Use the following information for the next two questions: On December 29, 20x2 (trade date), Jared Co. enters into a contract to sell a financial asset for its current fair value of ₱4,040 to Hera Co. The asset was acquired one year earlier for ₱4,000 and its carrying amount on December 29, 20x2 is ₱4,000. On December 31, 20x2 (financial year-end), the fair value of the asset is ₱4,024. On January 4, 20x3 (settlement date), the fair value is ₱4,052. 1. If the financial asset sold was classified as held for trading security and the sale is accounted for under the trade date accounting, the entry on December 29, 20x2 in Jared’s books will include a. a ₱4,000 credit to the “Held for trading securities” account. b. a ₱40 debit to unrealized gain. c. a ₱4,000 debit to a receivable account. d. No entry will be made on this date. 2. If the financial asset sold was classified as held for trading security and the sale is accounted for under the settlement date accounting, the entry on December 29, 20x2 in Jared’s books will include a. a credit to “Held for trading securities” for ₱4,000. b. a credit to “Unrealized gain” for ₱40. c. a ₱4,000 debit to a receivable account. d. No entry will be made on this date
Use the following information for the next two questions:
On December 29, 20x2 (trade date), Jared Co. enters into a contract to sell a financial asset for its current
fair value of ₱4,040 to Hera Co. The asset was acquired one year earlier for ₱4,000 and its carrying
amount on December 29, 20x2 is ₱4,000. On December 31, 20x2 (financial year-end), the fair value of the
asset is ₱4,024. On January 4, 20x3 (settlement date), the fair value is ₱4,052.
1. If the financial asset sold was classified as held for trading security and the sale is accounted for
under the trade date accounting, the entry on December 29, 20x2 in Jared’s books will include
a. a ₱4,000 credit to the “Held for trading securities” account.
b. a ₱40 debit to unrealized gain.
c. a ₱4,000 debit to a receivable account.
d. No entry will be made on this date.
2. If the financial asset sold was classified as held for trading security and the sale is accounted for
under the settlement date accounting, the entry on December 29, 20x2 in Jared’s books will include
a. a credit to “Held for trading securities” for ₱4,000.
b. a credit to “Unrealized gain” for ₱40.
c. a ₱4,000 debit to a receivable account.
d. No entry will be made on this date
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