BOARD WORK AND SEATWORK CHALLENGE 2018

STATEMENT OF FINANCIAL PERFORMANCE

(NARUTO SHIPPUDEN EDITION)
1. UZUMAKI NARUTO Company reported net income of P7,410,000 for the current year. The
auditor raised question about the following amounts that had been included in net income:
Unrealized loss on foreign currency translation (540,000)
Gain on early retirement of bonds payable 2,200,000
Adjustment of profit of prior year for error
in depreciation (net of tax effect) (750,000)
Loss from fire (1,400,000)
What amount should be reported as adjusted net income?

a. 6,500,000 c. 8,160,000
b. 6,610,000 d. 8,700,000

2. SASUKE UCHIHA Company reported income before tax of P5,000,000 for the current year. The
auditor questioned the following amounts that had been included in income before tax:
Equity in earnings of Cinn Company -40% interest 1,600,000
Dividend received from Cinn Company 320,000
Adjustment of profit year for arithmetical error in
depreciation (1,400,000)
What amount should be reported as income before tax?

a. 3,400,000 c. 4,800,000
b. 4,680,000 d. 6,080,000

3. SAKURA HARONO Company has a comprehensive insurance policy that allows assets to be
replaced at current value. The policy has a P250,000 deductible clause. One of the entity’s
waterfront warehouses was destroyed in winter storm. Such storms occur approximately every
four years. The entity incurred P100,000 of cost in dismantling the warehouse and plans to
replace it. The following data relate to the warehouse:
Current carrying amount 1,500,000
Replacement cost 5,500,000
What amount of gain should be reported as a component of income from continuing
operations?

a. 5,150,000 c. 3,650,000
b. 3,900,000 d. 0

4. KAKASHI HATAKE Company provided the following information for the current year:
Sales 50,000,000
Cost of goods sold 30,000,000
Distribution costs 5,000,000
General and administrative expenses 4,000,000
Interest expense 2,000,000
Gain in early extinguishment of long-term debt 500,000
Correction of inventory error, net of income tax-credit 1,000,000
Investment income – equity method 3,000,000
Gain on expropriation 2,000,000
Income tax expense 5,000,000
Dividends declared 2,500,000
What is the income from continuing operations?

a. 9,000,000 c. 9,500,000
b. 8,000,000 d. 7,000,000

5. TSUNADE SENJU Company provided the following information for the current year:
Sales 5,000,000
Cost of goods sold 2,800,000
Foreign translation adjustment – credit 400,000
Selling expenses 700,000
Unusual and infrequent gain 400,000
Correction of inventory error 200,000
General and administrative expenses 600,000
 Income tax expense 150,000
Gain on sale of investment 50,000
Proceeds from sale of land at cost 800,000
Dividends 300,000
What amount should be reported as income from continuing operations?

a. 1,200,000 c. 1,600,000
b. 1,350,000 d. 2,000,000

6. HASHIRAMA SENJU Company provided the following information for the current year:
Sales 7,000,000
Sales returns and allowances 100,000
Cost of goods sold 2,800,000
Utilities expense 1,000,000
Interest revenue 150,000
Income tax expense 800,000
Casualty loss due to earthquake 50,000
Finance cost 200,000
Salaries expense 600,000
Loss on sale of investments 50,000
What amount should be reported as income from continuing operations?

a. 1,550,000 c. 2,350,000
b. 1,600,000 d. 1,400,000

7. ITACHI UCHIHA Company provided the following information for the current year:
Uncollectible accounts expense 2,000,000
Freight out 3,500,000
Cost of sales 40,000,000
Loss on sale of equipment 1,500,000
Loss from typhoon 3,000,000
Sales 90,000,000
Interest income 4,000,000
Administrative expenses 10,000,000
Finished goods inventory, January 1 60,000,000
Sales commissions 7,000,000
Finished goods inventory, January 31 55,000,000
Income tax rate 30%
What amount should be reported as income from continuing operations?

