The following information was obtained in an audit of the equity and debt investment portfolio account, carried at fair value through other comprehensive income, of Matthew Corporation as of December 31, 2022: Investee Company -

Shares Cost Fair value John Enterprises* 100,000 P4,850,000 P5,050,000 Joseph Corporation* 125,000 5,900,000 5,725,000

*non-trading equity instruments

Face value Cost Fair value Nathan, Inc.** P140,000 P147,000 P136,500 ** business model based on realizing fair value changes

Transactions during the 2022 audit disclosed the following: On John Enterprises shares On September 4, 2022, the entity recorded a sale of 50,000 shares of John by a debit to "Cash" for its proceeds of P2,460,000, net of P40,000 transaction cost, and a credit to "Financial Asset - Fair Value through Other Comprehensive Income (FVOCI)" at a fair value of P2,540,000, net of P110,000 estimated transaction cost. The difference was recognized as Loss on disposal of equity investment". Moreover, the cumulative gain previously recognized in other comprehensive income on these shares sold amounting to P320,000 was closed to "Retained Earnings". On Joseph Corporation shares On December 31, 2022, you discovered that Joseph Corporation experienced a severe financial difficulty so that the fair value of its equity investment had fallen to P5,310,000. The client's accountant overlooked this transaction and reflected the financial asset at P5,725,000. On Nathan, Inc. bonds The entity's initial business model for its Nathan bonds was to collect contractual cash flows and to sell them in the open market. On December 31, 2022, it decided to adopt another business model of managing its financial asset and made the proper disclosure. However, the client's accountant failed to record the reclassification and the premium amortization of P2,000. The fair value of the financial asset, net of P2,500 estimated transaction cost, did not change throughout 2022. Based on your analysis

The further decline in the fair value of Joseph Corporation shares would require a correcting entry by: A. A debit to impairment loss at P415,000 B. A debit to unrealized loss - FVOCI at P590,000 C. A debit to impairment loss at P590,000 D. A debit to unrealized loss - FVOCI at P415,000 59. The correcting entry related to Nathan bonds on December 31, 2022 should be: A. Interest income 2,000 Financial Asset FVPL 136,500 Financial Asset - FVOCI 138,500 B. Interest income 2,000 Financial Asset FVOCI 500 Unrealized loss 2,500 C. Interest income 2,000 Financial Asset FVOCI 2,000 D. Financial Asset FVPL 137,000 Interest income 2,000 Financial Asset FVOCI 136,500 Unrealized loss 2,500

60. The adjusted equity investment balance in the statement of financial position as at December 31, 2022 1s: A. P10,250,000 B. P10,360,000 C. P10,775,000 D. P10,387,000