PRACTICE EXERCISES – INTERIM FINANCIAL REPORTING
1. A financial reporting period shorter than a full financial year.
a. Quarter
b. Semi-annual
c. Interim period
d. Fiscal period
2. Which of the following entities are required under PAS 34 to present interim financial reports?
a. Listed entities
b. Non-listed entities
c. Publicly accountable entities
d. None of these
3. According to PAS 34, the frequency of an entity’s reporting (annual, half-yearly or quarterly) shall not affect
the measurement of its annual results. To achieve that objective, measurements for interim reporting
purposes shall be made
a. on an interim basis
b. on a year-to-date basis
c. on an individual transaction basis
d. on a prospective basis except when retrospective application is warranted
4. According to PAS 34, as a minimum, interim financial reports should include
a. A condensed set of financial statements and selected notes.
b. A complete set of financial statements.
c. A statement of financial position and a statement of profit or loss only.
d. A condensed set of financial statements with no note disclosures.
Periods for which interim financial statements are prepared
5. Candle Co. uses a calendar year period. If Candle Co. prepares quarterly interim reports, its second quarter
financial statements for the year 2023 will include statement of financial position dated:
Current period Comparative
a. 6 months ending June 30, 2023 6 months ending June 30, 2022
b. 3 months ending June 30, 2023; and 6 months 3 months ending June 30, 2022; and 6 months
ending June 30, 2023 ending June 30, 2022
c. As of June 30, 2023 As of June 30, 2022
d. As of June 30, 2023 As of December 31, 2022
6. Light Co.’s financial year ends on December 31. Light Co.’s interim report for the second quarter in 2022
includes statement of changes in equity dated as
Current period Comparative
a. 3 months ending June 30, 2023 3 months ending June 30, 2022
b. 6 months ending June 30, 2023 6 months ending June 30, 2022
c. 3 months ending June 30, 2023; and 6 months 3 months ending June 30, 2022
ending June 30, 2023
d. 3 months ending June 30, 2023; and 6 months 3 months ending June 30, 2022; and 6 months
ending June 30, 2023 ending June 30, 2023
Recognition and measurement
7. Sunday Co. is preparing its first interim financial statements which cover the first quarter of 2023. Sunday
Co. is wondering how the following items are to be accounted for, that is, whether the item is recognized
immediately in full in the current quarter or spread out to all the quarters of the year.
1. Depreciation
2. Temporary decline in the fair value of an investment in equity securities which is expected to reverse in
the next quarter
3. Results of discontinued operations
4. Cost of one-year insurance paid in advance
a. (1) spread out; (2) not recognized; (3) immediately in full; (4) spread out
b. (1) immediately; (2) immediately in full; (3) immediately in full; (4) spread out
c. (1) spread out; (2) deferred; (3) immediately in full; (4) spread out
d. (1) spread out; (2) Immediately in full; (3) immediately in full; (4) spread out
8. The statement of comprehensive income of Sunny Corporation for the first quarter ended March 31, 2023
is shown below:
Revenue 7,000,000
Cost of goods sold (3,000,000)
Gross profit 4,000,000
Other operating expenses (2,800,000)
Property tax expense (1,200,000)
Depreciation expense (240,000)
Insurance expense (60,000)
Profit (300,000)
Other comprehensive income:
Revaluation increase 150,000
Comprehensive income (150,000)
Additional information:
a. Sunny paid P60,000 for one-year fire insurance on January 1, 2023.
b. Sunny revealed its land from its original cost of P3,800,000 to P4,400,000 on February 14, 2023.
c. Sunny paid P1,200,000 property tax for 2023 on February 28.
d. Sunny uses the straight-line method of depreciation. The depreciation expense pertains to equipment
with a depreciable amount of P1,200,000 and an estimated useful life of 5 years.
How much is the correct comprehensive income for the quarter ended March 31, 2023?
a. 75,000 b. 525,000 c. 975,000 d. 1,425,000
9. The statement of profit or loss of Sunset Co. for the first quarter ended March 31, 2023 is shown below:
Revenue 9,000,000
Cost of goods sold (3,000,000)
Gross profit 6,000,000
Other operating expenses (2,800,000)
Impairment loss (125,000)
Profit 3,075,000
Additional information:
a. Sunset Co. pays its employees 13th month pay as year-end bonus. Since the bonus is paid only at year-
end, this is not reflected in the statement of profit or loss above. Sunset expects that a total bonus of
P2,800,000 will be paid to the employees on December 31, 2023. The estimate is based on Sunset’s
current number of employees, the employees’ expected service hours during the year and their
expected salary levels on December 31, 2023.
b. On March 1, 2023, the carrying amount of Sunset’s land exceeded its recoverable amount by P500,000.
A portion of this amount is recognized during the quarter.
c. On March 16, 2023, Sunset committed to a plan to sell a component of an entity. All the conditions of
PFRS 5 are met. The component incurred loss of P700,000 during the first quarter. Sunset decided to
defer the loss until the actual sale of the component. The component was sold on April 8, 2023.
How much is the profit (loss) for the quarter ended March 31, 2023?
a. 2,900,000 b. 2,375,000 c. 2,000,000 d. 1,300,000
10. Walnut Burl Co. expects to earn P200,000 pre-tax profit each quarter. Walnut Burl Co. has tax rates of 20%
on the first P400,000 of annual earnings and 30% on all additional earnings. (1) What is weighted average
annual income tax rate and (2) if actual earnings match expectations, how much is the income tax expense
for the third quarter?
a. (1) 20%; (2) 80,000 c. (1) 25%; (2) 50,000
b. (1) 20%; (2) 160,000 d. (1) 25%; (2) 200,000
