Name: Brua, Mary Grace M.

Course-Year-and-Section : BSA - 2A
ASSIGMENT IN INTERMEDIATE ACCOUNTING 3

Cici (Chapter 2, No. 2)

Question:
From the given information, determine the amounts that shall be classified as (a) current assets and (b)
noncurrent assets as of December 31, 2023.
- Petty cash fund: P120,000
Current Assets: - Deferred tax assets: P1,000,000 (Assuming it is
- Cash in bank: P1,100,000 a current asset based on the context)
- Cash equivalents: P2,700,000 - Derivative assets (held-for-trading): P750,000
- Accounts receivable, net: P2,500,000 - P60,000 (Assuming it is a current asset based on the
= P2,440,000 (Net of credit balance) context)
- Notes receivable from selling of goods:
P860,000 Non-Current Assets:
- Inventories (excluding goods on consignment):
P3,300,000 - Land: P2,000,000
- Debit balances in suppliers' accounts: P450,000 - Office building, net: P5,600,000
- Loan receivable (portion due within one year): - Bond sinking fund: P1,400,000
We need to make an assumption here. Assuming - Investments in debt securities - FVTPL (Held-for-
the loan is payable in equal installments, the trading, maturing after one year): P4,900,000
portion due within one year is P800,000. The (maturing in 2027)
interest payment of 9% on P800,000 is also - Investments in debt securities at amortized cost
considered a current asset. Interest = 0.09 * (maturing after one year): P2,150,000 (maturing
800,000 = P72,000. Total current portion of loan in 2024) + P2,870,000 (maturing in 2028) =
receivable = P800,000 + P72,000 = P872,000 P5,020,000
- Investments in debt securities - FVTPL (Held-for- - Equipment, net: P4,600,000
trading, maturing within one year): P4,300,000 - Right-of-use asset: P3,800,000
(maturing in 2025) - Trademark, net: P800,000
- Investment in equity securities - FVTPL (held-for- - Furniture and fixtures, net: P1,300,000
trading): P900,000 - Goodwill: P2,550,000

Answer:
(a) Current Assets: Adding up all the current assets listed above, we get a total of approximately
P21,754,000.
(b) Non-Current Assets: Adding up all the non-current assets listed above, we get a total of approximately
P30,720,000.
ChatGPT (Chapter 2, No. 2)
a) Current Assets:
Current assets are those expected to be converted into cash, sold, or consumed within one year.

Asset Amount (₱)

Cash in bank 1,100,000 | Readily available cash |
Cash equivalents 2,700,000 | Short-term highly liquid investments |
Petty cash fund (coins & currency 30,000| Readily available for minor expenses |
Investments in debt securities (FVPTL, held-for-trading, maturity in 2027 4,900,000 | Classified as trading,
meaning short-term intent |
Investments in debt securities (failed SPPI test, maturity in 2025) 4,300,000 | Held-for-trading, making it a
current asset |
Investment in equity securities (FVPTL, held-for-trading) 900,000 | Trading investment, making it short-term
|
Inventories (excluding goods on consignment) 3,300,000 | Expected to be sold within the operating cycle |
Debit balances in suppliers' accounts 450,000 | Expected to be settled soon |
Notes receivable from selling of goods 860,000 | Typically collected within one year |
Total Current Assets 18,540,000 |

(b) Noncurrent Assets:

Noncurrent assets are held for long-term use and not expected to be converted into cash within one year.

Asset Amount (₱) Classification Reasoning

Land** | 2,000,000 | Long-term property |
Office building, net | 5,600,000 | Long-term structure |
Bond sinking fund (matures in 2026) | 1,400,000 | Reserved for long-term debt repayment |
Investment in debt securities at amortized cost (maturity in 2024) | 2,150,000 | Held until maturity,
noncurrent |
Investment in debt securities at amortized cost (maturity in 2028) | 2,870,000 | Held long-term |
Loan receivable (annual principal payments over several years) | 4,800,000 | Long-term receivable |
Deferred tax asset | 1,000,000 | Future benefit |
Trademark, net | 800,000 | Long-term intangible |
Derivative assets (held-for-trading) | 750,000 | Typically long-term if not settled within a year |
Furniture and fixtures, net | 1,360,000 | Long-term use |
Goodwill | 2,550,000 | Intangible, long-term benefit |
Right-of-use asset | 3,800,000 | Related to long-term leases |
Equipment, net | 4,600,000 | Used for long-term operations |
Accounts receivable, net | 2,200,000 | Assumed to be long-term (if short-term, should be current) |
Total Noncurrent Assets | ₱36,880,000 |

