Accounting For Investments in Debt Securities

Investments
Investments in
in Debt
Debt
Securities
Securities
(P1.920)
(P1.920)
R.
R. R.
R. Ocampo
Ocampo
Relevant
Relevant Standards
Standards
Financial Instruments Standards
• PAS 32 – Presentation
• PAS 39 – Recognition and
Measurement
• PFRS 7 – Disclosures
Problem
Problem No.
No. 1
1
Situation
Situation No.
No. 1
1
PV of Principal
(P1M x 0.7118) P711,800
PV of Interest
(P1M x .1 x 2.4018) 240,180
Purchase price P951,980
Situation
Situation No.
No. 2
2
PV of Principal
(P1M x 0.7462) P 746,200
PV of Interest
(P1M x .06 x 5.0757) 304,542
Purchase price P1,050,742
Situation
Situation No.
No. 3
3
PV of Principal (P1M x 0.7050) P705,000
PV of Int. (P1M x .05 x 4.9173) 245,865
PV, 1/1/10 950,865
Add disc. amort. 1/1 – 3/1:
EI (P950,865 x .06 x 2/6) P19,017
NI (P1M x .05 x 2/6) 16,667 2,350
Purchase price, 3/1/10 953,215
Accrued interest 16,667
Total amount paid P969,882
Situation
Situation No.
No. 4
4
Date Principal Interest Total PVF @ PV, 1/1/10
10% 12%
12/31/10
12/31/11
12/31/12
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M
12/31/11 1M
12/31/12 1M
3M
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M .3M
12/31/11 1M
12/31/12 1M
3M
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M .3M
12/31/11 1M .2M
12/31/12 1M
3M
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M .3M
12/31/11 1M .2M
12/31/12 1M .1M
3M
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M .3M 1.3M
12/31/11 1M .2M 1.2M

12/31/12 1M .1M 1.1M
3M
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M .3M 1.3M .8929
12/31/11 1M .2M 1.2M .7972

12/31/12 1M .1M 1.1M .7118
3M
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M .3M 1.3M .8929 1,160,770
12/31/11 1M .2M 1.2M .7972

12/31/12 1M .1M 1.1M .7118
3M
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M .3M 1.3M .8929 1,160,770
12/31/11 1M .2M 1.2M .7972 956,640

12/31/12 1M .1M 1.1M .7118
3M
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M .3M 1.3M .8929 1,160,770
12/31/11 1M .2M 1.2M .7972 956,640

12/31/12 1M .1M 1.1M .7118 782,980
3M
Situation
Situation No.
No. 4
4
10% 12%
12/31/10 1M .3M 1.3M .8929 1,160,770
12/31/11 1M .2M 1.2M .7972 956,640

12/31/12 1M .1M 1.1M .7118 782,980
3M 2,900,390
Problem
Problem No.
No. 2
2
Investments in Bonds
Classification Summary
Nature/Purpose Classification
Not quoted
Not quoted L&R or AFS
Quoted
Quoted TS, AFS, or HTM

To be sold immediately
To be sold immediately TS
To be held to maturity
To be held to maturity HTM

To be held indefinitely
To be held indefinitely AFS

To be held indefinitely AFS

Financial Assets
Measurement Summary
Category Initial Sub- Change in
sequent FV
FA @ FVTPL FV FV P/L
AFS FV + TC FV/Cost/AC Equity

(OCI)
HTM FV + TC AC Ignore
L&R FV + TC AC Ignore
Requirement
Requirement A
A (1)
(1)
Trading
Trading securities P874,164
Commission expense 50,000
Cash P924,164
Available-for-sale
AFS securities P924,164
Cash P924,164
Held-to-maturity
HTM securities P924,164
Cash P924,164
Requirement
Requirement A
A (2)
(2)
Trading
Interest receivable (P1M x .08) P80,000
Interest income P80,000
Available-for-sale
Same entry
Held-to-maturity
Same entry
Requirement
Requirement A
A (3)
(3)
Trading
No entry
Available-for-sale
AFS securities P ?
Interest income P ?
Held-to-maturity
HTM securities P ?
Interest income P ?
Effective
Effective interest
interest rate
rate (10%)
(10%)
PV of Principal
(P1M x 0.6209) P620,900
PV of Interest
(P1M x .08 x 3.7908) 303,264
CA of financial asset P924,164
Original
Original Amortization
Amortization Schedule
Schedule
Date EI NI Disc. A.C.

