Page 1 of 8 | AUD Handouts No.

08

INVESTMENTS IN EQUITY SECURITIES

DARRELL JOE O. ASUNCION, CPA, MBA

INVESTMENTS IN EQUITY SECURITIES

DARRELL JOE O. ASUNCION, CPA MBA

PROBLEM NO. 1 Purchase: Trade Date vs. Settlement Date Accounting

On December 29, 2018, Bifurcation Company commits itself to purchase a financial asset to be classified as held for trading
for ₱600,000, its fair value on commitment (trade) date. This security has a fair value of ₱601,000 and ₱602,000 on
December 31, 2018 (Bifurcation's financial year-end), and January 5, 2019 (settlement date), respectively.

Questions:
Based on the above data, answer the following:
1. If Bifurcation applies the trade date accounting method to account for regular-way purchases of its securities, how much
should be recognized as trading securities on December 31, 2018?
a. ₱600,000 c. ₱602,000
b. ₱601,000 d. ₱ 0

2. If Bifurcation applies the settlement date accounting method to account for regular-way purchases of its securities, how
much should be recognized as trading securities on December 31, 2018?
a. ₱600,000 c. ₱602,000
b. ₱601,000 d. ₱ 0

PROBLEM NO. 2 Sale: Trade Date vs. Settlement Date Accounting

On December 29, 2018 (trade date), Subterfuge Corp. enters into a contract to sell an equity security classified as Fair
Value through Other Comprehensive Income (FVTOCI) for its current fair value of ₱506,000. The asset was acquired a
year ago and its cost was ₱500,000. On December 31, 2018 (financial year-end), the fair value of the asset is ₱510,000.
On January 5, 2019 (settlement date), the asset's fair value is ₱513,000.

Questions:
Based on the above data, answer the following:
1. If Subterfuge uses the trade date method to account for regular-way sales of its securities, how much is the carrying
amount of FVTOCI at December 31, 2018?
a. ₱506,000 c. ₱513,000
b. ₱510,000 d. ₱ 0

2. If Subterfuge uses the settlement date method to account for regular-way sales of its securities, how much is the carrying
amount of FVTOCI at December 31, 2018?
a. ₱506,000 c. ₱ 5,000
b. ₱510,000 d. ₱ 0

PROBLEM NO. 3 Basic Journal Entries- Acquisitions in Between Dates of Declaration and Record
The Lurid Company has the following transactions relating to its investments during 2018:
January 5 Acquired 10,000 shares of Defray Co. for ₱1,000,000 paying additional ₱20,000 for brokerage and another
₱5,000 for commission.
February 14: Received dividends from Defray Co. declared January 2, 2018 to the stockholder of record January 31, 2018,
₱20,000.

On December 31, 2018 and 2019, the market value per share of the Defray stock is ₱95 and ₱120, respectively.

Required: Prepare all the necessary entries assuming the investment is

1) Financial Assets at Fair Value through Profit or Loss.
2) Investment in equity designated as at Fair Value through Other Comprehensive Income.

PROBLEM NO. 4 Derecognition of Financial Assets - Sale of Investment

On January 1, 2018, Haphazard Corp. owns 15,000 ordinary shares representing 15% of the shares outstanding of Luke
Corporation. The ordinary shares were acquired on November 12, 2017 at a cost of ₱1,500,000 and have a fair value of
₱1,600,000 on December 31, 2017. On January 2, 2018, Haphazard sold half of its investment for ₱100 per share incurring
a brokerage and commission expense of ₱20,000.

Questions:
Based on the above data, answer the following:
Case No. 1: Assume that the above securities are classified as fair value through profit or loss
1. Unrealized gain (or loss) on December 31, 2017 to be presented in the statement of financial position.
a. Nil c. ₱(100,000)
b. ₱100,000 d. ₱20,000
(074) 665 6774 0916 840 0661 admin@reo.com.ph MAY 2021 CPA REVIEW SEASON
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DARRELL JOE O. ASUNCION, CPA MBA

INVESTMENTS IN EQUITY SECURITIES

2. Gain (or loss) on sale on January 2, 2018 to be recognized in the profit or loss.
a. Nil c. ₱(50,000)
b. ₱(70,000) d. ₱20,000

Case No. 2: Assume that the above securities are designated as at fair value through other comprehensive income
3. Unrealized gain (or loss) on December 31, 2017 to be presented in the statement of financial position.
a. Nil c. ₱(100,000)
b. ₱100,000 d. ₱20,000

4. Gain or loss on sale on January 2, 2018 to be recognized directly in the retained earnings.
a. Nil c. ₱(50,000)
b. ₱(70,000) d. ₱20,000

5. Prepare all the necessary entries for the years 2017 and 2018 (for both FVTPL and FVTOCI).

PROBLEM NO. 5 Share Dividends

On October 1, 2018, Contentious Corp. owns 15,000 ordinary shares of Pulsate Corporation acquired at a cost of
₱1,500,000. The shares represent 15% of the ordinary shares outstanding of Pulsate Corporation.

