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ReSAr Revie.w Sclroo! Inc. IRENEO/ESPENILI-A

Auditing Problqn Quizzer 6 Solution Guide

,a. Ar., C.
Original Inl€st nst at praraitirB fW on July 1. 2Ol5 (toq6)
10,00osh*(P2.4t4l30t<) 800,000 - tJE pruailing FMV is based at, Lte drent
Mditbnal investrnent, July 1, 2Ol5 (3O%) 2,400,000 se/l,nEr PROBLEM
Share from Divideirds, Ocr 1, 2015 (40,OOO*P1.35) (s4,000)
Share from Net lrEorhe" Aug to Dec, 2015 (P2OO,00O*4O%)
Carryirig Y.lu., 12131/2015

PROBLEII 15: ORION OORP.

79. Ais. C.
Investmerts in Eonds:
Prol:eeds (ru cf future dr
flows, effective rate: 1096)
PrincipEl : (4,000,000*0.6830) 2,732,0s4
IntarEst: (48O,000*3. !.699)
Intial fair vallE (1,/1/13)

Corect Intses Nominal Inteft Amcrtization

. January 1,2013:
D(rembor 31, 2013:
Ir€nb.r 31,2O!t:
425,359 48o,ooo (s4,641) i;i33;il3
419,495 4aq(xxl (60,1l,5) 4,138,84s
Dcember31,2015: 413,884 480,000 (66,116) 4,072.777
Decenrber 31, 2016: 407,273 480,000 (72,727) 4,000,000
gr. An.. A
Fre \Alue of bonds 4,000,000
CocideGtion giEn up (Ft{V) 4.253,589
irterEt in@me p:r boks
Debit to/{leduction in (2s3,589)
l\lomiml inteBt colleted/Credited to inteEt in6me 480,000
Inter6r income in 2013 p€r bmks: 226,411.
Corst irteEt inm (s€ amrtization taue) 425,359
Und.rstatcrErt h iiil.rust irm in 2ott3 19q94a
81. Ans. A.
FMV of bords, Dec. 31, 2014 ar gyo effEtive Ete: (a) 4,ZLl,Og3
FMV of bondr, Dec. 31, 2013 at ll eftuctive rete: (b) 4,O)7,74g
ttnulizcd holdins guin - P&L f--ii1.J-t-l
(a) FMV cf bonds, Dec. 31, 2014 = A/ of remainins e?n-?ii6iE?r!4E-effecive cte for 2 periods.
Prirnipal: P4,000,000*0.841680 3;66,720 0.841680
Inteftst: P480,000*1.759111 g+qltZ 1.759111
(b) Ftw of Lnrds, Dec. 3r, zoL3= pV of remainin-o *.mffi effetive Ete for 23pgiods.
PrirEipal:P4,000,000r0.731191 2,924,766 0.731191
Interest: Pr18O,000.2.443715 t,l72EB3 ?.443715
4,oe7J4e
8:L Ar& B.
In\,6tment in Assiate (2O l
Acquisition Gt 5,800,000
BV of net ass€ts acquired (P25M*20o6) 5,000,000
Exces of Acquisition alst (Attrib. to Depr. 4s-11 800.000
September 30, 2013 Acquisition Cost s,800,000
Share from Dividsds, 2013 (80,000)
Share frcm NI, 2013 (3.8M*20%\*3/Lz 190,000
*Urdgstaterent in Depr (000K/1O)*3/12 (20,000) 170.000
Deember 31, 2013 Camying Value 5,890,000
Srare frcm Dividends, 2014 (160,000)
SlEre frcm NJ, 2014 (5.2M*20%) 1,04O,000
*UndeEtatemetn in CEp. (gOOwlO)
(80,0o0) 960,000
Share frcm OCt (400,000*20%) (80,0o0)
Sfrare frcm OCt (3OO,OOO*20%) 60,000
DEmber 3L, 2()13 Cmtyirg ValE
E:r. Ans. A-
Dvilend income (2+40,000) 80,Cr00
Llnelized lElding gain (155-14S)*4O,OOO 400,000
.
lnvestmert imDme per books in 2Ol3 480,000
Investment iftome per adit in 2013 (s* amh6is) r&99!_
R€troxtirc edljustomqrt to RE, bcg
_ 31O,OOO

84. Ars. E.
cEssA'ilor\: Before Cs. AfterCe.
Nrimber of shares owrEd
f'lumber of out:tariding shares 200.000 200.000
15o/o
Unreiized Total
Proce€ds frcm :rale (1 i9*10,OOO) 1,690,000 1,690,000
Fair value of romaining lnv€stnlent (169*30,000) 5,070,000 5,070,000
Olof inEtmtrt
-20o/o
Portion sold: (6,670,000*10/40) (1,667.s00) (1,667,s00)
Porticn reclassjfied: (6,670,000*30/40)
Cessation gain, hdore r€cyding of OCI/L ==@ 67,soo e0,0a0-
22,s00
Recycling of OCI 15,000 45,000 60,000
RecyclirE of OCL (oo.ooo). (8o.Joo)
Total c&tirn gain,/Iaxs 17,s00 52.500 Lo.ooo I
--J.19$91

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