%%ocate( on the ba$i$ o# each (i/i$ion$ $a%e$ in re%ation to P"ra$ areate $a%e$. In 2005, Di/i$ion I ha( $a%e$ o# P+,000,000, which wa$ 20: o# P"ra$ tota% $a%e$, an( ha( traceab%e o'eratin co$t$ o# P*,00,000. In 2005, P"ra inc"rre( o'eratin co$t$ o# P1,000,000 that were not (irect%y traceab%e to any o# the (i/i$ion$. In a((ition, P"ra inc"rre( intere$t e)'en$e o# P+00,000 in 2005. In re'ortin $e!ent in#or!ation, what a!o"nt $ho"%( be $hown a$ o'eratin 'ro#it o# Di/i$ion I #or 2005 a. P2,000,000 b. P1,0,000 c. P1,00,000 (. P2,200,000
+. &a!i%in &o!'any ha$ e$ti!ate( that tota% (e'reciation e)'en$e #or the year en(in Dece!ber *1, 2005 wi%% a!o"nt to P2,000,000, an( the 2005 yearen( bon"$e$ to e!'%oyee$ wi%% tota% P,000,000. &a!i%in 'ai( P500,000 'ro'erty ta)e$ a$$e$$e( #or the year 2005. On -"ne *0, 2005, &a!i%in inc"rre( a 'er!anent in/entory %o$$ #ro! !ar4et (ec%ine o# P00,000 an( %o$$ on $a%e o# %an( o# P200,000. In the interi! inco!e $tate!ent #or the $i) !onth$ en(e( -"ne *0, 2005, what tota% a!o"nt o# e)'en$e$ re%atin to the$e ite!$ $ho"%( be re'orte( a. P,250,000 b. P*,350,000 c. P*,50,000 (. P*,50,000
3. Ta%i'ao &o!'any$ P10,000,000 net inco!e #or the 9"arter en(e( Se'te!ber *0, 2005, inc%"(e( the #o%%owin a#terta) ite!$ •
•
A P1,200,000 ain rea%i=e( on A'ri% *0, 2005 wa$ a%%ocate( e9"a%%y to the $econ(, thir( an( #o"rth 9"arter$ o# 2005. A P*,000,000 c"!"%ati/e %o$$ re$"%tin #ro! a chane in in/entory /a%"ation !etho( wa$ reconi=e( on A""$t 2, 2005.
In a((ition, Ta%i'ao 'ai( P+00,000 on ;ebr"ary 1, 2005, #or 2005 ca%en(aryear 'ro'erty ta). O# thi$ a!o"nt, P150,000 wa$ a%%ocate( to the thir( 9"arter o# 2005. ;or the 9"arter en(e( Se'te!ber *0, 2005, Ta%i'ao $ho"%( re'ort net inco!e o# a. P12,+00,000 b. P11,00,000 c. P12,350,000 (. P 8,+00,000
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