Problem 7: In January 2020, Golden Company invested in P900,000 equity securities representing 15% interest in Rings Company. Golden Company incurred transaction cost of P100,000. On December 31, 2020, this investment has a market value of P950,000. On July 1, 2021,Golden Company sold all the investments for P1,200,000. 7.1 What amount of gain on sale should Golden Company recognize in profit or loss assuming the security was classified as Investment at FVPL? 7.2 How much is the amount transferred to Retained earnings upon sale assuming the security was classified as Investment at FVOCI? 7.3 Prepare all the necessary journal entries.
Problem 7: In January 2020, Golden Company invested in P900,000 equity securities representing 15% interest in Rings Company. Golden Company incurred transaction cost of P100,000. On December 31, 2020, this investment has a market value of P950,000. On July 1, 2021,Golden Company sold all the investments for P1,200,000. 7.1 What amount of gain on sale should Golden Company recognize in profit or loss assuming the security was classified as Investment at FVPL? 7.2 How much is the amount transferred to Retained earnings upon sale assuming the security was classified as Investment at FVOCI? 7.3 Prepare all the necessary journal entries.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Problem 7: In January 2020, Golden Company
invested in P900,000 equity securities representing
15% interest in Rings Company. Golden Company
incurred transaction cost of P100,000. On
December 31, 2020, this investment has a market
value of P950,000. On July 1, 2021, Golden
Company sold all the investments for P1,200,000.
7.1 What amount of gain on sale should
Golden Company recognize in profit or loss
assuming the security was classified as
Investment at FVPL?
7.2 How much is the amount transferred to
Retained earnings upon sale assuming the
security was classified as Investment at
FVOCI?
7.3 Prepare all the necessary journal entries.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3f177076-233b-4285-9243-14928f45f77c%2Ff7c8487d-53ab-4a45-b174-4b28073ba1ca%2Frv5ld07_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 7: In January 2020, Golden Company
invested in P900,000 equity securities representing
15% interest in Rings Company. Golden Company
incurred transaction cost of P100,000. On
December 31, 2020, this investment has a market
value of P950,000. On July 1, 2021, Golden
Company sold all the investments for P1,200,000.
7.1 What amount of gain on sale should
Golden Company recognize in profit or loss
assuming the security was classified as
Investment at FVPL?
7.2 How much is the amount transferred to
Retained earnings upon sale assuming the
security was classified as Investment at
FVOCI?
7.3 Prepare all the necessary journal entries.
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