Equity Investments Accounting

11/24/2020 CFAS Activity 6: TOPIC 7- Investments in Equity Instruments: BSA_2101 : Conceptual Framework and Accounting Standard
CFAS Activity 6: TOPIC 7- Investments in Equity

Instruments
Due Nov 23 at 11:59pm Points 26 Questions 26
Available Nov 4 at 12am - Nov 23 at 11:59pm 20 days Time Limit 50 Minutes
Allowed Attempts 2
Instructions
This activity is not graded, only a practice quiz. However, this will be considered in computing class
attendance for completion of polls and activities.
You can complete this activity within 50 minutes.
Only two attempts are allowed.
You may see the correct answers from the day of activity until the day before the actual quiz.
You may access this activity from the date of publication until the day before the actual quiz.
This quiz was locked Nov 23 at 11:59pm.
Attempt History
Attempt Time Score
KEPT Attempt 2 49 minutes 10 out of 26
LATEST Attempt 2 49 minutes 10 out of 26
Attempt 1 14 minutes 8 out of 26
Score for this attempt: 10 out of 26

Submitted Nov 16 at 12:52am
This attempt took 49 minutes.
THEORIES (5 items)
https://ue.instructure.com/courses/16907/quizzes/49085?module_item_id=325976 1/15
Question 1 1 / 1 pts
Statement I: The Unrealized Holding Gain/Loss—Equity account is

reported as a part of other comprehensive income
Statement II: Non-trading equity investments, in which the entity has

elected FVOCI option, are recorded at fair value, with unrealized gains
and losses reported in other comprehensive income
Both statements are incorrect.
Only statement II is correct.
Correct!
Both statements are correct
Only statement I is correct.
Under IFRS, the presumption is that equity investments are
held for trading- YES; held to profit from price changes- NO
held for trading- NO; held to profit from price changes- YES
Correct!
held for trading- YES; held to profit from price changes- YES
held for trading- NO; held to profit from price changes- NO
Statement I: Equity security holdings between 20 and 50 percent indicates

that the investor has a controlling interest over the investee.
Statement II: An investment of more than 50 percent of the voting stock of

an investee should lead to a presumption of significant influence over an
investee.
Both statements are correct.
Correct!
If the entity holds a specific equity instrument with a 19% ownership

interest, what method of accounting shall be used?
Market method
Equity method
Consolidation method
Correct!
Cost method
Unrealized holding gains or losses on trading investments are reported in
ou Answered other comprehensive income
equity
orrect Answer net income
accumulated other comprehensive income
PROBLEMS (21 items)
KINGSLAYER Company
During 2020, KINGSLAYER Company acquired an equity investment for

3,000,000 which represents 18% of the total ownership rights and
consequently, the voting rights of BABYMETAL Company. Based on
KINGSLAYER's assessment, this investment is considered as not held for
trading. Further, KINGSLAYER wanted to make sure that any changes in
the fair value of equity investment will not affect the net income position
and consequently, will not affect the income tax position of the Company.
KINGSLAYER does not anticipate recognition of any deferred taxes for
the next 5 years based on its income projection for tax planning.
On December 31, 2020, the cumulative loss recognized was 400,000 and
the carrying amount of the investment was 2,600,000. On December 31,
2021, the issuer of the equity instrument (i.e. BABYMETAL) was in severe
financial difficulty and the fair value of the equity investment had fallen to
1,200,000.
KINGSLAYER Company
Question 1: What amount of cumulative loss should be recognized in

other comprehensive income under equity section of statement of
financial position as of December 31, 2020?
Correct!
400,000
orrect Answers 400,000 (with margin: 0)
KINGSLAYER Company
Question 2: What amount of unrealized loss should be recognized in

income statement for the year-ended December 31, 2020?
ou Answered
72,000
orrect Answers 0 (with margin: 0)
KINGSLAYER Company
Question 3: What amount of unrealized loss should be recognized in

other comprehensive section of statement of comprehensive income for
the year ended December 31, 2021?
Correct!
1,800,000
orrect Answers 1,800,000 (with margin: 0)
KINGSLAYER Company
Question 4: What amount of equity investment should be recognized in

statement of financial position as of December 31, 2021?
ou Answered
2,200,000
KINGSLAYER Company
Question 5: Based on the Company's intention and election, the equity

investment was classified throughout its life as
Correct!
equity instrument at FVOCI
equity instrument at amortized cost
equity instrument either at FVTPL or FVOCI
equity instrument at FVTPL
1x1 Company
During 2020, 1x1 Company purchased marketable equity securities to be

measured at fair value wherein the net income and income tax position of
the Company for the current year will not be affected. On December 31,
2020, the balance in the unrealized loss on these securities was 200,000.
The detailed breakdown of the securities as of December 31, 2020 are as

follows:
Fair
Cost
value
X 2,100,000 1,800,000
Y 1,850,000 1,950,000
Z 1,050,000 1,000,000
A 1,600,000 1,800,000
B 700,000 550,000
Total 7,300,000 7,100,000
There were few transactions on these securities during 2021, but the
investments manager of the Company did not communicate these to the
chief accountant; thus the Company asked for your help if you can identify
them. Upon checking, you noticed that there was a cash proceeds in the
cash receipts books amounting to 450,000 with description: "Sold
investments during 2021".

follows:
Security X with original cost of 2,100,000 and fair value of 1,600,000;

Security Y with original cost of 1,850,000 and fair value of 2,000,000;
Security Z with original cost of 1,050,000 and fair value of 900,000;
Security A with original cost of 1,450,000 and fair value of 1,500,000;
and
Security B with original cost of 500,000 and fair value of 800,000.
Unanswered Question 11 0 / 1 pts
1x1 Company
Question 1: Considering the unrecorded few transactions during 2021 as

mentioned above, how much was the realized gain/loss in the sale of
securities, if any, during 2021? (please provide the absolute value of your
answer. Round off to nearest whole number/no decimal places)
ou Answered
1x1 Company
Question 2: Considering the unrecorded few transactions during 2021 as

mentioned above, how much was the cumulative gain/loss to be
transferred within retained earnings, if any, during 2021? (please provide
the absolute value of your answer)
ou Answered
1x1 Company
Question 3: How much is the cumulative unrealized gain/loss to be

recognized in other comprehensive income section of statement of
financial position as of December 31, 2020? (please provide absolute
value of your answer)
Correct!
200,000
1x1 Company
Question 4: How much is the unrealized gain/loss to be recognized in

income stateement for the year ended December 31, 2021? (please
provide absolute value of your answer)
ou Answered
50,000
1x1 Company
Question 5: How much is the cumulative unrealized gain/loss to be

recognized in other comprehensive income section of statement of
financial position as of December 31, 2021, if any? (please provide

absolute value of your answer)
ou Answered
500,000
BAYDEN Company
BAYDEN Company provided to you the following information pertaining to

the dividends from its non-trading investments in ordinary shares during
the year ended December 31, 2020:
The entity owned a 10% interest in TRAMP Company, which declared

a cash dividend of 600,000 on November 30, 2020 to shareholders of
record on December 31, 2020 and payable on January 15, 2021.
On October 15, 2020, the entity received a liquidating dividend of
100,000 from OWBAMAH Company. BAYDEN owned a 5% interest in
OWBAMAH.
Unanswered
BAYDEN Company
Question 1: What amount of dividend income should be reported by