Final Total of All Assets

Total Current Assets 18,540,000
Total Noncurrent Assets3 6,880,000
Total Assets ₱55,420,000
Gemini (Chapter 2, No. 2)
Classification of CAWAYAN Company's assets as of December 31, 2023:

Current Assets: Total Current Assets: P20,410,000

* Cash in bank: P1,100,000
* Cash equivalents: P2,700,000 **Noncurrent Assets:
* Accounts receivable, net: P2,500,000 * Equipment, net: P4,600,000
* Allowance for bad debts: P300,000 * Right-of-use asset: P3,800,000
* Investments in debt securities - FVTPL (Held- * Land: P5,600,000
for-trading, maturing in 2027): P4,900,000 * Office building, net: P11,400,000
* Investments in debt securities at amortized cost * Bond sinking fund: P4,300,000
(maturing in 2024): P2,150,000 * Investments in debt securities - FVTPL (Failed
* Investment in equity securities - FVTPL (held- SPPI, maturing in 2025): P4,300,000
for-trading): P2,870,000 * Investments in debt securities at amortized cost
* Loan receivable, current portion: P800,000 (maturing in 2028): P2,870,000
* Inventories (excluding goods out on * Loan receivable, noncurrent portion:
consignment): P3,300,000 P4,000,000
* Debit balances in suppliers' accounts: * Deferred tax assets: P1,000,000
P450,000 * Trademark, net: P1,300,000
* Notes receivable from selling of goods: * Furniture and fixtures, net: P2,550,000
P860,000 * Goodwill: P120,000
* Derivative assets (held-for-trading): P750,000
* Petty cash fund (coins and currency only): Total Noncurrent Assets: P55,840,000
P30,000

Cici (Chapter 3, No. 5)

Question:
From the given information, prepare a properly classified statement of comprehensive income by classifying
the expenses using (a) nature of expense method; and (b) function of expense method.
(a) Nature of Expense Method: This method classifies expenses based on their inherent nature, regardless
of their function within the business. For example, all depreciation expenses are grouped together,
regardless of which department or function they relate to.
(b) Function of Expense Method: This method classifies expenses according to their function within the
business. For example, all expenses related to production are grouped together, even if they involve
different types of expenses (e.g., direct materials, labor, factory overhead).

Statement of Comprehensive Income (Nature of Commission Expense 800,000

Expense Method): Delivery Expense to Customers 680,000
Expense Category Amount (P) Depreciation - Factory Building 1,600,000
Advertising Expense 1,100,000 Depreciation - Factory Equipment 850,000
Depreciation - Office Building 1,800,000 Salary of Production Line Workers 2,500,000
Depreciation - Office Equipment 700,000 Salary of Store Employees 1,000,000
Depreciation - Store Building 920,000 Sales Allowances 200,000
Insurance Expense - Factory Building 110,000 Sales Discounts 500,000
Insurance Expense - Office Building 130,000 Sales Returns 420,000
Insurance Expense - Store Building 90,000 Transportation Expense - Direct Materials
Purchase Returns of Direct Materials 180,000 760,000
Purchase Returns of Indirect Materials 80,000 Transportation Expense - Indirect Materials
Purchases of Direct Materials 3,000,000 29,400,000
Purchases of Factory Supplies 900,000 Utilities Expense - Factory 160,000
Repairs and Maintenance - Factory 400,000 Utilities Expense - Office 950,000
Repairs and Maintenance - Office 250,000 Utilities Expense - Store 600,000
Salary of Factory Administration 1,200,000 Total Expenses (Partial) 40,000,000 (approx)
Salary of Office Employees 2,800,000

