Alg 2 (15-16) - Can help students PDF

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BOLO, KYLE FRANCINE J.Unrealized gain 350 000—AProblem 15-9 (Judicious Company) 180 000—BUnrealized loss in 2021 (300 000) Unrealized loss- Dec. 31, 2020 (200 000)CHAPTER 16Problem 16-1 (Acclaim Company) July 15 Cash 25 000 Dividend income 25 000 (5 000 shares x 5) Dec. 15 Memo- received 1 000 share...

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BOLO, KYLE FRANCINE J.

Aura

325 000

BSA 2B

Bora

200 000

Cara

400 000

CHAPTER 15

Total carrying amount- Dec. 31, 2020

925 000

Problem 15-1 (Template Company)

Fair value- Dec. 31, 2020

800 000

Decrease in fair value

125 000

1. Unrealized Loss- TS

60 000

Trading securities 2. Cash Loss on sale of trading securities

60 000 140 000

Problem 15-3 (Splendid Company)

20 000

Dec. 31, 2020

Trading securities 3. Trading Securities (680k – 610k)

160 000 70 000 70 000

Unrealized loss- OCI

Market

300 000

320 000

Dec. 31, 2021

360 000

Unrealized loss- TS

610 000

500 000 100 000

Financial asset- FVOCI

Carrying Amount

C Preference (2k x 180)310 000

500 000

Unrealized gain- TS (2.5M – 2M)

Unrealized gain- TS

A Ordinary (4k x 80)

Trading securities

680 000

100 000

300 000

Trading securities (2.5M – 2.2M) Unrealized loss- OCI

300 000

600 000

Financial asset- FVOCI

Problem 15-2 (Spark Company)

600 000

2020 Jan. 1 Trading Securities

1 450 000

Cash

1 450

000

Problem 15-4 (Transitory Company) Dec. 31, 2020 Unrealized loss- OCI

Dec. 31 Unrealized Loss- TS

200 000

Financial asset- FVOCI

Trading Securities

200 000

2021 375 000 325 000

Gain on sale of TS

50 000

375 000

Carrying amount sold (650k x ½)

325 000

Gain on sale

50 000

125 000

100 000

Financial asset – FVOCI (600k-500k) 2. Cash

100 000

2 100 000 Financial Asset- FVOCI

2M

Retained Earnings

100 000

Retained Earnings 125 000

50 000

Problem 15-5 (Aborigine Company) 1. Unrealized loss – OCI

Sale Price

Trading Securities

50 000

Unrealized loss- OCI

Trading Securities

Dec. 31 Unrealized Loss- TS

150 000

Dec. 31, 2021 Financial asset- FVOCI

Oct. 1 Cash

150 000

Unrealized loss- OCI

500 000 500 000

3. Unrealized loss- OCI

250 000

Financial Asset- FVOCI Carrying Amount XYZ

1 200 000

RST

200 000

Market 900 000

250 000

Security One

700 000

Market

Security Two

1 000 000

1 100 000

1 700 000

2 000 000

1 000 000 150 000

1 400 000

Carrying Amount

1 50 000

Total (1.4M- 1.15M- 250k)

4. Financial Asset- FVOCI Unrealized gain- OCI 1 500 000

1 600 000

Security Four

1 250 000

1 200 000

2 750 000

2 800 000

1 500 000

Market value

1 150 000

Cumulative Unrealized Loss

350 000

Unrealized loss per book

100 000

Problem 15-7 (Chaplain Company)

Increase in unrealized loss

250 000

Dec. 31, 2020 Unrealized loss- TS

Financial asset- FVOCI

2020 2 900 000

2. Unrealized loss- TS

100 000 100 000

Dec. 31, 2021

6 500 000

Trading securities

900 000

Unrealized gain- TS (5.5M- 4.6M)

500 000

Trading securities (2.9M- 2.4M) 500 000 3. Financial Asset- FVOCI

400 000

Unrealized gain- OCI

3 600 000

Cash

400 000

Trading securities

Problem 15-6 (Beneath Company)