BAYDEN for the current year 2020?
ou Answered

Unanswered
BAYDEN Company
Question 2: Assuming the 10% interest in TRAMP is sold by BAYDEN to

another shareholder on December 15, 2020, the shares has a carrying
amount of 300,000 and it was sold for 400,000, how much is the gain on
sale of investment?
ou Answered
Unanswered
BAYDEN Company
Question 3: Assuming the 10% interest in TRAMP is sold by BAYDEN to

another shareholder on January 13, 2021, the shares has a carrying
amount of 300,000 and it was sold for 400,000, how much is the gain on
sale of investment?
ou Answered
ANTIVIST Corporation
ANTIVIST Corporation purchased 60,000 shares of another entity for

4,200,000 during the beginning of 2020. Also during the year, the entity
received 60,000 share rights from the investee. The share rights are not
accounted for separately. and each right has a fair value of P70. Each
right entitled the shareholder to acquire one share for P75. The market
price of the investee's share was P95 immediately before the rights were
issued and P85 immediately after the rights were issued. The entity
exercised 40,000 of the total share rights during the year, 10,000 of the
share rights were sold for P65 and the remaining 10,000 rights expired
before the end of the year. At year-end, the entity sold 25,000 shares at
P90 per share. The FIFO approach is used by ANTIVIST.
Question 1: The entry to record the purchase of 60,000 shares at the

beginning of 2020 includes a credit to cash amounting to?
Correct!
4,200,000
Question 2: The entry to record the receipt of 60,000 share rights during
the year includes a debit to share rights amounting to?
ou Answered
4,200,000
Question 3: The entry to record the sale of 10,000 share rights during the
year includes a credit to investment in equity instruments amounting to?
Correct!
650,000
Question 4: The entry to record the exercise of 40,000 share rights

during the year includes a debit to investment in equity instruments
amounting to?
ou Answered
3,400,000

Question 5: The entry to record the expiration of 10,000 share rights

during the year includes a credit to share rights amounting to?
ou Answered
700,000
Question 6: What amount of gain on sale of investment should be

recognized in the current year under FIFO method?
ou Answered
Question 7: What is the ending balance of the investment in equity

instruments by the end of the current year under FIFO method?
ou Answered
Unanswered
Question 8: Assuming Weighted Average Method is used by ANTIVIST,

what amount of gain on sale of investment should be recognized in the
current year?
ou Answered
Quiz Score: 10 out of 26
11/27/2020 CFAS Activity 7: TOPIC 7- Investments in Debt Instruments (Part 1): BSA_2101 : Conceptual Framework and Accounting Standard
CFAS Activity 7: TOPIC 7- Investments in Debt

Instruments (Part 1)
Due Nov 25 at 8am Points 30 Questions 30
Available until Nov 25 at 8am Time Limit 45 Minutes Allowed Attempts 2
Instructions
This quiz was locked Nov 25 at 8am.
Attempt History
Attempt Time Score

Submitted Nov 23 at 8:17pm
THEORIES (10 items)
Amortized cost is the initial recognition amount of the investment minus

repayments plus or minus cumulative amortization.
cumulative amortization and net of any reduction for uncollectibility.
repayments and net of any reduction for uncollectibility.
Correct!
repayments plus or minus cumulative amortization and net of any reduction
for uncollectibility.
Statement I: The Unrealized Holding Gain or Loss–Income account is

reported in the other income and expense section of the income
statement.
Statement II: At each reporting date, companies adjust debt investments’

amortized cost to fair value, with any unrealized holding gain or loss
reported as part of their comprehensive income.
Correct!
Which of the following are reported at fair value?
Debt investments.
Correct!
Both debt and equity investments.
Equity investments.
None of these answers choices are correct.
PFRS requires companies to measure their financial assets based on all

of the following except
The company’s business model for managing its financial assets.
All of these answer choices are IFRS requirements.
The contractual cash flow characteristics of the financial asset.
Correct!
Whether the financial asset is a debt or equity investment.
A held-for-collection debt investment is purchased at a premium. The

entry to record the amortization of the premium includes a
Credit to Interest Receivable.
Correct!
Credit to Debt Investments.
Credit to Interest Revenue.
None of these answers are correct.
Debt investments that are accounted for and reported at amortized cost,
are
Correct!
held-for-collection debt investments.
trading debt investments.
debt investments which are managed and evaluated based on a

documented risk-management strategy.
All of these answer choices are correct.
Which of the following is correct about the effective-interest method of

amortization?
Amortization of a premium decreases from period to period.
Amortization of a discount decreases from period to period.
The effective-interest method applied to debt investments is different from

that applied to bonds payable.
Correct!
The effective-interest method applies the effective-interest rate to the
beginning carrying amount for each interest period.
Debt investments that meet the business model and contractual cash flow
tests are reported at
net realizable value.
Correct! amortized cost.
the lower of amortized cost or fair value.
fair value.
Statement I: Amortized cost is the initial recognition amount of the

investment minus cumulative amortization
Statement II: Companies measure debt investments at fair value if the

objective of the company’s business model is to hold the financial asset to
collect the contractual cash flows.
Correct!
Statement I: Over the life of a debt investment, interest revenue and the
gain on sale are the same using either amortized cost or fair value
measurement.
Statement II: The fair value option is generally available only at the time a
company first purchases the financial asset or incurs a financial liability.
Correct!
PROBLEMS (15 items)
AAA Company
AAA Company purchased bonds with a face amount of P400,000. Kern

purchased the bonds at 102 and paid brokerage costs of P6,000. It was
classified as debt investment not held for trading. The amount to record
as the cost of this debt investment is
Correct!
414,000
BBB Company
On January 3, 2020, BBB Co. acquires P100,000 of CCC Company’s 10-

year, 10% bonds at a price of P106,418 to yield 9%. Interest is payable
each December 31. The bonds are classified as held-for-collection.
Assuming that BBB Co. uses the effective-interest method, what is the
amount of interest revenue that would be recognized in 2020 related to
these bonds? (Round off your answer to nearest whole number)
Correct!
9,578
OG Corporation
During the start of 2020, OG Corporation planned to acquire debt

investments as part of its financial plan for the year. The Company
acquired P6,500,000 of Nigma Corporation's 12% bonds on May 1, 2020
at 94 plus accrued interest. No further transaction costs were paid upon
acquisition. Based on the OG's assessment, the Company assessed that
the investment has a hold-to-collect business model and it evidently
passed the contractual cash flows test. The bonds were issued on March
1, 2020 and is due on March 1, 2024. The bonds pay interest quarterly on
March 1, June 1, September 1, and December 1. OG's year-end date is
December 31 and the amortization is done by OG following the straight
line method.
On May 1, 2022, all of the bonds acquired were sold at 105 plus accrued
interest.
OG Corporation
Question 1: OG Corporation assessed that the bonds purchased with

