Lesson 3A
Investments
CONTENTS:
Board Work – FVPL
Board Work – FVOCI
Self-Assessment Task 3A.1
Self-Assessment Task 3A.2
Self-Assessment Task 3A.3
Self-Assessment Task 3A.4
Self-Assessment Task 3A.5
Self-Assessment Task 3A.6
Self-Assessment Task 3A.7
Self-Assessment Task 3A.8
Self-Assessment Task 3A.9
Self-Assessment Task 3A.10
Self-Assessment Task 3A.11
Board Work – Investment Property
Self-Assessment Task 3A.12
Self-Assessment Task 3A.13
Self-Assessment Task 3A.14
Self-Assessment Task 3A.15
Board Work – FVPL
On January 1, 2020, ABC Company purchased equity securities for P10,000,000. The entity paid the broker P10,000 for his commission.
Provided below are the fair value of the equity securities:
December 31, 2020 – P9,500,000
December 31, 2021 – P9,800,000
December 31, 2022 – P10,100,000
December 31, 2023 – P10,500,000 – Selling price
Requirement: Compute for the unrealized/realized gain or loss.
January 1, December 31, December 31, December 31, December 31,
2020 2020 2021 2022 2023
Statement of Financial Position
Investments – FVPL
Statement of Changes in Equity
Retained earnings
Statement of Income
Unrealized gain/(loss)
Realized gain/(loss)
Board Work – FVOCI
On January 1, 2020, ABC Company purchased equity securities for P10,000,000. The entity paid the broker P10,000 for his commission.
Provided below are the fair value of the equity securities:
December 31, 2020 – P9,500,000
December 31, 2021 – P9,800,000
December 31, 2022 – P10,100,000
December 31, 2023 – P10,500,000 – Selling price
Requirement: Compute for the unrealized/realized gain or loss.
Jan 1, 2020 Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023
Statement of Financial Position
Investments - FVOCI
Statement of Changes in Equity
Other Comprehensive Income
Retained earnings
Statement of Comprehensive Income (Other Comprehensive Income)
Unrealized gain/(loss)
Self-Assessment Task 3A.1
Score
Items 12
- Answer format: With a comma, no decimal places, and no peso signs. Example: Your computed amount is 123456.78910. Encode it
as 123,457.
- For negative amounts: Place your answer inside the parenthesis. Example: Your answer is negative 123,457. Encode it as (123,457).
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Template Company provided the following with respect to marketable equity securities held as “trading”.
1. The entity carried the following securities on December 31, 2020:
Cost Market
A ordinary – 4,000 shares 330,000 300,000
B ordinary – 1,000 shares 200,000 160,000
C preference – 2,000 shares 300,000 310,000
830,000 770,000
2. On June 30, 2021, the entity sold all the B ordinary shares for P140,000.
3. On December 31, 2021, the securities are quoted as follows:
A ordinary – 4,000 shares P80 per share
C preference – 2,000 shares P180 per share
Requirement: Complete the table below. Write zero (0) if it is not applicable.
December 31, 2019 December 31, 2020 December 31, 2021
Statement of Financial Position
Investments – FVPL
Statement of Changes in Equity
Retained earnings
Statement of Income
Unrealized gain/(loss)
Realized gain/(loss)
Self-Assessment Task 3A.2
Score
Items 12
- Answer format: With a comma, no decimal places, and no peso signs. Example: Your computed amount is 123456.78910. Encode it
as 123,457.
- For negative amounts: Place your answer inside the parenthesis. Example: Your answer is negative 123,457. Encode it as (123,457).
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
On January 1, 2020, Spark Company purchased the following trading securities:
Fair Value
Cost
December 31, 2020
Aura Company ordinary 600,000 650,000
Bora Company preference 350,000 200,000
Cara Company bonds 500,000 400,000
On October 1, 2021, the entity sold one-half of Aura Company for P375,000.
