Problem 12018Jan 1- Nadayag Company purchased 20.000 shares of Cortez Company P100 par at P110 per shareMar 1 Cortez Company issued rights to Nadayag Company, each permitting the purchase of 1/4 share at par. No entry was made. The bidprice of the share was P140 and there was lo quoted price for the rightsApril 1 Nadayag Company paid the new shares charging the payment to the investment account. Since Nadayag Company felt that it hasbeen assessed by Cortez Company, the dividends received from Cortez Company in 2017 and 2018 wcre credited to the investmentaccount until the debit for payment of the new share was fully offsetDec 31 Nadayag received annual dividend of P250,000 from Cortez Company2019Dec 31-Nadayag received annual dividend of P250,000 from Cortez Company2020Jan 1- Nadayag Company received 50% share dividend from Cortcz Company. On the same date, the shares received as share dividendwere sold at P160 per share and all proceeds were credited to incomeDece 31- The shares of Cortez Company were split 2 for 1. Nadayag Company found that each-new share was worth P5 more than P110paid for the original shares. Accordingly, Nadayag Company debited the investment account with additional shares received at P110 pershare and credited to income2021June 30-Nadayag Company sold one half of the investment at P92 per share and credited the proceeds to investment accountRequirement:1.What is the balance of the investment on December 31, 2020 as it was kept by Nadayag Company?2. Using the average method, what is the correct balance of the investment on December 31, 2020?3. What amout of gain on sales of investment should be reported in 202o?

1) To compute the balance of the investment on December 31, 2020, by journalizing debit to cash and…

Problem 1 2018 Jan 1- Nadayag Company purchased 20.000 shares of Cortez Company P100 par at P110 pr Mar 1-Cortez Company issued rights to Nadayag Company each permitting the purchase of price of the share was P140 and there waso quoted price for the rightS April 1 Nadayag Company paid the new shares charging the payment to the investment acco been assessed by Cortez Company, the dividends received from Cortez Company in 2017 anc account until the debit for payment of the new share was fully offset

Problem 1 2018 Jan 1- Nadayag Company purchased 20.000 shares of Cortez Company P100 par at P110 pr Mar 1-Cortez Company issued rights to Nadayag Company each permitting the purchase of price of the share was P140 and there waso quoted price for the rightS April 1 Nadayag Company paid the new shares charging the payment to the investment acco been assessed by Cortez Company, the dividends received from Cortez Company in 2017 anc account until the debit for payment of the new share was fully offset

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

ChapterD: Investments

Section: Chapter Questions

Problem D.7EX

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Problem 1 2018 Jan 1- Nadayag Company purchased 20,000 shares of Cortez Company, P100 par at P110 per share Mar 1- Cortez Company issued rights to Nadayag Company, each permitting the purchase of 1/4 share at par. No entry was made. The bid price of the share was P140 and there was no quoted price for the rights April 1- Nadayag Company paid the new shares charging the payment to the investment account. Since Nadayag Company felt that it has been assessed by Cortez Company, the dividends received from Cortez Company in 2017 and 2018 were credited to the investment account until the debit for payment of the new share was fully offset Dec 31-Nadayag received annual dividend of P250,000 from Cortez Company 2019 Dec 31-Nadayag received annual dividend of P250,000 from Cortez Company 2020 Jan 1- Nadayag Company received 50% share dividend from Cortez Company. On the same date, the shares received as share dividend were sold at P160 per share and all proceeds were credited to income…
14.On August 20X1, ABC Company bought 50,000 shares of Z Corp at P300,000. Commission and taxes related to the acquisition were P15,000. ABC designated the shares as held for trading. On Dec 31, 20X1 Z Corp's share had a fair value of P350,000 On Jan 12, 20X2, the shares were sold at P7.10 per share. Transaction costs related to the sale were P6,000. How much is the realized gain (loss) on sale? 0 (1,000) 5,000 (11,000)
20.Corridor Company issued 6,000 share of its P100 par ordinary share to Max Las compensation for 1,000 hours of legal services performed, Max L usually bills P500 per hour for legal services. On this date of issuance, the share was selling at a public trading at P150 per share. By what amount should the share premium account of Corridor Company increase as a result of the issuance of those shares? A. P3,000,000 B. P600,000 C. P300.000 D. P900,000 The Magic Lamp Corporation was incorporated on January 1, 2021, with the following authorized capitalization: 40,000 ordinary shares, no par value, stated value P40 per share 10,000 shares of 5% cumulative preference share, par value P10 per share During 2021, Magic Lamp issued 24,000 ordinary share for a total of P1,200,000 and 6,000 preference share at P16 per share, In addition, on December 31, 2021, subscriptions for 2,000 preference shares were taken at a purchase price of P17. These subscribed share were paid for on January 2. 2022.…
15. On Jan 1, 20X1, ABC purchased 24,000 shares of XYZ for P200,000 and paid commission of P10,000 on the acquisition. ABC designated the investment as held for trading. On Dec 31, 20X1, the shares were quoted at P20 per share. On Jan 10, 20X2 were sold for P30 per share incurring P12,000 transaction costs. What amount of gain (loss) should ABC recognize on Dec 31, 20x1 and Jan 10, 20X2 respectively? 270,000; 228,000 280,000; 228,000 280,000 282,000 293,000; 220,000