Statement of Comprehensive Income (Function of Expense Method):

Expense Category Amount (P)
Cost of Goods Sold (Requires calculation using
beginning and ending inventory
and direct costs)

Selling Expenses (Requires summation of relevant

selling expenses)

Administrative Expenses (Requires summation of relevant

administrative expenses)

Total Expenses

Net Income/Loss

Answer:
Due to incomplete information in the image, I cannot provide a complete statement of comprehensive
income. To complete the statements, please provide the missing data from the image.
ChatGPT (Chapter 3, No. 5)
I can help you prepare the properly classified Statement of Comprehensive Income using both the Nature of
Expense Method and the Function of Expense Method based on the given data. I'll calculate it step by step.

1. Nature of Expense Method

This method groups expenses by their nature (e.g., depreciation, salaries, utilities) without allocating them
to specific functions like cost of sales, administrative expenses, or selling expenses.
2. Function of Expense Method
This method classifies expenses by their function (e.g., cost of goods sold, selling expenses, administrative
expenses).

Statement of Comprehensive Income

a) Nature of Expense Method

This method groups expenses based on their type.

Particulars Amount (₱)

Sales Revenue 29,400,000
Less: Cost of Goods Sold (COGS) (9,860,000)
Gross Profit 19,540,000
Less: Operating Expenses (14,240,000)
Net Income 5,300,000

b) Function of Expense Method

This method groups expenses based on their function (e.g., manufacturing, selling, administrative).

Particulars Amount (₱)

Sales Revenue 29,400,000
Less: Cost of Goods Sold (COGS) (9,860,000)
Gross Profit 19,540,000
Less: Selling Expenses (7,040,000)
Less: Administrative Expenses (7,200,000)
Net Income 5,300,000

Key Calculations:
- **Cost of Goods Manufactured (COGM): ₱9,510,000
- **Cost of Goods Sold (COGS): ₱9,860,000
- **Gross Profit: ₱19,540,000
- **Total Operating Expenses: ₱14,240,000
- **Net Income: ₱5,300,000
Gemini (Chapter 3, No. 5)
Statement of Comprehensive Income for PORTFOLIO Company using both the nature of expense and
function of expense methods.

A. Nature of Expense Method

PORTFOLIO Company
Statement of Comprehensive Income
For the Year Ended December 31, 2023

Sales Revenue P29,400,000

Sales Returns (420,000)
Sales Allowances (200,000)
Sales Discounts (500,000)
Net Sales P28,280,000

Cost of Goods Sold:

Beginning Finished Goods Inventory P3,950,000
Add: Cost of Goods Manufactured (See below) 21,900,000
Goods Available for Sale 25,850,000
Less: Ending Finished Goods Inventory 3,600,000
Cost of Goods Sold 22,250,000

Gross Profit P6,030,000

Operating Expenses:
Advertising Expense P1,100,000
Commission Expense 680,000
Delivery Expense to Customers 1,600,000
Depreciation Expense (See below) 3,650,000
Insurance Expense (See below) 340,000
Repairs and Maintenance (See below) 650,000
Salaries Expense (See below) 6,500,000
Transportation Expense - Indirect Materials 160,000
Utilities Expense (See below) 2,400,000
Other Operating Expenses (Factory Supplies) 80,000 *
Total Operating Expenses 17,180,000

Income from Operations (P11,150,000)

Other Income/Expenses:
None Given

Net Income/Loss (P11,150,000)

Cost of Goods Manufactured:

Beginning Work-in-Process Inventory P2,100,000
 Direct Materials:
Beginning Direct Materials Inventory P1,350,000
Add: Purchases of Direct Materials 3,000,000
Less: Purchase Returns 180,000
Net Purchases of Direct Materials 2,820,000
Add: Transportation In 760,000
Direct Materials Available for Use 4,930,000
Less: Ending Direct Materials Inventory 1,100,000
Direct Materials Used in Production 3,830,000
Direct Labor:
Salaries of Production Line Workers 2,500,000
Factory Overhead:
Depreciation - Factory Building 1,800,000
Depreciation - Factory Equipment 920,000
Insurance - Factory Building 110,000
Repairs & Maintenance - Factory 400,000
Utilities - Factory 950,000
Salary of Factory Administration 1,200,000
Indirect Materials 900,000
Total Factory Overhead 5,380,000
Total Manufacturing Costs 11,710,000
Less: Ending Work-in-Process Inventory 2,400,000
Cost of Goods Manufactured P21,900,000

Depreciation Expense:
Depreciation - Factory Building P1,800,000
Depreciation - Factory Equipment 920,000
Depreciation - Office Building 700,000
Depreciation - Store Building 230,000
Total Depreciation Expense P3,650,000

Insurance Expense:
Insurance - Factory Building P110,000
Insurance - Office Building 130,000
Insurance - Store Building 100,000
Total Insurance Expense P340,000

Repairs and Maintenance:

Repairs & Maintenance - Factory P400,000
Repairs & Maintenance - Office 250,000
Total Repairs and Maintenance Expense P650,000

Salaries Expense:
Salary of Factory Administration P1,200,000
Salary of Office Employees 2,800,000
Salary of Production Line Workers 2,500,000
Total Salaries Expense P6,500,000
Utilities Expense:
Utilities - Factory P950,000
Utilities - Office 750,000
Utilities - Store 700,000
Total Utilities Expense P2,400,000

Factory supplies are treated as other operating expenses under the nature of expense method.

B. Function of Expense Method

This method groups expenses according to their function (e.g., cost of sales, selling expenses,
administrative expenses).
PORTFOLIO Company
Statement of Comprehensive Income
For the Year Ended December 31, 2023

Sales Revenue P29,400,000

Sales Returns (420,000)
Sales Allowances (200,000)
Sales Discounts (500,000)
Net Sales P28,280,000
Cost of Goods Sold (See computation in Nature method) 22,250,000
Gross Profit P6,030,000
Operating Expenses:
Selling Expenses:
Advertising Expense P1,100,000
Commission Expense 680,000
Delivery Expense to Customers 1,600,000
Depreciation - Store Building 230,000
Insurance - Store Building 100,000
Salaries - Store Employees 2,500,000
Utilities - Store 700,000
Total Selling Expenses 6,910,000
Administrative Expenses:
Depreciation - Office Building 700,000
Depreciation - Office Equipment 920,000
Insurance - Office Building 130,000
Repairs & Maintenance - Office 250,000
Salaries - Office Employees 2,800,000
Utilities - Office 750,000
Total Administrative Expenses 5,550,000

Manufacturing Overhead (See computation in Nature method) 5,380,000

Total Operating Expenses 17,840,000

Income from Operations (P11,810,000)
Other Income/Expenses:
None Given
Net Income/Loss (P11,810,000)
 Key Points and Explanations

Cost of Goods Sold: Calculated the same way under both methods.
Operating Expenses: Classified differently based on the method.
Nature of Expense: Expenses are grouped by type (depreciation, salaries, etc.).
Function of Expense: Expenses are grouped by function (selling, administrative).
Manufacturing Overhead: In the function of expense method, manufacturing overhead is presented as a separate line item within operating
expenses. It includes all the indirect costs associated with production.
Direct Materials, Direct Labor, and Factory Overhead: These are the components of Cost of Goods Manufactured, which is used to calculate Cost of
Goods Sold.
Factory Supplies: Under the nature of expense method, factory supplies are classified as "Other Operating Expenses" because they are not directly
related to any specific function. In the function method, these may be included under manufacturing overhead if they are considered indirect
materials. I have included them in manufacturing overhead in the function method.

Cici (Chapter 4, No. 2)

To prepare a Statement of Changes in Equity for LUMBER Company for the year 2023, we need to account for
the various equity transactions that occurred during the year.

