empleo chapter 6 - investments in financial instruments

CHAPTER 6 – INVESTMENTS IN FINANCIAL INSTRUMENTS

Multiple Choice – Theories

1. B 2. A 3. B 4. D 5. C 6. A 7. B 8. C 9. B 10. D

Problem 1 A Corporation B Corporation C Corporation D Corporation E Corporation Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Jan 3 1,000 54,000 8 1,000 60,000 Apr 5 (500) (27,000) 8 1,000 30,000 1,000 36,000

July 15 500 20,000 Dec 8 50 Bal.

before adj to

FV

500

27,000

1,000

60,000

1.000

30,000

1,000

36,000

550

20,000 Adj 500 (6,000) 2,000 3,000 900 Per

audit

500

27,500

1,000

54,000

1,000

32,000

1,000

39,000

550

20,900 (a) Audit Adjusting Entries: Financial Assets at FV through P&L 1,000 Dividend Income 1,000 Financial Assets at FV through P&L 1,000 Gain on Sale of FVPL 1,000 Treasury Shares 33,000 Financial Assets at FV through P&L 33,000 Financial Assets at FV through P&L 20,000 Treasury Shares 16,500 Paid in Capital from Treasury Shares 3,500 Dividend Income 2,000 Financial Assets at FV through P&L 2,000 Financial Assets at FV through P&L 1,200 Dividend Income 1,200 Dividend Receivable 5,000 Dividend Income 5,000

SOLUTIONS TO INVESTMENTS IN FINANCIAL INSTRUMENTS

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Financial Assets at FV through P&L 400 Unrealized Gain on FVPL 400 (b) (1) Carrying amount of FVPL (see worksheet above) P173,400 (2) Gain on sale of FVPL = 28,000 – 27,000 = P 1,000 (3) Dividend Income = 1,000 + 1,200 + 5,000 = P 7,200 (4) Unrealized gain or loss on FVPL P 400 Problem 2 1. Selling price on May 20 P21,000 Carrying value of shares sold 40,000 x 250/750 shares 13,333 Gain on Shares sold P7,667 2. Proceeds from sale P8,500 Dividends included (sold dividends on) = 100 x 10 (1,000) Selling price without dividends P7,500 Carrying value 26,667 x 100/500 5,333 Gain on December 10 sale P 2,167 3. Dividend Income for the year 2012: November dividends 500 shares x P 5 P2,500 Dividends on 100 shares sold (100 x P50 x 20%) 1,000 Dividends accrued on December 31 (400 x P50 x 20%) 4,000 Total dividend income P7,500 4. Adjusted balance of the investment account shares Peso balance Market value, January 1 500 P40,000 April 30 stock dividend 250 May 20 sale (250) (13,333) Dec 10 sale (100) (5,333) Balances before adjustment to market 400 21,334 Adjustment to market 12,466 Balance, December 31, at market 400 34,000 Adjusting Entries Dividend Income 20,500 Trading Securities 20,500 Trading Securities 7,667 Gain on Sale of Trading Securities 7,667 Trading Securities (8,500 – 5,333) 3,167 Gain on Sale of Trading Securities 2,167 Dividend Income 1,000 Dividends Receivable 4,000 Dividend Income 4,000


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Trading Securities 12466 Unrealized Gain on Trading Securities 12,466 Problem 3 Investment in Creamy Company 135,000 Unrealized Gain /Loss on Equity Investments–

Other Comprehensive Income

135,000 12,000 x 65 = 780,000 780,000 – 645,000 = 135,000 Dividend Income 24,000 Retained Earnings 24,000 Dividends accrued last year. Dividend Income 6,000 Investment in Creamy 6,000 Dividends included in the purchase price

of March 5 acquisition, acquired dividends-‐on.

