At the start of 20x1, Aglolos Co.

’s held for trading securities consist of 10,000 shares of

Trucking Co. with fair value per share of P 80. Aglolo’s trading activities relating to Trucking
Co.’s shares during the year are summarized below:
Acquired 5,000 shares at P 78 per share. Total transaction cost (tax) was P 18,500.
Sold 3,000 shares (from those held at the start of the year) at P 82 per share. Total
transaction cost was P 12,300.

Trucking Co.’s shares have a fair value of P 81 per share on December 31, 20x1.

Requirements: Provide the journal entries. Determine the total net gail (loss) from the sale
and fair value change during the period.

Solution:
Acquisitio Held for trading securities 390,000
n Taxes and licenses 18,500
Cash 408,50
0
Sale Cash [(3,000 x 82) – 12,300] 233,700
Loss 6,300
Held for trading sec. (3,000 x 80) 240,000
Dec. 31, Held for trading securities 22,000
20x1 Gain (a) 22,000

(a) Fair value on 12/31/x1 (10,000 sh. + 5,000 sh. – 3,000 sh.) x ₱81 972,000
Carrying amount (10,000 sh. x ₱80) beg. + 390,000 Dr. – 240,000 Cr. 950,000
Gain 22,000

Realized loss on sale (6,300)

Unrealized gain on fair value change Net gain 22,000
15,700
❖ Reconciliation:

Held for trading - beg. 800,00

0
Acquisitions during the year 390,00
0
Total 1,190,000
Held for trading - end. 972,00
0
Net proceeds from sale 233,70
0
Total 1,205,700
Total net gain from fair value change and sale 15,70
0

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