CERTIFIED PUBLIC ACCOUNTANT Licensure Examination AUDITING PROBLEMS | Download for quality grades |

PROBLEM NO. 1 ANYANG CORP. invested its excess cash in marketable equity securities during 2012. The securities do not qualify as financial asset held for trading. Anyang Corp. has made an irrevocable election to pres ...

PROBLEM NO. 1 ANYANG CORP. invested its excess cash in marketable equity securities during 2012. The securities do not qualify as financial asset held for trading. Anyang Corp. has made an irrevocable election to present in other comprehensive income subsequent changes in fair value of its investment securities. As of December 31, 2012, the company’s securities portfolio consisted of the following: Investee Company Shares Cost Fair Value Kandong, Inc. 30,000 P 1,350,000 P 1,275,000 Egoy Corp. 60,000 4,500,000 4,830,000 Yoga Enterprises 60,000 6,480,000 6,900,000 Totals P 12,330,000 P 13,005,000 During the year 2013, Anyang Corp. sold 60,000 shares of Egoy Corp. for P 4,800,000 and purchased 60,000 additional shares of Kandong, Inc. and 30,000 shares of Kongga Company. On December 31, 2013, Anyang Corp.’s portfolio of securities comprised the following: Investee Company Shares Cost Fair Value Kandong, Inc. 30,000 P 1,350,000 P 1,500,000 Egoy Corp. 60,000 3,900,000 4,350,000 Kongga Company 30,000 1,560,000 1,440,000 Yoga Enterprises 60,000 6,480,000 2,100,000 Totals P 13,290,000 P 9,395,000 During the year 2014, Anyang Corp. sold all the Kandong, Inc. shares. Also, 15,000 shares of Kongga Company were sold at a loss of P 270,000. The net realized gain on sales of securities in 2014 amounted to P 1,440,000. On December 31, 2014, Anyang Corp.’s portfolio of securities consisted of the following: Investee Company Shares Cost Fair Value Yoga Enterprises 60,000 P 6,480,000 P 12,600,000 Kongga Company 15,000 780,000 540,000 Totals P 7,260,000 P 13,140,000 1. For the year ended December 31, 2013, Anyang’s Statement of Comprehensive Income should report unrealized loss of a. P1,300,000 b. P1,190,000 c. P3,915,000 d. P4,245,000 2. What amount of unrealized loss should be reported in Anyang’s December 31, 2013 Statement of Changes in Equity? a. P3,240,000 b. P3,570,000 c. P4,245,000 d. P3,900,000 3. How much was received by Anyang from the sale of its investment in Kandong securities in 2014? a. P6,960,000 b. P7,560,000 c. P7,020,000 d. P8,280,000 4. Anyang’s Statements of Financial Position should report investment in equity securities of