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Acccob 2 - Exercise 4-1 - 4-10

1. The document contains multiple choice questions and information about various financial instruments, including bonds, shares, and investments. 2. Key details include purchases of bonds and shares by different companies, classification of instruments as financial assets or liabilities, calculation of interest income, carrying amounts, fair values, and gains/losses. 3. Questions assess ability to calculate items like interest income, carrying amounts, and gains/losses from changes in fair values based on information provided.

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Ayanna Camero
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8K views19 pages

Acccob 2 - Exercise 4-1 - 4-10

1. The document contains multiple choice questions and information about various financial instruments, including bonds, shares, and investments. 2. Key details include purchases of bonds and shares by different companies, classification of instruments as financial assets or liabilities, calculation of interest income, carrying amounts, fair values, and gains/losses. 3. Questions assess ability to calculate items like interest income, carrying amounts, and gains/losses from changes in fair values based on information provided.

Uploaded by

Ayanna Camero
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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MULTIPLE CHOICE:

1 D. A financial assets of one entity and a financial liability or


2 C. A contractual right to exchange financial instrument with another entity under conditions that
3 C.other income as part of profit or loss
4 D.A financial assetsis recognized when the entity becomes a party to the contractual provisions
5 D. Financial assets of at amortized cost
nother entity under conditions that are potenially unfavorable

party to the contractual provisions of the instrument


Patton Company purchased P4,000,000 of 10% bonds of Scott Co. on January 1, 2020, paying P3,849,247. The b
The discount of 150,753 provides an effective yield of 1196. Patton Company classifies the debt instrument as fina

### 3,900,000
### 4,100,000
### 4,000,000

1. Determine the carrying amount of the debt instrument at the end of each year from 2020 to 2022.
2. Determine the interest income recognized by Patton on the bonds every year from 2020 to 2022.
3. Determine the gain or loss on change in fair value recognized in Patton's profit or loss statement during each yea

FV 4,000,000
3,849,247
150,753

CV/FV Unrealized GaUnrealized Lost


January 1, 2020 3,849,247
### 3,900,000 50,753
### 4,100,000 200,000
### 4,000,000 100,000

FV 4,000,000
10%
Interest Income 400,000
1, 2020, paying P3,849,247. The bonds mature December 31, 2024; interest is payable each July 1 and January 1.
lassifies the debt instrument as financial asset at fair value through profit or loss. The fair value of the bonds at the end of each

020 to 2022.

it or loss statement during each year from 2020 to 2022.


and January 1.
bonds at the end of each year follows
On January 1 2020, Beckham acquired P2,000,000, 10% bond for P2,159,708. The ongoing interest rate on the da
through other comprehensive income. The fair value of the bonds at the end of each year is listed below:

### 102
December 31, 2021 98
### 101

1. Determine the carrying amount of the debt instrument at the end of each year from 2020 to 2022.
2. Determine the interest income recognized by Beckham on the bonds every year from 2020 to 2022.
3. Determine the gain or loss on change in fair value recognized in Patton's statement of other comprehensive inco
4. Determine the ending balance of Unrealized Gain or Loss on Financial Asset at Fair Value through other compre

Cash Received Interest IncomeAmortization Carrying Amount


2,159,708.00
### 200,000 172,776.64 27,223.36 2,132,484.64
December 31, 2021 200,000 170,598.77 29,401.23 2,103,083.41
### 200,000 168,246.67 31,753.33 2,071,330.08

CV/FV CA/II Unrealized GaUnrealized Lost


January 1, 2020 3,849,247
### 2,040,000 2,132,484.64 (92,484.64)
December 31, 2021 1,960,000 2,103,083.41 (50,598.77) (143,083.41)
### 2,020,000 2,071,330.08 91,753.33 (51,330.08)
he ongoing interest rate on the date of the acquisition of the bonds was 8%. Beckham classifies the bonds as financial asset at
ach year is listed below:

rom 2020 to 2022.


ar from 2020 to 2022.
ment of other comprehensive income during each year from 2020 to 2022.
t Fair Value through other comprehensive income found in Beckham's shareholders' equity at the end of each year from 2020 t

rrying Amount

realized Lost
onds as financial asset at fair value

of each year from 2020 to 2022.