Statement of Changes in Equity for the Year Ended December 31, 2023:
Particulars Share Share Revaluation Cumulative Retained Treasury Total Equity
Capital Premium Surplus Net Earnings Shares
Translation
Gain
Balances at P8,000,000 P1,000,000 P2,500,000 P900,000 P4,800,000 (P240,000) P16,960,000
January 1,
2023
Transactions
during 2023:

Issue of P800,000 P200,000 P1,000,000

40,000
shares at
P25
Issue of P600,000 P90,000 P690,000
30,000
shares at
P23
Revaluation P1,500,000 P1,500,000
increase
Translation P200,000
gain
Net income P3,000,000 P3,000,000
for the year
Dividends (P1,800,000) (P1,800,000)
declared
Acquisition (P240,000) (P240,000)
of treasury
shares
Balances at P10,000,000 P1,290,000 P4,000,000 P1,100,000 P6,000,000 (P480,000) P21,910,000
December
31, 2023
Chat GPT (Chapter 4, No. 2)
LUMBER Company
Statement of Changes in Equity for the Year 2023
Particulars Share Share Revaluation Translation Retained Treasury Total Equity
Capital Premium Surplus Gain Earnings Shares
Beginning ₱8,000,000 ₱1,000,000 ₱2,500,000 ₱900,000 ₱4,800,000 (₱240,000) ₱16,960,000
Balance
Issuance of ₱1,400,000 ₱290,000 ₱1,690,000
Shares
Revaluation ₱1,500,000 ₱1,500,000
Increase
Translation ₱200,000 ₱200,000
Gain
Net Income ₱3,000,000 ₱3,000,000
Dividends (₱1,800,000) (₱1,800,000)
Declared
Acquisition
of Treasury
Shares
Ending ₱9,400,000 ₱1,290,000 ₱4,000,000 ₱1,100,000 ₱6,000,000 (₱240,000) ₱21,550,000
Balance
Gemini (Chapter 4, No. 2)
LUMBER Company
Statement of Changes in Equity
For the Year Ended December 31, 2023
Particulars Share Share Revaluation Net Retained Treasury Total Equity
Capital Premium Surplus Cumulative Earnings Shares
Translation
Gain
Beginning ₱8,000,000 ₱1,000,000 ₱2,500,000 ₱900,000 ₱4,800,000 (₱240,000) **₱16,960,000
Balance
Issuance of
Shares;
40,000 ₱800,000 ₱200,000 **₱1,000,000
shares @
P25
30,000 ₱600,000 ₱90,000 **₱690,000
shares @
P23
Revaluation ₱1,500,000 ₱1,500,000
of Land
Translation ₱200,000 ₱200,000
Gain
Net Income ₱3,000,000 ₱3,000,000
Dividends (₱1,800,000) (₱1,800,000)
Declared
Treasury (₱240,000) (₱240,000)
Shares
Acquired
Ending ₱9,400,000 ₱1,290,000 ₱4,000,000 ₱1,100,000 ₱6,000,000 (₱480,000) ₱21,310,000
Balance

**Explanation of Transactions:**
* **Issuance of Shares:**
* When shares are issued at a price higher than the par value, the excess is recorded as share premium.
* 40,000 shares at P25: Share Capital = 40,000 * P20 = P800,000; Share Premium = 40,000 * (P25-P20) = P200,000
* 30,000 shares at P23: Share Capital = 30,000 * P20 = P600,000; Share Premium = 30,000 * (P23-P20) = P90,000
* **Revaluation of Land:**
* The increase in the value of land is credited to the revaluation surplus account.
* **Translation Gain:**
* Translation gains are credited to the cumulative net translation gain account.
* **Net Income:**
* Net income for the year increases retained earnings.
* **Dividends Declared:**
* Dividends declared are deducted from retained earnings.
* **Treasury Shares Acquired:**
* The cost of treasury shares acquired is debited to the treasury shares account, which is a contra-equity account (reduces total equity). It's
important to note that the problem states "A number" of treasury shares were acquired, and the ending balance of treasury shares is P480,000. Since
the beginning balance was P240,000, this means an *additional* P240,000 worth of treasury shares were acquired during the year.

This statement shows the changes in each equity account during the year and the ending balances as of December 31, 2023.