Case 2: (100 - 10) 90: Problem 1: True or False

Chapter 9
PROBLEM 1: TRUE OR FALSE

2,4,5 true
PROBLEM 2: FOR CLASSROOM DISCUSSION

1. D 2. C 3. D 4. B 5. A 6. B 7. Case 1: (120 – 35) = 85
Case 2: (100 – 10) = 90
8. 2,000
9. B
10. B
11. Solutions:
Requirement (a):
1/1/x1
Held for trading securities (12,000 x 3) 36,000
Commission expense 1,800
Cash 37,800
12/31/x1
Held for trading securities [(12,000 x 5) – 36,000] 24,000
Unrealized gain – P/L 24,000
1/6/x1
Cash [(12,000 x 8) – 4,800] 91,200
Realized gain 31,200
Requirement (b):
1/1/x1
Cash in bank 37,800
12/31/x1
Fair value adjustment [(12,000 x 5) – 36,000] 24,000
1/6/x1
Cash [(12,000 x 8) – 4,800] 91,200
Fair value adjustment 24,000
Realized gain – P/L 31,200
Requirement (c):
1/1/x1
Investment in FVOCI securities [(12,000 x 3) + 1,800] 37,800
Cash in bank 37,800
1
12/31/x1
Investment in equity securities - FVOCI 22,200
Unrealized gain – OCI [(12,000 x 5) – 37,800] 22,200
1/6/x1
Unrealized gain – OCI 31,200*
*(12,000 x 8) – 4,800 = 91,200 – 60,000 = 31,200
Cash [(12,000 x 8) – 4,800] 91,200

Investment in equity securities - FVOCI (12,000 x 5) 91,200
Unrealized gain – OCI 53,400

Retained earnings 53,400
12. Solutions:
Requirement (a):
2001
Dec. 31 Unrealized Loss – P/L 20,000
Held for TradingSecurities 20,000
Unrealized loss – OCI 40,000

2002
Dec. 31 Held for TradingSecurities 4,000
Unrealized Gain – P/L 4,000
Dec. 31 Unrealized loss – OCI 240,000

Investment in equity securities – 240,000
FVOCI
Requirement (b):
Effect on 2001 profit (loss):
Recognized decline in value of held for tradingsecurities ₱(20,000
)
Effect on 2002profit (loss):
Recognized increase in value of held for tradingsecurities ₱ 4,000
2
PROBLEM 3: EXERCISES
1. Solutions:
Requirement (a):
1/1/x1
Cash 21,000
12/31/x1
Unrealized loss – P/L [(2,000 x 6) – 20,000] 8,000
Held for trading securities 8,000
1/6/x1
Cash [(2,000 x ½ x 3) – 150] 2,850
Realized loss 3,150
Held for trading securities (2,000 x ½ x 6) 6,000
Requirement (b):
1/1/x1
Cash 21,000
12/31/x1
Unrealized loss – P/L [(2,000 x 6) – 20,000] 8,000
Fair value adjustment 8,000
1/6/x1
Cash [(2,000 x ½ x 3) – 150] 2,850
Fair value adjustment (8,000 x ½) 4,000
Realized loss 3,150
Held for trading securities (2,000 x ½ x 10) 10,000
Requirement (c):
1/1/x1
Investment in equity securities - FVOCI [(2,000 x 10) + 1,000] 21,000
Cash 21,000
12/31/x1
Unrealized loss – OCI [(2,000 x 6) – 21,000] 9,000
1/6/x1
Unrealized loss – OCI 3,150
3
Investment in equity securities - FVOCI 3,150*
* [(2,000 x ½ x 3) – 150] = 2,850 – (1,000 x 6) = 3,150
Cash [(2,000 x ½ x 3) – 150] 2,850

Investment in FVOCI securities 2,850**
**[(21,000 - 9,000) x ½] – 3,150 = 2,850
Retained earnings 7,650

