SCHOOL OF ACCOUNTANCY, BUSINESS and HOSPITALITY

Accountancy Department

ACCT 1046- Intermediate Accounting 1

Second Semester, SY 2024-2025

EXERCISES

Investment in Equity Securities

Make sure to solve the following problems before attending our meeting. Please write your complete solutions in
the space provided for each item. Volunteers for recitation are encouraged during the discussion of the
exercises.

PROBLEM 1 – True or False

1. Generally, investments classified as equity securities do not have specific maturity dates.
2. Return on investment from equity securities has a higher variability compared to investments from debt
securities.
3. Investment in redeemable preference shares is considered as investment in equity securities since it
covers shares issued by another entity.
4. An investment in equity securities that is held for trading is classifiable at FVTOCI, provided it is
irrevocably designated as such on initial recognition.
5. By default, in the absence of irrevocable designation, investments in equity securities are classified at
FVTPL.
6. An existing investment in equity securities at FVTPL, which was acquired a few years ago, may be
irrevocably designated at FVTOCI later on.
7. Irrevocable designation means that an investment in equity securities designated at FVTOCI cannot be re-
designated later on at FVTPL.
8. Transaction costs related to investment in equity securities at FVTOCI may be capitalized or expensed
outright, depending on an entity’s policy.
9. Regardless of the accounting for investment in equity securities at FVTOCI or at FVTPL, its measurement
shall be equal to its fair value as of each reporting date.
10. Transaction costs related to the purchase of investment in equity securities at FVTPL shall be expensed
outright.
11. Changes in the investment’s fair value shall be recognized in profit or loss whether the investment in
equity securities is accounted for at FVTPL or FVTOCI.
12. The total amount to be reported in the income statement shall exclude the changes in the fair value of
investment in equity securities accounted for at FVTOCI.
13. Net cumulative changes in the fair value of investment in equity securities accounted for at FVTPL are
accumulated in a separate shareholders’ equity account.
14. Increases in the fair value of FVTPL equity securities are recognized as unrealized gain in profit or loss
while decreases are recognized as unrealized loss in profit or loss.
15. Transaction costs related to the actual selling of FVTPL equity securities shall be recognized in profit or
loss while those related to the actual selling of FVTOCI securities shall be recognized in OCI.
16. Cash dividends received from investment accounted for at FVTOCI shall be recognized as dividend
income in OCI.
17. The exact identities of the shareholders who will actually receive the cash dividends are determined on the
date of declaration.
18. Cash dividends to be received from preference shares shall be based on preference dividend rate applied
on the shares’ aggregate par value, and not on the shares’ carrying amount.
19. Dividend income to be recognized from property dividends shall be based on the fair value of the noncash
asset as determined on the date of declaration.
20. Generally, liquidating dividends are recognized as dividend income since the bulk of these amounts
represents a return on capital in contrast to a return of capital.
21. Under the traditional approach, share dividends of the same class decrease the investment’s carrying
amount per share.
22. Under the contemporary approach, share dividends belonging to a different class of shares are separately
recognized as unrealized gain equal to their fair values.
23. Share split-up increases the par value per share.
24. Share split-down decreases the par value per share.
25. By default, share rights are not separately accounted for since the investments in equity securities are
covered.
PROBLEM 2 – Equity Investments with different classifications
At the beginning of 2023, IVAN Company acquired 200,000 ordinary shares of another entity at P5/share (equal to its fair
value). Transaction costs amounted to P9,000.

At the end of 2023 and 2024, the shares have the following fair values and corresponding estimated transaction costs that
will be incurred assuming the shares are to be sold on each reporting dates:

Date Fair Value per Share Transaction Costs

December 31, 2023 P5.75 P10,000
December 31, 2024 6.35 11,500

The investment was actually sold on January 10, 2025 for P6.55/share with the Company incurring P12,000 transaction
costs.

Required: Determine the journal entries from 2023 to 2025 under each of the following independent assumptions:
1. The investment is accounted for at FVTPL
2. The investment is accounted for at FVTOCI

1. The investment is accounted for at FVTPL 2. The investment is accounted for at FVTOCI
PROBLEM 3 – Accounting for different classifications of debt investments
On July 1, 2023, WHITE Company acquired 50,000 preference shares of NAUGHTY Company for a total price of
P2,500,000 and incurred P20,000 transaction costs for the transaction.

