1:471.0029At the beginning of 2021, Galacompany purchased equitysecurities to held for tradingfor P5,000,000. The entityalso paid commission, taxesand other transaction costsamounting to P200,000. Thesecurities had a market valueof P5,500,000 at year-end. Nosecurities were sold during theyear. In the year 2022, 60% ofthe investments were sold.Proceeds from the saleamounted to P3,450,000which is net of transactioncosts amounting to P125,000.On December 31, 2022, the fairvalue of the investment is 40%more than the carryingamount at the end of 2021.What total gain/loss on tradingsecurities should be reportedin the income statement for2022? Answer should bepresented as: LOSS 123456 orGAIN 123456 :470.94 lWhite purchased 10% of anE itsinvestee's 100,0o00outstanding ordinary shareson January 1, 2022 forP1,000,000. On October 31,2022, White companypurchased 20,000 additionalshares of the investee forP3,000,000. On the samedate, the fair value of the 10%interest was P1,400,000. Thefair value of the net assets ofthe investee is equal tocarrying amount except for anequipment whose fair valueexceeds carrying amount byP640,000. The equipment hasa remaining life of 5 years. Theinvestee had not issued anyadditional shares for the year.The investee reported netincome of P8,000,000 for thecurrent year and paidP500,000 dividends. Whatamount should be reported onDecember 31 as investment inassociate?

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At the beginning of 2021, Gala company purchased equity securities to held for trading for P5,000,00O. The entity also paid commission, taxes and other transaction costs amounting to P200,000. The securities had a market value of P5,500,000 at year-end. No securities were sold during the year. In the year 2022, 60% of the investments were sold. Proceeds from the sale amounted to P3,450,000 which is net of transaction costs amounting to P125,000. On December 31, 2022, the fair value of the investment is 40% more than the carrying amount at the end of 2021. What total gain/loss on trading securities should be reported in the income statement for 2022? Answer should be presented as: LOSS 123456 or GAIN 123456

At the beginning of 2021, Gala company purchased equity securities to held for trading for P5,000,00O. The entity also paid commission, taxes and other transaction costs amounting to P200,000. The securities had a market value of P5,500,000 at year-end. No securities were sold during the year. In the year 2022, 60% of the investments were sold. Proceeds from the sale amounted to P3,450,000 which is net of transaction costs amounting to P125,000. On December 31, 2022, the fair value of the investment is 40% more than the carrying amount at the end of 2021. What total gain/loss on trading securities should be reported in the income statement for 2022? Answer should be presented as: LOSS 123456 or GAIN 123456

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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On April 5. 2023, Paul Company purchased P50 par, 10,000 ordinary shares of George Company at P80 per share. The shares are designated as equity investments at Fair value through other comprehensive income. On October 26, 2023, Paul received 10,000 rights to purchase an additional 2,000 shares at P90 per share. The share rights received had an expiration date of February 1, 2024. 12. Assuming that all of the share rights are exercised, at which time the market value per ordinary share was P98, what Is the total cost of the new Investment arising from the exercise of these rights? a. P196,000 b. P180,000 c. P160,000 d. P100,000 13. Refer to number 12, how much investment income should be recorded by Paul? a. P36,000b. P16,000c. P8,000d. P0
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48.On January 1, 2020, XYZ, Inc. acquired for $ 1,000,000 100% of the voting shares of ABC, Inc. As of December 31, 2020, the market value of the shares was $ 1,450,000. XYZ bought this investment with the objective of retaining it for an indefinite time. Which of the following statements is true regarding XYZ's investment and financial statements? Select one: a. This investment requires the XYZ and ABC financial statements to be consolidated and the investment account does not appear in the Statement of Financial Position. b. In XYZ's unconsolidated books, the investment is reported at amortized cost. c. This investment requires the financial statements of ABC and XYZ to be consolidated, and the investment account is reported as a long-term asset in the Consolidated Statement of Position. d. In XYZ's unconsolidated books, the investment is classified as Available for sale.
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