Henesto Company's investment account has the following transaction during the year: Jan. 10, 2020 Acquired the following investments at a lump sum price ofP1,000.000: ABC Company - 1,000 shares (par value, P80; market price is P100 per share) DEF Corporation - 5,000 shares (par value, P100; market price is P105 per share) GHI Company - 5,000 shares (par value, P70; the market price is P75 per share) Honesto Company paid 19% of the price as the broker's fee. Honesto Company classified all the above securities as trading securities. Dec. 31, 2020 The following are the fair values of the investment at year-end: ABC Company - P105 per share DEF Corporation - P99 per share GHI Company - P78 per share June 1, 2021 Honesto Company sold 500 shares of ABC Company at P115 per share. Sept. 1, 2021 The company purchased 2,000 shares of JKL Company for P300,000. The par value of the JKL share is P160. The company paid 15% of its price as a broker's fee. The company classified this investment at FVTOCI. Dec. 31, 2021 The following are the fair values of the investment at year-end: ABC Company - P101 per share DEF Corporation - P95 per share GHI Company - P83 per share JKL Company - P163 per share Requirements: 1 Prepare the necessary journal entries to record the above transactions. 2. How much is the carrying value of the investment at fair value? 3. How much is the unrealized holding gain or loss that will be reported in profit or loss on December 31, 2020?
Henesto Company's investment account has the following transaction during the year: Jan. 10, 2020 Acquired the following investments at a lump sum price ofP1,000.000: ABC Company - 1,000 shares (par value, P80; market price is P100 per share) DEF Corporation - 5,000 shares (par value, P100; market price is P105 per share) GHI Company - 5,000 shares (par value, P70; the market price is P75 per share) Honesto Company paid 19% of the price as the broker's fee. Honesto Company classified all the above securities as trading securities. Dec. 31, 2020 The following are the fair values of the investment at year-end: ABC Company - P105 per share DEF Corporation - P99 per share GHI Company - P78 per share June 1, 2021 Honesto Company sold 500 shares of ABC Company at P115 per share. Sept. 1, 2021 The company purchased 2,000 shares of JKL Company for P300,000. The par value of the JKL share is P160. The company paid 15% of its price as a broker's fee. The company classified this investment at FVTOCI. Dec. 31, 2021 The following are the fair values of the investment at year-end: ABC Company - P101 per share DEF Corporation - P95 per share GHI Company - P83 per share JKL Company - P163 per share Requirements: 1 Prepare the necessary journal entries to record the above transactions. 2. How much is the carrying value of the investment at fair value? 3. How much is the unrealized holding gain or loss that will be reported in profit or loss on December 31, 2020?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Henesto Company's investment account has the following transaction during the year:
Jan. 10, 2020 Acquired the following investments at a lump sum price ofP1,000.000:
ABC Company - 1,000 shares (par value, P80; market price is P100 per share)
DEF Corporation - 5,000 shares (par value, P100; market price is P105 per share)
GHI Company - 5,000 shares (par value, P70; the market price is P75 per share)
Henesto Company paid 1% of the price as the broker's fee.
Henesto Company classified all the above securities as trading securities.
Dec. 31, 2020 The following are the fair values of the investment at year-end:
ABC Company - P105 per share
DEF Corporation- P99 per share
GHI Company - P78 per share
June 1, 2021 Henesto Company sold 500 shares of ABC Company at P115 per share.
Sept. 1, 2021 The company purchased 2,000 shares of JKL Company for P300,000. The par value of the
JKL share is P160. The company paid 1% of its price as a broker's fee. The company classified
this investment at FVTOCI.
Dec. 31, 2021 The following are the fair values of the investment at year-end:
ABC Company - P101 per share
DEF Corporation - P95 per share
GHI Company - P83 per share
JKL Company - P163 per share
Requirements:
Prepare the necessary journal entries to record the above transactions.
How much is the carrying value of the investment at fair value?
3.
1.
2.
How much is the unrealized holding gain or loss that will be reported in profit or loss on
December 31, 2020?
How much is the unrealized holding gain or loss that will be reported in equity on December
31, 2021?
4.
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