PROBLEM 4-1

Year 1 a. Equity Investments - FVPL 150,000

Other Expenses 3,750
Cash 153,750

b. Equity Investments - FVPL 30,000

Unrealized Gains on Equity Investments 30,000

Year 2 a. Cash 94,000

Gain on Sale of Equity Investments - F 4,000
Equity Investments - FVPL 90,000

b. Equity Investments - FVPL 6,000

Unrealized Gains on Equity Investments 6,000

PROBLEM 4-2

Year 1 a. Equity Investments through OCI 153,750

Cash 153,750

b. Equity Investments through OCI 26,250

Unrealized Gains and Losses on Equity 26,250

Year 2 a. Equity Investments through OCI 10,000

Unrealized Gains and Losses on Equity 10,000

Cash 94,000
Loss on Sale of Equity Investments 1,000
Equity Investments through OCI 95,000

b. Equity Investments through OCI 1,000

Unrealized Gains and Losses on Equity 1,000

PROBLEM 4-3

a. Cash 18,000
Dividend Revenue 18,000

Memorandum entry: Received additional 600 ordinary shares of B

b. corporation as bonus issue on 2,400 shares held

c. Equity Investments - A preference 150,000

Dividend Revenue 150,000

Memorandum entry: Received additional shares of B corporation on a 4-1

d. stock split of 2,400 shares

e. Equity Investments - C ordinary 20,000

Dividend Revenue 20,000

PROBLEM 4-4
 a. December 31, Y2 1,950,000

Year 3
Memorandum entry: Received 6,000 ordinary shares as 20% bonus issue
on the 30,000 shares held

Cash 1,050,000
Equity Investments - FVPL 812,500
Gain on Sale of Equity Instruments 237,500

Equity Investments - FVPL 374,500

Unrealized Gain on Equity Investments 374,500

b. Gain 237,500
Unrealized on Equity investments at FVPL 374,500
Profit 612,000

c. Equity Investments at Fair Value 1,512,000

PROBLEM 4-5

a. December 31, Y2 1,950,000

Cost - 1,800,000
Unrealized Gain/Loss on Equity Investments - OCI 150,000

Year 3
Memorandum entry: Received 6,000 ordinary shares of NPA Co. as 20%
bonus issue on the 30,000 shares held

Equity Investments at FV through OCI 237,500

Unrealized Gain/Loss on Equity Invest 237,500

Cash 1,050,000
Equity Investments at FV through OCI 1,050,000

Unrealized gain or loss on Equity - OCI 300,000

Retained Earnings 300,000

Equity Investments at FV through OCI 42,000

Unrealized Gain on Equity Investments 42,000

b. None
c. Equity Investments at FV through OCI 1,512,000

d. Unrealized Gain or Loss in Equity, Y3 462,000

Fair Value, Y3 1,512,000

Cost - 1,050,000
Unrealized Gain in Equity 462,000

PROBLEM 4-6

a. P0
b. ₱ 35,000
Shares Cost FV Unrealized Gain
Monterey Preference 3,500 133,000 135,000 2,000
 Garcia Ordinary 1,000 180,000 190,000 10,000
Barney Corporation 3,000 177,000 200,000 23,000
490,000 525,000 35,000

PROBLEM 4-7

a. Fair Value 106,250

Cost - 110,000
Unrealized Loss, Y1 - 3,750

Total FV, Y2 180,000

Total Cost - 170,000
Cumulative Balance, Y2 10,000

b. Fair Value 106,250

Cost - 110,000
Unrealized Loss, Y1 - 3,750

Fair Value 180,000

Cost - 166,250
Unrealized Gain, Y2 13,750

Memorandum entry: Received 2,000 stock rights from

c.
Music. Inc at P80 per share

Equity Investments at FV through OCI 30,000

Cash 24,000
Investment Income 6,000

Cash 2,250
Investment Income 2,250

Equity Investments at FV through OCI 15,400

Unrealized Gains and Losses on Equity 15,400

PROBLEM 4-8

a. Cash 50,000
Investment Income 50,000

b. Equity Investments at FVPL 150,000

Cash 100,000
Investment Income 50,000

Equity Investments at FVPL 90,000

Unrealized Gains on Equity Investment 90,000

Market Value 936,000

CV prior adjustment - 810,000
Unrealized Gain 126,000

PROBLEM 4-9

YEAR 2
a. Equity Investments through OCI - Diana 54,000
 Cash 54,000

Memorandum entry: Received 500 additional shares from 2 for 1 split

b.

c. Equity Investments through OCI - Smith 121,200

Cash 121,200

d. Equity Investments through OCI - Diana 6,000

Unrealized Gains and Losses on Equity 6,000

Cash 15,000
Equity Investments through OCI - Diana 15,000

e. Memorandum entry: Received 750 stock rights from Diana at P55 per share

f. Equity Investments at FV through OCI - Diana 13,725

Cash 12,375
Investment Income 1,350

Cash 900
Investment Income 900

g. Equity Investments at FV through OCI - Diana 675

Unrealized Gains and Losses on Equity 675

Cash 6,400
Equity Investments through OCI - Diana 6,400

h. Cash 8,000
Dividend Revenue 8,000

i. Unrealized Gains and Losses on Equity Investme 4,950

Equity Investments at FV through OCI - Diana 1,250
Equity Investments at FV through OCI - 6,200

Original Shares 500 shares at P108 54,000

2-for-1 split 500 shares -
1,000 shares at P54 54,000
Adjustment 6,000
Balance 60,000
Sale (250 shares) - 15,000
Balance 750 shares at P60 45,000
Exercise of rights 225 shares at P61 13,725
Adjustment 675
Sale (100 shares) - 6,400
Balance 875 shares 53,000

Investment Income 2,250

Dividends Revenue 8,000
Total Income 10,250

PROBLEM 4-10
YEAR2
Apr-01 Cash 125,000
Loss on Sale of Equity In 14,000
Equity Investments at FVPL - 139,000

May-15 Equity Investments at FV 30,550

Cash 30,550

Memorandum entry: Received 4,000 additional shares of Darrel as

Jul-10
20% bonus issue

Nov-30 Cash 24,000

Dividend Revenue 24,000

Dec-31 Unrealized Loss on Equity 9,000

Equity Investments at FVPL 9,000

Equity Investments throug 110,000

Equity Investments throug 650
Unrealized Gains and Losse 110,650

Fair Value Carrying Val Change in FV

Ghio 31,200 30,550 650
Darrel 480,000 370,000 110,000
511,200 400,550 110,650
alized Gain