Relevant fair values for the years 2023 and 2024 are the following:

Date Total Fair Value

December 31, 2023 P2,420,000
December 31, 2024 2,360,000

The investment was actually sold on February 14, 2025 for P2,330,000 less transaction costs of P15,000.

Required: Determine the journal entries from 2023 to 2025 under each of the following independent assumptions:
1. The investment is accounted for at FVTPL
2. The investment is accounted for at FVTOCI

1. The investment is accounted for at FVTPL 2. The investment is accounted for at FVTOCI
PROBLEM 4 – Accounting for different classifications of debt investments
At the beginning of 2023, ZOFIA Company reported investment in equity securities with carrying amount of P4,700,000
and original cost of P4,500,000.

Relevant fair values for the years 2023 and 2024 are the following:

Date Total Fair Value

December 31, 2023 P4,850,000
December 31, 2024 4,460,000

On April 10, 2025, the Company decided to cut the loss it is experiencing and sold the investment for P4,375,000.

Required: Determine the journal entries from 2023 to 2025 under each of the following independent assumptions:
1. The investment is accounted for at FVTPL
2. The investment is accounted for at FVTOCI

1. The investment is accounted for at FVTPL 2. The investment is accounted for at FVTOCI
PROBLEM 5 – Accounting for FVOCI Equity Investments
On May 1, 2023, ELENA Company acquired equity securities for a total price of P1,950,000 (equal to its fair value) plus
P50,000 transaction costs. The Company irrevocably designated changes in the fair value of this investment to be
recognized in OCI.

Relevant fair values for the years 2023 to 2025 are the following:
Date Total Fair Value
December 31, 2023 P2,100,000
December 31, 2024 1,940,000
December 31, 2025 2,250,000

On February 5, 2026, the Company sold half of the securities for P1,180,000. The remaining shares had fair value of
P1,080,000 as of December 31, 2026.
Required: From the information given, determine the following:
a. Journal entries from 2023 to 2026.
b. The cumulative balance of net unrealized gains or loss - OCI account to be reported in the shareholders'
equity at the end of each year.

PROBLEM 6 – Accounting for FVPL and FVOCI Equity Investments

POLICE Company reported the following information in relation to its investments in equity securities that were acquired in
2021:

Securities Fair Value, Dec 31, Fair Value, Dec 31, Fair Value, Dec Fair Value, Dec 31,
2022 2023 31, 2024 2025
FVTPL Category
AAA P2,600,000 P2,650,000 P2,720,000 P2,790,000
BBB 1,300,000 1,150,000 1,400,000 1,560,000
Total FVTPL P3,900,000 P3,800,000 P4,120,000 P4,350,000
FVTOCI Category
CCC P1,900,000 P1,700,000 P1,480,000 P1,850,000

In addition, as of December 31, 2022, the Company reported net cumulative unrealized gain - OCI of P350,000 in its
shareholders' equity.

From this information, determine the following:

a. Amounts to be reported for the investments in equity securities in the asset section of the Company's
balance sheet as of December 31, 2023, 2024, and 2025.
b. Amounts to be reported in the income statement, other comprehensive income, and statement of
comprehensive income for the years 2023, 2024, and 2025.
c. Amounts to be reported in the shareholders' equity section of the Company's balance sheet as of December
31, 2023, 2024, and 2025.
PROBLEM 7 – Accounting for FVPL and FVOCI Equity Investments
RAINBOW Company had the following investments in equity securities transactions from the years 2023 to 2025:

Date Transactions
01/01/2023 Acquired 400,000 ordinary shares of DDD Company for P8/share and incurred transaction costs of
P30,000. The shares are to be accounted for at FVTPL.
06/15/23 Acquired 200,000 preference shares of EEE Company at P12/share, which are to be accounted for at
FVTOCI. Transaction costs incurred amounted to P20,000.
03/12/2024 Acquired 100,000 ordinary shares of FFF Company at P7/share, to be accounted for at FVTOCI.
09/10/2024 Acquired 300,000 preference shares of GGG Company at P9/share, to be accounted for at FVTPL.
04/05/2025 Sold 150,000 ordinary shares of DDD Company for P9.75/share. Transaction costs incurred amounted to
P12,000.
05/08/2025 Sold 120,000 preference shares of GGG Company for P8.40/share. Transaction costs incurred amounted
to P8,000.
07/08/2025 Sold 75,000 ordinary shares of FFF Company for P8/share. Transaction costs incurred amounted to
P10,000.