(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
12/31/14 98,212 80,000 18,212 1,000,000
Requirement
Requirement A
A (3)
(3)
Trading
No entry
Available-for-sale
Held-to-maturity
HTM securities P12,416
Requirement
Requirement A
A (4)
(4)
Trading
FV adj. (P980,000 – P874,164) = P105,836
FV adj. gain– TS (P/L) P105,836
Available-for-sale
FV adj. (P980,000 – P936,580) = P43,420
AFS securities P 43,420

FV adj. G/L– AFS (OCI) P 43,420
Held-to-maturity
No entry
Requirement B
Subsequent CA,
Category Measurement 12/31/10
TS FV
AFS FV/Cost/AC
HTM AC
Requirement B
Subsequent CA,
TS FV P980,000
AFS FV/Cost/AC
HTM AC
Requirement B
Subsequent CA,
TS FV P980,000
AFS FV/Cost/AC P980,000
HTM AC
Requirement B
Subsequent CA,
TS FV P980,000
AFS FV/Cost/AC P980,000
HTM AC P936,580
Computation of Gain or
Loss on Derecognition
Consideration received
or receivable xx
Less: Carrying amount xx
Unrealized loss-equity xx
Unrealized gain-equity (xx) xx
Gain (loss) xx(xx)
Requirement
Requirement C
C
Trading
Sales proceeds (P1M x .99) P990,000
Less CA 980,000
Gain on sale of TS P 10,000
Sales proceeds (P1M x .99) P 990,000

Accrued interest (P1M x .08) 80,000
Total proceeds P1,070,000
Cash P1,070,000
Interest income 80,000
Gain on sale of TS 10,000
Requirement
Requirement C
C
Available-for-sale
Original
Schedule

(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
12/31/14 98,212 80,000 18,212 1,000,000
Requirement
Requirement C
C
Available-for-sale

FV, 12/31/11 P990,000

Less CA before FV adj.
FV, 12/31/10 P980,000
Amortization – 2011 13,658 993,658
Increase (Decrease) (P 3,658)
FV adj. G/L–AFS (OCI) P3,658

Requirement
Requirement C
C
Available-for-sale
Proceeds, net P990,000
Less:
CA P990,000
U.G.-Equity ( 39,762) 950,238
Gain on sale of AFS P 39,762
Cash P1,070,000
FV adj. G/L- AFS 39,762
Gain on sale of AFS 39,762
Requirement
Requirement C
C
Held-to-Maturity
HTMS P13,658
Sales proceeds (P1M x .99) P990,000

Less CA 950,238
Gain on sale of HTMS P 39,762
Cash P1,070,000
HTMS P950,238
Gain on sale of HTMS 39,762
Reclassifications Summary
Transfer Permitted? FV - CA
Into and out of Generally, n/a

FA @ FV TPL NO
Into and out of L&R Generally, n/a
NO
HTM to AFS YES, OCI
sometimes (Equity)
required
AFS to HTM YES, but rare Equity
Requirement
Requirement D
D (HTM
(HTM to
to AFS)
AFS)
Discount amortization
HTMS P13,658
Reclassification
AFS (P1M x .99) P990,000
HTMS P950,238
FV adj. G/L– AFS 39,762
Requirement
Requirement E
E (AFS
(AFS to
to HTM)
HTM)
AFS Securities
FV adjustment G/L– AFS

