Investment Quiz 1

Problem 1: On January 1, 2018, ABC Company purchased marketable equity securities for P5, 000,000.
The equity securities qualify as financial assets held for trading. The ABC Company paid P50, 000 as
commission to the broker.
How much the financial assets FVPL in the statement of financial position after the purchased?

Problem 2: In January 1, 2017, an entity acquired trading securities with the following market value on
December 31, 2017
cost market gain(loss)
ABC preference share 200,000.00 150,000.00 (50,000.00)
XYZ ordinary share 800,000.00 950,000.00 150,000.00
RST ordinary share 1,000,000.00 1,100,000.00 100,000.00
MNO bonds 3,000,000.00 2,500,000.00 (500,000.00)
total 5,000,000.00 4,700,000.00 (300,000.00)
The acquisition on January 1, 2017 is recorded as follows:
Trading securities P5, 000,000
Cash 5,000,000
On January 15, 2018, the ABC preference share is sold for P80, 000.
On December 31, 2018, the remaining trading securities have following carrying amount and market
value:
Carrying
amount Market Gain(loss)
XYZ ordinary share 950,000.00 1,000,000.00 50,000.00
RST ordinary share 1,100,000.00 1,500,000.00 400,000.00
MNO bonds 2,500,000.00 2,400,000.00 (100,000.00)
total 4,550,000.00 4,900,000.00 350,000.00

Required:
a. How much the gain to be reported at Statement of income for the year December 31, 2017?
b. How much the unrealized loss on trading securities on December 31, 2017?
c. How much to be reported in statement of financial position as of December 31, 2017?
d. How much loss on sale of trading securities on January 15, 2018 to be recognized?
e. As of December 31, 2018, how much the trading securities to be reported at statement of financial
position?

Problem 3: On January 1, 2017 an entity purchases marketable securities of equity securities for P1,
000,000. The entity paid commission and taxes of P100, 000. The entity made an irrevocable election to
present unrealized gain or loss in other comprehensive income.
On December 31, 2017, the securities have a market value of P1, 300,000.

a. How much the financial assets – FVOCI to be recognized upon purchased?

b. How much realized gain to be reported statement of Comprehensive income December 31, 2017?
c. How much unrealized gain to be reported at Statement of Comprehensive income December 31,
2017?
d. How do we present the financial assets – FVOCI in the statement of financial position?

Problem 4: On January 1, 2017, an entity purchases marketable equity securities for P2, 000,000. The
securities do not qualify as financial asset held for trading. The entity elected to present changes in fair
value in other comprehensive income.

On December 21, 2017, the securities have market value of P1, 800,000. The changes in market value
shall be recorded as?

Problem 5: On January 1, 2018, EXY Company bought equity securities for a total amount of P90, 000.
The securities do not qualify as held for trading. EXY Company made an irrevocable election to classify
the investment in equity securities as subsequently measured at fair value though other comprehensive
income.

COST FV 12/31/17 FV 12/31/2018

ABC company, preference shares 50,000.00 60,000.00 55,000.00
CDE Company, ordinary shares 40,000.00 15,000.00 45,000.00
Total 90,000.00 75,000.00 100,000.00

Required:
a. Compute for the unrealized gain or loss recognized in other comprehensive income on December 31,
2017 and 2018.

b. Compute for the cumulative balances of gains (losses) presented in equity as of December 31, 2017
and 2018.