Trading securities – automatic always FVPL and account to decrease its balance.

its balance. Unlike in FVPL where  Share rights are  Share rights are - (1) Undervaluation of investee’s assets, and (2)
transaction costs are expensed we can use loss and gain accounts freely. independent and embedded Goodwill.
outright. initially measured at FV derivates, not Undervaluation of depreciable assets, excess is
Non-Trading (Equity) Securities – amount may not be POV OF SHAREHOLDER: or theoretical or parity stand-alone. amortized over remaining useful life.
transferred to profit or loss Equity Investments – fair value value  No gain or loss on If land or inventory, excess is expensed when
however, on derecognition Dividends are income on date of declaration.  Recognition: Debit sale of rights sold. If goodwill, included it in CA and entire CA is
amount may be transferred to 1. Exchange – FV of asset (1) given, share rights, credit  Recognition: tested for impairment.
retained earnings. (2) received, (3) CA of asset given investment in shares (to memo entry
Unquoted equity investments – at cost 2. Lump sum – prorated based on FV allocate portion of CA  Exercise: debit
to SR) investment in
Initial and Subsequent Recognition Cash Dividends – income and do not affect investment  Exercise: Cost of New shares and credit
account Investment – cash. Measured at
FVPL FVOCI
Property Dividends – income and at FV subscription price and subscription price.
At fair value At fair value + directly
Liquidating Dividends – not income and ROC cost of share rights  Expiration: memo
(transaction price, FV of attributable transaction
(credit to investment capital) exercised. entry
the consideration given). costs in the acquisition of
 Except in wasting assets corporation:  Sale: gain or loss may
Transaction costs are the asset
Partly income (dividend income) and partly arise.
expensed.
return of capital (credit to investment capital)  Expiration: loss on
Unrealized gain or loss Unrealized gain – OCI is
so allocate it. share rights
when there is difference part of reserves under
 L. dividend > Cost of investment = gain
between FV and CA » equity. Permanent account
 When L is complete, and CA is not yet Date of Record – issuance of share warrants.
Realized gain or loss unlike unrealized gain or
recovered = loss Between DoD and DoR – “right-on” so share and rights
when sold. loss in FVPL.
Share Dividends – not income bc there is no distrib. of are inseparable and treated as one. If sold
assets. Must be issuing entity’s own share. prior to this date, any excess is gain or loss
Unrealized gains and losses
Memo entry. Same equity interest. Total, same. on sale of investment.
are cumulative. Charged to
Per share, reduced. If not same class, original Between DoR and Exp. Date – “ex-right” shares and
retained earnings when
cost is prorated and allocated based on MV on rights can now be sold separately.
asset is sold.
date of receipt. Theoretical or Parity Value
Shares received in lieu of cash dividends - assumed FV of share right derived from FV
When asset is sold, gain or
– income at FV of shares received; or of shares.
loss is recognized in
– income equal to original cash dividends a. Right-on b. Ex-right
retained earnings.
Cash received in lieu of share dividends
– not income; gain or loss may arise FMV of share – FMV of share –
Subscription Price Subscription Price
As if approach: assume that shares were
No.of share rights No.of share rights
received and then sold at
Offsetting. When there are multiple securities, only net to purchase + 1 to purchase one share
cash received.
decrease or increase is recorded.
BIR approach: cash received is income.
Unrealized gain – other income Income Investment in Associate
Share Split – based on outstanding shares
Unrealized loss – other expense Statement - significant influence (20% - 50%)
Special Assessments – additional cost of the
Then “gain or loss on disposal or sale of…” - at cost, must be in ordinary shares.
investment
Redemption – gain or loss may arise; as if sold - share in profit and or loss is investment income or
Shortcut in FVOCI loss on investment
Share Right – form of financial asset
Total charged to retained earnings during sale is sales - distributions or dividends received reduce the CA of
price – historical cost (original acquisition cost) Separately Not Separately
the investment.
In FVOCI, sumulative unrealized gain is always - CA is increased or decreased depending on share in
current market value – historical cost. profit or loss.
Unrealized gain – OCI, being a permanent account, - share dividends do not affect equity interest.
must be exhausted first so if there is a loss, debit the Excess of Cost over Carrying Amount