AFS Securities
12/31/10 980,000

AFS Securities
12/31/10 980,000

43,420 12/31/10
Original
Schedule

(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
12/31/14 98,212 80,000 18,212 1,000,000
AFS Securities
12/31/10 980,000
Amort.-2011 13,658

43,420 12/31/10
AFS Securities
12/31/10 980,000
Amort.-2011 13,658
12/31/11 990,000

43,420 12/31/10
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000

43,420 12/31/10
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000

FV adj.-2011 3,658 43,420 12/31/10
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000

FV adj.-2011 3,658 43,420 12/31/10
39,762 12/31/11
Original
Schedule

(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
12/31/14 98,212 80,000 18,212 1,000,000
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000
Amort.-2012 15,024

FV adj.-2011 3,658 43,420 12/31/10
39,762 12/31/11
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000
Amort.-2012 15,024
12/31/12 985,000

FV adj.-2011 3,658 43,420 12/31/10
39,762 12/31/11
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000 20,024 FV adj.-2012
Amort.-2012 15,024
12/31/12 985,000

FV adj.-2011 3,658 43,420 12/31/10
39,762 12/31/11
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000 20,024 FV adj.-2012
Amort.-2012 15,024
12/31/12 985,000

FV adj.-2011 3,658 43,420 12/31/10
FV adj.-2012 20,024 39,762 12/31/11
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000 20,024 FV adj.-2012
Amort.-2012 15,024
12/31/12 985,000 985,000 Reclass

FV adj.-2011 3,658 43,420 12/31/10
FV adj.-2012 20,024 39,762 12/31/11
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000 20,024 FV adj.-2012
Amort.-2012 15,024
12/31/12 985,000 985,000 Reclass

FV adj.-2011 3,658 43,420 12/31/10
FV adj.-2012 20,024 39,762 12/31/11
AFS Securities
12/31/10 980,000 3,658 FV adj.-2011
Amort.-2011 13,658
12/31/11 990,000 20,024 FV adj.-2012
Amort.-2012 15,024
12/31/12 985,000 985,000 Reclass

FV adj.-2011 3,658 43,420 12/31/10
FV adj.-2012 20,024 39,762 12/31/11
19,738 12/31/12
Original
Schedule
(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
12/31/14 98,212 80,000 18,212 1,000,000
Original
Schedule
(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
12/31/14 98,212 80,000 18,212 1,000,000
Revised
Revised Amortization
Schedule
(8.85%) (8%) Amort.
12/31/12 985,000
12/31/13 87,173 80,000 7,173 992,173
12/31/14 87,827 80,000 7,827 1,000,000
Computation
Computation of
of Revised
Revised EIR
EIR
PV of Cash Flows @ 8%
Equal to face value P1,000,000
PV of Cash Flows @ 9%
PV of P (P1M x 0.8417) P 841,700
PV of I (P1M x .08 x 1.7591) 141,016
P 982,428
PV @ 8% less PV @ x% P 15,000
/ PV @ 8% less PV @ 9% P 17,572
0.85
Revised
Revised EIR
EIR (8.85%)
(8.85%)
PV of Principal
(P1M x 0.8440) P844,000
PV of Interest
(P1M x .08 x 1.7627) 141,016
CA of financial asset P985,016
Requirement
Requirement E
E (AFS
(AFS to
to HTM)
HTM)
b) Accrual of interest
Interest receivable P80,000
c) Discount amortization
Original
Schedule
(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
12/31/14 98,212 80,000 18,212 1,000,000
Revised
Schedule
(8.85%) (8%) Amort.
12/31/12 985,000
12/31/13 87,173 80,000 7,173 992,173
12/31/14 87,827 80,000 7,827 1,000,000
Requirement
Requirement E
E (AFS
(AFS to
to HTM)
HTM)
HTMS P7,173
d) Unrealized gain amortization

