Problem 1:

During 2018, CMC Corporation purchased the following Financial Assets at Fair Value through other comprehensive income held as long-term investments, with their corresponding fair values at December 31, 2018

Securities Cost FM, 12/31/18

A Securities- 10,000 shares P1,000,000 P1,300,000

B Securities- 20,000 shares 2,200,000 2,500,000

C Securities- 25,000 shares 2,000,000 1,800,000

During the year 2019, the company sold 10,000 shares of A securities for P1,500,000 and acquired D Securities and E Securities. On December 31, 2020, CMCs portfolio securities comprised the following;

Securities Cost FM, 12/31/19

B Securities- 20,000 shares 2,200,000 2,300,000

C Securities- 25,000 shares 2,000,000 2,500,000

D Securities- 15,000 shares 3,000,000 3,300,000

E Securities- 12,000 shares 2,400,000 2,600,000

During the year 2020, the company sold the B and C Securities for P5,000,000. On December 31, 2020 the CMCs portfolio securities consisted of the following: D Securities 15,000 shares with fair value of P3,200,000 and E Securities 12,000 shares with a fair value of P3,000,000.

Required:

1. Journal entries for the year 2018, 2019 and 2020.

2. What amount should be reported on CMCs financial statement?

Carrying Amount Unrealized Gain (Loss)

12/31/18 __________________ ___________________

12/31/19 __________________ ___________________

12/31/20 __________________ ___________________

3. How much is the realized gain or loss on the sale of securities in the year 2019?____________________

4. What amount shall be reported on CMCs 2020 income statement as realized gain or loss on the sale of securities?______________________