Unrealized loss – OCI 7,650***
*** (9,000 x ½) + 3,150 = 7,650
2. Solutions:
Requirement (a): 10,000 x 13 = 130,000
Requirement (b): (10,000 x 20) – [(10,000 x 15) + 7,500] = 42,500 gain
Requirement (c): [10,000 x (20 – 13)] = 70,000 gain
Requirement (d): 0
Requirement (e): [7,000 x (25 - 1.25)] – (7,000 x 20) = 26,250 gain
3. Solution:
Held for trading securities 7,000
Unrealized Gain on Trading Securities 7,000
4
PROBLEM 4: CLASSROOM ACTIVITIES
ACTIVITY #1:
Solution:
Investment in PLDT shares (FVPL) 47,280
(100 sh. x 2,364 closing price) = 236,400 - 189,120 = 47,280
ACTIVITY #2:
Solutions:
Requirement (a):
FVPL – because ABC’s business model is neither “hold to collect” nor “hold
to collect and sell.”
Requirement (b):
Held for trading securities 1,910.10*
Unrealized gain – P/L 1,910.10
* Given on the print screen of the portfolio.
Requirement (c):
PRICE ACQUISITION
SYMBOL SHARES PAID COST
GLO 250 2,350.00 587,500.00
JFC 1,000 208.80 208,800.00
BDOPBF:PM 10 1,554.67 15,546.70
ABS 10,000 65.20 652,000.00
SNLFMNY:PM 10,000 1.228 12,280.00
1,476,126.70
Requirement (d):
1,478,036.80 (given on the print screen, “VALUE” column)
Requirement (e):
SYMBOL TYPE
GLO EQUITY
JFC EQUITY
5
BDOPBF DEBT
ABS EQUITY
SNLFMNY DEBT
Requirement (f):
(250 x 2,400 x 95%) net proceeds – (250 x 2,372) carrying amount =
(23,000)loss
ACTIVITY #3:
1. A 2. A 3. D 4. C 5. A 6. C 7. A
PROBLEM 5: MULTIPLE CHOICE - THEORY

1. D 6. B 11. A 16. D
2. B 7. B 12. C 17. C
3. C 8. D 13. D 18. A
4. C 9. C 14. B 19. C
5. B 10. C 15. A 20. C
PROBLEM 6: MULTIPLE CHOICE – computational

1.b 2.c 3.b 4.c 5.c 6.a 7.c 8.b 9.b 10.b
11.d 12.d 13.a 14.b 15.b 16.c 17.d 18.a 19.c 20.b

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Case 2: (100 - 10) 90: Problem 1: True or False

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Chapter 9

PROBLEM 1: TRUE OR FALSE

PROBLEM 2: FOR CLASSROOM DISCUSSION

*(12,000 x 8) – 4,800 = 91,200 – 60,000 = 31,200

Cash [(12,000 x 8) – 4,800] 91,200

Unrealized gain – OCI 53,400

Unrealized loss – OCI 40,000

Dec. 31 Unrealized loss – OCI 240,000

* [(2,000 x ½ x 3) – 150] = 2,850 – (1,000 x 6) = 3,150

Cash [(2,000 x ½ x 3) – 150] 2,850

**[(21,000 - 9,000) x ½] – 3,150 = 2,850

Retained earnings 7,650

*** (9,000 x ½) + 3,150 = 7,650

Requirement (b): (10,000 x 20) – [(10,000 x 15) + 7,500] = 42,500 gain

Requirement (c): [10,000 x (20 – 13)] = 70,000 gain

Requirement (e): [7,000 x (25 - 1.25)] – (7,000 x 20) = 26,250 gain

(100 sh. x 2,364 closing price) = 236,400 - 189,120 = 47,280

* Given on the print screen of the portfolio.

PROBLEM 5: MULTIPLE CHOICE - THEORY

PROBLEM 6: MULTIPLE CHOICE – computational

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