1.
Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.
Held-to-maturity security: The debt securities which are held by the investor with intent to hold the investment till its maturity, are referred to as held-to-maturity securities.
Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.
Other Comprehensive income (OCI): OCI includes all financial items which result in changes in the
Comprehensive income: The total of net income and other comprehensive income (OCI) is referred to as comprehensive income. Comprehensive income should be reported on income statement, and statement of comprehensive income.
Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.
2.
To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.
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GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
- Gecko Investments has the following data regarding their debt investments as of December 31, 2021: Original Cost Amortized Cost Market Value Trading Bonds 95 96 97 Available for Sale Bonds 95 96 97 Held-to-Maturity Bonds 95 96 97 1. What is the total amount of gain or loss to be reported as part of other comprehensive income? Give both the amount and whether it is a gain or loss.arrow_forwardDecember 31, 2023. The effective interest rate is 8% considering the Interest is payable annually every December 31. The bonds mature on on January 1, 2021, Balibago Corporation purchased P1,000,000 10% bonds for P1,051,510 (including broker's commission of P20,000). Dorest is payable annually every December 31. The bonds mature on December 31, 2023. The effective interest rate is 8% considering the Dker's commission. On December 31, 2021, the fair value of bonds is P1,017,610. Question 1 If the bonds are classified as financial assets at fair value through profit or loss (FA at FVTPL), the amount to be recognized as fair value adjustment loss in the entity's 2021 profit or loss is O 33,900 O 18.021 O 13,900arrow_forward17. When a debt investment at FVOCI is reclassified to FVPL, an entity willa. Remeasure the investment to the original cost and eliminate the cumulative unrealized gain or loss in OCI.b. Transfer the cumulative unrealized gain or loss to retained earningsc. The cumulative gain or loss previously recognized in OCI is reclassified to profit or loss.d. The effective rate at the date of reclassification shall be the basis for interest income to be recognized in subsequent periods.arrow_forward
- Topic: Investmentarrow_forwardProblem No. 5 DAP Company started operation on January 1, 2018 and acquired the following securities: Trading Securities Portfolio Abad Company Aquino Company Lacierda Company Fair value P2,400,000 2,600,000 1,900,000 Fair value FVTOCI Portfolio Coloma Company Soliman Company Villanueva Company P3,050,000 2,725,000 1,875,000 No disposals were made during 2018. The fair values of the investment securities as of December 31, 2018 are as follows: Trading Securities Portfolio Abad Company Aquino Company Lacierda Company Fair value P2,380,000 2,600,000 1,870,000 Page |S/TOCI Portfolio Coloma Company Soliman Company Villanueva Company Fair value P3,070,000 2,737,500 1,871,000 The following additional transactions happened in 2019: On September 1, DAP Company sold its Aquino Company securities for P2,590,000. On October 1, DAP Company exchanged it Soliman Company portfolio for a piece of land. The carrying amount of the land was P1,937,500 an a zonal value of P2,777,500. At the time of…arrow_forwardMatch each of the items below with its most appropriately-related “letter” classification. (“Letter” classification may be used more than once, or not at all.)A. Fair Value Adjustment G. Available-for-sale debt securities B. Statement of Cash Flows H. Equity holdings between 20% and 50% C. Trading debt securitiesI. Temporary differences, deferred tax assetD. Equity holdings less than 20% J. Permanent differences E. Held-to-maturity debt securities K. Temporary differences, deferred tax liability F. Statute of Limitations L. Equity holdings more than 50% ____ 1. Premiums paid on life insurance of officers (company is the beneficiary).____ 2. Amortized cost; unrealized holding gains or losses not recognized; interest when earned.____ 3. Consolidation of financial statements; parent and subsidiary company income or loss combined.____ 4. Estimated future warranty costs.____ 5. Represents the increase in taxes refundable (or saved) in future yearsas a result of deductible temporary…arrow_forward
- Presented below are two independent cases related to available-for-sale debt investments. Amortized cost Fair value Expected credit losses Case 2 Case 1 Case 2 $37,230 $91,300 26,680 100,350 82,740 For each case, determine the amount of impairment loss, if any. Of no loss, please enter O. Do not leave any fields blank) Case 1 Impairment Loss $ Impairment Loss $ 21,640arrow_forwardMatch each of the items below with its most appropriately-related “letter” classification. (“Letter” classification may be used more than once, or not at all.) A. Fair Value Adjustment G. Available-for-sale debt securities B.Statement of Cash Flows H. Equity holdings between 20% and 5% C. Trading debt securitiesI. Temporary differences, deferred tax asset D. Equity holdings less than 20% J. Permanent differences E. Held-to-maturity debt securities K. Temporary differences, deferred tax liability F. Statute of Limitations L. Equity holdings more than 50% 1. Premiums paid on life insurance of officers (company is the beneficiary). ____ 2. Amortized cost; unrealized holding gains or losses not recognized; interest when earned .____ 3. Consolidation of financial statements; parent and subsidiary company income or loss combined. ____ 4. Estimated future warranty costs .____ 5. Represents the increase in taxes refundable (or saved) in future yearsas a…arrow_forwardrice be *. An entity reclassifies debt securities from FVOCI to Amortized cost. On reclassification date, the amount debited to the asset's new classification is equal to the asset's a. original acquisition cost. D. fair value on reclassification date. C. amortized cost as at the reclassification date. d. fair value on acquisition date.arrow_forward
- Part c pleasearrow_forwardzed 3. Which of the following reclassifications of financial assets is permitted under PFRS 9? a. Reclassification from FVPL designation to Amortized cost b. Reclassification from FVOCI (election) to FVPL C. Reclassification from held for trading equity securities to the if a ord, amortized cost d. Reclassification from amortized cost and to FVPL ofarrow_forwardplease answer in text form and in proper format answer with must explanation , calculation for each part and steps clearlyarrow_forward
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