Original
Schedule
(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
Remaining
12/31/13 discount
96,526 – original
80,000 16,526 981,788
12/31/14
(P1M 98,212 80,000
- P965,262) 18,212
P34,738 1,000,000
Revised
Amortization
Remaining Schedule
Schedule
discount – revised
(P1M – P985,000) 15,000
Difference P19,738
(8.85%) (8%) Amort.
12/31/12 985,000
12/31/13 87,173 80,000 7,173 992,173
12/31/14 87,827 80,000 7,827 1,000,000
Original
Schedule
(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
Discount amort.–80,000
12/31/14 98,212 original 18,212 P16,526
1,000,000
Revised
Revised
Discount Amortization
Amortization
amort.– revised Schedule
Schedule 7,173
Amortization
Date EI
of FVNI
adj. Disc.
P 9,353
A.C.
(8.85%) (8%) Amort.
12/31/12 985,000
12/31/13 87,173 80,000 7,173 992,173
12/31/14 87,827 80,000 7,827 1,000,000
Requirement
Requirement E
E (AFS
(AFS to
to HTM)
HTM)
HTMS P7,173
d) Unrealized gain amortization

FV adj. G/L– AFS P9,353
Original
Schedule
(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
12/31/14 98,212 80,000 18,212 1,000,000
Revised
Schedule
(8.85%) (8%) Amort.
12/31/12 985,000
12/31/13 87,173 80,000 7,173 992,173
12/31/14 87,827 80,000 7,827 1,000,000
Possible
Possible Questions
Questions
1) Interest income P 96,526
2) CA of investment ?
Original
Schedule
(10%) (8%) Amort.
1/1/10 924,164
12/31/10 92,416 80,000 12,416 936,580
12/31/11 93,658 80,000 13,658 950,238
12/31/12 95,024 80,000 15,024 965,262
12/31/13 96,526 80,000 16,526 981,788
12/31/14 98,212 80,000 18,212 1,000,000
Revised
Schedule
(8.85%) (8%) Amort.
12/31/12 985,000
12/31/13 87,173 80,000 7,173 992,173
12/31/14 87,827 80,000 7,827 1,000,000
Possible
Possible Questions
Questions
2) CA of investment P992,173
3) FV adjustment G/L ?
FV adj.-2011 3,658 43,420 12/31/10
FV adj.-2012 20,024 39,762 12/31/11
19,738 12/31/12
FV adj.-2011 3,658 43,420 12/31/10
FV adj.-2012 20,024 39,762 12/31/11
Amort.-2013 9,353 19,738 12/31/12
FV adj.-2011 3,658 43,420 12/31/10
FV adj.-2012 20,024 39,762 12/31/11
Amort.-2013 9,353 19,738 12/31/12
12/31/13
FV adj.-2011 3,658 43,420 12/31/10
FV adj.-2012 20,024 39,762 12/31/11
Amort.-2013 9,353 19,738 12/31/12
10,385 12/31/13
Possible
Possible Questions
Questions
2) CA of investment P992,173
3) FV adjustment G/L P 10,385

- MULTIPLE CHOICE
PROBLEMS -
A B C D
Problem
Problem No.
No. 1
1 (MC)
(MC)
Purchase price P905,000
Accrued interest
(P1M x .08 x 3/12) ( 20,000)
Initial CA of TS P885,000
FV, 12/31/10 P920,000

