4. The company has provided you the following information with regard to its stock investment acquisition...
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4. The company has provided you the following information with regard to its stock investment acquisition in its initial year of operations: ABC Corp. DEF Inc. H&M Co. Number of Shares acquired 2,000 1,500 3,000 4,000 Acquisition cost P240,000 225,000 285,000 200,000 D&G Corp. Additional information a. ABC Corp. stocks were acquired on March 1, 2020 at a total cost of P200,000 plus brokerage fees and commissions to P40,000. Dividends which were declared on January 25, 2020 to stockholders as of March 20, 2020 were received on April 1, 2020 for P20,000. ABC Corp. stocks were equired by the company designating the same as a financial asset at fair value through profit or loss. The stocks were selling at P105 per share as of December 31, 2020. b. DEF Corp. were acquired on May 1, 2020 at P150 per share. The company paid brokerage and commissions amounting to P30,000. The company had neither significant influence over DEF Corp. nor does it intend to sell the stocks for short- term profits, thus designated the same at fair value through other comprehensive income. The company received a 20% stock dividend on October 11, 2020. The stocks were selling at P160 per share on December 31, 2020. C. H&M Co. stocks, which were acquired for trading purposes on June 1, 2020 at P285,000, were split 5 for 3 on August 15, 2020. In addition, the company paid special assessment on the investment at P25 per share owned on September 30. On December 30, 2020, when the shares had a market value of P75 per share, H&M declared a P5 dividend payable on January 25 of the subsequent period. d. D&G Corp. stocks were acquired on August 1, 2020 to be appropriately classified as financial assets at fair value through OCI. D&G Corp. declared a P15 cash dividends on its outstanding shares on October 11, 2020 payable to stockholders on October 31. However, on October 31, D&G Corp. issued 1 share for every 4 shares held by the stockholders in lieu of the supposed cash dividends previously declared. The stocks were selling at that time at P55 per share. D&G shares were selling at P60 per share on December 31, 2020. 1. Give the entries to account for the transactions of each investment at relevant dates. 2. How much should the investment in ABC Corp. stocks and DEF Inc. stocks, respectively, be initially recognized? 4. The company has provided you the following information with regard to its stock investment acquisition in its initial year of operations: ABC Corp. DEF Inc. H&M Co. Number of Shares acquired 2,000 1,500 3,000 4,000 Acquisition cost P240,000 225,000 285,000 200,000 D&G Corp. Additional information a. ABC Corp. stocks were acquired on March 1, 2020 at a total cost of P200,000 plus brokerage fees and commissions to P40,000. Dividends which were declared on January 25, 2020 to stockholders as of March 20, 2020 were received on April 1, 2020 for P20,000. ABC Corp. stocks were equired by the company designating the same as a financial asset at fair value through profit or loss. The stocks were selling at P105 per share as of December 31, 2020. b. DEF Corp. were acquired on May 1, 2020 at P150 per share. The company paid brokerage and commissions amounting to P30,000. The company had neither significant influence over DEF Corp. nor does it intend to sell the stocks for short- term profits, thus designated the same at fair value through other comprehensive income. The company received a 20% stock dividend on October 11, 2020. The stocks were selling at P160 per share on December 31, 2020. C. H&M Co. stocks, which were acquired for trading purposes on June 1, 2020 at P285,000, were split 5 for 3 on August 15, 2020. In addition, the company paid special assessment on the investment at P25 per share owned on September 30. On December 30, 2020, when the shares had a market value of P75 per share, H&M declared a P5 dividend payable on January 25 of the subsequent period. d. D&G Corp. stocks were acquired on August 1, 2020 to be appropriately classified as financial assets at fair value through OCI. D&G Corp. declared a P15 cash dividends on its outstanding shares on October 11, 2020 payable to stockholders on October 31. However, on October 31, D&G Corp. issued 1 share for every 4 shares held by the stockholders in lieu of the supposed cash dividends previously declared. The stocks were selling at that time at P55 per share. D&G shares were selling at P60 per share on December 31, 2020. 1. Give the entries to account for the transactions of each investment at relevant dates. 2. How much should the investment in ABC Corp. stocks and DEF Inc. stocks, respectively, be initially recognized?
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Answer 1 Entries to account for the transactions of each investment at relevant dates a ABC Corp Mar... View the full answer
Related Book For
Principles of managerial finance
ISBN: 978-0132479547
12th edition
Authors: Lawrence J Gitman, Chad J Zutter
Posted Date:
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