Required:
Record the receipt of the share dividends on the Contentious’ book under each of the assumption listed below:
Case No. 1: Assuming the shares are investment in unquoted securities measured at cost
1. Contentious received 15% ordinary shares as Share Dividends.
2. Contentious received 1,500 preference shares as Share Dividends. The par value of the preference share is ₱200 per
share while the ordinary shares has a par value of ₱100.

Case No. 2: Assuming the shares are financial assets at fair value through profit or loss
3. Contentious received 15% ordinary shares as Share Dividends. The fair value of the ordinary shares amounted to ₱100.
4. Contentious received 1,500 preference shares as Share Dividends. The fair value of each preference share is ₱150.

Case No. 3: Assuming the shares are investment in equity securities designated as at fair value through other
comprehensive income
5. Contentious received 15% ordinary shares as Share Dividends. The fair value of the ordinary shares amounted to ₱100.
6. Contentious received 1,500 preference shares as Share Dividends. The fair value of each preference share is ₱150.

PROBLEM NO. 6 Cash Received in Lieu of Share dividends

On October 1, 2018, Qualms Corp. owns 15,000 ordinary shares of Sarcasm Corporation acquired at a cost of ₱345,000.
The shares represent 15% of the shares outstanding of Sarcasm Corporation. On the same date, Sarcasm Corp. declared
15% share dividends payable to stockholders on October 31. On October 31, the stock is selling at ₱40 per share. However,
on October 31, Sarcasm Corp. gave ₱36 per share cash in lieu of the supposed share dividends previously declared.

Case No. 1: Assuming the shares are investment in unquoted securities measured at cost
Case No. 2: Assuming the shares are financial assets at fair value through profit or loss
Case No. 3: Assuming the shares are investment in equity securities designated as at fair value through other
comprehensive income

Questions:
Based on the above data, compute for the following using the above independent cases:
1. Dividend income to be recognized in 2018
2. Gain or loss on sale of investment to be recognized in 2018

PROBLEM NO. 7 Shares Received in Lieu of Cash Dividends

On October 1, 2018, Venus Corp owns 15,000 ordinary shares of Mercury Corporation acquired at a cost of ₱345,000. The
shares represent 15% of the shares outstanding of Mercury Corporation. On the same date, Mercury Corp. declared ₱8
cash dividends on its outstanding shares payable to stockholders on October 31. However, on October 31, Mercury Corp.
issued 1 share for every 5 shares held by the shareholders in lieu of the supposed cash dividends previously declared.

Case No. 1: Assuming the shares are investment in unquoted securities measured at cost
Case No. 2: Assuming the shares are financial assets at fair value through profit or loss. October 1, 2018, the stocks were
selling at that time at ₱44 per share.

Requirements:
1. Based on the above data, compute for the dividend income to be recognized in 2018
2. Prepare all the necessary entries on
a. October 1, 2018
b. October 31, 2018
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DARRELL JOE O. ASUNCION, CPA MBA

INVESTMENTS IN EQUITY SECURITIES

PROBLEM NO. 8 Stock Split and Special Assessment

On January 1 of the current year, Phobos Company acquired 10,000 shares of Investment in equity designated as at Fair
Value through Other Comprehensive Income of Deimos Company at ₱400,000 plus brokerage expense of ₱20,000. On
March 1 of the current year, Deimos Company ordinary share was split on a 5-for-2 basis. On October 1, Deimos Company
made a special assessment of ₱3.20 per share on all ordinary shareholders. Phobos Company accordingly paid the
assessment. The fair value on December 31 amounted to ₱30 per share.

