Claret Corporation had the following transaction for the year 2019:

January 1 Purchased 40,000 shares of ABC Co. at P22 per share plus transaction cost of P1 per share. This is designated as fair value through profit or loss. 

February 1 Purchased 20,000 shares of DEF at P15 per share plus transaction costs of P2 per share. This is designated as fair value through other comprehensive income. 

March 1 ABC declared a P2 cash dividend per share to all stockholders as of April 15, 2019. 

DEF declared a P3 cash dividend per share to all stockholders as of May 1, 2019 

April 5 Sold 8,000 ABC shares for a total price of P240,000. 

April 20 Sold 5,000 DEF shares for a total price of P120,000 

May 1 Received cash dividend from ABC 

May 15 Received cash dividend from DEF June 1 Received 20% bonus issue from ABC April 1 

July 1 Received stock rights from ABC to purchase 1 share for P30 for every 10 rights exercised. 

August 1 Sold 25% of the stock rights for P2 per right 

September 1 Exercised 50% of the remaining rights when the fair market value of ABC share was P35. 

October 1 Remaining rights expired. December 31 Fair market value per share: P2S for ABC and P24 for DEF. 

The policy of transferring to retained earnings the cumulative balance in equity as a result of measuring certain type of investments to fair value when the investment is derecognized shall always be observed. 

Required: Compute for the following: 

1. Gain or loss on sale of DEF shares 

2. Gain or loss on sale of ABC shares 

3. Amount to be recycled to retained Earnings 

4. Unrealized gain/(loss) in the 2019 Statement of Financial Position 

5. December 31, 2019 Fair value of the two equity securities

Answer rating: 100% (QA)

1cost of DEF Share 20000152340000 cash divd to be received on if shares held on May 19 on April 2020... View the full answer