Nigma should be classified as:
Fair value through profit or loss- Irrevocable designation
Fair value through profit or loss- held for trading
Correct! Amortized cost
Fair value through other comprehensive income
OG Corporation
Question 2: Considering OG Corporation's method of amortization, the

monthly amortization should be recorded at (Round off to nearest
whole number)
Correct!
8,478
OG Corporation
Question 3: Based on the information above, interest income is first paid

on what date?
September 1, 2020
Correct! June 1, 2020
March 1, 2020
December 1, 2020
OG Corporation
Question 4: As of March 1, 2020, how much is the total credit to Cash

account? (Round off to nearest whole number)
Correct!
6,240,000
OG Corporation
Question 5: As of December 31, 2020, how much is the total amortization

during the year with a corresponding debit to Bond investment account?
(Round off to nearest whole number)
Correct!
67,826
OG Corporation
Question 6: How much is the total interest income recognized by OG

during 2020? (Round off to nearest whole number)
Correct!
522,826
OG Corporation
Question 7: As of May 1, 2022, how much is the gain on sale of bond

investment ? (Round off to nearest whole number)
Correct!
511,522
OG Corporation
Question 8: As of May 1, 2022, how much is the total cash received on

the sale of bond investment? (Round off to nearest whole number)
Correct!
6,955,000
OG Corporation
Question 9: Just before the sale of bond investment on May 1, 2022, how
much is the carrying amount of the bond investment? (Round off to
nearest whole number)
Correct!
6,313,478
EG Corporation
During 2020, EG Corporation had the following transactions in bond

investment held for trading:
Purchased 3,500 of P1,000, 10% bonds of SKT Compan

August 1
interest. Interest is payable on June 30 and December 3
Purchased 4,500 of P500, 8% bonds of Damwon Corpo
September 1
Interest is payable on June 30 and December 31
Sold 1,500 of Damwon Corporation at 102 exclusive of a
October 1
accrued interest are also sold during this date.
December 31 The fair values of the bonds held by EG are as follows:
SKT
Damwon
EG Corporation
Question 1: EG Corporation assessed that the bonds purchased with

various corporations should be classified as:
Correct! Fair value through profit or loss- held for trading
Amortized cost
EG Corporation
Question 2: As of August 1, 2020, how much is the total credit to cash?

Correct!
3,319,167
EG Corporation
Question 2: As of September 1, 2020, how much is the total credit to

cash? (Round off to nearest whole number)
Correct!
2,167,500
EG Corporation
Question 3: As of December 31, 2020, how much is the ending balance

of bond investment-trading securities? (Round off to nearest whole
number)
Correct!
4,735,000
EG Corporation
Question 4: During 2020, how much is the total interest income ? (Round
off to nearest whole number)
Correct!
190,833
EG Corporation
Question 5: During 2020, how much is the total gain on sale of bond
investments? (Round off to nearest whole number)
Correct!
52,500
EG Corporation
Question 6: During 2020, how much is the total net unrealized gain on
bond investments? (Round off to nearest whole number and provide
absolute value answer)
ou Answered
52,500
EG Corporation
Question 7: As of October 1 , how much is the total cash received on the

sale of Damwon's bond investments? (Round off to nearest whole
number and provide absolute value answer)
Correct!
780,000
Unanswered
EG Corporation
Question 8: As of December 31, 2020 , how much is the ending balance

of interest receivable? (Round off to nearest whole number and
provide absolute value answer)
ou Answered
CFAS Activity 7: TOPIC 7- Investments in Debt

Instruments (Part 2)
Due Nov 25 at 8am Points 20 Questions 20
Available until Nov 25 at 8am Time Limit 50 Minutes Allowed Attempts 2
Instructions
This quiz was locked Nov 25 at 8am.
Attempt History
Attempt Time Score

PROBLEMS (20 items)
ALO Company
ALO Company, a multinational multimedia company, decided to acquire

bond investments during year 2020. On January 1, 2020, ALO acquired
bonds issued by SAO Company amounting with a face amount of
5,000,000. The bonds were issued on January 1, 2020 and the whole
amount is expected to be fully paid on December 31, 2022. The bonds
carry 10% interest to be paid annually every December 31 and the bonds
are expected to yield at 8%. There are no transaction costs incurred upon
acquisition and the acquisition price is equal to the present value of future
cash flows of the bonds.
Based on the Company's assessment, the bonds are intended to have a

"collect and sell" business model and evidently, it passed the
contractual cash flows test. ALO also intended not to irrevocably
designate such bonds at fair value through profit or loss.
When computing for the present value of the bonds at acquisition date,
ALO used PV factors rounded off to 4 decimal places.
Based on the active markets, the following are the fair value quotes of the
bonds as of the end of 2020 and 2021:
@95 as of December 31, 2020
On June 1, 2022, the bonds were sold at 105 plus any accrued interest.
Accordingly, any gain on sale of bond investment will be recognized by
ALO.
ALO Company
Question 1: Based on ALO's assessment, the bonds acquired from SAO

should be classified as?
Amortized cost
Fair value through profit or loss- by irrevocable designation
Correct!
ALO Company
Question 2: Based on ALO's computation, the acquisition cost or present

value of bonds as of January 1, 2020 is? (Round off the PV factor to 4
decimal places and round off the answer to nearest whole number)
Correct!
5,258,050
ALO Company
Question 3: Based on ALO's computation, interest income to be

recognized for 2020 should be? (Round off the answer to nearest
whole number)
Correct!
420,644
ALO Company
Question 4: ALO should recognize the ending balance of bond

investment as of December 31, 2020 at what amount? (Round off the
answer to nearest whole number)
Correct!
4,750,000
ALO Company
Question 5: ALO should recognize the unrealized gain on fair value

changes on other comprehensive income as of December 31, 2020 at
what amount? (Round off the answer to nearest whole number)
Correct!
428,694
ALO Company
Question 6: ALO's cumulative unrealized gain on fair value changes on

other comprehensive income as of December 31, 2021 should be ?
(Round off the answer to nearest whole number)
Correct!
592,990
ALO Company
Question 7: ALO's increase in unrealized gain on fair value changes on

other comprehensive income for 2021 should be ? (Round off the
answer to nearest whole number)
Correct!
164,296
ALO Company
Question 8: On June 1,2022, ALO should recognize gain on sale of bond

investment at what amount ? (Round off the answer to nearest whole
number)
Correct!
195,756
ALO Company
Question 9: On June 1,2022, ALO should receive cash from sale at what
amount ? (Round off the answer to nearest whole number)
Correct!
5,458,333
Alicization Corporation
Alicization Corporation decided to acquire bond investments during year

2020. On January 1, 2020, Alicization acquired bonds issued by SAO
Company with a face amount of 6,000,000 and with a transaction price of
6,500,000- inclusive of transaction costs amounting to 100,000 . The
bonds were issued on January 1, 2020. The bonds carry 12% interest to
be paid annually every December 31 and the bonds are expected to yield
at 10%. Based on the Company's assessment, the bonds are intended to
be held for trading and evidently, it passed the contractual cash flows
test.
Alicization used PV factors rounded off to 4 decimal places.
Based on the active markets, the following is the fair value of the bonds as
of the end of 2020:

Question 1: Based on the Company's assessment, the bonds acquired

from SAO should be classified as?
Amortized cost
Question 2: As of January 1, 2020, the bonds should be initially

measured at what amount? (Round off your answer to nearest whole
number)
Correct!
6,400,000
Question 3: During 2020, the Company's total unrealized gain on bond

investments should be? (Round off your answer to nearest whole
number)
Correct!
200,000
Question 4: During 2020, the Company's total gain on bond investments

to be recognized in profit or loss should be? (Round off your answer to
nearest whole number)
Correct!
920,000
Question 5: As of December 31, 2020, the Company's ending balance of

bond investments should be? (Round off your answer to nearest whole
number)
Correct!
6,600,000
Ordinal Corporation
Ordinal Corporation decided to acquire bond investments during year

2020. On January 1, 2020, Ordinal acquired bonds issued by SAO
Company with a face amount of 7,500,000 with an acquisition price of
7,730,000 (inclusive of 230,000 transaction costs). The bonds were
issued on January 1, 2020 and is expected to be repaid on a semi-annual
basis with repayment dates of every June 30 and December 31 of each
year. The last repayment is expected to be on December 31, 2022. The
bonds carry 8% interest to be paid on a quarterly basis every March 31,
June 30, September 30, and December 31 and is computed based on the
outstanding balance of the bond before the corresponding repayment on
applicable repayment dates.
Ordinal decided to compute for the effective yield rate of the bond
investment based on the acquisition price (which is equal to the present
value of future cash flows of the bonds) and based on the cash flow profile
of the bonds. Ordinal used the "goal seek" function in excel to compute
and interpolate the exact effective yield rate of the bonds. Ordinal decided
not to round off any computed effective yield rate; however, Ordinal
decided to round off any PV factors used in the computation to four
decimal places.