CA ( 885,000)
FV adjustment gain - TS P 35,000
Answer is letter A
Problem
Problem No.
No. 2
2 (MC)
(MC)
Total proceeds P950,000
Accrued interest
(P1M x .08 x 3/12) ( 20,000)
Proceeds, net 930,000
CA of TS (previous FV) ( 920,000)
Gain from sale of TS P 10,000
Answer is letter C
Problem
Problem No.
No. 3
3 (MC)
(MC)
FV, 12/31/10
(P1M x 1.03) P1,030,000
Amortized cost ( ?)
Problem
Problem No.
No. 3
3 (MC)
(MC)
Date NI EI Premium A.C.
(10%) (8%) Amort.
Problem
Problem No.
No. 3
3 (MC)
(MC)
(10%) (8%) Amort.
1/1/10
Problem
Problem No.
No. 3
3 (MC)
(MC)
(10%) (8%) Amort.
1/1/10 1,051,510
Problem
Problem No.
No. 3
3 (MC)
(MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10
Problem
Problem No.
No. 3
3 (MC)
(MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10 100,000
Problem
Problem No.
No. 3
3 (MC)
(MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10 100,000 84,121
Problem
Problem No.
No. 3
3 (MC)
(MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10 100,000 84,121 15,879
Problem
Problem No.
No. 3
3 (MC)
(MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10 100,000 84,121 15,879 1,035,631
FV, 12/31/10
(P1M x 1.03) P1,030,000
Amortized cost ( 1,035,631)
FV adj. G/L balance, 12/31/10 (P 5,631)
Answer is letter C
Problem No. 4 (MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10 100,000 84,121 15,879 1,035,631
12/31/11
Problem No. 4 (MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10 100,000 84,121 15,879 1,035,631
12/31/11 100,000
Problem No. 4 (MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10 100,000 84,121 15,879 1,035,631
12/31/11 100,000 82,850
Problem No. 4 (MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10 100,000 84,121 15,879 1,035,631
12/31/11 100,000 82,850 17,150
Problem
Problem No.
No. 4
4 (MC)
(MC)
(10%) (8%) Amort.
1/1/10 1,051,510
12/31/10 100,000 84,121 15,879 1,035,631
12/31/11 100,000 82,850 17,150 1,018,481
Sales proceeds
(P1M x 1.05) P1,050,000
Amortized cost ( 1,018,481)
Gain on sale of AFS P 31,519
Answer is letter A
Problem
Problem No.
No. 5
5&&6
6
Impairment
Impairment of
of
Financial
Financial Assets
Assets
Financial Assets
Impairment Summary
Measure Loss Reversal
ment computation
FVTPL n/a n/a

AC CA – PV of CF P/L, subject to
(Use orig. EIR) limit
Cost CA – PV of CF Not allowed
(Use prev. IR)
FVTE (AFS) Cost - FV OCI (Equity);
-Equity prohibited in P/L
FVTE (AFS) AC - FV P/L (equal to
-Debt IL); excess OCI
(Equity)
Problem
Problem No.
No. 5
5 (MC)
(MC)
December 31, 2009
FV adj. G/L– AFS (OCI) P100,000
December 31, 2010

Loss on imp. of AFS (P/L) P300,000
FV adj. G/L– AFS (OCI) 100,000
Answer is letter A
Problem
Problem No.
No. 6
6 (MC)
(MC)
December 31, 2011

Reversal of IL on AFS (P/L) P300,000
FV adj. G/L– AFS (OCI) 100,000
Answer is letter A
Problem
Problem No.
No. 7
7 (MC)
(MC)
CA, 4/1/10
(P1,985,000 – P45,000) P1,940,000
Discount amortization
(P60,000 x 7/15) 28,000
CA, 10/31/10 P1,968,000
Answer is letter B
Problem
Problem No.
No. 8
8 (MC)
(MC)
Assuming that the face value is P10M:
Sales proceeds
(P10M + P2M) P12.0M
Amortized cost
(P10M – P3.5M) ( 6.5M)
Gain on sale P 5.5M
Answer is letter B
Problem
Problem No.
No. 9
9 (MC)
(MC)
PV of P (P1M x 0.7118) P711,800
PV of I (P1M x .1 x 2.4018) 240,180
Amortized cost, 12/31/10 P951,980
Sales proceeds (P500T x 1.01) P505,000

