Question
BUKIDNON CORP. has a policy of investing idle cash in equity securities. It has made periodic investments in its principal supplier, Nocon Company. Bukidnon currently
BUKIDNON CORP. has a policy of investing idle cash in equity securities. It has made periodic
investments in its principal supplier, Nocon Company. Bukidnon currently owns 12% of Nocon's
outstanding ordinary shares.
Cherry Kosme, Bukidnon's assistant controller, has gathered the following information about
the company's investments in equity securities.
a. Bukidnon has trading equity investment in Delta Corp. and Polygon company. During
2012, Bukidnon purchased 100,000 shares of Delta Cop. For P4,200,000; these shares
have a fair value of P4,800,000 at December 31, 2012. The investment in Polygon
consists of 50,000 shares acquired in March 2012 at P50 per share and currently has a
value of P2,160,000.
b. Bukidnon's 12% ownership on Nocon Company has a fair value of P66,675,000 on
December 31, 2012. On initial recognition, bukidnon made an irrevocable election to present in other comprehensive income subsequent changes in fair value of this investment in equity securities.The securities were purchased prior to 2012 for P67,500,000 and
was valued at P64,500,000 on December 31, 2011. Bukidnon has not changed its
holdings in the current year.
1. What amount of unrealized loss should be reported as component of other comprehensive
income on Bukidnon's December 31, 2011 statement of comprehensive income?
2. What is the cumulative unrealized gain/loss that should be shown on the statement of
changes in equity for the year ended December 31, 2012?
3. What amount of unrealized gain/loss should be reported on Bukidnon's income statement
for the year ended December 31, 2012?
4. What amount of unrealized gain/loss ahould be reported on Bukidnon's statement of comprehensive income for the year ended December 31,2012?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started