"hold to collect" business model and evidently, it passed the
contractual cash flows test. Ordinal also intended not to irrevocably
Ordinal Corporation

from SAO should be classified as?
ou Answered Fair value through other comprehensive income
orrect Answer Amortized cost
Ordinal Corporation

from SAO is initially recognized ?
at historical cost
with a discount
at face value
Correct!
with a premium
Ordinal Corporation
Question 3: Based on the Company's assessment, the effective yield rate

computed by Ordinal is ___%? (Do not round off, kindly answer/paste
the whole yield rate computed by goal seek function in excel)
7.12324354348342
Correct!
6.11622576948124
6.34592366364728
7.57465657289908
Unanswered
Ordinal Corporation
Question 4: How much is the ending balance of investment in bonds of

Ordinal as of December 31, 2020? (Round off your answer to nearest
whole number).
ou Answered
Unanswered
Ordinal Corporation

Ordinal as of December 31, 2021? (Round off your answer to nearest
whole number).
ou Answered
Ordinal Corporation
Question 6: How much is the total interest income arising from

investment in bonds of Ordinal for the year 2020? (Round off your
answer to nearest whole number).
Correct!
431,700
12/5/2020 CFAS Activity 8: TOPIC 9- Investment in Associates: BSA_2101 : Conceptual Framework and Accounting Standard
CFAS Activity 8: TOPIC 9- Investment in Associates

Due No due date Points 30 Questions 30 Time Limit 60 Minutes
Allowed Attempts 2
Instructions
Attempt History
Attempt Time Score
KEPT Attempt 2 28 minutes 19 out of 30
Attempt 1 59 minutes 18 out of 30

Submitted Dec 5 at 12:40am
THEORIES (10 items)
When an enterprise increases its interest in an investment in equity

securities accounted for by the fair value method, and changes to the
https://ue.instructure.com/courses/16907/quizzes/50867 1/18
equity method, what is the initial carrying value for purposes of

subsequent application of the equity method?
orrect Answer Fair value at the date of the change
Book value at the date of the change
The amount that would be reflected in the investment account had the
equity method been in use continually since the purchase of the securities.
ou Answered
Original cost plus or minus the net market value change since acquisition.
An investor need not use the equity method if all of the following four
conditions are met, except:
Correct!
The investor filed its financial statements with securities commission for the
purpose of issuing any class of instruments in a public market.
The ultimate or any intermediate parent of the investor produces

consolidated financial statements available for public use that comply with
PFRSs.
The investor is itself a wholly-owned subsidiary or is a partially-owned

subsidiary of another entity and its owners, including those not otherwise
entitled to vote, have been informed about, and do not object to, the
investor not applying the equity method.
The investor's debt or equity instruments are not traded in a public market.
An entity over which the investor has significant influence is called a(an)
Subsidiary
Joint venture
Joint operation
Correct!
Associate
How is goodwill arising on the acquisition of an associate dealt with in the

financial statements?
orrect Answer
Goodwill is not recognized separately within the carrying amount of the
investment.
It is amortized.
Impairment is tested individually.
ou Answered It is written off against profit or loss.
Which statement is correct regarding an investor's share of losses of an

associate?
After the entity's interest is reduced to zero, additional losses are provided
for, and a liability is recognized, only to the extent that the entity has
incurred legal or constructive obligations or made payments on behalf of
the associate.
If the associate subsequently reports profits, the entity resumes

recognizing its share of those profits only after its share of the profits
equals the share of cumulative losses not recognized.
orrect Answer
Losses recognized using the equity method in excess of the entity's
investment in ordinary shares are applied to other components of the
entity's interest in an associate in the order of their seniority (i.e. priority in
liquidation)
ou Answered
If an entity's share of losses of an associate equals or exceeds its interest
in the associate, the entity discontinues recognizing its share of further
losses.
When a company has acquired a "passive interest" in another corporation,

the acquiring company should account for the investment:
by consolidation.
by using the effective interest method.
Correct!
by using the fair value method.
by using the equity method.
The accounting method applied to investments in associates, known as

equity method, is also known as the:
Proprietary method of consolidation
Multiple line consolidation method
Correct!
One-line consolidation method
Entity method of consolidation
If the investor ceases to have significant influence over an associate, how

should the investment be treated?
The investment should be frozen at the date at which the investor ceases
to have significant influence
It should still be treated using equity accounting
ou Answered The investment should be treated at cost.
orrect Answer It should be treated in accordance with PFRS 9
Significant influence as defined in PAS 28 is
The power to govern the financial and operating policies of an entity so as

to obtain benefits from its activities.
Deemed to exist when the investor is exposed, or has rights, to variable

returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee.
The contractually agreed sharing of control of an arrangement, which

exists only when decisions about the relevant activities require the
unanimous consent of the parties sharing control.
Correct!
The power to participate in the financial and operating policy decisions of
the investee but is not control or joint control over those policies.
What should happen when the financial statements of an associate are

not prepared to the same date as the investor's acounts?
Any major transactions between the date of the financial statements of the
investor and that of the associate should be accounted for.
The financial statements of the associate prepared up to a different

accounting date will be used as normal.
As long as the gap is not greater than three months, there is no problem
Correct!
The associate should prepare financial statements for the use of the
investor at the same date as those of the investor.
PROBLEMS (20 items)
ZERO TWO Company
ZERO TWO Company, a large multinational technology company which is

behind the latest humanoid product called FRANXX, purchased 30% of
the outstanding ordinary shares of HIRO Corporation, a rising technology
company for 5,600,000 at the beginning of 2020. The acquisition cost is
composed of the following: 1,600,000 was paid in cash and 4,000,000 is

in a form of note that will be payable 10 years from now and is bearing
12% annual interest at every year-end. HIRO's shareholders' equity as of
the time of acquisition has a balance of 18,000,000. ZERO TWO
additionally paid 800,000 for broker's fee- this fee was for the broker who
assisted ZERO TWO in the search and negotiation with HIRO. Also, as of
such date, the fair values of HIRO's identifiable assets and liabilities were
equal to their carrying amounts except for a skyscraper building in Tokyo
which had a fair value in excess of the carrying amount of 3,000,000 with
a total estimated useful life of 10 years starting the completion of the
skyscraper, but with the remaining estimated life of 6 years starting from
acquisition by ZERO TWO.
During 2020, HIRO reported net income of 5,000,000 and paid cash
dividend of 2,000,000. Also during this year, ZERO TWO reported net
income 15,000,000 and paid cash dividend amounting to 7,000,000.
ZERO TWO Company
Question 1: How much is the total acquisition cost paid by ZERO TWO to
acquire 30% of HIRO's ordinary shares?
Correct!
6,400,000
ZERO TWO Company
Question 2: What is the implied goodwill from ZERO TWO's

purchase/acquisition?
Correct!
100,000
ZERO TWO Company
Question 3: The excess attributable to HIRO's skyscraper building should

be amortized for?
Correct! 6 years
4 years
should be wholly recognized at the end of the year
10 years
ZERO TWO Company
Question 4: What amount of income should be reported for the current

year as a result of the investment?
Correct!
1,350,000
ZERO TWO Company
Question 5: What is the carrying amount of the investment in associate at

year-end?
Correct!
7,150,000
DARLING Corporation
At the beginning of the current year, DARLING Corporation acquired a

