Ppl Cup

DIFFICULT

1. The Fitness Health Spa charges a non refundable annual membership fee of P 6,000 for its services. For this fee, each member receives a fitness evaluation (value P 1,000 ), a monthly magazine (annual value P 320), and 2 hours use of the equipment each week (annual value P 7,000) . Each of the three elements of the annual membership can be purchased separately. The initial direct costs to obtain the membership are P1,200. The direct cost of the fitness evaluation is P 500, and the monthly direct costs to provide the other services are estimated to be P 150 per person. A membership was sold to a customer on April 1, 2009.

The total fees earned by the company on this membership for the year ended December 31, 2009 is:

a. P 6,000 c. P 4,500

b. P 4,600 d. P 4,750

2. On January 1, 2009, Rockets Corporation issued a P 3 million 6% convertible bonds at par. The bonds are redeemable at a premium of 10% on December 31, 2012 or it may be converted into ordinary shares on the basis of 50 shares for each P 1,000 bond at the option of the holder. The interest rate of the equivalent bond without the conversion rights would have been 10%. The issuance of convertible bonds on January 1, 2009 increased the entity’s equity by (Round-off present value factors to four decimal places)

a. P 175, 518 b. P 380, 418 c. P 73,068 d. P 0

3. Detroit Corp. sells equipment with a carrying amount P 150,000 to Pistons Corp. for P170,000 when the equipments fair value is P 100,000 and then enters into a cancelable operating lease agreement to use the equipment for two years. In the current year, how much profit would Detroit Corp. record on the sale of the equipment.

a. P 20,000 b. P 70,000 c. P 50,000 d. Nil

4. Cavaliers Corporation made an accounting profit before tax of P 40,000 for the year ended June 2009. Included in the accounting profit were the following items of revenue and expenses.

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