278 Audit 0 Investment AUDIT PROGRAM FOR INVESTMENTS Audit Objectives: To detenie tha 1. Investments exst (held by the entity of the entity’ and manage) and are owed bythe entity. 2, All zeconed income from investments hus accroed tothe entity at the end ofthe reporting pend All ineestments owned by the eotiy atthe etl ofthe se- Dorting pesod ate sncladed in the statement of Gnas positon, 4. All income accring from invesumenty atthe en of the _eporing period bas been eecorded, vt AUDITOR ovESTAENTS 279 5, Invesrcene ate inched in the satement of franca po ‘sion at appropsiace amocns. The réatedEsveatzentn- ‘come is lade nthe income strement the sppeops 6, Allinvetments ae fee of lens, pledges, or oder sexsi savers, on roe ate adequvels duced Invesonets and selitd investment ieee accounts ane properly cated, desebed, end ciselosed in the faas- Eaiisatements in conformity ies PPRS. Audit Procedures: 1. Prepare or obtaia en snessc of the savesemeat soeoont and Trice to mplcable gence edger balances. 1 Vonch chunges doing the yearby eefereace ro board -muntesand broker! advice: 1+ Yerify completcees of dividend and anteret reve nes, and where cecessary, by seference 40 outside published sours 4+ Check fons ad crose-fosngs. ‘Conarsectes coun a + Taypoce scutes aro regsteed owe + Reconcile and compace Secale with imzstmentanaly- 1. Ror socurtes hel by an cumide custo ‘+ Amange for a vst to the custo asd conduc a + Coafim fom the crstodan the deals of secuies Se forthe aceon of She ent10. (4B AMMNATION REVIEWER: AUDITING! Review minutes, greements, and confirmation sepics foe ceidence of lens, pledges, or oer security interests ia the eatiy’s investments and of commitments to acqute for dispose of investmens. Inspect market quotations, Gaancial statements of inve= tee(), and other evidence to determine the curent vale of inrestments. Discuss with the entity the process sed by management in cassia its iovestments Determine whether the cents inresment activites ate consistent with ts business model for managing financial Determine whether the decline in fir valve of b-for collection Gnancil assets below amortized cost i other tha vemporury and i propery recogni >. Verity computations of gains an losses fom disposals of ‘Vest calculations of amorszation of premium or dis out on held for collection financial sss, Determine propicy of Snancial statement prseattion aad adequacy of dselosre. ‘ouwmen 4 AuDrT oP vests 281 PROBLEM 4-1 ‘Trading Securities Preented below are unrelated stuations LUTON COMPANY buys and sels secures execting to eam profits on shorttnrm ferences in price. During 2014, Lton Company pu ‘hoped the flloning trading Secures Fair value Secunty ost ba 31.2014 * 1gsj000P225}000 8 30000 162,000 ¢ 60,000 678,000 Before any adjustments related to these tracing secures, Ltn Copan had nt eae of 800,00. 1 What Uton's net Income afer mating any necessary trading secu adjustments? 7300000 | & F762,000 Psr0.000, 1, 348,000 2 What would Lton's net nce bef the far value of secu were F285,0007 1 P967,000, & Pass,000 & Po09}000| ©, 333,000 ‘CAOABA. CO's partolo of wating seurtes Indes the flowing (on December 31,2013 ost ‘lve 15,000 ordinary shores of Temas Co. P4700. P4700 30,000 ordnary shares of Gandra.co. 326.000 _370.000, Bioeoon ez Al of te above securties have been purchased in 2013. In 2014, Caeata Co. completes the loloving weuriesansactions:282 (PA EXAMINATION REVIEWER: AUDITING PROBLE Mar. Sold 15,000 shares of Tomas Co, ordinary shares at les brokerage commision of P00, ‘Aor Bova 1,800 ordinary shares of Westin, Inc. at P45 canmision, taxes, and ether transaction costs of P50. ‘The Cancaba Co. gonolo of trating secures appeared as ‘on December 31, 2014 Sess aie vaue 30,000 ortnay shares of Gandara Co, 546,000 PS80,C0N 4,800 ordinary shares of West, Ie 1. What amount of unrealized gan on these secures shoul be reported inte 2014 core statement? P1200 26,380 8 P10,350 i. P25;000 2, What is the gan of loss on the sale of Tomas Co. rtirary ‘Shares on Maren 1, 2018? ‘5 P48;000 5 P3000, c. Pe3.00 4 . Paso 3. Wihat amount shoud be reported as tredng securities i Crcata’s statement of fancal postion ox Decembst 31, 2 1k P555,000| 8. Ps63.000 ©. Pe25.650 i. 635.650, uanmied AUDI For RvESIENTS 283 SOLUTION 4-1 4, LETON COMPANY 1, Netincome before traing soustyadhstent 7900000 Unreal zed toss (P55 000 22.6650) (30.000) et income,as adjusted e000) Far vale secutty cost x iss.000 P2500 8 ‘00.000 162,000 c oon _ 78.000 Lisson = oes. Anse 2. Net income before trading secur adjsioent P900,000 Unrealized gain (P.teagce~ 1.135.000) 34.000 Netincome,az acted 009 Fair Value secuity Gost Dec 31. 2018 a igs.000 P225000 e 300.000 285000 c fe0.000 _ 518.000 eis ALimon Arse 0 2 canpasaco. 1. Vareatized gin (PE6,000-FES,000) eu.000 ‘amyng Vee Flr Value Dee 31.204 Dee. 3.2014 Gandars Co, 7570000 586,500 Westin Ine “sito 76500ound aubr oF mwsnaeNTS 285 20 eawewaverownevieren morte oa 2 Rerocedsiisie-nacon- m0) rans © Ose piling and pochona aim eow'oee a Die oe parane zoo 41,009 shares of Dwarfy Company. On December 31, 2015, Magno- GcinontetTonerco ordinary ses ‘Baa Senn ee eeacemach cae ane se a eee eee 3. Trading securities at fairvalue(seeno.1) Bsa tine Zoodsheres 98,000 130000 a Satcmey coats mee som fosae” london zien) gi eee 3. What's the gain oF loss on the sale of Polland Co. investment? ‘Trading Securities emer 1,400 gan GAOL COR, ed ees ca ey scan ng Area tie Re aa tei Tare Pat tr on erent ou bes cone freee a ben cach macol ‘A. Pe06,000 c F282,000 {@) As of December 31, 2014, the equy investment por consisted Cai ae ae eae ‘5. What amount of unrealized gain or loss should be reported in at oe ain Wihane nett inter nates sae? of eS eas Soe oo atomemabel en Pico, Lamostes “ise “eee & Flam dace KisoGop. bemostees isan aan 2 se ee = annie 5, Plot wea 1, im nes an, ent to ey tl (© Ding th yar 8, vant 300 chars fer Sk erepted to cai emantt i emt Fiisdah anders tay cosy o'ai ae nome erase Sate a Se andes ae pearance & so 5 Basan Std ackasne, 2 e214 ron tne at no sa etd cima, Qa GE Fave peers : Ereanelpac oP oo Siloar” chads Gites ine Unrealized los f 712000, © Unveatae loss o 6000, . Unrealized gin of P2000286 ces ExaGNATION REVIEWS: AUDITING PROB 6, Wat shale be repo a loss onsale of tracing sees i mnie P0300 & Paz 27. Wha amount of unreatzed 6 the income statemert forthe yer ended December 31, 2016? 