You were assigned to perform audit procedures on the investments account of Classic Corporation for 2020, your first-time audit of the client. The current asset portion of Classic Corporation’s statement of financial position shows the following information as of December 31, 2019:

Current Asset	Note	As of December 31, 2019
Cash and cash equivalents	5, 14	P 3,985,000
Receivables, net	6, 14	7,742,000
Inventories	7	15,859,000
Short-term investments	8, 14	3,280,000
Other current assets	10	352,000
Total Current Asset		31,218,000

Note 8 on investments described the investments as equity securities held primarily for being traded to take advantage of price fluctuations in the market. The following information shows the breakdown of the investment account per client’s subsidiary records:

Held for Trading Securities:

Securities	No. of Shares	Market Price	Amount
SMC Ordinary	5,000	176	P 880,000
AC Ordinary	3,000	800	2,400,000
Total			P3,280,000

You were able to verify that the quantity and valuation of the shares as of December 31, 2019, were appropriate.

Based on your substantive test of details of transactions and balances for the investment account you gathered the following information for 2020:

1. SMC declared and distributed a 10% bonus issue to its shareholders on February 1, 2020.

2. On March 31, 2020, AC declared and paid P5.00 cash dividend to its shareholders.

3. On May 30, 2020, Classic Corporation sold 550 shares of SMC ordinary shares for P200 per share.

4. On July 1, 2020, Classic Corporation acquired 1,000 ordinary shares of Excel Company for P26 per share. Classic Corporation paid P2,000 in transfer taxes and commissions. The company designated the shares at fair value through other comprehensive income.

5. On November 30, 2020, Classic Corporation sold 1,000 shares of AC ordinary for P780.00 per share.

6. On December 15, 2020, AC declared a P2 cash dividend per share on its ordinary shares, payable on January 31, 2021 to shareholders of record as of December 30, 2020.

7. Refer to WB for HO.2 excel file for market prices of the equity investments as of December 31, 2020.

Answer the following questions:

1. How many equity investments at fair value through profit or loss should be presented by Classic Corporation in the current assets portion of its statement of financial position as of December 31, 2020?

2. How many equity investments at fair value through other comprehensive income should be presented by Classic Corporation in the non-current assets portion of its statement of financial position as of December 31, 2020?

3. How much investment income (loss) should be presented in profit or loss in 2020?

4. How much investment income (loss) should be presented in other comprehensive income in 2020?

5. How much cumulative gains or losses should be presented as a separate component in shareholders’ equity related to equity investments at fair value through other comprehensive income as of December 31, 2020?

Answer rating: 100% (QA)

1 There should be two equity investments at fair value through profit or ... View the full answer