On December 31, 2021, the fair value of the remaining securities was P800,000.
Requirement: Complete the table below. Write zero (0) if it is not applicable.
December 31, 2019 December 31, 2020 December 31, 2021
Statement of Financial Position
Investments – FVPL
Statement of Changes in Equity
Retained earnings
Statement of Income
Unrealized gain/(loss)
Realized gain/(loss)
Self-Assessment Task 3A.3
Score
Items 21
- Answer format: With a comma, no decimal places, and no peso signs. Example: Your computed amount is 123456.78910. Encode it
as 123,457.
- For negative amounts: Place your answer inside the parenthesis. Example: Your answer is negative 123,457. Encode it as (123,457).
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Splendid Company purchased equity securities during 2020 to be held as investments. The cost and market value of the investments
are:
Cost Market
December 31, 2020
Trading securities 2,000,000 2,500,000
Securities not held for trading 3,000,000 2,900,000
December 31, 2021
Trading securities 2,000,000 2,200,000
Securities not held for trading 3,000,000 2,300,000
The securities not held for trading are measured at fair value through other comprehensive income by irrevocable election.
Requirement: Complete the table below. Write zero (0) if it is not applicable.
December 31, 2019 December 31, 2020 December 31, 2021
Statement of Financial Position
Investments – FVPL
Investments - FVOCI
Statement of Changes in Equity
Other Comprehensive Income
Retained earnings
Statement of Comprehensive Income
Net income - Unrealized gain/(loss)
Net income - Realized gain/(loss)
Other Comprehensive Income -
Unrealized gain/(loss)
Self-Assessment Task 3A.4
Score
Items 12
- Answer format: With a comma, no decimal places, and no peso signs. Example: Your computed amount is 123456.78910. Encode it
as 123,457.
- For negative amounts: Place your answer inside the parenthesis. Example: Your answer is negative 123,457. Encode it as (123,457).
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Transitory Company acquired the following equity securities:
Cost Market
December 31, 2020
Moon Company 200,000 120,000
Star Company 400,000 280,000
Sun Company 600,000 650,000
December 31, 2021
Moon Company 200,000 220,000
Star Company 400,000 300,000
Sun Company 600,000 580,000
The equity securities do not qualify as held for trading.
The entity has elected irrevocably to present changes in fair value in other comprehensive income.
Requirement: Complete the table below. Write zero (0) if it is not applicable.
January 1, 2020 December 31, 2020 December 31, 2021
Statement of Financial Position
Investments – FVOCI
Statement of Equity
Other Comprehensive Income
Retained earnings
Statement of Other Comprehensive Income
Unrealized gain / (loss)
Self-Assessment Task 3A.5
Score
Items 12
- Answer format: With a comma, no decimal places, and no peso signs. Example: Your computed amount is 123456.78910. Encode it
as 123,457.
- For negative amounts: Place your answer inside the parenthesis. Example: Your answer is negative 123,457. Encode it as (123,457).
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Aborgine Company reported the following accounts in the Statement of Financial Position on January 1, 2020:
Noncurrent assets
Financial asset – FVOCI 4,000,000
Market adjustment for unrealized loss (500,000)
Market value 3,500,000
Other comprehensive income
Unrealized loss (500,000)
An analysis of the investment portfolio revealed the following on December 31, 2020:
Cost Market
XYZ ordinary share 1,000,000 1,200,000
ABC ordinary share 2,500,000 2,000,000
RST preference share 500,000 200,000
4,000,000 3,400,000
On July 1, 2021, the ABC ordinary share was sold for P2,100,000.
On December 31, 2021, the remaining investments have the following market value:
XYZ ordinary share 1,000,000
RST preference share 150,000
Requirement: Complete the table below. Write zero (0) if it is not applicable.
