ABC Corporation holds ordinary shares of XYZ Inc. acquired as follows: Date of Acquisition Shares Total Cost September 19, Year 2 750 60,000 July 16, Year 1 1,250 110,000 The shares above were classified as equity investments at fair value through other comprehensive income. Fair values on December 31, Year 1 and Year 2 were P 85 and P 90 respectively. In Year 3, ABC Corp. Received 2,000 rights to purchase XYZ Inc. ordinary shares at P 80 per share. Five rights are required to purchase one share. ABC Corp. used rights to purchase additional 300 shares of XYZ Inc when each shares sells at P 100. Subsequently ABC sold the remaining rights at 4.50 each. At December 31, Year 3. XYZ Inc ordinary shares sell at P 98. Required: a) Determine the amount of the equity account Unrealized Gains or Losses on Equity Investments at Fair Value through Other Comprehensive Income at the end of the Years 1 and 2. b) Determine the amount taken to other comprehensive income as a result of the change in fair values for Years 1 and 2. c) Prepare all entries in the books of ABC Corporation during Year 3 as a result of the foregoing.
2. ABC Corporation holds ordinary shares of XYZ Inc. acquired as follows:
| Date of Acquisition | Shares | Total Cost |
| September 19, Year 2 |
750 |
60,000 |
| July 16, Year 1 | 1,250 | 110,000 |
The shares above were classified as equity investments at fair value through other comprehensive
income. Fair values on December 31, Year 1 and Year 2 were P 85 and P 90 respectively.
In Year 3, ABC Corp. Received 2,000 rights to purchase XYZ Inc. ordinary shares at P 80 per share.
Five rights are required to purchase one share. ABC Corp. used rights to purchase additional 300 shares of
XYZ Inc when each shares sells at P 100. Subsequently ABC sold the remaining rights at 4.50 each.
At December 31, Year 3. XYZ Inc ordinary shares sell at P 98.
Required:
a) Determine the amount of the equity account Unrealized Gains or Losses on Equity Investments
at Fair Value through Other Comprehensive Income at the end of the Years 1 and 2.
b) Determine the amount taken to other comprehensive income as a result of the change in fair
values for Years 1 and 2.
c) Prepare all entries in the books of ABC Corporation during Year 3 as a result of the
foregoing.
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