12.

Flexible Company has reported the following investments before the preparation of its December 31, 2011 statement of
financial position:
Equity investment to profit or loss, P1,500,000
Equity investment in available-for-sale 2,000,000
Debt investment in profit or loss 4,000,000
Debt investment in available-for-sale 3,000,000
Included in the equity investment to profit or loss is a P900,000 current fair value of equity investment originally classified as
investment to profit or loss acquired three years ago. The company held the investment for three years due to a large unexpected
downturn in the stock market.
What amount of investment to profit or loss should Flexible Company report in its December 31,2011
a. P2,000,000 b. P3,100,000 c. P4,600,000 d.P5,500,000

13. On January 1, 2008, Prerev Company purchased 10% of another entity’s outstanding ordinary shares for P5,000,000. The
investment is classified as a nonmarketable security and accounted for appropriately under the cost method. The following date
pertain to the investee’s operations for 2008 and 2009
2008 2009
Net Income 2,000,000 3,000,000
Dividend paid None 6,000,000
Prerev Company should report a return of investment at
a. P 100,000 b. P 500,000 c. P 600,000 d.P0

14. On January 1, 2006, Boggs Inc. paid P700,000 for 100,000 shares of Mart Corporation representing 20% of Mart’s
outstanding common stock, The following computation was made by Boggs.
Purchase price P700,000
20% equity in book value of Mart’s net assets 500,000
Excess cost over book value P200,000
The excess cost over book value was attributed to goodwill. Mart reported net income for the year ended December 31, 2006 of
P300,000. Mart Corporation paid cash dividends of P100,000 on July 1, 2006. If Boggs, Inc. did not exercised significant
influence over Mart Corporation, the amount of net investment revenue Boggs should report from its investment in Mart would
be: