XYZ, Inc. had the following portfolio of financial assets as of December 31, 2021 before any year-end fair value adjustments:

Investment                                                                           Balance

Ben Corp. stocks (20,000 shares)                                   P605,000

Chris, Inc. stocks (40,000 shares)                                   1,100,000

 

• The shares of Ben Corp. were acquired on February 20, 2021 with an intention of generating short-term profits from the share price’s fluctuations. The company paid P30.25 per share, which includes P1.25 per share broker’s fees and commissions. A P2 per share cash dividends were received on March 30. These dividends were declared by Ben Corp. on January 20, 2021 to stockholders as of record date March 1, 2021. The shares of Ben Corp. are trading at P30/share at year-end.

• The company paid P27.50 per share, including P0.50 per share broker’s fees and commissions on the acquisition of Chris, Inc.’s stocks on March 1, 2021 for trading purposes. A P3 per share dividends were received from the said shares on May 3, 2021. The dividends were declared on April 1 to stockholders as of record date April 20, 2021. The shares of Chris, Inc. are trading at P25/share at year-end.

2. What is the correct balance of the investment in equity securities to be presented in the statement of financial position on December 31, 2021?
3. What is the gain (loss) from change in fair value to be recognized in profit or loss in 2021? (Indicate if gain or loss)

Answer rating: 100% (QA)

Answer Correct balance of the investment in equity securitie... View the full answer