Investments in Stocks - This portfolio is composed of GKKB Company shares (GanyanKabaKatigasBash) and ABC Company shares. The shares were not held for trading and management has elected to designate the investments at fair value through other comprehensive income. Date Account Debit Credit May 3, 2020 Investment in GKKB Company 25,250 Broker's fee 1,000 Cash 26,250 To record the acquisition of GKKB shares and its related transaction cost Investment in ABC Company 32,450 Cash 32,450 To record the acquisition of ABC shares, acquired at P32.45 per share December 31, 2020 Unrealized Gain / (Loss) on market changes 400 Investment in ABC Company 1,500 Investment in GKKB Company 1,900 To record the market value adjustment for 2020 May 28, 2021 Investment in ABC Company 5,000 Dividend income 5,000 Received 100 shares of ABC Company in lieu of cash dividends of P5 per share. ABC shares were selling for P42 per share on this date. December 31, 2021 Unrealized Gain / (Loss) on market changes 100 Investment in ABC Company 300 Investment in GKKB Company 200 To record the market value adjustment for 2021 Audit Notes: The changes in fair value were appropriately recognized in OCI. The journal entries pertaining to the market value adjustments was prepared by the accountant in accordance with the following information: Year Cost Market Value Unrealized Gain / (Loss) 2020 GKKB P25,250 P23,350 (P1,900) ABC 32,450 33,950 1,500 2021 GKKB P25,250 P24,950 (P300) ABC 32,450 32,650 200 QUESTION: The investment in stocks account is overstated or understated by? (Use negative sign if overstated)
Investments in Stocks - This portfolio is composed of GKKB Company shares (GanyanKabaKatigasBash) and ABC Company shares. The shares were not held for trading and management has elected to designate the investments at fair value through other comprehensive income.
|
Date |
Account |
Debit |
Credit |
|
May 3, 2020 |
Investment in GKKB Company |
25,250 |
|
|
Broker's fee |
1,000 |
||
|
Cash |
26,250 |
||
|
To record the acquisition of GKKB shares and its related transaction cost |
|||
|
Investment in ABC Company |
32,450 |
||
|
Cash |
32,450 |
||
|
To record the acquisition of ABC shares, acquired at P32.45 per share |
|||
|
December 31, 2020 |
Unrealized Gain / (Loss) on market changes |
400 |
|
|
Investment in ABC Company |
1,500 |
||
|
Investment in GKKB Company |
1,900 |
||
|
To record the market value adjustment for 2020 |
|||
|
May 28, 2021 |
Investment in ABC Company |
5,000 |
|
|
Dividend income |
5,000 |
||
|
Received 100 shares of ABC Company in lieu of cash dividends of P5 per share. ABC shares were selling for P42 per share on this date. |
|||
|
|
|
||
|
December 31, 2021 |
Unrealized Gain / (Loss) on market changes |
100 |
|
|
Investment in ABC Company |
300 |
||
|
Investment in GKKB Company |
200 |
||
|
To record the market value adjustment for 2021 |
Audit Notes:
- The changes in fair value were appropriately recognized in OCI.
- The
journal entries pertaining to the market value adjustments was prepared by the accountant in accordance with the following information:
|
Year |
Cost |
Market Value |
Unrealized Gain / (Loss) |
|
2020 |
|||
|
GKKB |
P25,250 |
P23,350 |
(P1,900) |
|
ABC |
32,450 |
33,950 |
1,500 |
|
2021 |
|||
|
GKKB |
P25,250 |
P24,950 |
(P300) |
|
ABC |
32,450 |
32,650 |
200 |
QUESTION: The investment in stocks account is overstated or understated by? (Use negative sign if overstated)
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