Esau Corporation

A B C
Shares Cost/sh' Total Cost Shares Cost/sh' Total Cost Shares

3-Jan 1,000 54 54,000

8-Jan 1,000 60 60,000
5-Apr (500) 54 (27,000)
8-Apr 1,000
8-Apr
15-Jul
8-Dec

CA 500 54 27,000 1,000 60 60,000 1,000

FV 55 27,500 54 54,000
UG(UL) 500 (6,000)

Adjusting Entries:

2-Apr Financial Assets at FVTPL 1,000

Dividend Income 1,000

5-Apr Financial Assets at FVTPL 1,000

Gain on sale 1,000

15-Jul Treasury Shares @ 165 33,000

Financial Assets at FVTPL 33,000

15-Aug Financial Assets at FVTPL 20,000

Treasury Shares 16,500
Gain on sale from TS 3,500

8-Dec Dividend Income 2,000

Financial Assets at FVTPL 2,000

10-Dec Financial Assets at FVTPL 1,200

Dividend Income 1,200

15-Dec Dividend Receivable 5,000

Dividend Income 5,000
31-Dec Financial Assets at FVTPL 400
Unrealized Gain from change in FV 400
 C D E
Cost/sh' Total Cost Shares Cost/sh' Total Cost Shares Cost/sh' Total Cost

30 30,000
1,000 36 36,000
500 40 20,000
50 36.36

30 30,000 1,000 36 36,000 550 36 20,000 173,000

32 32,000 39 39,000 38 20,900 173,400
2,000 3,000 900 400
Problem 3:
A

Honey Company (1) Gain on July 10 sa

2013 Shares Cost Total
22-Jun 5,000 104 520,000 (2) Gain on Decembe
31-Dec 80,000
31-Dec 5,000 120 600,000 (3) 2014 Dividend Re

2014
31-May 500 109 600,000
10-Jul (1,000) 109 (109,091)
4-Dec (1,000.00) (109,091) (4) Unrealized Loss
Unadjusted 3,500 381,818
Adjusted 85 297,500 (5) Adjusted balance
Unrealized Loss 84,318.18

B Adjusting Journal

Dividend Income
Trading S

Trading Securities
Gain on

Trading Securities
Gain on

Dividends Receivab
Dividend
 SP CA Gain
Gain on July 10 sale 130,000 109,091 20,909

Gain on December 10 sa 140,000 109,091 30,909

2014 Dividend Revenue

November dividends declared 22,500
Dividends accrued on December 31 (3,500 35,000
Total dividend income 57,500

Unrealized Loss 84,318

Adjusted balance of Investment Account 297,500

Adjusting Journal Entries Dr Cr

Dividend Income 12,000

Trading Securities 12,000

Trading Securities 20,909

Gain on Sale of Trading Securities 20,909

Trading Securities 30,909

Gain on Sale of Trading Securities 30,909

Dividends Receivable 35,000

Dividend Income 35,000
PROBLEM 4

2014
a) Investment in Ivan Company 115,000
Unrealized Gain - OCI 115,000

b) Dividend Income 55,000

Retained Earnings 55,000

c) Dividend Income 20,000

Investment in Ivan Company 20,000

d) Investment in Adam Company 9,000

Dividend Income 9,000

e) Investment in Ivan Company 25,000 Selling Price

Unrealized Gain - OCI 25,000 Carrying Value
Unrealized Gain -OCI

Unrealized Gain - OCI 110,000

Retained Earnings 110,000

f) Investment in Myra Company 70,000 Selling Price

Unrealized Gain - OCI 70,000 Carrying Value
Unrealized Gain - OCI

Miscellaneous Receivable 280,000

Investment in Ivan Company 280,000

Unrealized Gain - OCI 80,000

Retained Earnings 80,000

g) Investment in Ivan Company 256,000 Fair Value, Dec 31

Unrealized Gain - OCI 256,000 Carrying Value:
4000 shares @105
4000 shares @115
Unrealized Gain - OCI
h) Investment in Adam Company 1,500
Unrealized Gain - OCI 1,500
 elling Price 550,000
Carrying Value 525,000
Unrealized Gain -OCI 25,000