40% interest in an investee at a cost of 5,800,000. The equity of the
investee on the date of acquisition was 8,400,000- consisting of 6,000,000
share capital and 2,400,000 retained earnings. All the identifiable assets
and liabilities of the investee were recorded at fair value except for an
equipment with a fair value of 4,000,000 greater than the carrying amount.
The remaining useful life of the equipment is 4 years. At year-end,
DARLING also had inventory costing 3,000,000 on hand which had been
purchased from the same investee. A profit of 720,000 had been made on
the sale. During the current year, the investee reported net income of
6,000,000 and paid dividend of 3,200,000.
The equity of the investee and DARLING at year-end showed the

following:
Investee DARLING
Share capital 6,000,000 12,000,000
Retained earnings 4,200,000 8,000,000
Retained earnings 1,000,000 -

appropriated
Revaluation surplus 2,500,000 7,200,000
The revaluation surplus of Investee arose from revaluation of land made

at the end of the current year. The retained earnings appropriated arose
from a transfer of unappropriated retained earnings for contingencies.
DARLING Corporation
Question 1: What is the implied goodwill from the acquisition of the

investment?
Correct!
840,000
DARLING Corporation
Question 2: What amount should be reported as investment income for

the current year?
Correct!
1,712,000
DARLING Corporation
Question 3: What is the carrying amount of the investment in associate at

year-end?
Correct!
7,232,000
JUSWA Company
At the beginning of current year, JUSWA Company, a multinational food

conglomerate which is known for producing quality vegetables, purchased
30,000 shares of CARLA Company's 200,000 outstanding ordinary shares
for 7,000,000. On that date, the carrying amount of the acquired shares
on CARLA's books was 3,900,000. JUSWA attributed the excess of cost
over the carrying amount to patent. The patent has a total useful life from
its purchase of 15 years, with a remaining useful life of 10 years from the
date of acquisition. During the current year, JUSWA's officers gained a
majority on CARLA's board of directors. CARLA reported earnings of
6,000,000 for the current year and declared and paid dividends of
3,500,000 at year end. JUSWA also reported earnings of 7,500,000 for
the current year and declared and paid dividends of 5,000,000 at year
end. What is the carrying amount of the investment in associate at year-
end?
Correct!
7,065,000
JOVIT Corporation
On July 31, 2020, JOVIT Corporation purchased 30% of BALDIBALLIN'

Company's outstanding ordinary shares and no goodwill resulted from the
purchase. JOVIT appropriately carried this investment at equity and the
balance in JOVIT's investment account was 2,400,000 on December 31,
2020. BALDIBALLIN' reported net income of 1,500,000 for the year ended
December 31, 2020 and paid cash dividend totaling 500,000 on
December 31, 2020.
How much did JOVIT pay for the 30% interest in BALDIBALLIN'?
Correct!
2,362,500
NORMAN Company
On January 1, 2020, NORMAN Company acquired a 10% interest in an

investee for 3,500,000. The investment was accounted for as a passive
investment and therefore accounted for using cost method. On January 1,
2021, the entity acquired a further 15% interest in the investee for
7,500,000. On such date, the carrying amount of the net assets of the
investee was 40,000,000 and the fair value of the 10% interest was
4,700,000. The fair value of the net assets of the investee is equal to the
carrying amount except for an equipment whose fair value exceeds
carrying amount by 4,000,000. The equipment has a remaining life of 5
years. Also, the investee has outstanding 15% cumulative preference
shares with P10 par value totaling to P10,000,000. The preferred
dividends were not paid during 2020 and 2021.
The investee reported net income of 10,000,000 for 2021 and paid cash
dividend of 5,000,000 on December 31, 2021.
NORMAN Company
Question 1: What amount of gain on re-measurement to equity should be

recognized for 2021, if any?
Correct!
1,200,000
NORMAN Company
Question 2: What is the implied goodwill arising from the acquisition?
Correct!
1,200,000
NORMAN Company
Question 3: What is the total investment income to be reported by

NORMAN during 2021?
ou Answered
2,300,000
NORMAN Company
Question 4: What is the carrying amount of the investment in associate

on December 31, 2021?
ou Answered
13,250,000
HEAVY METAL Corporation
On January 1, 2016, HEAVY METAL Corporation acquired as a long-term

investment for 8,100,000 a 45% interest in an investee when the fair value
of the net assets was 18,000,000. The investee reported the following net
profit/losses during the following years:
Year Net profit (loss)

2016 - 5,000,000
2017 1,000,000
2018 - 8,000,000
2019 - 8,000,000
2020 - 4,000,000
On January 1, 2019, HEAVY METAL made cash advances of 800,000 to

the investee. On December 31, 2020, it is not expected that the HEAVY
METAL will provide further financial support for the investee.
Question 1: During 2018, Investment in associate account should

credited at what amount?
ou Answered
8,000,000
Question 2: During 2019 when recording the loss on investment,

Investment in associate account should credited at what amount?
ou Answered
3,500,000
Question 3: During 2019 when recording the loss on investment,

Advances to associate account should credited at what amount?
ou Answered
Question 4: During 2020 when recording the loss on investment, loss on

investment should debited at what amount?
ou Answered
3,500,000
Question 5: During 2020 after recording the loss on investment, the

cumulative loss on investment that is not recognized is?
ou Answered
1,800,000
This is the governing standard for investments in associates.
PFRS 9
Correct! PAS 28
PFRS 10
PFRS 3
12/9/2020 CFAS Canvas Poll 26: Transactions on equity instruments: BSA_2101 : Conceptual Framework and Accounting Standard
CFAS Canvas Poll 26: Transactions on equity

instruments
Due No due date Points 11 Questions 11 Time Limit 20 Minutes
Allowed Attempts Unlimited
Instructions
Reminders:
1. This poll serves as part of your class attendance which comprise 20% of your grade. However, the
score is not graded; as long as you complete this poll, you will get your corresponding point
in your class attendance. However, each incomplete poll results to .5% deduction to your 20%
class standing.
2. Although not graded, you need to complete this poll to proceed with your next topic.
3. You have 3 maximum allowed attempts for each poll. The score to be reflected is the highest among
three attempts.
4. You can see the correct answers after your last attempt.
5. You have 20 minutes to answer this poll.
Take the Quiz Again
Attempt History
Attempt Time Score

TEARDROPS COMPANY
During 2020, TEARDROPS Company bought the shares of another entity

to be held for trading:
June 1 20,000 shares @ P100
December 1 30,000 shares @ P120
The following transactions were subsequently recorded during 2021:
On January 10, the Company received cash dividends at P10 per

share.
On January 20, the Company received 20% share dividend.
On December 10, the Company sold 30,000 shares at 125 per share.
TEARDROPS Company
Question 1: What is the gain on sale of investment using the FIFO