Questions:
Based on the above data, answer the following:
1. The total number of shares at the end of the year.
a. Nil c. 300,000
b. 140,000 d. 25,000

2. The unrealized gain to be presented in the other comprehensive income for the current year.
a. Nil c. ₱300,000
b. ₱140,000 d. ₱250,000

3. The necessary entries on January 1, will include a

a. Debit to Financial Asset at FVTOCI, ₱400,000
b. Debit to Financial Asset at FVTOCI, ₱420,000
c. Credit to Cash, ₱400,000
d. No journal entry

4. The necessary entries on December 31, will include a

a. Debit to Financial Asset at FVTOCI, ₱400,000
b. Debit to Financial Asset at FVTOCI, ₱300,000
c. Credit to Unrealized gain, ₱250,000
d. Credit to Unrealized gain, ₱140,000

PROBLEM NO. 9 Stock Right

On June 15, 2018, Mars Company owns 10,000 shares with a cost of ₱700,000 of Moon Company’s stocks. During the
same period, Moon Company issued stock rights to existing shareholders. Mars received 10,000 stock rights entitling him
to purchase 5,000 new shares at ₱80. The ordinary share was trading ex-rights at ₱80 a share and the rights had a market
value ₱20 per right.

On July 15, 2018, Mars exercised all the stock rights. The share is quoted right-on at ₱90.

Questions:
Based on the above data, answer the following:
1. Assuming that the above securities are FVTPL, the stock rights should be initially recognized at
a. Nil c. ₱100,000
b. ₱200,000 d. None of the choices

2. Assuming that the above securities are FVTOCI, the stock rights should be initially recognized at
a. Nil c. ₱100,000
b. ₱200,000 d. None of the choices

3. Assuming that the above securities are FVTPL, the cost of investment acquired through exercised of stock rights should
be
a. Nil c. ₱600,000
b. ₱400,000 d. None of the choices

4. Assuming that the above securities are FVTOCI, the cost of investment acquired through exercised of stock rights
should be
a. Nil c. ₱600,000
b. ₱400,000 d. None of the choices

PROBLEM NO. 10 Theoretical Value of Rights

On January 2, 2015, Jupiter Company purchased 10,000 shares of ₱100 par value ordinary shares at ₱120 per share of
Saturn Company. On March 2, 2015, Saturn Company issued stock rights to its shareholders. The holder needs five rights
to purchase one share of ordinary stock at par. The market value of the stock on that date was ₱160 per share. There was
no quoted price for the rights.

Questions:
Based on the above data, answer the following:
1. Compute for the theoretical value of the rights assuming, the stock is selling right-on
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DARRELL JOE O. ASUNCION, CPA MBA

INVESTMENTS IN EQUITY SECURITIES

a. Nil c. 12
b. 10 d. 27

2. Compute for the theoretical value of the rights assuming, the stock is selling ex-right
a. Nil c. 12
b. 10 d. 27

COMPREHENSIVE PROBLEMS
PROBLEM NO. 11
You were engaged by Governing Body Company to audit its financial statements for the year 2018. During the course of
your audit, you noted that the following Investment in equity securities designated as at fair Value through Other
Comprehensive Income securities were properly reported at December 31, 2017:

Cost Market
Gerrit Corporation, 15,000 shares,
convertible preference shares ₱ 900,000 ₱ 975,000
Loesch, Co., 10,000 shares of ordinary shares 550,000 451,000
₱1,450,000 ₱1,426,000

The following transactions transpired during 2018:

Jan. 10 Acquired 20,000 shares of Barr designated as at FVTOCI at ₱400,000 cash. Additional ₱20,000 was also paid
for the brokerage and commissions.

Feb. 10 Received the following dividends (all declared on January 15, 2018 to the stockholders of record January 20):

Loesch - 1,000 share dividends (The market value per share on this date is ₱60)
Gerrit ₱30,000
Barr ₱10,000

Mar. 10 Converted 5,000 shares of Gerrit preference shares into 10,000 shares of Gerrit Ordinary shares when the market
price was ₱70 per share for the preference share and ₱40 per share for the ordinary share.

April 1 Loesch Co. issued rights to ordinary shareholders for the acquisition of one additional share at ₱62 for every five
shares held. The ordinary share was trading ex-rights at ₱54 a share and the rights had a market value ₱6 per
right.

May 1 Exercised all the stock rights.

Nov. 15 Sold 2,000 shares of the Loesch stocks for ₱70 per share.

Dec. 1 Received ₱1 per share dividends on the Loesch shares declared on November 2, 2018 to the stockholders of
record November 20.

