How much should be reclassified to Retained Earnings as a result of derecognizing the investment in 2019? MD Corp. completed the following transactions relating to investment in AO Company ordinary shares,which were acquired for trading purposes.2018(1) Purchased 1,000 shares at P150 per share, plus transaction costs of P3,750(2) At year-end, the AO Company ordinary shares had a fair value of P180 per share.2019(1) Sold 500 of AO Company ordinary shares at P190 per share, incurring P1,000 transaction costs onsale.(2) At year-end, the fair value of each share was P192.

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How much should be reclassified to Retained Earnings as a result of derecognizing the investment in 2019?

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

How much should be reclassified to Retained Earnings as a result of derecognizing the investment in 2019?

MD Corp. completed the following transactions relating to investment in AO Company ordinary shares,
which were acquired for trading purposes.
2018
(1) Purchased 1,000 shares at P150 per share, plus transaction costs of P3,750
(2) At year-end, the AO Company ordinary shares had a fair value of P180 per share.
2019
(1) Sold 500 of AO Company ordinary shares at P190 per share, incurring P1,000 transaction costs on
sale.
(2) At year-end, the fair value of each share was P192.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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