Financial Asset at FVOCI

50 000

Security Three

Total cost (1M+ 500k)

1. Trading Securities

50 000

Financial asset- FVOCI

200 000

Unrealized gain- OCI (3.3M- 3.1M)

400 000

900 000

200 000

Unrealized gain- OCI (3.6M-4M) 400 000 Problem 15-8 (Haggard Company)

2021

Total market Value- Dec. 31, 2021

2 000 000

Trading securities (1/2 x 1.4M) 700 000

Total market value- - Dec. 31, 2020

1 650 000

Gain on sale of TS

Unrealized gain

350 000—A

1. Cash

1 000 000

2. Cash

300 000 1 300 000

Financial asset- FVOCI (2.5M x 1/2) 1 250 000

Problem 15-9 (Judicious Company)

Retained earnings

180 000—B

50 000

Unrealized gain- OCI (500k x ½) 250 000 Retained earnings 3. Trading Securities

250 000 300 000

Unrealized gain- TS (2m-1.7M) 300 000

Problem 15-10 (Knickknack Company) Total market value- Dec. 31, 2021

4 500 000

Total market value- Dec. 31, 2020

4 800 000

Unrealized loss in 2021

(300 000)

Unrealized loss- Dec. 31, 2020

(200 000)

Total unrealized loss- Dec. 31, 2021

500 000—A

Problem 15-11 (Manifold Company)

4.

(360 000 – 320 000)= 40 000—C

5.

Problem 15-12 (Nightmare Company)

Problem 15-17

Unrealized losses

260 000

1.

Unrealized gains

40 000

2.

Net unrealized loss- Dec. 31, 2020

220 000—B

3. 4. 5.

Problem 15-13 (Opulence Company) Sale price

1 450 000

Less: carrying amount of B

1 550 000

Loss on sale debited to retained earnings (100 000)—B Cash

1 450 000

Retained earnings

100 000

Financial asset- FVOCI Retained earnings

1 550 000 150 000

Unrealized loss- OCI

150 000

Problem 15-14 (Jerome Company) 0—D

Problem 15-15 (Lagoon Company) Sales price of Security B

1 100 000

C/A of Security B- 12/31/20

1 600 000

Loss on sale of trading securities

(500 000)

Market value of Security A- 12/31/21

600 000

Market value of Security A- 12/31/20

1 000 000

Unrealized loss on TS in 2021

(400 000)

Total loss (500 000- 400 000)

(900 000)—C

Problem 15-16 1. 2. 3.

CHAPTER 16

Problem 16-3 (Effective Company)

Problem 16-1 (Acclaim Company)

1. Investment in ANA ord. shares

July 15 Cash

Cash

25 000 Dividend income

300 000

2. Investment in Benguet Ord. shares

25 000

120 000

Dividend Income (2k x 60)

(5 000 shares x 5) Dec. 15 Memo- received 1 000 shares representing 20% stock dividend on 5 000 original shares held Dec. 28 Cash (3k shares x 60)

300 000

180 000

3. Investment in ANA ord. shares

120 000 420 000

Cash

420 000

4. Cash

Investment in shares

133 000

Gain on sale of inv’t.

47 000

60 000 Dividend income

60 000

(12% x 200= 24 x 5k x ½) 5. Memo- Received 20 000 new ANA ord. shares as

Lot No. 1 (2 400 shares)

100 000

Lot No. 2 (600/3600 x 198 000)

33 000

Cost of investment sold

133 000

as a result of a 2 for 1 split of 10k orig. shares 6. Cash (680k- 34k)

646 000

Inv. in ANA ord. shares

288 000

(8k/20k x 720k) Problem 16-2 (Distraught Company) 1. Investment in Aye ordinary

Gain on sale of investment

2 000 000

Shares

shares (40 000 x 50) Cash

2 000 000

2. Memo- Received 200 000 Aye Ordinary shares as a result of 5 for 1 split of 40 000 original shares

Cost

SMC Preference Shares

5 000

1 200 000

Benguet ord. share

10 000

1 000 000

Benguet ord. share

2 000

120 000

ANA ordinary share

12 000

432 000

29 000

2 752 000

3. Investment in Aye preference shares

358 000

125 000

Inv. In Aye ordinary shares

Problem 16-4 (Viable Company)