a. 30,000,000 c. 27,000,000
b. 19,500,000 d. 18,900,000

8. AKATSUKI Company had the following events and transactions during 2014:
 Depreciation for 2012 was understated by P300,000.
 A litigation settlement resulted in a loss of P250,000.
 The inventory on December 31, 2012 was overstated by P200,000.
 The entity disposed of a recreational division at a loss of P500,000.
 Income tax rate is 30%.
What is the effect of these events on the income from continuing operations for
2014?

a. 175,000 c. 665,000
b. 385,000 d. 525,000

9. ALLIED SHINOBI Company provided the following for the current year:
Net income 3,500,000
Unrealized gain on derivative contract 250,000
Foreign currency translation adjustment – debit 50,000
Revaluation surplus 1,000,000
What is the comprehensive income for the current year?

a. 3,700,000 c. 4,800,000
b. 4,700,000 d. 4,500,000
 10. TOBIRAMA Company an investment entity, provided the following income and expenses for the
current year:
Dividend income from investments 9,200,000
Distribution income from trusts 500,000
Interest income on deposits 700,000
Income from bank treasury bills 100,000
Unrealized gain on derivative contract 400,000
Income from dealing in securities and derivatives held
from trading 600,000
Write-down of securities and derivatives held for trading 150,000
Other income 250,000
Finance cost 300,000
Administrative staff costs 3,800,000
Sundry administrative costs 1,200,000
Income tax expense 1,700,000
What is the comprehensive income for the current year?

a. 4,200,000 c. 3,800,000
b. 4,600,000 d. 9,200,000

11. IRUKA-SENSEI Company provided the following information for the current year?
Sales 9,500,000
Interest revenue 250,000
Gain sale of equipment 100,000
Revaluation surplus during the year 1,200,000
Share of profit of associate 350,000
Cost of goods sold 6,000,000
Finance cost 150,000
Administrative expenses 300,000
Distribution costs 500,000
Translation loss on foreign operation 200,000
Income tax expense 950,000
What is the net income for the current year?

a. 2,300,000 c. 4,200,000
b. 3,300,000 d. 2,100,000

12. JIRAIYA Company provided the following data for the current year:
Sales 9,750,000
Share of profit of associate 450,000
Decrease in inventory of finished goods 250,000
Raw materials and consumables used 3,500,000
Employee benefit expense 1,500,000
Translation gain on foreign operation 300,000
Impairment loss 800,000
Finance cost 350,000
Other operating expenses 900,000
Income tax expense 900,000
Unrealized gain on interest rate swap designated
as a cash flow hedge 200,000
What is the net income for the current year?

a. 2,900,000 c. 2,000,000
b. 2,500,000 d. 1,850,000

13. NAGATO Company provided the following data for the current year:
Retaining earnings, January 1 3,000,000
Dividends 1,000,000
Sales 8,350,000
Dividend income 100,000
Inventory, January 1 1,040,000
Purchases 3,720,000
Salaries 1,540,000
 Contribution to employees’ pension fund 280,000
Delivery 205,000
Miscellaneous expense 125,000
Doubtful accounts expense 10,000
Depreciation expense 85,000
Loss on sale of securities 40,000
Loss on inventory write down 150,000
Income tax 735,000
Inventory on December 31 was valued at P700,000 (P850,000 less P150,000 write down of
absolute inventory).
1. What is the cost of goods sold?

a. 4,760,000 c. 3,910,000
b. 4,060,000 d. 4,210,000

2. What is the income from continuing operations?

a. 2,105,000 c. 1,520,000
b. 1,370,000 d. 1,410,000

3. What is the balance of retained earnings on December 31?

a. 4,370,000 c. 4,520,000
b. 3,370,000 d. 3,520,000

“Never give up! Just do it!”

-Naruto Uzumaki

E-07-17-2018-BSBAFM3A/3B