elling Price 280,000

Carrying Value 210,000
Unrealized Gain - OCI 70,000

air Value, Dec 31 1,136,000

Carrying Value:
4000 shares @105 420,000
4000 shares @115 460,000 880,000
Unrealized Gain - OCI 256,000
REQUIREMENTS:

a.) Schedule of investments in financial assets at fair value through profit or loss
Preference Shares
Red Corp Red Corp.
Shares Cost Total Shares
Wednesday, January 01, 2014 1000.00 450.00 450000.00
Thursday, January 02, 2014
Friday, January 17, 2014
Sunday, February 02, 2014
Sunday, April 06, 2014
Sunday, June 01, 2014
Monday, June 30, 2014
Wednesday, October 01, 2014 -500.00 450.00 ### 1500.00
Wednesday, December 31, 2014 500.00 900.00 225000.00 1500.00

b.) Schedule showing the carrying amount of White's investment in Green Corp. at December 31, 2

Acquisition Cost 16000000

Share in Net income 2500000
Dividends Received
Mar. 31 250000
Jun. 30 250000
Sep. 30 250000
Dec. 31 250000 ###

Investment in Associate- 12/31/14 ###

c.) Schedule showing dividend revenue earned for the year ended December 31, 2014.

Dividend Revenue
Red Corp - Preference Shares
Apr. 6 22500.00
Oct. 6 22500.00 45000.00
Blue Inc. - Ordinary Shares
Jun 30 17500.00
Total 62500.00

d.) Schedule to compute gains and losses on disposal of the securities during 2014.
Blue Inc. (sale)
Selling Price 325000.00
Carrying Amount 270833.33
 Gain(loss) on Sale 54166.67

Yellow Co. (sale)

Selling Price 105000.00
Carrying Amount 125000.00
Gain(loss) on Sale -20000.00

Red Corp. (conversion)

Market Value 240000.00
Carrying Amount 225000.00
Gain(loss) on Conversion of Shares 15000.00

e.) Schedule showing the amounts taken to profit or loss as a result of measuring the securities at

Preference Shares
Red Corp Red Corp.
Shares Cost Total Shares
Wednesday, January 01, 2014 1000.00 450.00 450000.00
Thursday, January 02, 2014
Friday, January 17, 2014
Sunday, February 02, 2014
Sunday, April 06, 2014
Sunday, June 01, 2014
Monday, June 30, 2014
Wednesday, October 01, 2014 -500.00 450.00 ### 1500.00
Wednesday, December 31, 2014 500.00 900.00 225000.00 1500.00

FV per Share - 12/31/14 500.00 460.00 230000.00 1500.00

Increase (decrease) 5000.00
 Ordinary Shares
Red Corp. Blue Inc. Yellow Co.
Cost Total Shares Cost Total Shares Cost Total
6000.00 108.33 650000.00 2000.00 275.00 550000.00

-2500.00 108.33 ###

2200.00 250.00 550000.00

-500.00 250.00 -125000.00

160.00 240000.00
160.00 240000.00 3500.00 216.67 379166.67 1700.00 250.00 425000.00

Corp. at December 31, 2014

er 31, 2014.
suring the securities at December 31, 2014.

Ordinary Shares
Red Corp. Blue Inc. Yellow Co.
Cost Total Shares Cost Total Shares Cost Total
6000.00 108.33 650000.00 2000.00 275.00 550000.00

-2500.00 108.33 ###

2200.00 250.00 550000.00

-500.00 250.00 -125000.00

160.00 240000.00
160.00 240000.00 3500.00 216.67 379166.67 1700.00 500.00 425000.00

160 240000.00 3500.00 110.00 385000.00 1700.00 230 391000.00

0.00 5833.33 -34000.00
###
Date
2-Jan Investment in Associate - Green Co. 16000000
Cash 16000000

17-Jan Cash 325000

Trading Securities - Blue Corp 270833.33
Gain on Sale of Trading Securities 54166.67

14-Feb Received 200 shares of Yellow Co. representing 10% stock dividend on 2000 shares held. Shares now held, 2200 shares

