R€SA, Reniew School Inc.

IRENEO/ESPENILLA
Arditing Problem Quizzer 6 Solution Guide

30.Alin A
IF gtARES ARE FIl{. ASSET AT FHV THROUGH PROFTTAOsSES
FMV (12-114) CV (FMV 12113)
DEF Corp. Shares 1.140,000 1,050,000
GHI Corp,StEres 348,000 369,600
]KL Shars

UnrstilGd holding gain - SHE

31. Ans. B.
IF IKL SI-{ARES IS It{VEfia'IENT IN ASSOCIATE:
Initial cost (including tErction cost) 325,400
Shae from c$vidends (0-75*4200) (3.1s0)
Sahre from rEt incorne (450,000*20 *8/12) 60,000
Carrying lrdu., 12.31.14 362'2s0

32.Arc. B
Proceds from sab plc accru€d iraerest
(P500,000*98%)+(p5o0,o0o*12%*1 v12) 545,000
Carriring valu€ (Initial co6f, elcludir€ aan:ed inteet and tBEctioil cod)
Total cash coreideration paid 1,0.14,258
Accrued ints€st (Pl M*12%*6/1 2)
Tranwtion <mt (m. m erpen*) 974,258
Promfa: portion rld 50% i48'1,729)
Acrued irteGt: (P500,O00x12%*1 1/12) (55_000 )
Ruliz.od gain on salo r----zEt
33.AE c.
Proc€eds fmm sale: ABC (15o00*p15) 225,OOO
xrz (5,00o*P13) 65,000 290,000
Carrying value:
ABC: 15,000*(f,21.50-Pt.50) 300,000
x\Q I 5,000*(20.o00+(pr3-pl.50)/23,00r 5C,000 350,000
Rulind lts: on slc r-r66ffin
3rLAED-
FMV t2/3L/14 CV
ABC (25,0O0sh*P18) 450,000 4t6,667 (a)
XYZ (18,0O0sh*P15) 270,000 180,000 (c)
DEF at 11q6 yield Ele
Prircitrat (isoo,Ooo*0. 9oo9o09)
Interest (P60,000*0.9009009)

UnMlircd haiding gBim - P&L

(a) Initial Gt ABc (40.000*P20) 800,000

CV of 15,000 drc sold (300,000)
Effet of cash div. in lieu of stck div. (83.333) rb)
cv Aw, 12l3yt4 476,667
(b) CV of ABC betore csh div. in iieu of *6k div. 5OO,O0O
Divic{e ay; # of sfEE (25,000+5,000) 3O,O0o
drv. ----JE.s7-
CV ot ABC after castl div. in lieu of stod<
lviultiply by: RefrEining sha16 25.000
Carying value, L?-l 3t / t4 416.667
(c) Initial co6t DEF (20,C0C*p11.So) 230,000
CV of sl,ares sold m 8/5 (50.000)
cv oEF t2l3L/74 180 000
35. Ans. B.
Irterest inome (6 /3O to t2/7r: p1,0OCr,OOO*1206*5112)
Intere* in@rne i7z|7 - L2/31): P500,000t12o/o*1/12
Intcrt inomfiom bord invGstmt
36. Are. A.
Slt ck dividerd d# rct @rt b dividerrd income and accounttd onty ttrcugh mem ow.
cash in lieu af stFre div(leds is acrunted ttrugh tle 'x if apprcach, t6r is, x lf sharc were rcejvd
s2ld rortle c6h dlvtddd tffiived.
and were as if

37. Ans. D,
..
FMV 72/3th4
ABC (25,000sh*P18) 450,000
XrZ (18,00oshr'P15) . 270,OOO
DEF at 1196 yieid rab]
Princir,€l (P500,000*0"90090o9) 4SO,4so
Interest (P60,00O'0.9009009) 54,054 504.505
rotal ---f_iE,E-il
!XoBt[M.Z:"NYUAA8p-
38. Ans. D.
Proceeds from sale on 11/5
SMC: (400sh*P230) 92,000
ABi: (800sh*P3?5) 260,000 352,000
Original c6t:
SMC: (40ostrvP2ti0) 1o4,OOO
ABI: (800shJ'p330) 264.000 368_000
Raalizdl bcs on dq und{ pAS 39
[_ (16,000)l
gl. Ane A.
Proceeds frcm sale on 12131 (p3OO,OO0*95o/o)
Amortized cost (P551,033*3/9)
Roalizcd loes on salc d bonds
*Amortized co6t: la3v14 Int.
Corrcrt Nominal Int. Amortization Balame
(Bal*g%) (Princ*12olo)
Mard 31, 2014: 558,345
December 31, 2014: (gmorths) 37,688 4s,000 (7,3L2) ss1,o33

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