125 000

Market Value Fraction Cost Ordinary shares (200k x 15)

3M

30/32 1.875M

Pref. Shares (20k x 10)

200k

2/32

125k

3.2M 4. Inv. in Bee ord. shares Dividend Income

2M

300 000

Inv. in Aye ord. shares

750 000

Gain on sale of inv’t.

450 000

1 800 000

2. 10 000 rights 3. Initial measurement of rights (10k x 10)

100 000

100 000

Investment in shares 5. Investment in shares

1 200 000

1 800 000

Cash

4. Share rights

300 000

(200k/4=50k x 6) 5. Cash (80 000 x 15)

1. Investment in shares

100 000 400 000

Cash (10k/5=2k x 150)

300 000

Share rights

100 000

6. Cash (10k x 15)

150 000

Share rights

100 000

Gain on sale of rights

50 000

7. Loss on share rights

100 000

Problem 16-7 (Earth Company)

Share rights

100 000

1. Investment in shares

3 200 000

Cash

3 200 000

2. memo- Received 20 000 shares as share dividend

Problem 16-5 (Vivacious Company) 1.

on 80 000 orig. shares. Shares now held, 100k

Theoretical value=

125- 100

= 5.00 per right

3. Cash (100k x 5)

4+1

500 000

Dividend income

a. Share rights (25k x 5)

125 000

4. Share rights (100k x 5)

Investment in shares

125 000

b. Investment in shares

750 000

500 000 500 000

Investment in shares 5. Cash (40k x 7)

500 000 280 000

Share rights

125 000

Share rights (40k x 5)

200 000

Cash (25k/4=6250 x 100)

625 000

Gain on sale of rights

80 000

2.

6. Investment in shares

Theoretical value=

125- 100

= 6.25 per right

4 a. Share rights (25k x 6.25)

156 250

Investment in shares b. Investment in shares

Share rights (60k x 5)

300 000

Cash (60k/5= 12k x 30)

360 000

7. Cash (80k x 35) 156 250

2 160 000

(80k/100k x 2.7M)

Share rights

156 250

Cash

625 000

Problem 16-6 (Moon Company)

Gain on sale of investment

640 000

Shares

Cost

Original acquisition

20 000

540 000

New acquisition

12 000

660 000

32 000

1 100 000

400 000

Investment in shares

2 800 000

Investment in shares

781 250

1. Share rights (40 000 x 10)

660 000

400 000

2. Investment in shares

1 500 000

Share rights (30k x 10)

300 000

Cash (15k shares x 80)

1 200 000

3. Cash (6k x 12)

Problem 16-8 (Benevolent Company) 2020 Aug. 1 investment in shares

72 000

Cash

Share rights (6k x 10)

60 000

Gain on sale of rights

12 000

4. Loss on stock rights (4k x 10)

40 000

Share rights

Oct. 1 Investment in shares

60 000 560 000

Cash

560 000

2021 40 000

Shares

60 000

July 1

Investment in shares

480 000

Cash

Cost

480 000

First Acquisition (3M- 400k)

40 000

2 600 000

New acquisition

15 000

1 500 000

Investment in shares

340 000

55 000

4 100 000

Gain on sale of investment

160 000

Aug. 1 cash

500 000

Dec. 1 Cash (66k shares x 5)

2022 Feb. 1 Received 5 500 shares representing 50% share dividend on 10 000 remaining shares held. Shares now held, 15 000. Nov. 1 Share rights

Dividend income Dec. 15 cash (10k shares x 30)

330 000 300 000

Investment in Queen Comp.