Closing market quotation as of December 31, 2018:

Bid Asked
Gerrit Corporation, preference shares 70 75
Gerrit Corporation, ordinary shares 45 42
Loesch Co 72 75
Barr Co 20 24

Questions:
Based on the above and the result of your audit, you are to provide the answers to the following:
1. How much is the correct cost of the investment acquired on January 10?
a. ₱400,000 c. ₱390,000
b. ₱420,000 d. None of the choices

2. How much is the total dividend income for the year 2018?
a. ₱101,200 c. ₱43,200
b. ₱53,200 d. None of the choices

3. How much is the gain on conversion of 5,000 Gerrit preference shares into 10,000 ordinary shares?
a. ₱100,000 gain c. ₱75,000 gain
b. ₱50,000 gain d. None of the choices

4. How much is the gain or loss on sale of 2,000 Loesch shares?

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DARRELL JOE O. ASUNCION, CPA MBA

INVESTMENTS IN EQUITY SECURITIES

a. ₱24,000 loss c. ₱ 39,000 gain

b. ₱36,000 gain d. ₱17, 333 gain

5. How much should be reported as unrealized gain on Fair Value through Other Comprehensive Income securities in the
company’s statement of financial position for the year 2018?
a. ₱308,000 c. ₱298,000
b. ₱338,000 d. None of the choices

PROBLEM NO. 13 Investment in Associate

At the beginning of the current year, the Catherine Company purchased 40% of the ordinary shares of Buban Company for
₱3,500,000.
At the acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair
value, except for equipment for which the fair value was ₱1,500,000 greater than the carrying amount and the inventory
whose fair value was ₱500,000 greater than cost.
The equipment has a remaining life of 4 years and the inventory was all sold during the current year.
The investee reported net income of ₱4,000,000 and paid ₱1,000,000 dividends on October 1 of the current year.

Assume the following independent cases, determine the balance of:

1. Investment income during the current year.
2. Investment account balance at the of the current year.

Case NO. 1-Assume that the investment is accounted for as investment in equity designated as at fair value through other
comprehensive income and the fair value of the share is ₱4,000,000.
Case NO. 2-the carrying amount of net assets of the investee on the date of acquisition is ₱5,000,000.
Case NO. 3-the carrying amount of net assets of the investee on the date of acquisition is ₱5,000,000 also assume that the
date of acquisition is April 1 of the current year.
Case NO. 4-the carrying amount of net assets of the investee on the date of acquisition is ₱7,000,000.
Case NO. 5-the carrying amount of net assets of the investee on the date of acquisition is ₱9,000,000.
Case NO. 6-the carrying amount of net assets of the investee on the date of acquisition and at the end of the reporting
period is:
January 1 December 31
Share capital 4,000,000 4,000,000
Revaluation surplus 1,500,000
Retained earnings 2,000,000 5,000,000
The revaluation surplus is the result of revaluation of the land recognized by Buban Company on December 31, of the
current year.
Additionally, depreciation is provided by Buban Company on the diminishing balance method whereas Catherine Company
uses straight-line method.
Had Buban Company used the straight-line, the accumulated depreciation would be increased by ₱200,000. The tax rate
is 30%.

PROBLEM NO. 14
On January 1, 2009, NCPAR Company acquired 20% of the outstanding ordinary shares of BRAYDEN Company for
₱4,500,000. This investment gave NCPAR the ability to exercise significant influence over BRAYDEN. The book value of
the acquired shares was ₱3,000,000. The excess of cost over book value was attributed to a depreciable assets which was
undervalued on BRAYDEN’ statement of financial position and which had a remaining useful life of ten years.
For the year ended December 31, 2009, BRAYDEN’ share capital outstanding is as follows:
10% cumulative preference share capital 2,500,000
Ordinary share capital 10,000,000

BRAYDEN reported net income ₱1,500,000 for the year ended December 31, 2009.

CASE NO. 1- Assuming the cumulative preference share is treated as equity by BRAYDEN and that BRAYDEN declared
dividends of ₱200,000 on the preference shares, answer the following:
1. What amount should NCPAR record as investment income for the year ended December 31, 2009?
2. What amount should NCPAR record as investment in associate for the year ended December 31, 2009?

CASE NO. 2- Assume instead that the preference shares are non-cumulative preference share treated as equity by
BRAYDEN and that BRAYDEN declared dividends of ₱200,000 on the preference shares, answer the following:
1. What amount should NCPAR record as investment income for the year ended December 31, 2009?
2. What amount should NCPAR record as investment in associate for the year ended December 31, 2009?

