1.
The following data pertain to the equity investments held by Doritos Company classified as "available for sale":Cost 3,000,000Market value: December 31, 2008 2,400,000 December 31, 2009 3,200,000What amount should be reported as unrealized gain in December 31, 2009 shareholders' equity?
A. 
B. 
C. 
D. 
2.
Banquet Company began operations on
January 1, 2009. The following information pertains to the company's
December 31, 2009 portfolio of equity securities: TRADING AVAILABLE FOR SALEAggregate cost 4,000,000 6,000,000Aggregate market value 3,700,000 5,500,000Aggregate lower of cost or market value applied to each security 3,500,000 5,300,000The
market declines are judged to be "other than temporary". What amount
should Banquet report as total loss on these securities in its 2009
income statement?
A. 
B. 
C. 
D. 
3.
Information regarding Trinity Company's portfolio of available for sale securities is as follows:Aggregate cost - December 31, 2009 1,700,000Unrealized gains - December 31, 2009 40,000Unrealized losses - December 31, 2009 260,000Net realized gains during 2009 300,000On
January 1, 2007 Trinity Company reported an unrealized loss of P15,000
as a component of shareholders' equity. In its December 31, 2009
shareholders' equity section of the balance sheet, Trinity Company
should report what amount of unrealized loss on these securities?
A. 
B. 
C. 
D. 
4.
Quezon Company acquired investments in
available for sale equity securities for P5,000,000 on January 1, 2008.
On December 31, 2009, Quezon decided to reclassify the available for
sale securities as nonmarketable equity securities. On such date, a
reliable measure of fair value of the securities is no longer
available. The market value of the securities was P4,500,000 on
December 31, 2008. In its 2009 statement of changes in equity, Quezon
should report unrealized loss on these securities at:
A. 
B. 
C. 
D. 
5.
Leviathan Company had investments in
bonds with face value of P8,000,000. The bonds were acquired at face
value on January 1, 2008 and classified as "available for sale". The
bond investment had the following market value: December 31, 2008 7,500,000 December 31, 2009 7,200,000On
December 31, 2009, Leviathan decided to reclassify the bong investment
as "held to maturity" as a result of a change in intention and ability.
What amount should be reported as unrealized loss on these securities
in the 2009 statement of changes in equity?
A. 
B. 
C. 
D. 
6.
Sumo Company had investments in
marketable debt securities which were acquired at the face value of
P6,500,000 and classified as available for sale. On June 30, 2009, Sumo
decided to hold the investments to maturity and accordingly
reclassified them from the available for sale category on that date.
The investments' market value was P5,750,000 at December 31, 2008,
P5,300,000 at June 30, 2009, and P4,900,000 at December 31, 2009.What amount of loss from investments should Sumo report in its 2009 income statement?
A. 
B. 
C. 
D. 
7.
Sumo Company had investments in marketable debt securities which
were acquired at the face value of P6,500,000 and classified as
available for sale. On June 30, 2009, Sumo decided to hold the
investments to maturity and accordingly reclassified them from the
available for sale category on that date. The investments' market value
was P5,750,000 at December 31, 2008, P5,300,000 at June 30, 2009, and
P4,900,000 at December 31, 2009.What amount should Sumo report as unrealized loss on these securities in its June 30, 2007 statement of shareholders' equity?
A. 
B. 
C. 
D. 
8.
On January 1, 2008, Broker Company
purchased "held to maturity" bonds with face value of P5,000,000 for
P4,562,000. The bonds are purchased to yield 10% interest. The stated
interest rate on the bonds is 8%, payable annually on December 31. On
December 31, 2009, Broker Company decided to reclassify the bonds as
"available for sale". On such date, the carrying value of the bonds is
P4,680,000 after amortization of discount using the effective interest
method. The market value of the bonds on December 31, 2009 is
P5,200,000.What amount of unrealized gain on these securities should be reported in the 2007 statement of changes in equity?
A. 
B. 
C. 
D. 
9.
2The following investments are classified
as trading unless otherwise stated and held by Peter Company as of
December 31, 2009, its first year of operation. COST MARKETMarketable equity securities: Wicker Company 2,000,000 1,900,000 London Company 1,000,000 880,000 Peter Company 1,500,000 2,400,000 Eden Company 2,500,000 2,300,000 Dixie Company 2,500,000 2,700,000 Kangaroo Company (redeemable preference share) 1,500,000 1,250,000Investment in stock rights Judy Company 500,000 400,000Marketable debt securities: Emu Company (convertible bonds) 3,000,000 3,700,000 Moore Company 4,500,000 4,200,000Investment
in Dixie Company represents 30% of outstanding preference share
capital. Total income reported by Dixie for 2009 amounted to
P10,000,000.Peter Company intends to hold its investment in Moore Company bonds to maturity.How much income related to the investments should be reported in Peter Company's income statement for 2009?
A. 
B. 
C. 
