Aud Activity 1
Aud Activity 1
The book value of ABC's identifiable net aseets on this date was at P14M. All its assets carrying value approximated
their fair values except for a depreciable assets with a remaining life of 5 years, which was undervalued on this date by P1.6M
ABC reported total comprehensive income in 2020 at P4,000,000 which was net of a foreign exhange loss reported in
as other comprehensive loss at P800,000. ABC also paid dividends at P1.5M at the end of the year, P500,000 of which
is from pre-acquisition Retained Earnings. The fair market value of shares on this date was at P210 per share.
Requirements:
1. What is the carrying value of Iffy's investment in ABC shares as of December 31, 2020 using the
appropriate accounting standards?
a. 5,990,000 c. 5,654,000
b. 5.750,000 d. 5,894,000
2. Assuming that Iffy Corp. is a medium-sized entity and that the company uses the fair value method in
accounting for its investment in ABC, how much in total should be recognized in Iffy Corp.'s profit or loss
for 2020?
a. 300,000 c. 1,300,000
b. 450,000 d. 1,750,000
3. Assuming that Iffy Corp. sold 18,000 shares of its ABC shares investment on December 31, 2020 at its
prevailing fair value, how much in total should be recognized in the profit or loss as aresult of the
transaction?
a. 646,000 c. 387,600
b. 406,000 d. 243,600
4. Using the information in the previous item, how much shall be the carrying value of any remaining
investment as of December 31, 2020
a. 2,261,600 c. 2,300,000
b. 2,357,600 d. 2,520,000
5. Assuming that ABC issued 25,000 shares to other stockholders on December 31, 2020 at prevailing fair
value without Iffy Corp's participation, how much should be recognized in the profit or loss as a result
of the transaction/event?
a. None c. 129,200
b. 196,200 d. 81200
or P5,000,000.
alue approximated
rvalued on this date by P1.6M.
31-Dec-15
FACE VALUE ACQUISITION COSTS AMORTIZED COSTS
12%, ABC Corp. 1,000,000.00 1,063,397.00 1,049,737.00
10%, DEF Inc. 2,000,000.00 1,903,926.00 1,932,398.00
12%, GHI Co. 3,000,000.00 3,190,191.00 3,149,211.00
TOTALS 6,000,000.00 6,157,514.00 6,131,346.00
ABC Corp. and GHI Co. bonds were acquired at prevailing market rate of interest at 10%, while DEF Inc. bonds were acquired a
The bonds had prevailing market rate of interest at the end of 2015 and 2016 applicable to the bonds were 11% and 9% respe
Answer the folllowing under (a) TRADING SECURITIES UNDER PAS 39; (b) HELD TO MATURITY SECURITIES under PAS 39 and ©
1. How muc is the unrealized holding gain or (loss) to be reported in the company's income statements for 2015 and 2016?
a. (67,848); 126,312 c. (26,168); (28,217)
b. (94,016); 165,943 d. 0 ;0
2. How much is the corresponding interest income to be reported in the company's income statement for 2015 and 2016?
a. 680,000; 680,000 c. 585,984; 845,943
b. 653,832; 651,783 d. 0: 0
3. What is the carrying value of the debt securities as of Dec. 31, 2015 and 2016?
a. 6,000,000; 6,000,000 c. 6,157,514; 6,157,514
b. 6,131,346; 6,103,129 d. 6,063,498; 6,229,441
4. If DEF Inc. bonds were sold at P2,000,000 on Jan. 2, 2017, how much realized gain or (loss) on the sale should be recognized
a. 35,714 c. (67,602)
b. 96,074 d. (18, 348)
31-Dec-15 31-Dec-16
FAIR VALUES AMORTIZED COSTS FAIR VALUES
1,024,437.00 1,034,711.00 1,052,773.00
1,965,750.00 1,964,286.00 2,018,348.00
3,073,311.00 3,104,132.00 3,158,320.00
6,063,498.00 6,103,129.00 6,229,441.00
4; 6,157,514
8; 6,229,441
3a AMORTIZED COSTS(2015)
12%, ABC Corp. 1,049,737.00
10%, DEF Inc. 1,932,398.00
12%, GHI Co. 3,149,211.00
TOTALS 6,131,346.00
3b Fair Value (2016)
12%, ABC Corp. 1,024,437.00
10%, DEF Inc. 1,965,750.00
12%, GHI Co. 3,073,311.00
TOTALS 6,063,498.00
3c
December 31,2015
EFFECTIVE RATE ACQUISITION COSTS Interest Income
10% 1,063,397.00 106,339.70
12% 1,903,926.00 228,471.12
10% 3,190,191.00 319,019.10
TOTALS 6,157,514.00 653,829.92
December 31,2016
EFFECTIVE RATE ACQUISITION COSTS Interest Income
10% 1,049,737.00 104,973.70
12% 1,932,398.00 231,887.76
10% 3,149,211.00 314,921.10
TOTALS 6,131,346.00 651,782.56
FACE VALUE Interest Income
12%, ABC Corp. 1,000,000.00 120,000.00
10%, DEF Inc. 2,000,000.00 200,000.00
12%, GHI Co. 3,000,000.00 360,000.00
TOTALS 6,000,000.00 680,000.00
31-Dec-15
FACE VALUE ACQUISITION COSTS Fair Value
12%, ABC C 1,000,000.00 1,063,397.00
10%, DEF I 2,000,000.00 1,903,926.00
12%, GHI C 3,000,000.00 3,190,191.00
TOTALS 6,000,000.00 6,157,514.00