Approach?
Correct!
1,150,000
TEARDROPS Company
Question 2: What is the gain on sale of investment using the Average

Approach?
Correct!
950,000
TEARDROPS Company
Question 3: What total amount should be reported as income from the

investment using the FIFO approach?
Correct!
1,650,000
TEARDROPS Company
Question 4: What is the balance should be reported as investment in

equity instruments using the FIFO approach as of the end of 2021,
assuming no other transactions were noted?
ou Answered
1,000,000
OUD Company
On January 1, 2020, OUD Company purchased 100,000 ordinary shares

at 80 per share to be classified as nontrading through other
comprehensive income. On September 30, 2020, the Company received
100,000 share rights to purchase 20,000 shares at 90 per share. The
share rights had an expiration date of February 1, 2021. On September
30, 2020, each share had a fair value of P114 and the share right had a
market value of P6.
OUD Company
Question 1: What amount should be reported on September 30, 2020 as

investment in share rights?
Correct!
600,000
OUD Company
Question 2: What is the total cost of the new investment if all of the share
rights are exercised?
Correct!
2,400,000
OUD Company
Question 3: Assuming that the Company recorded the share right as if it

is not accounted for separately. the entry to record the receipt of share
rights on September 30, 2020 includes?
Debit to investment in equity instruments amounting to 600,000
Debit to share rights amounting to 1,800,000
Debit to share rights amounting to 600,000
Correct! a memorandum entry
OUD Company
Question 4: Assuming that the Company recorded the share right as if it

is accounted for separately. the entry to record the sale of share rights on
for 700,000 includes?
a debit to share rights amounting to 600,000
a memorandum entry
Correct! a debit to cash amounting to 700,000
a debit to gain on sale of share rights amounting to 100,000
NIHILIST Corporation
NIHILIST Corporation owned 50,000 ordinary shares held for trading.

These 50,000 shares were purchased for P120 per share. During the
year, the investee distributed 50,000 share rights to the investor. The
investor was entitled to buy one new share for P90 cash and two of these
rights. Each share had a market value of 130 and each right had a market
value of P20 on the date of issue.
Question 1: What total cost should be recorded for the new shares that
are acquired by exercising the rights?
Correct!
3,250,000
Question 2: Assuming that the Corporation recorded the share rights as if

it is not accounted for separately, the share rights account should be
debited by what amount as of the time the Corporation is entitled to such?
Correct!
0
Question 3: Assuming that the Corporation records the share rights as if

they are accounted for separately, the market value is not given above,
and the shares are quoted P140 rights-on, the share rights account
should be debited as of the receipt of share rights by what amount?
(ROUND OFF THE MARKET VALUE PER SHARE RIGHT INTO 2
DECIMAL POINTS)
Correct!
166,500
12/9/2020 CFAS Quiz 8- TOPIC 7 and 8- Investments in Equity and Debt Instruments: BSA_2101 : Conceptual Framework and Accounting Standard
CFAS Quiz 8- TOPIC 7 and 8- Investments in Equity

and Debt Instruments
Due Dec 1 at 11:59pm Points 25 Questions 25
Available Nov 25 at 8:40am - Dec 1 at 11:59pm 7 days Time Limit 60 Minutes
Instructions
Quiz protocols:
You only have 60 minutes to complete this quiz

Only 1 attempt to answer this quiz is allowed.
This quiz will only be available at the time of your class.
Be responsible. Discussing the questions and answers with your blockmates during the quiz proper is
strictly not allowed.
The quiz questions are in multiple choice/supply the answer format; you can revisit and review the
previous questions and previous answers (no locking of questions)
This quiz was locked Dec 1 at 11:59pm.
Attempt History
Attempt Time Score
Score for this quiz: 23 out of 25

THEORIES (10 items)
In accounting for debt investments that are classified as trading

investments,
any unrealized gain (loss) is reported as part of equity.
a premium is reported separately.
Correct!
no discount or premium amortization is required.
the original cost is compared to amortized cost to compute any unrealized

gain (loss).
Debt investments.
Correct!
Equity investments.
Statement I: Over the life of a debt investment, interest revenue and the
gain on sale are the same using either amortized cost or fair value
measurement.
Statement II: The fair value option is generally available only at the time a
company first purchases the financial asset or incurs a financial liability.
Correct!
Statement I: Amortized cost is the initial recognition amount of the

investment minus cumulative amortization
Statement II: Companies measure debt investments at fair value if the

objective of the company’s business model is to hold the financial asset to
collect the contractual cash flows.
Correct!
Debt investments not held for collection are reported at
Correct!
fair value.
amortized cost.
When a company holds between 20% and 50% of the outstanding

ordinary shares of an investee, which of the following statements applies?
The investor should always use the fair value method to account for its
investment.
The investor should always use the equity method to account for its
investment.
The investor must use the fair value method unless it can clearly
demonstrate the ability to exercise "significant influence" over the investee.
Correct!
The investor should use the equity method to account for its investment
unless circum-stances indicate that it is unable to exercise "significant
influence" over the investee.


investee.
Correct! Both statements are incorrect.
Under IFRS, the presumption is that equity investments are
held for trading- YES; held to profit from price changes- NO
Correct! held for trading- YES; held to profit from price changes- YES
held for trading- NO; held to profit from price changes- YES
held for trading- NO; held to profit from price changes- NO
Equity investments acquired by a corporation which are accounted for by

recognizing unrealized holding gains or losses as other comprehensive
income and as a separate component of equity are generally
investments where a company has holdings of more than 50%.
trading investments where a company has holdings of less than 20%.
trading investments where a company has holdings of less than 20%.
Correct!
non-trading where a company has holdings of less than 20%.

Equity method
Correct!
Cost method
Market method
PROBLEMS (15 items)
AQUA Corporation
AQUA Corporation purchased 60,000 shares of another entity for

4,200,000 during the beginning of 2020. Also during the year, the entity
received 60,000 share rights from the investee. The share rights are not
accounted for separately. and each right has a fair value of P70. Each
right entitled the shareholder to acquire one share for P75. The market
price of the investee's share was P95 immediately before the rights were
issued and P85 immediately after the rights were issued. The entity
exercised 40,000 of the total share rights during the year, 10,000 of the
share rights were sold for P65 and the remaining 10,000 rights expired
before the end of the year. At year-end, the entity sold 25,000 shares at
P90 per share. The FIFO approach is used by AQUA.
AQUA Corporation
Question 1: The entry to record the purchase of 60,000 shares at the

beginning of 2020 includes a credit to cash amounting to?
Correct!
4,200,000

AQUA Corporation
Question 2: The entry to record the receipt of 60,000 share rights during
the year includes a debit to share rights amounting to?
Correct!
0
AQUA Corporation
Question 3: The entry to record the sale of 10,000 share rights during the
year includes a credit to investment in equity instruments amounting to?
Correct!
650,000
AQUA Corporation
Question 4: The entry to record the exercise of 40,000 share rights

during the year includes a debit to investment in equity instruments
amounting to?
Correct!
3,000,000
AQUA Corporation
Question 5: The entry to record the expiration of 10,000 share rights

during the year includes a credit to share rights amounting to?
Correct!
0
AQUA Corporation
Question 6: What amount of gain on sale of investment should be