On January 1 2020, Corry Co. purchased P3,000,000, 12% five-year bond. The bonds were acquired to yield 14%,
The fair value of the bonds at the end of each year from 2020 to 2022 is listed below:

December 31, 2020 97


December 31, 2021 98
December 31, 2022 100

1. How much is the initial cost of the debt instrument?


2. Determine the interest income recognized by Corr on the bonds during each year from 2020 to 2022.
3. Prepare an amortization table to show the carrying amount of the bonds at the end of each year from 2020 to 20

Present Value of principal 1,558,105.99


Present Value of interest 1,235,909.15
Initial Amount 2,794,015.14

Date Interest Incom Cash RecievedAmortization Amortized Cost


January 1, 2020 2,794,015.14
December 31, 2020 391,162.12 360,000 #NAME? #NAME?
December 31, 2021 395,524.82 360,000 #NAME? #NAME?
December 31, 2022 400,498.29 360,000 #NAME? #NAME?
December 31, 2023 406,168.05 360,000 #NAME? #NAME?
December 31, 2024 412,631.58 360,000 #NAME? #NAME?
s were acquired to yield 14%, and pay interest annually. Corr purchased the bonds solely for the collection of the interest.

om 2020 to 2022.
of each year from 2020 to 2022

mortized Cost
ction of the interest.
On January 1 2020, Hough Co. purchased 100,000 ordinary shares of derek Co. at P20 per share.The shares are c
Derek declared and paid dividend of P4 and 3 per share during 2020 and 2021. At the end of 2020 and 2021. Dere

1. Determine the income recognized by Hough on the equity in 2020 to 2021


2. Determine the carrying amount of the equity every instrument on Hough's statement of financial statement on December 31
3. Determine the unrealized gain or loss on change in fair value recognized by Hough's in its profit or loss statemen

2020 2021
Dividend income 200,000 300,000
Carrying Amount 1,800,000 2,200,000
Unrealized gain/lo (200,000) 400,000
o. at P20 per share.The shares are classified as financial asset as a fair value through profit or loss.
At the end of 2020 and 2021. Derek shares have a fair value of P18 and P22, respectively

of financial statement on December 31, 2020 and December 31, 2021.


Hough's in its profit or loss statement for the year ended Decemebr 31, 2020 and December 31,2021.
On January 1, 2020, Blunt Co. purchased 50,000 ordinary shares of Powter Co. at onds at the ex p16 per share. Th
Powter declared and paid dividends of P4 and P5 per share in 2020 and 2021, respectively. At the end of 2020 and

1. Determine the dividend income recognized by Blunt on the equity instrument in 2020 and 2021.
2. Determine the carrying amount of the equity instrument on Blunt's statement of financial statement on December
3. Determine the unrealized gain or loss on change in fair value recognized by Blunt in its profit or loss statement fo
4. Determine the cumulative balance of the unrealized gain or loss recognized in the other comprehensive income o

2020 2021
Dividend income 200,000 250,000
Carrying Amount 850,000 700,000
Unrealized gain/loss 50,000 (150,000)
Cummulative Balanc (200,000)
at onds at the ex p16 per share. The shares are classified as financial asset at fair value through other comprehensive income.
spectively. At the end of 2020 and 2021, Powter's shares were trading at P17 and P14, respectively.

f financial statement on December 31, 2020 and December 31, 2021. s during each
unt in its profit or loss statement for the year ended December 31, 2020 and December 31, 2021
the other comprehensive income of Blunt's shareholders' equity on December 31, 2020 and December 31, 2021.
r comprehensive income.

er 31, 2021.
On January 1, 2020, Levesque Co. purchased 500,000 ordinary shares of uring 2020 Rowland Co. at P14 per share, represen
Rowland declared and paid dividends of P1 and P2 in 2020 and 2021, respectively. At the end of 2020 instrument and 2021, R

1. Determine the investment income recognized by Levesque in 2020 and 2021.


2. Determine the carrying amount of Levesque's investment on December 31, recognized by December 2020, and December

Investment IncomeAcquisition CoDividend receivedCarrying Amount


2020 600,000 7,000,000 125,000 7,475,000
2021 800,000 7,475,000 250,000 8,025,000
Co. at P14 per share, representing a 25% ownership in Rowland.This of P18 and allowed Levesque to exercise significant control over Row
of 2020 instrument and 2021, Rowland's shares were trading at P15 and P17 per share. Rowland's net income in 2020 and 2021 was P2,4

ecember 2020, and December 31, 2021.


e significant control over Rowland.
in 2020 and 2021 was P2,400,000 and P3,200,000, respectively.

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