January 1, 2020 December 31, 2020 December 31, 2021
Statement of Financial Position
Investments – FVOCI
Statement of Equity
Other Comprehensive Income
Retained earnings
Statement of Other Comprehensive Income
Unrealized gain/(loss)
Self-Assessment Task 3A.6
Score
Items 2
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
During 2020, Haggard Company purchased marketable equity securities for P1,850,000 to be held as trading investments.
In 2020, the entity appropriately reported an unrealized loss of 200,000 in the income statement.
There was no change during 2021 in the composition of the portfolio of trading securities. Pertinent data on December 31, 2021 are:
Security Cost Market
A 600,000 700,000
B 450,000 400,000
C 800,000 900,000
What amount of unrealized gain on these securities should be included in the 2021 income statement?
a. 350,000
b. 150,000
c. 550,000
d. 0
Self-Assessment Task 3A.7
Score
Items 2
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Judicious Company acquired an equity investment a number of years ago for P3,000,000 and classified it as at fair value through other
comprehensive income.
On December 31, 2020, the cumulative loss recognized in other comprehensive income was P400,000 and the carrying amount of the
investment was P2,600,000.
On December 31, 2021, the issuer of the equity instrument was in severe financial difficulty and the fair value of the equity investment
had fallen to P1,200,000.
What cumulative amount of unrealized loss should be reported as component of other comprehensive income in the statement of
changes in equity for the year ended December 31, 2021?
a. 1,400,000
b, 1,800,000
c. 1,000,000
d. 0
Self-Assessment Task 3A.8
Score
Items 2
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
During 2020, Knicknack Company purchased marketable equity securities to be measured at fair value through other comprehensive
income.
On December 31, 2020, the balance in the unrealized loss of these securities was P200,000.
There were no security transactions during 2021. Pertinent data on December 31, 2021 are:
Security Cost Market
X 2,100,000 1,600,000
Y 1,850,000 2,000,000
Z 1,050,000 900,000
In the statement of changes in equity for 2021, what amount should be included as cumulative unrealized loss as component of other
comprehensive income?
a. 500,000
b. 300,000
c. 200,000
d. 0
Self-Assessment Task 3A.9
Score
Items 2
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
At the beginning of current year, Manifold Company began operations. The following information related to the portfolio of equity
securities held at year-end:
Trading Non-trading
Aggregate cost 360,000 550,000
Aggregate fair value 320,000 450,000
Aggregate lower of cost or market value
304,000 420,000
applied to each security in the portfolio
The nontrading investments are measured at fair value through the other comprehensive income.
What amount should be reported as unrealized loss in the income statement for the current year?
a. 140,000
b. 186,000
c. 40,000
d. 56,000
Self-Assessment Task 3A.10
Score
Items 2
- You are given until 11:59 pm of November 3, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Lagoon Company purchased the following investments during 2020:
Market value
Classification Cost
December 31, 2020
Security A Trading 900,000 1,000,000
Security B Trading 1,000,000 1,600,000
On July 31, 2021, the entity sold all of the shares of Security B for P1,100,000.
On December 31, 2021, the shares of Security A had a market value of P600,000.
No other activity occurred during 2021 in relation to the trading security portfolio.
What total loss on the trading securities should be reported in the income statement for 2021?
a. 500,000
b. 400,000
c. 900,000
d. 100,000
Self-Assessment Task 3A.11
Score
Items 2
- Answer format: With a comma, no decimal places, and no peso signs. Example: Your computed amount is 123456.78910. Encode it
as 123,457.
- For negative amounts: Place your answer inside the parenthesis. Example: Your answer is negative 123,457. Encode it as (123,457).-
- You are given until 11:59 pm of November 14, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Classic Company and its subsidiaries own the following properties:
Land held for undetermined use 5,000,000
A vacant building to be leased out under an operating 3,000,000
lease
Property held for sale by a real estate firm in the ordinary 2,000,000
course of business
Property held for use in production 4,000,000
1,500,000
Building owned for which the company provides security
and maintenance services to the lessees
Property under construction for use as investment 6,000,000
property
Land held for future factory site 3,500,000
Machinery leased out under an operating lease 1,000,000
Compute for the total investment property.
