Reference no: EM132950597

Question - Karen Co. purchased the following equity securities on January 1, 20x1 for a total amount of P360,000.

Cost

Alaska Co. preference shares P200,000

Valdez Co. ordinary shares 160,000

Totals P360,000

The shares did not qualify for recognition as held for trading, thus they were classified as investment in equity securities measured at fair value through other comprehensive income.

On December 31, 20x1, the portfolio of Karen Co. comprised the following.

Fair value - 12/31/x1

Alaska Co. preference shares P240,000

Valdez Co. ordinary shares 60,000

Total P300,000

On December 31, 20x2, the portfolio of Karen Co. comprised the following:

Fair value - 12/31/x2

Alaska Co. preference shares P220,000

Valdez Co. ordinary shares 180,000

Total P400,000

On February 2, 20x3, all of the Alaska Co. preference shares were sold for P160,000 net of transaction costs.

Required -

1. How much is the unrealized gain (loss) recognized in other comprehensive income on December 31, 20x1?

a. 60,000

b. (60,000)

c. 100,000

d. 0

2. How much is the unrealized gain (loss) accumulated in equity as of December 31, 20x2?

a. 40,000

b. (40,000)

c. 100,000

d. 0