Question
CASE: (FVPL VS FVOCI) Araneta Corporation made the following cash purchases of securities during 2020, which is the first year in which Araneta invested in
CASE: (FVPL VS FVOCI)
Araneta Corporation made the following cash purchases of securities during 2020, which is the first year in which Araneta invested in securities.
On January 15, purchased 10,000 shares of Norman Companys common stock at P33.50 per share plus commission P1,980. The purpose of this investment is for trading.
On April 1, purchased 5,000 shares of Valentin Co.s common stock at P52.00 per share plus commission P3,370. This investment is considered available for sale.
Norman Company declared dividends on November 1, 2020 paid on December 1, 2020, P.75 per share. Valentin also declared dividends on November 15, 2020 to be paid on December 15, 2020, P1.25 per share.
At the end of December 31, 2020, Norman Companys market value of stock is P35 and Valentin market value of stock is P50.00.
Questions:
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What is the investment value to Araneta Company on January 15, 2020? How should the commission be recognized?
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What is the investment value to Valentin Co. on April 1, 2020? How should the commission be recognized?
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How should we treat the dividend income received from Norman and Valentin ?
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Auditing And Assurance Services
Authors: Timothy Louwers, Penelope Bagley, Allen Blay, Jerry Strawser, Jay Thibodeau
8th International Edition
1260570517, 978-1260570519
