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BA 99.2 2ndSemester AY 2018-2019 Investments Exercises Set 4 1.On April 1, 2010, Purefoods Company purchased as a short-term investment a P1,000,000 face value 8% bond for P905,000 including accrued interest. The bonds were designated as held for trading. The commission to acquire the bonds was P5,000. The bonds are dated January 1, 2010 and mature on January 1, 2015, and pay interest semi-annually on January 1 and July 1. On December 31, 2010, the bonds had a market value of P920,000. On April 1, 2011, Purefoods sold the bonds for a total consideration of P950,000. What amount should Purefoods report as unrealized gain in its 2010 income statement? 2.Refer to the preceding no.. How much is the gain from the sale of short-term investment in debt securities on 4/1/11? 3.On January 1, 2010, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including broker’s commission of P20,000). Interest is payable annually every December 31. The bonds mature on December 31, 2012. The bonds are classified as at FVTPL. The bonds were selling at 103 on December 31, 2010. On December 31, 2011, Alaska sold the bonds at 105. How much is the gain on sale of bonds on December 31, 2011? 4.In 2015, Wallace Corporation purchased marketable securities, and at 12/31/15, had the following equity securities: Cost Market In trading portfolio: Security X P80,000 P50,000 Security Y 15,000 20,000 In available-for-sale portfolio: Security Q P60,000 P70,000 Security R 90,000 45,000 At December 31, 2015, what amounts should be charged to the income statement and to OCI? 5.On April 1, 2010, Saxe, Inc. purchased P2,000,000 face value, 9% bond for P1,985,000, including accrued interest of P45,000. The bonds will mature on July 1, 2011, and pay interest semiannually on January 1 and July 1. Saxe uses the effective interest method of amortization. The bonds were sold on December 1, 2010 for P2,065,000 including accrued interest of P75,000. If the bonds are classified as FAAC, the carrying amount of this investment in the company’s October 31, 2010 statement of financial position should be ______________. 6.Refer to the preceding number. How much is the gain or loss from sale on December 1, 2010? 7.Gil Co. began operations on January 3, 2015. The following information was extracted from Gil Co.’s December 31, 2015 balance sheet: Noncurrent assets: FOVI equity securities P96,450 Stockholders’ equity:Net unrealized loss on investments in FOVI