The Company also compiled the following fair value information as of the end of each year, from 2023 to 2025:
Equity Securities FV, 12/31/23 FV, 12/31/24 FV, 12/31/25
DDD Company P 8.75/share P 9.50/share P 10.20/share
EEE Company 11.50/share 10.90/share 9.80/share
FFF Company 6.50/share 7.75/share 8.45/share
GGG Company 9.25/share 8.65/share 8.15/share

From this information, determine the following:

a. Journal entries from 2023 to 2025.
b. Amounts to be reported for the investments in equity securities in the asset section of the Company's
balance sheet as of December 31, 2023, 2024, and 2025.
c. Amounts to be reported in the income statement, other comprehensive income, and statement of
comprehensive income for the years 2023, 2024, and 2025.
d. Amounts to be reported in the shareholders' equity section of the Company's balance sheet as of December
31, 2023, 2024, and 2025.
PROBLEM 8 – Accounting for Dividends
At the beginning of 2023, RONALD Company had the following investments in equity securities:

a. 200,000 ordinary shares of AAA Company with P10 par value and total carrying amount of P3,600,000.

b. 120,000 preference shares of BBB Company with P50 par value and total carrying amount of P9,000,000.
Relevant preference dividend rate is 9%.

✓ On May 1, 2023, AAA Company declared cash dividend of P2.00/share for shareholders on record on June 1, 2023.
The dividends were eventually received on July 1, 2023.

✓ On September 1, 2023, BBB Company declared the preference dividend for shareholders on record on September
15, 2023. The dividends were eventually received on September 30, 2023.

✓ As of December 31, 2023, AAA Company's ordinary shares had P19.50/share fair value, while BBB Company's
ordinary shares had P78/share fair value.

Required: From the given information, determine the following for both classifications:
a. Journal entries to be made for the year 2023.
b. Total amount to be recognized in profit or loss for the year 2023.

1. The investment is accounted for at FVTPL 2. The investment is accounted for at FVTOCI
PROBLEM 9 – Accounting for Dividends
At the beginning of 2023, CESAR Company reported investment in equity at securities at FVTPL at their fair value of
P2,400,000 as represented by 100,000 ordinary shares. On April 1, 2023, the investee entity declared cash dividends of
P2.75/share to its ordinary shares for shareholders on record as of April 20, 2023. Date of payment is set on May 15,
2023.

Required: Under each of the following independent scenarios, determine the journal entries to be made by
CESAR Company and the buyer:
1. The shares were sold on April 15, 2023 for P2,600,000.
2. The shares were sold on April 30, 2023 for P2,520,000.

PROBLEM 10 – Accounting for Dividends

On April 1, 2023, GALAXY Company received a notice that one of its investees declared some of its inventory items
composed of office supplies as property dividends. The supplies that the Company will receive on May 1, 2023 had fair
value of P500,000 and P400,000 carrying amount in the investee's books.
Required: Determine the journal entries in the books of GALAXY Company.

PROBLEM 11 – Accounting for Dividends

At the beginning of 2023, PIZZA Company had investment in equity securities of PEPPERONI Company, an entity
involved in mining operations. The investment had carrying amount of P3,000,000. During the year, the Company
received the following liquidating dividends:

Date Liquidating Dividends

March 12, 2023 P1,600,000
July 20, 2023 900,000
October 5, 2023 725,000

Required: Determine the journal entries to be made in the books of PIZZA Company.
PROBLEM 12 – Accounting for Dividends
On January 1, 2023, RESILIENT Company reported investment in equity securities representing 400,000 shares of
STRONG Company at its fair value of P12/share.
✓ On June 1, 2023, 20% share dividends were declared making the fair value of the shares at P9/share.
✓ On August 1, 2023, 100,000 shares were sold for P9.50/share.
✓ On October 31, 2023, 150,000 shares were sold for P10.75/share.