1k P160 000 wevelzed cin ‘8,160,000 unrealized oss C 24000 urvealaed gel 1. P2300 unrealized iss 18, In the Occember 31, 2016, statement of find postion, ‘Should 2 rezared a cing amount acing secariies? & F240.000 1 7254/0 B °234,000 D, pz70p00 SOLUTION 4-2 1. Trading secures, afar value asgo2 Anes: 8 2, Fair vale, December 31,2014 369,000 Acquistion cost, 38.000) Unrealized oss Bao Asie: 8 3, Sales price of Poland sects P114.600 CCarryeg artount, December 31,2014 26000 Losson sale of Pollan sorties eiisao Answer 9 4 Trading secures at flr value ezaz.n00 Arsoer: cnn 4 AUDIT OF evesToENTS 287 5 avestment —_Quantty Cana Value falc Vaue 4,600stares >63000 60,000 Zo0dshares 99,009 120,000 DwarlyCompany 1,000shares 48000 36,000, Alabangcorp. Z000shares 180.009 _ 66,000 Totals ‘Zeoo) ezaz009 Unrealized oss F300.200-2232,000) PxoH.900 Asner: 6 Sales price of ine sscurties 119,700 ‘Garying amount December 31,2015: "1200 stares Pop00 2000stares| 126000 180.000 oss onsale of Inc securkies 60,300 lass om sale of sary Company secutles 8100 ‘otal realized iss in 2016 Peaso0 Acar: D Tnesimer: —QuenmyGamim VaueicVlue warty Company SOOshares P1000" 18,000 Alabang Corp. 2.000stures 66.000 246.000 Totals ‘aso 264.000 Unrealized pain (7268,000- 94,000) xga.000 Arse: 3 Trading securities, at flr value 264.000 arsine C PROBLEM 4-3288 (PA EXAMINATION REVIEWER: AUDITING PROBLEMS. During the course of your aust ofthe finsnclsttenents of FISHING CORPORATION forthe en ended Oecerbe 31, 2038, you fond 2 ew Secon, Tnvestment in equy Sarees” You" aut eva that c= ‘tg 201, Pong bogon a prog of iestnety ard of rvesne= Ted tansctone were entered Ins Sxaurt. Your analss ffs ‘cone for 2014 fons: sing Corpraion ‘Analysis of Ivestentin Et Secures Fore Year Ended December 31, 2015 (Seroarn ty agente) 28 Sot 300 ota Sores mo ‘Salmon Company received July 26 @ Proper sae ram. © ‘emban, Inc Outnary Shares ‘Apel 30. Purchased 180,00 shares {2 PO per share 7,200,000 Coc. 28 Received dividend of P20 per share. P2i6.c00 Dez Ge ‘Additonal information: |&. The ei volue foreach scurty as of the 2014 cate of each rsae= tion fallow: ‘own AvoIror nvEsnMENTS 289 Sowa Fob. 14 sow30 d.26 Sep 28 Dec 31 seimon Company PSS Por PD Pa Tena. Ine Peo 3 Lo a ae . lf the investments of Fishing Corereton ere nominal in respect to percentage of onnersnp (8s rs), (& Gach investments conslered! by Fshing Corporation to be nen- ‘wecng. Fishing Coporetin has riage an trevcabe ection to ‘reset nether comprenersive came scbesjene changes in Far Salve offs romain equty seas 1, Whet emount should be reported as gan 01 sie of nonading eg- Uy sears in 2016? 4 r2000 754000 5 F15,000 BPO 2. The reap of 3,600 share disend weds couse the investrent bel ance tones by x F223200 P1s8,000 B 7252.00 5. Po 3. Wet ents necessary to comet he recoding of he cash viene reesied frm Tambor Inc? Gan 215,000 Died income 216,000 B cxh 236,00 Tnyestment in equity secures 236,000 Investment in ecutyseeurtis 216,000 Divdend income 236,000 2. Omid nears 216,000 Tnvester in equty secre: 216,000 4 Wot emount of uneaized san r oss show be reported in the 2014 statement cf compreherske Income te comporent of thor ‘eompenenve income?vena 4 suo OF INVESTAENTS 21 290 (CPA EXAMINATION REUTEARER: AUDITING PROBLE Secunia Apso: 5. lnvestment in eguiy securities aalevalue — PR&24000 8, Px,440,000 ss 1, 9576/00 fess arses © 5. What amount shuld be reoced as Investment In Enuty Sec inthe statement of foancel postion on December 31, 20147 1. 