recognized in the current year under FIFO method?
Correct!
500,000
AQUA Corporation
Question 7: What is the ending balance of the investment in equity

instruments by the end of the current year under FIFO method?
Correct!
4,800,000
KAZUMA Company
At the beginning of 2020, KAZUMA Company acquired nontrading equity

instrument for 5,000,000. The equity instrument is irrevocably designated
as financial asset at fair value through other comprehensive income. The
transaction costs incurred by KAZUMA amounted to 450,000: 400,000 of
which was assessed as directly attributable costs. The fair value of the
instrument as of the end of 2020 was 5,700,000 and the transaction cost
that would be incurred if the investment will be sold is estimated at
500,000 as of the end of 2020.
As of the end of 2021, the equity instrument is still unsold and the fair
value as of the end of 2021 is 6,100,000.
KAZUMA Company
Question 1: Based on the information above, how much will be charged

as expense during 2020?
Correct!
50,000
KAZUMA Company
Question 2: Based on the information above, equity investments is

debited at the date of acquisition amounting to?
Correct!
5,400,000
KAZUMA Company
Question 3: Based on the information above, the cumulative balance of

other comprehensive income at the end of 2021 is?
Correct!
700,000
KAZUMA Company
Question 4: Based on the information above, the incremental unrealized

gain to be recognized in income statement at the end of 2021 is?
ou Answered
400,000
DARKNESS Corp.
During 2020, Darkness Corp. held 45,000 shares of Megumin Company's

150,000 outstanding shares and 7,000 of Eris Company's 350,000
outstanding shares. Within the year, Darkness received P500,000 cash
dividend from Megumin, and P75,000 cash dividend and 15% share
dividend from Eris. The closing price of Eris' shares as of the date of
declaration is P120.
DARKNESS Corp.
Question 1: Based on the information above, Darkness should record

dividend income from Megumin Company's declaration of cash dividends
amounting to?
Correct!
0
DARKNESS Corp.
Question 2: Based on the information above, Darkness should record

dividend income from Eris Company's declaration of dividends amounting
to?
ou Answered
0
KING Company
KING Company buys ten shares of equity securities at P1,000 each on

January 15, 2020. The percentage of KING's ownership within the issuer
is considered as immaterial. The securities are classified as fair value
through other comprehensive income by election. The fair value of the
securities increases to P1,250 per share on December 31, 2020.
Assuming that no dividends were declared and paid and that the entity
has 30% tax rate, how much is the ending balance of other
comprehensive income, net of tax presented in the equity section of
KING's statement of financial position as of December 31, 2020?
Correct!
1,750
ULYSSES Company
During 2020, Ulysses Company purchased marketable equity securities to

be measured at fair value wherein the net income and income tax position
of the Company for the current year will not be affected. On December 31,
2020, the balance in the unrealized loss on these securities was 200,000.

follows:
Fair
Cost
value
X 2,100,000 1,800,000
Y 1,850,000 1,950,000
Z 1,050,000 1,000,000
A 1,600,000 1,800,000
B 700,000 550,000
Total 7,300,000 7,100,000
There were few transactions on these securities during 2021, but the
investments manager of the Company did not communicate these to the
chief accountant; thus the Company asked for your help if you can identify
them. Upon checking, you noticed that there was a cash proceeds in the
cash receipts books amounting to 450,000 with description: "Sold
investments during 2021".

follows:
Security X with original cost of 2,100,000 and fair value of 1,600,000;

Security Y with original cost of 1,850,000 and fair value of 2,000,000;
Security Z with original cost of 1,050,000 and fair value of 900,000;
Security A with original cost of 1,450,000 and fair value of 1,500,000;

and
Security B with original cost of 500,000 and fair value of 700,000.
How much is the cumulative unrealized gain/loss to be recognized in other

comprehensive income section of statement of financial position as of
December 31, 2021, if any? (please provide absolute value of your
answer)
Correct!
250,000
CFAS Quiz 9- TOPIC 7 and 8- Investments in Equity

and Debt Instruments
Due Nov 27 at 11:20am Points 25 Questions 25
Available Nov 27 at 8:40am - Nov 27 at 11:20am about 3 hours
Time Limit 60 Minutes
Instructions
Quiz protocols:
You only have 60 minutes to complete this quiz

Only 1 attempt to answer this quiz is allowed.
This quiz will only be available at the time of your class.
Be responsible. Discussing the questions and answers with your blockmates during the quiz proper is
strictly not allowed.
The quiz questions are in multiple choice/supply the answer format; you can revisit and review the
previous questions and previous answers (no locking of questions)
This quiz was locked Nov 27 at 11:20am.
Attempt History
Attempt Time Score
Score for this quiz: 18 out of 25

THEORIES (10 items)
Debt investments not held for collection are reported at
amortized cost.
Correct!
fair value.
Statement I: The IASB requires that investments meeting the business

model (held-for-collection) and contractual cash flow tests be valued at
fair value.
Statement II: The IASB requires that companies classify financial assets
into two measurement categories – amortized cost and fair value.
Correct!
Correct!
Debt investments.
Equity investments.
Which of the following is not generally correct about recording a sale of a

debt investment before maturity date?
Correct!
The entry to amortize a premium to the date of sale includes a debit to
Debt investments.
Accrued interest will be received by the seller even though it is not an

interest payment date.
A gain on the sale is the excess of the selling price over the book value of
the bonds.
An entry must be made to amortize a discount to the date of sale.
Statement I: The Unrealized Holding Gain or Loss–Income account is

reported in the other income and expense section of the income
statement.
Statement II: At each reporting date, companies adjust debt investments’

amortized cost to fair value, with any unrealized holding gain or loss
reported as part of their comprehensive income.
Correct!
When a company has acquired a "passive interest" in another corporation,

the acquiring company should account for the investment
by consolidation.
by using the effective interest method.
by using the equity method.
Correct!
by using the fair value method.

Correct! Cost method
Market method
Equity method
Under IFRS,
Realized gains and losses related to changes in the fair value of non-
trading equity investments are reported as a part of other comprehensive
income and as a component of other accumulated comprehensive income
Dividends received in cash are always reported as income on the income

statement
Correct!
The accounting for non-trading equity investments deviates from the
general provisions for equity investments
All of the answer choices are correct.


investee.
Correct!
Unrealized holding gains or losses on trading investments are reported in
other comprehensive income
accumulated other comprehensive income
equity
Correct!
net income
PROBLEMS (15 items)
Faker Corporation
During 2020, Faker Corporation had the following transactions in bond

investment held for trading:
Purchased 3,250 of P1,000, 10% bonds of T1 Company

August 1
interest. Interest is payable on June 30 and December 3
Purchased 4,000 of P500, 8% bonds of SG Corporation
September 1
is payable on June 30 and December 31
Sold 1,500 of SG Corporation at 102 exclusive of any ac
October 1
interest are also sold during this date.
December 31 The fair values of the bonds held by Faker are as follow
T1
SG
Faker Corporation
Question 1: Faker Corporation assessed that the bonds purchased with

various corporations should be classified as:
Amortized cost
Faker Corporation
Question 2: As of August 1, 2020, how much is the total credit to cash?

