Please provide solution to the problems. 1. On January 1, 20x1, Allan Co. purchased ?400,000 bonds for ?392,000. The bonds mature on January 1, 20x5 and pay 12% annual interest beginning January 1, 20x2. Transaction costs are negligible. The bonds were classified as held for trading securities. On December 31, 20x1, the bonds are selling at a yield rate of 10%. How much is the unrealized gain (loss) recognized on December 31, 20x1? a. 27,986 b. 31,298 c. 28,964 d. 33,359 2. On January 1, 20x1, Mitch Co. acquired 12%, P4,000,000 bonds at 98. Commission paid to brokers amounted to P204,000. Principal is due on December 31, 20x4 but interest payments are made annually starting December 31, 20x1. The adjusted effective interest rate on the investment is closest to a. 12% b. 11% c. 10.2650% d. indeterminable 3. On December 31, 20x1, DECAPITATE BEHEAD Co. decided to lease out under operating lease one of its buildings that was previously used as office space. The building has an original cost of ?12,000,000 and accumulated depreciation of ?8,000,000 as of January 1, 20x1. Annual depreciation is ?400,000. DECAPITATE Co. uses the fair value model for investment property. The fair value of the building on December 31, 20x1 is ?6,000,000. The entry to record the transfer of the building to investment property includes a a. credit to gain on reclassification for ?2,000,000. b. credit to revaluation surplus for ?2,000,000. c. debit to building for ?12,000,000. d. credit to revaluation surplus for ?2,400,000.

6. On December 29, 20x1, an entity commits itself to purchase a financial asset for P10,000, which is its fair value on commitment date (trade date). Transaction costs are immaterial. On December 31, 20x1 and on January 4, 20x2 (settlement date) the fair values of the asset are P12,000 and P15,000, respectively. If the entity uses the settlement date accounting and that the investment is classified as held for trading, how much is the carrying amount of the investment in the December 31, 20x1 statement of financial position? a. 10,000 c. 15,000 b. 12,000 d. 0 7. On January 1, 20x1, Dagul Co. acquired 10%, P4,000,000 bonds for P3,807,853. The principal is due on January 1, 20x4 but interest is due annually starting December 31, 20x1. The yield rate on the bonds is 12%. On July, 1 20x1, Dagul Co. changed its business model. It was ascertained that the investment in bonds at amortized cost should be reclassified to held for trading securities on reclassification date. The bonds were quoted at 102, 103 and 104 on July 1, 20x1, December 31, 20x1 and January 1, 20x2, respectively. How much is the gain (loss) on reclassification on January 1, 20x2? a. 243,676 c. 295,205 b. 255,205 d. 0 8. On March 31, 20x1, Budoy Co. received 10,000 stock rights from its investment in equity securities to subscribe to new shares at P60 per share for every 4 rights held. Prior to issuance of stock rights, the shares were selling at P80 per share. How much is the initial carrying amount of the stock rights? a. 20,000 c. 50,000 b. 40,000 d. cannot be determined