Board Work – Investment Property
Galore Company ventured into construction of a condominium in Makati which is rated as the largest state-of-the-art structure.
The board of directors decided that instead of selling the condominium, the entity would hold this property for purposed of earning
rentals by letting out space to business executives in the area.
The construction of the condominium was completed and the property was placed in service on January 1, 2020.
The cost of the construction was P50,000,000.
The useful life of the condominium is 25 years and the residual value is P5,000,000.
An independent valuation expert provided the following fair value at each subsequent year-end:
December 31, 2020 55,000,000
December 31, 2021 53,000,000
December 31, 2022 60,000,000
Required:
Compute for the amount reflected on the December 31 financial statement using:
Fair value model December 31, 2020 December 31, 2021 December 31, 2022
Investment Property
Gain/(loss) on change in FV
Cost model
Investment Property – gross
Less: Accumulated depreciation
Investment Property – net
Depreciation expense
Self-Assessment Task 3C.12
Score
Items 2
- You are given until 11:59 pm of November 14, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Robust Company purchased an investment property on January 1, 2019 at a cost of P4,000,000.
The property had a useful life of 20 years and on December 31, 2020 had a fair value of P4,800,000.
On December 31, 2020, the property was sold for net proceeds of P4,500,000
The entity used the cost model to account for the investment property.
What is the gain to be recognized for 2020 regarding the disposal of the investment property?
a. 900,000
b. 500,000
c. 800,000
d. 700,000
Self-Assessment Task 3C.13
Score
Items 2
- You are given until 11:59 pm of November 14, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Nonchalant Company owned three investment properties with the following details:
Fair value Fair value
Initial cost
Dec 31, 2020 Dec 31, 2021
Property 1 2,700,000 3,200,000 4,000,000
Property 2 3,450,000 3,000,000 2,100,000
Property 3 3,300,000 3,900,000 3,600,000
Each property was acquired in 2020 with a useful life of 10 years. The accounting policy is to use the fair value model for investment
property.
What is the gain or loss to be recognized for 2021?
a. 900,000 loss
b. 400,000 loss
c. 650,000 gain
d. 300,000 loss
Self-Assessment Task 3C.14
Score
Items 2
- You are given until 11:59 pm of November 14, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Ingenuous Company acquired a building on January 1, 2020 for P9,000,000. At that date, the building had a useful life of 30 years.
On December 31, 2020, the fair value of the building was P9,600,000 and on December 31, 2021, the fair value is P9,800,000.
The building was classified as an investment property and accounted for under the cost model.
What amounts should be carried in the statement of financial position and recognized in profit or loss for 2021?
a. Carrying amount – 8,400,000; Profit or loss – 300,000 expense
b. Carrying amount – 9,000,000; Profit or loss – No gain, no loss
c. Carrying amount – 9,800,000; Profit or loss – 200,000 gain
d. Carrying amount – 8,700,000; Profit or loss – 300,000 expense
Self-Assessment Task 3C.15
Score
Items 2
- You are given until 11:59 pm of November 14, 2020 to complete this seatwork.
- You can keep on answering this seatwork and use it as a reviewer for quizzes and exam but the recorded score will be based on your
first (1st) attempt.
Considerate Company has a single investment property which had an original cost of P5,800,000 on January 1, 2018.
On December 31, 2020, the fair value was P6,000,000 and on December 31, 2021, the fair value was P5,900,000.
On acquisition, the property had a useful life of 40 years.
What is the expense recognized in profit or loss for 2021 under the fair value and cost model?
a. Fair value model – 147,500; Cost model – 145,000
b. Fair value model – 100,000; Cost model – 145,000
c. Fair value model – 145,000; Cost model – 100,000
d. Fair value model – 100,000; Cost model – 147,500