Correct!
3,082,083
Faker Corporation
Question 3: As of December 31, 2020, how much is the ending balance

of bond investment-trading securities? (Round off to nearest whole
number)
Correct!
4,252,500
Faker Corporation
Question 4: During 2020, how much is the total gain on sale of bond
investments? (Round off to nearest whole number)
Correct!
52,500
Faker Corporation
Question 5: During 2020, how much is the total net unrealized gain on
bond investments? (Round off to nearest whole number and provide
absolute value answer)
Correct!
10,000
AKALI Company
AKALI Company, a multinational multimedia company, decided to acquire

bond investments during year 2020. On January 1, 2020, AKALI acquired
bonds issued by AHRI Company amounting with a face amount of
7,300,000. The bonds were issued on January 1, 2020 and the whole
amount is expected to be fully paid on December 31, 2022. The bonds
carry 7% interest to be paid annually every December 31 and the bonds
are expected to yield at 8%. There are no transaction costs incurred upon
acquisition and the acquisition price is equal to the present value of future
cash flows of the bonds.
Based on the Company's assessment, the bonds are intended to have

a "collect and sell" business model and evidently, it passed the
contractual cash flows test. AKALI also intended not to irrevocably
AKALI decided not to round off the PV factors.
Based on the active markets, the following are the fair value quotes of the
bonds as of the end of 2020 and 2021:
On June 1, 2022, the bonds were sold at 103 plus any accrued interest.
Accordingly, any gain on sale of bond investment will be recognized by
AKALI.
AKALI Company
Question 1: Based on AKALI's computation, the acquisition cost or

present value of bonds as of January 1, 2020 is? (Round off the PV
factor to 4 decimal places and round off the answer to nearest whole
number)
ou Answered
7,112,368

AKALI Company
Question 2: Based on AKALI's computation, interest income to be

recognized for 2020 should be? (Round off the answer to nearest
whole number)
ou Answered
568,989
AKALI Company
Question 3: AKALI's cumulative unrealized gain on fair value

changes on other comprehensive income as of December 31, 2021
should be ? (Round off the answer to nearest whole number)
ou Answered
78,986
AKALI Company
Question 4: On June 1,2022, AKALI should receive cash from sale at

what amount ? (Round off the answer to nearest whole number)
Correct!
7,731,917
AKALI Company
Question 5: On June 1,2022, AKALI should recognize gain on sale of

investment at what amount? (Round off the answer to nearest whole
number)
ou Answered
799,758
Seraphine Corporation
Seraphine Corporation decided to acquire bond investments during year

2020. On January 1, 2020, Seraphine acquired bonds issued by AHRI
Company with a face amount of 9,000,000 with an acquisition price of
9,270,000 (inclusive of 270,000 transaction costs). The bonds were
issued on January 1, 2020 and is expected to be repaid on a semi-annual
basis with repayment dates of every June 30 and December 31 of each
year. The last repayment is expected to be on December 31, 2022. The
bonds carry 8% interest to be paid on a quarterly basis every March 31,

June 30, September 30, and December 31 and is computed based on the
outstanding balance of the bond before the corresponding repayment on
applicable repayment dates.
Seraphine decided to compute for the effective yield rate of the bond
investment based on the acquisition price (which is equal to the present
value of future cash flows of the bonds) and based on the cash flow profile
of the bonds. Seraphine used the "goal seek" function in excel to
compute and interpolate the exact effective yield rate of the bonds.
Seraphine decided not to round off any computed effective yield rate
and any PV factors used in the calculation of present value at day 1.

"hold to collect" business model and evidently, it passed the
contractual cash flows test. Seraphine also intended not to
irrevocably designate such bonds at fair value through profit or loss.
Question 1: Based on the Company's assessment, the effective yield rate

computed by Seraphine is ___%? (Just for this question kindly round
off to 4 decimal places, computed by goal seek function in excel. For
the rest of the calculation, do not round off.)
Correct!
6.1563
orrect Answers 6.1563 (with margin: 0)

Seraphine as of December 31, 2020? (Round off your answer to
nearest whole number).
Correct!
6,131,143

Seraphine as of December 31, 2021? (Round off your answer to
ou Answered
304,013
Question 4: How much is the interest received by Seraphine as of

December 31, 2020? (Round off your answer to nearest whole
number).
ou Answered
Unanswered
Question 5: How much is the interest income of Seraphine arising from

the bonds as of December 31, 2020? (Round off your answer to
ou Answered

Equity Investments Accounting

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11/24/2020 CFAS Activity 6: TOPIC 7- Investments in Equity Instruments: BSA_2101 : Conceptual Framework and Accounting Standard

CFAS Activity 6: TOPIC 7- Investments in Equity

This quiz was locked Nov 23 at 11:59pm.

LATEST Attempt 2 49 minutes 10 out of 26

Attempt 1 14 minutes 8 out of 26

Score for this attempt: 10 out of 26

Statement I: The Unrealized Holding Gain/Loss—Equity account is

Statement II: Non-trading equity investments, in which the entity has

Both statements are incorrect.

Only statement II is correct.

Only statement I is correct.

Under IFRS, the presumption is that equity investments are

held for trading- YES; held to profit from price changes- NO

held for trading- NO; held to profit from price changes- NO

Statement I: Equity security holdings between 20 and 50 percent indicates

Statement II: An investment of more than 50 percent of the voting stock of

Only statement I is correct.

Both statements are correct.

Only statement II is correct.

If the entity holds a specific equity instrument with a 19% ownership

Unrealized holding gains or losses on trading investments are reported in

ou Answered other comprehensive income

orrect Answer net income

accumulated other comprehensive income

PROBLEMS (21 items)

During 2020, KINGSLAYER Company acquired an equity investment for

Question 1: What amount of cumulative loss should be recognized in

orrect Answers 400,000 (with margin: 0)

Question 2: What amount of unrealized loss should be recognized in

orrect Answers 0 (with margin: 0)

Question 3: What amount of unrealized loss should be recognized in

the year ended December 31, 2021?

orrect Answers 1,800,000 (with margin: 0)

Question 4: What amount of equity investment should be recognized in

orrect Answers 1,200,000 (with margin: 0)

Question 5: Based on the Company's intention and election, the equity

equity instrument at amortized cost

equity instrument either at FVTPL or FVOCI

equity instrument at FVTPL

During 2020, 1x1 Company purchased marketable equity securities to be

The detailed breakdown of the securities as of December 31, 2020 are as

The detailed breakdown of the securities as of December 31, 2021 are as

Security X with original cost of 2,100,000 and fair value of 1,600,000;

Unanswered Question 11 0 / 1 pts

Question 1: Considering the unrecorded few transactions during 2021 as

orrect Answers 124,107 (with margin: 0)

Unanswered Question 12 0 / 1 pts

Question 2: Considering the unrecorded few transactions during 2021 as

orrect Answers 100,000 (with margin: 0)

Question 3: How much is the cumulative unrealized gain/loss to be

orrect Answers 200,000 (with margin: 0)

Question 4: How much is the unrealized gain/loss to be recognized in

orrect Answers 0 (with margin: 0)

Question 5: How much is the cumulative unrealized gain/loss to be

financial position as of December 31, 2021, if any? (please provide

orrect Answers 150,000 (with margin: 0)

BAYDEN Company provided to you the following information pertaining to

The entity owned a 10% interest in TRAMP Company, which declared

Question 1: What amount of dividend income should be reported by

orrect Answers 60,000 (with margin: 0)

Question 2: Assuming the 10% interest in TRAMP is sold by BAYDEN to

orrect Answers 40,000 (with margin: 0)