CHAPTER 15—1 (ACP)

Template Company provided the following with respect to marketable equity securities held as
“trading”.

1. The entity carried the following securities on December 31, 2020:

Cost Market

A ordinary – 4,000 shares 330,000 300,000

B ordinary – 1,000 shares 200,000 160,000
C preference – 2,000 shares 300,000 310,000
830,000 770,000

2. On June 30, 2021, the entity sold all the B ordinary shares for P140,000.

3. On December 31, 2021, the securities are quoted as follows:

A Ordinary 80
C Preference 180

Required:
Prepare journal entries to record the transactions.

CHAPTER 15—2 (IAA)

On January 1, 2020, Spark Company purchased the following trading securities:

Cost FV 12/31/20

Aura Company ordinary 600,000 650,000

Bora Company preference 350,000 200,000
Cara Company bonds 500,000 400,000

On October 1, 2021, the entity sold one-half of Aura Company ordinary for P375,000.

On December 31, 2021, the fair value of the remaining securities was P800,000.

Required:
Prepare journal entries to record the transactions.

CHAPTER 15—3 (IAA)

Splendid Company purchased equity securities during 2020 to be held as investments. The cost
and market value of the investments are:

December 31, 2020 Cost Market

Trading securities 2,000,000 2,500,000

Securities not held for trading 3,000,000 2,900,000
December 31, 2021

Trading securities 2,000,000 2,200,000

Securities not held for trading 3,000,000 2,300,000

The securities not held for trading are measured at fair value through other comprehensive
income by irrevocable election.

Required:
Prepare journal entries to record the transactions.

CHAPTER 15—4 (IAA)

Transitory Company acquired the following equity securities:

December 31, 2020 Cost Market

Moon Company 200,000 120,000

Star Company 400,000 280,000
Sun Company 600,000 650,000

December 31, 2021

Moon Company 200,000 220,000

Star Company 400,000 300,000
Sun Company 600,000 580,000

The equity securities do not qualify as held for trading.

The entity has elected irrevocably to present changes in fair value in other comprehensive
income.

Required:
Prepare journal entries on December 31, 2020 and December 31, 2021.

CHAPTER 15—5 (IAA)

Aborigine Company reported the following accounts in the statement of financial position on
January 1, 2020:

Noncurrent assets

Financial asset – FVOCI 4,000,000

Market adjustment for unrealized loss ( 500,000)
Market Value 3,500,000

Other comprehensive income

Unrealized loss ( 500,000)

An analysis of the investment portfolio revealed the following on December 31, 2020.

XYZ ordinary share 1,000,000 1,200,000

ABC ordinary share 2,500,000 2,000,000
RST preference share 500,000 200,000
4,000,000 3,400,000

On July 1, 2021, the ABC ordinary share was sold for P2,100,000.

On December 31, 2021, the remaining investments have the following market value:

XYZ ordinary share 1,000,000

RST preference share 150,000

Required:
1. Prepare journal entry to recognize the decrease in value on December 31, 2020.
2. Prepare journal entry to record the sale of ABC ordinary share on July 1, 2021.
3. Prepare journal entry on December 31, 2021 to recognize the change in fair value.

CHAPTER 15—6 (IAA)

During 2020, the first year of operations, Beneath Company purchased the following equity
securities:

Cost MV 12/31/20 MV 12/31/21

Security One 2,200,000 1,400,000 900,000

Security Two 700,000 1,000,000 1,100,000
Security Three 1,600,000 1,500,000 1,600,000
Security Four 2,000,000 2,500,000 1,200,000

Security One and Security Two are held for trading and Security Three and Security Four are
measured as at fair value through other comprehensive income by election.

During 2021, the entity sold one-half of Security One for P1,000,000, and one-half of Security
Four for P1,300,000.

Required:
Prepare journal entries for 2020 and 2021.

CHAPTER 15—7 (ACP)