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    Quiz On Investment

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    Dan Andrei Bongo
    1. Stone Co. should report an accumulated other comprehensive income of ₱2,500 based on the unrealized loss reported in the prior year. 2. The fair valuation of Caloy Co.'s investment is ₱575,000, which is the market value from Market A of ₱500,000 less the related transaction cost of ₱25,000. 3. The unrealized gain on Allan Co.'s bonds as of December 31, 20x1 is ₱8,000.

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    Quiz On Investment

    Uploaded by

    Dan Andrei Bongo
    475 views3 pages
    1. Stone Co. should report an accumulated other comprehensive income of ₱2,500 based on the unrealized loss reported in the prior year. 2. The fair valuation of Caloy Co.'s investment is ₱575,000, which is the market value from Market A of ₱500,000 less the related transaction cost of ₱25,000. 3. The unrealized gain on Allan Co.'s bonds as of December 31, 20x1 is ₱8,000.

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    1. Stone Co. should report an accumulated other comprehensive income of ₱2,500 based on the unrealized loss reported in the prior year. 2. The fair valuation of Caloy Co.'s investment is ₱575,000, which is the market value from Market A of ₱500,000 less the related transaction cost of ₱25,000. 3. The unrealized gain on Allan Co.'s bonds as of December 31, 20x1 is ₱8,000.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    475 views3 pages

    Quiz On Investment

    Uploaded by

    Dan Andrei Bongo
    1. Stone Co. should report an accumulated other comprehensive income of ₱2,500 based on the unrealized loss reported in the prior year. 2. The fair valuation of Caloy Co.'s investment is ₱575,000, which is the market value from Market A of ₱500,000 less the related transaction cost of ₱25,000. 3. The unrealized gain on Allan Co.'s bonds as of December 31, 20x1 is ₱8,000.

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    of 3

    1. Information regarding Stone Co.

    ’s portfolio of FVOCI securities is as follows:


    Aggregate cost as of 12/31/03 170,000
    Unrealized gains as of 12/31/03 4,000
    Unrealized losses as of 12/31/03 26,000
    Net realized gains during 2003 30,000

    At December 31, 2002, Stone reported an unrealized loss of ₱1,500 in other comprehensive income to
    reduce these securities to market. Under the accumulated other comprehensive income in stockholders’
    equity section of its December 31, 2003 balance sheet, what amount should Stone report? ____________

    2. Caloy Co. bought 1,000 shares from Bayan Co. The shares have no active market, but an identical or
    similar asset has an active market. The identical asset, however, has multiple markets. Caloy
    determines that the identical asset has the following market values:
    Market A Market B
    Quoted price 500 600
    Related transaction cost 25 150

    How much is fair valuation of the investment? _________________

    3. On January 1, 20x1, Allan Co. purchased P400,000 bonds for P392,000. The bonds mature on January
    1, 20x5 and pay 12% annual interest beginning January 1, 20x2. Transaction costs are negligible. The
    bonds were classified as held for trading securities. On December 31, 20x1, the bonds are selling at a
    yield rate of 10%. How much is the unrealized gain (loss) recognized on December 31, 20x1?
    __________________

    4. On January 1, 20x1, Rizzi Co. purchased 12,000 shares of Andre, Inc. for P400,000. Commission paid
    to broker amounted to P20,000. Management made an irrevocable choice to subsequently measure
    the shares at fair value through other comprehensive income. On December 31, 20x1, the shares are
    quoted at P40 per share. On January 3, 20x2, all of the shares were sold at P60 per share. Commission
    paid for the sale amounted to P24,000. How much is the unrealized gain (loss) recognized in profit or
    loss on December 31, 20x1? ______________________

    Use the following information for the next two questions:


    Karen Co. purchased the following equity securities on January 1, 20x1 for a total amount of P360,000.
    Cost
    Alaska Co. preference shares P200,000
    Valdez Co. ordinary shares 160,000
    Totals P360,000

    The shares did not qualify for recognition as held for trading, thus they were classified as investment in
    equity securities measured at fair value through other comprehensive income.

    On December 31, 20x1, the portfolio of Karen Co. comprised the following.
    Fair value – 12/31/x1
    Alaska Co. preference shares P240,000
    Valdez Co. ordinary shares 60,000
    Total P300,000
    On December 31, 20x2, the portfolio of Karen Co. comprised the following:
    Fair value – 12/31/x2
    Alaska Co. preference shares P220,000
    Valdez Co. ordinary shares 180,000
    Total P400,000

    On February 2, 20x3, all of the Alaska Co. preference shares were sold for P160,000 net of transaction
    costs.

    5. How much is the unrealized gain (loss) recognized in other comprehensive income on December 31,
    20x1? ________________________

    6. How much is the unrealized gain (loss) accumulated in equity as of December 31, 20x2?
    ____________________

    Use the following information for the next two questions:


    On January 1, 20x1, Kevin Co. acquired 12%, P4,000,000 bonds for P 4,198,948. The principal is due on
    December 31, 20x3 but interest is made annually starting December 31, 20x1. The effective interest rate
    on the bonds is 10%.

    7. How much is the interest income recognized in 20x1? ________________

    8. How much is the carrying amount of the investment on December 31, 20x1? ________________

    9. On April 1, 20x1, Ronald Ryan Co. acquired 12%, P4,000,000 bonds dated January 1, 20x1 at 98
    including interest. The bonds mature on December 31, 20x3 but pays annual interest at each year-
    end. How much is the initial carrying amount of the investment? ______________________

    10. On January 1, 20x1, Mitch Co. acquired 12%, P4,000,000 bonds at 98. Commission paid to brokers
    amounted to P204,000. Principal is due on December 31, 20x4 but interest payments are made
    annually starting December 31, 20x1.

    The adjusted effective interest rate on the investment is closest to ________________________

    Use the following information for the next three questions:


    On January 1, 20x1, ABC Co. acquired 10%, ₱1,000,000 bonds for ₱827,135. The bonds mature on
    December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs
    ₱80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is
    14%. The bonds are to be held under a “hold to collect and sell” business model. Information on fair
    values is as follows:
    December 31, 20x1…………………………….98

    December 31, 20x2……………………………102

    December 31, 20x3……………………………100


    11. How much is the carrying amount of the investment on December 31, 20x1? _________________

    12. How much is the unrealized gain (loss) recognized in other comprehensive income on December 31,
    20x1? ___________________

    13. How much is the interest income recognized in 20x2? __________________

    14. On December 29, 20x1, an entity commits itself to purchase a financial asset for ₱10,000, which is its
    fair value on commitment date (trade date). Transaction costs are immaterial. On December 31, 20x1
    and on January 4, 20x2 (settlement date) the fair values of the asset are ₱12,000 and ₱15,000,
    respectively. If the entity uses the settlement date accounting and that the investment is classified as
    held for trading, how much is the carrying amount of the investment in the December 31, 20x1
    statement of financial position? ___________________

    15. On January 1, 20x1, Dagul Co. acquired 10%, ₱4,000,000 bonds for ₱3,807,853. The principal is due
    on January 1, 20x4 but interest is due annually starting December 31, 20x1. The yield rate on the
    bonds is 12%. On July, 1 20x1, Dagul Co. changed its business model. It was ascertained that the
    investment in bonds at amortized cost should be reclassified to held for trading securities on
    reclassification date. The bonds were quoted at 102, 103 and 104 on July 1, 20x1, December 31, 20x1
    and January 1, 20x2, respectively. How much is the gain (loss) on reclassification on January 1, 20x2?
    ____________________

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