Reference no: EM132856480

During 2019, the first year of operations, Breath Corporation purchased the following equity securities:

                        Cost         Market Value Dec. 31, 2019        Market Value Dec. 31, 2020

Security 1     2,200,000           1,400,000                               900,000

Security 2      700,000             1,000,000                             1,100,000

Security 3     1,600,000            1,500,000                           1,600,000

Security 4       2,000,000           2,500,000                         1,200,000

Security 1 and Security 2 are held for trading and Security 3 and Security 4 are measured as at fair value through other comprehensive income by election. During 2020, the entity sold one-half of Security 1 for P1,000,000, and one-half of Security 4 for P1,300,000.

Required:

Question 1: Prepare journal entries for 2019 and 2020.

Question 2: Compute the unrealized gain or unrealized loss to be reported in profit or loss.

Question 3: Compute the unrealized gain or unrealized loss to be reported in other comprehensive income.

Question 4: Compute the gain or loss on sale of financial assets at fair value to be reported in profit or loss.

Question 5: Compute the gain or loss on sale of financial assets at fair value to be recognized in retained earnings.

Question 6: Compute the remaining unrealized gain or unrealized loss recognized in the equity section of the statement of financial position.