Please provide solutions for each item.
AICPA Adapted Nightmare Company provided the following information on December 31, 2020 regarding the portfolio of equity securities: Aggregate cost 1,?00000 Unreaized gain 40,000 Unreaized losses 250,000 Net realized gains during the cunent year 300,000 The equity investments are measured at fair value through other comprehensive income. On January 1, 2020, the entity reported unrealized loss of P 15,000 to reduce investment to market on a portfolio basis. In the December 31, 2020 statement of changes in equity, what amount of unrealized loss should he reported? A. P 250,0 00 B. P 20,0 00 C. P 205,0 00 D. P 0 AICPA Adapted During 2020, Opulence Company purchased marketable equity securities as short-tenn investment to be measured at fair value through other comprehensive income. The cost and market value on December 31, 2020 were: Security Cost Market A 1,000 shares 300,000 350,000 B 10,000 shares 1,?00,000 1,550,000 C 20,000 shares 3,150,0000 2,950,000 The entity sold 10,000 sh ares of B on January 5, 2021 for P 1,450,00 0. What total amount should be charged to retained earnings as a result of the sale of equity securities? A. P 200,0 00 B. P 100,0 00 C. P 250,0 00 D. P 50,0 00 AICPA Adapted Temporal Company owned 50,000 shares held for trading. These 50,000 shares were purchased for P 120 per share. During the year, the investee distributed 50,000 share rights to the investor. The investor was errtilled to buy one new share for P 90 cash and two of these ghts. Each share had a market value of P 130 and each right had a market value of P 20 on the date of Issue What total Dost should be reoorded for the new shares that are acquired by exercising the rights? A. P 2,2500 00 B. P 3,2500 00 C. P 3,0500 00 D. P 5,5000 00 4. PHILCPA Adapted Haste Company invested in shares of another entity. Year Number of Shares Cost 2018 20.000 shares P 2,000,000 2019 40,000 shares 3,500,000 In 2020, the entity received 60,000 rights to purchase one share at P 80 Five rights are required to purchase the share. At issuance date, rights had a market value of P 15 each. The entity used rights to purchase 10,000 additional shares of the investee and allowed the rights no exercised to lapse. What amount was debited to investment account for the purchase of the additional investment? . P 1,100,000 B. P 1,050,000 C. P 800,000 D. P 900,000 5. AICPA Adapted On April 1, 2020, August Company purchased 40% of the outstanding shares of an associate for P 4,000,000. On this date, the investee's net assets totaled P 8,000,000 and August Company cannot attribute the excess of cost of the investment over the equity in the investee's net assets to any particular factor. The investee reported net income of P 1,000,000 for the current year. What is the maximum amount which could be included in August Company's income before tax to reflect its "equity in earnings of the investee" for the current year? A. P 270,000 B. P 360,000 C. P 300,000 P 400,000 6. AICPA adapted Norm Company owned 20% of Love Company's preference share capital and 50% of the ordinary share capital. Love Company's share capital outstanding on December 31, 2020 is as follows: 10% cumulative preference share capital 2,000,000 Ordinary share capital 7,000,000 Love Company reported net income of P 5,000,000 for the year ended December 31, 2020. What amount should be reported as investment income for the year ended December 31, 2020? A. P 2,400,000 B. 2.500,000 C. P 2,600,000 D. P 2,700,0008. AICPA Adapted On January 1, 2020, Mega Company acquired 10% of the outstanding ordinary shares of Penny Company for P 4,000,000. The investment was appropriately accounted for under cost method. On January 1,2021, Mega gained the ability to exercise significant influence over financial and operating control of Penny by acquiring an additional 20% of Penny's outstanding ordinary shares for P 10,000,000. The fair value Penny's net assets equaled carrying amount. The fair value of the 10% interest in January 1, 2021 was P 6,000,000. For the years ended December 31, 2020 and 2021, the investee reported the following: 2019 2020 Dividends paid 2,000,000 3,000,000 Net income 6,000,000 6,500,000 What is the investment income in 2020? A. P 200,000 B. P 400,000 C. P 600,000 D. P 300,000 9. Using the same information in number (8), what is the investment income in 2021? A. P 1,300,000 B. P 1,950,000 C. P 1,000,000 D. P 1,900,000 10. Using the same information in number (8), what is the carrying amount of the investment in associate on December 31, 2021? A. P 16,000,000 B. P 17,050,000 C. P 15,050,000 D. P 16,700,000
