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Financial accounting. topic: investment in associates IFRS 28 Claret Corporation had the following transaction for the year 2019: January 1 Purchased 40,000 shares of ABC
Financial accounting. topic: investment in associates IFRS 28
Claret Corporation had the following transaction for the year 2019: January 1 Purchased 40,000 shares of ABC Co. at P22 per share plus transaction cost of P1 per share. This is designated as fair value through profit or loss. February 1 Purchased 20,000 shares of DEF at P15 per share plus transaction costs of P2 per share. This is designated as fair value through other comprehensive income. March 1 ABC declared a P2 cash dividend per share to all stockholders as of April 15, 2019. DEF declared a P3 cash dividend per share to all stockholders as of May 1, 2019 April 5 Sold 8,000 ABC shares for a total price of P240,000. April 20 Sold 5,000 DEF shares for a total price of P120,000 May 1 Received cash dividend from ABC Mai 15 Received cash dividend from DEF June 1 Received 20% bonus issue from ABC April 1 July 1 Received stock rights from ABC to purchase 1 share for P30 for every 10 rights exercised. August 1 Sold 25% of the stock rights for P2 per right September 1 Exercised 50% of the remaining rights when the fair market value of ABC share was P35. October 1 Remaining rights expired. December 31 Fair market value per share: P2S for ABC and P24 for DEF. The policy of transferring to retained earnings the cumulative balance in equity as a result of measuring certain type of investments to fair value when the investment is derecognized shall always be observed. Required: Compute for the following: 1. Gain or loss on sale of DEF shares 2. Gain or loss on sale of ABC shares 3. Amount to be recycled to retained Earnings 4. Unrealized gain/(loss) in the 2019 Statement of Financial Position 5. December 31, 2019 Fair value of the two equity securities Step by Step Solution
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