150 000

Investment in shares

60 000

Lot 3- 9 000 rights (9k x 10)

90 000

Cost of rights received

150 000

110 000

(10k/60k x 660k)

150 000

Lot 2- 6 000 rights (6k x 10)

Dec. 1 cash (15k x 15)

330 000

Gain on sale of investment

190 000

Summary of Investments

Shares

Cost

King Comp. Shares

10 000

700 000

Block 1

50 000

550 000

Block 2

6 000

120 000

Princess comp. shares

10 000

500 000

76 000

1 870 000

Queen Comp. shares

225 000

Share rights

150 000

Gain on sale of share rights

75 000

Summary of investments

Shares

Cost

Lot 2 (280k – 60k)

6 000

220 000

Lot 3 (480k – 90k)

9 000

390 000

Total

15 000

610 000

Problem 16-10 (Maxim Company) Original shares on Oct.1

40 000

Stock dividend on Nov. 30 (10%)4 000 Problem 16-9 (Dearth Company) Jan. 2 Investment in King Comp.

700 000

Cash Mar. 1 Investment in Queen Comp.

700 000

660 000 50 000

Dividend Income July 1

50 000

Received 2 000 shares representing 20% share dividend on 10 000 Queen Company shares originally held. Shares now held, 12 000.

Aug. 1 Investment in Princess Comp.

500 000

Oct. 1 Received 60 000 new shares of Queen Company as a result of a 5 for 1 split of 12 000 original shares. 50 000

Dividend income

50 000

Oct. 31 Memo- Received 60 000 stock rights from Queen Company to subscribe for one new share at P20 for every 10 rights held. Nov. 15 Investment in Queen Comp. Cash (6k shares x 20)

Shares sold on Dec. 31

(4 000)

Balance

40 000

Sales price

1 000 000

Cost of shares sold (4k/44k x 6.6M)

(600 000)

Gain on sale

400 000—B

Problem 16-11 (Presumptuous Company) Cash dividend (10% x 500k)

50 000—D

500 000

Cash

Cash (10k x 5)

44 000

660 000

Cash Apr. 1 Cash (10k x 5)

Total shares

120 000 120 000

Problem 16-12 (Reminiscent Company) 1.

June 1

Dec. 1

Original shares

20 000

30 000

Share dividend- 20%

4 000

6 000

Total shares

24 000

36 000

Sales price (30k x 125)

3 750 000

Problem 16-16 (Animosity Company)

Cost of shares sold:

Shares

From June 1- 24k shares2 000 000 From Dec. 1- 6k shares

600 000

2 600 000

(6k/36k x 3.6M)

Cost

Original investment

50 000

3 800 000

New investment acquired

50 000

4 000 000

through stock rights (50 000 x 80)

Gain on sale

A--1 150 000

2. Average Approach

Total

100 000

7 800 000

FIFO Approach

Sale price

3 750 000

Sales price (25k x 90)

2 250 000

Cost of share sold (30k/60k x 5.6M)

2 800 000

Cost of shares sold (25k/50k x 3.8M)

1 900 000

Gain on sale

950 000—A

Gain on sale

A—350 000

Average Approach 3.

Sales price

2 250 000

Dividend income (50k x 10)

500 000

Cost of shares sold (25k/100k x 7.8M)

1 950 000

Gain on sale of investment- FIFO

1 150 000

Gain on sale

300 000

Total income from investment

1 650 000—A

Problem 16-13 (Scoundrel Company) 1. Cost of rights (100k x 6)

600 000—D

2. Cash payment (20 000 x 90)

1 800 000

Cost of rights exercised

600 000

Total cost of new investment

2 400 000—D

Problem 16-14 (Temporal Company) Initial cost of rights (50k x 20)

1 000 000

Cash paid for new shares (25k x 90)

2 250 000

Total cost of new shares

3 250 000—B

Problem 16-15 (Haste Company) Total cost of rights (60k x 5)

300 000

10 000 shares x 5 rights

30 000 rights

Cash paid (10k x 80)

800 000

Cost of rights exercised (50k x 5)250 000 Total cost of 900 shares

1 050 000—B...