31-Mar Cash 250000

Investment in Associate - Green Co. 250000

6-Apr Cash 22500

Dividend Income 22500

1-Jun Cash 105000

Loss on Sale of Trading Securities 20000
Trading Securities - Yellow 125000

30-Jun Cash 250000

Investment in Associate - Green Co. 250000

30-Jun Cash 250000

Investment in Associate - Green Co. 250000

1-Oct Trading Securities - Red Co., Ordinary Shares 240000

Unrealized Gain on Conversion 15000
Trading Securities - Red Co., Preference Shares 225000

6-Oct Cash 22500

Dividend Income - Red Preference Shares 22500

31-Dec Cash 250000

Investment in Associate - Green Co. 250000

Investment in Associate - Green Co. 2500000

Investment Income 2500000

Unrealized Loss from Changes in Fair Value 23166.67

Trading Securities 23166.67
d. Shares now held, 2200 shares.
PROBLEM 6: EPSON COMPANY
FINANCIAL ASSET AT FAIR VALUE THROUGH PROFIT OR LOSS

Facts: Face Value 400,000

Nominal rate 9% 4.5%
Effective rate 12% 6%
Maturity October 31, 2016
Interest on bonds is payable semiannually on April 30 and October 31.
Periods 7

JOURNAL ENTRIES:

May 1, 2013 Financial Asset at Fair Value Through Profit or Loss

Cash
*to record the acquisition of bonds

Oct 31, 2013 Cash

Interest Income
*to record the collection of semi annual interest income

Dec 31, 2013 Interest Receivable

Interest Income
*to record the accrual of interest for 2 months

Financial Asset at Fair Value Through Profit or Loss

Unrealized Gain from Change in Fair Value
*to reflect the changes in fair value at year-end

Jan 1, 2014 Interest Income

 Interest Receivable
*reversing entry

Apr 30, 2014 Cash

Interest Income

May 1, 2014 Cash

Loss on Sale of Financial Asset
Financial Asset at Fair Value Through Profit or Loss
*to record the sale of bonds

July 1, 2014 Financial Asset at Fair Value Through Profit or Loss *equity
Loss on exchange
Financial Asset at Fair Value Through Profit or Loss
*to record the purchase of XYZ Corp. shares by exchange

Cash
Interest Income

Oct 31, 2014 Cash

Interest Income
*to record the collection of interest income for the remaining bonds

Dec 31, 2014 Interest Receivable

Interest Income

Unrealized Loss from change in fair value

Financial Asset at Fair Value Through Profit or Loss
April 30 and October 31.

366,506 Computation for the purchase price of the bonds:

366,506
Present value of an ordinary annuity of 1at 6% for 7 interest pe

Interest payments each period

Present value factor

Present value of 1 at 6% for 7 periods:

Principal
Present value factor
Purchase Price (Market Price)

18,000
18,000
st income

6,000
6,000

61,494 Market Value as of Dec 31, 2 (400,000 x 1.07)

61,494 Carrying Amount
Unrealized Gain from change in fair value

6,000
 6,000

18,000
18,000

103,000 Proceeds from the sale of bonds

4,000 Less: Carrying amount of P100,000 bonds
t or Loss 107,000 Loss on Sale of Financial Asset

Acquisition of equity securities by exchange:

128,000 Acquisition cost measurement - order of priority:

400 1 Fair value of asset given
t or Loss 128,400 2 Fair value of asset received
y exchange 3 Carrying amount of asset given

1,800
1,800

8,100
8,100
r the remaining bonds

2,700
2,700

3,600 Market Value as of Dec 31, 2014

t or Loss 3,600 Carrying Amount
Unrealized Loss from change in fair value
rice of the bonds:

of 1at 6% for 7 interest periods:

18,000
5.58 100,483

400,000
0.67 266,023
366,506

00 x 1.07) 428,000
366,506
fair value 61,494
 103,000
107,000
(4,000)

by exchange:

er of priority:

189,000
192,600
fair value (3,600)
Required:

2013 A B
Interest Revenue Unrealized Gains (Losses)

May 1
Oct 31 18,000
Dec 31 6,000 61,494
Total 24,000 61,494

2014 A B
Interest Revenue Unrealized Gains (Losses)

Beg. Balance
Apr 30 12,000
May 1 -
July 1 1,800

Oct 31 8,100
Dec 31 2,700 (3,600)
Total 24,600 (3,600)
 C D
Gains (Losses) on Disposal Carrying Value of the Investments

366,506

61,494
- 428,000

C D
Gains (Losses) on Disposal Carrying Value of the Investments(Bo

428,000
-
(4,000) (107,000)
(400)
(128,400)

(3,600)
(4,400) 189,000
D
Carrying Value of the Investments (Equity)

128,000

128,000
Problem 7

Purchase Price 547,778.00 Nominal Rate

Face Value 500,000.00 Effective Rate
Semi-annual payment 25,000.00

Carrying Value on August 1, 2013:

Purchase Price 547,778.00
Less: Accrued Interest (8,333.33)
Carrying Value 8/1/13 539,444.67

Interest Date Interest Received Interest Income Premium Amortization

1-Aug-13
30-Nov-13 16,666.67 14,385.19 2,281.48
31-Dec-13 4,166.67 3,581.09 585.58
31-May-14 20,833.33 17,885.92 2,947.41
30-Nov-14 25,000.00 21,345.21 3,654.79
31-Dec-14 4,166.67 3,533.17 633.50
31-May-15 20,833.33 17,644.73 3,188.60
30-Nov-15 25,000.00 21,046.13 3,953.87
31-May-16 25,000.00 20,887.98 4,112.02
30-Nov-16 25,000.00 20,723.50 4,276.50
31-May-17 25,000.00 20,552.44 4,447.56
30-Nov-17 25,000.00 20,374.53 4,625.47
31-May-18 25,000.00 20,189.52 4,737.88

2013 2014
A.) Interest Revenue 17,966.28 42,764.30
B.) Interest Receivable 4,166.67 4,166.67
C.) Carrying Value At Dec 536,577.61 529,341.91
 10%
8%

Journal Entries: (2013)

1-Aug-13 Investment in Bonds 539,444.67
Interest Receivable 8,333.33
Cash 547,778.00

Carrying Value 30-Nov-13 Cash 25,000.00

539,444.67 Interest Receivable 8,333.33
537,163.19 Interest Income 16,666.67
536,577.61
533,630.20 Interest Income 2,281.48
529,975.41 Investment in Bonds 2,281.48
529,341.91
526,153.31 31-Dec-13 Interest Receivable 4,166.67
522,199.44 Interest Income 4,166.67
518,087.42
513,810.91 Interest Income 585.58
509,363.35 Investment in Bonds 585.58
504,737.88
500,000.00 Journal Entries: (2014)
31-May-14 Cash 25000
Interest Receivable 4,166.67
Interest Income 20,833.33

Interest Income 2,947.41

Investment in Bonds 2,947.41

30-Nov-14 Cash 25,000.00

Interest Income 25,000.00

Interest Income 3,654.79

Investment in Bonds 3,654.79

31-Dec-14 Interest Receivable 4,166.67

Interest Income 4,166.67
Interest Income 633.50
Investment in Bonds 633.50
 Investment in Pearl 9% Bonds (Due date, June 01, 2019)
Date Item Debit
Bonds, P500,000.00 par acquired at 102 plus
01/20/2014 516,250.00
accrued interest
Proceeds from sale of bonds, P100,000.00 face
1/3/2014 -
and accrued
1/6/2014 Interest received -

Amount received on call of bonds, P100,000.00

1/11/2014 -
face, at 101 and accrued interest

1/12/2014 Interest received -

Entries made by Ruby Corporation

Date Particulars Debit
01/20/2014 Investment in Bonds 516,250.00
Cash

1/3/2014 Cash 106,000.00

Investment in Bonds

1/6/2014 Cash 18,000.00

Investment in Bonds

1/11/2014 Cash 104,750.00

Investment in Bonds

1/12/2014 Cash 13,500.00

Investment in Bonds

Entries that should have been made by Ruby Corporation

Date Particulars Debit
01/20/2014 Investment in Bonds 510,000.00
Interest Income 6,250.00
Cash

