Problem #1

On January 1, 2016, an entity purchased marketable equity securities not qualifying as financial asset held for trading. The entity elected to present changes in fair vake as component of other comprehensive income.

On December 31, 2016, the securities have the following cost and market value:

Axel Company buys and sells securities expecting to earn profits on short-term differences in price. During 2016, Axel Company purchased the following trading securities: Security Cost Fair Value (Dec. 31, 2016) A P195,000 P225,000 B 300,000 162,000 C 660,000 678,000 Before any adjustments related to these trading securities, Axel Company had net income of P900,000. What is Axel's net income after making any necessary trading security adjustments? Net income before trading security adjustment Unrealized loss (P1, 155,000-P1,065,000) Net income, as adjusted v Security Cost Fair Value (Dec. 31, 2016) A B Total2. On July 1, 2017, Security A was sold for P1,400,000. What is the journal entry to record the sale? V The unrealized gain of P100,000 related to Security A is transferred to retained earnings.