CASE NO. 3- Assuming the cumulative preference share is treated as Financial liability by BRAYDEN, answer the following:
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DARRELL JOE O. ASUNCION, CPA MBA

INVESTMENTS IN EQUITY SECURITIES

1. What amount should NCPAR record as investment income for the year ended December 31, 2009?
2. What amount should NCPAR record as investment in associate for the year ended December 31, 2009?

PROBLEM NO. 15 CHANGE FROM COST TO EQUITY METHOD

On January 1, 2016, Christine Co. acquired 20,000 ordinary shares out of the 200,000 outstanding ordinary shares of Mary
Inc. for ₱3,400,000. The investment was classified as fair value through profit or loss (FVTPL). The fair values per share of
Mary are as follows: December 31, 2016, ₱160; December 31, 2017, ₱150 and December 31, 2018, ₱180.

On January 1, 2018, Christine purchased an additional 24,000 of Mary’s stock representing 12% additional interest for
₱3,840,000, its fair value on that date, when the carrying amount of Mary's net assets was ₱10,000,000. The excess was
attributable to the machinery having a remaining life of ten years.

On December 31, 2016, Mary reported net income of ₱800,000 and declared and paid dividends of ₱400,000. On December
31, 2017, Mary reported net income of ₱1,400,000 and declared and paid dividends of ₱550,000. On December 31, 2018,
Mary reported net income of ₱1,300,000 and declared and paid dividends of ₱400,000.

Questions:
Based on the above date, answer the following:
1. How much is the amount of unrealized gain (or loss) to be recognized in the profit or loss in 2017?
a. Nil c. ₱(400,000)
b. ₱(200,000) d. ₱(300,000)

2. How much is the amount of investment income to be recognized in the profit or loss in 2017?
a. Nil c. ₱82,500
b. ₱55,000 d. ₱88,000

3. How much is the gain on reclassification of January 1, 2018 as a result of acquisition of 12% interest in Mary Corp to
be recognized in the profit or loss?
a. Nil c. ₱200,000
b. ₱88,000 d. ₱275,000

4. How much is the net share in the profit or loss of the associate (investment income) in 2018?
a. ₱286,000 c. ₱770,000
b. ₱(198,000) d. ₱308,000

5. How much is the carrying amount of the investment as of December 31, 2018?
a. ₱7,326,000 c. ₱7,810,000
b. ₱6,754,000 d. ₱7,722,000

PROBLEM NO. 16 DISCOUNTINUANCE OF EQUITY METHOD-CHANGE FROM EQUITY

On July 1, 2016 Marianne Corporation acquired 60,000 shares of the 200,000 shares outstanding of Sexy Inc. at ₱25 per
share. The company incurred ₱2 transaction cost per share. The book value of Sexy Inc.’s net assets on this date amounted
to ₱5,000,000. The fair value of one of its identifiable intangible with a 5 year remaining life higher than book value by
₱50,000 while it’s Equipment having a remaining life of 8 years had a fair value ₱160,000 higher than book value. All other
identifiable assets had fair value approximating their book values.

Sexy reported total net income in 2016 at ₱800,000 and distributed dividends at year end at ₱300,000. Fair value of shares
on this date was ₱30 per share while cost to sell is at ₱2 per share.

Sexy reported total comprehensive income in 2017 at ₱1,250,000 which is net of a foreign translation loss amounting to
₱150,000. It also distributed dividends at year end at ₱500,000. Fair value of shares on this date was at ₱30 per share
while cost to sell remained ₱2 per share.

On January 1, 2018, Marianne Corp. sold 24,000 Sexy Corp. shares at ₱32/share, its fair value on that date, and reclassified
the remaining shares to investment in equity securities designated as at fair value through other comprehensive income.

Questions:
Based on the above date, answer the following:
1. The investment in associate balance on December 31, 2016
a. ₱1,645,500 c. ₱1,680,000
b. ₱1,740,000 d. ₱1,590,000
2. The impairment loss on December 31, 2016
a. Nil c. ₱154,500
b. ₱34,500 d. ₱181,500
3. The impairment loss on December 31, 2017
a. Nil c. ₱154,500
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DARRELL JOE O. ASUNCION, CPA MBA

INVESTMENTS IN EQUITY SECURITIES

b. ₱34,500 d. ₱181,500
4. The investment income to be recognized by the company in its income statement for 2017 should be
a. ₱150,000 c. ₱270,000
b. ₱420,000 d. ₱411,000
5. The total net gain (or loss) due to reclassification from investment in associate to fair value through other comprehensive
income to be recognized 2018 profit or loss
a. ₱96,000 c. ₱(45,000)
b. ₱99,000 d. ₱195,000

PROBLEM NO. 17 Deemed Disposal

Israel Company held an interest in Cristina Company. On January 1, 2018, Cristina issued 40,000 new shares of ₱8 each
to CJ Company. Cristina Company has the following data prior to issuance of the new shares:
• Share capital before its increase was ₱800,000 at ₱5 par.
• Net assets were ₱1,000,000.

