Aborigine Company reported the following accounts in the statement of financial position on January 1, 2020: Noncurrent assets Financial asset-FVOCI Market adjustment for unrealized loss 4,000,000 ( 500,000) Market value 3,500,000 Other comprehensive income Unrealized loss ( 500,000) An analysis of the investment portfolio revealed the following on December 31, 2020. Cost Market XYZ ordinary share ABC ordinary share RST preference share 1,000,000 2,500,000 500,000 1,200,000 2,000,000 200,000 4,000,000 3,400,000 On July 1, 2021, the ABC ordinary share was sold for P2,100,000. On December 31, 2021, the remaining investments have the following market value: XYZ ordinary share RST preference share 1,000,000 150,000 Required: 1. Prepare journal entry to recognize the decrease in value on December 31, 2020. 2. Prepare journal entry to record the sale of ABC ordinary share on July 1, 2021. 3. Prepare journal entry on December 31, 2021 to recognize the change in fair value.

Aborigine Company reported the following accounts in the statement of financial position on January 1, 2020: Noncurrent assets Financial asset-FVOCI Market adjustment for unrealized loss 4,000,000 ( 500,000) Market value 3,500,000 Other comprehensive income Unrealized loss ( 500,000) An analysis of the investment portfolio revealed the following on December 31, 2020. Cost Market XYZ ordinary share ABC ordinary share RST preference share 1,000,000 2,500,000 500,000 1,200,000 2,000,000 200,000 4,000,000 3,400,000 On July 1, 2021, the ABC ordinary share was sold for P2,100,000. On December 31, 2021, the remaining investments have the following market value: XYZ ordinary share RST preference share 1,000,000 150,000 Required: 1. Prepare journal entry to recognize the decrease in value on December 31, 2020. 2. Prepare journal entry to record the sale of ABC ordinary share on July 1, 2021. 3. Prepare journal entry on December 31, 2021 to recognize the change in fair value.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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Problem 15-5 (IAA)
Aborigine Company reported the following accounts in the
statement of financial position on January 1, 2020:
Noncurrent assets
Financial asset - FVOCI
Market adjustment for unrealized loss
4,000,000
( 500,000)
Market value
3,500,000
Other comprehensive income
Unrealized loss
( 500,000)
An analysis of the investment portfolio revealed the
following on December 31, 2020.
Cost
Market
XYZ ordinary share
ABC ordinary share
RST preference share
1,000,000
2,500,000
500,000
1,200,000
2,000,000
200,000
4,000,000
3,400,000
On July 1, 2021, the ABC ordinary share was sold for
P2,100,000.
On December 31, 2021, the remaining investments have the
following market value:
XYZ ordinary share
RST preference share
1,000,000
150,000
Required:
1. Prepare journal entry to recognize the decrease in value
on December 31, 2020.
2. Prepare journal entry to record the sale of ABC ordinary
share on July 1, 2021.
3. Prepare journal entry on December 31, 2021 to recognize
the change in fair value.

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