As of December 31, 2023, the shares had fair value of P11/share.

Required: Determine the journal entries for the year 2023 for this investment under the (a) traditional approach;
and (b) contemporary approach.

PROBLEM 13– Accounting for Dividends

At the beginning of 2023, PLASMA Company invested in the 500,000 ordinary shares of MATTER Company for
P12/share.
✓ On July 1, 2023, MATTER Company distributed 10% share dividends. However, instead of ordinary shares,
MATTER Company distributed preference shares with fair value of P60/share. On the same date, the ordinary
shares had fair value of P14/share.
✓ On September 1, 2023, 24,000 preference shares were sold for P50/share.

As of December 31, 2023, the ordinary shares and preference shares had fair values of P15.50/share and P56/share,
respectively.

Required: Determine the journal entries for the year 2023 under the (a) traditional approach; and (b)
contemporary approach.
PROBLEM 14– Accounting for Share Split
On January 1, 2023, CHICKEN Company's investment in 250,000 ordinary shares of another had total fair value of
P7,500,000.

✓ On February 1, 2023, the investee entity executed a 3-for-1 share split-up, resulting to the fair value of the shares
decreasing to P12.50/share.
✓ On May 1, 2023, 400,000 of these shares were sold for P11.50/share.

As of December 31, 2023, the remaining shares had fair value of P11/share.

Required: Determine the journal entries for the year 2023 for this investment under the (a) traditional approach;
and (b) contemporary approach.

PROBLEM 15 – Accounting for Share Split

On March 1, 2023, TURKEY Company acquired 900,000 ordinary shares of another entity at P4.50/share.

✓ On July 15, 2023, the investee entity instituted a 4-for-1 share split-down, increasing the fair value of the ordinary
shares to P16/share.
✓ On July 1, 2023, 140,000 of these shares were sold for P17/share.

As of December 31, 2023, the remaining shares had fair value of P19.50/share.

Required: Determine the journal entries for the year 2023 for this investment under the (a) traditional approach;
and (b) contemporary approach.

PROBLEM 16 – Accounting for Stock Rights

At the beginning of 2023, PITU Company reported investment in equity securities at FVTPL with carrying amount of
P3,500,000 representing 100,000 ordinary shares of the investee.
✓ On May 1, 2023, share rights to acquire additional 100,000 ordinary shares were received, with exercise price set
at P35/share. Due to the share rights, the fair value of investment in equity securities increased to P3,850,000.
✓ All of these share rights were exercised on September 1, 2023 when the shares’ fair value is P40/share.

Required:
1. Prepare the journal entries.
2. Assume that instead of exercising the share rights, the Company sold these for P380,000. Give the journal
entry.
PROBLEM 15 - Theoretical Value of Stock Rights
On January 2, 2023, Jupiter Company purchased 10,000 shares of P200 par value ordinary shares at P240 per share of
Saturn Company. On March 2, 2023, Saturn Company issued stock rights to its shareholders. The holder needs five rights
to purchase one share of ordinary stock at par. The market value of the stock on that date was P320 per share. There
was no quoted price for the rights.
Required:
a. Compute for the theoretical value of the rights assuming the stock is selling right-on.
b. Compute for the theoretical value of the rights assuming the stock is selling ex-right.

PROBLEM 16 - Stock Split and Special Assessment

On January 1 of the current year, Phobos Company acquired 10,000 shares of Investment in equity designate as at Fair
Value through Other Comprehensive Income of Deimos Company at P400,000 plus brokerage expense of P20,000.

On March 1 of the current year, Deimos Company ordinary shares was split on a 5-for-2 basis.

On October 1, Deimos Company made a special assessment of P3.20 per share on all ordinary shareholders. Phobos
Company accordingly paid the assessment.

The fair value on December 31 amounted to P30 per share.