9,000,000 cP7380,000 8. P5424,000 5 Pojseq.o00 PROBLEM 4-4 Bande SOLUTION 4-3 ‘Sonn bec an amerzatcn schedule '2ated to ANGLER COMPANY'S Sir spb bon wena i eee on 99% Ye, se rosad on Denerber 31, 2014, fr 4 Sales price Salmon ordinary shares (#703600) P252,000 ae ane: _-Loo.o00 ‘equistion cost (1.980.000 3600/3600 act test Penta © cong Gain ons fSsimon ordinary shares zane om Rene) lems Anodiaton mat . puis Z es 300 Lass rapq00wazaes Pras es Sith athlete iaauis "Sss00 “toms gana 2 The receipt of share aiden doesnot et theft eos of Chur Soo eee investment. ysis S00 so Sams ost: aus m0 a0 sD S.000 3, Investment in equity secures 216000 “he flrs sms 2 cmoaison othe arte cost na vate ot Dividend income 236000 Ue bonds at years (e203 s60000Shar) Amortized Cost Fair Value Decenber 31,20:8 "Psamaes” | P5s2500 asi: © Deaenber 1,23:8 527.08 ssn Deomber 31,2077 i800 saan 4 tovesment —Gumnty Gast Eva Deane 31,2318 S23 51300) Salmon Company 36000sharesF1.800000 P2.664,000 December 31,2019 S000, s.00) Tamban ng 160000sares 200.000 5.760.000" Totals oomony Haszsana Required 2774x3600 sare 4 Presa te Josral ent tortor the purchase ofthese Eons on #2180000 shares Dacenber 3, 2004, sonny he bends ar held Franca 5s nreatized iss 7.000000 Pe24.000} sri neared at arerted est. ~ Pree the sual entries) related to hese bons foe 2035, © Prepare th cura entry} rete to these bons for 2017.292 (CPA BRAMINATION REVIERER. AUOTTING 4 What shuld be rept asthe canying emu of these bos if the statement of irandal rostion on December 31, 20182 SOLUTION 4-4 (@) December 31,2014 Invesement in bonds 543300 ‘cash (©) December 34.2015 Cash 35.00, Investment in bonds Interest income (© December 31.2017 Cash 35,000 Investment in bonds Iverest income (Investment in bonds at amortized ost PROBLEM 4-5 (oo En SIN soto ‘Trading Secariies ‘Supporting recs of MAYON CORPORATION'S trading secures porfor Teo Show te folowing debt and equty sears: Sear Gost v 200 oni shares Concave Co, 137,250 PIDUEOD 100,032 Too ca 7% bons 358250 387/000 so}000 Tukey Co. We bonds 603.789 _ogasD Totals Ausza = Luzss0 cuvie 4 aupirormvesnaents 293 Interest dates on the bords are January 2 2nd Ju. Mayon Corpora ten uses the Incr approach to recor the purchace of Eons wth a= a + A cher ideriiabe ogive and tangle aces of 1B Co. era five cuenta vates thet are equal to heir comang emou 2 Acquisition cost (squeEze) Investment revenue (sno 1) Dividends received 3x03) Caring value, December 31,2014 (given) Spuatepi2-es3-Bang arsner A 3. Acquistion cost fee na. 2) Fair value of net assets purchased (0775+ P05 +P2= PED 40%) ood Arsier A 18 on. reore ret inane P2000, are every ring the rent year enced Devember 33, 2016. Aso nthe curent year, (lve ad pai can cen 515,000 as iar tne, arketvehe of 15 Cars ory shares at December 3 2014, © ‘non, “cabbage Compans trance yes-end is December 31. 1 What he tal anoint af gmt 1 co. based on te pce atc Cones? evo pismo & 1060000 3. Paco326 (CPA PAMINCATION REVIEWER: ALDETING 2. nat ancunt fist icone shold Cabboge repr ince dato rh Ys raed Coen foeveis nebo Fran 8 Fans c p2a750 B. P7150, 3+ What amount of investment income should Cabbage report Income statement or the yar ended December 33,2014, under equi metho? ® Pe02.500| 8. F200,250, ©. pra7s0 BL Pi23,750 4 Under the equity method, the carying value of Cabbage investment in crcnary shares of IB Co. on December 3, should be i P2221500 &. ®2.070,000 B. 2,100,000, . 