D. 
10.
On July 1, 2009, Salt Company exchanged a
truck for 25,000 ordinary shares of Alas Company. On that date, the
truck's carrying amount was P2,500,000 and its fair value was
P3,000,000. Also, the book value of Alas' share was P60. On December
31, 2009, Alas had 250,000 ordinary shares outstanding and its book
value per share was P50. What amount should report in its December 31,
2009 balance sheet as investment in Alas?
A. 
B. 
C. 
D. 
11.
On January 1, 2009, XYZ Company purchased
40,000 shares of TUV at P100 per share. Brokerage fees amounted to
P120,000. A P5 dividend per share of TUV had been declared on December
15, 2008, to be paid on March 31, 2009 to shareholders of record on
January 31, 2009. No other transactions occurred in 2009 affecting the
investment in TUV shares. The cost of the investment is:
A. 
B. 
C. 
D. 
12.
On January 1, 2008, Eve Company purchased
as a long-term investment on 100,000 ordinary shares of Miles Company
for P40 a share. On December 31, 2008, the market price of Miles' share
was P35, reflecting a temporary decline in market price. On December
28, 2009 Eve sold 80,000 shares of Miles Company for P30 a share. For
the year ended December 31, 2009, Adam should report a loss on disposal
of long-term investment of:
A. 
B. 
C. 
D. 
13.
Corn Company purchased 10,000 shares
representing 2% ownership of Row Company on February 15, 2009. Corn
received a stock dividend of 2,000 shares on March 31, 2009, when the
carrying amount per share on Row's books was P350 and the market value
per share was P400. Row paid a cash dividend of P15 per share on
September 15, 2009. In Corn's income statement for the year ended
October 31, 2009, what amount should Corn report as dividend income?
A. 
B. 
C. 
D. 
14.
Duff Company acquired 20,000 ordinary
shares of Post Company on October 1, 2008, at a cost of P4,400,000. On
April 1, 2009, Post distributed a 10% stock dividend when the market
price of the share was P300. On December 30, 2009, Duff sold 2,000
shares for P640,000. For the year ended December 31, 2007, how much
should Duff report as gain on sale?
A. 
B. 
C. 
D. 
15.
During 2008, Lawin Company bought the shares of Burnwood Company as follows:June 1 20,000 shares @ P100 2,000,000December 1 30,000 shares @ P120 3,600,000 5,600,000The transactions for 2009 are:January 10 - Received cash dividend at P10 per share.January 20 - Received 20% stock dividend.December 10 - Sold 30,000 shares at P125 per share.The gain on sale of the shares assuming FIFO approach is:
A. 
B. 
C. 
D. 
16.
Woody Company owns 20,000 shares of Buzz
Company's 200,000 shares of P100 par, 6% cumulative, nonparticipating
preference share capital and 10,000 shares representing 2% ownership of
Buzz's ordinary share capital. During 2009, Buzz declared and paid
preference dividends of P2,400,000. No dividends had been declared or
paid during 2008. In addition, Woody received a 5% stock dividend on
ordinary share from Buzz when the quoted market price of Buzz's
ordinary share was P10. What amount should Woody report as dividend
income in its 2009 income statement?
A. 
B. 
C. 
D. 
17.
Knight Company received dividends from its share investments during the year ended December 31, 2009 as follows:
* A stock dividend of 4,000 shares from Parrot Company on July 31,
2009 when the market price of Parrot's share was P20. Knight owns less
than 1% of Parrot's share capital. * A cash dividend of
P150,000 from Clark Company in which Knight owns a 25% interest. A
majority of Clark's directors are also directors of Knight.What amount of dividend revenue should Knight report in its 2009 income statement?
A. 
B. 
C. 
D. 
18.
Information pertaining to dividends from Rex Company's share investments for the year ended December 31, 2009, follows:
* On September 1, Rex received a P500,000 cash dividend from Silo
Company in which Rex owns a 30% interest. A majority of Rex's directors
are also directors of Silo. * On October 1, Rex
received a P60,000 liquidating dividend from Caveman Company. Rex owns
a 5% interest in Caveman Company. * Rex owns a 2%
interest in Spear Company, which declared a P2,000,000 cash dividend on
November 15, 2009, to shareholders of record on December 15, 2009,
payable on January 15, 2010.What amount should Rex report as dividend income in its income statement for the year ended December 31, 2009?
A. 
B. 
C. 
D. 
19.
On March 1, 2009, Evan Company purchased
10,000 ordinary shares of Bruce at P80 per share. On September 30,
2009, Evan received 10,000 stock rights to purchase an additional
10,000 shares at P90 per share. The stock rights had an expiration date
of February 1, 2010. On September 30, 2009, Bruce's share had a market
value ex-right of P95 and the stock right had a market value of P5.
What amount should Evan report in its September 30, 2009 balance sheet
for investment in stock rights?
A. 
B. 
C. 
D.