Apple Corp. had the following portfolio of financial instruments of the December 31, 2020. All securities were acquired at the beginning of 2020: Security Zulu shares Xray shares 10%, Yankee bonds, 3 years Audit Notes: Security Denomination/ Face Value Zulu shares Xray shares 10%, Yankee bonds, 3 years 100,000 shares 40,000 shares P2,000,000 par ▪ Zulu shares were acquired and were designated as financial asset at fair value through profit/losses. The shares were acquired at P52.50 per share which included a P5.50 per share transaction cost. Half of the Zulu shares were sold at P62.50 per share on July 1, 2021. ▪ The Yankee bonds were acquired on January 1, 2020, when the prevailing market rate of interest was at 11%. Interest are collectible every December 31. Half of the Yankee bonds were sold on June 30, 2021 at P1.1M. Xray shares were and were designated as financial asset at fair value through other comprehensive income/losses. The shares were acquired at P60 per share which included P2.50 per share transaction cost. 15,000 of these shares were sold on August 1, 2021 at P56 per share. ▪ Additional information on the securities are as follows: Fair value Dec. 31, 2020 P59/share 57.50/share 8% yield: 2 Recorded Acquisition Cost P5,250,000 2,350,000 1,951,126 2 Fair value Dec. 31, 2021 P62/share 64/share 14% yield:

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 9P

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1. Assuming that the company’s business model has an objective of holding the debt securities to collect contractual cash flows, what is the realized gain on sale of the Yankee bonds in 2021?

2. Assuming that the company's business model has an objective of holding debt securitiees to collect contractual cash flows, what is the total unrealized holding gain/loss to be reported in the profit/loss for 2021?

Apple Corp. had the following portfolio of financial instruments of the December 31,
2020. All securities were acquired at the beginning of 2020:
Denomination/
Recorded
Security
Face Value
Acquisition Cost
Zulu shares
100,000 shares
P5,250,000
Xray shares
40,000 shares
2,350,000
10%, Yankee bonds, 3 years
P2,000,000 par
1,951,126
Audit Notes:
· Zulu shares were acquired and were designated as financial asset at fair value
through profit/losses. The shares were acquired at P52.50 per share which
included a P5.50 per share transaction cost. Half of the Zulu shares were sold at
P62.50 per share on July 1, 2021.
· The Yankee bonds were acquired on January 1, 2020, when the prevailing market
rate of interest was at 11%. Interest are collectible every December 31. Half of
the Yankee bonds were sold on June 30, 2021 at P1.1M.
• Xray shares were and were designated as financial asset at fair value through
other comprehensive income/losses. The shares were acquired at P60 per share
which included P2.50 per share transaction cost. 15,000 of these shares were
sold on August 1, 2021 at P56 per share.
· Additional information on the securities are as follows:
Security
Fair value
Fair value
Dec. 31, 2020
Dec. 31, 2021
Zulu shares
P59/share
P62/share
Xray shares
57.50/share
64/share
10%, Yankee bonds, 3 years
8% yield:
14% yield:

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