During the year 2019, Strict Company acquired 10,000 ordinary shares of Lenient Company for P220,000 plus broker's commission of P 5,000. The shares acquired by Strict are intended for trading. The market value of these shares for the last three years are as follows: December 31, 2019---------P235,000 December 31, 2020---P240,000 December 31, 2021---------P222,000 How much unrealized gain on equity investment is recognized in profit or loss for the year 2020?

During the year 2019, Strict Company acquired 10,000 ordinary shares of Lenient Company for P220,000 plus broker's commission of P 5,000. The shares acquired by Strict are intended for trading. The market value of these shares for the last three years are as follows: December 31, 2019---------P235,000 December 31, 2020---P240,000 December 31, 2021---------P222,000 How much unrealized gain on equity investment is recognized in profit or loss for the year 2020?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1MC

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On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.
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