On January 1, 20x1, ABC Co. purchased 1,000 shares of XYZ, Inc. for ₱250,000. Commission paid to broker amounted to ₱10,000. The equity securities were designated by management to be measured at fair value through profit or loss. On December 31, 20x1, the shares are quoted at ₱200 per share. It was estimated that the transaction cost of ₱20 per share will be incurred if the shares were sold on that date. 1. How much is the unrealized gain (loss) on change in fair value recognized in the 20x1 profit or loss? 2. On January 3, 20x2, all the shares were sold at ₱300 per share. Commission paid for the sale amounted to ₱60,000. How much is the realized gain (loss) from the sale? 3. If ABC Co. uses an allowance account to account for changes in fair values, how much is the balance of this account on December 31, 20x1?
On January 1, 20x1, ABC Co. purchased 1,000 shares of XYZ, Inc. for ₱250,000. Commission paid to broker
amounted to ₱10,000. The equity securities were designated by management to be measured at fair value
through profit or loss. On December 31, 20x1, the shares are quoted at ₱200 per share. It was estimated that
the transaction cost of ₱20 per share will be incurred if the shares were sold on that date.
1. How much is the unrealized gain (loss) on change in fair value recognized in the 20x1 profit or loss?
2. On January 3, 20x2, all the shares were sold at ₱300 per share. Commission paid for the sale amounted
to ₱60,000. How much is the realized gain (loss) from the sale?
3. If ABC Co. uses an allowance account to account for changes in fair values, how much is the balance of
this account on December 31, 20x1?
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