Investment in Creamy 35,000 Unrealized Gain /Loss on Equity Investments

-‐ OCI 35,000

Selling price P360,000 Previous carrying value = fair value on January 1 5,000 x 65 325,000 Unrealized gain – OCI P 35,000

*Unrealized Gain/Loss on Equity Investments – OCI 135,000 Retained Earnings 135,000 3,000 (72 – 35) + 2,000 (72-‐60) =135,000 Investment in Coffee 3,000 Dividend Income 3,000 Property dividends should be recorded at

market. (1,000 x 4) – 1,000 = 3,000

Investment in Creamy 25,000 Unrealized Gain/Loss on Equity Investments

-‐ OCI 25,000

Selling price = FV 1,000 x 90 = 90,000 Previous CV = FV, Jan. 1 = 65,000 Unrealized Gain 25,000

Miscellaneous Receivables 90,000 Investment in Creamy (1,000 x 90) 90,000


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*Unrealized Gain/Loss on Equity Investments -‐ OCI 30,000 Retained Earnings 30,000

1,000 ( 90 – 60) = 30,000

Investments in Creamy 210,000 Unrealized Gain/Loss on Equity Investments

-‐ OCI 210,000

FV, 12/31/12 = 9,000 x 90 = 810,000 Previous CV : Old = FV, Jan. 1 = 6,000 x 65 = 390,000

New= 3,000 x 70 = 210,000 600,000 Unrealized Gain – OCI 210,000

Unrealized Gain/Loss on Equity Investments -‐ OCI 500 Investment in Coffee

1,000 (3.50 – 4) = 500 500

Note to the Teacher: At the date of sale, the investments at fair value through other comprehensive income are adjusted to fair value (presumed to be equal to the selling price on the date of sale). Thus, no gain or loss on sale is recognized in profit or loss. The entry transferring the cumulative unrealized gain or loss (equity account) to the retained earnings account is optional. Problem 4 Financial Assets at FV through Profit or Loss Red Corp Preference Red Corp. Ordinary Blue Ordinary Yellow Ordinary Shares Peso amt Shares Peso amt Shares Peso amt Shares Peso amt 1/1/10 1,000 45,000 6,000 65,000 2,000 55,000 1/17 (2,500) (27,083) 2/14 200 6/01 (500) (12,500) 10/01 (500) (22,500) 1,500 30,000 Before adj. 500 22,500 1,500 30,000 3,500 37,917 1,700 42,500 Adj to market

5,500

583

(5,100)

MV 12/31 500 28,000 1,500 30,000 3,500 38,500 1,700 37,400 Non-‐Current Investments Investment in Associate – Green Company Acquisition cost P1,600,000 Dividends received 100,000 x P0.50 x 4 (200,000) Income from associate 25% x P1,200,000 300,000 Investment in Associate , 12/31/2012 P1,700,000 Gains and losses On sale of Blue on January 17 Selling price P32,500 Carrying value (P65,000 x 2,500/6,000 27,083 Gain on sale P 5,417


5

On sale of Yellow Selling price 500 x P21 P10,500 Carrying value (P55,000 x 500/2200) 12,500 Loss on sale P 2,000 On conversion of Red Preference to Red Ordinary Market value 500 x P60 P30,000 Carrying value P45,000 x 500/1000 22,500 Gain on exchange P 7,500 Dividend Income On Red preference April 6 1,000 x 1.20 P1,200 Oct, 6 1,000 x 1.20 1,200 On Blue ordinary June 30 3,500 x P1 3,500 P5,900 Unrealized gains on FVPL (see above working papaer) P5,500 + 583 – 5,100 = P 983 Income from Associate (Green Company) 25% x P1,200,000 P 300,000 Problem 5 PV at March 1, 2011 = (P400,000 x .74726) + (18,000 x 4.21236) = 298,904 + 75,822 = 374,726 May 1, 2011 purchase price: Fair value at March 1, 2011 = P374,726 Discount amortization March 1 to May 1 6% x 374,726 = P22,484 4.5% x 400,000 = 18,000 Amortization for 6 months P 4,484 No. of months-‐ Mar. 1 to May 1 2/6 1,495 Purchase price P376,221 Accrued interest 400,000 x 9% x 2/12 6,000 Total cash paid P382,221 May 1 FVPL -‐ XYZ Bonds 376,221 Interest Income 6,000 Cash 382,221 Sept 1 Cash 18,000 Interest Income 18,000 Dec 31 Interest Receivable 12,000 Interest Income 12,000