Amort. cost (P951,980 x ½) 475,990
Gain on sale of investment P 29,010
Answer is letter B
Tainting
Tainting Provision
Provision
An entity shall not classify any
financial assets as held to
maturity if the entity has,
during the current financial
year or during the two
preceding financial years, sold
or reclassified more than an
insignificant amount of held-to-
maturity investments before
maturity (more than
insignificant in relation to the
total amount of held-to-
maturity investments).
Tainting
Tainting Provision
Provision -- Exceptions
Exceptions
Sales or reclassifications that:
• are so close to maturity or the financial
asset’s call date (for example, less than
three months before maturity) that
changes in the market rate of interest
would not have a significant effect on the
financial asset’s fair value;
• occur after the entity has collected
substantially all of the financial asset’s
original principal through scheduled
payments or prepayments; or
• are attributable to an isolated event that
is beyond the entity’s control, is non-
recurring and could not have been
reasonably anticipated by the entity.
Problem
Problem No.
No. 10
10 (MC)
(MC)
FV, 12/31/11 (P500T x 1.03) P515,000
Less amortized cost, 12/31/11

PV of P (P500T x 0.7972) P398,600
PV of I (P500T x .1 x 1.6901) 84,505
P483,105
FV adj. G/L balance, 12/31/11 P 31,895
Answer is letter C
-now do the DIY drill-
DIY
DIY Drill
Drill Answers
Answers
1. A
2. B
3. C
4. A
5. B
 end of P1.920 
 end of P1.920 

Accounting For Investments in Debt Securities

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Accounting For Investments in Debt Securities

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Investments

12/31/10 1M .3M 1.3M

12/31/11 1M .2M 1.2M

12/31/10 1M .3M 1.3M .8929

12/31/11 1M .2M 1.2M .7972

12/31/10 1M .3M 1.3M .8929 1,160,770

12/31/11 1M .2M 1.2M .7972

12/31/10 1M .3M 1.3M .8929 1,160,770

12/31/11 1M .2M 1.2M .7972 956,640

12/31/10 1M .3M 1.3M .8929 1,160,770

12/31/11 1M .2M 1.2M .7972 956,640

12/31/10 1M .3M 1.3M .8929 1,160,770

12/31/11 1M .2M 1.2M .7972 956,640

Quoted TS, AFS, or HTM

Quoted TS, AFS, or HTM

Quoted TS, AFS, or HTM

Quoted TS, AFS, or HTM

Quoted TS, AFS, or HTM

To be held to maturity HTM

Quoted TS, AFS, or HTM

To be held to maturity HTM

Quoted TS, AFS, or HTM

To be held to maturity HTM

To be held indefinitely AFS

Quoted TS, AFS, or HTM

To be held to maturity HTM

To be held indefinitely AFS

AFS FV + TC FV/Cost/AC Equity

Date EI NI Disc. A.C.

AFS securities P 43,420

AFS FV/Cost/AC P980,000

AFS FV/Cost/AC P980,000

Sales proceeds (P1M x .99) P 990,000

Date EI NI Disc. A.C.

AFS securities P13,658

FV, 12/31/11 P990,000

FV adj. G/L–AFS (OCI) P3,658

Sales proceeds (P1M x .99) P990,000

Into and out of Generally, n/a

FV adjustment G/L– AFS

FV adjustment G/L– AFS

FV adjustment G/L– AFS

Date EI NI Disc. A.C.

FV adjustment G/L– AFS

FV adjustment G/L– AFS

FV adjustment G/L– AFS

FV adjustment G/L– AFS

FV adjustment G/L– AFS

Date EI NI Disc. A.C.

FV adjustment G/L– AFS

FV adjustment G/L– AFS

FV adjustment G/L– AFS

FV adjustment G/L– AFS

FV adjustment G/L– AFS

FV adjustment G/L– AFS

FV adjustment G/L– AFS

d) Unrealized gain amortization

d) Unrealized gain amortization

1) Interest income P 96,526

1) Interest income P 96,526

1) Interest income P 96,526

3) FV adjustment G/L P 10,385

FV, 12/31/10 P920,000