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Investment in equity securities additional problems

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Problem 1
On January 1, 2020, EFG Company purchased 40,000 shares of XYZ at P100 per share. The investment is
measured at fair value through other comprehensive income. Brokerage fees amounted to P120,000. A
P5 dividend per share of XYZ had been declared on December 15, 2019, to be paid on March 31, 2020 to
shareholders of record on January 31, 2020. No other transactions occurred in 2020 affecting the
investment in XYZ shares. What is the initial measurement of the investment?
Problem 2
During 2020, Lawan Company bought the shares of Canyon Company as follows:
June 1
20,000 shares @ P100
2,000,000
December 1
30,000 shares @ 120
3,600,000
5,600,000
The transactions for 2021 are:
January 10 Received cash dividend at P10 per share.
January 20 Received 20% bonus issue.
December 10 Sold 30,000 shares at P125 per share.
December 25 The shares of Canyon company were split for 5 for 3.
December 29 Received cash dividend of P2 for every 5 shares held.
The fair value of Canyon’s share on December 31, 2021 is 98 per share.
a. How much is the gain or loss on sale on December 10, 2021?
b. How much is the total dividend income to be recognized in Lawan’s 2021 profit and loss
statement?
c. How much is the total value of Lawan’s investment as of December 31, 2021?
d. How much is the total amount that should be recognized in Lawan’s 2021 profit and loss
statement?
e. How much unrealized gain or loss should be recognized in Lawan’s statement of financial
position as of December 31, 2021?

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Problem 1 On January 1, 2020, EFG Company purchased 40,000 shares of XYZ at P100 per share. The investment is measured at fair value through other comprehensive income. Brokerage fees amounted to P120,000. A P5 dividend per share of XYZ had been declared on December 15, 2019, to be paid on March 31, ...
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Really useful study material!

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