Assignment Detail

Assignment ID: FG133178436

Question 1 – Agustin Company has the following transactions relating to its investments during 2022. January 5 – Acquired 10,000 shares of Abalos Company for P1,000,000 paying additional P20,000 for brokerage fee and another P5,000 for commission. Received dividends from Abalos declared January 2, 2022 to stockholders of record January 10, 2022, P20,000.

1. How much should the investment account be debited if the shares are held for trading?

a. 980,000

b. 1,000,000

c. 1,005,000

d. 1,025,000

e. None of the above

2. How much should the investment account be debited if the shares are considered non-trading and the company designated to recognize change in fair value through other comprehensive income?

a. 980,000

b. 1,000,000

c. 1,005,000

d. 1,025,000

e. None of the above

Question 2 – Jaybu Company acquired the following portfolio of equity instruments held for trading during 2022 and reported the following balances at December 31, 2022. No sales occurred during 2022.

Security / Cost / Market Value, 12/31/22

AAA Company Shares / 300,000 / 350,000

BBB Company Shares / 450,000 / 410,000

CCC Company Shares / 540,000 / 640,000

DDD Company Shares / 610,000 / 650,000

1. What is the carrying amount of the securities on December 31, 2022?

a. 1,900,000

b. 2,050,000

c. 3,950,000

d. 0

e. None of the above

2. How much is the unrealized gain that should be taken to profit or loss statement?

a. 150,000

b. 190,000

c. 40,000

d. 0

e. None of the above

Question 3 – Tamaraw Corp. had the following portfolio of financial instrument as of December 31, 2021. All securities were acquired at the beginning of 2021:

Basted shares

Face value/denomination – 160,000 shares

Recorded acquisition cost – 9,000,000

Holi Sprite shares

Face value/denomination – 60,000 shares

Recorded acquisition cost – 3,600,000

Audit notes: Basted shares were acquired and designated as financial asset at fair value through profit or loss. The shares were acquired at P60 per share which included P3 per share transaction cost. Half of the Basted shares were sold at P62 per share on July 1, 2022.

Holi Sprite shares were acquired and designated as financial asset at fair value through other comprehensive income. The shares were acquired at P60 per share which included P2 per share transaction cost. 20,000 of these shares were sold on August 1, 2022 at P59 per share.

Additional information on the securities are as follows:

Basted shares: FV 12/31/21 – P 58 per share / FV 12/31/22 – P 63 per share

Holi Sprite shares: FV 12/31/21 – 61 per share / FV 12/31/22 – 66 per share

1. What is the realized gain or (loss) on sale of Basted shares?

a. 75,000 loss

b. 320,000 gain

c. 460,000 gain

d. 0

e. None of the above

2. What is the realized gain or loss from sale of Holi Sprite shares in 2022 under IFRS 9, Financial Instruments?

a. 20,000 loss

b. 10,000

c. 30,000

d. 0

e. None of the above