Chapter 15: Financial Asset at Fair Value
Problem 15-1: SKYLINE COMPANY
a. Unrealized Loss – TS (770,000 – 730,000)
60,000
Trading securities
#
b. Cash
140,000
Loss on Sale of Trading Securities (140,000 – 160,000) 20,000
Trading Securities
#
c. Trading Securities (680,000 – 610,000)
70,000
Unrealized Gain – TS
60,000
160,000
70,000
Supporting Computations:
A Ordinary (4,000 * 80)
C Preference (2,000 * 180)
Total
Carrying Amount
300,000.00
310,000.00
Market
320,000.00
360,000.00
610,000.00
680,000.00
Problem 15-4: BENEATH COMPANY
2023
Trading Securities (2,200,000 + 700,000)
Financial Asset at FVOCI (1,600,000 + 2,000,000)
Cash
#
Unrealized Loss – TS (2,400,000 – 2,900,000)
Trading Securities
#
Financial Asset at FVOCI
Unrealized Gain – OCI (4,000,000 – 3,600,000)
2,900,000
3,600,000
Cash
1,000,000
6,500,000
500,000
500,000
400,000
400,000
2024
Trading Securities (1,400,000 * 1/2)
Gain on Sale of TS (1,000,000 – 700,000)
#
Cash
700,000
300,000
1,300,000
Financial Asset at FVOCI (2,500,000 * 1/2)
Retained Earnings (1,300,000 – 1,250,000)
#
Unrealized Gain – OCI [(2,500,000 – 2,000,000) * 1/2]
Retained Earnings
#
Trading Securities (2,000,000 – 1,700,000)
Unrealized Gain – TS
#
Financial Asset at FVOCI (2,800,000 – 2,750,000)
Unrealized Gain – OCI
1,250,000
50,000
250,000
250,000
300,000
300,000
50,000
50,000+
Supporting Computations:
Security One (1,400,000 * 1/2)
Security Two
Carrying Amount
700,000.00
1,000,000.00
Market
900,000.00
1,100,000.00
1,700,000.00
2,000,000.00
Carrying Amount
1,500,000.00
1,250,000.00
Market
1,600,000.00
1,200,000.00
2,750,000.00
2,800,000.00
Total
Security Three
Security Four (2,500,000 * 1/2)
Total
Chapter 16: Equity Investments (Dividends, Share Split, and Share Right)
Problem 16-3 VIVACIOUS COMPANY
Requirement 1:
Theoretical Value: [(125 – 100) / (4 + 1)] = 5.00 per right
Share Right (25,000 * 5.00)
Investment in Shares
#
Investment in Shares (125,000 + 625,000)
Share Right
Cash [(25,000 / 4) * 100]
125,000
125,000
750,000
125,000
625,000
Requirement 2:
Theoretical Value: [(125 – 100) / 4] = 6.25 per right
Share Right (25,000 * 6.25)
Investment in Shares
#
Investment in Shares (156,250 + 625,000)
Share Right
Cash [(25,000 / 4) * 100]
156,250
156,250
781,250
156,250
625,000
Problem 16-7: EARTH COMPANY
Requirement 1:
01/01
#
03/01
#
04/01
`
#
07/01
#
08/01
#
Investment in King Company (10,000 * 70)
Cash
700,000
Investment in Queen Company
Cash
660,000
Cash (10,000 * 5)
Dividend Income
50,000
700,000
660,000
50,000
Memo: Received 2,000 shares as 20% share dividend on 10,000 Queen
Company shares originally held. Shares now held, 12,000 shares.
Investment in Princess Company
(10,000 * 50)
Cash
500,000
500,000
10/01
Memo: Received 60,000 (12,000 * 5) new shares of Queen Company as
a result of a 5-for-1 split of 12,000 original shares.
#
Cash (10,000 * 5)
Dividend Income
#
10/31
#
11/15
#
12/01
#
12/15
5,000
5,000
Memo: Received 60,000 stock rights from Queen Company to subscribe
for one new share at Php20.00 for every 10 rights held.
Investment in Queen Company
[(60,000 / 10) * 20]
Cash
120,000
Cash (66,000 * 5)
Dividend Income
330,000
Cash (10,000 * 30)
Investment in Queen Company
[660,000 * (10,000 / 60,000)]
Gain on Sale of Investment
(300,000 – 110,000)
300,000
120,000
330,000
110,000
190,000
Requirement 2:
King Company
Queen Company
Block 1
Block 2
Princess Company
Total
Shares
10,000.00
Cost
700,000.00
50,000.00
6,000.00
10,000.00
76,000.00
550,000.00
120,000.00
500,000.00
1,870,000.00