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Dec. 31 FVPL – XYZ Bonds 51,779 Unrealized Gains on FVPL 51,779 Market value P428,000

Ledger balance 376,221 Unrealized gain P 51,779

2012 Mar. 1 Cash 18,000 Interest Receivable 12,000 Interest Income 6,000 May 1 Cash 125,400 Loss on Sale of FVPL ( 4% x 120,000) 4,800 FVPL – XYZ Bonds (107% x 120,000) 128,400 Interest Income 1,800 Selling price 120,000 x 103% P123,600 Accrued interest 120,000 x 9% x

2/12

1,800

Total cash received P125,400 July 1 Cash 4,500 FVPL – XYZ Ordinary Shares (2,200 x 80) 176,000 FVPL – XYZ Bonds (150,000 x 107%) 160,500 Gain on Exchange of FVPL 15,500 Interest Income (150,000 x 9% x

4/12) 4,500

Sept. 1 Cash (150,000 x 9% x 6/12) 6,750 Interest Income 6,750 Dec. 31 Interest Receivable (150,000 x 9% x 4/12) 4,500 Interest Income 4,500 31 Unrealized Loss on FVPL 3,000 FVPL – XYZ Bonds ( 2% x 150,000) 3,000 2013 Mar. 1 Cash 6,750 Interest Receivable 4,500 Interest Income 2,250 Sept. 1 Cash 6,750 Interest Income 6,750 1 Cash 150,000 Loss on Sale of FVPL 7,500 FVPL – XYZ Bonds (105% x 150,000) 157,500


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Problem 6

Amortization Table

Date Nominal Interest(4%)

Effective Interest (5%)

Amortization Carrying Value, end

6/1/11 P369,150 12/1/11 16,000 18,458 2,458 371,608 6/1/12 16,000 18,580 2,580 374,188 12/1/12 16,000 18,709 2,709 376,897 6/1/13 16,000 18,845 2,845 379,742 12/1/13 16,000 18,987 2,987 382,729 06/1/14 16,000 19,136 3,136 385,865

1. Interest Income, 2011 18,458 + (18,580 x 1/6) P21,555 2. Interest Income, 2012 (18,580 x 5/6) + 18,709 + (18,845 x 1/6) P37,333 3. Interest Income, 2013 (18,845 x 5/6) + 18,987 + (19,136 x 1/6) P37,880 4. Carrying Value, 12/31/12 CV, 12/1/12 P376,897 Amortization 12/1 to 12/31 (2845 x 1/6) 474 CV, 12/31/12 P377,371 Problem 7 Entries that should have been made: Jan. 21 Investment in Pearl 204,000 Interest Income 2,550 Cash 206,550 Mar. 1 Cash 106,000 Investment in Pearl (204,000 x 100/200) 102,000 Interest Income (100,000 x 9% x 3/12) 2,250 Gain (Loss) on Sale of Trading Securities 1,750 June 1 Cash 4,500 Interest Income 4,500 Nov. 1 Cash 41,900 Gain (Loss) on Sale of Trading Securities 400 Investment in Pearl (204,000 x 40/200) 40,800 Interest Income (40,000 x 9% x 5/12) 1,500


