On December 29, 20x1, ABC Co. sells 1,000 units of an investment through a broker at P1.00 per unit, the quoted price on this date. The investment has a carrying amount of P1,200. Ownership over the financial asset transfers to the buyer on January 3, 20x2. The fair values per unit on December 31, 20x1 and January 3, 20x2 are P1.75 and P1.50, respectively. Requirements: Provide the journal entries under the trade date ccounting and the settlement date accounting assuming the financial asset sold was classified as subsequently measured at: a. FVPL (held for trading securities), b. FVOCI (mandatory); and c. Amortized cost.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
On December 29, 20x1, ABC Co. sells 1,000 units of an investment through a broker at P1.00 per unit, the quoted price on this date. The investment has a carrying amount of P1,200. Ownership over the financial asset transfers to the buyer on January 3, 20x2. The fair values per unit on December 31, 20x1 and January 3, 20x2 are P1.75 and P1.50, respectively.
Requirements: Provide the
a. FVPL (held for trading securities),
b. FVOCI (mandatory); and
c. Amortized cost.
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