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    58 views6 pages

    Ap 600 PDF

    Uploaded by

    Johanna Vidad

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 6
    ReSA The Review School of Accountancy @ Tel. No. 735-9807 & 734-3989 AUDITING PROBLEMS IRENEO/ESPENILLA INVESTING CYCLE . AUDIT OF INVESTMENTS (EQUITY AND DEBT ‘SECURITIES, PAS 39, PAS 28) ing the CSI INC’ s investments account, Tn its initial year of operations. The PROBLEM 1: You are auditi no viewing information with regard to its stock investment ‘acquisition for the Company has provided you t . Number of shares Recorded acquired acquisition cost ‘ABC Corp. 2,000 240,000 DEF Inc. 1,500 225,000 GHI Co. 3,000 285,000 IKL Corp. 4,000 200,000 MNO Co. 10,000 850,000 'P3,800,000 Additional information: 2. ABC Corp. stacks were acquire ‘commissions to P40,000. Dividends, w March 20, 2016 were received on April 3, 2016 at P20,00 Company with the intention of designating the same as @ inane! snare stocks were selling at PLO5 per share as of December 34, 2016 44 on March 1, 2016 at a totai cost of P200,000 plus brokerage fees and cn ore declared on January 25, 2016 to stockholders Hs of 10" ABC Corp. stocks were acquired by the I asset at fair value through profit or b. DEF Corp. were acquired on May 1, 2016 at P150 per share | the company paid brokerage and oe se crane amounting to P30,000. The company had neither signicare influence over DEF Corp. nor Goes it intend to sell the stocks for short-term profits, anted the same as fair value through SGher comprehensive income. The company received 20% stock “dwidend on October 11, 2016. The Stocks were selling at P160 per share on December 31, 7016 c. GHICo. stocks, which were acquired for trading purposes on June 1, 2016 at P285,000, were split 5 for Sen Guagust 18, 2016. On September 30, 2016, the company paid spe {assessment on the investment aaa ieer snare. On December 30, 2036, when the shares had a market value of P75 per share, GHI declared a PS dividend payable on January 25, 2017 classified as financial asset at fair value through other for every 4 shares held in lieu of a P15 per share cash {t PSS per share. IKL shares d. JKL Corp. stocks were acquired on August 1, 201 Comprehensive income. JKL Corp. issued 1 share Ghinlends it has previously declared. The stocks were selling at that time 2 were selling at P6O per share on December 31, 2016. quired at the beginning of, 2016 when MNO Corp. offered its PSO por vale MNO cor Teo in January 2016. All of MNO Corp.’s 50,000 authorized shaves Ber issued on the same stocks Uy remained outstanding as of December 31, 2026. The combeny reported total comprehensive date an 167930,000, which Is net of a foreign exchange loss reported’ te ‘OCI/OCL amounting to e900. MNO also, pald P3 cash dividends on December 31. 2016. The stocks were selling at P90 per soo onen December 31, 2016. No entry has been made by the company to reflect the transactions and information on December 31, 2016. e. MNO Corp. stocks were ac REQUIREMENTS. 1. How much shou ‘a, 240,000; 225,000 sd the investment in ABC Corp stocks and DEF Inc., be initially recognized? ye 000; 255,000. 200,000; 255,000 d. 200,000; 225,000 >, How much is the correct dividend income to be recognized irom investment in stocks of DEF Inc ‘and GHI Co., respectively? ‘a. 46,500; 15,000 b. 0; 25,000 . 46,500; 25,000 4. 0; 15,000 3. How much isthe correct dividend income to be recognized from investmene in KL Corp.? a0 b. 55,000 c. 60,000 4. 220,000 4 How much investment income should be reported from investment in MNO Co. stocks? ‘a. 100,000 bb. 50,000 cc. 120,000 d. 60,000 5, How much should be reported as investment in stocks classified as trading securities and the Corresponding unrealized holding gain or (loss) to be reported in ts vcore statement? ‘a 590,000; 0 'b. 585,000; (5,000) _¢. 590,000; 5,000

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