Problem 1

J Company bought the ordinary shares of M Company designated as equity securities at fair value through other
comprehensive income, as follows:
June 20, 2020 1,000 shares for 101,600
November 15, 2020 3,000 shares at 104 per share

On January 25, 2021, J Company received cash dividend of 4.50 per share. On June 14, 2021, it received a 10%
bonus issue and on July 18, 2021, J Company sold 1,500 shares at 95 per share. Market value of M Company
ordinary shares are as follows:
December 31, 2020 106.70 per share
December 31, 2021 96.00 per share

a. At what amount should the equity investment be reported at December 31, 2020?
b. How much is the dividend income reported by J in the company’s statement of comprehensive income for
the year ended December 31, 2021?
c. What is the revised carrying amount per share of M ordinary share after the receipt of bonus issue on June
14, 2021?
d. How much is the gain or loss on the sale of M Company shares on July 18, 2021?
e. What is the amount transferred to retained earnings at the date of sale of shares of J?
f. At how much would the remaining equity investment be reported at December 31, 2021?

Problem 2

During 2021, S Company purchased several equity securities, all of which are designated as equity investments
at fair value through profit or loss. The cost and market value at December 31, 2021 were as follows:
Cost Market
AB Company ordinary (200 shares) 28,000 34,000
CD Company ordinary (1,000 shares) 170,000 153,000
EF Company ordinary (2,000 shares) 315,000 295,000
Appropriate valuation entry was made on December 31, 2021. On January 31, 2022, S Company sold 1,000
ordinary shares CD at 155 per share, incurring 900 broker’s commission and taxes.

On December 31, 2022, the market value of the ordinary shares of AB and EF were 150 and 153 per share
respectively.
a. What is the unrealized gain or loss reported in profit or loss for the year 2021?
b. How much is the gain or loss on the sale of CD shares?
c. What is the equity investment of FPL balance reported at December 31, 2022 statement of financial
position?

Problem 3

A Company had various investment at fair value through profit or loss transactions during 2020 and 2021. The
acquisition cost of all securities in its portfolio during 2020 was 532,000. At December 31, 2020 and December
31, 2021, the market value of these securities was 541,000 and 512,000, respectively. In 2022, all of these
securities were sold at 550,000.
A. Assuming no other transactions are noted regarding these financial assets at fair value through profit or
loss, what is the amount of unrealized gain or loss to be reported in the 2021 income statement relating to
these securities?
B. What is the gain on sale reported in A Company’s 2022 income statement?
C. Assuming that the securities held by A Company are classified as at fair value through other
comprehensive income, what is the gain on sale reported in A Company’s 2021 income statement?

Problem 4

P Company presented the following information pertaining to its investments in equity securities:
FVPL FVOCI
Cost 1,000,000 1,000,000
Market value, December 31, 2021 1,050,000 980,000
Market value, December 31, 2022 950,000 920,000
a. What is the amount should P report as unrealized gain in its 2021 income statement?
b. What amount should P report as unrealized gain/losses in the shareholders’ equity as its December 31,
2021 statement of financial position?