Required:
a. The total number of shares at the end of the year.
b. The unrealized gain to be presented in the other comprehensive income for the current year.
c. Journal entry on January 1.
d. Journal entry on December 31.
TEST YOUR SELF:

Write your SCORE here:

1. On March 1, 2023, DONALD Company acquired a number of ordinary shares of RACHELLE Company at a total
purchase price of P2,000,000 plus transaction costs of P50,000. On October 1, 2023, the Company sold half of these
shares for P1,100,000 and incurred P10,000 transaction costs. As of December 31, 2023, the remaining shares had a
total fair value of P1,260,000 and estimated transaction costs of P11,000 are to be incurred in selling the shares.
From this information, the net gain or loss amount to be reported in profit or loss, assuming the equity securities are
accounted for at FVTPL, shall be
a. P300,000 net loss
b. P300,000 net gain
c. P289,000 net loss
d. P289,000 net gain
2. From this information, the net gain or loss amount to be reported in OCI, assuming the equity securities are accounted
for at FVTOCI, shall be
a. P299,000 net loss
b. P299,000 net gain
c. P310,000 net loss
d. P310,000 net gain

3. On January 1, 2023, ALBINO Company reported carrying amount of P6,500,000 for its investments in equity
securities accounted for at FVTOCI. In addition, net cumulative unrealized gains – OCI amounted to P200,000. During
2023, equity securities with original cost and carrying amount of P2,450,000 and P2,300,000, respectively, were sold
for P2,380,000. The remaining equity securities had total fair value of P4,060,000 as of December 31, 2023.
The net amount to be reported in the Company's 2023 OCI shall be
a. P60,000 net gain
b. P60,000 net loss
c. P140,000 net gain
d. P140,000 net loss
4. The direct net effect of the sale transaction in the Company's retained earnings shall be
a. P80,000 net increase
b. P80,000 net decrease
c. P70,000 net decrease
d. P70,000 net increase
5. The net cumulative unrealized gain or loss – OCI to be reported as of December 31, 2023 in the Company's equity
shall be
a. P210,000 net gain
b. P210,000 net loss
c. P60,000 net gain
d. P60,000 net loss

6. At the beginning of 2023, ZOLO Company reported the following carrying amounts of its investments in equity
securities:
Carrying Amounts
FVTPL equity securities P5,000,000
FVTOCI equity securities 6,000,000

In addition, as of that date, the Company also reported net unrealized loss – OCI of P500,000. Fast forward to
December 31, 2023, these investments in equity securities had the following fair values:

FVTPL equity securities P4,600,000

FVTOCI equity securities 6,230,000

Based on this limited information, the amounts to be recognized in income statement and OCI, respectively, shall be
a. P400,000 net loss; P230,000 net gain
b. P230,000 net loss; P400,000 net gain
c. P400,000 net gain; P230,000 net loss
d. P230,000 net gain; P400,000 net loss
7. The net amount that shall be reported in the Company's equity shall be
a. P730,000 net gain
b. P730,000 net loss
c. P270,000 net gain
d. P270,000 net loss
8. On January 1, 2023, BEETLE Company acquired the following equity securities, both to be accounted for at FVTOCI:
• 200,000 preference shares of AAA Company at a total purchase price of P2,800,000 plus P30,000 transaction
costs.
• 300,000 preference shares of BBB Company at a total purchase price of P3,300,000 plus P40,000 transaction
costs.

For the years 2023 and 2024, there were no changes in these investments. However, during 2025, the following
equity securities were sold:
• 100,000 preference shares of AAA Company at total proceeds of P1,800,000 with the Company incurring
P20,000 transaction costs.
• 180,000 preference shares of BBB Company at total proceeds of P2,160,000 with the Company incurring
P18,000 transaction costs.