2,250,000, 5. What amount should cabbage company report in December 21, 2014, statament of francel postion as In Bo, under the far vate methoc? A P2,250,000 © P2221,500 8. Fz,070,000 . 2300;000 SOLUTION 4-22 1L._Underiying valu of 8 o:s owners equity (2,160,000 25%) 400,000 Carying value of Co’s owners’ equity 2.200.000 Excess underying value over book value 1200.00 Atributableto depreciable assets P180,000 ‘Aibutable to land 900.000 2.080.000 Goodwill 220.000 Arsver: ¢ vor ALDITOF AVES 3a Underyingyalie of Cx'soweers equity Fatooood | alrvaiue iB Go'snet anos {e7atG000 + 2190300 =P.) ag0.000 os eum | “Investment income fair value method Divider esi (F156003254) eagza0 answer 6 e nvestment income ~ equity method: | Share of et income @120030%250x6/:2) 7202500 Depreciation adjustment Peapcte x 25m- PeSEEO® 2036/12) a2 Investment even ae ase zon Anon 8 "The denon of nd oe aff! Cabage Companys sae of income boca 4 noneprele ste 200000 Shoe oftetncomme a asd ena. 3) 200250 Exh lisncereceivedatsccoxesm) 8750) Gmying vale Des 31,2014 equity metiod — £2225.500 arse A “The sock inesteinl sould be carrie tits fave of P2250,000, {eo mlkon x25) on December 31,2014 ‘Toe yeorend astnent lvestrent in equlty secures Unrealzed gan on ect securities 150,000 150,000328 (PA EXANUNATION REVIVE, AUDTTING| cost 200000 Faire (fo milions25%) 2.280000 Furvaiueadustment P5000 Anse: & PROBLEM 4-23 Equity Methoa LETTUCE 00, pce 40% ct MY Cap on ft, 20% "Sb. when Moe as 25000 on edit vale of Ms nto eal ‘except for the following: Sead * MU ecupment has afar value ofP50,00 less than is vole. The equipment has a remaining weft feof 10 years, + MUS bug tat fa vale of P4000 mere an ‘ae. The bling foo enehg wat Woof 2 years "MUS results of operations in 20:4 and 2015 aes follows 2018 nt came is Zeist 000 [MY paid cash dividends of 20000 and P10,000 in 2014 and @ 2015, 1, What amount of investment income should be reported on Lettuce Companys" income statement for the year" ended December 3, 20147 Pas.400, © hs, 'B. P58,800. 500 3, Pas'00 “The investment oss to be reparted on : = ported on Lettce Companys 2015 © P13,200 B, Pi2;000 orm 4 AUDITOr RVESTNENTS 329 3. What isthe coming value of the stock investment on Desember 31, 20147 ‘% P536,100 c Pss3.200 5 FSS7300 ©, soon 4. Wat te coming yoke of the stock lnvesment on Decanter 3, 20157 A FszL, 300 523,100 8. F536,000 . 500000 SOLUTION 4-23 1. Share ofnet income (150.000x 40% x9/12) P45;000 Deprecistion najestment - equipment: {250 6C0 09 = P20.000 1039/12) 11500 Depreciation acjestment balling: {40,000 x 44 =P36.000 209/12) 1600) tnvestnentincome in 2014 Besso0 Arsver: 2. Shareof nat las (236,000: 408) Pc12.000) Depreciation adjustment equipment (P20000~ 10) 2,000 Depreciation adjstment —eulaing (21600020) (800), “Loss from feverttent in 2035 zion Ananer A 3, Aoquzton cost 500,000, Asted share of eae in 2014 (sens 1) 45900 Dividend recelvedin 2014 (P20.00'<43%) (2.000) Carrying value ofinvesent, Dec 31,2014 Bazan Arsen 8 4. Caryn value of svestment Dec 31,2014 (eee. 3) ?537.900 {aes from investment in 2035 (ce 2) (20800)330 (CPA EXAMINATION REVIEWER: AUDITING PRO Dividend received in 2015 9900 x40%) Carrying value of investment, Dee. 31, 2015 asses C PROBLEM 4-24 Tiguity Method (on January 2, 2014, OKRA CORP. pai P600,000 for the purchase 40% of the ordinary shares of Thunder Company. The statement of ancal poston of Thunder atthe date of acquistion sows the fo Information: Assos subject to depreciation (ering useful fe 8 yeas) ea00.000 Assets not subject 0 ceprelton 300/000 Uses 00/000, oth ook valve and fir velve ate the same fr assets not sublect depreciation alas. The for mares value of Thunders Subject to depreciation Is 72,720,000.» Thunder deprecats king the staigtne method. Tunders inanges are amortized 1 20-yer period. Net oom for the Year ended December 31,2018, et0,00. Tt decares and pays dividends of 500,000 2014. 1. What amount ofthe inestmant cote atibuabe to geod? A'P352,000 © P128,00 3B, Ps80/000| ©. Pe08,000 2 Whet is the canning vole of the stock December 3, 20147 AL PLe22 00 . 600,000, Investment at ©. 1,784,000 . P690;000 una 4 Aur or nvesToesrs 331 SOLUTION 4-24 Acguskion cost 1,600,000 Fri value of net stets purchased {2720000 + anD0OE ~4C0.900 = 5.120.000 x40%) Lzan.o00 Goodwit 2 aszo00 arr: 8 Acoustion cst 1,600,000 Share sfnct income (60,200.40) 256,00 Disidend received (P5e,000% 0%) (200,000) Depreciation adjustment: {2720000 -F2420.000 - P320,000 x48 = 7128000 «8 years) 116.000) Canyingvalueofisvesiment Dee 31,2014 BL gaDo00 svi: D PROBLEM 4-25 Discontinuance of the Equity Metbod XANGKONG COMPANY purchased 256000 shares of Secret Co. orinary ‘Shares on ly 1, 2014, at PES per stare, whch refeced book value as that dite, At the tne of purchase, Sesret Co. had 1,059,000 ordinary ‘Dares ostarcng, Wangkong had no ounershp herent i Sete por {ths surcvase. Secret reported net cme of F 960,000 for the si rronthe ended June 30, £014 Kangkong resid a didend of 920,000 fro Secret on August 22038, Secret reported ne incre of 7,200,000 fx the year endes bacenzer 3, 2014, and again pal angkong ctadoncs of 420020. (on January 4, 2015, Kangkong sod 106,000 orcinay shares of Secret fee ser share and eosties the remaining stock 35 at fat value {rough other epenerche rcome. The quoted markt price cf ach332 (CPA EAMINNATION REVIEWER: AUDITING! Investment on January 1, 2015, was P69 per share Secret reported Income of P7,40,000 forthe year ended December 31,2015, nd Kengkorg dividends of F240,000. The fa value of Secret ott shares at December 31,2015, was P70 per shoe, 1. What the arming value of the stock investment December 31, 20147 Pig 620,000 P16,380000 16 50,000, . 972,000 statement i © P5200 1, 680/000 | ‘3. What amount of unreses gain should be reported in the 2015 statement of comprehensive come az component of other compte ensive meome? a PO 529,000 5. P150,000 ©. 378,000 4. The carrying vale of the retained investment tobe shown in the The total amount of gun to be reprted in the 2015 -tatemet of financial postion on December 31,2015 A Ps72000 ‘c P10,350,000 8 P10,688,000 ©. Pi0'500;c00 SOLUTION 4-25 4 Acquistion cst 66 250.00) ‘Share of net income (P7.200,000- F360 000= P53940.000325%) Dividends received (420,002) Investment balance, December 31,2014 pase: & P16500,000 960,000 40.009) Pag20.000 ‘cums 4 ALDI oF RvESTMENTS 333 2. Sales price (rea 100.000) 6,800,000 Carrying value ofskaces sold {P6200 + 100,000/280 90) 6.649.000) ain oa sale of investment in stock