In connection with your audit of the financial statements of the Lovely Company for the year 2020, the following Investment in Ordinary Shares and Dividend Income accounts were presented to you:
In connection with your audit of the financial statements of the Lovely Company for the year 2020, the following Investment in Ordinary Shares and Dividend Income accounts were presented to you:
Investment in Ordinary Shares
|
Date |
Description |
Ref. |
Debit |
Credit |
|
01/15 |
10,000 ordinary shares, par value P75, SPIKES Co. |
VR-18 |
585,000 |
|
|
04/30 |
5,000 shares SPIKES Co. received as share dividend |
CJ-7 |
375,000 |
|
|
05/20 |
Sold 5,000 shares @ P37.5 |
CR-21 |
|
187,500 |
|
12/10 |
Sold 2,000 shares @ P90 |
CR-S2 |
|
180,000 |
Dividend Income
|
Date |
Description |
Ref. |
Debit |
Credit |
|
04/30 |
Share dividend |
SJ-7 |
|
375,000 |
|
11/30 |
SPIKES Company ordinary |
CR-22 |
|
75,000 |
The following information was obtained during your examination:
- From independent sources, you determine the following dividend information:
|
Type of Dividend |
Date Declared |
Date of Record |
Date of Payment |
Rate |
|
Share Cash Cash |
03/15/20 11/01/20 12/01/20 |
04/01/20 11/15/20 12/15/20 |
04/30/20 11/28/20 01/02/21 |
50% P7.5/share 20% |
- Closing market quotation as at December 31, 2020:
|
|
Bid |
Ask |
|
SPIKES Company ordinary |
20-5/8 |
24-3/4 |
QUESTIONS:
Based on the above and the result of your audit, answer the following:
- How much is the gain (loss) on the May 20 sale?
- How much is the gain on the December 10 sale?
- How much is the total dividend income for the year?
- How much is the adjusted carrying amount of Investment in Ordinary Shares as of December 31, 2020?
- How much is the fair value adjustment loss for the year ended December 31, 2020?
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