Fair value data for these equity securities are the following:
Securities FV, 12/31/23 FV, 12/31/24 FV, 12/31/25
AAA Company P15.00/share P16.50/share P19.20/share
BBB Company 10.50/share 12.80/share 11.20/share

The net amount to be recognized in OCI for the year 2023 shall be
a. P20,000 net gain
b. P20,000 net loss
c. P50,000 net gain
d. P50,000 net loss
9. The net amount to be recognized in OCI for the year 2024 shall be
a. P390,000 net gain
b. P390,000 net loss
c. P990,000 net gain
d. P990,000 net loss
10. The net amount to be recognized in OCI for the year 2025 shall be
a. P46,000 net gain
b. P46,000 net loss
c. P84,000 net gain
d. P84,000 net loss
11. The cumulative net unrealized gain or loss – OCI to be reported in the Company's equity as of December 31, 2025
shall be
a. P513,000 net gain
b. P513,000 net loss
c. P497,000 net gain
d. P497,000 net loss

12. At the beginning of 2023, GOLD Company reported the following FVTOCI equity securities:

Securities No. of Shares Original Cost Fair Value

AAA 100,000 P5.00/share P6.00/share
BBB 300,000 9.00/share 8.00/share
CCC 200,000 20.00/share 21.50/share

On March 31, 2023, 250,000 shares of DDD Company were acquired for P30/share. During 2024, all of AAA
Company's shares were sold for P7.50/share less P5,000 transaction costs while 150,000 shares of BBB Company
were sold for P7/share less P6,000 transaction costs.

Fair value data at the end of 2023 and 2024 are the following:
Securities FV, 12/31/23 FV, 12/31/24
AAA P6.70/share P7.80/share
BBB 6.90/share 7.10/share
CCC 20.80/share 22.00/share
DDD 32.00/share 31.20/share

The net amount to be reported in the OCI for the year 2023 shall be
a. P225,000 net gain
b. P225,000 net loss
c. P100,000 net gain
d. P100,000 net loss
13. The net cumulative unrealized gain or loss - OCI to be reported as of December 31, 2023 in the Company's equity
shall be
a. P200,000 net gain
b. P200,000 net loss
c. P148,000 net gain
d. P148,000 net loss
14. The net amount to be reported in the OCI for the year 2024 shall be
a. P165,000 net gain
b. P165,000 net loss
 c. P215,000 net gain
d. P215,000 net loss
15. The net cumulative unrealized gain or loss - OCI to be reported as of December 31, 2024 in the Company's equity
shall be
a. P415,000 net loss
b. P415,000 net gain
c. P375,000 net loss
d. P375,000 net gain

16. JOANA Company reported the following information to its investments in equity securities, all of which were acquired
during 2023:
Securities Original Cost Fair Value, Fair Value, December Fair Value, December
December 31, 2023 31, 2024 31, 2025
FVTPL Category
XXX P1,200,000 P1,100,000 P1,400,000 P1,250,000
YYY 3,200,000 3,560,000 3,440,000 3,470,000
P4,400,000 P4,660,000 P4,840,000 P4,720,000
FVTOCI Category
ZZZ P3,600,000 P3,400,000 P3,500,000 P3,550,000
AAA 4,300,000 4,100,000 4,280,000 4,500,000
P7,900,000 P7,500,000 P7,780,000 P8,050,000

The net amount to be reported in the statement of comprehensive income for the year 2023 shall be
a. P400,000 net gain
b. P400,000 net loss
c. P140,000 net gain
d. P140,000 net loss
17. The net amount to be reported in the statement of comprehensive income for the year 2024 shall be
a. P460,000 net gain
b. P460,000 net loss
c. P280,000 net gain
d. P280,000 net loss
18. The net amount to be reported in the income statement for the year 2025 shall be
a. P120,000 net gain
b. P120,000 net loss
c. P150,000 net gain
d. P150,000 net loss
19. The cumulative net unrealized gain or loss – OCI to be reported in the Company's equity as of December 31, 2025
shall be
a. P470,000 net gain
b. P470,000 net loss
c. P150,000 net gain
d. P150,000 net loss

20. At the beginning of 2023, CIPRIANO Company had 200,000 ordinary shares of ZZZ Company carried at P15/share
accounted for at FVTPL. On May 1, 2023, additional 50,000 ordinary shares of ZZZ Company were acquired for
P16/share. On June 1, 2023, ZZZ Company declared P3.25/share cash dividends for shareholders on record as of
June 30, 2023 and to be paid on July 15, 2023. On June 26, 2023, CIPRIANO sold 100,000 shares from its
beginning-of-the-period holdings for P18/share. On December 31, 2023, ZZZ shares had fair value of P16.50/share.