E5200. Far value of etaned investment (P59 150020), 20,350,000 Caerylag amount of retatped investment (Pige209n05 150,006/250.090) 2.972.000) ‘ain from remeasuremeat 375.000 “otal gun (F152.00 + #373000) zsao.000 ‘Arwuer: 3. Fair value, Dec 31,2015 (£70 150,009) 10,500,000 Fair value, jan 1, 2015 (2130.00) 0.350.000 ‘Unrealized gan on equity securities Pisno00 Arse: B 4. Pair value, Dec 31,2015 (F70 x 150,000) Puasoo009 Answer: D PROBLEM 4-26 Investment fa Asovlate Achieved in Stages: Fair Value to Equity Method ‘On Janry 2, 20:4, LOVELY, INC. acme a 15% etre in CPS Corp. by paying P;000,000 fr 100,000 ordhary shares. On Zs cat, the net ‘asses ct CPS Corp. take PA,000,00.. The far vals of CPS Corp's idee assets ond ibis were ena to ther bok values. Lovely ‘didnot have he bly to curse sires ifiverce aver the operat Ing anéfnancal plies of CPS. Lovely recive dicerds of PLA0 por share from C25 cn October 1, 2014. CPS reported net cone’ of 520,000 for the year ended Deceiber 31, 201%, Lowy cessed the334 (CPA EXAMINATION REVIEWER: AUDITING) Investments at fa value trough cher comprehensive income. et price forthe 10,000 shares as 9006000 on December 31,20 ‘vey pais 30,000,000 on January 1, 2015, for 300,000 adtionl ‘orcnary shares, wich represents a 25% ineestn CPS. The fle PS Corps identifiable asses, net of Naito, was eau to book velues of 992,000,000. Asa resi ofthis actona a has the abit to exercise signa ence over the share on Ocicber 5, 2015, CPS reported et Income of P,000,000, the year ended December 31, 2015. The investments far value December 31,2015, 6 P85,00,000, 4, In the December 31, 2014, statement of francal postion, what the eiryng amount ofthe investment in equtysecurtls? ‘A. P5,10,000 ‘© p3.000.000, 8 3,000,000 ©. 8,750,000, \What isthe total amourt of ivecentested revene thet be repertas nthe 2044 Income taterent? A 0,000 P7s0;000 3. i,140,000 . 1,610,000 What amount of gain on remeasurement to equity shouldbe report led in the 2015 income statement? '\, Pi320,000 % Pp 8. 1,080,000, ©. 1,000,000 What Is the goodwill arsing fom the scqustion of addtional 300,000 shares on January 1, 20157 a PO. © F7000,000 8. °2,200,000 . F3;000,000, 5. What & the caring amount of the Investment In associate on December 3, 20157 ‘A. Pa5,000,00 © P33,120000 8. p40.320,000 ©. 739,000,000 Cotas 4 AUDIT OF mVESTMENTS 335 SOLUTION 4-26 1 Investment inequity securities, atfulrvalue 3,009,000, dose & 2. Dividend income (1.40 100000) paso.000 Asner: & 3. Any previous uelizod guin or loss on she existing intrest scouted frat fir value though other comprehensive income is reclassified 16 profit rls Fara, Do 31,2034 9000000, Garyingamoust -.000.00 Unrealized gain ther compretensieincome ‘BLoooonn “Tesscosay he unsaid grin on anwar 1 2015: Unrealized gan -OCt 4,000,000 ‘Gain on Femeasurementto equity +,000,000 nse: © 4. Falrvalueof 15% existing interest 9,000,000 Cost of 25% ational interest, ‘sjoo0.000 ‘otal castofavestment n associate 39,000,000 Carrying amount of net assets acquired (792,000,000. 4096) c.e00.000 Goodwil (notamortized) ezzoo000 dosner & 5. Total costofinvestment in associate Jan 1,2015 39,000,000, (ash dividend received (P2:703 400,000) (2,080,000) Share in net income (P6,000,000 x 4036) 200,000 Carrying amount, Dee. 31,2015 Pinz0.000 sien: 8