1/3/2014 Cash 106,000.00

Investment in Bonds
Interest Income
Gain on Sale of Bond Investment
 1/6/2014 Cash 18,000.00
Interest Income

1/11/2014 Cash 104,750.00

Loss on Redemption of Bonds 1,000.00
Investment in Bonds
Interest Income

1/12/2014 Cash 13,500.00

Interest Income

Adjusting Entries
Date Particulars Debit
01/20/2014 Interest Income 6,250.00
Investment in Bonds

1/3/2014 Investment in Bonds 4,000.00

Interest Income
Gain on Sale of Bond Investment

1/6/2014 Investment in Bonds 18,000.00

Interest Income

1/11/2014 Loss on Redemption of Bonds 1,000.00

Investment in Bonds 2,750.00
Interest Income

1/12/2014 Investment in Bonds 13,500.00

Interest Income

12/31/2014 Accrued Interest Receivable 2,250.00

Interest Income

Investment in Bonds 3,000.00

Unrealized Gain on Bond Investment
e, June 01, 2019)
Credit Balance

- 516,250.00

106,000.00 410,250.00

18,000.00 392,250.00

104,750.00 287,500.00

13,500.00 274,000.00

Credit

516,250.00

106,000.00

18,000.00

104,750.00

13,500.00

Supporting Computations
Credit Investment in Bonds, 01/20/2014
Face Value, 01/20/2014
Quotation
516,250.00 Quoted Price

Interest Income, 01/20/2014

102,000.00 Face Value, 01/20/2014
2,250.00 Interest Rate
1,750.00 Term of Accrual
 Interest Income

18,000.00 Sale of Bonds, 03/01/2014

Sale Price (Squeeze)
Add: Accrued Interest (12/01 to 03/01)
Total Cash Received
102,000.00
3,750.00 Sale Price
Less: Carrying Amount
Gain (Loss) on Sale
13,500.00
Interest Income, 06/01/2014
Face Value, 01/20/2014
Less: Sale of Bonds
Credit Face Value, 06/01/2014
Interest Rate
6,250.00 Term of Accrual
Interest Income

2,250.00 Calling of Bonds, 11/01/2014

1,750.00 Redemption Price (Squeeze)
Add: Accrued Interest
Total Cash Received
18,000.00
Redemption Price
Less: Carrying Amount
Gain (Loss) on Redemption
3,750.00
Interest Income, 12/01/2014
Face Value, 06/01/2014
13,500.00 Less: Redemption of Bonds
Face Value, 12/01/2014
Interest Rate
2,250.00 Term of Accrual
Interest Income

3,000.00 Accrued Interest Receivable, 12/31/2014

Face Value, 12/31/2014
Interest Rate
Term of Accrual
Interest Income
 Unrealized Gain on Bond Investment, 12/31/2014
Investment in Bonds, 01/20/2014
Less: Sale of Bonds
Redemption of Bonds
Investment in Bonds, 12/31/2014

Market Value, 12/31/2014

Less: Carrying Amount
Unrealized Gain (Loss)
nt in Bonds, 01/20/2014
500,000.00
102%
510,000.00

st Income, 01/20/2014
500,000.00
9%
5/36
 6,250.00

of Bonds, 03/01/2014
103,750.00
2,250.00
106,000.00

103,750.00
102,000.00
1,750.00

st Income, 06/01/2014
500,000.00
100,000.00
400,000.00
9%
1/ 2
18,000.00

of Bonds, 11/01/2014
101,000.00
3,750.00
104,750.00

101,000.00
102,000.00
(1,000.00)

st Income, 12/01/2014
400,000.00
100,000.00
300,000.00
9%
1/ 2
13,500.00

rest Receivable, 12/31/2014

300,000.00
9%
1/12
2,250.00
on Bond Investment, 12/31/2014
510,000.00
102,000.00
102,000.00 204,000.00
306,000.00

309,000.00
306,000.00
3,000.00