Case No. 1: Israel has 20% interest in Cristina Company and the adjusted balances of the related accounts before deemed
disposal are:
• Investment in associate account is ₱200,000
• Cumulative share in the associate’s gain on exchange difference on translation of foreign operation is ₱100,000.
1. How much is the gain or loss on deemed disposal to be recognized in the 2018 profit or loss?
a. Nil c. ₱16,800
b. ₱11,200 d. ₱40,000
2. How much is the amount of share in the other comprehensive income to be recycled to profit or loss in 2018?
a. Nil c. ₱16,000
b. ₱100,000 d. ₱4,000
3. Assume instead that the share in the other comprehensive of ₱100,000 arises not from translation gain of foreign
operations but from the share in the revaluation surplus of the associate, how much is the amount of share in the other
comprehensive income to be recycled to profit or loss in 2018?
a. Nil c. ₱4,000
b. ₱100,000 d. ₱20,000

Case No. 2: Israel has 30% interest in Cristina Company and the adjusted balances of the related accounts before deemed
disposal are:
• Investment in associate account is ₱300,000 before deemed disposal.
• Cumulative share in the associate’s gain on exchange difference on translation of foreign operation is ₱100,000.
4. How much is the gain or loss on deemed disposal to be recognized in the 2018 profit or loss?
a. Nil c. ₱16,800
b. ₱90,000 d. ₱106,800
5. How much is the amount of share in the other comprehensive income to be recycled to profit or loss in 2018?
a. Nil c. ₱20,000
b. ₱100,000 d. ₱6,000
6. Assume instead that the share in the other comprehensive of ₱100,000 arises not from translation gain of foreign
operations but from the share in the revaluation surplus of the associate, how much is the amount of share in the other
comprehensive income to be recycled to profit or loss in 2018?
a. Nil c. ₱20,000
b. ₱100,000 d. ₱6,000

PROBLEM NO. 18
On January 1, 2017, Myrah Company acquired 30% of the ordinary shares of an associate for ₱5,000,000. On this date, all
the identifiable assets and liabilities of the associate were recorded at fair value. An analysis of the acquisition showed that
goodwill of ₱400,000 was acquired.

The net income and dividend of the associate for 2017 and 2018 were as follows:

2017 2018
Net income ₱2,500,000 ₱4,000,000
Dividend paid 900,000 2,000,000

On January 3, 2017, Myrah Company sold an equipment costing ₱300,000 to the associate for ₱400,000. The equipment
has a remaining life of 5 years.
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DARRELL JOE O. ASUNCION, CPA MBA

INVESTMENTS IN EQUITY SECURITIES

In December 2017, the associate sold inventory to Myrah Company for ₱350,000. The cost of the inventory was ₱300,000.
This inventory remained unsold by Myrah Company on December 31, 2017. However, it was sold by Myrah Company in
2018.

In December 2018, Myrah Company sold inventory to the associate for ₱550,000. The cost of the inventory was ₱400,000.
This inventory remained unsold by the associate on December 31, 2018.

Questions:
Based on the above date, determine the following: (ignore income tax on the intercompany sale)
1. Investment income in 2017
a. ₱575,000 c. ₱670,000
b. ₱655,000 d. ₱676,000
2. Investment income in 2018
a. ₱1,106,000 c. ₱1,190,000
b. ₱1,085,000 d. ₱1,215,000
3. Carrying amount of the investment in associate on December 31, 2017
a. ₱5,385,000 c. ₱4,440,000
b. ₱5,835,000 d. ₱4,170,000
4. Carrying amount of the investment in associate on December 31, 2018
a. ₱5,790,000 c. ₱5,912,000
b. ₱5,870,000 d. ₱5,975,000
5. Assuming the company is a small/medium entity and uses the equity method, the carrying amount of investment on
December 31, 2018 is
a. ₱5,790,000 c. ₱5,912,000
b. ₱5,870,000 d. ₱5,975,000

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