For the year ended December 31, 2019 WQA company reported opening retained earnings For the year ended December 31, 2019, WQA Company reportedopening retained earnings of P1,850,000 and cumulative unrealizedgains recorded as reserves of P25,000. These gains are from aninvestment with an original cost of P100,000 and a fair value ofP125,000. The company policy is to value all investments at fair valuewith unrealized gains and losses included in reserves. The company'saccounting policy is that when an investment is sold, the reserveamount is transferred to retained earnings. During 2020, one-half ofthe investment was sold. The remaining investment increased invalue to P70,000. A second investment was bought for P150,000 andits fair value had increased to P165,000 by the end of 2020. What isthe reserve balance at December 31, 2020?O P27,500O P35,000O P60,000O P45,000

Calculation of reserve balance at December 31 2021: Unrealized gain from half old…

Answered: For the year ended December 31, 2019,…

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

Chapter12: Intangibles

Section: Chapter Questions

Problem 3P

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For the year ended December 31, 2019, WQA company reported opening retained earnings of P1,850,000 and cumulative unrealized gains recorded as reserves of P25,000. These gains are from an investment with an original cost of P100,000 and a fair value of P125000. The company policy isto value all investments at fair value with unrealized gains and losses included in reserves. Thecompany's accounting policy is that when an investment is sold, the reserve amount is transferred toretained earnings. During 2020, one half of the investment was sold. The remaining investmen increased in value to P70,000. A second investment was bought for P150000 and its fair value had to P165000 by the end of 2020. What is the reserve balance at December 31. 20202
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