PROBLEM 4.Shares Receivable in Lieu of Cash Dividends

On October 1,2021, Venus Corp owns15,000 fair value through other comprehensive income share acquired at a cost of P 345,000.The shares represent 15% of the shares outstanding of Mercury Corporation. On the same date, Mercury Corp, declared P 8 cash dividends on its outstanding shares payable to stock holder on October 31. However, on October 31, Mercury Corp issued 1 share for every 5 shares held by the shareholders in lieu of the supposed cash dividends previously declared.

Requirements:

1.Based on the above data, compute for the dividend income to be recognized in 2021

2.Make all the necessary entries on

a.October 1, 2021

b.October 31, 2021

PROBLEM 5. Stock Split and Special Assessment

On January 1 of the current year, Phobos Company acquired 10,000 shares of Investment in equity designated as a Fair Value through Other Comprehensive Income of Deimos Company at P 400,000 plus brokerage expenses of P 20,000. On March 1 of the current year, Deimos Company ordinary share was split on a 5 for 2 basis. On October 1, Deimos Company made a Special assessment of P 3.20 per share on all ordinary shareholder. Phobos Company accordingly paid the assessment. The fair value of December 31 amounted to P 30 per share:

Questions:

Based on the above data answer the following:

1.The total number of shares at the end of the year

a.Nil c. 300,000

b.140,000d. 25,000

2.The unrealized gain to be presented in the other comprehensive income for the current year:

a.Nil c. 300,000

b.140,000d. 250,000

3.The necessary entries on January 1, will include a

a.Debit to financial asset at FVTOCI, P 400,000

b.Debit to financial asset to FVTOCI, P 420,000

c.Credit to cash, P 400,000

d.No journal entry

4.The necessary entries on December 31, will include a

a.Debit to financial asset at FVTOCI, P 400,000

b.Debit to financial asset at FVTOCI, P 300,000

c.Credit to Unrealized gain, P 250,000

d.Credit to Unrealized gain, P 140,000

PROBLEM 6. Stock Rights

On June 15, 2021 Mars Company owns 10,000 shares with a cost P 700,000 of Moon Company's stocks. During the same period, Moon Company right to existing shareholder. Mars received 10,000 stock rights entitling him to purchase 5,000 new shares at P 80. The ordinary share was trading ex rights. On July 15,2021 mars exercised all the stocks rights. The share is quoted right on at P90.

Question:

Based on the above data, answer the following:

1.Assuming that the above securities are FVTPL, the stock rights should be initially recognized at

a.Nil c. P100,000

b.P200,000d. None of the choices

2.Assuming that the above securities are FVTOCI, the stocks rights should be initially recognized at

a.Nil c. P100,000

b.P200,000d. None of the choices

3.Assuming that the above securities are FVTPL, the cost of the investment acquired through exercised of stocks rights should be

a.Nil c. P600,000

b.P400,000d. None of the choices

1.Assuming that the above securities are FVTOCI, the cost of the investment acquired through exercised of stocks rights should be

a.Nil c. P600,000

b.P400,000d. None of the choices