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Dec. 1 Cash 2,700 Interest Income 2,700 60,000 x 9% x 6/12 31 Interest Receivable 450 Interest Income 450 60,000 x 9% x 1/12 31 Investment in Pearl 600 Unrealized Gains on Trading Securities 600 (60,000 x 1.03) – (204,000 x 60/200) Audit Adjustments Interest Income 2,550 Investment in Pearl 2,550 Investment in Pearl 4,000 Interest Income 2,250 Gain on Sale of TS 1,750 Investment in Pearl 4,500 Interest Income 4,500 Investment in Pearl 1,100 Loss on Sale of TS 400 Interest Income 1,500 Investment in Pearl 2,700 Interest Income 2,700 Dividend Receivable 450 Interest Income 450 Investment in Pearl 600 Unrealized Gains on TS 600 SUPPLY THE REQUIRED INFORMATION

1. P12 per share 2. 2,500 3. 3,500 gain 4. 6,500 5. 350 6. 15,800 7. 55,200 8. 1,600 9. 376,400


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10. 3,776,400 11. 0 12. 48,279 13. 2,167,000 14. 365,218 15. 360,000 16. 160,000 17. 35,000 loss 18. 1,970,000 19. 50,000 gain 20. 0 21. 30,000 22. 0 23. 0 24. 15,000 25. 116,000 26. 0 27. 1,816,000 28. 3,333 29. 1,000 gain 30. 18,300 gain 31. 200 gain 32. 10,600 33. 77,100 34. 55,000 35. 4,125 36. 111,000 37. 2,293,500 38. 316,500 39. 31,500 40. 4,125 41. 136,300 42. 0 43. 52,900 44. 7,500 45. 758,600 46. 3,133

Final Answers Computations 1. P36,000 or P12 per share 2. P2,500 gain Net selling price: (1,000 x 8) -‐ 500 = P7,500 Cost of shares sold P 30,000 x 1,000/6,000 5,000 Gain on sale P 2,500 3. P3,500 gain Selling price 1,000 x 8.50 P8,500 Cost of shares sold


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4. P6,500 Property dividends 5,000/5 x P2.50 P2,500 Cash dividends 5,000 x 0.80 4,000 Total dividend income P6,500 5. P350 500 (3.20 – 2.50) P 350

6. P15,800 Unrealized Gain or Loss on AFS 01-‐01 Balance P6,000

03-‐17 1,000/6,000 x P6,000 (1,000) 11-‐30 1,000/6,000 x 6,000 (1,000) 12-‐31 Market value 6,000 x P 9.20 = P55,200 Cost 35,400 Cumulative Unrealized Gain 19,800 Balance before adjustment to FV 6,000 – 1,000 – 1,000 4,000 Unrealized gain this year in OCI 15,800 Cumulative balance in equity, Dec. 31 P19,800

7. P55,200 6,000 x 9.20 P55,200 8. P1,600 500 X 3.20 P 1,600 DEXTER COMPANY AFS – Y Company Ordinary Date Shares Total Cost Gain(loss) Dividend Income 01-‐01-‐12 3,000 P30,000 01-‐12-‐12 3,000 03-‐17-‐12 (1,000) (5,000) P2,500 06-‐30-‐12 1,000 x P2.50 = P2,500 10-‐01-‐12 2,000 15,400* 10-‐20-‐12 5,000 x 0.80= 4,000 11-‐30-‐12 (1,000) (5,000) 3,500 12-31-12 Balances

6,000

P35,400

P6,000

P6,500

• 2,000 (8.50 -‐ .80 dividends on) = 15,400

FVPL – B Co. Ordinary

Date Shares Total CV Gain(loss) Dividend Income 06-‐30-‐12 1,000 P2,500 9-‐10-‐12 (500) (1,250) 150 12-‐31-‐12 UGL 500 x (3.20 – 2.50)

350

12-‐31-‐12 balances 500 shares P1,600 Unrealized Gain or Loss on AFS


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01-‐01-‐12 Balance P6,000 03-‐17 1,000/6,000 x P6,000 (1,000) 11-‐30 1,000/6,000 x 6,000 (1,000) 12-‐31 Market value 6,000 x P 9.20 = P55,200 Cost 35,400 Cumulative Unrealized Gain 19,800 Balance before adjustment to FV 6,000 – 1,000 – 1,000 4,000 Unrealized gain this year in OCI 15,800 Cumulative balance in equity, Dec. 31 P19,800

