Problem 1: At the beginning of current year , Laudable Company acquired 200,000 ordinary shares of an investee for P9,000,000. The investment is measured at fair value through other comprehensive income. At the time of purchase, the investee had outstanding 800,000 shares with a carrying amount of P36,000,000. The following events took place during the year:
* The investee reported net income of P1,800,000.
* Laudable Company received from the investee a dividend of 0.75 per ordinary share.
* The market value of the investee's share had declined to P40 at year-end.
What is the carrying amount of the investment at year end?
a. 9,000,000
b. 8,000,000
c.9,300,000
d.9,450,000
Problem 2: At the beginning of current year , Manifold Company began operations. The following information related to the portfolio of equity securities held for trading at year-end:
Trading Nontrading
Aggregate cost 360,000 550,000
Aggregate fair value 320,000 450,000
Aggregate lower of cost of market
value applied to each security
in the portfolio 304,000 420,000
The nontrading investments are measured at fair value through other comprehensive income. The fair value declines are judged to be nontemporary.
What amount should be reported as unrealized loss in the income statement for the current year?
a. 140,000
b. 186,000
c. 40,000
d. 56,000
Problem 3: Lagoon Company purchased the following securities during 2016:
Classification Cost Market value December 31,2016
Security A Trading 900,000 1,000,000
Security B Trading 1,000,000 1,600,000
On July 31,2017, the entity sold all the shares of Security B for 100,000. On December 31,2017, the shares of Security A had a market value of P600,000
No other activity occured during 2017 in relationto the trading security portfolio.
What total loss on trading securities should be reported in the income statement for 2017?
a. 500,000
b. 400,000
c. 900,000
d. 100,000