Liquidating Dividend, Share split, share dividends in Lieu of cash, and cash dividends in lieu of shares.

Problem 1: Assume on January 1,2022, Saitama Corporation bought 20,000 shares of Genos Corporation
for 30 each and accounted it using the cost method.
1. On July 1,2019, BCD Corporation declares 2:1 share split. Compute for the new cost per share.
2. If on July 1,2019, BCD Corporation declares 2:1 reverse split. Compute for the new cost per share

Problem 2: On January 1,2022, Bang Company purchased 30,000 shares for P10 each representing 20%
of Garou Corporation. Bang was not able to affect the policy making process of Garou Corporation. The
following are the transaction that took place during the year regarding the shares.
January 31 – Garou declared and issued 3:2 reverse split.
February 2 – Garou declared and paid cash dividend amounting to P1 per share
February 5 – Bang sold 10,000 shares for P13 each.
February 10 – Bang received cash dividends of P0.5 per share
1. Prepare journal entry for the transaction.
2. How much is the dividend income because of February 2 transaction?
3. How much is the gain or loss on sale on February 5?
4. How much is the dividend income for the year 2022?

Problem 3: On January 10,2022 , the entity purchased 10,000 shares of another entity for P10 each. On
January 15,2021, the investee company declared cash dividend amounting to P2 per share, on date of
record of January 31, and payment date on February 20. On February 20, the investee doesn’t have
enough cash, the Investee issued 5,000 shares of its own shares to the entity as payment for the cash
dividend. The fair market value of the investee’s share is P3 at the date of issuance of shares.
1. What is the journal entry for the transaction
2. How much is the dividend income?
3. How much is the new cost per share of the investment in equity securities?
4. If the shares received has no fair value at the date of issuance, how much is the new cost
per share of the investment?

Problem 4: On March 1,2022, the entity purchased 100,000 shares for P1,200,000. On March 31, the
investee company declared 15% stock dividends with date of record April 10, and payment date of May
1. On May 1, the investee paid the entity P200,000 cash in exchange of the 15% shares dividends.
1. How much is the dividend income?
2. How much is the gain or loss on sale of shares?

Problem 5: The entity purchased 20,000 shares for P10 each on March 1,2023. The entity received
P50,000 as liquidating dividends.
1. How much is the investment in equity securities after the dividends?
2. How much is the cost per share?
3. How many shares does the entity have after the liquidating dividends?

Problem 6: The following are the transaction of Sa Wakas Corporation regarding its share investment
 On March 1, 2022, received P60,000 cash dividends from investee corporation. Sa Wakas has
20% ownership in the investee corporation
Liquidating Dividend, Share split, share dividends in Lieu of cash, and cash dividends in lieu of shares.

 On March 15,2022, received P100,000 liquidating dividends from Kornik Corporation. Sa Wakas
has 5% ownership
 On March 20, 2022, received 10,000 shares in lieu of cash dividend. The fair market value of the
investee’s share is 12 per share. The cash that was supposedly received was P110,000. Sa Wakas
has 10% ownership in the corporation
 On March 25,2022, received P50,000 cash from the investee corporation as cash dividend
1. How much is the dividend income during the year?