Items 9 through 14: Kristine Company

Interest Date

9%Interest Paid

10%Effective Interest

Discount Amortization

Amortized Cost, End

Jan. 1, 2012 P3,760,000 June 30, 2012 P180,000 188,000 P8,000 3,768,000 Dec. 31, 2012 P180,000 188,400 8,400 3,776,400 June 30, 2013 P180,000 188,820 8,820 3,785,220 Dec. 31, 2013 P180,000 189,261 9,261 3,794,481 June 30, 2014 P180,000 189,724 9,724 3,804,205 Dec. 31, 2014 P180,000 190,210 10,210 3,814,415 Final Answers Computations 9. P376,400 P188,000 + 188,400 = P376,400 10. P3,776,400 11. P0 12. P48,279 Selling price on November 30 (1.8M x 98%) P1,764,000

Carrying amount June 30, 2014 3,804,205 x 1.8/4 = P1,711,892 Amortization June 30 – Nov 30 10,210 x 1.8/4 x 5/6 = 3,829 1,715,721

Gain on sale on November 30 P 48,279 13. P2,167,000 P2,200,000 x 98.5% = P2,167,000 14. P365,218 Interest income for 2014 January 1 to June 30 P190,210 July 1 to November 30 190,210 x 5/6 = 158,508 December 1 to 31 P2,200,000 x 9% x 1/12 16,500 Total interest income P 365,218 Items 15 through 19 15. P360,000 P4,000,000 x 9% = P360,000


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16. P160,000 (98% x P4,000,000) – 3,760,000 = P160,000 17. P35,000 loss

Total proceeds P1,960,000

Accrued interest 2,000,000 x 9% x 5/12 = ( 75,000) Selling price P1,885,000 CV 96% x 2,000,000 1,920,000 Loss on sale of FVPL P 35,000

18. P1,970,000 2M x .985 = P1,970,000 19. P50,000

Fair value, 12/31/12 P1,970,000 Fair value, 12/31/11 2,000,000 x .96 1,920,000 Unrealized gain for 2012 P 50,000

Items 20 through 24 20. P0 There was no objective evidence of impairment. The decline is taken to OCI. 21. P30,000 Cumulative decline from date of acquisition = P10,000 + P20,000 = P30,000 (Impairment loss is taken to profit or loss) 22. P0 The recovery in fair value of AFS-‐ Equity is taken to other comprehensive income,

not to profit or loss. 23. P0 At the date impairment loss is recognized, the unrealized gain or loss in equity is

transferred to profit or loss. Hence, the equity account UGL is brought to zero. 24. P15,000 The recovery in fair value is taken to other comprehensive income through the

account Unrealized Gain or Loss on AFS. Items 25 through 27 Power Cast Company

Cost of investment P1,800,000 Underlying equity 20% x P6,000,000 1,200,000 Excess of cost P 600,000 Undervaluation in land 20% x 750,000 (150,000) Undervaluation in equipment 20% x 200,000 (40,000) Undervaluation in inventory 20% x 30,000 ( 6,000) Goodwill P 404,000_

25. P116,000 Income from Associate Initial share (800,000 – 160,000) x 20% P128,000 Amortization Depreciation on Equipment 40,000/5 x 9/12 ( 6,000) Inventory ( 6,000) Income from Associate P116,000


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26. P0 Dividends received from associate should be credited to the Investment account. 27. P1,816,000 Cost of investment P1,800,000

Dividends received ( 100,000) Income from Associate 116,000 Carrying value of investment P1,816,000

Items 28 through 33 Boracay Co. ordinary Bohol Company ordinary 8% treasury bonds

# of shares Amount # of shares Amount Face Amount 1/1/12 bal. 1,000 P 25,000 3,000 P18,000 P50,000 P50,000 1/31 (200) ( 5,000) 6/30 600 7/8 (300) (1,500) 8/1 (20,000) (20,000) 12/31 bal. before Fair Value adj.

