Академический Документы
Профессиональный Документы
Культура Документы
2016
On March 31, 2016, Jack received the
Piper’s ordinary shares. On this date;
Piper’s OS are selling at P13/share.
On July 1, 2016, Jack acquired from
other shareholder of Jill, additional shares
at P135 per share to increase its
investment to 25% and paid brokers fees
of P45,000.
On October 1, 2016, Jack bought at
special price of P450,000, merchandise
from Jill. This merchandise normally sells
at P500,000, giving Jill a gross profit of
25%.
On December 1, 2016, Jack received 500
new ordinary shares in lieu of P2 cash
dividend declared by Jill. On the same
date, Jack also received from Piper,
additional shares representing 10% stock
dividend. On this date Jill’s and Piper’s
ordinary shares are selling at P138 and
P12.75 respectively.
On December 31, 2016, Jill reported a
net income of P3,870,000, and the fair
value per share of Jill’s OS and Piper’s OS
were P138.50 and P12.80 respectively.
Required: Journal entries assuming that
Jack Company classifies the investment as
a) Financial Asset at FV and b) Financial
Asset at FV through OCI.
Problem 2:
On December 31, 2014, Joan Corporation has the
following equity securities in its investment
portfolio:
Jerry Corporation’s quoted ordinary shares
representing 15% of the 200,000 shares
outstanding with a par value of acquired on April
1, 2012 at their fair value of P112 plus
transaction of P140,000.
10% of JJ Incorporated, P50 par value,
unquoted ordinary share. These investments
were acquired on Sep 1, 2011 at a total cost of
P550,000, on the same day JJ Incorporation
outstanding share were 100,000 shares and
10,000 shares of ordinary and 12%, P100 par
value cumulative preference shares
respectively.
Transactions and other information related to the
investments were as follows:
Jerry Corporation:
On November 15, 2012, Jerry declared 20%
stock rights to issue additional at P10 premium
per share. On this date the Jerry’s ordinary
share is selling P113. Joan exercised the stock
rights on January 15, 2013.
Purchases of Jerry from Joan Corporation is
estimated at 40% of its total purchases. On
December 31, Jerry reported Purchases from
Joan, Unsold goods from purchases from Joan,
Income reported, Dividends declared and paid
and Fair Value of Jerry’s ordinary share as
follows:
Unsold Net Fair
Yea Purchas as of Income Dividen Valu
r es Decemb ds e
er 31
201 5,200,00 442,000 2,850,0 1,350,0 115
2 0 00 00
201 5,395,00 669,500 3,100,0 1,600,0 118
3 0 00 00
201 5,200,00 585,000 2,900,0 1,400,0 123
4 0 00 00
201 6,799,00 458,900 3,430,0 1,930,0 135
5 0 00 00
Jerry’s profit margin rate is 35%, while Joan’s
profit rate to Jerry is 30% on cost.
Joan Corporation has been the major supplier
of Jerry since 2011. Early January 2013 and
during the general shareholders meeting, Joan
Corporation was able to acquire a seat in the
board of directors.
On October 1, 2014, Joan sold to Jerry an
equipment costing P1,500,000, with a carrying
value of P750,000 and a remaining useful life of
5 years for P1,200,000 receiving P200,000 cash
and a non-interest bearing promissory note
discounted at 12% and payable at P500,000
each on October 1, 2015, and October 1, 2016.
JJ Incorporated
On December 1, 2012, JJ Inc. declared 20%
share dividend to shareholder of record on
December 15, 2012, payable on December 29,
2012.
On January 5, 2015, received from JJ Inc. 240
preference share representing share dividends
declared on December 15, 2014. On this date
JJ ordinary share and preference share can be
purchased at P58.50 and P105.50.
January 15, 2015, Joan acquired additional
15% of the outstanding ordinary of JJ Inc. for
P1,000,000. On this date the fair value of the
old 10% interest is P720,000 and the carrying
value of the net asset of JJ Inc. is P6,500,000.
Any excess of cost over carrying value is
attributable to an undervalued depreciable asset
with an average useful life of 5 years.
Net Income and dividend declared and paid by
JJ Inc. were as follows: