The difference between the new carrying amount of the

The difference between the new
carrying
amount of the financial asset at
amortized
cost and the face value of the financial
asset shall be amortized through profit
or loss over the remaining life of the
financial asset using the effective
interest method.
Reclassification from Amortized Cost to The fair value is determined at
Fair Value - reclassification date. The difference
between the previous carrying amount
and fair value is recognized in profit or
loss.
Impairment - Financial assets at fair value –
no more
impairment loss is recognized in the
profit
or loss.
Financial assets at amortized cost –
impairment loss is recognized.
Tainting - No more tainting provision. The entity
need
not hold all of those instruments until

maturity.
Stock Rights - Measured at fair values.
Investment in Associate - It is recognized initially at transaction
price,
Excluding transaction costs. At each
reporting date, an investor shall
measure it
at fair value, changes in fair values
recognized in profit or loss.
MULTIPLE CHOICES:
1. On January 1, 2010, Lim purchased trading equity securities for P5,000,000. The
entity also paid transaction costs amounting to P200,000. The securities had a
market value of P5,500,000 on December 31, 2010 and the transaction costs
that would be incurred on sale are estimated at P100,000. No securities were
sold during 2010.
What amount of unrealized gain or loss on these securities should be
reported in the 2010 income statement?
(a) P500,000 unrealized gain (c) P300,000 unrealized gain
(b) P500,000 unrealized loss (d) P400,000 unrealized gain
A
2. Data regarding Bright Company’s financial assets at fair value through other
comprehensive income follow:
Cost Market
December 31, 2009 5,000,000 4,600,000
December 31, 2010 5,000,000 5,800,000
Differences between costs and market values are considered other than
temporary. The income statement for 2010 should report realized gain on these
securities at:
(a) P1,200,000 (b) P800,000 (c) P400,000 (d) 0 D
2009 AFS securities 5,000,000
Cash 5,000,000
Unrealized loss (OCI) 400,000
Trading securities 400,000
2010 Trading securities 1,200,000
Unrealized gain (OCI) 1,200,000
(4,600,000 – 5,800,000)
3. On January 1, 2010, Lemon Company purchased securities to be held as “at fair
value through other comprehensive income”. On December 31, 2010, the cost
and market value were:
Cost Market value
Security X 2,000,000 2,400,000
Security Y 3,000,000 3,500,000
Security Z 5,000,000 4,900,000
On July 1, 2011, Lemon sold Security X for P2,500,000. What amount of gain on
sale of financial asset should be reported in the 2011 income statement?
(a) P500,000 (b) P100,000 (c) P400,000 (d) P 0
B
Cash 2,500,000
Security X 2,400,000
Gain on sale 100,000
Unrealized gain (OCI) 400,000
Retained earnings 400,000
4. The following information relates to Phil Company for 2010:
Realized gain on sale of trading securities P40,000
Unrealized gains arising during the period on trading securities 120,000
How much is the other comprehensive income of Phil to be included in the
December 31, 2010 statement of financial position?
(a) P 0 (b) P40,000 (c) P120,000 (d) P160,000A
5. The investment portfolio of Hip Inc. on December 31, 2010 contains the following
securities:

I. Art Co. ordinary, 3% ownership, 5,000 shares; cost, P100,000; market value,
P95,000; classified as a financial asset at fair value through profit or loss.