800

P20,000

3,300

P16,500

30,000

P30,000 Adj to FV 4,000 6,600 12/31 per audit

800 shares

P24,000

3,300

P23,100

P30,000

P30,000

28. P3,333 Interest Income January 1 to July 31 P50,000 x 8% x 7/12 = P2,333 August 1 to Dec. 31 P30,000 x 8% x 5?12 = 1,000 Total interest income for 2012 P3,333 29. P1,000 gain Net selling price P6,000 Carrying value P25,000 x 200/1,000 (5,000) Gain on sale P 1,000 30. P18,300 gain Selling price P19,800 Carrying value P18,000 x 300/3,600 ( 1,500) Gain on sale P18,300 31. P200 gain Cash received P21,000 Interest for 6 months (20,000 x 8% x 6/12) ( 800) Selling price P20,200 Carrying value 20,000 Gain on sale P 200 32. P10,600 See above worksheet: P4,000 + P6,600 P10,600 33. P77,100 See above worksheet: P24,000 PP23,100 + P30,000 = P77,100


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Items 34 through 40 34. P55,000 P1,040,000 – P985,000 = P55,000 35. P4,125 From Alaska: 5,500 x P0.75 = P4,125 36. P111,000 P370,000 x 30% = P111,000 37. P2,293,500 Fair value of old 25,000 shares: P1,520,000 x 25,000/50.000 = P760,000 Purchase price of new 50,000 shares 1,520,000 Initial cost of 75,000 shares P2,280,000 Income from associate 111,000 Dividends received (75,000 x 1.30) ( 97,500) Carrying value, December 31, 2013 P2.293,500 38. P316,500 Alaska 5,500 x 23 P126,500 Bahamas 10,000 x 19 190,000 Total fair value P316,500 39. P31,500 Fair value P316,500 Cost : 125,000 + 160,000 285,000 Cumulative balance of UGL P 31,500 40. P115,125 P111,000 + P4,125 = P115,125 Items 41 through 46 Financial Assets at Fair Value through Profit or Loss Seattle Ordinary Grunge Preference Cobain Ordinary Shares Amount Shares Amount Shares Amount 1/1/12 2,000 P28,400 1,200 P78,000 20% bonus 400 Sale (400) (4,733) Purchase 1,500 P31,500 12/31 bal. before adj to FV

2,000

P23,667

1,200

P78,000

1,500

P31,500 Unrealized Gains (Losses)

4,333

(1,200)

Per audit 2,000 P28,000 1,200 P76,800 1,500 P31,500 41. P136,300 28,000 + 76,800 + 31,500 = 136,300 42. P0 Cash dividend from Grunge should have been recorded as income in 2011.


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43. P52,900 Cost (800 x P50) + P5,400 = P45,400 Share in profit 50,000 x 20% x 9/12 7,500 Investment in Associate, Dec. 31 P52,900 44. P7,500 50,000 x 20% x 9/12 = P 7,500 45. 758,600 764,000 – 5,400 = P758,600 46. 3,133 See above worksheet : 4,333 – 1,200 P 3,133

A-MAGS CORPORATION

Selling and Administrative Expenses 2,000 Advances to Officers and Employees 1,500 Cash – Petty cash fund 3,500 Other Assets 130,000 Cash in Bank 130,000 Cash in Bank – PCI Bank – Current 5,000 Accounts Payable 5,000 Cash in Bank 45,000 Other Current Liabilities (Bank Overdraft) 45,000 Accounts Receivable – Past Due 20,000 Cash in Bank – PCI Bank 20,000 Accounts Receivable 15,000 Customer Credit Balances 15,000 Allowance for Doubtful Accounts 10,250 Accounts Receivable – Past due 10,250 Advances to Officers and Employees 3,500 Accounts Receivable 3,500 Sales 30,000 Discount on Notes Receivable 30,000 Notes Receivable – Non-Current 120,000 Interest Income 24,337 Notes Receivable 120,000 Discount on Notes Receivable – Non- current 24,337