Based on this information, the net amount to be reported in CIPRIANO’s 2023 profit or loss shall be
a. P987,500 net income
b. P987,500 net loss
c. P962,500 net income
d. P962,500 net loss

21. On February 15, 2023, CONCHITA Company acquired 200,000, P40 par value preference shares of YYY Company
for P55/share. Preference dividend rate is 5%. On July 1, 2023, YYY Company declared the preference share
dividend for the year 2023 for shareholders on record as of July 15, 2023 and to be paid on July 31, 2023.
Fast forward to December 31, 2023, YYY shares had P54.50/share fair value.
Based on this information, the net amount to be reported in CONCHITA’s 2023 statement of comprehensive income
shall be
a. P400,000 net income
b. P400,000 net loss
c. P450,000 net income
d. P450,000 net loss
22. On January 1, 2023, LORNA Company had the following investments:
Securities No. of Shares Cost per Share FV per Share

FFF 300,000 P6.00 P7.50

GGG 250,000 10.00 9.50

FFF is accounted for at FVTPL while GGG is accounted for at FVTOCI. During the year 2023, the following events
occurred:
• On April 5, 2023, the Company acquired additional 100,000 FFF shares for P8/share.
• On June 10, 2023, FFF declared cash dividends of P2.50/share to its shareholders on record as of June 20,
2023, which will be paid on June 30, 2023.
• On September 6, 2023, GGG declared cash dividends of P1.80/share for shareholders on record as of
September 30, 2023, which will be paid on October 15, 2023. On September 25, 2023, the Company acquired
additional 120,000 GGG shares for P10.80/share.
• As of December 31, 2023, the equity securities had the following fair values:
FFF GGG

P11.50/share P7.80/share

Based on this information, the net amount to be reported in LORNA’s 2023 profit or loss shall be
a. P3,000,000 net income
b. P3000,000 net loss
c. P2,550,000 net income
d. P2,550,000 net loss
23. Based on this information, the net amount to be reported in LORNA’s 2023 other comprehensive income shall be
a. P119,000 net income
b. P119,000 net loss
c. P569,000 net income
d. P569,000 net loss

24. On January 31, 2023, DENNIS Company acquired 100,000 ordinary shares of CCC Company for P60/share to be
accounted for at FVTPL. On March 31, 2023, CCC Company declared 20% share dividends to be distributed on April
15, 2023. On June 15, 2023, additional 60,000 CCC shares were acquired for P58/share. CCC Company dividends
declared P2.60/share cash dividends on July 31, 2023 to be paid on August 31, 2023 for shareholders on record as of
August 20, 2023. Lastly, on December 31, 2023, the CCC shares had fair value of P59.50/share.

From this information, determine the total amount to be reported in DENNIS Company’s 2023 profit or loss.
a. P1,230,000 net income
b. P1,230,000 net loss
c. P1,698,000 net income
d. P1,698,000 net loss

25. At the beginning of 2023, CRISANTO Company reported investments in ordinary shares at FVTPL amounting to
P1,040,000 as represented by 200,000 ordinary shares. These shares were issued by RC Company. On February 15,
2023, RC declared share dividends of 30% to be issued on February 28, 2022. In addition, on July 15, 2023 RC also
executed a 2-for-1 share split up. Further, on November 15, 2023, 300,000 of these shares were sold for P3.20 per
share. Lastly, as of December 31, 2023, the remaining shares have fair value of P3.40 per share. The Company uses
the traditional approach.
The amount of gain or loss to be recognized on November 15, 2023 sale shall be
a. P360,000 gain
b. P360,000 loss
c. P540,000 gain
d. P540,000 loss
26. The amount of unrealized gain or loss to be recognized on December 31, 2023 due to the changes in fair value shall
be
a. P396,000 gain
b. P396,000 loss
c. P308,000 gain
d. P308,000 loss
27. The total carrying amount of the investment as of December 31, 2023 shall be
a. P1,144,000
b. P748,000
c. P630,000
d. P340,000

Prepared by sir je