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Discount on Notes Receivable (30,000 x 5/12) 12,500 Discount on Notes Receivable – Non-current (95,663 x 12% x 10/12) 9,566 Interest Income 22,066 Interest Receivable 4,057 Interest Income 4,057 40,000 x 16% x 36/360 = 640 75,000 x 20% x 82/360 = 3,417 Total 4,057 Inventories 22,500 Accounts Payable 22,500 Sales 80,000 Advances from Customers 24,000 Accounts Receivable – Not yet due 56,000 Accounts Receivable – not yet due (182,000 x 60% x 125%) 136,500 Sales 136,500 Inventories ( 182,000 x 40%) 72,800 Cost of Sales 72,800 Selling and Administrative Expenses 5,460 Accrued Expenses 182,000 x 60% x 5%) 5,460 Other Current Assets (80% x 28,000) 22,400 Loss due to Flood 5,600 Inventories 28,000 Equipment 15,000 Cost of sales 15,000 Selling and Administrative Expenses 1,500 Accumulated Depreciation (15,000/5 x 6/12) 1,500 AR – Total AR – Not due Per client P424,000 P187,000 Adjustments 20,000 15,000 (10,250) (3,500) (56,000) (56,000) 136,500 136,500 P525,750 P267,500


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Operating Expenses 363 Allowance for Doubtful Accounts 363 Total Accounts Receivable P525,750 Accounts Receivable not yet due (267,500) Accounts Receivable past due P258,250 Provision rate for past due accounts 5% Required allowance P 12,913 Existing allowance ( 22,800 – 10,250) 12,550 Additional doubtful accounts expense P 363 Trading Securities 48,000 Available for Sale Securities 47,800 Investments in Equity Securities 95,800 Allowance for Decline in Market Value 6,800 Trading Securities 4,800 Market Adjustments – Available for Sale Securities 2,000 Unrealized Gains/Losses on Available for Sale Securities 2,000 Retained Earnings, January 1 2,000 Investments in Associate – Johnny Walker 280,000 Investment in Equity Securities 280,000 Investment in Associate – Johnny Walker 150,000 Income from Associate 150,000 Dividend Income 12,000 Investments in Equity Securities 12,000 Investment in Equity Securities 16,800 Trading Securities 16,800 Trading Securities 2,400 Gain on Sale of Trading Securities 2,400 Treasury Stock 45,000 Investments in Equity Securities 45,000


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Trading Securities AFS Securities Balances, January 1 adjustment P48,000 P 47,800 Adjustments ( 4,800) (16,800) 2,400 Balances before adjustment P 28,800 P47,800 Market value, December 31 800 x 38 30,400 500 x 50 = P25,000 1,200 x 31= 37,200 62,200 Unrealized Gain P 1,600 P14,400 Balance before adjustment (Dr.) 2,000 Adjustment P 1,600 P16,400 Dividend Income 30,000 Investment in Associate 30,000 Trading Securities 1,600 Unrealized Gain on Trading Securities (I.S.) 1,600 Market Adjustment – AFS 16,400 Unrealized Gains/Losses on AFS 16,400

1. P491,500 2. P30,400 3. P525,750 4. P12,913 5. P6,500 6. P295,000 7. P12,500 8. P4,057 9. P5,000 10. P1,347,300 11. P5,500 12. P62,200 13. P400,000 14. P213,500 15. P257,629 16. P399,500 17. P275,000 18. P15,000 19. P24,000 20. P153,450 21. P122,960 22. P52,500 23. P490,914 24. P45,000 25. P14,400 26. P4,677,163 27. P3,682,361


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28. P643,126 29. P9,000 30. P35,923 31. P2,400 32. P14,400 33. 16,400 34. P5,600 35. P150,000 36. 157,140 37. P366,659 38. 363 39. 9,566 40. 5612,724

empleo chapter 6 - investments in financial instruments

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